Magazine article American Banker

Proponents and Skeptics Debate High LTVs at Chicago Conference

Magazine article American Banker

Proponents and Skeptics Debate High LTVs at Chicago Conference

Article excerpt

Making mortgage loans for more than a home's value may seem like risky business to some, but the phenomenal profit margins of these loans are making the high loan-to-value market difficult to resist.

Judging by the attendance at the first-ever high loan-to-value mortgage conference, lenders of all kinds are interested.

Chase Manhattan Corp., Norwest Corp., PNC Bank Corp. Associates First Capital Corp., GMAC Mortgage Corp., Amresco, Advanta Corp., and Heritage Bank all were represented. With more than 300 at the event, attendance was triple what was expected, said conference chairman Paul Jenison, managing director of PaineWebber Inc.

Idle hallway chatter was at a minimun; talk was centered on potential deals. Every educational panel was packed, and lenders not already in the market engaged speakers in lengthy question-and- answer sessions.

The main message that high LTV experts were hoping to communicate: These are safe loans.

They emphasized that only borrowers with high credit scores are eligible for these loans, which are also known as 125-LTV loans because they let the consumer borrow up to 125% of a home's value.

If you can't get a loan that qualifies for sale to a secondary mortgage agency, Mr. Jenison said, "you're not going to be able to get a high LTV loan."

Lenders said these loans tend to be made to upper-middle-class borrowers. "It's not the intent of the prime borrower to put himself into bankruptcy," Mr. Jenison said. "That's a problem with subprime borrowers . …

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