Deja vu

Via Zero Hedge. Aren’t you glad we broke up the big banks, reinstated the rule against banks owning insurance companies, tightened up on their banking practices, and threw the crooks in jail so they wouldn’t dream of crashing the economy again?

Oh, wait:

First we got GM subprime interest-free car loans, then we got subprime ABS securitizations, then we got soaring student loan defaults and delinquencies, then we got the opportunity to sell and short student loan exposure, and now, finally, the credit bubble is complete as FastFunds Financial Corporation is proud to announce that it has acquired exclusive mortgage servicing rights for an “Innovative New Mortgage Product.”

Why is it so innovative? Because it requires no credit verification, no credit history, no docs and needs no personal guarantees. In other words, it is the very worst of the worst lending practices we saw in 2006: the NINJA.

But there is a twist: “all that is required to qualify for a mortgage loan is qualifying for a life insurance policy, a down payment that usually amounts to 10% of the purchase price and verification that the borrower has the financial ability to pay the monthly payments.

“In other words: buy life insurance, get a subprime, no doc mortgage for free.Ye olde days are truly back.

From the FastFund credit bubble peak press release:

NET LIFE is a development stage enterprise that has developed and is offering an innovative new mortgage product that is not based on credit history (no doc) or personal guarantees. It is only secured by the underlying collateral and a life insurance policy on the borrower. Therefore, all that is required to qualify for a mortgage loan is qualifying for a life insurance policy, a down payment that usually amounts to 10% of the purchase price and verification that the borrower has the financial ability to pay the monthly payments. NET LIFE believes this mortgage product will be attractive to a wide spectrum of potential borrowers including:

  • first time homebuyers;
  • borrowers who have experienced prior financial difficulties such as foreclosures, bankruptcies, late payments or credit problems; are presently employed and whose current income would qualify for a mortgage loan; but who couldn’t otherwise qualify; and
  • borrowers who may wish to bypass the traditional paperwork involved in the typical underwriting process but who would otherwise qualify.

Since its formation in 2012, NET LIFE has completed development of its mortgage product and conducted testing via a limited number of successful closings. NET LIFE is now developing plans for a national launch of its product line.”We are excited to be on the forefront of launching this exciting new product and especially being on the servicing side where we can gain substantial benefit without the risk associated with traditional mortgage underwriting,” stated Barry Hollander, acting Chief Executive Officer of FastFunds.

2 Responses to Deja vu

  1. lless March 6, 2013 at 1:13 pm #

    It just boggles the mind that any investor would bet the up side of this paper! The”too big to fail” meme has to be behind it. There is no part of the political spectrum that will bail this toxic waste out now.

  2. montag March 6, 2013 at 6:37 pm #

    Reads like there is still a mortgage on the property and an assignment of whole life policy. If you default do they kill you and collect?

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