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HonestChieffan
03-28-2011, 08:04 AM
NPR of course positions a higher down payment as a huge negative toward buyers. But this is exactly what should have stayed in place all along. Low down payments were a bad idea when it started back in the 80s and just got worse. When banks were told who and how they could loan to or worse, required to, banks lost control of their own business and trouble started to brew.




New Loans Could Raise The Price Of Homeownership
by CHRIS ARNOLD


Since the housing bubble collapsed, it's been harder for many Americans to qualify for a home loan. But soon, it might get even more difficult.

The government is reshaping the mortgage market. And right now there is strong political support for requiring much bigger down payments for most home loans. Powerful congressional Democrats and Republicans support the move, as does the Obama administration.

In a matter of weeks, federal regulators are expected to unveil new rules for home loans. The buzz is that the rules could translate into mandatory 10 percent or even 20 percent down payments for most new loans in the U.S., which would be a significant change.

A Mandatory Down Payment

For the average-priced home that would mean saving $18,000 to $36,000 for a down payment. Some experts think that's a good idea.

"We put too many people into houses they weren't qualified to buy, they didn't have income [and] they didn't have skin in the game," says Edward Pinto, a fellow with the American Enterprise Institute.

The Face Of The New Mortgage?
The government's 10 percent or 20 percent down payment rule would be for loans that could be considered "Qualified Residential Mortgages" under the Dodd-Frank Act.

These "QRM" loans would be exempt from requirements that banks retain a portion of the risk for the loans after they issue them. The idea is that it would make banks more careful about lending.

But industry and housing advocates both predict the result would be that very few non-QRM loans would actually be offered by the banks. That's because the banks wouldn't want to set extra capital aside to cover potential losses from loans that they retain risk on.

So, the idea is that these capital requirements would push almost all loans to be QRM loans. Therefore, most loans would require a 10 to 20 percent down payment.


He thinks requiring 20 percent down is probably going too far and favors a 10 percent down payment rule. He says that would be good evidence of a person's ability to handle owning a house.

"And if people know they need the down payments, they'll start saving for them," he says. "You can't just buy lattes if you need to be saving for down payments."

A Return To The 1960s?

Some economists and many housing advocates don't like the proposed down payment rules.

They say this would set the country back more than 30 years in terms of the ability for minorities and people without family wealth to buy houses.

Mike Calhoun, the president of the nonprofit Center for Responsible Lending, estimates it would take seven years for the average American to save up even a 10 percent down payment.

"If it made a big difference in the performance of mortgages it would be worth it," he says. "But the real key is not the down payment."

Calhoun says some loans with smaller down payments perform quite well. He says the housing bubble and subsequent foreclosure mess happened mainly because lenders got sloppy in other ways. For example, banks gave out no-document loans where they didn't even check to see if a homebuyer made enough money to pay back the loan.

"All those other safeguards were totally abandoned," he says.

Calhoun says "bailout shock" is the reason why the big down payment rule is so popular right now among both Democrats and Republicans

"The taxpayers got stuck with a big bailout, and so people sort of want to throw the baby out with the bath water and say, 'Let's never do anything like that again.'"

The Death Of 30-Year Fixed-Rate Loans?

The down payment is just one big change. Lawmakers are talking about dismantling the government-backed mortgage finance giants Fannie Mae and Freddie Mac. And Pinto, of the American Enterprise Institute, says that for decades Fannie and Freddie have subsidized one of the bedrocks of the current mortgage industry: the 30-year fixed-rate loan.

"That exists because the government subsidizes it," he says.

Going forward, banks might prefer to push borrowers toward shorter-term loans instead, perhaps 20-year fixed-rate loans. In most other countries, loans with shorter-term fixed rates are much more common. But going down that road could also make it more expensive to buy a house.

Calhoun, of the Center for Responsible Lending, doesn't like that path. But Pinto says in the long run it might help homeowners.

"The problem with the 30-year loan it amortizes incredibly slowly," Pinto says. In other words, homeowners pay a ton of interest up front in the first years, and it takes a long time to pay off what they owe.

Twenty-year loans do have moderately higher monthly payments, but Pinto says borrowers would quickly find themselves owning a bigger chunk of their houses.
http://www.npr.org/2011/03/27/134663182/new-loans-could-raise-the-price-of-homeownership

healthpellets
03-28-2011, 10:26 AM
They say this would set the country back more than 30 years in terms of the ability for minorities and people without family wealth to buy houses.



Going forward, banks might prefer to push borrowers toward shorter-term loans instead, perhaps 20-year fixed-rate loans. In most other countries, loans with shorter-term fixed rates are much more common. But going down that road could also make it more expensive to buy a house.



you don't need family wealth to buy a house. dumb. dumb. dumb. you need to save some money. spend less, save more. really simple concept. might it take some time if you want to buy a $250k house? sure, it could.

but to say that it would disproportionately affect minorities is just dumb. will it affect low income wage earners? yes. but it has nothing to do with race. it has to do with income. but if you can't save enough each month that if combined with your rent payment would equal the monthly payment on your mortgage, then you probably shouldn't be looking at buying a house.

as for 30 year mortgages...ugh. it's great for the MID to be paying all that interest up front. but man, i'll be done paying off the loan in 15 years or less. no way i'm gonna have this albatross around my neck for 30 years.

and a 15 or 20 year loan doesn't make it "more expensive" to buy a house as asserted in the quoted portion above. in reality, it makes it cheaper to buy a house. in the short term you pay more. but in the long run, it's so much cheaper.

ClevelandBronco
03-28-2011, 11:21 AM
...to say that it would disproportionately affect minorities is just dumb. will it affect low income wage earners? yes. but it has nothing to do with race. it has to do with income.

That's what YOOOUR KIND of people AAALWAYS SAAAY when all they're REEEALLY DOING IS USING COOODE for "I sure as HELL don't want to live next door to THEEEIR KIND of people." You're just ONE OF THOOOSE KIND of people that doesn't want to live next door to BLAAACK PEOPLE, and BROOOWN PEOPLE, and TAAAN PEOPLE, and BEEEIGE PEOPLE, and OFF-WHIIITE PEOPLE, and JEUUWISH PEOPLE, and...well, I guess this won't mean shit to Jewish people, but YOU KNOW WHAT I MEAN. DON'T YOU!?! AND AREN'T YOU?!? NOW I KNOW where that little Hitler mustache comes from in your avatar. "Have a nice daaaaay." Yeah. You can HAVE a nice day if you're WHITE. But if you're not, well then it's just, "FUCK you. You can RENT a nice day from US, or live in some shitty government nice day somewhere WITH EVERYONE ELSE WHO DOESN'T LOOK LIKE MITT FUCKIN' ROMNEY."

ClevelandBronco
03-28-2011, 11:43 AM
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ClevelandBronco
03-28-2011, 11:46 AM
<iframe title="YouTube video player" width="640" height="390" src="http://www.youtube.com/embed/ugLKGRmhVTM" frameborder="0" allowfullscreen></iframe>

vailpass
03-28-2011, 11:55 AM
You mean houses cost money?

KC Dan
03-28-2011, 02:41 PM
GOOD! People have to have serious skin in the game (besides signing a contract) should they decide to buy a house.

KC native
03-28-2011, 06:24 PM
You mean it will go back to what it was like before we had a hyperbolic boom and crash in real estate? That's what it should have been and it's good we're going back to that. Home ownership isn't for everyone.

Donger
03-28-2011, 06:26 PM
You mean it will go back to what it was like before we had a hyperbolic boom and crash in real estate? That's what it should have been and it's good we're going back to that. Home ownership isn't for everyone.

Racist.

KC Dan
03-28-2011, 06:28 PM
You mean it will go back to what it was like before we had a hyperbolic boom and crash in real estate? That's what it should have been and it's good we're going back to that. Home ownership isn't for everyone.Your best post ever!:clap:

Brock
03-28-2011, 06:57 PM
Wonder what the consequences will be as far as house prices.

HonestChieffan
03-28-2011, 07:14 PM
You mean it will go back to what it was like before we had a hyperbolic boom and crash in real estate? That's what it should have been and it's good we're going back to that. Home ownership isn't for everyone.

Who wrote this post?

Brock
03-28-2011, 07:19 PM
general belief it seems would be a depression of 25%-30% of a house's current value.

Yikes! time to be a slumlord again.

alnorth
03-28-2011, 07:24 PM
general belief it seems would be a depression of 25%-30% of a house's current value.

Ouch. That will likely result in a really big increase in strategic defaults.

On the other hand, if prices fall that much, getting into a house might be easier than you'd think. Ignore crazy states like CA and expensive suburbs, if you are a poor young couple trying to get into a small starter home, 90-100k today wouldn't be bad. Lets call it 100k. FHA loan, you used to need 3,500.

Price crashes to 70k, at 10% now you need 7,000. Really only double that low 3.5% down payment instead of almost triple.

HonestChieffan
03-28-2011, 07:27 PM
general belief it seems would be a depression of 25%-30% of a house's current value.

General belief by whom?


Who comes up with this stuff?

ClevelandBronco
03-28-2011, 07:30 PM
General belief by whom?


Who comes up with this stuff?

Hey, guys? This one's asking questions. What do we do with him?

healthpellets
03-28-2011, 07:31 PM
nm. wrong thread. removing the MID would depress a house's value that much.

no idea what a required down payment of 10-20 percent would do to value.

LiveSteam
03-28-2011, 07:31 PM
I live next door to a black couple. They have a beautiful raised ranch house that the GOV is paying for. As matter of fact. She isnt supposed to have her Black boy friend living with her, in her house that she pays $95.00 a month for. But she does. Not that I care. They are nice god fearing poeple. & the last last batch was gang banging scum.

Brock
03-28-2011, 07:53 PM
nm. wrong thread. removing the MID would depress a house's value that much.

no idea what a required down payment of 10-20 percent would do to value.

Okay. In my mind, however, I'd guess that a much smaller pool of eligible buyers is going to impact price somehow (downward).

Brock
03-28-2011, 07:53 PM
I live next door to a black couple. They have a beautiful raised ranch house that the GOV is paying for. As matter of fact. She isnt supposed to have her Black boy friend living with her, in her house that she pays $95.00 a month for. But she does. Not that I care. They are nice god fearing poeple. & the last last batch was gang banging scum.

You should be proud of your amazing tolerance.

Donger
03-28-2011, 08:19 PM
I live next door to a black couple. They have a beautiful raised ranch house that the GOV is paying for. As matter of fact. She isnt supposed to have her Black boy friend living with her, in her house that she pays $95.00 a month for. But she does. Not that I care. They are nice god fearing poeple. & the last last batch was gang banging scum.

Forgive my ignorance, but is this accurate? If so, how?

ClevelandBronco
03-28-2011, 08:20 PM
Forgive my ignorance, but is this accurate? If so, how?

Section 8 would be my guess.

LiveSteam
03-28-2011, 09:03 PM
Section 8 would be my guess.

Its a H.U.D. house in the nice part of Omaha. Omaha has what they call scattered site housing. I dont know if other cities do? Omaha thinks moving poor African Americans out of the hood & in to other parts of the city will help the fight against gangs. It hasn't. The gangs have cars & can pretty much go anywhere. Not sure if the Gov buys the cars to. But wouldn't surprise me.
$95.00 a month for 18 years & the house will belong to them.
How fair is that? It not. But like I said, they are nice people. & compared to the first peeps which were black gang bang-ers. & then the WHITE GOD DAM TRASH THAT LIVED THERE 2 YEARS AGO. I couldn't ask for nicer African American family. I hope they stay.

ClevelandBronco
03-28-2011, 09:08 PM
Its a H.U.D. house in the nice part of Omaha. Omaha has what they call scattered site housing. I dont know if other cities do? Omaha thinks moving poor African Americans out of the hood & in to other parts of the city will help the fight against gangs. It hasn't. The gangs have cars & can pretty much go anywhere. Not sure if the Gov buys the cars to. But wouldn't surprise me.
$95.00 a month for 18 years & the house will belong to them.

No shit? What gang do I have to join?

healthpellets
03-28-2011, 09:11 PM
Its a H.U.D. house in the nice part of Omaha. Omaha has what they call scattered site housing. I dont know if other cities do? Omaha thinks moving poor African Americans out of the hood & in to other parts of the city will help the fight against gangs. It hasn't. The gangs have cars & can pretty much go anywhere. Not sure if the Gov buys the cars to. But wouldn't surprise me.
$95.00 a month for 18 years & the house will belong to them.

really curious what that does to housing prices in neighborhoods with the "scattered" housing. are we talking typical neighborhoods or higher middle-class hoods? wouldn't seem fair to move them next to houses with a six figure incomes. pressure to keep up with the Jones so to speak.

LiveSteam
03-28-2011, 09:15 PM
My house is worth around 135 to 140 thousand

LiveSteam
03-28-2011, 09:17 PM
No shit? What gang do I have to join?

Non educated scum is what I call their gang.
Omaha finds out you are raising lil pig gang members . They will toss you out. & fast.

alnorth
03-28-2011, 09:24 PM
Wikipedia (http://en.wikipedia.org/wiki/Section_8_(housing)) seems to have the details.

Assuming its not a project (which it isn't, if its not a big apartment complex), the tenant has to apply for section 8 (huge waiting list, means-tested but you have to have income), and the landlord also has to sign up for section 8. If the landlord doesn't want to participate, they don't have to.

The government requires inspections and that the rent be no higher than fair market rent (however the feds determine that) for that house in that area. Also, the feds require that the tenant pay at least 30-40% of their income for rent. The feds make up the rest by paying the landlord, and sometimes the feds pick up some of the utilities too. In return for giving up some freedom and maybe a higher price, the landlord gets a pretty reliable stream of tenants since there's always going to be a section 8 tenant looking to move in.

If its a nice expensive house in a rich neighborhood, the landlord probably wont want to sign up for section 8 (and be limited on how much to charge).

ClevelandBronco
03-28-2011, 09:27 PM
Wikipedia (http://en.wikipedia.org/wiki/Section_8_(housing)) seems to have the details.

Assuming its not a project (which it isn't, if its not a big apartment complex), the tenant has to apply for section 8 (huge waiting list, means-tested but you have to have income), and the landlord also has to sign up for section 8. If the landlord doesn't want to participate, they don't have to.

The government requires inspections and that the rent be no higher than fair market rent (however the feds determine that) for that house in that area. Also, the feds require that the tenant pay at least 30-40% of their income for rent. The feds make up the rest by paying the landlord, and sometimes the feds pick up some of the utilities too. In return for giving up some freedom and maybe a higher price, the landlord gets a pretty reliable stream of tenants since there's always going to be a section 8 tenant looking to move in.

If its a nice expensive house in a rich neighborhood, the landlord probably wont want to sign up for section 8 (and be limited on how much to charge).

If LiveSteam's point about the resident family eventually owning the house is correct, it's definitely not Section 8.

LiveSteam
03-28-2011, 09:29 PM
Wikipedia (http://en.wikipedia.org/wiki/Section_8_(housing)) seems to have the details.

Assuming its not a project (which it isn't, if its not a big apartment complex), the tenant has to apply for section 8 (huge waiting list, means-tested but you have to have income), and the landlord also has to sign up for section 8. If the landlord doesn't want to participate, they don't have to.

The government requires inspections and that the rent be no higher than fair market rent (however the feds determine that) for that house in that area. Also, the feds require that the tenant pay at least 30-40% of their income for rent. The feds make up the rest by paying the landlord, and sometimes the feds pick up some of the utilities too. In return for giving up some freedom and maybe a higher price, the landlord gets a pretty reliable stream of tenants since there's always going to be a section 8 tenant looking to move in.

If its a nice expensive house in a rich neighborhood, the landlord probably wont want to sign up for section 8 (and be limited on how to charge).

We had several sec 8 rentals back in the 90s. big big big mistake
one time the fricken idiots broke out the basement concrete floor & started a pot growing operation. another had 5 to 10 dogs piss in every corner of the house. another burnt the god dam kitchen up. It was nightmare

ClevelandBronco
03-28-2011, 09:30 PM
We had several sec 8 rentals back in the 90s. big big big mistake
one time the fricken idiots broke out the basement concrete floor & started a pot growing operation. another had 5 to 10 dogs piss in every corner of the house. another burnt the god dam kitchen up. It was nightmare

I made the same mistake once. Once.

petegz28
03-28-2011, 09:51 PM
I don't think this would have a lasting effect on home prices in the negative. Actually it will stabalize the entire industry. Home builders may not be able to build as many and sell as fast but they will be able to build and sell with more confidence and banks will be able to loan with more confidence.

alnorth
03-28-2011, 10:24 PM
Well, one thing's for sure, my timing was certainly perfect. Finally bought my first home two years ago. 3.5% down payment, collected an $8,000 bribe from the government, and locked in a 5 point something mortgage.

Before, I was inclined to continue to rent due to the freedom and less hassle that comes with being a tenant able to leave on a month's notice and never having to care if something broke down, but I simply couldn't pass that up. I might never see a deal that good again.

LiveSteam
03-28-2011, 10:31 PM
Well, one thing's for sure, my timing was certainly perfect. Finally bought my first home two years ago. 3.5% down payment, collected an $8,000 bribe from the government, and locked in a 5 point something mortgage.

Before, I was inclined to continue to rent due to the freedom and less hassle that comes with being a tenant able to leave on a month's notice and never having to care if something broke down, but I simply couldn't pass that up. I might never see a deal that good again.

My lil sister took full advantage of this to

Chocolate Hog
03-28-2011, 10:33 PM
We had several sec 8 rentals back in the 90s. big big big mistake
one time the fricken idiots broke out the basement concrete floor & started a pot growing operation. another had 5 to 10 dogs piss in every corner of the house. another burnt the god dam kitchen up. It was nightmare

So thats where Damon Benning went.