Quote:
Originally Posted by 1ntCobra
So if a developer starts a brand new condo development and 0% of the units are sold, how do they get from 0% to 70%? Is the developer stuck only with buyers that can pay 100% of the purchase price with cash? Exactly how many of them are around?
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You miss the point. By having any threshold at all means other conventional banks are involved. Other risk takers... not just the government. It makes complete sense. What Barney is asking FM to do (again) is to lower the bar. Do you get it? This not about FM ponying up a percentage of the money for each condo. Its about FM deciding to step in at some point when enough OTHER risk takers have ponied up THEIR money. 70% of the owners are reliable borrowers. The other 30% are more risky. FM backs those folks up. When FM backs up most or all of those risky borrowers, then the financial reliability of the entire investment (the condo building) is at extreme risk. Requiring 70% to be convential means the viability of the building is much greater. Doing what Barney is asking is EXACTLY how we got into this mess in the first place. Letting whole areas be purchased by people who are high risk borrowers is assinine. And it is downright immoral.
Mike