Remember those days of single-digit down payments for low-income buyers? Well, they're back! According to a Real Deal article this week, the 29-unit development at 111 Monroe Street (which we've been tracking since its infancy under its other address, 1142 Bedford Avenue) has been approved for FHA loans, meaning that "qualified" buyers can buy a property with as little as 3 percent down. (At 111 Monroe, the minimum down payment will be 3.5 percent.) This sounds like a smart move for the developer but isn't this how we got into the current mess? Check out this verbiage from FHAinfo.com:
The main advantage to a FHA home loan is that the credit criteria for a first time borrower are not as strict as Conventional Loans sold to Fannie Mae (FNMA) or Freddie Mac (FHLMC). Someone who may have had a few credit problems or no traditional credit should not have a problem obtaining FHA financing...FHA loans may may require less income to qualify as they will exceed the Conventional debt ratios.
Is this nuts or are we missing something?
111 Monroe Street Banks on FHA Approval [TRD]
1142 Bedford Avenue Nearing Completion [Brownstoner] GMAP
Development Watch: 1142 Bedford Avenue [Brownstoner]
Development Watch: Halfway There at 1142 Bedford [Brownstoner]
New Development: 1142 Bedford Avenue [Brownstoner]