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Something about that line that's really wrong, (Did Barney's Frank say this?).
WAKE UP AMERICA
Posted on 09/05/2010 5:02:58 PM PDT by fightinJAG
If you're a buyer with little cash or a small-scale investor looking for a deal on a foreclosed house, a little-publicized national lending program could be just what you need this fall.
Here's what it offers:
• Minimal down payments — 3% for buyers who plan to live in the house, 10% for investors. Most of your down payment can come from documented gifts from relatives or others with no direct connection to the transaction.
• No requirement for an appraisal on the property unless you're applying for additional money to renovate the house. This is crucial because lowball appraisals can be deal-killers, especially when the house needs cosmetic or other repairs.
Generous "seller contribution" limits of up to 6% of the price, effectively reducing the cash you'll need to pay closing costs.
• No requirement for mortgage insurance coverage, despite your high loan-to-value ratio at purchase.
• A minimum credit score of 660 — significantly lower than the 700-plus scores many lenders now demand for conventional loans on favorable terms.
• Maximum loan amounts tied to standard conventional loan limits: $729,750 in the highest cost markets, $625,500 in others, and $417,000 everywhere else.
Who is offering such an unusual package of come-ons like this in an era of stringent underwriting requirements? It's Fannie Mae, the mortgage investment giant that got into deep trouble when the housing bubble burst and is now bleeding red ink in prodigious quantities under federal conservatorship.
(Excerpt) Read more at latimes.com ...
I live in a small cheap house but it is my house and paid for now.
Why did I buy it?
Because it is what I could afford.
Now I am pissed off to high heaven that all of this crap is going on and the likes of fannie and freddie need to be sold off to private business
Here we go again.
Insanity: Repeating the same action over and over again while expecting different results.
Uhhhhhhmmmmm...haven’t we been here before?
mark
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Something about that line that's really wrong, (Did Barney's Frank say this?).
ping
The jig is up.
Too many of the public are catching on to the level of inflation in the base price.
This will fail.
OTOH, there's something very accurate and descriptive about it, too.
No. This is not a give away program run by the politicians. The homes being offered are foreclosures owned by Fannie Mae and many are in rough shape and not in the best locations. Therefore in order to get these dogs sold, Fannie is offering favorable terms and financing. A bank owned home needing repairs is very, very difficult to finance. A bank will not make repairs (it is already losing money on the deal) and a new lender will not fund a mortgage for a home needing repairs. Currently, this inventory is sitting on Fannie’s books as a non producing asset. There is no downside. Once it is sold, there is a new owner and cash flow where there is none today. As a taxpayer, I am happy to see this. All of these REO’s need to be sold in order for the country move forward economically.
• No requirement for an appraisal on the property unless you're applying for additional money to renovate the house. This is crucial because lowball appraisals can be deal-killers, especially when the house needs cosmetic or other repairs.
Gee, what could go wrong with these terms?
It's like a game of musical chairs: pull one chair out and start the same music all over again. The end of the next round will be the same as this one, and then again and again until there are no more chairs.
Fannie Mae again? That’s like consulting a prostitute for marriage counseling!
It’s like these people still believe in unicorns.
No requirement for appraisal. So I’ll buy one of these little hundred grand cottages around here, sell it to a straw buyer for five hundred grand, kick back half of that to him, and he’ll default in two years. Do these people have no awareness of human nature at all?
Sheesh!
More trouble ahead.
“There is no downside.”
If these are non-productive assets, why not just auction them to the highest bidder, the way private lenders do?
Four years ago legions of politicians and financial advisers also claimed Fannie and Freddie had no downside risk.
Since then:
(1) Fannie and Freddie lost $125 billion in stock value.
(2) They required a $150 billion taxpayer bail out to stay solvent.
(3) The CBO estimates they will require another $135 billion bail out to stay solvent.
Well, yeah. I did discover this program’s limited to bank owned properties, which shoots down my scenario, but not a number of others.
These FHA loans are not some big secret. These loans are what is keeping the RE market going. This is what the first time home buyers are getting.
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