how will Geithner’s PPIP affect the housing price?

[paranoid]

PPIP will buy the bad assets from the banks. The bad assets are mainly mortgage-related. There is a bidding process involved for these assets, with the taxpayerx paying 93% of all cost. If the price is too low (relative to fair market value), the banks will not be willing to sell, and there will be a lot of biders to raise the price. If the price is too high, private sector will not be join because they will not be able to make money unless they believe the housing market will recover soon, or they are compensated with a big return for a small risk. By funding 93% of the PPIP, the taxpayers are taking the most risks, with potential returns shared with the private investors.

So I believe the bad assets will be priced at relatively high price which will prevent the private partners of the PPIP from selling the asset in short term without suffering a loss. The PPIP will be holding the assets for years. This will effectively put a floor to the housing price with taxpayers money.

how do you guys think?

[DWCAP]

Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

Or I guess if the banks didnt learn their lesson and started lending to all warm bodies regardless then housing will have a floor put under it. But we would be right back here again soon enough, and then people would get linched.

No, this is all about stopping the overcorrection from trend. We will revert to normal relationships compared to incomes.
All the other stuff is BS from/for the guys who bought Congress calling in their chips.

[DWCAP]

Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

Or I guess if the banks didnt learn their lesson and started lending to all warm bodies regardless then housing will have a floor put under it. But we would be right back here again soon enough, and then people would get linched.

No, this is all about stopping the overcorrection from trend. We will revert to normal relationships compared to incomes.
All the other stuff is BS from/for the guys who bought Congress calling in their chips.

[DWCAP]

Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

Or I guess if the banks didnt learn their lesson and started lending to all warm bodies regardless then housing will have a floor put under it. But we would be right back here again soon enough, and then people would get linched.

No, this is all about stopping the overcorrection from trend. We will revert to normal relationships compared to incomes.
All the other stuff is BS from/for the guys who bought Congress calling in their chips.

[DWCAP]

Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

Or I guess if the banks didnt learn their lesson and started lending to all warm bodies regardless then housing will have a floor put under it. But we would be right back here again soon enough, and then people would get linched.

No, this is all about stopping the overcorrection from trend. We will revert to normal relationships compared to incomes.
All the other stuff is BS from/for the guys who bought Congress calling in their chips.

[DWCAP]

Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

Or I guess if the banks didnt learn their lesson and started lending to all warm bodies regardless then housing will have a floor put under it. But we would be right back here again soon enough, and then people would get linched.

No, this is all about stopping the overcorrection from trend. We will revert to normal relationships compared to incomes.
All the other stuff is BS from/for the guys who bought Congress calling in their chips.

[davelj]

[quote=DWCAP]Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

[/quote]

The banks aren’t going to be holding this paper. Freddie and Fannie (and other govt entities) – that is we, the taxpayers – will be holding it.

[davelj]

[quote=DWCAP]Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

[/quote]

The banks aren’t going to be holding this paper. Freddie and Fannie (and other govt entities) – that is we, the taxpayers – will be holding it.

[davelj]

[quote=DWCAP]Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

[/quote]

The banks aren’t going to be holding this paper. Freddie and Fannie (and other govt entities) – that is we, the taxpayers – will be holding it.

[davelj]

[quote=DWCAP]Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

[/quote]

The banks aren’t going to be holding this paper. Freddie and Fannie (and other govt entities) – that is we, the taxpayers – will be holding it.

[davelj]

[quote=DWCAP]Why would this put a floor under housing? The only way that would happen is if the real problem was that good credit risks couldnt get loans. This isnt the problem. Good credit risks, people with jobs, and real DP’s, and good credit histories, can get loans that historically speaking are retarded for the banks to be doing. But they are there, loaning away, at 4.5% again.

[/quote]

The banks aren’t going to be holding this paper. Freddie and Fannie (and other govt entities) – that is we, the taxpayers – will be holding it.

[Huckleberry]

This will not put a floor under housing prices.

The only way to do that is once again allow exotic mortgages so people can get into mortgages out of their income range. Without this segment of the market, there is not enough leverage (buying power) for people to continue moving up into higher price ranges.

I agree, all this will do is slow the decent so we don’t have a catastrophic meltdown. Price are still going to head lower, and once they do stabilize, will have stagnant appreciation for at least a few years, if not longer…

[Huckleberry]

This will not put a floor under housing prices.

The only way to do that is once again allow exotic mortgages so people can get into mortgages out of their income range. Without this segment of the market, there is not enough leverage (buying power) for people to continue moving up into higher price ranges.

I agree, all this will do is slow the decent so we don’t have a catastrophic meltdown. Price are still going to head lower, and once they do stabilize, will have stagnant appreciation for at least a few years, if not longer…

[Huckleberry]

This will not put a floor under housing prices.

The only way to do that is once again allow exotic mortgages so people can get into mortgages out of their income range. Without this segment of the market, there is not enough leverage (buying power) for people to continue moving up into higher price ranges.

I agree, all this will do is slow the decent so we don’t have a catastrophic meltdown. Price are still going to head lower, and once they do stabilize, will have stagnant appreciation for at least a few years, if not longer…

[Huckleberry]

This will not put a floor under housing prices.

The only way to do that is once again allow exotic mortgages so people can get into mortgages out of their income range. Without this segment of the market, there is not enough leverage (buying power) for people to continue moving up into higher price ranges.

I agree, all this will do is slow the decent so we don’t have a catastrophic meltdown. Price are still going to head lower, and once they do stabilize, will have stagnant appreciation for at least a few years, if not longer…

[Author]

Posts