Gov’t to target 4.5% for mortgages

[sdrealtor]

Prices arent going up anytime soon to any degree that should worry anyone. 4.5% mortgages would defintely increase the pace at which we stabilize though.

[Nor-LA-SD-guy]

Just my thoughts but I think 4.5% could cause a bounce in some (for lack of a better way to put it) Over sold markets like Temecula, for all the talk about how bad things are in the TV, there are very few REO listing active, and any time a good one comes up it’s gone (has offers over the listing price) in hours (not days).

[Nor-LA-SD-guy]

Just my thoughts but I think 4.5% could cause a bounce in some (for lack of a better way to put it) Over sold markets like Temecula, for all the talk about how bad things are in the TV, there are very few REO listing active, and any time a good one comes up it’s gone (has offers over the listing price) in hours (not days).

[Nor-LA-SD-guy]

Just my thoughts but I think 4.5% could cause a bounce in some (for lack of a better way to put it) Over sold markets like Temecula, for all the talk about how bad things are in the TV, there are very few REO listing active, and any time a good one comes up it’s gone (has offers over the listing price) in hours (not days).

[Nor-LA-SD-guy]

Just my thoughts but I think 4.5% could cause a bounce in some (for lack of a better way to put it) Over sold markets like Temecula, for all the talk about how bad things are in the TV, there are very few REO listing active, and any time a good one comes up it’s gone (has offers over the listing price) in hours (not days).

[Nor-LA-SD-guy]

Just my thoughts but I think 4.5% could cause a bounce in some (for lack of a better way to put it) Over sold markets like Temecula, for all the talk about how bad things are in the TV, there are very few REO listing active, and any time a good one comes up it’s gone (has offers over the listing price) in hours (not days).

[davelj]

I think this is an interesting strategy under the circumstances. If the Treasury can issue enough 30-year paper at 3% and turn around and collect 4.5%, that’s a positive spread of 1.5%. Realistically, credit and operating costs will eat up the 1.5% spread over time, but break-even under the circumstances is pretty good. And, hell, the assets and liabilities would even exhibit matched durations. Holy asset-liability management!

So, govt. debt would increase but assets would increase as well, so net debt-to-GDP would remain constant, which is a good thing. There should be no additional ongoing net costs to the taxpayer so long as the credit costs and operating costs remain in check, which is a reasonable assumption given dramatically lower home prices.

I assume they’d use Fannie and Freddie to administer the whole thing because that would be the most efficient manner of handling things – they’re already set up for this type of operation.

The issue is how to determine who gets the loans, because everyone – including folks like me who have no issues with their mortgage payment – is going to want to participate. That’s going to be a tricky issue.

But the idea itself is solid. I think the Officialdom now realizes that housing prices are going to continue trending down until they’re back to trend relative to incomes and rents. They’re resigned to that fact. I think what they’re trying to achieve now is some mechanism for not allowing prices to go too much BELOW that trend. Because we’re staring a depression in the face if proper actions aren’t taken. And this is an interesting idea that shouldn’t burden the taxpayer too heavily if administered properly.

I give it an A for ingenuity. Let’s see how the execution is.

[davelj]

I think this is an interesting strategy under the circumstances. If the Treasury can issue enough 30-year paper at 3% and turn around and collect 4.5%, that’s a positive spread of 1.5%. Realistically, credit and operating costs will eat up the 1.5% spread over time, but break-even under the circumstances is pretty good. And, hell, the assets and liabilities would even exhibit matched durations. Holy asset-liability management!

So, govt. debt would increase but assets would increase as well, so net debt-to-GDP would remain constant, which is a good thing. There should be no additional ongoing net costs to the taxpayer so long as the credit costs and operating costs remain in check, which is a reasonable assumption given dramatically lower home prices.

I assume they’d use Fannie and Freddie to administer the whole thing because that would be the most efficient manner of handling things – they’re already set up for this type of operation.

The issue is how to determine who gets the loans, because everyone – including folks like me who have no issues with their mortgage payment – is going to want to participate. That’s going to be a tricky issue.

But the idea itself is solid. I think the Officialdom now realizes that housing prices are going to continue trending down until they’re back to trend relative to incomes and rents. They’re resigned to that fact. I think what they’re trying to achieve now is some mechanism for not allowing prices to go too much BELOW that trend. Because we’re staring a depression in the face if proper actions aren’t taken. And this is an interesting idea that shouldn’t burden the taxpayer too heavily if administered properly.

I give it an A for ingenuity. Let’s see how the execution is.

[davelj]

I think this is an interesting strategy under the circumstances. If the Treasury can issue enough 30-year paper at 3% and turn around and collect 4.5%, that’s a positive spread of 1.5%. Realistically, credit and operating costs will eat up the 1.5% spread over time, but break-even under the circumstances is pretty good. And, hell, the assets and liabilities would even exhibit matched durations. Holy asset-liability management!

So, govt. debt would increase but assets would increase as well, so net debt-to-GDP would remain constant, which is a good thing. There should be no additional ongoing net costs to the taxpayer so long as the credit costs and operating costs remain in check, which is a reasonable assumption given dramatically lower home prices.

I assume they’d use Fannie and Freddie to administer the whole thing because that would be the most efficient manner of handling things – they’re already set up for this type of operation.

The issue is how to determine who gets the loans, because everyone – including folks like me who have no issues with their mortgage payment – is going to want to participate. That’s going to be a tricky issue.

But the idea itself is solid. I think the Officialdom now realizes that housing prices are going to continue trending down until they’re back to trend relative to incomes and rents. They’re resigned to that fact. I think what they’re trying to achieve now is some mechanism for not allowing prices to go too much BELOW that trend. Because we’re staring a depression in the face if proper actions aren’t taken. And this is an interesting idea that shouldn’t burden the taxpayer too heavily if administered properly.

I give it an A for ingenuity. Let’s see how the execution is.

[davelj]

I think this is an interesting strategy under the circumstances. If the Treasury can issue enough 30-year paper at 3% and turn around and collect 4.5%, that’s a positive spread of 1.5%. Realistically, credit and operating costs will eat up the 1.5% spread over time, but break-even under the circumstances is pretty good. And, hell, the assets and liabilities would even exhibit matched durations. Holy asset-liability management!

So, govt. debt would increase but assets would increase as well, so net debt-to-GDP would remain constant, which is a good thing. There should be no additional ongoing net costs to the taxpayer so long as the credit costs and operating costs remain in check, which is a reasonable assumption given dramatically lower home prices.

I assume they’d use Fannie and Freddie to administer the whole thing because that would be the most efficient manner of handling things – they’re already set up for this type of operation.

The issue is how to determine who gets the loans, because everyone – including folks like me who have no issues with their mortgage payment – is going to want to participate. That’s going to be a tricky issue.

But the idea itself is solid. I think the Officialdom now realizes that housing prices are going to continue trending down until they’re back to trend relative to incomes and rents. They’re resigned to that fact. I think what they’re trying to achieve now is some mechanism for not allowing prices to go too much BELOW that trend. Because we’re staring a depression in the face if proper actions aren’t taken. And this is an interesting idea that shouldn’t burden the taxpayer too heavily if administered properly.

I give it an A for ingenuity. Let’s see how the execution is.

[davelj]

I think this is an interesting strategy under the circumstances. If the Treasury can issue enough 30-year paper at 3% and turn around and collect 4.5%, that’s a positive spread of 1.5%. Realistically, credit and operating costs will eat up the 1.5% spread over time, but break-even under the circumstances is pretty good. And, hell, the assets and liabilities would even exhibit matched durations. Holy asset-liability management!

So, govt. debt would increase but assets would increase as well, so net debt-to-GDP would remain constant, which is a good thing. There should be no additional ongoing net costs to the taxpayer so long as the credit costs and operating costs remain in check, which is a reasonable assumption given dramatically lower home prices.

I assume they’d use Fannie and Freddie to administer the whole thing because that would be the most efficient manner of handling things – they’re already set up for this type of operation.

The issue is how to determine who gets the loans, because everyone – including folks like me who have no issues with their mortgage payment – is going to want to participate. That’s going to be a tricky issue.

But the idea itself is solid. I think the Officialdom now realizes that housing prices are going to continue trending down until they’re back to trend relative to incomes and rents. They’re resigned to that fact. I think what they’re trying to achieve now is some mechanism for not allowing prices to go too much BELOW that trend. Because we’re staring a depression in the face if proper actions aren’t taken. And this is an interesting idea that shouldn’t burden the taxpayer too heavily if administered properly.

I give it an A for ingenuity. Let’s see how the execution is.

[KIBU]

I wonder if the 4.5% mortgage will have an income cap or other limitations/conditions (like when you sell, you share the profits).

Some suggestions for Paulson to set conditions:

1. You get 4.5% only if you also buy a brand new Ford/GM/Chrysler or a nice hummer.

2. You get 4.5% if you buy 5000 dollars of toxic securities and keep it until you are 90 years old.

3. You get 4.5% only if you assassinate HLS and stop his gloom and doom radio show.

Decision to buy depends on how long you can wait. I believe long term housing will go much further down and stays there for a while.

[KIBU]

I wonder if the 4.5% mortgage will have an income cap or other limitations/conditions (like when you sell, you share the profits).

Some suggestions for Paulson to set conditions:

1. You get 4.5% only if you also buy a brand new Ford/GM/Chrysler or a nice hummer.

2. You get 4.5% if you buy 5000 dollars of toxic securities and keep it until you are 90 years old.

3. You get 4.5% only if you assassinate HLS and stop his gloom and doom radio show.

Decision to buy depends on how long you can wait. I believe long term housing will go much further down and stays there for a while.

[KIBU]

I wonder if the 4.5% mortgage will have an income cap or other limitations/conditions (like when you sell, you share the profits).

Some suggestions for Paulson to set conditions:

1. You get 4.5% only if you also buy a brand new Ford/GM/Chrysler or a nice hummer.

2. You get 4.5% if you buy 5000 dollars of toxic securities and keep it until you are 90 years old.

3. You get 4.5% only if you assassinate HLS and stop his gloom and doom radio show.

Decision to buy depends on how long you can wait. I believe long term housing will go much further down and stays there for a while.

[KIBU]

I wonder if the 4.5% mortgage will have an income cap or other limitations/conditions (like when you sell, you share the profits).

Some suggestions for Paulson to set conditions:

1. You get 4.5% only if you also buy a brand new Ford/GM/Chrysler or a nice hummer.

2. You get 4.5% if you buy 5000 dollars of toxic securities and keep it until you are 90 years old.

3. You get 4.5% only if you assassinate HLS and stop his gloom and doom radio show.

Decision to buy depends on how long you can wait. I believe long term housing will go much further down and stays there for a while.

[Author]

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