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July 22, 2009 at 5:19 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #435473July 22, 2009 at 5:19 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #435791
patientrenter
Participant[quote=CA renter]Solution to the problem:
Higher down payments
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[/quote]I agree that, if we did only did one thing to avoid a repeat of the bubble, requiring much more real buyer money as a downpayment would be the right choice.
I don’t know what the right % is, but I am thinking 30%, with exceptions down to 20% if you pass a barrage of tests: you can prove that all the downpayment is yours or your immediate family’s; AND you can show that you will occupy the house as your main residence; AND the appraised value is the lesser of two completely independent appraisals, one of which is conservative, taking into account all sales, including REOs, short sales etc, and was conducted by an appraiser chosen by a representative of the ultimate investors. Regular fully public public audits of those conservative appraisals etc…
July 22, 2009 at 5:19 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #435864Participant[quote=CA renter]Solution to the problem:
Higher down payments
————————
[/quote]I agree that, if we did only did one thing to avoid a repeat of the bubble, requiring much more real buyer money as a downpayment would be the right choice.
I don’t know what the right % is, but I am thinking 30%, with exceptions down to 20% if you pass a barrage of tests: you can prove that all the downpayment is yours or your immediate family’s; AND you can show that you will occupy the house as your main residence; AND the appraised value is the lesser of two completely independent appraisals, one of which is conservative, taking into account all sales, including REOs, short sales etc, and was conducted by an appraiser chosen by a representative of the ultimate investors. Regular fully public public audits of those conservative appraisals etc…
July 22, 2009 at 5:19 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #436033Participant[quote=CA renter]Solution to the problem:
Higher down payments
————————
[/quote]I agree that, if we did only did one thing to avoid a repeat of the bubble, requiring much more real buyer money as a downpayment would be the right choice.
I don’t know what the right % is, but I am thinking 30%, with exceptions down to 20% if you pass a barrage of tests: you can prove that all the downpayment is yours or your immediate family’s; AND you can show that you will occupy the house as your main residence; AND the appraised value is the lesser of two completely independent appraisals, one of which is conservative, taking into account all sales, including REOs, short sales etc, and was conducted by an appraiser chosen by a representative of the ultimate investors. Regular fully public public audits of those conservative appraisals etc…
ParticipantWe have an enormously complex system designed to help people buy homes, keep homes, live in their own homes…. Why not just replace all of them with a simple and more transparent system:
Pay $200,000 immediate govt cash to each and every homeowner. For people who own multiple homes, pay them multiples of the $200,000. For people who don’t think that’s enough, or that spend all the money, then re-visit the payment after a few years, and pay another $50,000, or whatever people want. This would boost the economy, encourage homeownership, and help the underprivileged and the victims of financial predators to live in comfort in a nice big home in a nice area. After 30 years of that, the home will have tripled in real price, and they can sell it and live in comfort in retirement, without the bother of having to save a lot.
ParticipantWe have an enormously complex system designed to help people buy homes, keep homes, live in their own homes…. Why not just replace all of them with a simple and more transparent system:
Pay $200,000 immediate govt cash to each and every homeowner. For people who own multiple homes, pay them multiples of the $200,000. For people who don’t think that’s enough, or that spend all the money, then re-visit the payment after a few years, and pay another $50,000, or whatever people want. This would boost the economy, encourage homeownership, and help the underprivileged and the victims of financial predators to live in comfort in a nice big home in a nice area. After 30 years of that, the home will have tripled in real price, and they can sell it and live in comfort in retirement, without the bother of having to save a lot.
ParticipantWe have an enormously complex system designed to help people buy homes, keep homes, live in their own homes…. Why not just replace all of them with a simple and more transparent system:
Pay $200,000 immediate govt cash to each and every homeowner. For people who own multiple homes, pay them multiples of the $200,000. For people who don’t think that’s enough, or that spend all the money, then re-visit the payment after a few years, and pay another $50,000, or whatever people want. This would boost the economy, encourage homeownership, and help the underprivileged and the victims of financial predators to live in comfort in a nice big home in a nice area. After 30 years of that, the home will have tripled in real price, and they can sell it and live in comfort in retirement, without the bother of having to save a lot.
ParticipantWe have an enormously complex system designed to help people buy homes, keep homes, live in their own homes…. Why not just replace all of them with a simple and more transparent system:
Pay $200,000 immediate govt cash to each and every homeowner. For people who own multiple homes, pay them multiples of the $200,000. For people who don’t think that’s enough, or that spend all the money, then re-visit the payment after a few years, and pay another $50,000, or whatever people want. This would boost the economy, encourage homeownership, and help the underprivileged and the victims of financial predators to live in comfort in a nice big home in a nice area. After 30 years of that, the home will have tripled in real price, and they can sell it and live in comfort in retirement, without the bother of having to save a lot.
ParticipantWe have an enormously complex system designed to help people buy homes, keep homes, live in their own homes…. Why not just replace all of them with a simple and more transparent system:
Pay $200,000 immediate govt cash to each and every homeowner. For people who own multiple homes, pay them multiples of the $200,000. For people who don’t think that’s enough, or that spend all the money, then re-visit the payment after a few years, and pay another $50,000, or whatever people want. This would boost the economy, encourage homeownership, and help the underprivileged and the victims of financial predators to live in comfort in a nice big home in a nice area. After 30 years of that, the home will have tripled in real price, and they can sell it and live in comfort in retirement, without the bother of having to save a lot.
July 21, 2009 at 4:05 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #434718Participant+1, XBoxBoy.
July 21, 2009 at 4:05 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #434923Participant+1, XBoxBoy.
July 21, 2009 at 4:05 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #435240Participant+1, XBoxBoy.
July 21, 2009 at 4:05 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #435314Participant+1, XBoxBoy.
July 21, 2009 at 4:05 PM in reply to: Intentional defaulting, not subprime mortgage is the problem #435482Participant+1, XBoxBoy.
July 19, 2009 at 1:09 AM in reply to: Ethical considerations (none) for defaulting on non-recourse loan. #433689ParticipantCA Renter, I’d be very happy with the lenders failing. And you’re right, if that were allowed to occur, then lenders would get more careful, and we’d avoid the next bubble.
We could solve this problem with even one of these possible actions:
1. Let lenders fail
2. Require borrowers to repay
3. Require minimum 20% downpayments in all cases
There are probably more options, but these will do. Unfortunately, none of these actions will be taken.
I still think that borrowers should be responsible for their loans (and lenders too). I can’t imagine letting other people determining for me what I can or cannot borrow and repay. Each party should make their own determination of how far they can go, and the loan should be the lesser of what each comes up with. And if the loan isn’t repaid, it should be a black mark for both. In the case of the lender, the penalty is easy to determine – it’s the loss of the unrepaid loan amount. In the case of the borrower, there should be a large penalty too. I don’t see that large penalty being applied now. I guess I still think the system is lopsided, and borrowers need to be held more accountable.
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