I found a flyer in my inbox today. It was headlined:

ATTENTION AGENTS

IT'S BACK

What is back, you ask??

100% LTV (Loan to Value). So, basically we're talking 100% mortgages. The flyer goes on to detail all the mortgage options available including no income, no asset, no employment verification and "no doc" mortgages.

First of all, I'm not opposed to a variety of mortgage options and even "no docs", mortgages where they basically run your credit and take you at your word for everything else, do have their place. In fact, several states have now outlawed no doc mortgages and I believe that's a mistake.

The problem is that these instruments have all been overused! There is a legitimate market for each and every one of these products. But they should be niche products, appropriate for a small subset of borrowers.

But the flyers mass delivered to real estate agents all over the area make me wonder whether we've really learned that lesson yet. I'll give them the benefit of the doubt and assume that they just want me to know that the products do still exist. I sure hope this doesn't mean that these products are still being widely offered.

Given what we've seen in the mortgage market in the last couple of years, if you're in the market for a mortgage choose your lender carefully both by the company's reputation and that of the individual. And, even then, remember that it's your responsibility to fully understand what you're committing to. Read the fine print and if you don't understand something ask more questions. If anyone says "trust me" or tries to push you into something you don't feel comfortable with, run for the hills!

So, we're all forewarned now. If we're paying attention there's no reason that we should still be seeing these horror stories a couple of years from now!

And I think I'm going to toss that flyer!