Fannie and Freddie to consider underwriting 125% of loan value (CA, number, foreclosure)

[suzie02]

Originally Posted by 70Ford

I gotcha. You can afford it. I think everyone would like to not have to pay PMI.

Well if I refi to save $100-$150 per month and then I have to pay $200 in PMI what is the point of refi. When I bought my house I put 20% down so I didn't have to pay PMI?. I do not plan to start now.

News flash for you, a lot of people do not pay PMI now. Remember those 80/20 mortgages. 0% down and no PMI.

I've noticed that you only pick at certain parts of my posts. I guess you have no argument for the other parts.

[user_id]

Originally Posted by 70Ford

I know, I know YOU'RE good for it. But recently, Fannie and Freddie have added a whole crapton of bad mortgages to their portfolio. Which is a bad thing. Now, they are going to give those bad mortgages even more credit.

As the other posted mention this is not true, they are not "giving even more credit". They are simply refinancing loans they currently hold. This does not increase their risk exposure or potential loses. Rather the opposite.

Originally Posted by 70Ford

Why would I believe the vetting process would be any different this time.

Does not matter, they already own the loans.

Originally Posted by 70Ford

Imagine this. 100 percent. Now imagine 125 percent. Which is another 1/4th. Which means a 30 year loan becomes a 37.5 year loan.

Huh? The loan amount is not increasing, rather its the value of the home that has decreased. Traditionally, they would not be able to refinance because they have negative equity. This is giving people with negative equity the opportunity to refinance into more attractive loans.

[floridasandy]

why are people even trying to hang onto negative equity homes? with the 80/20 loans they are running 100% debt levels on a house that is likely to depreciate further in this economy. they basically own nothing.

[suzie02]

Originally Posted by floridasandy

why are people even trying to hang onto negative equity homes? with the 80/20 loans they are running 100% debt levels on a house that is likely to depreciate further in this economy. they basically own nothing.

Because they want to own their homes and not be renters for the next 7-10 years. Because it is their home and not an investment property.

[Kaye02]

Originally Posted by floridasandy

why are people even trying to hang onto negative equity homes? with the 80/20 loans they are running 100% debt levels on a house that is likely to depreciate further in this economy. they basically own nothing.

Well, a lot of people like their homes. Like my mom, she loves her home, even if it was only worth 1 cent I'd bet you anything that she'd still love it just as much. A home is not merely an investment, to some people it's well.... home. Also, the market will correct itself eventually (though it may be a long time) and home prices will go back up at least somewhat. Would it not make more sense to wait it out and hang on to it?

[user_id]

Originally Posted by Kaye02

WAlso, the market will correct itself eventually (though it may be a long time) and home prices will go back up at least somewhat. Would it not make more sense to wait it out and hang on to it?

I think this would depend on your local market. In the bubble markets, like most of California, Las Vegas, Miami, etc if you purchased during the peak you're unlikely to see that price again for decades.

[suzie02]

Originally Posted by user_id

I think this would depend on your local market. In the bubble markets, like most of California, Las Vegas, Miami, etc if you purchased during the peak you're unlikely to see that price again for decades.

True. That is why the program would only go up to 125% not 200 or 300%.

[Kaye02]

Originally Posted by user_id

I think this would depend on your local market. In the bubble markets, like most of California, Las Vegas, Miami, etc if you purchased during the peak you're unlikely to see that price again for decades.

Yes, very true. I should have clarified, I wasn't thinking about people that purchased at the peak. I was thinking of all those other people (like Suzie02) who weren't dumb enough to purchase at the peak or out of their price range yet still saw a huge depreciation in their home values.

[floridasandy]

most of the people in trouble are the people who purchased at the peak. some people tried to use their homes as an ATM machine and those days are going to be over. as well, some people seem to think that their homes are going to be a cash cow for their retirement. if people are just looking to stay in their homes because they want to live in them then it might make sense to do the refinance because a home is about more than just money.

people who are refinancing because they think they are going to see a lot of appreciation in the future may be surprised however.

[70Ford]

Originally Posted by suzie02

Well if I refi to save $100-$150 per month and then I have to pay $200 in PMI what is the point of refi. When I bought my house I put 20% down so I didn't have to pay PMI?. I do not plan to start now.

News flash for you, a lot of people do not pay PMI now. Remember those 80/20 mortgages. 0% down and no PMI.

I've noticed that you only pick at certain parts of my posts. I guess you have no argument for the other parts.

I have no argument at all. I have observations. I'm sorry if you are angry that you can't get a new loan without PMI.

News flash for you, you're stating the obvious.