Posted on 06/30/2011 7:25:03 AM PDT by Notary Sojac
What a coincidence, Johnny Isakson made a fortune as a realtor.
I'm fine with the free market determining the terms for loans if the lender eats any losses rather than selling the loans to Freddie/Fannie or coming to the taxpayer for a bailout.
It's because we have not yet thoroughly purged the idea of "too big to fail" from our culture that we have the government setting these requirements.
see my post 22 above
The market stopped working the day that Henry Paulson went on his knees in front of Nancy Pelosi, begging for $800 billion so his buds wouldn't have to face the consequences of their imprudent decisions.
It has not been restarted since.
“This economy cannot recover if housing does not recover. It’s one-sixth of the economy,”
Driving housing prices down even further than current would not be helpful.
Maybe, and I know this is a crazy idea, we should let lenders determine the acceptable level of risk when writing mortgages and other loans.
FICO is too sensitive to perfect timing of payment history and small nonpayments (many of which are disputable). You can have a good FICO and still get in way over your head with a loan.
Debt to income ratio (no more than 3:1 including the loan), employment history, and accurate valuation of the property ("recent comparable sales" are what gave us the bubble, I much prefer "no more than 120x monthly rents for comparable residences") are what say "good risk" to me.
Congress shouldn’t be making any regulations dictating down payments. Minimum or max. They need to stay ouit of it
Anyone should be free to make any loan they want to anyone else at any terms which are mutually agreeable, as long as the lender is at full risk (not one penny from the taxpayers!) if that loan is not repaid.
Personally I have no confidence, NO confidence, in the ability of our government (whether Democrat or Republican) to resist the calls for a bailout of the TBTF's when the next phony crisis comes along.
So the fewer loans that get made, the fewer bad loans I'll eventually get saddled with as a taxpayer.
I agree. But also, I do not think a first time home buyer should be expected to be able to afford a MEDIAN priced home.
I would expect most of us here in freeperland bought a cheap house for our first place, and worked up from there.
By quoting the 20% downpayment for the median priced home the congress critters are intentionally misrepresenting the effect on the first time buyers.
see posts 22 and 29
Period.
If you get something for nothing down, you lose nothing if you walk away.
And speaking of default rates, blacks have a much higher default rate than other categories of borrowers, meaning that they were not being held to a higher standard, they were being held to a lower standard.
They used to.
Then young lawyers, fresh out of college, like Barry Obama, took the banks to court on the basis that 20% down was racist.
Well, after all, it is a Constitutional right. You can find it in the Constitution right under the guaranteed right to kill any babies you don't want.
You base a loan on a persons ability to repay it not on some BS score from some credit bureau. Lets face it if you can’t afford to repay the loan you shouldn’t be given one to begin with and that’s been the problem.
Banks have been lending to very high risk individuals simply because the loans have been backed by bad government programs.
Common sense goes along ways. That’s why government programs don’t use it.
The average house back then was about 1200 square feet. Those same houses are going for 2-3 times average income in my area.
The problem is that the people who can afford a 1200 square foot house are trying to buy 2500 square foot houses.
Some folks just can’t afford 20%, 10% or even 5% down no matter how long they save but they can afford to make a house payment.
Banks should base a loan on ability to repay not by the size of the down payment. A large down payment DOES NOT guarantee the loan will be repaid and that’s been proven over and over.
Because now the banks are being OVERLY restrictive on lending, and the result is prices for rentals is skyrocketing. My counter question is: why are you in favor of the government setting the down payment requirement - should that not be a free market outcome?
As soon as I read the headline I knew Isakson would be wormed in there somehow. He's not a Senator, he's a real estate agent lobbying from the inside. Worst of the seven candidates for the seat in 2004 and not getting any better.
See posts 22 and 29. If I truly believed that the government would have the cojones to say no the next time Wall Street pulls a Chicken Little like they did in 2008, I would entirely agree with you.
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