The Big Short II

In the week that the movie, The Big Short comes out, a San Francisco Credit Union is doing exactly what partially caused the big short to happen.

These geniuses are putting out a loan with No Money Down up to, get ready…….$2,000,000.  That’s two million dollars with no down payment.  Let me say that again.  Buy a $2,000,000 house in San Francisco and put nothing into it.  No skin in the game.

Will the CFPB do anything about it?  Will anyone be up in arms (except me?).  No.  They’ll just say that it is a great business decision on their part for the non-profit credit union to attack a niche in the market.


First, if you put no money down, you have costs to sell the place.  Between brokerage commission, transfer taxes, title insurance, possible closing cost credit to buyer for a defect in the house, etc., you could be looking at upwards of $200,000 or 10% as a fee to leave.  And if you don’t have that money (assuming the house is still around the same price as you bought it for), you need to default on the loan for it to go away, rent it for not what the payment is and then, eventually, down the tubes it goes. See details by clicking here.

If the credit people at Fannie or Freddie saw this, they would shriek!  The idiocracy that they make us go through on “normal” loans defies intelligence.  This takes the cake.

So, what to do?  There will be plenty of ignorant real estate agents screaming on their social media posts about how great this is because of their current need for sales.  Someone (that’s me) has to think long-term.

So, I am hereby officially letting the CFPB, the banking department at the State of California, Michael Lewis (who wrote The Big Short) and anyone else that will listen that this has to stop before it gets us back into trouble.

If you agree, spread the word, if you don’t, then good luck with the new job in 2018.

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