Home › Forums › Financial Markets/Economics › Here we go again?
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October 18, 2014 at 5:17 PM #21263October 18, 2014 at 5:33 PM #778941CoronitaParticipant
My favorite parts of the article
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…Investors paying all cash for foreclosed properties buoyed housing markets for several years, but a decline in distressed sales and rising home prices have reduced those once common transactions.…The California Assn. of Realtors last week projected that home sales in the state this year would fall nearly 65,000 short of their initial forecast, in part because of tighter mortgage lending.
…At No. 1 mortgage lender Wells Fargo & Co., Chief Financial Officer John R. Shrewsberry said this week that the standoff over mortgage repurchases has created two mortgage markets, only one of which — for affluent borrowers with well-established credit — serves borrowers well.
…The low- to middle-income and minority borrowers most often thwarted by the tougher lending standards are also the same people who were hit hardest in the mortgage crisis, said Paul Leonard, California director of the Center for Responsible Lending.
…”Those folks took it on the chin the hardest and have been least able to get up off of the mat,” Leonard said. “That’s a serious challenge in terms of building wealth.”
[/quote]My translation of this is:
…Now that the all cash/well financed buyers have stopped purchasing their cheaper REO and short sales properties, and now that home buying is slowing
…let’s relax lending standards so people with less than stellar credit and can now take out loans to buy homes that are now much more expensive…
…so that all the people that were able to buy with cash or were well financed buyers that bought at a much lower price can sell to people that have been locked out of their purchase….
…so that people who couldn’t qualify to buy when prices were cheap can help continue to build the wealth of well financed, first wave buyers….
…as these new buyers lock into a loan for a property that is priced much higher now than before…
…so that we can continue to maintain higher home prices, with a steady pool of people that want to buy….
Cant say I didn’t see this coming eventually after the first way of buyers started to saturate…
October 18, 2014 at 5:33 PM #778942kev374ParticipantThe alternative is that housing prices will fall due to lack of demand… since incomes are not rising the demand has to be created somehow.
October 18, 2014 at 5:41 PM #778943CoronitaParticipant[quote=kev374]The alternative is that housing prices will fall due to lack of demand… since incomes are not rising the demand has to be created somehow.[/quote]
I said it before and I said it again…
Don’t worry. I’m sure there will be a larger subprime borrowing program that will eventually follow once this second way of “buyers” saturates too…
Financial institutions make more money on subprime lending then they do on prime lending, so I doubt subprime is going to stay in the backseat always…
We can seeKinda reminds me of the joke someone said once…
“The best way to accumulate $1million in wealth… Is to first start out with $990,000 and…”
October 18, 2014 at 10:04 PM #778949scaredyclassicParticipantI’m so dumb I thought this would happen way in the future wwhen the crash was a distant memory. What a dope
October 18, 2014 at 11:19 PM #778950spdrunParticipantLooks like the Fed is clamping down at the same time as Fannie and Freddie are loosening:
http://www.realtytoday.com/articles/6746/20141018/federal-reserve-s-new-rules-affect-housing-market.htmWith any luck, we’ll also have both houses go GOP this year and make sure that Obama’s pet FHFA stooge won’t be able to do much more for the next two years!
October 19, 2014 at 12:02 AM #778951spdrunParticipantBefore the speculation starts, I must say that the more I read about this, the less dramatic it seems. Title of the L.A. Times article (as usual for that rag) is much more sensational than what the agreement appears to entail.
Here’s the actual WSJ article that everyone is rehashing and using as their basis of speculation, BTW. Apart from a 3% downpayment requirement for some loans (which existed anyway until 2013) and a clarification of rules vis-a-vis fraud, it doesn’t actually seem all that dramatic or quick to be implemented:
The new agreement would clarify which mistakes should constitute fraud, giving greater confidence to lenders that they won’t be penalized many years after a loan is made. Still, lenders and regulators must reach an accord on what to do if they disagree on some problems, which could involve using a third-party arbiter to resolve disputes.
Betting that lying about income or failing to verify will still constitute fraud.
Lastly, the 3% downpayment is the minimum downpayment possible, and won’t apply to a lot of loans. If the loan hits debt-to-income thresholds under QM/ability-to-repay, the bank will have to keep a part of the loan on its books and won’t be able to fully resell it to the GSEs unless the loan is made for less money. Requiring either a lower sale price or more money down. So ultimately, QM will control downpayments more than the minimum % requirement itself.
I try to buy a house at 3% down, but the loan payment is 60% of my income, verified over past two years, and I have credit card payments totalling another 10%. Lender will tell me to either put more down, negotiate price down, or go walk off a pier. And rightly so.
If and when someone tries to fuck around with QM or Dodd-Frank, THEN I will worry about a new bubble.
October 20, 2014 at 7:28 PM #778952spdrunParticipantSo Mel the Marching Moron hath spake — the main interesting thing is that after loans stay good for three years, buybacks can only be triggered by a pattern of bad lending. So I suppose that lenders could make a small % of riskier loans and hope they end up under the radar.
Fortunately, things like overlays and QM were not addressed. Slightly looser, but incremental at worst.
October 20, 2014 at 7:31 PM #779084CoronitaParticipantLol…..
http://finance.yahoo.com/news/u-regulator-targeting-lower-down-192959377.html
U.S. regulator targeting lower down payments on mortgagesLAS VEGAS, Oct 20 (Reuters) – The regulator of Fannie Mae and Freddie Mac said on Monday it was developing rules to let Americans buy homes with down payments as low as 3 percent, part of a push to boost access to credit.
A lot of people in this country really didn’t learn shit from the housing crisis, did they?
Oh well, spend away… and Print baby print!
October 20, 2014 at 8:43 PM #779092moneymakerParticipantIs it time for you to refi again flu? I think the cutoff should be 680 fico score, honestly. I think ability to pay is important. Personally I would not have loaned me money when I bought in 2009 (with a fico in the 750 range), but I’m glad they did, 3 times in fact (2 refi’s). The government is printing money by virtue of extending credit. All the T-Bills are loans to themselves.
October 20, 2014 at 9:18 PM #779097spdrunParticipant3% down payment isn’t the major issue here, since down payment these days is more controlled by mortgage qualification standards (43% DTI, etc). Plus FNMA offered 3% down till 2013, if not later, so it’s just going back to last year’s standards.
Actually, stricter than last year, since they’re talking about only offering it to first-time home buyers, not investors (as they did through HomePath till recently).
Moneymaker- you’re probably a bit smarter than the average piece of human trash that was getting subprime loans in the mid-2000s.
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