Posted on 06/10/2011 7:24:42 AM PDT by Kaslin
This is a good idea and long overdue.
In addition, the new proposals announced this week would cap the amount of income that borrowers could devote to mortgage payments to no more than 28 percent of gross income.
This is a good idea and long overdue.
Worse, it would disqualify any borrower whose combined debt payments amounted to more than 36 percent of monthly gross income.
This is a good idea and long overdue.
Why is it a good idea for individuals to go into debt up to their eyeballs just like the government.
The housing bubble was created because it vastly increased demand by lowering lending standards. Now that those folks can’t pay, the bubble pops.
There is nothing preventing private lenders from holding loans to doctors, lawyers etc who have high income upside, they just can’t sell them to the government and leave the tax payers holding the bag if things go bad with the loan.
If we don't keep these programs, how will people who can't afford housing by a home?
Good grief, I'm surprised he can fog a mirror by himself.
“The housing bubble was created because it vastly increased demand by lowering lending standards.”
Which then fed on itself as people could bid up the price of houses with money they were never going to pay back, forcing financially responsible people to pay an artificially high price. For those responsible people, it was like they had to use their own real money to bid against someone using Monopoly money.
Terrible idea. The lender gets huge profit and no risk. You think home sales are slow now? Institute these changes and nothing will sell. Longer term loans are a better idea than this.
It's not just 'home ownership', it is a question of where a society wishes to invest it's wealth. McMansions for the masses with those lovely 9 foot ceilings requiring all that extra heating and cooling, or factories to create wealth for current and future generations. Are we talking home ownership for those who can afford it or palace ownership for everyone?
Aren’t these the rules that used to be pretty standard for most banks naturally? I don’t have any problem with it. I would just say that for every 10% additional down payment beyond 20%, there should be some flexibility in the debt to income ratios. If someone has serious “skin” in the game they are a much better risk and the loan to asset ratio is much safer.
Financially, yes, but should the government (who was largely responsible for the problem to begin with) force it?
Also, it would destroy what little equity remains since it would essentially take 70% of potential buyers out of the market for two reasons:
1. Fewer have the 20% down
2. Those that have enough equity to sell and “buy up” no longer will after their values plummet even more.
It will basically snowball a decline in home values to far UNDER their likely intrinsic value for a good decade.
Probably something ultimately good would result, but, there will be a LOT of people, probably 40% of the population, who are so far underwater in their homes that the value of their home will likely be less than 50% of their mortgage balance.
I’m not even getting into the income requirements, but analyzing that it seems to be pretty on-target with what most requirements are anyway.
If a private lender without a government guarantee wants to lend at less than 20% down though, why should the government stop them?
Here in the south, I find my 9 foot ceilings more comfortable in the summer than my previous 8 foot ceilings. My next house will have 12 foot ceilings.
I think these standards swing the pendulum too far in the opposite direction. The domino effect from taking that many buyers out of the market will be disasterous, at least in the short term.
Aristocracy!
A solid recovery can only happen when home buyers “have skin in the game”.
Has the cause of this disaster already been forgotten?
Like so much else that damages America, the federal government precipitated this recession/depression with their foolish racist demands that lenders finance homes for people who do not have the ability to pay back the loans.
Of course, lending institutions ran amok with the policy once they found the profitable loopholes, but the root cause is social engineering by a leftist, racist government.
Yes, all good ideas. But the government has no business being in the reale estate market and the financial markets at all. The market should determine whether the person is at risk or not. This is more regulation from central planners...
Ladder futures are rising as we speak. ;^)
I agree with all these rules, however the US Gov is why there is a mess right now, subprimes loans in addition to Fannie/Freddie owning in incredible amounts of loans. I just found out they own our loan, a normal over 20% down down coventional 15 year. Why are they buying loans like mine?? The gov needs to get out of the loan business.
I agree with all these rules, however the US Gov is why there is a mess right now, subprimes loans in addition to Fannie/Freddie owning in incredible amounts of loans. I just found out they own our loan, a normal over 20% down down coventional 15 year. Why are they buying loans like mine?? The gov needs to get out of the loan business.
Central planning got us into this mess. So their solution is more central planning.
Returning the housing industry to normal is going to take at least five years, so why not get it right?
Financially, the biggest problem our nation has is Leverage, i.e. we're over-leveraged: Wall Street, the federal debt, credit cards, student loans...need I go on?
I don't know where the bottom is on housing prices, but it's obvious we aren't there yet.
20% too steep? What's wrong with 15% combined with a credit score of 720+ and verifiable income for the past 3 years?
Beats the heck out of someone with a credit score of 550 and no verifiable income getting a home loan for $600K.
I am against micro-management of the economy by government prescription. Very often, so called consumer protection regulations have just the opposite effect. They hurt more than they help. This is just another manifestation of the nanny state in action.
Intervention by the government created the housing market bubble in the first place. Relaxing market based qualifications by government coercion was the main culprit. Such a regulation would swing the pendulum back in the opposite direction way too far. The market had it right and the government had it wrong all along. The government should butt out and let the market place do what it does best.
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