FHA Loans and PUD Rules

[CA renter]

[quote=chrisp]Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?[/quote]

The TARP is just the tip of the iceberg…

“TARP does not operate in a vacuum,” Mr. Barofsky said in his prepared testimony. To properly evaluate that spending, “the context of these broader efforts” must be considered.

That $23.7 trillion figure would amount to about $77,000 for every person in the United States, and would be almost $10 trillion more than the country’s entire economic output, which is $14.1 trillion.

To reach that figure, Mr. Barofsky added up all possible Federal Reserve programs, and got a total of $6.8 trillion. He figured the TARP program could end up costing $3 trillion, including possible spending by the Federal Deposit Insurance Corporation and the Fed.

http://dealbook.blogs.nytimes.com/2009/07/21/a-big-tarp-estimate-that-isnt-worth-much/

If you read the entire article, you’ll see that this is (so far) the maximum risk, and many people believe it’s impossible to have these kinds of losses. Personally, I believe it’s always best to plan for the worst, and hope for the best. While we may not see the taxpayers bail out these entities to the tune of $23 TRILLION+, we should know what we are backing.
——————-

Yes, the housing crisis was caused by “loose lending” and by borrowers who took on too much risk.

Many people here are older, and have seen and/or studied various cycles before. We’ve seen the **permanent** damage it can cause in peoples’ lives. It’s easy to feel invincible, and that the sky is the limit, when you are young. We’re just trying to be helpful (even if that’s not what you really wanted), and show you why this decision might not be as safe as you think it is.

[chrisp]

Again point taken. What is everyone’s thought on inflation though? Is that an additional incentive to get in now?

[chrisp]

Again point taken. What is everyone’s thought on inflation though? Is that an additional incentive to get in now?

[chrisp]

Again point taken. What is everyone’s thought on inflation though? Is that an additional incentive to get in now?

[chrisp]

Again point taken. What is everyone’s thought on inflation though? Is that an additional incentive to get in now?

[chrisp]

Again point taken. What is everyone’s thought on inflation though? Is that an additional incentive to get in now?

[CA renter]

Another thing…renting is NOT “throwing money down the drain.”

The REIC has brainwashed everyone into thinking buying a house is always the best choice. It’s not. Don’t forget all the taxes, interest charges, buying/selling costs, HOA fees, insurance premiums, maintenance fees, Mello-Roos (for certain homes), etc. Oftentimes, people can spend more on these things then they ever would on rent.

For the most part, you are only “building equity” when prices are rising, espeically in the first few years when most of your payment goes toward interest. If prices go down, not only are you not building equity, but you stand to lose everything you’ve put into it — including the down payment, principal payments, and other expenses. Then, if you need to move and have only put 3-10% down, the likelihood of a foreclosure is very high, which is exactly what you DON’T want when you are going through a rough patch in your life. Renting gives you flexibility to move for work, or downsize if you ever need to, which “ownership” does not (especially with a low down payment).

A “special assessment” can appear out of the blue, and your HOA can bill you for tens of thousands of dollars — due now — for some big-time repair/maintenance issues.

I’d like to see people spend LESS on housing, so that they can allocate more money toward savings and spending on more productive endeavours. Many of us have been expecting the economy to enter a depression for a long time. This isn’t news to us. What would be the worst of all worlds is if they DRAG THE DEPRESSION OUT, so that nobody makes it out alive. All of these guarantees/bailouts are not making the problems go away, they are pushing them into the future to be dealt with then. I’d much rather have a very severe depression that lasts 2-4 years instead of a long, grinding recession/depression that lasts 10-20 years (or more).

[CA renter]

Another thing…renting is NOT “throwing money down the drain.”

The REIC has brainwashed everyone into thinking buying a house is always the best choice. It’s not. Don’t forget all the taxes, interest charges, buying/selling costs, HOA fees, insurance premiums, maintenance fees, Mello-Roos (for certain homes), etc. Oftentimes, people can spend more on these things then they ever would on rent.

For the most part, you are only “building equity” when prices are rising, espeically in the first few years when most of your payment goes toward interest. If prices go down, not only are you not building equity, but you stand to lose everything you’ve put into it — including the down payment, principal payments, and other expenses. Then, if you need to move and have only put 3-10% down, the likelihood of a foreclosure is very high, which is exactly what you DON’T want when you are going through a rough patch in your life. Renting gives you flexibility to move for work, or downsize if you ever need to, which “ownership” does not (especially with a low down payment).

A “special assessment” can appear out of the blue, and your HOA can bill you for tens of thousands of dollars — due now — for some big-time repair/maintenance issues.

I’d like to see people spend LESS on housing, so that they can allocate more money toward savings and spending on more productive endeavours. Many of us have been expecting the economy to enter a depression for a long time. This isn’t news to us. What would be the worst of all worlds is if they DRAG THE DEPRESSION OUT, so that nobody makes it out alive. All of these guarantees/bailouts are not making the problems go away, they are pushing them into the future to be dealt with then. I’d much rather have a very severe depression that lasts 2-4 years instead of a long, grinding recession/depression that lasts 10-20 years (or more).

[CA renter]

Another thing…renting is NOT “throwing money down the drain.”

The REIC has brainwashed everyone into thinking buying a house is always the best choice. It’s not. Don’t forget all the taxes, interest charges, buying/selling costs, HOA fees, insurance premiums, maintenance fees, Mello-Roos (for certain homes), etc. Oftentimes, people can spend more on these things then they ever would on rent.

For the most part, you are only “building equity” when prices are rising, espeically in the first few years when most of your payment goes toward interest. If prices go down, not only are you not building equity, but you stand to lose everything you’ve put into it — including the down payment, principal payments, and other expenses. Then, if you need to move and have only put 3-10% down, the likelihood of a foreclosure is very high, which is exactly what you DON’T want when you are going through a rough patch in your life. Renting gives you flexibility to move for work, or downsize if you ever need to, which “ownership” does not (especially with a low down payment).

A “special assessment” can appear out of the blue, and your HOA can bill you for tens of thousands of dollars — due now — for some big-time repair/maintenance issues.

I’d like to see people spend LESS on housing, so that they can allocate more money toward savings and spending on more productive endeavours. Many of us have been expecting the economy to enter a depression for a long time. This isn’t news to us. What would be the worst of all worlds is if they DRAG THE DEPRESSION OUT, so that nobody makes it out alive. All of these guarantees/bailouts are not making the problems go away, they are pushing them into the future to be dealt with then. I’d much rather have a very severe depression that lasts 2-4 years instead of a long, grinding recession/depression that lasts 10-20 years (or more).

[CA renter]

Another thing…renting is NOT “throwing money down the drain.”

The REIC has brainwashed everyone into thinking buying a house is always the best choice. It’s not. Don’t forget all the taxes, interest charges, buying/selling costs, HOA fees, insurance premiums, maintenance fees, Mello-Roos (for certain homes), etc. Oftentimes, people can spend more on these things then they ever would on rent.

For the most part, you are only “building equity” when prices are rising, espeically in the first few years when most of your payment goes toward interest. If prices go down, not only are you not building equity, but you stand to lose everything you’ve put into it — including the down payment, principal payments, and other expenses. Then, if you need to move and have only put 3-10% down, the likelihood of a foreclosure is very high, which is exactly what you DON’T want when you are going through a rough patch in your life. Renting gives you flexibility to move for work, or downsize if you ever need to, which “ownership” does not (especially with a low down payment).

A “special assessment” can appear out of the blue, and your HOA can bill you for tens of thousands of dollars — due now — for some big-time repair/maintenance issues.

I’d like to see people spend LESS on housing, so that they can allocate more money toward savings and spending on more productive endeavours. Many of us have been expecting the economy to enter a depression for a long time. This isn’t news to us. What would be the worst of all worlds is if they DRAG THE DEPRESSION OUT, so that nobody makes it out alive. All of these guarantees/bailouts are not making the problems go away, they are pushing them into the future to be dealt with then. I’d much rather have a very severe depression that lasts 2-4 years instead of a long, grinding recession/depression that lasts 10-20 years (or more).

[CA renter]

Another thing…renting is NOT “throwing money down the drain.”

The REIC has brainwashed everyone into thinking buying a house is always the best choice. It’s not. Don’t forget all the taxes, interest charges, buying/selling costs, HOA fees, insurance premiums, maintenance fees, Mello-Roos (for certain homes), etc. Oftentimes, people can spend more on these things then they ever would on rent.

For the most part, you are only “building equity” when prices are rising, espeically in the first few years when most of your payment goes toward interest. If prices go down, not only are you not building equity, but you stand to lose everything you’ve put into it — including the down payment, principal payments, and other expenses. Then, if you need to move and have only put 3-10% down, the likelihood of a foreclosure is very high, which is exactly what you DON’T want when you are going through a rough patch in your life. Renting gives you flexibility to move for work, or downsize if you ever need to, which “ownership” does not (especially with a low down payment).

A “special assessment” can appear out of the blue, and your HOA can bill you for tens of thousands of dollars — due now — for some big-time repair/maintenance issues.

I’d like to see people spend LESS on housing, so that they can allocate more money toward savings and spending on more productive endeavours. Many of us have been expecting the economy to enter a depression for a long time. This isn’t news to us. What would be the worst of all worlds is if they DRAG THE DEPRESSION OUT, so that nobody makes it out alive. All of these guarantees/bailouts are not making the problems go away, they are pushing them into the future to be dealt with then. I’d much rather have a very severe depression that lasts 2-4 years instead of a long, grinding recession/depression that lasts 10-20 years (or more).

[patientrenter]

chrisp, the TARP money is $700 billion. I wouldn’t call that chump change myself, but it isn’t anywhere close to the total extra money the govt has pumped into housing in the last 2 years.

Did you know that, starting in 2007, the FHLB system (with implicit guarantees from the govt) has put trillions into banks to lend on homes? That Fannie Mae and Freddie (whose private status is a fig leaf) have done the same? That the FDIC has guaranteed hundreds of billions of dollars of new loans for banks to lend out for housing? That the Fed has purchased in the neighborhood of a trillion dollars of trashed home loan securities from banks at way over market to keep the banks lending with abandon?

Almost every loan against housing in the last 2 years has been made only because the US taxpayer has arranged to pay the losses. If only private investment dollars had been available, with no govt intervention, very few home loans would have been made until:

1. Down payments had increased to cover most possible losses after the biggest home price bubble in recorded history. In 2007, right at the peak of the bubble, that would have meant minimum down payments of around 50%.

2. Home prices had decreased to levels supported by long term traditional affordability standards. After that had occurred, minimum downpayments could have come down to around 20%.

I have many relatives in Europe. They used to always rib me about the cowboy capitalist economy of the USA. I’d laugh, but I remember in late 2007 describing to one of them how 70-90% of the money going into US housing was from the government, on terms that no truly private lender would give. We were more socialist than the Europeans, in this one respect. He loves to argue, but he knew enough finance to see that what I was saying was correct. It’s even more true today. I don’t object to the socialism in itself, but the distortions and penalties created by these nutty govt home price policies, on a personal and macroeconomic level, are enormous.

[patientrenter]

chrisp, the TARP money is $700 billion. I wouldn’t call that chump change myself, but it isn’t anywhere close to the total extra money the govt has pumped into housing in the last 2 years.

Did you know that, starting in 2007, the FHLB system (with implicit guarantees from the govt) has put trillions into banks to lend on homes? That Fannie Mae and Freddie (whose private status is a fig leaf) have done the same? That the FDIC has guaranteed hundreds of billions of dollars of new loans for banks to lend out for housing? That the Fed has purchased in the neighborhood of a trillion dollars of trashed home loan securities from banks at way over market to keep the banks lending with abandon?

Almost every loan against housing in the last 2 years has been made only because the US taxpayer has arranged to pay the losses. If only private investment dollars had been available, with no govt intervention, very few home loans would have been made until:

1. Down payments had increased to cover most possible losses after the biggest home price bubble in recorded history. In 2007, right at the peak of the bubble, that would have meant minimum down payments of around 50%.

2. Home prices had decreased to levels supported by long term traditional affordability standards. After that had occurred, minimum downpayments could have come down to around 20%.

I have many relatives in Europe. They used to always rib me about the cowboy capitalist economy of the USA. I’d laugh, but I remember in late 2007 describing to one of them how 70-90% of the money going into US housing was from the government, on terms that no truly private lender would give. We were more socialist than the Europeans, in this one respect. He loves to argue, but he knew enough finance to see that what I was saying was correct. It’s even more true today. I don’t object to the socialism in itself, but the distortions and penalties created by these nutty govt home price policies, on a personal and macroeconomic level, are enormous.

[patientrenter]

chrisp, the TARP money is $700 billion. I wouldn’t call that chump change myself, but it isn’t anywhere close to the total extra money the govt has pumped into housing in the last 2 years.

Did you know that, starting in 2007, the FHLB system (with implicit guarantees from the govt) has put trillions into banks to lend on homes? That Fannie Mae and Freddie (whose private status is a fig leaf) have done the same? That the FDIC has guaranteed hundreds of billions of dollars of new loans for banks to lend out for housing? That the Fed has purchased in the neighborhood of a trillion dollars of trashed home loan securities from banks at way over market to keep the banks lending with abandon?

Almost every loan against housing in the last 2 years has been made only because the US taxpayer has arranged to pay the losses. If only private investment dollars had been available, with no govt intervention, very few home loans would have been made until:

1. Down payments had increased to cover most possible losses after the biggest home price bubble in recorded history. In 2007, right at the peak of the bubble, that would have meant minimum down payments of around 50%.

2. Home prices had decreased to levels supported by long term traditional affordability standards. After that had occurred, minimum downpayments could have come down to around 20%.

I have many relatives in Europe. They used to always rib me about the cowboy capitalist economy of the USA. I’d laugh, but I remember in late 2007 describing to one of them how 70-90% of the money going into US housing was from the government, on terms that no truly private lender would give. We were more socialist than the Europeans, in this one respect. He loves to argue, but he knew enough finance to see that what I was saying was correct. It’s even more true today. I don’t object to the socialism in itself, but the distortions and penalties created by these nutty govt home price policies, on a personal and macroeconomic level, are enormous.

[patientrenter]

chrisp, the TARP money is $700 billion. I wouldn’t call that chump change myself, but it isn’t anywhere close to the total extra money the govt has pumped into housing in the last 2 years.

Did you know that, starting in 2007, the FHLB system (with implicit guarantees from the govt) has put trillions into banks to lend on homes? That Fannie Mae and Freddie (whose private status is a fig leaf) have done the same? That the FDIC has guaranteed hundreds of billions of dollars of new loans for banks to lend out for housing? That the Fed has purchased in the neighborhood of a trillion dollars of trashed home loan securities from banks at way over market to keep the banks lending with abandon?

Almost every loan against housing in the last 2 years has been made only because the US taxpayer has arranged to pay the losses. If only private investment dollars had been available, with no govt intervention, very few home loans would have been made until:

1. Down payments had increased to cover most possible losses after the biggest home price bubble in recorded history. In 2007, right at the peak of the bubble, that would have meant minimum down payments of around 50%.

2. Home prices had decreased to levels supported by long term traditional affordability standards. After that had occurred, minimum downpayments could have come down to around 20%.

I have many relatives in Europe. They used to always rib me about the cowboy capitalist economy of the USA. I’d laugh, but I remember in late 2007 describing to one of them how 70-90% of the money going into US housing was from the government, on terms that no truly private lender would give. We were more socialist than the Europeans, in this one respect. He loves to argue, but he knew enough finance to see that what I was saying was correct. It’s even more true today. I don’t object to the socialism in itself, but the distortions and penalties created by these nutty govt home price policies, on a personal and macroeconomic level, are enormous.

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