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ParticipantThis is probably going to prove to be one of the most ineffective and costly wastes of legislation in history. All the more why it’s assinine that it passed, but all I read indicates it’s virtually pointless for CA, where people all along have been planning on selling for massive gains once their loan adjusts.
This is from the doctorhousingbubble.com:
“The new housing bill now fully signed into law by the President will do very little to help California. Why? First, lenders should they wish to participate will need to have the property reappraised at today’s market value… In addition, the lender will be required to cut an additional 10 percent from the current appraised value. Well in places like Los Angeles where the median price is off by 35.65 percent an additional reduction of 10 percent will bring the one year correction to nearly 50 percent!…
…Another reason that this won’t fly in states like California is many borrowers even with the new bailout program will not be able to make their payments on a 30 year fixed……the minimum payment is only $2,053 on a $616,230 loan! Simply insane and ridiculous. What should be a $3,626 a month payment is artificially lowered by nearly half. Keep in mind that data on option arm loans tells us that approximately 80 percent of people make the minimum payment and we are not factoring in taxes or insurance above.
So with that said, let us assume the lender decides to participate and that home valued at $616,230 is now appraised at $396,560. How will the numbers work out now? Well first the lender will need to take off 10 percent off the appraised value plus a one time 3 percent fee from the note to participate in the program:
$396,560 x .13 = $345,007 new 30 year fixed mortgage
According to the Freddie Mac website the current 30 year fixed rate is 6.63%.So let us assume the borrower now goes with this loan. What does his monthly principal and interest payment work out to be?
30 year fixed new principal and interest payment = $2,210.26!!!
So even after the massive haircut the lender will take from the 35.65% market correction, the additional 10% in reduced appraisal terms, and the extra one time payment the borrower actually has a higher payment than the initial Pay Option ARM payment for a loan that was $271,223 larger.”ParticipantThis is probably going to prove to be one of the most ineffective and costly wastes of legislation in history. All the more why it’s assinine that it passed, but all I read indicates it’s virtually pointless for CA, where people all along have been planning on selling for massive gains once their loan adjusts.
This is from the doctorhousingbubble.com:
“The new housing bill now fully signed into law by the President will do very little to help California. Why? First, lenders should they wish to participate will need to have the property reappraised at today’s market value… In addition, the lender will be required to cut an additional 10 percent from the current appraised value. Well in places like Los Angeles where the median price is off by 35.65 percent an additional reduction of 10 percent will bring the one year correction to nearly 50 percent!…
…Another reason that this won’t fly in states like California is many borrowers even with the new bailout program will not be able to make their payments on a 30 year fixed……the minimum payment is only $2,053 on a $616,230 loan! Simply insane and ridiculous. What should be a $3,626 a month payment is artificially lowered by nearly half. Keep in mind that data on option arm loans tells us that approximately 80 percent of people make the minimum payment and we are not factoring in taxes or insurance above.
So with that said, let us assume the lender decides to participate and that home valued at $616,230 is now appraised at $396,560. How will the numbers work out now? Well first the lender will need to take off 10 percent off the appraised value plus a one time 3 percent fee from the note to participate in the program:
$396,560 x .13 = $345,007 new 30 year fixed mortgage
According to the Freddie Mac website the current 30 year fixed rate is 6.63%.So let us assume the borrower now goes with this loan. What does his monthly principal and interest payment work out to be?
30 year fixed new principal and interest payment = $2,210.26!!!
So even after the massive haircut the lender will take from the 35.65% market correction, the additional 10% in reduced appraisal terms, and the extra one time payment the borrower actually has a higher payment than the initial Pay Option ARM payment for a loan that was $271,223 larger.”ParticipantThis is probably going to prove to be one of the most ineffective and costly wastes of legislation in history. All the more why it’s assinine that it passed, but all I read indicates it’s virtually pointless for CA, where people all along have been planning on selling for massive gains once their loan adjusts.
This is from the doctorhousingbubble.com:
“The new housing bill now fully signed into law by the President will do very little to help California. Why? First, lenders should they wish to participate will need to have the property reappraised at today’s market value… In addition, the lender will be required to cut an additional 10 percent from the current appraised value. Well in places like Los Angeles where the median price is off by 35.65 percent an additional reduction of 10 percent will bring the one year correction to nearly 50 percent!…
…Another reason that this won’t fly in states like California is many borrowers even with the new bailout program will not be able to make their payments on a 30 year fixed……the minimum payment is only $2,053 on a $616,230 loan! Simply insane and ridiculous. What should be a $3,626 a month payment is artificially lowered by nearly half. Keep in mind that data on option arm loans tells us that approximately 80 percent of people make the minimum payment and we are not factoring in taxes or insurance above.
So with that said, let us assume the lender decides to participate and that home valued at $616,230 is now appraised at $396,560. How will the numbers work out now? Well first the lender will need to take off 10 percent off the appraised value plus a one time 3 percent fee from the note to participate in the program:
$396,560 x .13 = $345,007 new 30 year fixed mortgage
According to the Freddie Mac website the current 30 year fixed rate is 6.63%.So let us assume the borrower now goes with this loan. What does his monthly principal and interest payment work out to be?
30 year fixed new principal and interest payment = $2,210.26!!!
So even after the massive haircut the lender will take from the 35.65% market correction, the additional 10% in reduced appraisal terms, and the extra one time payment the borrower actually has a higher payment than the initial Pay Option ARM payment for a loan that was $271,223 larger.”ParticipantI agree there are too many Obama posts here, but I am honestly shocked at how many people here support him.
I don’t think McCain is the best answer either, but I question whether many of the BO supporters here REALLY know what he is about.
If you plan on voting for Barak Hussein Obama the 2nd then I suggest you read this so you’re not surprised when it happens.
ParticipantI agree there are too many Obama posts here, but I am honestly shocked at how many people here support him.
I don’t think McCain is the best answer either, but I question whether many of the BO supporters here REALLY know what he is about.
If you plan on voting for Barak Hussein Obama the 2nd then I suggest you read this so you’re not surprised when it happens.
ParticipantI agree there are too many Obama posts here, but I am honestly shocked at how many people here support him.
I don’t think McCain is the best answer either, but I question whether many of the BO supporters here REALLY know what he is about.
If you plan on voting for Barak Hussein Obama the 2nd then I suggest you read this so you’re not surprised when it happens.
ParticipantI agree there are too many Obama posts here, but I am honestly shocked at how many people here support him.
I don’t think McCain is the best answer either, but I question whether many of the BO supporters here REALLY know what he is about.
If you plan on voting for Barak Hussein Obama the 2nd then I suggest you read this so you’re not surprised when it happens.
ParticipantI agree there are too many Obama posts here, but I am honestly shocked at how many people here support him.
I don’t think McCain is the best answer either, but I question whether many of the BO supporters here REALLY know what he is about.
If you plan on voting for Barak Hussein Obama the 2nd then I suggest you read this so you’re not surprised when it happens.
ParticipantThis is not a reply to any of the previous comments, and it’s actually ON TOPIC for housing and concerns Obama. I just don’t want another Obama thread:
Obama: ‘What we need is a floor in the housing market’
[quote=OBAMA]Well, I–you know, I think that part of what we have to recognize is they’ve got $5 trillion worth of, worth of mortgages out there, and we’ve got to make some decisions in terms of whether or not we want to take that — those liabilities onto the federal balance sheet. So there are, there are a host of complicated issues here. It is true that there may be some folks who didn’t make the best decision that will still benefit from the home foreclosure plans that have been put forward. But keep in mind that many of these folks were not so much speculators as they were probably in over their heads. They tried to get more house than they could afford because they were told by these mortgage brokers that they could afford it. We are better off helping them stay in their home if you can fix the mortgage and let them pay it off over time than have them foreclose, in which not only do they lose their home, not only do the lenders lose a lot, but that community suddenly sees its property values going down. And what we need is a floor in the housing market, a, a stop to the decline in housing values, as well as some certainty on the part of lenders in terms of what houses are worth so that we can start restoring confidence in the housing market, but also confidence in the financial markets where credit has been contracting. And that’s affecting a lot of terrific businesses and good sound developments and entrepreneurial opportunities because they just can’t get good credit.[/quote]Here’s more:
http://latimesblogs.latimes.com/laland/2008/07/obama-what-we-n.html -
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