[ctr70]

Go get some charts on the default rates for FHA & VA over time. They were never even close to what we are seeing now and have seen since 2008 for fannie, freddie, and Wall Street loans. Even in the 1980’s, never even close. I just saw a very good chart on this at a Bruce Norris seminar the other day. Nor will they be this time.

b/c FHA is taking on a much larger % of the total loan volume in the U.S. (b/c there is NO private label mortgage market in existence right now) their total # of foreclosures will increase. But the ***percentage*** of those loans defaulting will never be close to what we are seeing today.

Yes fannie/freddie now have a high defualt rate b/c of the housing collapse. But the prices were driven up more by the “kryptonite” loans created by Wall Street 2002-2007. Wall Street did pretty much all the really scary subprime 2 and 3 year fixed exploding ARM’s, ALL of the option arms, and they were much more aggressive with stated IO ARM’s with zero down. Fannie and Freddie were late to the exotic loan stuff and their exotic stuff was not nearly as aggressive. The super toxic stuff from Wall Street was what really drove the market “vertical” in 2003 to early 2007. Those were the first loans to default in 2008 and bring down the market. If you notice most of the REO’s on the market in 2008/2009 were not Fannie owned…now much more REO’s are fannie owned b/c the prime loans are defaulting now that prices collapsed. If we did not have the Wall Street kryptonite loans, we would never had seen prices go even close to where they went at the peak. There were almost NO FHA or VA loans done in CA from 2002-2007.

A lot of people have a huge misunderstanding that fannie/freddie is primarily to blame, when it was the private label “kryptonite loans” from Wall Street that really caused the most damage & put house price increases on steriods from 2003-2007. Fannie/Freddie NEVER did ONE option ARM ever…those were 100% Wall Street products securitized by Credit Suisse, Morgan Stanley, Merrill Lynch, JP Morgan and Goldman Sachs (GS who also made huge bets with credit default swaps that their OWN LOANS they securitized & sold off would go bad… AND paid a half a billion settlement with the SEC b/c of that!).

[ctr70]

Go get some charts on the default rates for FHA & VA over time. They were never even close to what we are seeing now and have seen since 2008 for fannie, freddie, and Wall Street loans. Even in the 1980’s, never even close. I just saw a very good chart on this at a Bruce Norris seminar the other day. Nor will they be this time.

b/c FHA is taking on a much larger % of the total loan volume in the U.S. (b/c there is NO private label mortgage market in existence right now) their total # of foreclosures will increase. But the ***percentage*** of those loans defaulting will never be close to what we are seeing today.

Yes fannie/freddie now have a high defualt rate b/c of the housing collapse. But the prices were driven up more by the “kryptonite” loans created by Wall Street 2002-2007. Wall Street did pretty much all the really scary subprime 2 and 3 year fixed exploding ARM’s, ALL of the option arms, and they were much more aggressive with stated IO ARM’s with zero down. Fannie and Freddie were late to the exotic loan stuff and their exotic stuff was not nearly as aggressive. The super toxic stuff from Wall Street was what really drove the market “vertical” in 2003 to early 2007. Those were the first loans to default in 2008 and bring down the market. If you notice most of the REO’s on the market in 2008/2009 were not Fannie owned…now much more REO’s are fannie owned b/c the prime loans are defaulting now that prices collapsed. If we did not have the Wall Street kryptonite loans, we would never had seen prices go even close to where they went at the peak. There were almost NO FHA or VA loans done in CA from 2002-2007.

A lot of people have a huge misunderstanding that fannie/freddie is primarily to blame, when it was the private label “kryptonite loans” from Wall Street that really caused the most damage & put house price increases on steriods from 2003-2007. Fannie/Freddie NEVER did ONE option ARM ever…those were 100% Wall Street products securitized by Credit Suisse, Morgan Stanley, Merrill Lynch, JP Morgan and Goldman Sachs (GS who also made huge bets with credit default swaps that their OWN LOANS they securitized & sold off would go bad… AND paid a half a billion settlement with the SEC b/c of that!).

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I think it’s great BYU has the honor code and puts a stake in the ground and doesn’t change their standards for athletes for every way the wind blows. They are very, very clear with all their recruits that this is a private religious affiliated university that has an honor code. And knowing that those athletes do not have to choose to go there. They are free to go anywhere they choose.

I personally would never had made it there as I partied hardy:) And I am not Mormon and not religious. But I respect that they have standards and I think that is a good thing.

[ctr70]

I think it’s great BYU has the honor code and puts a stake in the ground and doesn’t change their standards for athletes for every way the wind blows. They are very, very clear with all their recruits that this is a private religious affiliated university that has an honor code. And knowing that those athletes do not have to choose to go there. They are free to go anywhere they choose.

I personally would never had made it there as I partied hardy:) And I am not Mormon and not religious. But I respect that they have standards and I think that is a good thing.

[ctr70]

I think it’s great BYU has the honor code and puts a stake in the ground and doesn’t change their standards for athletes for every way the wind blows. They are very, very clear with all their recruits that this is a private religious affiliated university that has an honor code. And knowing that those athletes do not have to choose to go there. They are free to go anywhere they choose.

I personally would never had made it there as I partied hardy:) And I am not Mormon and not religious. But I respect that they have standards and I think that is a good thing.

[ctr70]

I think it’s great BYU has the honor code and puts a stake in the ground and doesn’t change their standards for athletes for every way the wind blows. They are very, very clear with all their recruits that this is a private religious affiliated university that has an honor code. And knowing that those athletes do not have to choose to go there. They are free to go anywhere they choose.

I personally would never had made it there as I partied hardy:) And I am not Mormon and not religious. But I respect that they have standards and I think that is a good thing.

[ctr70]

I think it’s great BYU has the honor code and puts a stake in the ground and doesn’t change their standards for athletes for every way the wind blows. They are very, very clear with all their recruits that this is a private religious affiliated university that has an honor code. And knowing that those athletes do not have to choose to go there. They are free to go anywhere they choose.

I personally would never had made it there as I partied hardy:) And I am not Mormon and not religious. But I respect that they have standards and I think that is a good thing.

[ctr70]

Correction…lending has not gone back to the 90’s…it’s gone more back to the 1970’s!

Fha has been around since the 1930’s and is 3.5% down and has had low default rates. VA is 100% and been around since post WWII and has had low default rates. FHA are full income documentation throughly underwritten loans. You can not even begin to compare it with the toxic stuff that was happening from 2002-2007.

I saw a chart the other day that compared the performance of prime, subprime, alt a, fha, va over decades….really the stuff that got out of control and got us into trouble was subprime & alt a (stated income) from 2002-2007. It was really just 5-6 REALLY bad years of lending Wall Stree product that did it. And contrary to popular belief, the toxic loans were Wall Street products for the most part (not Gov loans Fannie, Freddie, FHA, VA). The underwriting guidelines were created by Morgan Stanley, Merril Lynch, Credit Suisse and JP Morgan & they created a secondary market for those loans.

FHA and VA have never had super high default rates. So it’s a myth that real estate “used to be” 20% down back in the day or it needs to be 20% down. FHA has never been 20% down and it’s been around since 1934.

What we are doing here is classic “throwing the baby out with the bathwater”. Lending standards are OVER-correcting in my opinion. For example, I know a guy with $5 million in the bank but could not show income on his tax returns so he can’t get a conventional loan even with 40% down. He has to buy cash. Now that is plan stupid. This is the kind of borrower “no income verification” loans were originally created for. Not the janitor in 2005 making $20k a year with no money in the bank buying stated income zero down.

I think 5% down and throughly underwritten FULL income documentation loan is plenty.

[ctr70]

Correction…lending has not gone back to the 90’s…it’s gone more back to the 1970’s!

Fha has been around since the 1930’s and is 3.5% down and has had low default rates. VA is 100% and been around since post WWII and has had low default rates. FHA are full income documentation throughly underwritten loans. You can not even begin to compare it with the toxic stuff that was happening from 2002-2007.

I saw a chart the other day that compared the performance of prime, subprime, alt a, fha, va over decades….really the stuff that got out of control and got us into trouble was subprime & alt a (stated income) from 2002-2007. It was really just 5-6 REALLY bad years of lending Wall Stree product that did it. And contrary to popular belief, the toxic loans were Wall Street products for the most part (not Gov loans Fannie, Freddie, FHA, VA). The underwriting guidelines were created by Morgan Stanley, Merril Lynch, Credit Suisse and JP Morgan & they created a secondary market for those loans.

FHA and VA have never had super high default rates. So it’s a myth that real estate “used to be” 20% down back in the day or it needs to be 20% down. FHA has never been 20% down and it’s been around since 1934.

What we are doing here is classic “throwing the baby out with the bathwater”. Lending standards are OVER-correcting in my opinion. For example, I know a guy with $5 million in the bank but could not show income on his tax returns so he can’t get a conventional loan even with 40% down. He has to buy cash. Now that is plan stupid. This is the kind of borrower “no income verification” loans were originally created for. Not the janitor in 2005 making $20k a year with no money in the bank buying stated income zero down.

I think 5% down and throughly underwritten FULL income documentation loan is plenty.

[ctr70]

Correction…lending has not gone back to the 90’s…it’s gone more back to the 1970’s!

Fha has been around since the 1930’s and is 3.5% down and has had low default rates. VA is 100% and been around since post WWII and has had low default rates. FHA are full income documentation throughly underwritten loans. You can not even begin to compare it with the toxic stuff that was happening from 2002-2007.

I saw a chart the other day that compared the performance of prime, subprime, alt a, fha, va over decades….really the stuff that got out of control and got us into trouble was subprime & alt a (stated income) from 2002-2007. It was really just 5-6 REALLY bad years of lending Wall Stree product that did it. And contrary to popular belief, the toxic loans were Wall Street products for the most part (not Gov loans Fannie, Freddie, FHA, VA). The underwriting guidelines were created by Morgan Stanley, Merril Lynch, Credit Suisse and JP Morgan & they created a secondary market for those loans.

FHA and VA have never had super high default rates. So it’s a myth that real estate “used to be” 20% down back in the day or it needs to be 20% down. FHA has never been 20% down and it’s been around since 1934.

What we are doing here is classic “throwing the baby out with the bathwater”. Lending standards are OVER-correcting in my opinion. For example, I know a guy with $5 million in the bank but could not show income on his tax returns so he can’t get a conventional loan even with 40% down. He has to buy cash. Now that is plan stupid. This is the kind of borrower “no income verification” loans were originally created for. Not the janitor in 2005 making $20k a year with no money in the bank buying stated income zero down.

I think 5% down and throughly underwritten FULL income documentation loan is plenty.

[ctr70]

Correction…lending has not gone back to the 90’s…it’s gone more back to the 1970’s!

Fha has been around since the 1930’s and is 3.5% down and has had low default rates. VA is 100% and been around since post WWII and has had low default rates. FHA are full income documentation throughly underwritten loans. You can not even begin to compare it with the toxic stuff that was happening from 2002-2007.

I saw a chart the other day that compared the performance of prime, subprime, alt a, fha, va over decades….really the stuff that got out of control and got us into trouble was subprime & alt a (stated income) from 2002-2007. It was really just 5-6 REALLY bad years of lending Wall Stree product that did it. And contrary to popular belief, the toxic loans were Wall Street products for the most part (not Gov loans Fannie, Freddie, FHA, VA). The underwriting guidelines were created by Morgan Stanley, Merril Lynch, Credit Suisse and JP Morgan & they created a secondary market for those loans.

FHA and VA have never had super high default rates. So it’s a myth that real estate “used to be” 20% down back in the day or it needs to be 20% down. FHA has never been 20% down and it’s been around since 1934.

What we are doing here is classic “throwing the baby out with the bathwater”. Lending standards are OVER-correcting in my opinion. For example, I know a guy with $5 million in the bank but could not show income on his tax returns so he can’t get a conventional loan even with 40% down. He has to buy cash. Now that is plan stupid. This is the kind of borrower “no income verification” loans were originally created for. Not the janitor in 2005 making $20k a year with no money in the bank buying stated income zero down.

I think 5% down and throughly underwritten FULL income documentation loan is plenty.

[ctr70]

Correction…lending has not gone back to the 90’s…it’s gone more back to the 1970’s!

Fha has been around since the 1930’s and is 3.5% down and has had low default rates. VA is 100% and been around since post WWII and has had low default rates. FHA are full income documentation throughly underwritten loans. You can not even begin to compare it with the toxic stuff that was happening from 2002-2007.

I saw a chart the other day that compared the performance of prime, subprime, alt a, fha, va over decades….really the stuff that got out of control and got us into trouble was subprime & alt a (stated income) from 2002-2007. It was really just 5-6 REALLY bad years of lending Wall Stree product that did it. And contrary to popular belief, the toxic loans were Wall Street products for the most part (not Gov loans Fannie, Freddie, FHA, VA). The underwriting guidelines were created by Morgan Stanley, Merril Lynch, Credit Suisse and JP Morgan & they created a secondary market for those loans.

FHA and VA have never had super high default rates. So it’s a myth that real estate “used to be” 20% down back in the day or it needs to be 20% down. FHA has never been 20% down and it’s been around since 1934.

What we are doing here is classic “throwing the baby out with the bathwater”. Lending standards are OVER-correcting in my opinion. For example, I know a guy with $5 million in the bank but could not show income on his tax returns so he can’t get a conventional loan even with 40% down. He has to buy cash. Now that is plan stupid. This is the kind of borrower “no income verification” loans were originally created for. Not the janitor in 2005 making $20k a year with no money in the bank buying stated income zero down.

I think 5% down and throughly underwritten FULL income documentation loan is plenty.

[ctr70]

I’m a big fan of SDSU hoops and I go to most home games. But the recent BYU loss was a reality check. It’s an ego check and back down to earth. They are not the 6th best team in the nation. What would their record be if they were playing in the Big East twice a week? Pitt? Louiville? UCONN? Syracuse? If they were in the Big East they may not even be in the top 25 right now.

They have only played one team currently in the top 25 and lost both times (BYU). And BYU didn’t just squeak by them, they beat them handily twice.

That said, it’s a magical year for them. But the true test will be in the NCAA tourney. Especially after their 1st NCAA game.

[ctr70]

I’m a big fan of SDSU hoops and I go to most home games. But the recent BYU loss was a reality check. It’s an ego check and back down to earth. They are not the 6th best team in the nation. What would their record be if they were playing in the Big East twice a week? Pitt? Louiville? UCONN? Syracuse? If they were in the Big East they may not even be in the top 25 right now.

They have only played one team currently in the top 25 and lost both times (BYU). And BYU didn’t just squeak by them, they beat them handily twice.

That said, it’s a magical year for them. But the true test will be in the NCAA tourney. Especially after their 1st NCAA game.

[ctr70]

I’m a big fan of SDSU hoops and I go to most home games. But the recent BYU loss was a reality check. It’s an ego check and back down to earth. They are not the 6th best team in the nation. What would their record be if they were playing in the Big East twice a week? Pitt? Louiville? UCONN? Syracuse? If they were in the Big East they may not even be in the top 25 right now.

They have only played one team currently in the top 25 and lost both times (BYU). And BYU didn’t just squeak by them, they beat them handily twice.

That said, it’s a magical year for them. But the true test will be in the NCAA tourney. Especially after their 1st NCAA game.

[Author]

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