grayfingers
Cave Dweller
Member since November 2007
Posts: 4,575
|
Post by grayfingers on Apr 3, 2013 8:13:59 GMT -5
Now, this is real smart . . . another Obamafolly on the backs on the taxpayers. Now he's back to doing the hard work of fundamentally changing America. Obama administration pushes banks to make home loans to people with weaker credit. "The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place. President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession. In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default. Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default. Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps." www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html
|
|
|
Post by helens on Apr 3, 2013 12:26:20 GMT -5
What's wrong with that? Do you know that the CURRENT lending environment is 20% down with top credit for a basic home mortgage? No first time home buyer or vet or most other people besides overseas investors can typically come up with 20% down.
We went from 0% down to 20% down in the last 10 years, as if defaulting loans were the problem with the banks, when in fact it was the banks selling those loans up to 10x PER LOAN that led to the failure.
WHY should consumers and home buyers be punished for the sins of Wall Street in the form of being UNABLE to afford a home, where they could 30 years ago?
It's about time they loosened it up again. You realize that in an INCREASING housing market, where the home is collateral for a loan, it doesn't MATTER what the buyer's credit is? If they default, the bank will MAKE MONEY as the prices recover?
Look around, real estate prices are starting to EXPLODE. We have a housing development that started 2 years ago within a mile, and they were selling their new homes for $258K. Today, those exact same new homes are selling for $358K on way inferior lots, because the $258K homes are long sold.
Real estate here fell over 50%... in some areas as much as 70%. $300,000 homes were selling 2 years ago for LESS than $100,000. Today, those homes are back up to $220,000.
If a bank loans to someone with the worst credit possible, and they put the old 'standard' of 5% down on a $200,000 home, then defaults in a year, that bank can foreclose, and sell that home for $300,000, keep all the guy's payments and down, and what do they lose.
Why SHOULDN"T they loan in this environment? It's win win win for everyone. The buyer gets a chance to fix his credit, get a mortgage deduction for LESS than the price of rent in most cases, and own his own home, at the lowest interest rate in history. The bank cannot lose a dime either way, and stands to profit both ways.
It kicks our economy in the form of currency circulation to Realtors, Bankers, Mortgage Brokers, Home Inspectors, Appraisers, Repair companies, Moving companies, U-Haul, Title Companies, Attorneys, home staging companies, etc etc.
Win for the buyer, win for the bank, win for our economy, zero downside.
Can you give me ONE reason this sounds like a bad idea to you? Maybe I'll finally 'get' why you hate Obama.
|
|
|
Post by helens on Apr 3, 2013 13:09:50 GMT -5
Also keep in mind that when the housing bubble popped, it was because people were FLIPPING... not their own homes, but buying multiple investment properties they did not live in at all, then put 0% down to buy.
That is NOT what Obama asked for, he's asking for banks to loan to home OWNERS, not home INVESTORS. 30 years ago, before Clinton, you could buy a home with 5% down and less than perfect credit. Today, you must have perfect credit AND 20% down.
Relaxing it to the same home buying standard of the past 80 years will cause the same level of bubble as loaning to any and every investor, on his 30th house with 0% down, 8 years ago, while banks engaged in derivative flipping and reselling the same mortgage up to 10x because Bush castrated banking regulations?
Not even close to the same thing.
|
|
Sabre52
Cave Dweller
Me and my gal, Rosie
Member since August 2005
Posts: 20,487
|
Post by Sabre52 on Apr 3, 2013 15:17:39 GMT -5
Wow, hope you're right Helen. I firmly believe in the old 20% down and good credit rating idea myself. Latest report I've heard, there were still a bunch of folks on the edge of default and something like over 25% of folks owe more than their home is worth. Plus, Fannie and Freddie are still a friggin nightmare and have eaten hundreds of billions of taxpayer money already. And the job market and job security is not much better than before Obama. I personally don't think folks should be encouraged to buy homes they cannot afford with little skin in the game ( equity). I know I would not. Next little jobs market setback or recession and we'll be back in the crapper with tons of folks defaulting just like before. Yeah, the banks did bundle and resell loans etc but the bottom line was, folks bought homes they could not afford to pay for and that they never should have been allowed to buy in the first place. Why should government encourage risky or irresponsible behavior on the part of home buyers, or banks. Seems the ultimate in stupidity to me.......Mel
|
|
|
Post by Toad on Apr 3, 2013 15:52:37 GMT -5
Not smart. Technically I shouldn't own one right now based on the 20% rule. I only put down 3% but had excellent credit - and that was just a year ago. The door is already open - especially with the low interest rates. No sense bringing in higher credit risks to a housing market that is still recovering.
I don't know how much of a risk I was considering my tiny down payment... But if someone has poor credit and a tiny down payment, who knows.
|
|
chassroc
Cave Dweller
Rocks are abundant when you have rocktumblinghobby pals
Member since January 2005
Posts: 3,586
|
Post by chassroc on Apr 3, 2013 16:13:01 GMT -5
I do not have any facts to support it...but I believe that there were no checks on Mortgage originators. I know of plenty of people who were in other branches of work became mortgage brokers because it was easy money;
Noone was checking on the con artists brokering the loans; no checks and no penalties for giving mortgages; none for anyone caught doing dirty deeds.
In that environment the people sniffing the money were writing mortgages and quite possibly encouraging/coaching the applicants to put the right numbers on the application that would get them a loan even if the data was ficticious
|
|
|
Post by parfive on Apr 3, 2013 16:16:57 GMT -5
|
|
|
Post by texaswoodie on Apr 3, 2013 16:28:57 GMT -5
It worked so well last time so let's do it again.
Curt
|
|
Sabre52
Cave Dweller
Me and my gal, Rosie
Member since August 2005
Posts: 20,487
|
Post by Sabre52 on Apr 3, 2013 16:56:17 GMT -5
I do agree with both Rich and Charlie for a change. Folks were flocking into the mortgage industry during this period and a lot of them seem to have been pretty much crooks anmd should have been prosecuted. Where is Obama's Justice dept and Mr. Holder on this issue? However that being said, a poor credit risk is still a poor credit risk. A car dealer would not sell a new Mercedes to a teen with a paper route and a banker should not let a guy who makes 40K a year buy a 400K mini-mansion with hardly anything down and a low credit score....Mel
|
|
|
Post by helens on Apr 3, 2013 18:05:15 GMT -5
Wow, hope you're right Helen. I firmly believe in the old 20% down and good credit rating idea myself. Latest report I've heard, there were still a bunch of folks on the edge of default and something like over 25% of folks owe more than their home is worth. Plus, Fannie and Freddie are still a friggin nightmare and have eaten hundreds of billions of taxpayer money already. And the job market and job security is not much better than before Obama. I personally don't think folks should be encouraged to buy homes they cannot afford with little skin in the game ( equity). I know I would not. Next little jobs market setback or recession and we'll be back in the crapper with tons of folks defaulting just like before. Yeah, the banks did bundle and resell loans etc but the bottom line was, folks bought homes they could not afford to pay for and that they never should have been allowed to buy in the first place. Why should government encourage risky or irresponsible behavior on the part of home buyers, or banks. Seems the ultimate in stupidity to me.......Mel So many issues here... There is a HUGE inventory of bank owned and still to be foreclosed homes, true, your source was accurate. Banks are unloading their inventory, and still foreclosing on people, and will be doing so for the next year or 2 even. You'd think this would drive the prices down, but they are doing it in such a way as to drive the prices UP. This the piecemeal release to avoid rattling the market again. FannieMae is pulling a sneaky... very interesting one (doh. 17.5 BILLION profit in the first QUARTER). When they get a home back, they price it at the loan rate.... which is USUALLY higher than the appraisal could possibly come in at. THEN, they offer a 3% down loan to QUALFIED buyers.... now if you're paying 50% MORE for rent (which is average in most areas) than you would for a mortgage... what dummy wants to pay that for nothing, when you can: 1. deduct mortgage interest, putting more money in your pocket. 2. get in on the lowest rate in 30 years. 3. improve your credit. 4. have a 'homestead' (which in Florida is a $50,000 a year tax deduction off the top of the tax appraisal price... taxes you do not have to pay... while LOCKING in growth of the taxes to 5% for the remainder of your life). Now, QUALIFIED is the term we need to clarify... today's QUALIFIED is a ridiculous # compared to past... I think it's above 720 for most banks. That's with ZERO late payments over 20 years of credit or so, not a single late medical bill (and if you have a dispute with a medical provider, your credit's dumping below 700 for ONE late, as you duke it out). Being SLIGHTLY less qualified does not equal UNQUALIFIED. My understanding of what Obama asked for is SLIGHTLY less qualified. No foreclosures, no huge outstanding debts, etc. I have not seen the actual credit # however to know exactly what he meant... but based on the language, it EXCLUDES past foreclosures for 7 years, and short sellers for at least 2 years from getting loans. Remember, this is with conventional financing's 20% down. I see no reason why someone in a rising real estate market putting 20% down should even have his credit checked... that's MY opinion. The bank cannot lose, and the person loses his 20%. What's the problem? As for what Rich and Charlie said, that's absolutely true. There was so much rampant FRAUD going on with loans and brokers it was ridiculous. When you take away regulations and punishments and enforcements, gee, wonder how that can happen? Who wants no regulation? Oh, the guys who want to rip others off! Sort of like believing thieves that we should fire all cops to save money. The result was paranoia and no lending for years, which punished everyone, INCLUDING the banks. Going back to the lending requirements of 30 years ago which happened to be 5% down for conventional loans and 'average', not FLAWLESS IMPECCABLE credit, is what kept our economy chugging. Lets do it again? Since it never happened from lending to homeowners, but because of banking DERIVATIVES, it can happen again if banks make the same DERIVATIVES mistake, and they allow every tom dick and harry to hop on the lending tree (not), but it's not going to be because of lending to home buyers. See home owners do not like sitting in the street surrounded by their entire lives, photos, mementos, pets, babies, in the rain, and having their credit destroyed for the next 7 years. Investors may not care, it's not their house... but homeowners DO care, and it's no light decision to buy a home to live in for most people... not when the option is just throwing that exact same money away to a landlord. Lets not forget that all landlords do credit checks... foreclosures need not apply unless they are renting at a motel or slum. People do not buy homes lightly, and the foreclosure rate for actual homeowners without a recession is very low, regardless of credit. And, by most accounts, we are digging out of recession, slowly.
|
|
|
Post by helens on Apr 3, 2013 18:30:05 GMT -5
And so it's clearer, the MAJORITY of people who walked away were underwater investors. I know one lady who had TEN, TEN homes she bought to flip, when the axe came down. She lost all 10 to foreclosure.
Didn't bug her a bit, she still lived in her nice paid off home. She had NO skin in the game at all, and what's 7 years of bad credit to a real estate market that happened to have 7 years of downtime? (*COUGH*). AS IF the Republicans didn't engineer this from the start (ok, that's ME being paranoid)... how convenient.
I've heard of investors who lost 30 homes. It's ridiculous to blame home OWNERS who will fight tooth and nail to keep the only roof they have over their children's heads.
|
|
|
Post by helens on Apr 3, 2013 18:42:55 GMT -5
Not smart. Technically I shouldn't own one right now based on the 20% rule. I only put down 3% but had excellent credit - and that was just a year ago. The door is already open - especially with the low interest rates. No sense bringing in higher credit risks to a housing market that is still recovering. I don't know how much of a risk I was considering my tiny down payment... But if someone has poor credit and a tiny down payment, who knows. Toad... you had to prove that your mortgage payment was less than 25% of your total gross family income. THAT meant that unless you suddenly become a drug addict, you would still be able to pay your mortgage. If your credit were worse, because of ONE hospital bill for a child that you were fighting with the Insurance company about, you should not have a home? Because that's happening to people right now. And they don't have homes because of an evil insurance company hell bent on keeping their CEO's 72 million dollar annual salary, and will wreck a family for a $100 doctor bill dispute. Anyway... with FannieMae pulling this ugly all over the country, your home you smartly bought last year may well be your retirement all by itself when real estate recovers.
|
|
robsrockshop
has rocks in the head
Member since August 2012
Posts: 715
|
Post by robsrockshop on Apr 3, 2013 19:30:32 GMT -5
I'm still trying to figure out how all the investors are going to get 1k monthly rents in places like Detroit. LOL.
I've studied the economy for hours a day for the last 10+ years, which really means nothing as our most respected economist are idiots, but I do tend to take the pessimistic side from what I know. It didn't work the first time, it won't work the 2nd time. It's just more BS to keep the gov't ponzi flowing like the subprime auto and BS student loan program in which the gov't shouldn't even be involved in.
Everyone thinks todays little stock market burp was because of the so-called sudden realization that employment sucks(pretty sure there's a few million that already know that) and in reality it was the mere mention of the FED saying it might start winding down QE this summer. This economy is on total life support and will NEVER stand on it's own. And that's how im preparing accordingly. Do what you want.
|
|
|
Post by helens on Apr 3, 2013 19:52:43 GMT -5
I don't see why investors buy properties in Detroit. Maybe they do.
In Florida, 2 years ago, you could buy a condo for $20,000, and rent it for $750 a month. Gee. Same condo as above is today selling for $80,000. I know because I made my mom buy one for $20,000:). When new, same condo sold for $187,500. No brainer.
Economists are idiots. Well of course, because economics is an art and not a science.
And... economics is relative. Ask yourself when you think how badly we're doing... WHO is doing BETTER:)? When you are a big fish in a small pond with small fish, you're da POWAH. Takes no economics to apply common sense.
|
|
|
Post by Rockoonz on Apr 3, 2013 23:53:47 GMT -5
FHA downpayment is 3.5% VA is zero% Gross income/payment ratio is 31 % with FHA. That's just payment w/o insurance and tax factored in. The way that works out you could pay over half your take home on a house. And since for many the boss won't be giving out raises to cover that tax increase, coupled with rising energy costs and carbon taxes, expect great deals on foreclosed and short sale homes pretty soon.
Lee
|
|
|
Post by Rockoonz on Apr 3, 2013 23:56:13 GMT -5
Oh yeah, and about that home that was just starting to go back up in value... Well the good news is your property taxes will be less.
Lee
|
|
|
Post by helens on Apr 4, 2013 0:25:07 GMT -5
FHA downpayment is 3.5% VA is zero% Gross income/payment ratio is 31 % with FHA. That's just payment w/o insurance and tax factored in. The way that works out you could pay over half your take home on a house. And since for many the boss won't be giving out raises to cover that tax increase, coupled with rising energy costs and carbon taxes, expect great deals on foreclosed and short sale homes pretty soon. Lee Real estate laws are by State, it's not covered by Federal Law. In Florida, it's 25% of your gross income, tho in your state, it may well be 50%, no idea. That doesn't apply to federal loans such as VA or FHA, which follow their own guidelines, and have nationwide guidelines. The vast majority of loans here are conventional, and you need to keep your entire mortgage to 25% of gross income here. Soon? We have been going through the recession in Florida since 2007. It's been happening the entire time for us. What you forget is that once you get a mortgage, your payment only goes up with Taxes and Insurance. Unlike your rent, which will likely go up 10% per year. Your taxes in Florida are capped to 5% increase per year, no matter how much the property appraisal office adjusts for... so if your property in 1 year doubles in value, you cannot increase taxes by more than 5%. The HO insurance can rise, but if it does, you bet the rental property's insurance is going to rise too... MORE. Every dollar you pay in rents typically cover the landlord's taxes and insurance... so if your homeowners goes up, you bet the rent will go up that year even more to adjust. 15 years of renting, what might be the difference from the rent you started with? What would your mortgage cost be 15 years from now? As I recall, 15 years ago, the average rent around here was about $500 for a 2 bedroom apartment. Nicer apartments cost more, worse ones cost less. The average rent today is around $1000 for same 2 bedroom. 15 years ago, the average home price was around $70,000. In 2006, average home prices were around $300,000. Today, same average home costs around $150,000. If you got a 30 year mortgage 15 years ago, your payment PITI would ballpark at around $500 a month (interest rates then were much higher... going to guess around 8% without looking). If you stayed in that house, you'd still gain, you'd only lose if you bought in 2005-2006... but your payment with ONLY increasing insurance and taxes would be ballpark $600. Your rent would be $1000. And that doesn't count the tax refund for the mtg deduction, or equity from paying down the mortgage for 15 years.... and you still beat out renting by almost double in monthly savings for your payment. So what the taxes went up? In Florida, that cannot hurt you beyond 5%. If your boss won't give you the difference in that 5% of increased tax, he sure won't give you the 10-25% increase in rent if you don't buy.
|
|
grayfingers
Cave Dweller
Member since November 2007
Posts: 4,575
|
Post by grayfingers on Apr 4, 2013 7:04:53 GMT -5
|
|
|
Post by helens on Apr 4, 2013 8:11:36 GMT -5
This may seem weird, but every Politicians uses Ambassadorships of 'easy' nations as political thank yous. Ambassadors are figureheads, all the work is done by Foreign Service Agents, who are career diplomats.
The President typically gets to appoint up to 30% of the Ambassadors to European and South American nations, and they are almost always to big campaign donors, wealthy 'celebrity' types, or hard working campaign people (the ones who give the Fundraisers). The other 70% Ambassadors are career Foreign Service who have been in the service for 20+ years near the end of their tenures..
This has been going on for the entire past century, and isn't a surprise, other than the name Goldman Sachs makes people mad.
|
|
|
Post by parfive on Apr 4, 2013 12:41:04 GMT -5
Oh wow, we got an ambassador!!! Far out, man.
Now suck on this . . .
Bob Rubin
Hank Paulson
Geithner
Corzine
Gary Gensler
Joshua Bolten, Shrub’s boy
Carney the Qanuck, off to the Bank of England
Mario Draghi, European Central Bank
Robert Zoellick, World Bank
And you get to thank Rubin for Larry f__king Summers too. ;D
Oodles and oodles more pals over at The Googley.
Have a nice day, Your pals @ Goldman Sachs
|
|