Posted on 05/20/2011 8:27:39 AM PDT by 92nina
A group of federal agencies is considering regulations (PDF) that would restrict a vast number of homebuyers from securing private home loans, unless approved for a “Qualified Residential Mortgage.” To meet this standard, homebuyers would have to have a whopping 20 percent down payment to get a mortgage. Homebuyers also can not have been more than 60 days late on a credit card payment in the past two years or spend more than 28 percent of their income on the house. Failing to meet these and other tests means your lender will have to hold a certain percentage of your loan on their books, forcing them to charge you – the homebuyer – a much higher interest rate. So, you can either pay a higher rate, or go to the one lender exempt from these onerous rules: the government. The rule – authorized in the ill-conceived Dodd-Frank financial act – creates enormous risk for taxpayers. Already, the Federal Housing Administration insures over 37 percent of all mortgages – up dramatically from a mere 7 percent in 2007. This rule would expose taxpayers to even greater risk by placing virtually every loan that the government considers "too risky" for private lenders onto government balance sheets. This puts American taxpayers on the line to bail out future, defaulting mortgages...
Read more: http://www.atr.org/uncle-sam-wants-mortgage-a6157#ixzz1MuB0jy5T
(Excerpt) Read more at atr.org ...
Take this article and others I found to the fight to the Libs on their own turf; put the Left on the defensive at at Digg and at Reddit and in Delicious and Stumbleupon
Sounds good to me. I am required to have 20% left in equity to do a home equity loan. Why should the rules be different for the original mortgage?
Don’t like this ‘government’ component. Not good at all.
These are the qualifications that were in effect for decades. It’s about time they were reinstated.
I am sick and tired of being responsible for debts incurred by people who had no business getting a mortgage on a house they could not afford.
The 20 percent down seems logical to me - it’s what we had to pay to buy our first three homes but that was years ago. Our first house had 4000 square feet, was brand new but it only cost $65,000. You can hardly buy a closet for that amount now. People need to have skin in the game and to allow someone to have a mortgage who is not credit worthy is just asking for trouble. IMO not everybody needs to own a house.
You are going to be responsible for a lot more than that...
They WANT to drive out private lenders because who will meet these regulations? People USED to have 20% down etc. like you said.
But thats not what this says: it says you can get a private loan IF you do that but if you CAN’T, you can qualify for a government loan.
Big difference, to my understanding.
And we all know that will mean the same people who didn’t qualify before will still be on the books except at EVERYONE’s expense.
Of course, this “requirement” will be “waived” for people in a favored class — such as contributors to the political campaigns of Democrats.
Hey...
It works in Chicago...
I own a mortgage company. Only about 20% of home buyers have 20% to put down these days. Sure it makes sense in theory, but if there is no alternative to 20% down, there will be 80% less home purchases than there are now.
Fannie and Freddie still giving mortgages to those with little or no down payment, no income, no assets. It’s the Obama way.
Eight billion dollars lost in the first quarter of 2011.
I think the theory is that just as many homes will be sold as there are potential buyers. But folks will save up befor buying, and prices will adjust so that more can afford the 20% down and then all the payments.
The easier it is to buy, the more buyers, and the higher the price goes.
And even to the extent that that is not true, any artificial “cure” is worse than the perceived disease.
I realize that you’re in the business so I don’t discount your perspective.
Although the idea of 20% down and 28% of income is good, this sounds like a thinly-veiled way to nationalize the whole thing even moreso than they already have.
It’s not that liberals don’t KNOW what to do. EVERYONE knows that a 3% down-payment for a home purchase is too small.
It’s that liberals just don’t believe that a collapse of America will hurt THEM...
So basically they’re saying that EVEN IF a private bank without government backing wants to lend at less than 20% down they can’t?
THAT I have a problm with regardless of whether they should do it or not.
“You are going to be responsible for a lot more than that...
They WANT to drive out private lenders because who will meet these regulations? People USED to have 20% down etc. like you said.
But thats not what this says: it says you can get a private loan IF you do that but if you CAN’T, you can qualify for a government loan.
Big difference, to my understanding.
And we all know that will mean the same people who didn’t qualify before will still be on the books except at EVERYONE’s expense.”
I’m failing to see the difference from what was to what will be???
Your experience in this is important so you would know.
The article says:”
In a nutshell, the rule will force young, first-time homeowners, and all Americans that can’t pay at least 20 percent of a home price up front, onto a government loan. Just how many people would that be? In 2010, nearly three-quarters of homebuyers put less than 20 percent down. By exempting themselves from these regulations, the federal government is effectively undercutting the private sector, nudging Americans into government-run, taxpayer-backed loans.”
Doesn’t say they won’t get the loans...just says that folks like you won’t write them and we as taxpayers are responsible for them if they default.
Sounds to me like the mess of a couple years ago will merely be compounded next time except it will be that to not approve more and more bailouts will throw granny on the street....
This new rule only applies to the sliver that banks keep on their books; portfolio loans.
Some who are replying to this thread seem to favor 20% down as a fix to potential future loan defaults. What's being missed is the 20% down is not a free market solution. It is another of many rules being imposed by the Government via Dodd/Frank.
Does this mean that people (who agree) actually like Government control? Do these same people realize that by crashing housing prices further it's going to sink our economy further?
The housing crash is a text book example of how Government control ruins a free market. Yet, some (here) want more Government control to fix the problem?
This basically says that EVEN IF A PRIVATE LENDER WANTS TO, they CANNOT lend to you if you have under 20%.
So the government is telling banks they’re not allowed to do it even if they have PMI or whatever protecting them against default.
Exactly!
I remember when 10% was for the norm and 20% was for documentation based on self employment.
Yes we did bail out some banks and the majority paid us back. Federal loans do not have anyone to bail them out.
That, to me, is a huge difference. So I am guessing there will be a big difference.
But what do I know.
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