These banks don’t want houses to become more affordable, they want you to borrow as much money as possible and become a long term revenue stream to them. I think what we’re seeing is that homeowning is becoming sort of a lifetime renting arrangement from the bank.
Ironic you should mention this.. because Japan was looking at lifetime ‘mortgages’ before their RE bubble crashed.
If you still need X down and a yearly income of Y to afford house at price Z then prices will still fall to those levels, and to me it seems like we are still a bit away from that.
Yes, but allowing Freddie Mac, Fannie Mae to pick them up, drops the interest rate for those loans, changing the relationship between X,Y and Z above.
would this save those banks from having to mark down their holdings by simply getting rid of them altogether?
Kind of. I would have to see the specific language and how Freddie Mac is going to select the criteria for the mortgages.
does this save indy mac?
See above. I suspect not though. Right now the requirement of Freddie Mac is doc’d mortgages w/ a minimum equity ratio (though this part might get fudged). See implode-o-meter
Specifically, Frank said Fannie and Freddie would be able to buy mortgages worth up to 125 pct of the median value of a home in any given region, up to a new limit of 730,000 usd.
Humm.. and why would 125% financing in a downward real estate market with insufficient loan loss reserves be a problem?… I agree. Hopefully it won’t go through.
Actually they do. In fact they get reamed. I already posted the tax schedule for single in another thread. That the rich are not paying their share of taxes is a common theme that politicians like to play out when looking at more taxes. They either have to fight 80 to 90% of the population on raising taxes or they fight 20 – 10% of the population(so called rich) to raise taxes.
This is from a 2005 tax table for single.
0 – 7299 10% marginal rate, 10% total.
7300 – 29699 15% marginal rate (additional dollars over 7300 taxed at 15% on top of the 10% on under 7300)
29700 – 71949 25% marginal rate.
71950 – 150149 28% marginal rate.
150150 – 326449 33% marginal rate
326450+ 35% marginal rate.
Add in the fact that deductions start being eliminated for incomes over 146,000(single) due to AMT. So where is it that the rich are not paying taxes? 35% of your income gone to fed taxes? Add in CA state and you are looking at 44% of your income gone to taxes. Looks like it is almost better to sit around and let the gov take care of you..
