Chase Mortgage Second
Rules get tougher on 'piggyback' mortgages
An exhaustive study of the performance of piggyback loans found them anywhere from 43 percent to 50 percent more likely to go into default.
KENNETH HARNEY
Wall Street is sounding the alarm on one of the most popular ways to buy a house in many high-cost areas around the country -- ''piggyback'' programs that mesh simultaneously closed first-lien mortgages and second-lien credit lines or mortgages.
As of July 1, the most influential ratings agency in the mortgage arena, Standard & Poor's Corp., has upped the ante for lenders who seek to fund piggyback deals through capital market financings. The move is likely to raise interest rates and fees for some home purchasers this summer, say mortgage experts, and could reduce the volume and availability of piggyback programs overall.
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Asking for financial guidance early can save heartaches
They had financed the purchase of a new car last year using a low-interest-rate credit card, and then purchased their existing home later in the year with almost no money down and two mortgage loans. The first mortgage was an interest-only, five-year adjustable rate loan, which meant none of their payments was being used to reduce principal and that the rate would begin to float after five years. The second mortgage was much smaller, but the interest rate was over 8 percent.
Jim made a respectable salary as an information systems manager, and they had agreed that Janet would remain at home while the children were young. As little Jacob began bringing out his fleet of toy airplanes for my inspection, I respected that decision. But I could also tell that their small two-bedroom condo would slowly shrink as the kids grew older.