100% LTVs: Gone or Forgotten?

The days of 100% financing are long gone, according to several speakers at the Consumer Bankers Association's annual Home Equity Lending Conference in Austin, Texas. The problem is, what has been learned about 100% loan-to-value ratios may soon be forgotten, warned Cynthia Balser, senior vice president at KeyBank NA, Cleveland. Ms. Balser, a member of the CBA's Home Equity Lending Committee, said one thing she's learned during her 34 years in the banking business is that memories are short. "Over the next five years, lenders will be very cautious and careful," she said. "But after that, I question how well we will remember what we learned." As Ms. Balser sees it, it's not a matter of whether 100% financing will return, either as a single primary mortgage or as combined first and second trusts. Rather, it's "just a question of how long it will take." However, Margaret Lawlor of Bank of America and James Manelis of JPMorgan Chase disagreed, saying borrowers are going to have to have some skin in the game. "At Chase, the maximum LTV is 90%," said Mr. Manelis, who chairs the CBA's home equity committee. "No matter what the situation is, we're never going to go beyond that." But Jeffrey Hooper, senior vice president and consumer lending product manager at Sun Trust Bank, Atlanta, said his institution expects to "take customers' [LTV ratios] up and down," depending on what's going on in their lives.