I read the article. It seems like Congress may be coming to its senses, after all.
If the FHA ceiling is now $729,750 in San Diego County, then that is way too high. The FHA was not originally put in place to fund upper middle-class and luxury home purchases. It was created to give low-income, predominately first-time buyers a leg-up into the housing market. I believe the FHA ceiling in SD County should be no more than $300K. The downpayment SHOULD be higher than 3.5%, as that is not enough “skin in the game” to prevent strategic default. The FHA should require 10% down and eliminate the MMI.
Ditto for VA loans. An active duty servicemember should not be able to receive their certificate of eligibility until they separate or retire from the service. Active duty servicemembers are deployed and relocated at the whim of the government, whether or not it is a good time for them to sell their homes. In the vast majority of cases, they have a dependent, unemployed or underemployed spouse and minor children living in their homes, a great many of whom have little education and no clue about managing money on their own. Married servicemembers in both active duty enlisted and officer ranks are already paid HUGE housing stipends to live in SD county in addition to their base bay (approx $1800-3000 per mo). This is sufficient to pay monthly rent or assign it back to the Navy and receive military quarters in return (w/gas elec, water, sewer and trash paid).
The VA program should require at least a 10% downpayment and offer their loans at market nterest rates with zero points and wipe away the aversion that sellers have with VA financing by eliminating the VA funding fee and points.
As to Fannie and Freddie, they have both proved to cost taxpayers way more $$ than any “benefits” conferred by them. Those “agencies” should be abolished, forthwith.
I believe in the old model where a LOCAL bank makes LOCAL decisions based upon their OWN appraisals and their OWN underwriting guidelines, NOT based upon FF’s “guidelines” in Washington DC. A bank asking for a 20-30% downpayment is not asking too much. 20% should be the minimum downpayment for a conventional loan. There should be no need for PMI. These banks should keep these loans, service them and collect the payments. Impound accounts are ridiculous. It is cheaper for the lender to employ personnel to check to see if a borrowers have paid these items on time and threaten to file an NOD if they haven’t than it is to service “impound accts.” If a person is adult enough to sign a trust deed and note, they are adult enough to budget to pay their own taxes and insurance when they come due.
I would like to see government from ALL levels exit the housing market.
I agree with SDR in that owning real property is not right in this country. It’s a privilege for those who have earned the right to borrow a mortgage and saved a downpayment. Owning real property obviously isn’t for everyone. A large segment of the population is unable to budget for the true costs of homeownership, i.e. taxes, fire ins premiums and inevitable repairs. This portion should rent.
I’d like to see far less government intervention in the housing market. If this results in permanent RE asset deflation, then so be it.
Hard line to take? Maybe. Just consider how the RE market has been decimated and will continue to be for years to come under the current way of doing business. It’s an utterly incompetent comedy-of-errors turned into a complete disaster.
