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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 3:29 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 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 10/23/14 at 1:19 pm to NC_Tigah
3% down conventional loans are coming back because the PMI companys are making an nice profit these days due to tight lending standards. FHA loans are super expensive because everyone got tired of bailing out FANNIE and FREDDIE so FHA raised the montly PMI payments 4 times in the last 3 years. As long as they do not bundle securities with these loans everything will be okay. Also i tend to discount anything the national new agency's say about the houseing markets they mention in every article that you need 20% down to buy a house and that is total BS.
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