Will There Be a Fed Funds Rate Cut Now?

[ibjames]

if their income doesn’t support the 400k loan payment, then they don’t get the loan

[cr]

I wonder if people are comparing this crisis to the dotcom burst…

The obvious difference being the form of the asset, it’s convertibility to liquidity, and there for the speed at which the correction will take place.

Stocks change hands in seconds, homes take months. That may explain some of the market volatility. Stocks were up 1% today on news that housing picked up. But it picked up in the single busiest month of the year, from one of the worst months we’ve had in a while. So what?

I don’t think the FED knows what it’s even supposed to do anymore.

[cr]

I wonder if people are comparing this crisis to the dotcom burst…

The obvious difference being the form of the asset, it’s convertibility to liquidity, and there for the speed at which the correction will take place.

Stocks change hands in seconds, homes take months. That may explain some of the market volatility. Stocks were up 1% today on news that housing picked up. But it picked up in the single busiest month of the year, from one of the worst months we’ve had in a while. So what?

I don’t think the FED knows what it’s even supposed to do anymore.

[cr]

I wonder if people are comparing this crisis to the dotcom burst…

The obvious difference being the form of the asset, it’s convertibility to liquidity, and there for the speed at which the correction will take place.

Stocks change hands in seconds, homes take months. That may explain some of the market volatility. Stocks were up 1% today on news that housing picked up. But it picked up in the single busiest month of the year, from one of the worst months we’ve had in a while. So what?

I don’t think the FED knows what it’s even supposed to do anymore.

[Ozzie]

I didn’t ask him for a W-2 and a list of his debts, but I assume he makes a bit over $100k and I’m sure his FICO is 700+. This is in the SF Bay Area and his reason for moving was a bigger home as they were in a home a little over 1,000 sq feet (with 2 small kids) which I think they sold for over $700k. If you think prices are high here you should see what $700k buys you in Marin County, SF, or the San Jose area.

My point is that lenders have gone from overly lax to overly harsh in a matter of weeks. Of course he should qualify. Any lender in their right mind is going to lend to someone who is making that kind of down payment even if it’s 60% of his take home pay. No way is he going to walk from that kind of down payment and if he does there’s more than enough equity to withstand a horrific housing correction.

[Ozzie]

I didn’t ask him for a W-2 and a list of his debts, but I assume he makes a bit over $100k and I’m sure his FICO is 700+. This is in the SF Bay Area and his reason for moving was a bigger home as they were in a home a little over 1,000 sq feet (with 2 small kids) which I think they sold for over $700k. If you think prices are high here you should see what $700k buys you in Marin County, SF, or the San Jose area.

My point is that lenders have gone from overly lax to overly harsh in a matter of weeks. Of course he should qualify. Any lender in their right mind is going to lend to someone who is making that kind of down payment even if it’s 60% of his take home pay. No way is he going to walk from that kind of down payment and if he does there’s more than enough equity to withstand a horrific housing correction.

[Ozzie]

I didn’t ask him for a W-2 and a list of his debts, but I assume he makes a bit over $100k and I’m sure his FICO is 700+. This is in the SF Bay Area and his reason for moving was a bigger home as they were in a home a little over 1,000 sq feet (with 2 small kids) which I think they sold for over $700k. If you think prices are high here you should see what $700k buys you in Marin County, SF, or the San Jose area.

My point is that lenders have gone from overly lax to overly harsh in a matter of weeks. Of course he should qualify. Any lender in their right mind is going to lend to someone who is making that kind of down payment even if it’s 60% of his take home pay. No way is he going to walk from that kind of down payment and if he does there’s more than enough equity to withstand a horrific housing correction.

[bsrsharma]

I don't think the FED knows what it's even supposed to do anymore.

Actually, I think it is more complicated. FED is in a tricky position of having to solve a financial crisis but not appear to be doing so. If everyone understands FED is in crisis management mode, that worsens the crisis. e.g. Imagine what a run on major banks will do now. So, they have to resort to these underhanded black arts to pump money into the arteries. They seem to be whispering: show me a secret hole, (any hole as long as it is hidden from public view) where I can squeeze some funds in.

[bsrsharma]

I don't think the FED knows what it's even supposed to do anymore.

Actually, I think it is more complicated. FED is in a tricky position of having to solve a financial crisis but not appear to be doing so. If everyone understands FED is in crisis management mode, that worsens the crisis. e.g. Imagine what a run on major banks will do now. So, they have to resort to these underhanded black arts to pump money into the arteries. They seem to be whispering: show me a secret hole, (any hole as long as it is hidden from public view) where I can squeeze some funds in.

[bsrsharma]

I don't think the FED knows what it's even supposed to do anymore.

Actually, I think it is more complicated. FED is in a tricky position of having to solve a financial crisis but not appear to be doing so. If everyone understands FED is in crisis management mode, that worsens the crisis. e.g. Imagine what a run on major banks will do now. So, they have to resort to these underhanded black arts to pump money into the arteries. They seem to be whispering: show me a secret hole, (any hole as long as it is hidden from public view) where I can squeeze some funds in.

[bsrsharma]

they were in a home a little over 1,000 sq feet (with 2 small kids)

Ozzie – This is completely unrelated; is there a reason why they don't take that $400K and move to a place with a little more joy in life?

[bsrsharma]

they were in a home a little over 1,000 sq feet (with 2 small kids)

Ozzie – This is completely unrelated; is there a reason why they don't take that $400K and move to a place with a little more joy in life?

[bsrsharma]

they were in a home a little over 1,000 sq feet (with 2 small kids)

Ozzie – This is completely unrelated; is there a reason why they don't take that $400K and move to a place with a little more joy in life?

[Ozzie]

They love it there and his job is very solid with a big pension building, etc. I think the credit crunch will ease in 6-12 months and then he’ll qualify. Prices should be down a little there although you never know. The dot come mess was much worse in that area than any other in the country and prices didn’t budge – in fact they accelerated.

[Ozzie]

They love it there and his job is very solid with a big pension building, etc. I think the credit crunch will ease in 6-12 months and then he’ll qualify. Prices should be down a little there although you never know. The dot come mess was much worse in that area than any other in the country and prices didn’t budge – in fact they accelerated.

[Author]

Posts