Forum Replies Created
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davelj
Participant[quote=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.[/quote]
You sure about that? This chart is 1 1/2 years old, but the story it tells is an UGLY one for FHA loans:
http://seekingalpha.com/article/170759-performance-of-fha-loan-portfolio
That’s a full-fledged disaster, so I have no idea where you’re getting your information. Inquiring minds would like to know.
[quote=ctr70]
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. [/quote]Ok, so… those multi-hundred billion dollar losses that We the People are currently eating on Fannie/Freddie loans aren’t real? Those came from Wall Street? While I agree that Wall Street was responsible for a lot of the real dreck… the GSEs clearly underwrote a helluva a lot of bad loans that are generating big losses that We the People are going to be eating for a while.
[quote=ctr70]
FHA and VA have never had super high default rates.[/quote]Yeah, right up until this cycle…
[quote=ctr70]
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.[/quote]The average down payment for a SFR loan steadily declined from the early-90s through 2007. (And, again, FHA is its own disaster currently.) I’ll find a graph.
[quote=ctr70]
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. [/quote]This sounds very suspicious. If he’s got “$5 million in the bank” and otherwise sound finances, then he can explain away his tax return. This happens all the time, particularly with real estate investors who often have huge net worths and cash flow but very little in the way of taxable income. If this guy can’t get a loan, then (1) he’s hiding something, (2) he’s not particularly clever, or (3) he’s getting bad advice. I simply don’t buy that he’s some victim because I see folks like this all the time who don’t have the problem you’re describing.
[quote=ctr70]
I think 5% down and throughly underwritten FULL income documentation loan is plenty.[/quote]In a world of defaulting-is-a-business-decision (which I’m betting you support)… I think you’re smoking crack. But we can agree to disagree.
Participant[quote=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.[/quote]
You sure about that? This chart is 1 1/2 years old, but the story it tells is an UGLY one for FHA loans:
http://seekingalpha.com/article/170759-performance-of-fha-loan-portfolio
That’s a full-fledged disaster, so I have no idea where you’re getting your information. Inquiring minds would like to know.
[quote=ctr70]
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. [/quote]Ok, so… those multi-hundred billion dollar losses that We the People are currently eating on Fannie/Freddie loans aren’t real? Those came from Wall Street? While I agree that Wall Street was responsible for a lot of the real dreck… the GSEs clearly underwrote a helluva a lot of bad loans that are generating big losses that We the People are going to be eating for a while.
[quote=ctr70]
FHA and VA have never had super high default rates.[/quote]Yeah, right up until this cycle…
[quote=ctr70]
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.[/quote]The average down payment for a SFR loan steadily declined from the early-90s through 2007. (And, again, FHA is its own disaster currently.) I’ll find a graph.
[quote=ctr70]
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. [/quote]This sounds very suspicious. If he’s got “$5 million in the bank” and otherwise sound finances, then he can explain away his tax return. This happens all the time, particularly with real estate investors who often have huge net worths and cash flow but very little in the way of taxable income. If this guy can’t get a loan, then (1) he’s hiding something, (2) he’s not particularly clever, or (3) he’s getting bad advice. I simply don’t buy that he’s some victim because I see folks like this all the time who don’t have the problem you’re describing.
[quote=ctr70]
I think 5% down and throughly underwritten FULL income documentation loan is plenty.[/quote]In a world of defaulting-is-a-business-decision (which I’m betting you support)… I think you’re smoking crack. But we can agree to disagree.
Participant[quote=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.[/quote]
You sure about that? This chart is 1 1/2 years old, but the story it tells is an UGLY one for FHA loans:
http://seekingalpha.com/article/170759-performance-of-fha-loan-portfolio
That’s a full-fledged disaster, so I have no idea where you’re getting your information. Inquiring minds would like to know.
[quote=ctr70]
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. [/quote]Ok, so… those multi-hundred billion dollar losses that We the People are currently eating on Fannie/Freddie loans aren’t real? Those came from Wall Street? While I agree that Wall Street was responsible for a lot of the real dreck… the GSEs clearly underwrote a helluva a lot of bad loans that are generating big losses that We the People are going to be eating for a while.
[quote=ctr70]
FHA and VA have never had super high default rates.[/quote]Yeah, right up until this cycle…
[quote=ctr70]
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.[/quote]The average down payment for a SFR loan steadily declined from the early-90s through 2007. (And, again, FHA is its own disaster currently.) I’ll find a graph.
[quote=ctr70]
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. [/quote]This sounds very suspicious. If he’s got “$5 million in the bank” and otherwise sound finances, then he can explain away his tax return. This happens all the time, particularly with real estate investors who often have huge net worths and cash flow but very little in the way of taxable income. If this guy can’t get a loan, then (1) he’s hiding something, (2) he’s not particularly clever, or (3) he’s getting bad advice. I simply don’t buy that he’s some victim because I see folks like this all the time who don’t have the problem you’re describing.
[quote=ctr70]
I think 5% down and throughly underwritten FULL income documentation loan is plenty.[/quote]In a world of defaulting-is-a-business-decision (which I’m betting you support)… I think you’re smoking crack. But we can agree to disagree.
Participant[quote=bearishgurl][quote=davelj] . . . OK, let’s assume that the lenders are the American tax payers. Are you suggesting that We the People should have less strict underwriting standards than the typical private enterprise? That’s absurd. That’s how We the People ended up with the GSEs. So, contrary to your position, I think that if We the People’s money is at stake, the underwriting standards should be among the highest in the industry. I remain unsympathetic. . .[/quote]
Understand what you’re saying here, davelj. I received all my RE loans after being fully qualified and properly underwritten. I haven’t borrowed any mortgage money during the “loose lending” craze. And I DID have a Fannie Mae loan in the 80’s (10% down with PMI canceled after 14 mos). The rest of my RE purchase-money loans were made at 70-80% LTV.
I don’t recall ever being asked to supply more than one year of tax returns or any checking statements. If I WAS asked to provide bank statements, it was only for the balance. I could redact all the details before submitting. Of course, my/our employers were called before my/our pre-approval was issued (signed by an underwriter) and ALSO AGAIN on closing week. I have NEVER been asked the “source” of any funds I/we had on deposit and I have never had to resubmit any (previously “lost”) documents. I have always used a “direct” lender.
[/quote]Similar experience to mine. I’m self-employed and had to provide three years of tax returns, multiple months of multiple bank statements, corporate charter, flow charts of my entities, etc. etc. And my LTV is 60%. And I didn’t complain for a moment. In my view – and reasonable people can disagree – this is how it should be.
Participant[quote=bearishgurl][quote=davelj] . . . OK, let’s assume that the lenders are the American tax payers. Are you suggesting that We the People should have less strict underwriting standards than the typical private enterprise? That’s absurd. That’s how We the People ended up with the GSEs. So, contrary to your position, I think that if We the People’s money is at stake, the underwriting standards should be among the highest in the industry. I remain unsympathetic. . .[/quote]
Understand what you’re saying here, davelj. I received all my RE loans after being fully qualified and properly underwritten. I haven’t borrowed any mortgage money during the “loose lending” craze. And I DID have a Fannie Mae loan in the 80’s (10% down with PMI canceled after 14 mos). The rest of my RE purchase-money loans were made at 70-80% LTV.
I don’t recall ever being asked to supply more than one year of tax returns or any checking statements. If I WAS asked to provide bank statements, it was only for the balance. I could redact all the details before submitting. Of course, my/our employers were called before my/our pre-approval was issued (signed by an underwriter) and ALSO AGAIN on closing week. I have NEVER been asked the “source” of any funds I/we had on deposit and I have never had to resubmit any (previously “lost”) documents. I have always used a “direct” lender.
[/quote]Similar experience to mine. I’m self-employed and had to provide three years of tax returns, multiple months of multiple bank statements, corporate charter, flow charts of my entities, etc. etc. And my LTV is 60%. And I didn’t complain for a moment. In my view – and reasonable people can disagree – this is how it should be.
Participant[quote=bearishgurl][quote=davelj] . . . OK, let’s assume that the lenders are the American tax payers. Are you suggesting that We the People should have less strict underwriting standards than the typical private enterprise? That’s absurd. That’s how We the People ended up with the GSEs. So, contrary to your position, I think that if We the People’s money is at stake, the underwriting standards should be among the highest in the industry. I remain unsympathetic. . .[/quote]
Understand what you’re saying here, davelj. I received all my RE loans after being fully qualified and properly underwritten. I haven’t borrowed any mortgage money during the “loose lending” craze. And I DID have a Fannie Mae loan in the 80’s (10% down with PMI canceled after 14 mos). The rest of my RE purchase-money loans were made at 70-80% LTV.
I don’t recall ever being asked to supply more than one year of tax returns or any checking statements. If I WAS asked to provide bank statements, it was only for the balance. I could redact all the details before submitting. Of course, my/our employers were called before my/our pre-approval was issued (signed by an underwriter) and ALSO AGAIN on closing week. I have NEVER been asked the “source” of any funds I/we had on deposit and I have never had to resubmit any (previously “lost”) documents. I have always used a “direct” lender.
[/quote]Similar experience to mine. I’m self-employed and had to provide three years of tax returns, multiple months of multiple bank statements, corporate charter, flow charts of my entities, etc. etc. And my LTV is 60%. And I didn’t complain for a moment. In my view – and reasonable people can disagree – this is how it should be.
Participant[quote=bearishgurl][quote=davelj] . . . OK, let’s assume that the lenders are the American tax payers. Are you suggesting that We the People should have less strict underwriting standards than the typical private enterprise? That’s absurd. That’s how We the People ended up with the GSEs. So, contrary to your position, I think that if We the People’s money is at stake, the underwriting standards should be among the highest in the industry. I remain unsympathetic. . .[/quote]
Understand what you’re saying here, davelj. I received all my RE loans after being fully qualified and properly underwritten. I haven’t borrowed any mortgage money during the “loose lending” craze. And I DID have a Fannie Mae loan in the 80’s (10% down with PMI canceled after 14 mos). The rest of my RE purchase-money loans were made at 70-80% LTV.
I don’t recall ever being asked to supply more than one year of tax returns or any checking statements. If I WAS asked to provide bank statements, it was only for the balance. I could redact all the details before submitting. Of course, my/our employers were called before my/our pre-approval was issued (signed by an underwriter) and ALSO AGAIN on closing week. I have NEVER been asked the “source” of any funds I/we had on deposit and I have never had to resubmit any (previously “lost”) documents. I have always used a “direct” lender.
[/quote]Similar experience to mine. I’m self-employed and had to provide three years of tax returns, multiple months of multiple bank statements, corporate charter, flow charts of my entities, etc. etc. And my LTV is 60%. And I didn’t complain for a moment. In my view – and reasonable people can disagree – this is how it should be.
Participant[quote=bearishgurl][quote=davelj] . . . OK, let’s assume that the lenders are the American tax payers. Are you suggesting that We the People should have less strict underwriting standards than the typical private enterprise? That’s absurd. That’s how We the People ended up with the GSEs. So, contrary to your position, I think that if We the People’s money is at stake, the underwriting standards should be among the highest in the industry. I remain unsympathetic. . .[/quote]
Understand what you’re saying here, davelj. I received all my RE loans after being fully qualified and properly underwritten. I haven’t borrowed any mortgage money during the “loose lending” craze. And I DID have a Fannie Mae loan in the 80’s (10% down with PMI canceled after 14 mos). The rest of my RE purchase-money loans were made at 70-80% LTV.
I don’t recall ever being asked to supply more than one year of tax returns or any checking statements. If I WAS asked to provide bank statements, it was only for the balance. I could redact all the details before submitting. Of course, my/our employers were called before my/our pre-approval was issued (signed by an underwriter) and ALSO AGAIN on closing week. I have NEVER been asked the “source” of any funds I/we had on deposit and I have never had to resubmit any (previously “lost”) documents. I have always used a “direct” lender.
[/quote]Similar experience to mine. I’m self-employed and had to provide three years of tax returns, multiple months of multiple bank statements, corporate charter, flow charts of my entities, etc. etc. And my LTV is 60%. And I didn’t complain for a moment. In my view – and reasonable people can disagree – this is how it should be.
Participant[quote=paramount]I thought you’d like that high horse…
Anyway, here’s the deal and something I have learned recently.
First of all – home ownership is good for America. It’s what builds communities and identities. It’s good for the economy. It gives people and families something to strive for – and it’s worth striving for.
Allow me to relate (2) recent experiences:
1. In January I decided to look for a rental house in San Diego to be closer to work. In going through this process I (IMO) encountered some really unpleasant people in the property management business.
Experiences like that help one appreciate home ownership (even if you are renting it from the bank).
2. 10 years ago the community I live in was primarily owner occupied. Fast forward 10 years and now our community is primarily renter occupied and there is much less of a sense of community IMO. No more block parties, U-Haul trucks appearing weekly – very transient.[/quote]
Yup. Rental communities and owner communities have different characteristics. That doesn’t mean that we should try to turn folks who should be renting into owners. We tried a lot of that recently and it didn’t turn out well. Consequently, I’m not sure what your point is in the context of this discussion.
[quote=paramount]
We have to take calculated risks. For buyers with strong credit profiles, 10% down and good ratios I think that’s a risk worth taking given the benefit to the buyers and the community.[/quote]Hold on a sec… if I go back to the archives under the discussions of strategic defaults am I not going to find you supporting such actions as a “business decision”? Clearly there isn’t much value in that “strong credit profile” if the value of the collateral declines. My point is that if there are no ethics involved – that is, the “Character” in the 3 C’s of credit is a quaint joke – then you’ll have to pardon me if I’d like a bit more than 10% downside protection on the Collateral. If you’re in the strategic-default-is-a-business-decision crowd, then your position here is more than a little hypocritical. Frankly, if it’s MY money at risk… 20% is the threshold to START a discussion. But perhaps that’s because I have my own principal at risk in ownership of small banks, so my mind is a bit more focused on the issue.
Participant[quote=paramount]I thought you’d like that high horse…
Anyway, here’s the deal and something I have learned recently.
First of all – home ownership is good for America. It’s what builds communities and identities. It’s good for the economy. It gives people and families something to strive for – and it’s worth striving for.
Allow me to relate (2) recent experiences:
1. In January I decided to look for a rental house in San Diego to be closer to work. In going through this process I (IMO) encountered some really unpleasant people in the property management business.
Experiences like that help one appreciate home ownership (even if you are renting it from the bank).
2. 10 years ago the community I live in was primarily owner occupied. Fast forward 10 years and now our community is primarily renter occupied and there is much less of a sense of community IMO. No more block parties, U-Haul trucks appearing weekly – very transient.[/quote]
Yup. Rental communities and owner communities have different characteristics. That doesn’t mean that we should try to turn folks who should be renting into owners. We tried a lot of that recently and it didn’t turn out well. Consequently, I’m not sure what your point is in the context of this discussion.
[quote=paramount]
We have to take calculated risks. For buyers with strong credit profiles, 10% down and good ratios I think that’s a risk worth taking given the benefit to the buyers and the community.[/quote]Hold on a sec… if I go back to the archives under the discussions of strategic defaults am I not going to find you supporting such actions as a “business decision”? Clearly there isn’t much value in that “strong credit profile” if the value of the collateral declines. My point is that if there are no ethics involved – that is, the “Character” in the 3 C’s of credit is a quaint joke – then you’ll have to pardon me if I’d like a bit more than 10% downside protection on the Collateral. If you’re in the strategic-default-is-a-business-decision crowd, then your position here is more than a little hypocritical. Frankly, if it’s MY money at risk… 20% is the threshold to START a discussion. But perhaps that’s because I have my own principal at risk in ownership of small banks, so my mind is a bit more focused on the issue.
Participant[quote=paramount]I thought you’d like that high horse…
Anyway, here’s the deal and something I have learned recently.
First of all – home ownership is good for America. It’s what builds communities and identities. It’s good for the economy. It gives people and families something to strive for – and it’s worth striving for.
Allow me to relate (2) recent experiences:
1. In January I decided to look for a rental house in San Diego to be closer to work. In going through this process I (IMO) encountered some really unpleasant people in the property management business.
Experiences like that help one appreciate home ownership (even if you are renting it from the bank).
2. 10 years ago the community I live in was primarily owner occupied. Fast forward 10 years and now our community is primarily renter occupied and there is much less of a sense of community IMO. No more block parties, U-Haul trucks appearing weekly – very transient.[/quote]
Yup. Rental communities and owner communities have different characteristics. That doesn’t mean that we should try to turn folks who should be renting into owners. We tried a lot of that recently and it didn’t turn out well. Consequently, I’m not sure what your point is in the context of this discussion.
[quote=paramount]
We have to take calculated risks. For buyers with strong credit profiles, 10% down and good ratios I think that’s a risk worth taking given the benefit to the buyers and the community.[/quote]Hold on a sec… if I go back to the archives under the discussions of strategic defaults am I not going to find you supporting such actions as a “business decision”? Clearly there isn’t much value in that “strong credit profile” if the value of the collateral declines. My point is that if there are no ethics involved – that is, the “Character” in the 3 C’s of credit is a quaint joke – then you’ll have to pardon me if I’d like a bit more than 10% downside protection on the Collateral. If you’re in the strategic-default-is-a-business-decision crowd, then your position here is more than a little hypocritical. Frankly, if it’s MY money at risk… 20% is the threshold to START a discussion. But perhaps that’s because I have my own principal at risk in ownership of small banks, so my mind is a bit more focused on the issue.
Participant[quote=paramount]I thought you’d like that high horse…
Anyway, here’s the deal and something I have learned recently.
First of all – home ownership is good for America. It’s what builds communities and identities. It’s good for the economy. It gives people and families something to strive for – and it’s worth striving for.
Allow me to relate (2) recent experiences:
1. In January I decided to look for a rental house in San Diego to be closer to work. In going through this process I (IMO) encountered some really unpleasant people in the property management business.
Experiences like that help one appreciate home ownership (even if you are renting it from the bank).
2. 10 years ago the community I live in was primarily owner occupied. Fast forward 10 years and now our community is primarily renter occupied and there is much less of a sense of community IMO. No more block parties, U-Haul trucks appearing weekly – very transient.[/quote]
Yup. Rental communities and owner communities have different characteristics. That doesn’t mean that we should try to turn folks who should be renting into owners. We tried a lot of that recently and it didn’t turn out well. Consequently, I’m not sure what your point is in the context of this discussion.
[quote=paramount]
We have to take calculated risks. For buyers with strong credit profiles, 10% down and good ratios I think that’s a risk worth taking given the benefit to the buyers and the community.[/quote]Hold on a sec… if I go back to the archives under the discussions of strategic defaults am I not going to find you supporting such actions as a “business decision”? Clearly there isn’t much value in that “strong credit profile” if the value of the collateral declines. My point is that if there are no ethics involved – that is, the “Character” in the 3 C’s of credit is a quaint joke – then you’ll have to pardon me if I’d like a bit more than 10% downside protection on the Collateral. If you’re in the strategic-default-is-a-business-decision crowd, then your position here is more than a little hypocritical. Frankly, if it’s MY money at risk… 20% is the threshold to START a discussion. But perhaps that’s because I have my own principal at risk in ownership of small banks, so my mind is a bit more focused on the issue.
Participant[quote=paramount]I thought you’d like that high horse…
Anyway, here’s the deal and something I have learned recently.
First of all – home ownership is good for America. It’s what builds communities and identities. It’s good for the economy. It gives people and families something to strive for – and it’s worth striving for.
Allow me to relate (2) recent experiences:
1. In January I decided to look for a rental house in San Diego to be closer to work. In going through this process I (IMO) encountered some really unpleasant people in the property management business.
Experiences like that help one appreciate home ownership (even if you are renting it from the bank).
2. 10 years ago the community I live in was primarily owner occupied. Fast forward 10 years and now our community is primarily renter occupied and there is much less of a sense of community IMO. No more block parties, U-Haul trucks appearing weekly – very transient.[/quote]
Yup. Rental communities and owner communities have different characteristics. That doesn’t mean that we should try to turn folks who should be renting into owners. We tried a lot of that recently and it didn’t turn out well. Consequently, I’m not sure what your point is in the context of this discussion.
[quote=paramount]
We have to take calculated risks. For buyers with strong credit profiles, 10% down and good ratios I think that’s a risk worth taking given the benefit to the buyers and the community.[/quote]Hold on a sec… if I go back to the archives under the discussions of strategic defaults am I not going to find you supporting such actions as a “business decision”? Clearly there isn’t much value in that “strong credit profile” if the value of the collateral declines. My point is that if there are no ethics involved – that is, the “Character” in the 3 C’s of credit is a quaint joke – then you’ll have to pardon me if I’d like a bit more than 10% downside protection on the Collateral. If you’re in the strategic-default-is-a-business-decision crowd, then your position here is more than a little hypocritical. Frankly, if it’s MY money at risk… 20% is the threshold to START a discussion. But perhaps that’s because I have my own principal at risk in ownership of small banks, so my mind is a bit more focused on the issue.
Participant[quote=paramount]
Oh get off your high horse[img_assist|nid=14709|title=High Horse|desc=|link=node|align=left|width=100|height=75]
[/quote]
No. I rather like my high horse. I’m quite happy atop it at the moment.
[quote=paramount]
And BTW those lenders are way more than likely the American tax payers not some con artist mortgage broker.[/quote]OK, let’s assume that the lenders are the American tax payers. Are you suggesting that We the People should have less strict underwriting standards than the typical private enterprise? That’s absurd. That’s how We the People ended up with the GSEs. So, contrary to your position, I think that if We the People’s money is at stake, the underwriting standards should be among the highest in the industry. I remain unsympathetic.
Now, I’m off for a ride on my high horse… at a pleasant gallop.
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