bail out math, WTF?

[Aecetia]

I hope you are correct about the bail out being DOA. It would set another dangerous precedent down the already slippery slope.

[DWCAP]

I very much doubt that this is DOA. The Gov will insure upto 300b or so in morgages at 90% of CURRENT value assuming full doc strict underwriting.
There are just too many people accross the country crossing their arms and saying “well, the Government needs to do SOMething”, not really caring what that something is. All they know is that their 401k is down, their kid just getting outa college is haveing trouble getting a job, Gas prices are finally just not worth the SUV ‘safety’ premium, and the news sounds like their jobs might be in jeapordy. And dont get them started on grocery shopping. (BTW- When the hell did “the GOV needs to fix this!” become the way we deal with challenges?)

The banks are “not” (BS!) being bailed out cause they will have to write off about 25% of the loan (15% current houseing decline nationally, +10%) instead of the…. what?…… 30-55% a foreclosure would cost. They will dump the worst of the worst, take their licks, and call it a bottom.
A few issues I dont know the answer to:

1) Does the Homeowner sign up for this, or the bank? Why would the banks sign up anyone cept those that already starting to fail?

2) Is there a window of oppertunity for this, or could my kid (I am unmarried, no kids, no plans; for time frame purposes) get into banking and take advantage of this?

3) How does this end? or is it just another corner of a GOV that is forgotten till the next bubble pop. There will be jobs, managers, directors, loan officers, computers, offices, support staff, all employees of the USA and so basically unable to be fired. What happens to these people as housing turns?

4) How does it address current value? Who’s appraisal counts? How old can it be? (have you seen the range of values seen on the houses TG posted in the Tem&Mur thread? Can you say “Missed it by ‘THAT’ much!”) We need to worry about appraisal inflation again as banks will remember who helped them keep as much capital as possible and who didnt.

5) Is there a limit to the bailout, or can anyone get one? I paid 2M for a house in 2006, now I cant afford it, and its only worth 1.2million. Can I get a loan for 1.08M and call it a day? If so, WOW! (hasnt happened yet in SD, but may be an issue in Hawaii and FL)

6) Do people who lied to get the loan get to play too?

Your answers are appreciated.

[DWCAP]

I very much doubt that this is DOA. The Gov will insure upto 300b or so in morgages at 90% of CURRENT value assuming full doc strict underwriting.
There are just too many people accross the country crossing their arms and saying “well, the Government needs to do SOMething”, not really caring what that something is. All they know is that their 401k is down, their kid just getting outa college is haveing trouble getting a job, Gas prices are finally just not worth the SUV ‘safety’ premium, and the news sounds like their jobs might be in jeapordy. And dont get them started on grocery shopping. (BTW- When the hell did “the GOV needs to fix this!” become the way we deal with challenges?)

The banks are “not” (BS!) being bailed out cause they will have to write off about 25% of the loan (15% current houseing decline nationally, +10%) instead of the…. what?…… 30-55% a foreclosure would cost. They will dump the worst of the worst, take their licks, and call it a bottom.
A few issues I dont know the answer to:

1) Does the Homeowner sign up for this, or the bank? Why would the banks sign up anyone cept those that already starting to fail?

2) Is there a window of oppertunity for this, or could my kid (I am unmarried, no kids, no plans; for time frame purposes) get into banking and take advantage of this?

3) How does this end? or is it just another corner of a GOV that is forgotten till the next bubble pop. There will be jobs, managers, directors, loan officers, computers, offices, support staff, all employees of the USA and so basically unable to be fired. What happens to these people as housing turns?

4) How does it address current value? Who’s appraisal counts? How old can it be? (have you seen the range of values seen on the houses TG posted in the Tem&Mur thread? Can you say “Missed it by ‘THAT’ much!”) We need to worry about appraisal inflation again as banks will remember who helped them keep as much capital as possible and who didnt.

5) Is there a limit to the bailout, or can anyone get one? I paid 2M for a house in 2006, now I cant afford it, and its only worth 1.2million. Can I get a loan for 1.08M and call it a day? If so, WOW! (hasnt happened yet in SD, but may be an issue in Hawaii and FL)

6) Do people who lied to get the loan get to play too?

Your answers are appreciated.

[DWCAP]

I very much doubt that this is DOA. The Gov will insure upto 300b or so in morgages at 90% of CURRENT value assuming full doc strict underwriting.
There are just too many people accross the country crossing their arms and saying “well, the Government needs to do SOMething”, not really caring what that something is. All they know is that their 401k is down, their kid just getting outa college is haveing trouble getting a job, Gas prices are finally just not worth the SUV ‘safety’ premium, and the news sounds like their jobs might be in jeapordy. And dont get them started on grocery shopping. (BTW- When the hell did “the GOV needs to fix this!” become the way we deal with challenges?)

The banks are “not” (BS!) being bailed out cause they will have to write off about 25% of the loan (15% current houseing decline nationally, +10%) instead of the…. what?…… 30-55% a foreclosure would cost. They will dump the worst of the worst, take their licks, and call it a bottom.
A few issues I dont know the answer to:

1) Does the Homeowner sign up for this, or the bank? Why would the banks sign up anyone cept those that already starting to fail?

2) Is there a window of oppertunity for this, or could my kid (I am unmarried, no kids, no plans; for time frame purposes) get into banking and take advantage of this?

3) How does this end? or is it just another corner of a GOV that is forgotten till the next bubble pop. There will be jobs, managers, directors, loan officers, computers, offices, support staff, all employees of the USA and so basically unable to be fired. What happens to these people as housing turns?

4) How does it address current value? Who’s appraisal counts? How old can it be? (have you seen the range of values seen on the houses TG posted in the Tem&Mur thread? Can you say “Missed it by ‘THAT’ much!”) We need to worry about appraisal inflation again as banks will remember who helped them keep as much capital as possible and who didnt.

5) Is there a limit to the bailout, or can anyone get one? I paid 2M for a house in 2006, now I cant afford it, and its only worth 1.2million. Can I get a loan for 1.08M and call it a day? If so, WOW! (hasnt happened yet in SD, but may be an issue in Hawaii and FL)

6) Do people who lied to get the loan get to play too?

Your answers are appreciated.

[DWCAP]

I very much doubt that this is DOA. The Gov will insure upto 300b or so in morgages at 90% of CURRENT value assuming full doc strict underwriting.
There are just too many people accross the country crossing their arms and saying “well, the Government needs to do SOMething”, not really caring what that something is. All they know is that their 401k is down, their kid just getting outa college is haveing trouble getting a job, Gas prices are finally just not worth the SUV ‘safety’ premium, and the news sounds like their jobs might be in jeapordy. And dont get them started on grocery shopping. (BTW- When the hell did “the GOV needs to fix this!” become the way we deal with challenges?)

The banks are “not” (BS!) being bailed out cause they will have to write off about 25% of the loan (15% current houseing decline nationally, +10%) instead of the…. what?…… 30-55% a foreclosure would cost. They will dump the worst of the worst, take their licks, and call it a bottom.
A few issues I dont know the answer to:

1) Does the Homeowner sign up for this, or the bank? Why would the banks sign up anyone cept those that already starting to fail?

2) Is there a window of oppertunity for this, or could my kid (I am unmarried, no kids, no plans; for time frame purposes) get into banking and take advantage of this?

3) How does this end? or is it just another corner of a GOV that is forgotten till the next bubble pop. There will be jobs, managers, directors, loan officers, computers, offices, support staff, all employees of the USA and so basically unable to be fired. What happens to these people as housing turns?

4) How does it address current value? Who’s appraisal counts? How old can it be? (have you seen the range of values seen on the houses TG posted in the Tem&Mur thread? Can you say “Missed it by ‘THAT’ much!”) We need to worry about appraisal inflation again as banks will remember who helped them keep as much capital as possible and who didnt.

5) Is there a limit to the bailout, or can anyone get one? I paid 2M for a house in 2006, now I cant afford it, and its only worth 1.2million. Can I get a loan for 1.08M and call it a day? If so, WOW! (hasnt happened yet in SD, but may be an issue in Hawaii and FL)

6) Do people who lied to get the loan get to play too?

Your answers are appreciated.

[DWCAP]

I very much doubt that this is DOA. The Gov will insure upto 300b or so in morgages at 90% of CURRENT value assuming full doc strict underwriting.
There are just too many people accross the country crossing their arms and saying “well, the Government needs to do SOMething”, not really caring what that something is. All they know is that their 401k is down, their kid just getting outa college is haveing trouble getting a job, Gas prices are finally just not worth the SUV ‘safety’ premium, and the news sounds like their jobs might be in jeapordy. And dont get them started on grocery shopping. (BTW- When the hell did “the GOV needs to fix this!” become the way we deal with challenges?)

The banks are “not” (BS!) being bailed out cause they will have to write off about 25% of the loan (15% current houseing decline nationally, +10%) instead of the…. what?…… 30-55% a foreclosure would cost. They will dump the worst of the worst, take their licks, and call it a bottom.
A few issues I dont know the answer to:

1) Does the Homeowner sign up for this, or the bank? Why would the banks sign up anyone cept those that already starting to fail?

2) Is there a window of oppertunity for this, or could my kid (I am unmarried, no kids, no plans; for time frame purposes) get into banking and take advantage of this?

3) How does this end? or is it just another corner of a GOV that is forgotten till the next bubble pop. There will be jobs, managers, directors, loan officers, computers, offices, support staff, all employees of the USA and so basically unable to be fired. What happens to these people as housing turns?

4) How does it address current value? Who’s appraisal counts? How old can it be? (have you seen the range of values seen on the houses TG posted in the Tem&Mur thread? Can you say “Missed it by ‘THAT’ much!”) We need to worry about appraisal inflation again as banks will remember who helped them keep as much capital as possible and who didnt.

5) Is there a limit to the bailout, or can anyone get one? I paid 2M for a house in 2006, now I cant afford it, and its only worth 1.2million. Can I get a loan for 1.08M and call it a day? If so, WOW! (hasnt happened yet in SD, but may be an issue in Hawaii and FL)

6) Do people who lied to get the loan get to play too?

Your answers are appreciated.

[SK in CV]

To answer your questions, in order:

1. Both the original lender and the borrower have to agree, since both are being affected. As a practical matter, lenders never negotiate with borrowers that are current, so it would most likely apply only to loans that are already delinquent (at least 1 payment late). Lenders could adapt on this one, but given their historical shortsightedness, it’s unlikely.

2. It sunsets at the earlier of the funding of the insurance on the $300 billion or some future date, I think I remember 5 years, though I may have imagined that.

3. FHA loan volume moves as does the market. With the repeal of Glass-Steagal in the 90’s and the related deregulation which lead to the expansion of mortgage lending to non-banks, along with the advent of mortgage backed securities, FHA insured lending all but disappeared in many markets. If this bill passes, they will be back in business. At least until they’re not anymore.

4. Appraisals will have to be brand spanken new, paid for by the borrower/lender and the appraisal will have to be done according to strict FHA guidelines, which are much more strict than traditional underwriting guidelines. (I know, its an oxymoron to call recent customs in the lending industry “guidelines”. The were more like suggestions. The FHA does not operate that way.)

5. FHA geographical lending limits will apply.

6. Unless there has been a modification to the bill since I read it last, no. Borrowers who knowingly presented false loan applications on the loan being renegotiated will not be eligible. How strictly the FHA enforces this clause may well be regulated by the demand for the FHA insurance. Lower demand may dictate more lax interpretation. Higher demand would lead to more strict interpretation. At its most strict, the FHA could deem that any exaggeration on a signed loan app qualifies as “knowingly”. I suspect this clause will greatly diminish any expected benefits of the bill.

[SK in CV]

To answer your questions, in order:

1. Both the original lender and the borrower have to agree, since both are being affected. As a practical matter, lenders never negotiate with borrowers that are current, so it would most likely apply only to loans that are already delinquent (at least 1 payment late). Lenders could adapt on this one, but given their historical shortsightedness, it’s unlikely.

2. It sunsets at the earlier of the funding of the insurance on the $300 billion or some future date, I think I remember 5 years, though I may have imagined that.

3. FHA loan volume moves as does the market. With the repeal of Glass-Steagal in the 90’s and the related deregulation which lead to the expansion of mortgage lending to non-banks, along with the advent of mortgage backed securities, FHA insured lending all but disappeared in many markets. If this bill passes, they will be back in business. At least until they’re not anymore.

4. Appraisals will have to be brand spanken new, paid for by the borrower/lender and the appraisal will have to be done according to strict FHA guidelines, which are much more strict than traditional underwriting guidelines. (I know, its an oxymoron to call recent customs in the lending industry “guidelines”. The were more like suggestions. The FHA does not operate that way.)

5. FHA geographical lending limits will apply.

6. Unless there has been a modification to the bill since I read it last, no. Borrowers who knowingly presented false loan applications on the loan being renegotiated will not be eligible. How strictly the FHA enforces this clause may well be regulated by the demand for the FHA insurance. Lower demand may dictate more lax interpretation. Higher demand would lead to more strict interpretation. At its most strict, the FHA could deem that any exaggeration on a signed loan app qualifies as “knowingly”. I suspect this clause will greatly diminish any expected benefits of the bill.

[SK in CV]

To answer your questions, in order:

1. Both the original lender and the borrower have to agree, since both are being affected. As a practical matter, lenders never negotiate with borrowers that are current, so it would most likely apply only to loans that are already delinquent (at least 1 payment late). Lenders could adapt on this one, but given their historical shortsightedness, it’s unlikely.

2. It sunsets at the earlier of the funding of the insurance on the $300 billion or some future date, I think I remember 5 years, though I may have imagined that.

3. FHA loan volume moves as does the market. With the repeal of Glass-Steagal in the 90’s and the related deregulation which lead to the expansion of mortgage lending to non-banks, along with the advent of mortgage backed securities, FHA insured lending all but disappeared in many markets. If this bill passes, they will be back in business. At least until they’re not anymore.

4. Appraisals will have to be brand spanken new, paid for by the borrower/lender and the appraisal will have to be done according to strict FHA guidelines, which are much more strict than traditional underwriting guidelines. (I know, its an oxymoron to call recent customs in the lending industry “guidelines”. The were more like suggestions. The FHA does not operate that way.)

5. FHA geographical lending limits will apply.

6. Unless there has been a modification to the bill since I read it last, no. Borrowers who knowingly presented false loan applications on the loan being renegotiated will not be eligible. How strictly the FHA enforces this clause may well be regulated by the demand for the FHA insurance. Lower demand may dictate more lax interpretation. Higher demand would lead to more strict interpretation. At its most strict, the FHA could deem that any exaggeration on a signed loan app qualifies as “knowingly”. I suspect this clause will greatly diminish any expected benefits of the bill.

[SK in CV]

To answer your questions, in order:

1. Both the original lender and the borrower have to agree, since both are being affected. As a practical matter, lenders never negotiate with borrowers that are current, so it would most likely apply only to loans that are already delinquent (at least 1 payment late). Lenders could adapt on this one, but given their historical shortsightedness, it’s unlikely.

2. It sunsets at the earlier of the funding of the insurance on the $300 billion or some future date, I think I remember 5 years, though I may have imagined that.

3. FHA loan volume moves as does the market. With the repeal of Glass-Steagal in the 90’s and the related deregulation which lead to the expansion of mortgage lending to non-banks, along with the advent of mortgage backed securities, FHA insured lending all but disappeared in many markets. If this bill passes, they will be back in business. At least until they’re not anymore.

4. Appraisals will have to be brand spanken new, paid for by the borrower/lender and the appraisal will have to be done according to strict FHA guidelines, which are much more strict than traditional underwriting guidelines. (I know, its an oxymoron to call recent customs in the lending industry “guidelines”. The were more like suggestions. The FHA does not operate that way.)

5. FHA geographical lending limits will apply.

6. Unless there has been a modification to the bill since I read it last, no. Borrowers who knowingly presented false loan applications on the loan being renegotiated will not be eligible. How strictly the FHA enforces this clause may well be regulated by the demand for the FHA insurance. Lower demand may dictate more lax interpretation. Higher demand would lead to more strict interpretation. At its most strict, the FHA could deem that any exaggeration on a signed loan app qualifies as “knowingly”. I suspect this clause will greatly diminish any expected benefits of the bill.

[SK in CV]

To answer your questions, in order:

1. Both the original lender and the borrower have to agree, since both are being affected. As a practical matter, lenders never negotiate with borrowers that are current, so it would most likely apply only to loans that are already delinquent (at least 1 payment late). Lenders could adapt on this one, but given their historical shortsightedness, it’s unlikely.

2. It sunsets at the earlier of the funding of the insurance on the $300 billion or some future date, I think I remember 5 years, though I may have imagined that.

3. FHA loan volume moves as does the market. With the repeal of Glass-Steagal in the 90’s and the related deregulation which lead to the expansion of mortgage lending to non-banks, along with the advent of mortgage backed securities, FHA insured lending all but disappeared in many markets. If this bill passes, they will be back in business. At least until they’re not anymore.

4. Appraisals will have to be brand spanken new, paid for by the borrower/lender and the appraisal will have to be done according to strict FHA guidelines, which are much more strict than traditional underwriting guidelines. (I know, its an oxymoron to call recent customs in the lending industry “guidelines”. The were more like suggestions. The FHA does not operate that way.)

5. FHA geographical lending limits will apply.

6. Unless there has been a modification to the bill since I read it last, no. Borrowers who knowingly presented false loan applications on the loan being renegotiated will not be eligible. How strictly the FHA enforces this clause may well be regulated by the demand for the FHA insurance. Lower demand may dictate more lax interpretation. Higher demand would lead to more strict interpretation. At its most strict, the FHA could deem that any exaggeration on a signed loan app qualifies as “knowingly”. I suspect this clause will greatly diminish any expected benefits of the bill.

[Anonymous]

I don’t see this helping the people who were in the Option ARM or a stated loan. I don’t see many (80%+) being able to afford or qualify for a real loan. I can see this program helping people who qualified for & have a real loan but just bought at the wrong time and are now upside down.

I wonder if this is going to be like the jumbo fannie/freddie flop.

[Anonymous]

I don’t see this helping the people who were in the Option ARM or a stated loan. I don’t see many (80%+) being able to afford or qualify for a real loan. I can see this program helping people who qualified for & have a real loan but just bought at the wrong time and are now upside down.

I wonder if this is going to be like the jumbo fannie/freddie flop.

[Anonymous]

I don’t see this helping the people who were in the Option ARM or a stated loan. I don’t see many (80%+) being able to afford or qualify for a real loan. I can see this program helping people who qualified for & have a real loan but just bought at the wrong time and are now upside down.

I wonder if this is going to be like the jumbo fannie/freddie flop.

[Anonymous]

I don’t see this helping the people who were in the Option ARM or a stated loan. I don’t see many (80%+) being able to afford or qualify for a real loan. I can see this program helping people who qualified for & have a real loan but just bought at the wrong time and are now upside down.

I wonder if this is going to be like the jumbo fannie/freddie flop.

[Author]

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