What the Rate Freeze Cheerleaders need to hear…

[cr]

In today’s LA times

Mortgage relief program a slap in the face to some
Would-be buyers say they will have to delay homeownership while aid for reckless borrowers keeps prices elevated.
By Walter Hamilton
Los Angeles Times Staff Writer

December 7, 2007

When Casey Johnson and his wife moved to San Diego County three years ago, they couldn’t find a home in their price range. So they did what they thought was the sensible thing.

Rather than over-leverage themselves with a risky mortgage, the couple rented an apartment in La Jolla and waited patiently for the housing market to drift back to earth, hoping they hadn’t missed their chance to become homeowners.

But now the government-brokered plan unveiled Thursday by President Bush to ease terms on some sub-prime mortgages feels like a “slap in the face,” Johnson said.

Many people who prudently sat out the housing bubble — or resisted the urge to cash out their home equity to help finance their standard of living — share that visceral reaction. In part, they resent on principle the rush to help a segment of society that may not have acted so responsibly. But they also fear that any effort to prevent foreclosures could keep home prices from falling to an affordable level.

“I try to do the right thing, which is to have a down payment and a job and to be fiscally responsible, and it basically looks like it’s not going to pan out if this sub-prime bailout goes through,” said Johnson, a 34-year-old biologist at the Salk Institute.

Proponents of the Bush-backed plan, under which interest rates would be frozen for five years for some adjustable-rate borrowers in danger of losing their homes, say the relief effort would help unsophisticated home buyers who were misled by mortgage lenders into taking on high-risk loans. Supporters also say the program is needed to keep the housing crisis from sending the country’s economy into a recession. A vast majority of the country’s politicians appear to be in favor of the plan, with some saying it doesn’t go far enough.

But the undercurrent of antagonism to the program is strong and is lent support by an economic principle that says people tend to act more recklessly if they know they’ll be protected from the consequences. By that logic, aiding homeowners who are in trouble now will only encourage future borrowers to take on too much risk.

“Should you and I be bailing out people who lied about their incomes, bit off more than they could chew or were too lazy or ignorant to understand what kind of an obligation they were entering into?” said Michael Darda, chief economist at MKM Partners, a brokerage firm in Greenwich, Conn. “I understand there are sleazy people in the mortgage area, but what I don’t hear from politicians is: ‘Does the individual bear any responsibility for this problem?’ ”

Ed Skebe of Manhattan Beach would agree that even if some people were duped by shady mortgage brokers or loan officers, many knew they couldn’t afford the homes they bought and rolled the dice anyway in hopes that the boom had enough life left to shower them with profits.

“They hurt everyone. They drove the prices up,” said Skebe, a 61-year-old program manager at an air-freight company, who said the booming housing market prevented him from trading up to a larger home. “It’s hard for me to believe that someone didn’t realize they couldn’t afford a $600,000 home.”

The worst potential consequence, critics say, is if the government’s actions prop up a housing market that easy financing helped inflate. That, they say, would delay the eventual day of reckoning when property values finally settle at their natural levels, keeping many would-be buyers locked out of the market in the meantime.

“I’m not asking for Armageddon,” said Matthew McGuinness, a 43-year-old television writer living in Hermosa Beach. “I’m just saying, let the market go to where it should go.”

Housing and finance experts sympathize with such arguments.

“I definitely see where these people are coming from,” said Tracey Seslen, an assistant professor of finance at USC’s Marshall School of Business.

But she and others say there are no ideal public-policy options in the sub-prime crisis, and the overriding goal is to head off a sharper housing downturn that drags the economy into recession.

“The first-order objective would be to avoid a further deepening of already serious problems in housing markets,” said Stuart Gabriel, director of the Richard S. Ziman Center for Real Estate at UCLA’s Anderson School of Management. “What’s going on here is concern that this issue is big, broad and of such significant consequence that it could seriously hurt the U.S. economy.”

That’s little consolation to Johnson.

Not only could the rescue plan force him to delay his dream of homeownership, he said, but it also risks validating rampant spending and gaudy lifestyles bankrolled by free-flowing home equity.

“You see the guy making $38,000 and every weekend he’s bringing new toys into the house, a new TV or a new couch,” Johnson said. “We all end up suffering for it, whether it’s the loss of community or destruction of the environment.”

[email protected]

[pepsi]

If the rate freeze works, then the MBS investors will ask for high rates for their money, which will price even more people (even with excellent credit scores) out of market.

When even $150K income can not afford the $600K house, because of tighten lending standard and interest spread, the house price will goes even lower and over-correct……

The end result will be more default and more inventory on the market.

No matter what you do, the price has to go back to the norm. Better no bailout and let the market find its way out than having the bailout and blocking the most efficient way to the recovery.

 

[Ash Housewares]

This is the article/reporter whom I posted was looking for people to talk to. Only had one taker.

[Ash Housewares]

This is the article/reporter whom I posted was looking for people to talk to. Only had one taker.

[Ash Housewares]

This is the article/reporter whom I posted was looking for people to talk to. Only had one taker.

[Ash Housewares]

This is the article/reporter whom I posted was looking for people to talk to. Only had one taker.

[Ash Housewares]

This is the article/reporter whom I posted was looking for people to talk to. Only had one taker.

[kev374]

This is an interesting read on the long term effects of such a plan:

http://www.cnbc.com/id/22150432

IMHO, home prices will continue to decline rapidly with or without the freeze. Freezing rates doesn’t stop the market from declining. Those that NEED to sell set the comps not those that are off the market.

This freeze will ACCELERATE the decline, why? Because lending will become MUCH tighter in effect further reducing the pool of those who qualify to buy. Less people to buy, lower prices go 🙂

[rocket science]

Some of these points are similar to Rich’s latest write up.But there is another article right next to this one in the LA Times with a Q&A on the process.Cash-strapped borrowers gain time to improve credit, equityhttp://www.latimes.com/business/la-fi-subprimeqa7dec07,1,380708.story?coll=la-headlines-business&ctrack=5&cset=trueOne excerptWho qualifies for the rate freeze?

First, the residence must be owner-occupied. The borrower must be no more than 30 days late on his or her mortgage payments and have a FICO credit score of 660 or less. The loan must have been originated in January 2005 to July 2007 and have an initial reset date of January 2008 to July 2010. Also, the borrower must have less than 3% equity in the home.And then they include an example where the borrower will pay ~$28,300 less per $100K  of loan for the 30 year loan with the freeze, assuming they are paying P&I.  Or in other words the bank gets ~$28,300K LESS per $100K of loan for the 30 year loan.  Are a lot of lenders going to buy into this?And of course we can surely assume they are most likely a large percentage of interest only loans.And the instigators of this apparently didn’t read this article (courtesy of gary_broker, not sure if it has been in another thread) http://finance.yahoo.com/real-estate/article/103872/Real-Estate:-Buy,-Sell,-or-Hold;_ylt=AoYhL5ognSwCfrwaIJ3.KbC7YWsAwhich uses the rental ratio concept analysis to predict that anyone w/o any equity in their house now (see less tna 3% to qualify above) is sure to be way underwater in 5 years when it is time to reset! Bingo! Almost guarantees they all get foreclosed because they can’t refi then w/o equity!

 

And then the third LA Times article in today’s paper right next to the other two is the coup de gras.All this might just be too late……. Mortgage delinquency rate risesThe number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes…http://www.latimes.com/business/la-fi-foreclose7dec07,1,6968753.story?coll=la-headlines-business&ctrack=8&cset=true

rs

[cr]

I just wonder what % of the population is actually in support of something like this.

The perma-bulls of housing argue that 98% or more of homeowners are paying on time. If so, then why all this trouble for the irresponsible 2%?

They should make this a vote, not election year propaganda. Alt-A and Prime will make sub-prime problems look like the good ‘ol days.

[paramount]

If there is one thing I have learned in the last 5 years with the housing bubble, it’s that the financial system is rigged and engineered.

[kev374]

please watch this, 20 minutes…very good analysis!!!

http://www.paperdinero.com/BNN.aspx?id=469

[kev374]

please watch this, 20 minutes…very good analysis!!!

http://www.paperdinero.com/BNN.aspx?id=469

[kev374]

please watch this, 20 minutes…very good analysis!!!

http://www.paperdinero.com/BNN.aspx?id=469

[kev374]

please watch this, 20 minutes…very good analysis!!!

http://www.paperdinero.com/BNN.aspx?id=469

[kev374]

please watch this, 20 minutes…very good analysis!!!

http://www.paperdinero.com/BNN.aspx?id=469

[paramount]

If there is one thing I have learned in the last 5 years with the housing bubble, it’s that the financial system is rigged and engineered.

[paramount]

If there is one thing I have learned in the last 5 years with the housing bubble, it’s that the financial system is rigged and engineered.

[paramount]

If there is one thing I have learned in the last 5 years with the housing bubble, it’s that the financial system is rigged and engineered.

[paramount]

If there is one thing I have learned in the last 5 years with the housing bubble, it’s that the financial system is rigged and engineered.

[Arraya]

“I just wonder what % of the population is actually in support of something like this.”

The only percentage that matters is the tiny percentage of people on Wall Street that wrote it.

This a nothing more than a skillful ruse to keep FBs that are upside down on their homes to keep paying. If they knew what was good for them they would run as far away from that house as possible.

Do we really think the BK law that was changed back in 05 was a coincidence. It is just more leverage to keep them in their homes.

[rocket science]

Another article in the LA Times today.

Loan fix requires investors to yield

Tom Petruno

The success of the Bush administration's plan to stem home foreclosures will hinge in large part on whether the investors who own sub-prime mortgages will play along and accept lower interest payments to keep people in their houses.

He quotes one of the guys from the video link in the kev374 post above.

Josh Rosner, suggests that a rash of legal challenges to loan modificaions is inevitable.

rs

[Arraya]

What is better for the investor to take posession of an asset that they could sell for 30-50% less or have some fool pay a lower interest rate on the full vaue. Those are the investor’s choices.

[bobby]

yup. I agree with araya.
as long as it doesn’t involve tax money in this “bail out”, I don’t care if interest rate if frozen or vaporized.
the banks will be even more careful than needed when lending out money now. i.e less buyers and decreased price.
market forces are still at work.

[TheBreeze]

Yeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?

I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.

Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.

[TheBreeze]

Yeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?

I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.

Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.

[TheBreeze]

Yeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?

I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.

Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.

[TheBreeze]

Yeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?

I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.

Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.

[TheBreeze]

Yeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?

I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.

Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.

[bobby]

yup. I agree with araya.
as long as it doesn’t involve tax money in this “bail out”, I don’t care if interest rate if frozen or vaporized.
the banks will be even more careful than needed when lending out money now. i.e less buyers and decreased price.
market forces are still at work.

[bobby]

yup. I agree with araya.
as long as it doesn’t involve tax money in this “bail out”, I don’t care if interest rate if frozen or vaporized.
the banks will be even more careful than needed when lending out money now. i.e less buyers and decreased price.
market forces are still at work.

[bobby]

yup. I agree with araya.
as long as it doesn’t involve tax money in this “bail out”, I don’t care if interest rate if frozen or vaporized.
the banks will be even more careful than needed when lending out money now. i.e less buyers and decreased price.
market forces are still at work.

[bobby]

yup. I agree with araya.
as long as it doesn’t involve tax money in this “bail out”, I don’t care if interest rate if frozen or vaporized.
the banks will be even more careful than needed when lending out money now. i.e less buyers and decreased price.
market forces are still at work.

[Arraya]

What is better for the investor to take posession of an asset that they could sell for 30-50% less or have some fool pay a lower interest rate on the full vaue. Those are the investor’s choices.

[Arraya]

What is better for the investor to take posession of an asset that they could sell for 30-50% less or have some fool pay a lower interest rate on the full vaue. Those are the investor’s choices.

[Arraya]

What is better for the investor to take posession of an asset that they could sell for 30-50% less or have some fool pay a lower interest rate on the full vaue. Those are the investor’s choices.

[Arraya]

What is better for the investor to take posession of an asset that they could sell for 30-50% less or have some fool pay a lower interest rate on the full vaue. Those are the investor’s choices.

[rocket science]

Another article in the LA Times today.

Loan fix requires investors to yield

Tom Petruno

The success of the Bush administration's plan to stem home foreclosures will hinge in large part on whether the investors who own sub-prime mortgages will play along and accept lower interest payments to keep people in their houses.

He quotes one of the guys from the video link in the kev374 post above.

Josh Rosner, suggests that a rash of legal challenges to loan modificaions is inevitable.

rs

[rocket science]

Another article in the LA Times today.

Loan fix requires investors to yield

Tom Petruno

The success of the Bush administration's plan to stem home foreclosures will hinge in large part on whether the investors who own sub-prime mortgages will play along and accept lower interest payments to keep people in their houses.

He quotes one of the guys from the video link in the kev374 post above.

Josh Rosner, suggests that a rash of legal challenges to loan modificaions is inevitable.

rs

[rocket science]

Another article in the LA Times today.

Loan fix requires investors to yield

Tom Petruno

The success of the Bush administration's plan to stem home foreclosures will hinge in large part on whether the investors who own sub-prime mortgages will play along and accept lower interest payments to keep people in their houses.

He quotes one of the guys from the video link in the kev374 post above.

Josh Rosner, suggests that a rash of legal challenges to loan modificaions is inevitable.

rs

[rocket science]

Another article in the LA Times today.

Loan fix requires investors to yield

Tom Petruno

The success of the Bush administration's plan to stem home foreclosures will hinge in large part on whether the investors who own sub-prime mortgages will play along and accept lower interest payments to keep people in their houses.

He quotes one of the guys from the video link in the kev374 post above.

Josh Rosner, suggests that a rash of legal challenges to loan modificaions is inevitable.

rs

[Arraya]

“I just wonder what % of the population is actually in support of something like this.”

The only percentage that matters is the tiny percentage of people on Wall Street that wrote it.

This a nothing more than a skillful ruse to keep FBs that are upside down on their homes to keep paying. If they knew what was good for them they would run as far away from that house as possible.

Do we really think the BK law that was changed back in 05 was a coincidence. It is just more leverage to keep them in their homes.

[Arraya]

“I just wonder what % of the population is actually in support of something like this.”

The only percentage that matters is the tiny percentage of people on Wall Street that wrote it.

This a nothing more than a skillful ruse to keep FBs that are upside down on their homes to keep paying. If they knew what was good for them they would run as far away from that house as possible.

Do we really think the BK law that was changed back in 05 was a coincidence. It is just more leverage to keep them in their homes.

[Arraya]

“I just wonder what % of the population is actually in support of something like this.”

The only percentage that matters is the tiny percentage of people on Wall Street that wrote it.

This a nothing more than a skillful ruse to keep FBs that are upside down on their homes to keep paying. If they knew what was good for them they would run as far away from that house as possible.

Do we really think the BK law that was changed back in 05 was a coincidence. It is just more leverage to keep them in their homes.

[Arraya]

“I just wonder what % of the population is actually in support of something like this.”

The only percentage that matters is the tiny percentage of people on Wall Street that wrote it.

This a nothing more than a skillful ruse to keep FBs that are upside down on their homes to keep paying. If they knew what was good for them they would run as far away from that house as possible.

Do we really think the BK law that was changed back in 05 was a coincidence. It is just more leverage to keep them in their homes.

[cr]

I just wonder what % of the population is actually in support of something like this.

The perma-bulls of housing argue that 98% or more of homeowners are paying on time. If so, then why all this trouble for the irresponsible 2%?

They should make this a vote, not election year propaganda. Alt-A and Prime will make sub-prime problems look like the good ‘ol days.

[cr]

I just wonder what % of the population is actually in support of something like this.

The perma-bulls of housing argue that 98% or more of homeowners are paying on time. If so, then why all this trouble for the irresponsible 2%?

They should make this a vote, not election year propaganda. Alt-A and Prime will make sub-prime problems look like the good ‘ol days.

[cr]

I just wonder what % of the population is actually in support of something like this.

The perma-bulls of housing argue that 98% or more of homeowners are paying on time. If so, then why all this trouble for the irresponsible 2%?

They should make this a vote, not election year propaganda. Alt-A and Prime will make sub-prime problems look like the good ‘ol days.

[cr]

I just wonder what % of the population is actually in support of something like this.

The perma-bulls of housing argue that 98% or more of homeowners are paying on time. If so, then why all this trouble for the irresponsible 2%?

They should make this a vote, not election year propaganda. Alt-A and Prime will make sub-prime problems look like the good ‘ol days.

[rocket science]

Some of these points are similar to Rich’s latest write up.But there is another article right next to this one in the LA Times with a Q&A on the process.Cash-strapped borrowers gain time to improve credit, equityhttp://www.latimes.com/business/la-fi-subprimeqa7dec07,1,380708.story?coll=la-headlines-business&ctrack=5&cset=trueOne excerptWho qualifies for the rate freeze?

First, the residence must be owner-occupied. The borrower must be no more than 30 days late on his or her mortgage payments and have a FICO credit score of 660 or less. The loan must have been originated in January 2005 to July 2007 and have an initial reset date of January 2008 to July 2010. Also, the borrower must have less than 3% equity in the home.And then they include an example where the borrower will pay ~$28,300 less per $100K  of loan for the 30 year loan with the freeze, assuming they are paying P&I.  Or in other words the bank gets ~$28,300K LESS per $100K of loan for the 30 year loan.  Are a lot of lenders going to buy into this?And of course we can surely assume they are most likely a large percentage of interest only loans.And the instigators of this apparently didn’t read this article (courtesy of gary_broker, not sure if it has been in another thread) http://finance.yahoo.com/real-estate/article/103872/Real-Estate:-Buy,-Sell,-or-Hold;_ylt=AoYhL5ognSwCfrwaIJ3.KbC7YWsAwhich uses the rental ratio concept analysis to predict that anyone w/o any equity in their house now (see less tna 3% to qualify above) is sure to be way underwater in 5 years when it is time to reset! Bingo! Almost guarantees they all get foreclosed because they can’t refi then w/o equity!

 

And then the third LA Times article in today’s paper right next to the other two is the coup de gras.All this might just be too late……. Mortgage delinquency rate risesThe number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes…http://www.latimes.com/business/la-fi-foreclose7dec07,1,6968753.story?coll=la-headlines-business&ctrack=8&cset=true

rs

[rocket science]

Some of these points are similar to Rich’s latest write up.But there is another article right next to this one in the LA Times with a Q&A on the process.Cash-strapped borrowers gain time to improve credit, equityhttp://www.latimes.com/business/la-fi-subprimeqa7dec07,1,380708.story?coll=la-headlines-business&ctrack=5&cset=trueOne excerptWho qualifies for the rate freeze?

First, the residence must be owner-occupied. The borrower must be no more than 30 days late on his or her mortgage payments and have a FICO credit score of 660 or less. The loan must have been originated in January 2005 to July 2007 and have an initial reset date of January 2008 to July 2010. Also, the borrower must have less than 3% equity in the home.And then they include an example where the borrower will pay ~$28,300 less per $100K  of loan for the 30 year loan with the freeze, assuming they are paying P&I.  Or in other words the bank gets ~$28,300K LESS per $100K of loan for the 30 year loan.  Are a lot of lenders going to buy into this?And of course we can surely assume they are most likely a large percentage of interest only loans.And the instigators of this apparently didn’t read this article (courtesy of gary_broker, not sure if it has been in another thread) http://finance.yahoo.com/real-estate/article/103872/Real-Estate:-Buy,-Sell,-or-Hold;_ylt=AoYhL5ognSwCfrwaIJ3.KbC7YWsAwhich uses the rental ratio concept analysis to predict that anyone w/o any equity in their house now (see less tna 3% to qualify above) is sure to be way underwater in 5 years when it is time to reset! Bingo! Almost guarantees they all get foreclosed because they can’t refi then w/o equity!

 

And then the third LA Times article in today’s paper right next to the other two is the coup de gras.All this might just be too late……. Mortgage delinquency rate risesThe number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes…http://www.latimes.com/business/la-fi-foreclose7dec07,1,6968753.story?coll=la-headlines-business&ctrack=8&cset=true

rs

[rocket science]

Some of these points are similar to Rich’s latest write up.But there is another article right next to this one in the LA Times with a Q&A on the process.Cash-strapped borrowers gain time to improve credit, equityhttp://www.latimes.com/business/la-fi-subprimeqa7dec07,1,380708.story?coll=la-headlines-business&ctrack=5&cset=trueOne excerptWho qualifies for the rate freeze?

First, the residence must be owner-occupied. The borrower must be no more than 30 days late on his or her mortgage payments and have a FICO credit score of 660 or less. The loan must have been originated in January 2005 to July 2007 and have an initial reset date of January 2008 to July 2010. Also, the borrower must have less than 3% equity in the home.And then they include an example where the borrower will pay ~$28,300 less per $100K  of loan for the 30 year loan with the freeze, assuming they are paying P&I.  Or in other words the bank gets ~$28,300K LESS per $100K of loan for the 30 year loan.  Are a lot of lenders going to buy into this?And of course we can surely assume they are most likely a large percentage of interest only loans.And the instigators of this apparently didn’t read this article (courtesy of gary_broker, not sure if it has been in another thread) http://finance.yahoo.com/real-estate/article/103872/Real-Estate:-Buy,-Sell,-or-Hold;_ylt=AoYhL5ognSwCfrwaIJ3.KbC7YWsAwhich uses the rental ratio concept analysis to predict that anyone w/o any equity in their house now (see less tna 3% to qualify above) is sure to be way underwater in 5 years when it is time to reset! Bingo! Almost guarantees they all get foreclosed because they can’t refi then w/o equity!

 

And then the third LA Times article in today’s paper right next to the other two is the coup de gras.All this might just be too late……. Mortgage delinquency rate risesThe number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes…http://www.latimes.com/business/la-fi-foreclose7dec07,1,6968753.story?coll=la-headlines-business&ctrack=8&cset=true

rs

[rocket science]

Some of these points are similar to Rich’s latest write up.But there is another article right next to this one in the LA Times with a Q&A on the process.Cash-strapped borrowers gain time to improve credit, equityhttp://www.latimes.com/business/la-fi-subprimeqa7dec07,1,380708.story?coll=la-headlines-business&ctrack=5&cset=trueOne excerptWho qualifies for the rate freeze?

First, the residence must be owner-occupied. The borrower must be no more than 30 days late on his or her mortgage payments and have a FICO credit score of 660 or less. The loan must have been originated in January 2005 to July 2007 and have an initial reset date of January 2008 to July 2010. Also, the borrower must have less than 3% equity in the home.And then they include an example where the borrower will pay ~$28,300 less per $100K  of loan for the 30 year loan with the freeze, assuming they are paying P&I.  Or in other words the bank gets ~$28,300K LESS per $100K of loan for the 30 year loan.  Are a lot of lenders going to buy into this?And of course we can surely assume they are most likely a large percentage of interest only loans.And the instigators of this apparently didn’t read this article (courtesy of gary_broker, not sure if it has been in another thread) http://finance.yahoo.com/real-estate/article/103872/Real-Estate:-Buy,-Sell,-or-Hold;_ylt=AoYhL5ognSwCfrwaIJ3.KbC7YWsAwhich uses the rental ratio concept analysis to predict that anyone w/o any equity in their house now (see less tna 3% to qualify above) is sure to be way underwater in 5 years when it is time to reset! Bingo! Almost guarantees they all get foreclosed because they can’t refi then w/o equity!

 

And then the third LA Times article in today’s paper right next to the other two is the coup de gras.All this might just be too late……. Mortgage delinquency rate risesThe number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes…http://www.latimes.com/business/la-fi-foreclose7dec07,1,6968753.story?coll=la-headlines-business&ctrack=8&cset=true

rs

[kev374]

This is an interesting read on the long term effects of such a plan:

http://www.cnbc.com/id/22150432

IMHO, home prices will continue to decline rapidly with or without the freeze. Freezing rates doesn’t stop the market from declining. Those that NEED to sell set the comps not those that are off the market.

This freeze will ACCELERATE the decline, why? Because lending will become MUCH tighter in effect further reducing the pool of those who qualify to buy. Less people to buy, lower prices go 🙂

[kev374]

This is an interesting read on the long term effects of such a plan:

http://www.cnbc.com/id/22150432

IMHO, home prices will continue to decline rapidly with or without the freeze. Freezing rates doesn’t stop the market from declining. Those that NEED to sell set the comps not those that are off the market.

This freeze will ACCELERATE the decline, why? Because lending will become MUCH tighter in effect further reducing the pool of those who qualify to buy. Less people to buy, lower prices go 🙂

[kev374]

This is an interesting read on the long term effects of such a plan:

http://www.cnbc.com/id/22150432

IMHO, home prices will continue to decline rapidly with or without the freeze. Freezing rates doesn’t stop the market from declining. Those that NEED to sell set the comps not those that are off the market.

This freeze will ACCELERATE the decline, why? Because lending will become MUCH tighter in effect further reducing the pool of those who qualify to buy. Less people to buy, lower prices go 🙂

[kev374]

This is an interesting read on the long term effects of such a plan:

http://www.cnbc.com/id/22150432

IMHO, home prices will continue to decline rapidly with or without the freeze. Freezing rates doesn’t stop the market from declining. Those that NEED to sell set the comps not those that are off the market.

This freeze will ACCELERATE the decline, why? Because lending will become MUCH tighter in effect further reducing the pool of those who qualify to buy. Less people to buy, lower prices go 🙂

[NeetaT]

If you are correct, I will be in low-ball heaven. Of course, it will eat up most of my savings, but none-the-less. If interest rates drive prices, it is a good thing. If a 10% interest rate makes a $500k house a $250k house, then I will pay property tax on $250k. People don’t realize the extent of the property tax burden, because it is absorbed and hidden in the mortgage and thus ignored. I bought my last home with cash and will buy my next home with cash and let me tell you that property tax stings you like a wasp when it is realized.

[NeetaT]

If you are correct, I will be in low-ball heaven. Of course, it will eat up most of my savings, but none-the-less. If interest rates drive prices, it is a good thing. If a 10% interest rate makes a $500k house a $250k house, then I will pay property tax on $250k. People don’t realize the extent of the property tax burden, because it is absorbed and hidden in the mortgage and thus ignored. I bought my last home with cash and will buy my next home with cash and let me tell you that property tax stings you like a wasp when it is realized.

[NeetaT]

If you are correct, I will be in low-ball heaven. Of course, it will eat up most of my savings, but none-the-less. If interest rates drive prices, it is a good thing. If a 10% interest rate makes a $500k house a $250k house, then I will pay property tax on $250k. People don’t realize the extent of the property tax burden, because it is absorbed and hidden in the mortgage and thus ignored. I bought my last home with cash and will buy my next home with cash and let me tell you that property tax stings you like a wasp when it is realized.

[NeetaT]

If you are correct, I will be in low-ball heaven. Of course, it will eat up most of my savings, but none-the-less. If interest rates drive prices, it is a good thing. If a 10% interest rate makes a $500k house a $250k house, then I will pay property tax on $250k. People don’t realize the extent of the property tax burden, because it is absorbed and hidden in the mortgage and thus ignored. I bought my last home with cash and will buy my next home with cash and let me tell you that property tax stings you like a wasp when it is realized.

[NeetaT]

If you are correct, I will be in low-ball heaven. Of course, it will eat up most of my savings, but none-the-less. If interest rates drive prices, it is a good thing. If a 10% interest rate makes a $500k house a $250k house, then I will pay property tax on $250k. People don’t realize the extent of the property tax burden, because it is absorbed and hidden in the mortgage and thus ignored. I bought my last home with cash and will buy my next home with cash and let me tell you that property tax stings you like a wasp when it is realized.

[pepsi]

If the rate freeze works, then the MBS investors will ask for high rates for their money, which will price even more people (even with excellent credit scores) out of market.

When even $150K income can not afford the $600K house, because of tighten lending standard and interest spread, the house price will goes even lower and over-correct……

The end result will be more default and more inventory on the market.

No matter what you do, the price has to go back to the norm. Better no bailout and let the market find its way out than having the bailout and blocking the most efficient way to the recovery.

 

[pepsi]

If the rate freeze works, then the MBS investors will ask for high rates for their money, which will price even more people (even with excellent credit scores) out of market.

When even $150K income can not afford the $600K house, because of tighten lending standard and interest spread, the house price will goes even lower and over-correct……

The end result will be more default and more inventory on the market.

No matter what you do, the price has to go back to the norm. Better no bailout and let the market find its way out than having the bailout and blocking the most efficient way to the recovery.

 

[pepsi]

If the rate freeze works, then the MBS investors will ask for high rates for their money, which will price even more people (even with excellent credit scores) out of market.

When even $150K income can not afford the $600K house, because of tighten lending standard and interest spread, the house price will goes even lower and over-correct……

The end result will be more default and more inventory on the market.

No matter what you do, the price has to go back to the norm. Better no bailout and let the market find its way out than having the bailout and blocking the most efficient way to the recovery.

 

[pepsi]

If the rate freeze works, then the MBS investors will ask for high rates for their money, which will price even more people (even with excellent credit scores) out of market.

When even $150K income can not afford the $600K house, because of tighten lending standard and interest spread, the house price will goes even lower and over-correct……

The end result will be more default and more inventory on the market.

No matter what you do, the price has to go back to the norm. Better no bailout and let the market find its way out than having the bailout and blocking the most efficient way to the recovery.

 

[CAwireman]

Really good posts, esp Coop and R Science

The freeze could be largely symbolic and political.

Too much downward real and psychological pressure may be
in effect to bring this aircraft out of a nose dive.

Its a measured act of desperation. If the govt wasn’t frightened, the plan wouldn’t have been floated. Its presence merely confirms what we’ve been batting around here for years, loose and deceptive lending by the banks, and reckless spending by home buyers have aligned and the result is dire.

Look at Rich’s report on the September Case-Shiller numbers. Those look bad. Look at the slope of the three tiers. None of those look good. And, they only show activity thru September. Any bets on Oct, Nov, Dec, or in 2008?

We went looking at homes to keep our feelers out last weekend. A seller in CV had listed a home for ~$835K. The down-the-street neighbors who waited for us outside and who also viewed the home, stopped us and said they are selling the same model of home for more like $730K (or lower w/o agents ~$700K?) On the same street, similar model home prices vary by $100K OR MORE!

The mortgage freeze isn’t going to have any significant affect on this market, IMHO. It will continue spiral down.

HiggyBaby

[SD Realtor]

I got to sneak out and play hockey today… the big conversation amongst the men was this bailout…lots of angst because this crew of guys are all pretty well educated and prudent… most are homeowners although some are renters. In all cases they are all fiscally responsible and everyone was pretty pissed off about the entire shmear…

I am sure you guys have all heard the infamous rumor about Paulson joining the Bush team for future immunity when it is found that GS hoodwinked investors… That one made me laugh today.

At any rate I couldn’t agree more about all of this being

a – about getting votes,
b – having nothing to do with helping people
c – most likely to be challenged by investors
d – not applicable to many people
e – not really having any major effect on the slide

However as you all know it all does piss me off. Furthermore I think maybe perhaps the backlash to it is something I underestimated which is a very good thing.

Still I am worried about it and the future ploys, announcements, schemes… whatever you want to call them. As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

SD Realtor

[Arraya]

As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

This is the problem they are all like that. Trciking us that something is good for the populace when it is only good for corporations is the norm in washington. Look at iraq, ethanol subsidies etc… The bottom line is until our politicans stop being corporate slaves nothing will change and they will continue to destroy our country.

IMO most people have their anger misdirected about this subject. They think it is about getting a free lunch. It is obviously not, it is about again tricking financially un-savvy people into a bad idea again. This is what we should all be mad about.

[SD Realtor]

Arraya you have made alot of insightful posts on the subject and I could not agree more with them.

SD Realtor

[NotCranky]

I wonder what is going to happen when it becomes obvious that the industry is applying a bifurcated rate system with the help of the government. One set of rates for people who can get a welfare rate(to protect the lending system) and another of higher rates, later down the road, for people who behaved responsibly and were not overly leveraged at the time the welfare rates were being given out. So the second group waits for the housing market to fall like it should but pay as much monthly as the welfare cases anyway because of higher rates with no guaranty of when they will come down again. Nice. Unfortuantely I think the group that would be most enfuriated by this is small and resembles many piggs. The rest of us are to some degree conned by the potential benefits or perhaps have the means and can see how to exploit them.

[NotCranky]

I wonder what is going to happen when it becomes obvious that the industry is applying a bifurcated rate system with the help of the government. One set of rates for people who can get a welfare rate(to protect the lending system) and another of higher rates, later down the road, for people who behaved responsibly and were not overly leveraged at the time the welfare rates were being given out. So the second group waits for the housing market to fall like it should but pay as much monthly as the welfare cases anyway because of higher rates with no guaranty of when they will come down again. Nice. Unfortuantely I think the group that would be most enfuriated by this is small and resembles many piggs. The rest of us are to some degree conned by the potential benefits or perhaps have the means and can see how to exploit them.

[NotCranky]

I wonder what is going to happen when it becomes obvious that the industry is applying a bifurcated rate system with the help of the government. One set of rates for people who can get a welfare rate(to protect the lending system) and another of higher rates, later down the road, for people who behaved responsibly and were not overly leveraged at the time the welfare rates were being given out. So the second group waits for the housing market to fall like it should but pay as much monthly as the welfare cases anyway because of higher rates with no guaranty of when they will come down again. Nice. Unfortuantely I think the group that would be most enfuriated by this is small and resembles many piggs. The rest of us are to some degree conned by the potential benefits or perhaps have the means and can see how to exploit them.

[NotCranky]

I wonder what is going to happen when it becomes obvious that the industry is applying a bifurcated rate system with the help of the government. One set of rates for people who can get a welfare rate(to protect the lending system) and another of higher rates, later down the road, for people who behaved responsibly and were not overly leveraged at the time the welfare rates were being given out. So the second group waits for the housing market to fall like it should but pay as much monthly as the welfare cases anyway because of higher rates with no guaranty of when they will come down again. Nice. Unfortuantely I think the group that would be most enfuriated by this is small and resembles many piggs. The rest of us are to some degree conned by the potential benefits or perhaps have the means and can see how to exploit them.

[NotCranky]

I wonder what is going to happen when it becomes obvious that the industry is applying a bifurcated rate system with the help of the government. One set of rates for people who can get a welfare rate(to protect the lending system) and another of higher rates, later down the road, for people who behaved responsibly and were not overly leveraged at the time the welfare rates were being given out. So the second group waits for the housing market to fall like it should but pay as much monthly as the welfare cases anyway because of higher rates with no guaranty of when they will come down again. Nice. Unfortuantely I think the group that would be most enfuriated by this is small and resembles many piggs. The rest of us are to some degree conned by the potential benefits or perhaps have the means and can see how to exploit them.

[SD Realtor]

Arraya you have made alot of insightful posts on the subject and I could not agree more with them.

SD Realtor

[SD Realtor]

Arraya you have made alot of insightful posts on the subject and I could not agree more with them.

SD Realtor

[SD Realtor]

Arraya you have made alot of insightful posts on the subject and I could not agree more with them.

SD Realtor

[SD Realtor]

Arraya you have made alot of insightful posts on the subject and I could not agree more with them.

SD Realtor

[Arraya]

As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

This is the problem they are all like that. Trciking us that something is good for the populace when it is only good for corporations is the norm in washington. Look at iraq, ethanol subsidies etc… The bottom line is until our politicans stop being corporate slaves nothing will change and they will continue to destroy our country.

IMO most people have their anger misdirected about this subject. They think it is about getting a free lunch. It is obviously not, it is about again tricking financially un-savvy people into a bad idea again. This is what we should all be mad about.

[Arraya]

As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

This is the problem they are all like that. Trciking us that something is good for the populace when it is only good for corporations is the norm in washington. Look at iraq, ethanol subsidies etc… The bottom line is until our politicans stop being corporate slaves nothing will change and they will continue to destroy our country.

IMO most people have their anger misdirected about this subject. They think it is about getting a free lunch. It is obviously not, it is about again tricking financially un-savvy people into a bad idea again. This is what we should all be mad about.

[Arraya]

As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

This is the problem they are all like that. Trciking us that something is good for the populace when it is only good for corporations is the norm in washington. Look at iraq, ethanol subsidies etc… The bottom line is until our politicans stop being corporate slaves nothing will change and they will continue to destroy our country.

IMO most people have their anger misdirected about this subject. They think it is about getting a free lunch. It is obviously not, it is about again tricking financially un-savvy people into a bad idea again. This is what we should all be mad about.

[Arraya]

As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

This is the problem they are all like that. Trciking us that something is good for the populace when it is only good for corporations is the norm in washington. Look at iraq, ethanol subsidies etc… The bottom line is until our politicans stop being corporate slaves nothing will change and they will continue to destroy our country.

IMO most people have their anger misdirected about this subject. They think it is about getting a free lunch. It is obviously not, it is about again tricking financially un-savvy people into a bad idea again. This is what we should all be mad about.

[SD Realtor]

I got to sneak out and play hockey today… the big conversation amongst the men was this bailout…lots of angst because this crew of guys are all pretty well educated and prudent… most are homeowners although some are renters. In all cases they are all fiscally responsible and everyone was pretty pissed off about the entire shmear…

I am sure you guys have all heard the infamous rumor about Paulson joining the Bush team for future immunity when it is found that GS hoodwinked investors… That one made me laugh today.

At any rate I couldn’t agree more about all of this being

a – about getting votes,
b – having nothing to do with helping people
c – most likely to be challenged by investors
d – not applicable to many people
e – not really having any major effect on the slide

However as you all know it all does piss me off. Furthermore I think maybe perhaps the backlash to it is something I underestimated which is a very good thing.

Still I am worried about it and the future ploys, announcements, schemes… whatever you want to call them. As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

SD Realtor

[SD Realtor]

I got to sneak out and play hockey today… the big conversation amongst the men was this bailout…lots of angst because this crew of guys are all pretty well educated and prudent… most are homeowners although some are renters. In all cases they are all fiscally responsible and everyone was pretty pissed off about the entire shmear…

I am sure you guys have all heard the infamous rumor about Paulson joining the Bush team for future immunity when it is found that GS hoodwinked investors… That one made me laugh today.

At any rate I couldn’t agree more about all of this being

a – about getting votes,
b – having nothing to do with helping people
c – most likely to be challenged by investors
d – not applicable to many people
e – not really having any major effect on the slide

However as you all know it all does piss me off. Furthermore I think maybe perhaps the backlash to it is something I underestimated which is a very good thing.

Still I am worried about it and the future ploys, announcements, schemes… whatever you want to call them. As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

SD Realtor

[SD Realtor]

I got to sneak out and play hockey today… the big conversation amongst the men was this bailout…lots of angst because this crew of guys are all pretty well educated and prudent… most are homeowners although some are renters. In all cases they are all fiscally responsible and everyone was pretty pissed off about the entire shmear…

I am sure you guys have all heard the infamous rumor about Paulson joining the Bush team for future immunity when it is found that GS hoodwinked investors… That one made me laugh today.

At any rate I couldn’t agree more about all of this being

a – about getting votes,
b – having nothing to do with helping people
c – most likely to be challenged by investors
d – not applicable to many people
e – not really having any major effect on the slide

However as you all know it all does piss me off. Furthermore I think maybe perhaps the backlash to it is something I underestimated which is a very good thing.

Still I am worried about it and the future ploys, announcements, schemes… whatever you want to call them. As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

SD Realtor

[SD Realtor]

I got to sneak out and play hockey today… the big conversation amongst the men was this bailout…lots of angst because this crew of guys are all pretty well educated and prudent… most are homeowners although some are renters. In all cases they are all fiscally responsible and everyone was pretty pissed off about the entire shmear…

I am sure you guys have all heard the infamous rumor about Paulson joining the Bush team for future immunity when it is found that GS hoodwinked investors… That one made me laugh today.

At any rate I couldn’t agree more about all of this being

a – about getting votes,
b – having nothing to do with helping people
c – most likely to be challenged by investors
d – not applicable to many people
e – not really having any major effect on the slide

However as you all know it all does piss me off. Furthermore I think maybe perhaps the backlash to it is something I underestimated which is a very good thing.

Still I am worried about it and the future ploys, announcements, schemes… whatever you want to call them. As long as there are people like Dodd, Schumer, Hillary, Paulson, and others… there will be pandering to lowest common denominator.

SD Realtor

[CAwireman]

Really good posts, esp Coop and R Science

The freeze could be largely symbolic and political.

Too much downward real and psychological pressure may be
in effect to bring this aircraft out of a nose dive.

Its a measured act of desperation. If the govt wasn’t frightened, the plan wouldn’t have been floated. Its presence merely confirms what we’ve been batting around here for years, loose and deceptive lending by the banks, and reckless spending by home buyers have aligned and the result is dire.

Look at Rich’s report on the September Case-Shiller numbers. Those look bad. Look at the slope of the three tiers. None of those look good. And, they only show activity thru September. Any bets on Oct, Nov, Dec, or in 2008?

We went looking at homes to keep our feelers out last weekend. A seller in CV had listed a home for ~$835K. The down-the-street neighbors who waited for us outside and who also viewed the home, stopped us and said they are selling the same model of home for more like $730K (or lower w/o agents ~$700K?) On the same street, similar model home prices vary by $100K OR MORE!

The mortgage freeze isn’t going to have any significant affect on this market, IMHO. It will continue spiral down.

HiggyBaby

[CAwireman]

Really good posts, esp Coop and R Science

The freeze could be largely symbolic and political.

Too much downward real and psychological pressure may be
in effect to bring this aircraft out of a nose dive.

Its a measured act of desperation. If the govt wasn’t frightened, the plan wouldn’t have been floated. Its presence merely confirms what we’ve been batting around here for years, loose and deceptive lending by the banks, and reckless spending by home buyers have aligned and the result is dire.

Look at Rich’s report on the September Case-Shiller numbers. Those look bad. Look at the slope of the three tiers. None of those look good. And, they only show activity thru September. Any bets on Oct, Nov, Dec, or in 2008?

We went looking at homes to keep our feelers out last weekend. A seller in CV had listed a home for ~$835K. The down-the-street neighbors who waited for us outside and who also viewed the home, stopped us and said they are selling the same model of home for more like $730K (or lower w/o agents ~$700K?) On the same street, similar model home prices vary by $100K OR MORE!

The mortgage freeze isn’t going to have any significant affect on this market, IMHO. It will continue spiral down.

HiggyBaby

[CAwireman]

Really good posts, esp Coop and R Science

The freeze could be largely symbolic and political.

Too much downward real and psychological pressure may be
in effect to bring this aircraft out of a nose dive.

Its a measured act of desperation. If the govt wasn’t frightened, the plan wouldn’t have been floated. Its presence merely confirms what we’ve been batting around here for years, loose and deceptive lending by the banks, and reckless spending by home buyers have aligned and the result is dire.

Look at Rich’s report on the September Case-Shiller numbers. Those look bad. Look at the slope of the three tiers. None of those look good. And, they only show activity thru September. Any bets on Oct, Nov, Dec, or in 2008?

We went looking at homes to keep our feelers out last weekend. A seller in CV had listed a home for ~$835K. The down-the-street neighbors who waited for us outside and who also viewed the home, stopped us and said they are selling the same model of home for more like $730K (or lower w/o agents ~$700K?) On the same street, similar model home prices vary by $100K OR MORE!

The mortgage freeze isn’t going to have any significant affect on this market, IMHO. It will continue spiral down.

HiggyBaby

[CAwireman]

Really good posts, esp Coop and R Science

The freeze could be largely symbolic and political.

Too much downward real and psychological pressure may be
in effect to bring this aircraft out of a nose dive.

Its a measured act of desperation. If the govt wasn’t frightened, the plan wouldn’t have been floated. Its presence merely confirms what we’ve been batting around here for years, loose and deceptive lending by the banks, and reckless spending by home buyers have aligned and the result is dire.

Look at Rich’s report on the September Case-Shiller numbers. Those look bad. Look at the slope of the three tiers. None of those look good. And, they only show activity thru September. Any bets on Oct, Nov, Dec, or in 2008?

We went looking at homes to keep our feelers out last weekend. A seller in CV had listed a home for ~$835K. The down-the-street neighbors who waited for us outside and who also viewed the home, stopped us and said they are selling the same model of home for more like $730K (or lower w/o agents ~$700K?) On the same street, similar model home prices vary by $100K OR MORE!

The mortgage freeze isn’t going to have any significant affect on this market, IMHO. It will continue spiral down.

HiggyBaby

[Author]

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