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Subject:  Re: GA Deal I'm working... Date:  2/19/2006  10:31 PM
Author:  Dwdonhoff Number:  7618 of 14302

Hi namkato,

Thanks for being straight & candid!

This deal strikes me as loan sharking. Unsophisticated buyer with bad credit taking on a 1st with 90% LTV (what kind of loan?), a 2nd with neg-am. I know it happens every day but it is not suitable.

By what measures? Seriously... what standards are to be used in determining what is or isn't suitable, if the individual isn't allowed to decide in full awareness.

In this specific deal, she's completely aware of all factors... including the expectation that she could own the home for several years before she catches up in equity to her original acquisition price, yet nobody else is providing her with the means of owning her home in any other way.

This is like a stock broker putting someone's life savings into all tech stocks in 1999.

Except that she's putting precisely $2,500 into this, she's not buying a home she doesn't already live in, and her real-market payments will be "at" what someone with good credit would be paying.

With all sincerity, she's being placed into a pretty advantageous position. Nobody else will let her qualify to retain possession, and attain title, with a limited amount of the future equity being the collateral that allows her to do so.

You are stretching her to the max, no one should be buying with 100% LTV and neg-am at the peak of the market.

A) MILLIONS of bnaks and borrowers finance at 100% LTV. Are they all wrong, in your opinion?

B) The real estate markets (most anyway) peak every year at least once. In some markets they cycle longer... but living in your home at or below A-paper carry-costs is rarely a bad financial decision... even in flattening markets.

I'm trying to see how she is not getting in way over her head, and how you might be using your knowledge of the game to take advantage of her.

Of the first statement, it appears you're looking for the opposite.
Of the second statement, I've created a set of solutions to several folks problems that (all being aware all around) are acceptable to all.

Am I using my knowledge? I certainly hope so.
Is it to the occupant/buyer's detriment? Not in either of our estimations.
Is it legal? In every aspect I am aware of, yes.
Is it ethical? In every aspect I am aware of, yes.
Is it profitable? For all parties, potentially yes.
Is it risky? For all parties, potentially yes.

Here's an acid-test question I ask myself;
If the counter-party knew what I know about the deal, would they proceed?
In this case, I've made sure they do... so the answer is "yes."

I find it's actually quite regularly possible to create such profitable cross-solution situations WITH everyone on the same page. It definitely let's me sleep at night. (And besides... for whatever reasons... my whole life I've found underhanded deals to never end up being profitable anyway.)

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