Why dont banks lend to paid off propertys that are appraising 50k

4 Replies

Why dont banks lend to paid off propertys that are appraising 50k??

can anyone recommend any banks that are willing to work or lend ltv for houses that are 50k    most banks want house to appraise at 100k

i am in nj

50K can be a bit hard of a loan to get, over 60k should be easy though. Even big banks do mortgages <100K, should be no problem. Now if the house appraises for 100K, you'll only get ~75% of that, so the loan has to be 60K on an 85K home.

as for why banks don't like these loans, ask yourself this question from the other side, why WOULD a bank want to loan like this?

it takes the same amount of work to do a 500K loan as it does a 50K loan. the loan balances are smaller so income is MUCH less, so the banks return on overhead and time is far less. it's a product banks provided to keep a big customer base, not a money maker.

these are called low value assets and low balance loans.. its a widely known fact in the standard mortgage industry that these are the highest risk.

it cost as much to foreclose on a 40k loan as a 400k loan.. there Is no money.. and those properties tend to be in less desirable areas or flat out war zones or worst area of a city..