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I read this article today about steps that could be taken to help resolve this housing mess. Does anyone have any thoughts as to whether this "rate reduction" idea will ever fly? 2.99% on a 30 year fixed?? Wow! Link below. I'd appreicate any thoughts/insights you all have to offer!
but reducing rates isn't solving the issues at hand. it may help those who are having trouble though. unfortunately i think it would be another failed attempt. it would be a temporary solution to a long term problem. the problem isn't that simple. 2700 foreclosures a day, yes a day! giving money to banks to cover the past and present loses isn't solving the future problems, hence liquidity isn't solved.
here is the problem, FUNDING, most often they refer to this as liquidity.
when freddie mac and fannie mae stopped purchasing the b/c (subprime) credit mortgages there was no longer any liquidity.
the solution is very simple. it is law that banks have to offer these (bad) loans. i call them affirmative action loans. all the government has to do is insure its own requirements. if they want people to be able to obtain mortgages who cant afford them or have a history of not paying bills, then they need to insure them.
FHA only covers 20% of the loan amount.
if the government honored the loans they required to be made, then issue would be solved. and market would correct itself in 6 months.
home values have gone down so much, people think they can walk away now and buy something in a few years at half the price.
The current situation is NOT SIMPLE and the odds of it being "fixed" but anything other than some slow, complex, subtle changes are NOT GOOD.
Like Dave says, the rate issues do NOTHING to address the FUNDING, hell it would probably make things worse! I mean seriously, every one ought to agree that "CHEAP MONEY" is one of the big culprits that drove prices higher and higher, and why would we want to do that?
Can some COMBINATION of the things listed HELP to get things headed in the right direction? Sure, my personal favorite is the "shared appreciation mortgage", as one TOOL that could help restore a lot of faith in homebuying and lending, but even THAT has to be done carefully lest it leave to many people too eager rewrite the whole Tax Code...
My gut tells me that the Nation's best hope for seeing things "trend upward" may be from the nature of "mid term elections" in 2010. Either people "will be better off in 2010 than they were in 2008" or they will "throw the bums out"...
Can appropriate regulatory changes AND direct mortgage relief AND new kinds of mortgages be enacted in that time frame? We shall see...
Thanks for your input. I know there is no simple solution. In reading the article, it seems (to somoene like me who doesn't know a lot about mortgages) that capping rates on 30 yr fixed mortgages might at least get more buyers into the market which would help decrease the number of foreclosures and help home values. I understand it's more complicated than that. I'm just hoping for some low rates in the near future for my personal situation, and wondered if anyone had heard whether that might really happen.
Thanks for your input. I know there is no simple solution. In reading the article, it seems (to somoene like me who doesn't know a lot about mortgages) that capping rates on 30 yr fixed mortgages might at least get more buyers into the market which would help decrease the number of foreclosures and help home values. I understand it's more complicated than that. I'm just hoping for some low rates in the near future for my personal situation, and wondered if anyone had heard whether that might really happen.
it doesn't matter if they give .1% or even 0%, because most people cant qualify to get financed.
It'll never happen. The reality is, people who are paying their mortgage on time are not going to get any help.
The problem starts with the buyers... no one should ever buy a home that they can not afford. People bought thinking they could always refi or sell later when the home was worth much more. Now that it's worth less and they are stuck, they blame the bank for giving them the money.
Now, there is a credit crunch and everyone is blaming the banks for NOT giving them money.
Everyone is partially to blame, but it starts with personal financial responsbility.
I guess what I don't understand is - why is the solution to now require investment property borrowers to fork over 20% before a lender will give a loan. If someone has the credit score and the debt-to-income ratio to afford the payment on the property, even with her first, primary property, why not just give the loan and keep the downpayment at 10%, as it has been for sometime with investment properties. I understand why a lender would WANT to ask for 20%, but, to me, if you ask for 20%, and investors are not willing to do it, how is the lender really being helped? Banks are racking up foreclosures night and day, but they can't get rid of them b/c the lending policies are so ridiculous.
I also often wonder if the banks really want to keep stacking up the losses from foreclosures. Does it really help the bank with write-offs? I have looked for a foreclosure for 3 months. Most of the time, the agents working for the banks do not call back (or call back weeks later), the lockbox codes are never write (and the agents don't have the right code when you call), you are told to make an offer and then find out that the bank hasn't even approved the property as a short sale (for example). It is a total mess. Where are the banks finding these agents?
With agents like these, and lending policies like those in place now, I'm starting to think that maybe the banks WANT to keep those foreclosure and short sale properties on their rolls.
Yet, at every turn, they are moaning about the numbers of foreclosures and reporting record losses. What's really going on?
It's ridiculous,
SC
Quote:
Originally Posted by NJ987654
It'll never happen. The reality is, people who are paying their mortgage on time are not going to get any help.
The problem starts with the buyers... no one should ever buy a home that they can not afford. People bought thinking they could always refi or sell later when the home was worth much more. Now that it's worth less and they are stuck, they blame the bank for giving them the money.
Now, there is a credit crunch and everyone is blaming the banks for NOT giving them money.
Everyone is partially to blame, but it starts with personal financial responsbility.
There is considerable disarray in the real estate market. Systems that worked reasonable well for years, if not decades, have ground to a halt. The increased down payment requirement IS A MOSTLY A GOOD THING, as it puts a bigger more solid FLOOR under things and THAT takes risk out of the system.
Real estate, especially residential real estate, is not DESIGNED to be highly risky. People don't want to see they property values fluctuate wildly. Local governments LIKE to see property taxes move is slow orderly fashion. Banks are happy to have people borrow large sums and pay it back over a working lifetime. These things are part of a strong US economy that has fueled a might big engine.
The financial people basically LIED TO THEMSELVES that buying with no money down, on adjustable terms, with questionable income was sustainable. The finance people have paid for that lie with the implosion/elimination of MANY firms and jobs. The customers who came to rely on that temporary madness are out of luck. Even those of us who did NOT directly participate in the madness are harmed, on way is the "rebound" in overly cautious lending.
Frankly I am not going to shed too many tears for investment buyers that have to come up 20% down -- if that forces them into fewer deals so be it. Eventually if that system stays too restrictive a parallel system of lending will sprout up with easier money and more profits, but hopefully with tighter access, better regulation, and no cry babies that run to "Mommie Fed" to put BandAides on the bloody stumps where the sharks they swim with gnawed off their legs...
20% use to be required to buy a primary home in the 1970s and 1980s! Now we are saying that investors DESERVE to put down less.
You can't be an investor if you don't have money to invest. 20% is reasonable for the risk a lender is taking. People forget that mortgage companies are giving huge amounts of money to private citizens at very low rates!!! That's a lot of risk.
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