Not implying VW & BMWs break down more often, those just seem to be the car of choice of many of our lawyers. Sorry for any miscommunication. Interestingly, they cost as much as much as one would have bought a home back in the 60’s/70’s? No ??
Anyway, my thinking is that lenders are still giving loans to people “s t r e t c h i n g” themselves as opposed to others coming into the market who are putting down solid down payments and can afford the homes due to a fundamental such as “income”. This data would probably be meangingless and most likely not trackable. But I think that would also be a determinative factor on how the bubble will deflate.
I had read in the OFEHA (ha ha) or whatever that government site is that Fannie Mae was immediately told to STOP writing risky loans and that they may not write loans over $417,000 per loan. Fannie and Freddie were doing this as well, along with their bogus accounting practices to hide the income they were making from the loans. By being told to stop, my belief is that a huge number of potential sketchy buyers will be foreclosed from the market to help shrink the massive inventory of the overvalued homes.
http://www.ofheo.gov/News.asp?FormMode=Releases – OFHEO ANNOUNCES THIRD QUARTER 2006 MINIMUM AND RISK-BASED CAPITAL C LASSIFICATION FOR FANNIE MAE; RECLASSIFIES FOURTH QUARTER 2002 AND 2003 AS SIGNIFICANTLY UNDERCAPITALIZED – December 28, 2006
I also read that a large number of people purchasing investment property were indicating on their loans that the purchase was going to be used as a primary residence. I’ve learned through reading and reading and reading that this is completely inaccurate and considered Loan Fraud. The lenders were told to clamp down on this too.
