FNM/FRE to discontinue jumbo-conforming

[an]

[quote=esmith]High-income people can live frugal too. It’s one thing to make 3500/month after-tax and save 500/month, it’s another to make 7500/month and save 4500/month with the same standard of living.

[/quote]
I know they can and I know some of them too. That’s why I said it won’t be as easy as if you make more money. If you want to make more money, go get an education. If you don’t want to do that, work 2 jobs. If you don’t want to do that, well, stop whining. I’m just saying it’s very doable to save if you put your mind to it. I want a $1M house. It won’t be easy for me, but it’ll be easy for a guy making $1M/year. Does that mean I should get some assistance because it’s hard for me to save $200k+ for a down payment?

[Eugene]

*facepalm*

I repeat my statement: “All else equal, it is harder for a low-income homebuyer to save enough money for 20% of 3x his gross income. … Mandatory 20% down payment for everyone would push disproportionate numbers of low-income families into rentals and disproportionate numbers of low-income houses into investors’ hands.”

If you don’t have the income, you’re not going to live in a $1M house anyways, whether someone gives you a 3% down or not.

If we go by 3x gross rule, a person with 50k income will live in a 150k house, a person with 200k income will live in a 600k house. The difference being, that the 600k house will be owned by the resident (it’s easy for him to save for the down payment), and the 150k house will be owned by an investor (it’s hard for the resident to save, so he’ll rent instead).

What’s your problem with this statement?

[Eugene]

*facepalm*

I repeat my statement: “All else equal, it is harder for a low-income homebuyer to save enough money for 20% of 3x his gross income. … Mandatory 20% down payment for everyone would push disproportionate numbers of low-income families into rentals and disproportionate numbers of low-income houses into investors’ hands.”

If you don’t have the income, you’re not going to live in a $1M house anyways, whether someone gives you a 3% down or not.

If we go by 3x gross rule, a person with 50k income will live in a 150k house, a person with 200k income will live in a 600k house. The difference being, that the 600k house will be owned by the resident (it’s easy for him to save for the down payment), and the 150k house will be owned by an investor (it’s hard for the resident to save, so he’ll rent instead).

What’s your problem with this statement?

[Eugene]

*facepalm*

I repeat my statement: “All else equal, it is harder for a low-income homebuyer to save enough money for 20% of 3x his gross income. … Mandatory 20% down payment for everyone would push disproportionate numbers of low-income families into rentals and disproportionate numbers of low-income houses into investors’ hands.”

If you don’t have the income, you’re not going to live in a $1M house anyways, whether someone gives you a 3% down or not.

If we go by 3x gross rule, a person with 50k income will live in a 150k house, a person with 200k income will live in a 600k house. The difference being, that the 600k house will be owned by the resident (it’s easy for him to save for the down payment), and the 150k house will be owned by an investor (it’s hard for the resident to save, so he’ll rent instead).

What’s your problem with this statement?

[Eugene]

*facepalm*

I repeat my statement: “All else equal, it is harder for a low-income homebuyer to save enough money for 20% of 3x his gross income. … Mandatory 20% down payment for everyone would push disproportionate numbers of low-income families into rentals and disproportionate numbers of low-income houses into investors’ hands.”

If you don’t have the income, you’re not going to live in a $1M house anyways, whether someone gives you a 3% down or not.

If we go by 3x gross rule, a person with 50k income will live in a 150k house, a person with 200k income will live in a 600k house. The difference being, that the 600k house will be owned by the resident (it’s easy for him to save for the down payment), and the 150k house will be owned by an investor (it’s hard for the resident to save, so he’ll rent instead).

What’s your problem with this statement?

[Eugene]

*facepalm*

I repeat my statement: “All else equal, it is harder for a low-income homebuyer to save enough money for 20% of 3x his gross income. … Mandatory 20% down payment for everyone would push disproportionate numbers of low-income families into rentals and disproportionate numbers of low-income houses into investors’ hands.”

If you don’t have the income, you’re not going to live in a $1M house anyways, whether someone gives you a 3% down or not.

If we go by 3x gross rule, a person with 50k income will live in a 150k house, a person with 200k income will live in a 600k house. The difference being, that the 600k house will be owned by the resident (it’s easy for him to save for the down payment), and the 150k house will be owned by an investor (it’s hard for the resident to save, so he’ll rent instead).

What’s your problem with this statement?

[an]

So you’re saying in the 80s and 90s, when 20% and 3x income were the norm, the majority of cheaper area were bought by investors? I don’t buy that one bit. If the buyers of primary resident are not there, the price will fall to a point where they can afford it. I thought that’s the whole argument of this site, is that, price will fall to fundamental. Fundamental is where people can afford to buy.

[an]

So you’re saying in the 80s and 90s, when 20% and 3x income were the norm, the majority of cheaper area were bought by investors? I don’t buy that one bit. If the buyers of primary resident are not there, the price will fall to a point where they can afford it. I thought that’s the whole argument of this site, is that, price will fall to fundamental. Fundamental is where people can afford to buy.

[an]

So you’re saying in the 80s and 90s, when 20% and 3x income were the norm, the majority of cheaper area were bought by investors? I don’t buy that one bit. If the buyers of primary resident are not there, the price will fall to a point where they can afford it. I thought that’s the whole argument of this site, is that, price will fall to fundamental. Fundamental is where people can afford to buy.

[an]

So you’re saying in the 80s and 90s, when 20% and 3x income were the norm, the majority of cheaper area were bought by investors? I don’t buy that one bit. If the buyers of primary resident are not there, the price will fall to a point where they can afford it. I thought that’s the whole argument of this site, is that, price will fall to fundamental. Fundamental is where people can afford to buy.

[an]

So you’re saying in the 80s and 90s, when 20% and 3x income were the norm, the majority of cheaper area were bought by investors? I don’t buy that one bit. If the buyers of primary resident are not there, the price will fall to a point where they can afford it. I thought that’s the whole argument of this site, is that, price will fall to fundamental. Fundamental is where people can afford to buy.

[PC]

The blame on the CRA is entirely misplaced, as Barry articulates much better than I ever could have:

http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html

I also believe there’s greater culpability in deregulation (than the misplaced blame on the CRA), including: (1) the lifting of the prohibition of Credit Default Swaps via the Commodity Futures Modernization Act; and (2) Greenspan’s malfeasance in ignoring the numerous warnings from his own Fed governors and treasury officials.

http://bigpicture.typepad.com/comments/2008/09/the-new-new-dea.html

[PC]

The blame on the CRA is entirely misplaced, as Barry articulates much better than I ever could have:

http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html

I also believe there’s greater culpability in deregulation (than the misplaced blame on the CRA), including: (1) the lifting of the prohibition of Credit Default Swaps via the Commodity Futures Modernization Act; and (2) Greenspan’s malfeasance in ignoring the numerous warnings from his own Fed governors and treasury officials.

http://bigpicture.typepad.com/comments/2008/09/the-new-new-dea.html

[PC]

The blame on the CRA is entirely misplaced, as Barry articulates much better than I ever could have:

http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html

I also believe there’s greater culpability in deregulation (than the misplaced blame on the CRA), including: (1) the lifting of the prohibition of Credit Default Swaps via the Commodity Futures Modernization Act; and (2) Greenspan’s malfeasance in ignoring the numerous warnings from his own Fed governors and treasury officials.

http://bigpicture.typepad.com/comments/2008/09/the-new-new-dea.html

[PC]

The blame on the CRA is entirely misplaced, as Barry articulates much better than I ever could have:

http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html

I also believe there’s greater culpability in deregulation (than the misplaced blame on the CRA), including: (1) the lifting of the prohibition of Credit Default Swaps via the Commodity Futures Modernization Act; and (2) Greenspan’s malfeasance in ignoring the numerous warnings from his own Fed governors and treasury officials.

http://bigpicture.typepad.com/comments/2008/09/the-new-new-dea.html

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