What’s with the Kool-Aid doom-and-gloom “Jumbo loans are going to disappear”

[kev374]

fat_lazy, you’re correct jumbo loans aren’t going to “vanish”..I don’t think anyone is saying that, but demand is going to contract by probably 95+% to a trickle. This will virtually halt activity in the region, infact that is what is happening before our eyes right now.

How many well doc’d, 20% down, high credit score, high income buyers do you know that can buy $600k+ properties?? 20% down in itself is $120k cash + fees. How many have this kind of liquidity? The person who has this much liquidity is most likely already a homeowner or not looking to buy at the bottom end of the market, in that case who is going to buy the $500-600k “starter” homes? As for move up buyers with a lot of equity who is going to buy their 600k homes if they cannot find qualified buyers for their place first? And what makes you think that move up buyers are going to buy because they may as well wait for prices to come down to get a better tax basis.

Nothing adds up here except one reality…the market is going to crash and burn like no tommorow so that it is back to fundamentals that were in existence before this mania.

Remember that this SEVERE credit crunch is only a few weeks old and we do not currently know the effects until new reports come out. Wait a month or two and we will see SHOCKWAVES through this market because of this. One doesn’t have to be a rocket scientist to figure it out.

[patientrenter]

HLS, in the debates currently raging about how to bail out homeowners, the majority view is that underwater homeowners who don’t pay according to the terms of their loan should receive only mild penalties. Mad Jim Cramer has already given his mail-back-the-keys advice to all and sundry.

If I were lending my own money for someone else to buy a $800K California home, I’d notice all these debates, and I’d figure out that the buyer has a lot more incentives to walk, or demand a huge loan mod, than pay me what he promised if the home price dropped by 30% in the next 2-5 years. And that’s assuming I had an appraisal I could trust, something most mortgage investors don’t have.

For how much longer will the mortgage investors be dumber than little ol’ me? Surely not forever. The days of less than 20% down in S Cal have to be limited. The credit quality of the borrowers won’t have much impact.

Patient renter in OC

[patientrenter]

HLS, in the debates currently raging about how to bail out homeowners, the majority view is that underwater homeowners who don’t pay according to the terms of their loan should receive only mild penalties. Mad Jim Cramer has already given his mail-back-the-keys advice to all and sundry.

If I were lending my own money for someone else to buy a $800K California home, I’d notice all these debates, and I’d figure out that the buyer has a lot more incentives to walk, or demand a huge loan mod, than pay me what he promised if the home price dropped by 30% in the next 2-5 years. And that’s assuming I had an appraisal I could trust, something most mortgage investors don’t have.

For how much longer will the mortgage investors be dumber than little ol’ me? Surely not forever. The days of less than 20% down in S Cal have to be limited. The credit quality of the borrowers won’t have much impact.

Patient renter in OC

[patientrenter]

HLS, in the debates currently raging about how to bail out homeowners, the majority view is that underwater homeowners who don’t pay according to the terms of their loan should receive only mild penalties. Mad Jim Cramer has already given his mail-back-the-keys advice to all and sundry.

If I were lending my own money for someone else to buy a $800K California home, I’d notice all these debates, and I’d figure out that the buyer has a lot more incentives to walk, or demand a huge loan mod, than pay me what he promised if the home price dropped by 30% in the next 2-5 years. And that’s assuming I had an appraisal I could trust, something most mortgage investors don’t have.

For how much longer will the mortgage investors be dumber than little ol’ me? Surely not forever. The days of less than 20% down in S Cal have to be limited. The credit quality of the borrowers won’t have much impact.

Patient renter in OC

[Coronita]

fat_lazy, you're correct jumbo loans aren't going to "vanish"..I don't think anyone is saying that, but demand is going to contract by probably 95+% to a trickle. This will virtually halt activity in the region, infact that is what is happening before our eyes right now.

 

I guess my vision is warped. Out of all the people I know, I can only think of 1 couple that might not qualify for a jumbo. But then again, most of the people I know have already bought and aren't really looking to buy again. 

[Coronita]

fat_lazy, you're correct jumbo loans aren't going to "vanish"..I don't think anyone is saying that, but demand is going to contract by probably 95+% to a trickle. This will virtually halt activity in the region, infact that is what is happening before our eyes right now.

 

I guess my vision is warped. Out of all the people I know, I can only think of 1 couple that might not qualify for a jumbo. But then again, most of the people I know have already bought and aren't really looking to buy again. 

[Coronita]

fat_lazy, you're correct jumbo loans aren't going to "vanish"..I don't think anyone is saying that, but demand is going to contract by probably 95+% to a trickle. This will virtually halt activity in the region, infact that is what is happening before our eyes right now.

 

I guess my vision is warped. Out of all the people I know, I can only think of 1 couple that might not qualify for a jumbo. But then again, most of the people I know have already bought and aren't really looking to buy again. 

[JWM in SD]

“But then again, most of the people I know have already bought and aren’t really looking to buy again.”

Which is why you don’t seem to understand the dilemma. Those people you know, are not the ones who are going to set the comps in next few years.

[JWM in SD]

“But then again, most of the people I know have already bought and aren’t really looking to buy again.”

Which is why you don’t seem to understand the dilemma. Those people you know, are not the ones who are going to set the comps in next few years.

[JWM in SD]

“But then again, most of the people I know have already bought and aren’t really looking to buy again.”

Which is why you don’t seem to understand the dilemma. Those people you know, are not the ones who are going to set the comps in next few years.

[kev374]

watch this:

http://www.paperdinero.com/BNN.aspx?id=336

Remember that for ALL borrowers the rates on Jumbos have gone up quite high. This makes a SIGNIFICANT impact on affordability. And just because someone qualifies for a loan doesn’t mean they necessarily want to stretch that much, especially in this market. Nobody is going to pay 50% of thier paychecks on a loan anymore and the thought of a 8% interest rate on such a large loan is not appealing to most buyers!! That type of thinking has passed because RE is now viewed as a depreciating asset.

[kev374]

watch this:

http://www.paperdinero.com/BNN.aspx?id=336

Remember that for ALL borrowers the rates on Jumbos have gone up quite high. This makes a SIGNIFICANT impact on affordability. And just because someone qualifies for a loan doesn’t mean they necessarily want to stretch that much, especially in this market. Nobody is going to pay 50% of thier paychecks on a loan anymore and the thought of a 8% interest rate on such a large loan is not appealing to most buyers!! That type of thinking has passed because RE is now viewed as a depreciating asset.

[kev374]

watch this:

http://www.paperdinero.com/BNN.aspx?id=336

Remember that for ALL borrowers the rates on Jumbos have gone up quite high. This makes a SIGNIFICANT impact on affordability. And just because someone qualifies for a loan doesn’t mean they necessarily want to stretch that much, especially in this market. Nobody is going to pay 50% of thier paychecks on a loan anymore and the thought of a 8% interest rate on such a large loan is not appealing to most buyers!! That type of thinking has passed because RE is now viewed as a depreciating asset.

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