Sensible rules proposed for mortgage industry

[StaunchLibertarian]

This is quite surprising. The government is actually proposing (or has already put into place) some sensible rules for the mortgage industry.

Here are some excerpts from an article on the subject.

http://finance.yahoo.com/news/Why-you-cant-get-a-cnnm-1758048512.html?x=0&sec=topStories&pos=1&asset=&ccode=

And these days, only highly qualified borrowers can get financing — let alone the best rates.

Makes sense.

The average credit score has risen to 760 from 720 a few years ago. For FHA loans, the average score has gone to 700 from 660. Loans made to borrowers with sub-620 scores are almost nonexistent.

Again, sensible.

Another factor keeping people out of the mortgage market is that lenders now require much more up-front cash. The median down payment for purchase is about 15%. During the housing boom, it approached zero.

Requiring 15% down is a step in the right direction.

On most loans, banks want 20% down.

As it should be.

Banks would be required to keep 5% of some loans, specifically those with less than 20% down payments, on their books rather than selling them all off as securities. As a result, banks make be unlikely to issue loans where less than 20% is put down.

Requiring lenders to have skin in the game is always a smart thing to do. 20% down sounds about right.

…Fannie, Freddie and FHA loans are all exempt from the requirements and they represent more than 90% of the market right now…

Boo!

…The government, however, wants to reduce the presence of all three agencies in favor of private lenders…

Yes!

Let’s hope the government has the political will to follow through with the proposed regulations and doesn’t listen to all the whiny special interests quoted in the article. San Diego real estate may actually become affordable.

[Scarlett]

The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.

[Scarlett]

The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.

[Scarlett]

The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.

[Scarlett]

The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.

[Scarlett]

The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.

[briansd1]

[quote=Scarlett]The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.[/quote]

That would work for most of the country, but it ain’t gonna happen. That would cause some markets to come to standstill and the lobbying will gear up.

You have a populace that feels entitled to buy (without the ability to pay) and the politicians want votes. Realtors, builders, lenders, etc… want money.
So the government explicitly and implicitly guarantees the loans made by too big to fail institutions.

Why the government needs to be involved in subsidizing mortgages over $250k is beyond my comprehension. I think that I need help buying a Mercedes too because I really deserve it.

[briansd1]

[quote=Scarlett]The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.[/quote]

That would work for most of the country, but it ain’t gonna happen. That would cause some markets to come to standstill and the lobbying will gear up.

You have a populace that feels entitled to buy (without the ability to pay) and the politicians want votes. Realtors, builders, lenders, etc… want money.
So the government explicitly and implicitly guarantees the loans made by too big to fail institutions.

Why the government needs to be involved in subsidizing mortgages over $250k is beyond my comprehension. I think that I need help buying a Mercedes too because I really deserve it.

[briansd1]

[quote=Scarlett]The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.[/quote]

That would work for most of the country, but it ain’t gonna happen. That would cause some markets to come to standstill and the lobbying will gear up.

You have a populace that feels entitled to buy (without the ability to pay) and the politicians want votes. Realtors, builders, lenders, etc… want money.
So the government explicitly and implicitly guarantees the loans made by too big to fail institutions.

Why the government needs to be involved in subsidizing mortgages over $250k is beyond my comprehension. I think that I need help buying a Mercedes too because I really deserve it.

[briansd1]

[quote=Scarlett]The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.[/quote]

That would work for most of the country, but it ain’t gonna happen. That would cause some markets to come to standstill and the lobbying will gear up.

You have a populace that feels entitled to buy (without the ability to pay) and the politicians want votes. Realtors, builders, lenders, etc… want money.
So the government explicitly and implicitly guarantees the loans made by too big to fail institutions.

Why the government needs to be involved in subsidizing mortgages over $250k is beyond my comprehension. I think that I need help buying a Mercedes too because I really deserve it.

[briansd1]

[quote=Scarlett]The rule they should add is the one that Brian suggested: make the loan regular limit 250K; then jumbo loans up to 417K. All of them with 15-20% down of course.[/quote]

That would work for most of the country, but it ain’t gonna happen. That would cause some markets to come to standstill and the lobbying will gear up.

You have a populace that feels entitled to buy (without the ability to pay) and the politicians want votes. Realtors, builders, lenders, etc… want money.
So the government explicitly and implicitly guarantees the loans made by too big to fail institutions.

Why the government needs to be involved in subsidizing mortgages over $250k is beyond my comprehension. I think that I need help buying a Mercedes too because I really deserve it.

[bearishgurl]

I’d also like to see privatization of the mortgage market but I still think the conventional conforming ceiling needs to be higher in high-cost areas than lower-cost areas. I DO think the VA/FHA ceilings are way too high. Buyers who use these loans typically cannot qualify for a $700K + loan and it is not prudent to lend more than about $300K on a zero down or low downpayment program, such as VA/FHA, IMO.

[bearishgurl]

I’d also like to see privatization of the mortgage market but I still think the conventional conforming ceiling needs to be higher in high-cost areas than lower-cost areas. I DO think the VA/FHA ceilings are way too high. Buyers who use these loans typically cannot qualify for a $700K + loan and it is not prudent to lend more than about $300K on a zero down or low downpayment program, such as VA/FHA, IMO.

[bearishgurl]

I’d also like to see privatization of the mortgage market but I still think the conventional conforming ceiling needs to be higher in high-cost areas than lower-cost areas. I DO think the VA/FHA ceilings are way too high. Buyers who use these loans typically cannot qualify for a $700K + loan and it is not prudent to lend more than about $300K on a zero down or low downpayment program, such as VA/FHA, IMO.

[bearishgurl]

I’d also like to see privatization of the mortgage market but I still think the conventional conforming ceiling needs to be higher in high-cost areas than lower-cost areas. I DO think the VA/FHA ceilings are way too high. Buyers who use these loans typically cannot qualify for a $700K + loan and it is not prudent to lend more than about $300K on a zero down or low downpayment program, such as VA/FHA, IMO.

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