More bad news for Real Estate? (insurance, 2009, mortgage, purchase)

[London Girl]

I can't see how this can do anything but depress home values further:

*FLASH* Mortage Insurance BOOM! - The Market Ticker

UPDATE 2-MGIC to halt new business; posts steep loss | Markets | Markets News | Reuters

An enforced return to minimum 20% deposits?

[chet everett]

Au contrare

In most every market bust there comes an action that seems like "shutting the barn door after all the horses have run away" that in hindsight is THE turning point that signals the last of the confused and decieved have finally come to their senses.

I can't say with certainty that this return to sanity of requiring a decent down payment is the exact moment from which all things will get better, but I can say that for those that do have skin in the game they will be far less likely that those than walked away from nothing to keep the dominoes tumbling...

[floridasandy]

i certainly think we need to go back to the point where people actually have a higher amount of money invested in the home purchase. they wouldn't be so quick to walk away and the market would certainly have a better chance of stability. we wouldn't need the government to then step in and change all of the rules. i am surprised that obama is proposing that people turn the homes back in to the government and then have government act as landlord for these same people.

[London Girl]

I wholeheartedly agree with the principle that people should have a decent downpayment as a condition of buying a home and also I agree that those with no "skin in the game" are the ones most likely to default.

Maybe this will be the first step in a return to sensible lending and stability........

Be that as it may, I do think this will also cause downward pressure on prices for some time as those with smaller downpayments saved will be kept out of the market until they have raised the required 20%. Or, of course, until home values fall to the point where their downpayment is adequate.

I can't see any real recovery in values beginning until the unemployment situation starts to ease and the full scale of the impact of the OPT Arm and Alt A resets has been exposed - probably not until 2013 at the earliest

[Boompa]

What is happening right now is that speculators are buying up the forclosures and the government is trying to put the unqualified into the derilict houses. If you are a speculator you will get burned. If you can hang on for 7 yyears or so you should make money

[rubber_factory]

I would imagine that requiring 20% downpayments would absolutely kill housing values.

I don't think there's the political will to allow a situation where 20% downpayments are the only option. I bet Congress would intervene in the mortgage markets before that happened.

[whydoucare?]

Originally Posted by London Girl

I wholeheartedly agree with the principle that people should have a decent downpayment as a condition of buying a home and also I agree that those with no "skin in the game" are the ones most likely to default.

Maybe this will be the first step in a return to sensible lending and stability........

Be that as it may, I do think this will also cause downward pressure on prices for some time as those with smaller downpayments saved will be kept out of the market until they have raised the required 20%. Or, of course, until home values fall to the point where their downpayment is adequate.

I can't see any real recovery in values beginning until the unemployment situation starts to ease and the full scale of the impact of the OPT Arm and Alt A resets has been exposed - probably not until 2013 at the earliest

I agree with you on this point, I dont care how much money you put down, if you lose your job and you run through your savings you are going to lose your house just as well. My neighbor is barely hanging onto their house and they put down more than 30%.

[Boompa]

Originally Posted by rubber_factory

I would imagine that requiring 20% downpayments would absolutely kill housing values.

I don't think there's the political will to allow a situation where 20% downpayments are the only option. I bet Congress would intervene in the mortgage markets before that happened.

Back when I bought my first house the lender told me that the reason for the downpayment was so that I had my future invested in the property

[Traderx]

Most homes sales right now are being done through FHA. That means 3-3.5% down and no PMI.

Sorry, sanity will have to wait a bit longer I'm afraid.

[chet everett]

Originally Posted by Traderx

Most homes sales right now are being done through FHA. That means 3-3.5% down and no PMI.

Sorry, sanity will have to wait a bit longer I'm afraid.

... but the shear dearth of buyers in MANY area suggests that FHA is NOT the most common method of financing. In fact data that I have seen suggest a lot of volume is CASH and that generally means investors and others that are pretty resistant to whims.

True sanity is still a ways off, but to my way of thinking the road to sane standards includes a healthy preference for higher equity buyers.