A Slam Dunk!

Reports have been released recently suggesting that lenders are increasing scrutiny of new loan applications in an effort to decrease the risk of loan defaults. A decrease in the number of “Slam Dunk” loans are highlighted as a result of the greater scrutiny.

Slam Dunk loans are those that are provided with a “minimum of underwriting fuss” and, as illustrated by a memo entitled “Slam Dunk qualified loans… no questions asked!” issued by lender Triad Guaranty Insurance Corporation, a buyer is qualified based simply on a credit score, clean credit record and 5% deposit.

Furthermore, Slam Dunk loans seem to have accounted (and continue to account) for a substantial percentage of loan applications in recent times.

Slam Dunk loans account for:

1. 66.5% of loan application nationwide.
2. 44.1% of loan application in Colorado.
3. 76.9% of loan application in Nevada.
4. 79.6% of loan application in California (now down from 84%)
5. 84.3% of loan application in Massachusetts

Some examples...

Triad would guarantee “Slam Dunk” approval for a fixed, balloon, or ajustable rate loan, with the following terms:

FICO Score: 680 or higher
Loan to Value: 90% (10% donw)
Max cash out: $100K (if refinancing only)
Loan amount: $650K

FICO Score: 660 - 679
Loan to Value: 90% (10% donw)
Max cash out: $0
Loan amount: $500K

FICO Score: 620 - 659
Loan to Value: 90% (10% donw)
Max cash out: $0
Loan amount: $450K

Interestingly, the Triad memo also covers a Slam Dunk program to qualify buyers that have no deposit…. 100% Slam Dunk financing with the Triad 100!