I read the Forbes article and you misread the interest rate comparison. It is comparing the Unison payment to a 30 year fixed mortgage WITHOUT the extra 10% down to be 1% higher. The DPA is not 1% higher.
You guys need to read the article again. The savings to the buyer is a 1% LESS interest rate than if the buyer only put down ten percent (80% LTV instead of 90% LTV) AND no mortgage insurance.
There is also downside protection. IF the house declines in value then Unison subtracts 35% of the drop in value. So using the $1 million purchase price a $286k+- drop in value would wipe out the Unison down payment ($286k x 35%). The buyer would only be out $186k.
The buyer can also refinance out of it in a year or two when they have the equity or extra cash (pay back Unison $100k plus 35% appreciation).
I could see this for some limited uses. I can also see this ripe for abuse.
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I read the Forbes article and you misread the interest rate comparison. It is comparing the Unison payment to a 30 year fixed mortgage WITHOUT the extra 10% down to be 1% higher. The DPA is not 1% higher.
They probably picked up the idea from the Fed, the way they take all of the profits from Fannie & Freddie.
You guys need to read the article again. The savings to the buyer is a 1% LESS interest rate than if the buyer only put down ten percent (80% LTV instead of 90% LTV) AND no mortgage insurance.
There is also downside protection. IF the house declines in value then Unison subtracts 35% of the drop in value. So using the $1 million purchase price a $286k+- drop in value would wipe out the Unison down payment ($286k x 35%). The buyer would only be out $186k.
The buyer can also refinance out of it in a year or two when they have the equity or extra cash (pay back Unison $100k plus 35% appreciation).
I could see this for some limited uses. I can also see this ripe for abuse.
SO is this Part of the OBAMA DON’t CARE program or contuinuation of the DODD FRANK/ Elizabeth WARREN ? Maybe should have a play SHAKEDOWN by the PARK.