Piggyback mortgage financing structures appear to be creeping back into the market, a trend that some observers say could destabilize the industry. Before the financial crisis, many borrowers combined a first-lien mortgage for 80 percent of home value with a second lien of 10 percent or more in order to avoid paying private mortgage insurance. While many first-lien mortgages are still originated with a simultaneous second in recent years, the combined loan-to-value ratio of the two has been capped at 80 percent or less. “From what we’ve seen from lenders who are interested in expanding their customer base, there appears...
About three years ago, some investors – private equity firms and hedge funds in particular – started purchasing NPLs as a cheaper alternative to buying foreclosed homes.