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OK, I am completely lost here.
Is this raise aiming at boosting home sales, or allowing existing homeowners to refinance out of their toxic mortgages?
They don’t know!!! It’s a feeble attempt to throw a bunch of crap against a wall and see what sticks.
A raise will help any future buyers IF they can qualify, full doc. FHA is tougher than FNMA or FHLMC.
Existing homeowners need to figure out if it’s worth being saved. If you owe $600K and it’s worth $500K or less, isn’t a new mortgage toxic too ???
It’s an attempt at stalling what will eventually happen anyways, a return to more reasonable lower prices.
It’s an attempt to add liquidity to the mortgage market because investors have balked at buying non-conforming loans thus limitng the number of lenders in the non-conforming market. The GSE’s charter is to help assure that the mortgage markets remain liquid. They haven’t been for the last couple months.
I do think this will help sales in California, but probably not until next year. The question remains what happens to global interest rates in the face of the falling dollar. The French are clamoring for rate reductions and if the Fed continues to lower the Euro Bank is going to have to do likewise for their exporters to remain competitive.