San Diego Housing Bubble News and Analysis

Still has to make it through the Senate.

In theory, to the extent that RE pain is concentrated in CA, FL, OH, MI, NV, and AZ, the remainder of the Senate may not be too happy about opening the Federal coffers for people in these states to borrow huge multiples of their income and buy houses.

Of course, party lines will play a huge role, too...

Phew!!

Fortunately for all those households earning $180,000 a year, willing and able to document their income, and only paying out 40% of their gross income on PITI to buy a piece of shit $725,000 house....the Federal government has come to your rescue!!

Now...if we can just find a household that looks like that....

I don't get why you seem so bitter about increasing the fha limits, and why you refer to it as a "bailout." The 417k is merely an arbitrary valuation and has nothing to do with the ability to pay the loan back. If the person is entitled to the loan based upon credit worthiness, and has met all other qualifications, what th f...k difference does it make to you and why do you care as long as the loan has a very good chance of being paid back? There is no difference between that and a loan 417k or less, the key is credit worthiness, not the total amount.
if your so upset about uncle sam holding the bag, what about the continual pissing away of billions on a pointless war in Iraq that going to lead to real inflation just like after the vietnam war!!! Oh, that's right, its not called a bailout when the recipients of the government billions are Halliburton and Blackwater, its called the war on terror.. all cwide needs is a new pr person to refer to the housing crisis as a terrorist plot.
give me a break!!!
LL

llj-

I don't disagree with you about the pissing away of billions on the war.

If there are enough households in CA that meet my above posted criteria for a $725,000 FHA loan to help hold the line on prices...then fuck me for holding out and renting these past few years;)

If not, then, look out below California....as what is happening in Florida and the "Inland Empire" (give me a break) will soon spread like wildfire to a posh south OC or San Diego County neighborhood near you.

I, of course, am expecting the latter.

LBB,
sorry about the rant, my opinion is if you have been responsible worked hard and paid the bills and have a top notch credit, you should not be penalized by living in a high cost state like CA or NY and forced to get a jumbo, that is all.

good luck to you.

LL

raise the FHA's loan limit from its current $417,000 to as much as $729,750

I researched this topic in the web a bit, but still don't understand some things.

1. As far as I know, the FHA's limit until very recently was $368,000, not $417K.
2. If the bill really talks about FHA (as opposed to GSEs Freddy and Fannie), then it's not that bad. FHA is not a mortgage company, it's an insurance company. If you are eligible, you can pay the insurance premium, that would cover your mortgage in case of a default. FHA claims it does not rely on taxpayers' money for its business, and covers all expenses with the income it generates from insurance payments. Am I correct?
3. If the bill is about raising GSEs' conforming threshold, will it allocate any additional funding to Freddy and Fannie? Neither this nor any other article I was able to find mentioned that. As far as I know, they have combined budget of $1.4 trillion. If that number is not increased, doesn't raising the limit mean that GSEs will have an option to finance one expensive house instead of 3 regular ones?

I'd appreciate if somebody could shed some light on this.

Sandi you are right, that article was complete crap on the part of the writer. You are right, 417 is the gse magic number, FHA varies and S.D. is 363k. It also said it would authorize up to 300 million, great, that will be less than 500 houses.

This is all political speak and won't help anyone, Lending bubble is right, you need 180k fully doccumented and guaranteed income to pull that 700k from FHA and that is not who needs the help nor will those people go FHA. FHA rates are usually higher, require upfront mort insurance (MMI? or whatever they call it) they have the strictest of income ratios and the strictest regulations. From a buyer's perspective I wouldn't get an FHA loan unless it was my only option. The average problem scenario for those facing foreclosure are people who are facing a reset on a mortgage of 400k to 750k with 100k or less in income and they are upside down 5-20%, regardless if FHA is now allowed to loan them money those people won't come close to qualifying. The people foreclosing are not short two or three hundred a month and their reset in many cases is only what the amortized rate should have been in the first place. Unless FHA decides to do stated, pay option, neg am, this is an 8 seat lifeboat for a whole cruise ship.

Yo Temec...
Last cruise I was on had about 4,000 with passengers & crew. Anybody wanting off that ship better get in line early!

Are people going to be willing to make huge sacrifices to buy an asset thats losing value on an almost daily basis?

I doubt it.

People tend to get irrationally attached to their homes. Even flippers.

yeah. moral questions aside, this is not going to make heck of a lot of difference. they are not rising debt to income ratio limits, that's the important part.

It's crazy that it has taken this long to raise the limits for California. Hawaii, Alaska, US Virgin Islands and Guam all have limits 50% higher than the rest of the country. The increased limit may be temporary, but it will help drive down the rates on Jumbo's because more lenders will get in the game and they'll accept lower margins if GSE's will buy their loans.

As for Bush, I cringe whenever I hear him talk about the economy or the housing market (or just bout anythig else for that matter). He has the same credibility as the "sideline reporter" on Monday Might Football discussing football strategy.

Before GWB was elected the first time, I used to get into a lot of arguments (friendly types) with friends and acquaintances who said that GWB was really dumb. My rationale was that the man had an MBA from an ivy league university and had been the governor of Texas so how he couldn't possibly be an idiot...................and so, I voted for him.
After one term, I saw that I was wrong and that the people who said he was dumb, in fact, were correct. Now, that's not to say that any of the idiots who were running against him both times were any brighter than Bush but this whole housing debacle has truly shown just what an economic genius that he is NOT. By the time all of the greedy fools in Congress get through destroying the value of the dollar and the U.S. economy, the USA will be in such pitiful shape that it will take 10-20 years of proper management from some very disciplined, extremely smart politicians (if there is such a thing as a smart politician) just to get the country back to 1999 value level. We are watching a disaster in the making. NO, not the housing problem but the fixes that the politicians are going to implement in an attempt to fix it. God help us all.

The ONLY good news from this 729k, is you have to be full doc and can qualify for it. lol. none of them can.

PadreBrian--

I agree. Of course, there are people out there making $180K who would qualify....they just won't be buying "starter" homes for $729K in cookie cutter neighborhoods like 4ShittingTheirPants Ranch.

OK, I am completely lost here.
Is this raise aiming at boosting home sales, or allowing existing homeowners to refinance out of their toxic mortgages?

They don't know!!! It's a feeble attempt to throw a bunch of crap against a wall and see what sticks.

A raise will help any future buyers IF they can qualify, full doc. FHA is tougher than FNMA or FHLMC.

Existing homeowners need to figure out if it's worth being saved. If you owe $600K and it's worth $500K or less, isn't a new mortgage toxic too ???

It's an attempt at stalling what will eventually happen anyways, a return to more reasonable lower prices.

It's an attempt to add liquidity to the mortgage market because investors have balked at buying non-conforming loans thus limitng the number of lenders in the non-conforming market. The GSE's charter is to help assure that the mortgage markets remain liquid. They haven't been for the last couple months.

I do think this will help sales in California, but probably not until next year. The question remains what happens to global interest rates in the face of the falling dollar. The French are clamoring for rate reductions and if the Fed continues to lower the Euro Bank is going to have to do likewise for their exporters to remain competitive.