Rocket Mortage's 1st Down Payment: A deja Vu of the 2008 Real Estate Crisis
Rocket Mortage's 1st Down Payment: A deja Vu of the 2008 Real Estate Crisis
Rocket Mortgage launched a new initiative that has raised concerns reminiscent of the risky lending practices leading up to the 2008 real estate crisis. This program allows home buyers, particularly those in the low to moderate income bracket, to make a remarkably low down payment of just one percent for their prospective homes. Known as One Plus, this product offered by Rocket Mortgage, one of the largest non-bank mortgage lenders in the US, aims to facilitate homeownership for low-income individuals by enabling them to purchase houses in their neighborhoods with minimal upfront costs.
In addition to the low down payment requirement, Rocket Mortgage will also waive off the mortgage insurance, significantly reducing the overall cost of home ownership for the borrowers. However, there are some aspects that may raise red flags. To ensure the sale and guarantee of these mortgages, Rocket Mortgage plans to pay 2 percent of the borrowers' loans, making them accountable for a portion of the risk. Furthermore, the company will substantially reduce the mortgage premium typically required for home buyers who put down less than 20 percent on a home.
Bob Walters, CEO of Rocket Mortgage, expressed excitement about the program, stating that it will be a significant opportunity for many people. However, it is essential to approach this initiative with caution, considering the potentially hazardous implications. The similarities to the lending behaviors that led to the housing market crash in 2008 cannot be ignored.
If you require legal advice, you can contact the law offices of Omar Zambrano today for a free consultation by calling 626-338-5505.