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America's housing policy: The definition of insanity
Posted on 10/22/14 at 2:23 pm
Posted on 10/22/14 at 2:23 pm
quote:
Yahoo Finance
America's housing policy: The definition of insanity
By Aaron Task
4 hours ago
If the definition of insanity is "doing the same thing over and over again and expecting a different result," then clearly Albert Einstein is not responsible for America's housing policies.
Federal Housing Finance Agency director Mel Watt on Tuesday unveiled new regulations that would make it easier for Americans to buy a house with little or no money down. The rules are aimed at private lenders who opposed a proposal that borrowers make a 20% down payment.
“Finalizing this rule represents a major step forward to providing greater certainty to the housing finance market and paves the way for increased participation by the private sector,” Watt said Tuesday at the Mortgage Bankers Association's annual conference held at the Mandalay Bay in Las Vegas (A casino? Really? The optics couldn't be worse.)
In 2013, less than 2% of the $1.6 trillion of MBS issued were so-called private-label securities, meaning they did not have government backing.
In separate but related news, Watt earlier this week announced that Fannie and Freddie are planning to guarantee loans with down payments as little as 3%, down from 5% previously and back to pre-crisis levels.
Insanity number one is the government bending to industry lobbying against proposed rules designed to tighten lending standards and force borrowers to have more "skin in the game" vs. less . . . .
LINK
quote:
U.S. Regulators Agree to Go Easier on Mortgage-Lending Rules
By Alan Zibel
19 hours ago
Housing and Urban Development Secretary Julián Castro, in a speech at a mortgage-lending conference Monday, sought to downplay those concerns. “Government must take action by shaping an environment where good lenders and good borrowers can work together without reservation,” he said.
More policy changes designed to expand lending could be coming: Mr. Castro is facing stepped-up pressure from mortgage lenders to lower the premiums the government-run Federal Housing Administration charges to lenders.
The FHA doesn’t make loans but insures low-down-payment loans to low- and middle-income borrowers. It needed a $1.7 billion federal rescue last year, but an annual study of the agency’s finances being released next month is expected to show significant improvement in the agency’s finances.
LINK
This post was edited on 10/22/14 at 2:24 pm
5
Posted on 10/22/14 at 2:43 pm to NC_Tigah
Now that I've got some money to play with, another stock market crash would be great.
Posted on 10/22/14 at 3:18 pm to NC_Tigah
Did people actually think the banks were going to change after the gov't bailed them out? 
Posted on 10/22/14 at 3:22 pm to tom
quote:
banks
are the
quote:
gov't
We live under a fascist state. There is no seperation of gov't and business, esp at the federal level.
Posted on 10/22/14 at 3:29 pm to NC_Tigah
The federal government, especially under the Obama Administration (or any progressive, really) wants to raise homeownership rates. The only way to do so is to loosen credit requirements for mortgages. But... the government doesn't issue mortgages.
Banks want to increase lending, cause that is how they make money. Banks want to make loans. The only thing banks want more than making loans, is to sell those loans forever. The threat of having to buyback bad loans is stronger than the income from making loans. In a perfect world, banks could make all the money, but not have any of the risk - the risk would be borne by others - such as the government.
Realtors want to sell houses. Most people can't buy cash for a house, so they need lending to do so. Loosening credit expands the pool of potential buyers.
Realtors and banks have very, very good lobbying groups, and make lots of campaign contributons.
If banks, realtors, and government all have aligned goals - loosening of credit - yes, it is going to happen. And in 6 - 8 years when it all goes to hell again, Obama, the bankers, and the realtors will all be retired, and it will be someone else's problem.
Banks want to increase lending, cause that is how they make money. Banks want to make loans. The only thing banks want more than making loans, is to sell those loans forever. The threat of having to buyback bad loans is stronger than the income from making loans. In a perfect world, banks could make all the money, but not have any of the risk - the risk would be borne by others - such as the government.
Realtors want to sell houses. Most people can't buy cash for a house, so they need lending to do so. Loosening credit expands the pool of potential buyers.
Realtors and banks have very, very good lobbying groups, and make lots of campaign contributons.
If banks, realtors, and government all have aligned goals - loosening of credit - yes, it is going to happen. And in 6 - 8 years when it all goes to hell again, Obama, the bankers, and the realtors will all be retired, and it will be someone else's problem.
Posted on 10/22/14 at 7:23 pm to white perch
quote:this
Now that I've got some money to play with, another stock market crash would be great.
Posted on 10/22/14 at 8:11 pm to LSUFanHouston
GWB was actually the president who was the huge proponent of home ownership for all. Not Obama.
Posted on 10/22/14 at 8:19 pm to Tiger n Miami AU83
Ok, who is president now ? Not 6 years ago.
Who appointed the current guy Mel Watt?
Who is currently presiding over a still recovering economy spurred on by housing crisis ?
Who currently has administrative staff assisting with this easing of standards?
Oh yeah, Obama is the answer to all of that.
Pull your head out of the sand and look around.
Lowering mortgage standards is not a good decision, don't kid yourself.
Who appointed the current guy Mel Watt?
Who is currently presiding over a still recovering economy spurred on by housing crisis ?
Who currently has administrative staff assisting with this easing of standards?
Oh yeah, Obama is the answer to all of that.
Pull your head out of the sand and look around.
Lowering mortgage standards is not a good decision, don't kid yourself.
Posted on 10/22/14 at 8:44 pm to NC_Tigah
I just wish there were better rules about PMI. If you buy a house when you are young but cash poor you are forced to get PMI with less than 20% down. While I realize that this is essentially used as default insurance, it really just causes you to piss more money away until you are able to finally own 20% of the home. Not all markets are great for renting, and I would like to see perhaps a tiered PMI or one based more on credit or payment history.
Wishful thinking I know....
Wishful thinking I know....
Posted on 10/22/14 at 8:57 pm to Bmath
Is it not possible to avoid PMI with less than 20% down even with an outstanding credit score?
Posted on 10/22/14 at 9:12 pm to Boomshockalocka
quote:Only doctors can avoid this for the most part
Is it not possible to avoid PMI with less than 20% down even with an outstanding credit score?
Posted on 10/22/14 at 9:14 pm to lsupride87
My opinion on the loan situation is the fact that they have these stone clad rules for everyone, with no common sense allowed to be used by the bank. Newly married 26 yr old couple, both CPAs, with little money down and little credit because they recently got out of school(lets say scores of 710, so good for being young), are thrown in the same bucket as 45 year old couple with little money down because they pissed it away with credit score of 670 because of bad payment history
Posted on 10/22/14 at 10:21 pm to Tiger n Miami AU83
quote:
GWB was actually the president who was the huge proponent of home ownership for all.
All Presidents say this. What's different about poor, dumb ole W was that he BEGGED - PLEADED with Congress to tighten the legislation before the bubble burst.
US News article
Like a lot of this mess, a bunch of these problems have roots in the good idea fairies running around the WH during the 1990s...
W? Really? Y'all don't have any other answers?
Posted on 10/22/14 at 11:29 pm to Ace Midnight
Home ownership and healthcare are two things that should be considered to be an earned privilege, and not a government given right.
Posted on 10/23/14 at 7:02 am to lsupride87
quote:
quote: Is it not possible to avoid PMI with less than 20% down even with an outstanding credit score? Only doctors can avoid this for the most part
VA loans do not require PMI.
Posted on 10/23/14 at 7:27 am to Tiger n Miami AU83
quote:
GWB
LINK
W tried to tighten loan oversight and was howled down by Democrats AND Republicans. The charge was led by Bawney Frank.
But don't let facts get in the way of political views.
Posted on 10/23/14 at 7:52 am to ItNeverRains
quote:
VA loans do not require PMI.
Nor a down payment. Only the VA funding fee and closing costs. In fact, I think it is illegal to charge PMI on a VA loan, although they tend to run 1/4 point or 1/2 higher on the APR (pay me now or pay me later...).
I closed my house on purchase (VA Loan, 1998) with $500 at closing. Because the appraisal was good, we upped the offer if the seller agreed to pay the balance of the closing costs.
Posted on 10/23/14 at 9:29 am to Ace Midnight
Good luck getting a VA loan in south LA. Tried to use VA multiple times over the last 20 years, and it was either not cost effective compared to non-VA or unavailable (no lenders doing VA construction loans).
But I agree about the "one size fits all" bank assessments. We had trouble getting a construction loan from the corporate banks, despite excellent credit. Only the locals would offer anything that made sense. I will only do business with a bank that can make its own lending decisions locally---not one that has to send all your stats to a regional office for decision-making.
But I agree about the "one size fits all" bank assessments. We had trouble getting a construction loan from the corporate banks, despite excellent credit. Only the locals would offer anything that made sense. I will only do business with a bank that can make its own lending decisions locally---not one that has to send all your stats to a regional office for decision-making.
Posted on 10/23/14 at 9:41 am to Tiger n Miami AU83
Which president pushed through the community reinvestment act? (Hint, who was president in 1977?) Which president pushed through the biggest changes to the CRA which promoted lending to those who could not afford it? (Hint, who was president in 1995?)
All Democrats.
W, as has been noted multiple times below, begged and pleaded to rein in loans.
All Democrats.
W, as has been noted multiple times below, begged and pleaded to rein in loans.
Posted on 10/23/14 at 11:20 am to Ace Midnight
quote:
Nor a down payment. Only the VA funding fee and closing costs. In fact, I think it is illegal to charge PMI on a VA loan, although they tend to run 1/4 point or 1/2 higher on the APR (pay me now or pay me later...).
Correct on down payment. Through my experience they tend to be lower than conventional or FHA APR.
If you sign up to potential die for your country, I have no problem giving you these perks
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