FINANCE

Home Financing: Mortgage bankers, hurting from the near halt in refinancings caused by higher interest rates, are now betting that home values have nowhere to go but up. So they’re offering 100% financing for customers buying homes.

The new package of loans, combinations of first and second trust deeds, is risky because property values must increase for lenders to get their money back in cases of defaults and foreclosures.

Rob Roof, president of RPM Mortgage in Laguna Niguel, said the new loans show the confidence that mortgage bankers have in the resurrection of Southern California home values. “Lenders wouldn’t be doing this unless they thought we’ve reached the bottom of the market,” he said.

But mortgage bankers, who lured loan customers from savings and loans and banks over the last few years, have seen their market share dwindle with the higher rates. The 100% financing is one of their methods for attracting customers again.

Borrowers could get a conventional mortgage loan--one that is 80% of the sale price--from a bank, S&L; or mortgage banker, and then could obtain a home equity loan the next day from a mortgage banker for up to the remaining 20% of the sale price. The same mortgage banker also could fund both loans, Roof said.

Borrowers can use the home equity loan to pay off car loans, put children through school or pay medical bills, Roof said. But customers can’t use the package as a way of borrowing the down payment, he said. Even so, he acknowledged, some customers probably will try to borrow the down payment secretly from a relative and repay the amount with the home equity loan.

Officials of banks and S&Ls; consider it unsafe to make loans that equal the value of the homes. Such 100% financing helped cause a number of Southern California banks to fail in the early 1980s.