This is just the first mortgage company I checked. Last week I spoke to a friend of mine that is a loan officer for a competitor and they offer the same.
http://69.20.13.21/newnymc/programm/no-documentation.shtml
http://69.20.13.21/newnymc/programm/first-time.shtml
And not to start an argument, but not putting 20% down isn't the cause of the problem. In the past, if you didn't put 20% down, you were forced to pay PMI. The problem this time around is that borrowers are taking out interest only or 1-5 year ARM mortgages and gambling that their property would appreciate enough within five years that they could refinance into a more conventional mortgage. Since many properties are valued less than what they appraised for when they took out the loan, the borrower can't pull off a refinance.
Although I never saw a direct quote, it's often been said that Greenspan encouraged people to take those loans with the rediculously low teaser rates.... so why wouldn't they? Besides, in the end... as usual... the US Taxpayer shoudlers the utlimate risk since so many mortgages are in the end backed by the US Gov't.
I also disagree that not putting 20% isn't the problem: historically you are correct that you could get 90% financing and pay PMI, BUT you couldn't get a no doc 90% loan, and you couldn't get more than 90%, unlike the OVER 100% FINANCING in a lot of sub prime loans.
Also, there is something very important that very few people realize about foreclosures/defaults* (which is the real problem. As long as the borrower is actually paying, none of this matters really). There is a psychological factor in "how much I have sunk into this place": Even if the property is "under water" (i.e. the amount of the loan is greater than the value), a lot of people will continue to pay, even if it means a big financial hardship, to hang onto their percieved "equity" (scare quotes because in reality, if the property is under water, there is no equity). If they haven't sunk much or any money into the place, they are MUCH more likely to walk away from it when things head even slightly south. This can be seen when people "cash out refi" and pull equity out. Example: a property is worth $500,000 in today's market. If someone bought it for $800,000 and put $250,00 down, having a $550,000 mortgage, they are much less likely to walk away from it than a person who bought the same property for $200,000 and cashed out for a refi of $525,000 (taking a "profit" of $325,000) even though the first owner is $25,000 more under water than the second.
* even bankers.
