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follow gsr 2016 Jul 27, 8:33am
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Theyâ€™re courting Silicon Valley workers with tailored loans, guaranteed 24-hour approval and financial-planning services. Social Finance Inc. has deals with Google and other top technology companies that allow it to market to new hires. First Republic Bank -- which gave Facebook Inc. billionaire Mark Zuckerberg a 1.05 percent interest-rate mortgage -- has opened branches in Facebook and Twitter Inc. headquarters. San Francisco Federal Credit Union will finance 100 percent of houses costing up to $2 million.
And the notion of 100-percent financing makes some in the industry nervous. â€œGiven what we went through in 2008, zero-down financing is suicidal for our country,â€ says Chuck Green, CEO of Bay Area Captial Funding Inc., a mortgage brokerage that offers loans from about 40 different companies. â€œWe have to learn from our mistakes.â€
For its part, San Francisco Federal Credit Union sees the gamble as manageable. Four in 10 applicants are rejected and those that have gotten loans have an average FICO score of 747 and average household income of $219,000, says Rebecca Reynolds Lytle, chief lending officer. â€œWe are vetting our borrowers to make sure they can afford it and have reserves.â€ But in the end â€œitâ€™s a loan -- itâ€™s not going to be risk free.â€
Wow, that is insane.
The next tech downturn should be very interesting.