Sensible rules proposed for mortgage industry

[StaunchLibertarian]

[quote=paramount]Yah, let’s prevent the same people who had to pay for bank bailouts from owning a house.

The rules stated in the article are far to stringent.

The following basic guidelines make sense (although each situation should be treated uniquely):

Credit Score: 650 and above
Down Payment: Anything below 20% pays PMI
Income Ratio: 36% Gross Income to Loan Amount[/quote]

Down payments below 20% make one a glorified renter, not an owner. If a would-be owner can really afford a house on the typical 30-year mortgage, then a 20% down payment should only take 6 years to save up for.

That means that if you start saving at about the time you plan to have kids, you can rent for 6 years while saving up for a home, and then actually buy and move into that home when the kid starts school. 20% down payments are perfectly reasonable.

All these government subsidies and lowering of down payments is just causing house prices to go up. Requiring at least 20% down payments from everyone means you won’t be competing against speculators who ‘buy’ with 0% down and then dump their houses a couple of years later if they don’t go up in value.

[equalizer]

Bethany McLean has a good background story on 30 year mortgage here.

“For a homeowner, a mortgage with a 30-year fixed rate (especially one that he can pay off early without a penalty) is a wonderful thing. For lenders and investors, however, it is a financial Frankenstein’s monster, an unnatural product filled with the potential for losses. Absorbing some of the risk of those losses is a large part of what the government does in the housing market.”

It’s been a great subsidy for homeowners and a real path to wealth, which is why Greenspan was pushing for increased home ownership for all. Of course he didn’t bother to study or counter the massive risks.

Who Wants a 30-Year Mortgage?

Podcast:
http://www.npr.org/blogs/money/2011/01/14/132940442/the-friday-podcast-the-frankenstein-mortgage

[equalizer]

Bethany McLean has a good background story on 30 year mortgage here.

“For a homeowner, a mortgage with a 30-year fixed rate (especially one that he can pay off early without a penalty) is a wonderful thing. For lenders and investors, however, it is a financial Frankenstein’s monster, an unnatural product filled with the potential for losses. Absorbing some of the risk of those losses is a large part of what the government does in the housing market.”

It’s been a great subsidy for homeowners and a real path to wealth, which is why Greenspan was pushing for increased home ownership for all. Of course he didn’t bother to study or counter the massive risks.

Who Wants a 30-Year Mortgage?

Podcast:
http://www.npr.org/blogs/money/2011/01/14/132940442/the-friday-podcast-the-frankenstein-mortgage

[equalizer]

Bethany McLean has a good background story on 30 year mortgage here.

“For a homeowner, a mortgage with a 30-year fixed rate (especially one that he can pay off early without a penalty) is a wonderful thing. For lenders and investors, however, it is a financial Frankenstein’s monster, an unnatural product filled with the potential for losses. Absorbing some of the risk of those losses is a large part of what the government does in the housing market.”

It’s been a great subsidy for homeowners and a real path to wealth, which is why Greenspan was pushing for increased home ownership for all. Of course he didn’t bother to study or counter the massive risks.

Who Wants a 30-Year Mortgage?

Podcast:
http://www.npr.org/blogs/money/2011/01/14/132940442/the-friday-podcast-the-frankenstein-mortgage

[equalizer]

Bethany McLean has a good background story on 30 year mortgage here.

“For a homeowner, a mortgage with a 30-year fixed rate (especially one that he can pay off early without a penalty) is a wonderful thing. For lenders and investors, however, it is a financial Frankenstein’s monster, an unnatural product filled with the potential for losses. Absorbing some of the risk of those losses is a large part of what the government does in the housing market.”

It’s been a great subsidy for homeowners and a real path to wealth, which is why Greenspan was pushing for increased home ownership for all. Of course he didn’t bother to study or counter the massive risks.

Who Wants a 30-Year Mortgage?

Podcast:
http://www.npr.org/blogs/money/2011/01/14/132940442/the-friday-podcast-the-frankenstein-mortgage

[equalizer]

Bethany McLean has a good background story on 30 year mortgage here.

“For a homeowner, a mortgage with a 30-year fixed rate (especially one that he can pay off early without a penalty) is a wonderful thing. For lenders and investors, however, it is a financial Frankenstein’s monster, an unnatural product filled with the potential for losses. Absorbing some of the risk of those losses is a large part of what the government does in the housing market.”

It’s been a great subsidy for homeowners and a real path to wealth, which is why Greenspan was pushing for increased home ownership for all. Of course he didn’t bother to study or counter the massive risks.

Who Wants a 30-Year Mortgage?

Podcast:
http://www.npr.org/blogs/money/2011/01/14/132940442/the-friday-podcast-the-frankenstein-mortgage

[briansd1]

Here’s an interesting article on Fan/Fred.

White: Well there is some consensus, which is if we’re going to be subsidizing housing and housing finance, it ought to be with a more focused, on budget, targeted, smaller program that focuses on low/moderate-income households. For the rest of the mortgage market, our vision is really that the private sector — a combination of banks, private securitizers — really can handle these markets

http://marketplace.publicradio.org/display/web/2011/04/07/pm-the-problems-with-fannie-mae-freddie-mac/

[briansd1]

Here’s an interesting article on Fan/Fred.

White: Well there is some consensus, which is if we’re going to be subsidizing housing and housing finance, it ought to be with a more focused, on budget, targeted, smaller program that focuses on low/moderate-income households. For the rest of the mortgage market, our vision is really that the private sector — a combination of banks, private securitizers — really can handle these markets

http://marketplace.publicradio.org/display/web/2011/04/07/pm-the-problems-with-fannie-mae-freddie-mac/

[briansd1]

Here’s an interesting article on Fan/Fred.

White: Well there is some consensus, which is if we’re going to be subsidizing housing and housing finance, it ought to be with a more focused, on budget, targeted, smaller program that focuses on low/moderate-income households. For the rest of the mortgage market, our vision is really that the private sector — a combination of banks, private securitizers — really can handle these markets

http://marketplace.publicradio.org/display/web/2011/04/07/pm-the-problems-with-fannie-mae-freddie-mac/

[briansd1]

Here’s an interesting article on Fan/Fred.

White: Well there is some consensus, which is if we’re going to be subsidizing housing and housing finance, it ought to be with a more focused, on budget, targeted, smaller program that focuses on low/moderate-income households. For the rest of the mortgage market, our vision is really that the private sector — a combination of banks, private securitizers — really can handle these markets

http://marketplace.publicradio.org/display/web/2011/04/07/pm-the-problems-with-fannie-mae-freddie-mac/

[briansd1]

Here’s an interesting article on Fan/Fred.

White: Well there is some consensus, which is if we’re going to be subsidizing housing and housing finance, it ought to be with a more focused, on budget, targeted, smaller program that focuses on low/moderate-income households. For the rest of the mortgage market, our vision is really that the private sector — a combination of banks, private securitizers — really can handle these markets

http://marketplace.publicradio.org/display/web/2011/04/07/pm-the-problems-with-fannie-mae-freddie-mac/

[Aecetia]

Proposed new mortgage rules may spell trouble for homebuyers: http://therealdeal.com/newyork/articles/new-little-touted-mortgage-finance-requirements-may-spell-trouble-kenneth-harney-says

One of the most difficult for many would be buyers is the “strict mandatory debt-to-income limits.”

[Aecetia]

Proposed new mortgage rules may spell trouble for homebuyers: http://therealdeal.com/newyork/articles/new-little-touted-mortgage-finance-requirements-may-spell-trouble-kenneth-harney-says

One of the most difficult for many would be buyers is the “strict mandatory debt-to-income limits.”

[Aecetia]

Proposed new mortgage rules may spell trouble for homebuyers: http://therealdeal.com/newyork/articles/new-little-touted-mortgage-finance-requirements-may-spell-trouble-kenneth-harney-says

One of the most difficult for many would be buyers is the “strict mandatory debt-to-income limits.”

[Aecetia]

Proposed new mortgage rules may spell trouble for homebuyers: http://therealdeal.com/newyork/articles/new-little-touted-mortgage-finance-requirements-may-spell-trouble-kenneth-harney-says

One of the most difficult for many would be buyers is the “strict mandatory debt-to-income limits.”

[Author]

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