That was very helpful, HLS. Thanks for taking the time to inform us.
I don’t want to hijack this thread too much, so I think I will start a new one that will pursue one of the two reasons I asked you about the limits.
Reason 1: I think that high LTV ratios are the single biggest problem with bubble behavior, and I suspect that Larry Summers and Barney Frank and the other geniuses making the current economic decisions for us all are trying hard to perpetuate the bad behavior by using this loophole. All that publicity about new standards requiring good credit and enough income is equivalent to “don’t pay attention to that man behind the curtain”. It’s a sop thrown to satisfy the ever-gullible public that our economic masters are genuinely reforming the system. I suspect they are utterly opposed to any real fundamental reform.
Reason 2: I have a friend who is thinking of refi’ng her home. It’s a condo that she paid $300K for, but is being currently appraised for – I am amazed – over $700K. She is very responsible (with a credit score of 795, and long-time, steady, and well-paid employment at a solid company) and is focused on paying down principal and getting a low rate and all that, as am I. But I am wondering if she should instead borrow the max, and walk away if home prices go well below her new loan balance. The system is screwing people like her and me, and I wonder if I should advise her to screw the system back.
