Posted on 06/30/2011 7:25:03 AM PDT by Notary Sojac
Banks have been reckless...which is kind of funny. My credit rating is pure gold. When I bought my VERY modest home about 10 years ago, I had a 20%+ downpayment and the bank acted like they were going to do me a favor accepting my loan app. I had to jump through my own rectum to meet their qualifications (even with my perfect credit history) all the time they were handing out liar loans like popcorn to 'others'
I remember watching all the HGTV shows in 2005-2006 with the twenty somethings who were “approved for $600K” and the realtor asking “Well, can you stretch your budget a little more”?
Which is precisely why the Chrysler Bailout in the 70s was such a bad move, for it set up the precedent that government was responsible for stopping companies from failing...I don't care if Chrysler paid back the money with interest early, it set a horrible precedent.
IMHO 5% is too low but 20% is too high for many especially if theaverage market price is over $200K like it is in many markets.I think somewhere between would work best and not kill the market further.
IMHO 5% is too low but 20% is too high for many especially if the average market price is over $200K like it is in many markets.I think somewhere between would work best and not kill the market further.
Now that is a good idea but I think somehow they would manage to label it racist even though there is nothing about a credit score that has anything to do with that.It’s all about how well you pay your bills.
PRICES NEED TO COME DOWN OR THE INCOMES NEED TO COME UP...”
IMO, not everyone needs to or should be a homeowner. Bought a home 4 years ago and paid more than 20% down. But then I live in Texas where you can generally find a reasonably priced home where you can live within your means. Lot of people don’t think about the additional cost for maintenance, utilities, taxes, etc. Many are just not willing to begin with a starter home and WORK their way up.
True Dat!
No, allowing the market to set the terms of loans makes perfect sense.
However... you and I, as taxpayers, should not be funding the buying of speculative mortgages written with absurd LTV’s through Fannie/Freddie/FHA/etc.
The regulation(s) should be set to require that loans to be purchased in the secondary market by Fannie/Freddie/FHA/etc require a 20% down payment. If a bank wants to write a note with a higher LTV ratio, then they can. They just can’t sell the note to the taxpayer-backed secondary market.
Correct, but it DOES increase the homeowner's incentive to make those payments. As such, it discourages people from taking out loans they cannot afford, otherwise thinking that the government will bail them out.
. . . except for what you paid up each month until you walk away.
Mandating 20% down would pretty much mean little to no first-time buyers into the market. The mandate would hit young college graduates exceptionally hard, as a considerable portion of them are saddled with college loans that can, in some circumstances, equal or even surpass an average mortgage payment.
This means an inflated rental market and/or a weird societal thing where adults in their twenties, including married couples, are forced to live with parents or relatives for an extended period of time due to fiscal issues. Talk about extending an already over-extended period of adolescence.
Hmm.
A societal environment where people remain in a suspended state of adolescence until their late twenties, or dare I say it, their thirties, is "not good" for people of our political persuasion, which is based on an attitude of independence, self-reliance, and personal freedom.
Knee-jerk reaction is to say let's let the free market take care of it, but then again, the free market got us redlining, which is how we got into this mess in the first place.
Food for thought. Thanks for the thought-provoking post.
You'd have to pay rent wherever you were.
Unless you're a deadbeat renter too.
In my opinion the job market for decades to come is going to favor those who can pull up roots and move with a minimum of fuss. This will push young Americans into the rental market more than any tweaking with mortgage terms will.
The one constant in any economic or financial bubble is the over-exuberance of the masses.
The tech bubble was inflated by the aggregate excessive demand of each 401k holder that wanted to get in on the dot-com action. Wall Street just obliged (as they always do) by selling us more dodgy tech stocks and finding them wherever they could get an executive team with plausible CVs, even if the companies didn’t have a clue how they were ever going to be profitable. If we the consumer didn’t care, why should Wall Street care?
The housing bubble was inflated by the aggregate demand of each American home buyer who individually believed that houses can only go up in value, and that they DESERVED that 4000 square foot mini-mansion after their long hours at home. Wall Street just obliged (as they always do), and figured out ways to funnel more money to our demand for loans, by securitization which allowed Americans to, in essence, borrow from every source of capital in the world..
The fact is that no government, and especially not a democratic government, can help a populace that is individually and collectively lacking in prudence.
Sure Greenspan and Frank and Dodd and Paulson and Bernanke poured gasoline on the fires, but they would have been replaced if they didn’t. As long as the public thinks there is a free ride to wealth, anyone that promises it will be exalted, and anyone that hinders it will be shoved aside.
. . . but that's not what you wrote.
I still live in a modest house of less than 2000 sq feet which we built in 1976, and all of the houses in our subdivision are modest. I am sure there are plenty of American Citizens who were also prudent in their housing choices.
This, and add to it social engineering on the part of the federal government designed, at least in its most noble sense, to try and combat racism. The feds gave the private sector that lemon, and the private sector discovered how to make lemonade with it . . . because the feds were more than happy to buy back that lemonade at the end of the day.
Big government and big business created this mess, and yeah, the American public was only too happy to get swept up in it.
To Asia. :)
It wasnt the down payment that was the problem.
It was giving loans to people who had no income.
If we let the banks, and their underwriters do their jobs we will be fine. it is when the government steps in and says they will underwrite and guarantee mortgages for people who would otherwise not qualify that we get into trouble.
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