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Seeking opinions on government plan to bailout mortgage lenders, banks, struggling homeowners, bailout good for economy or negative, big brother intervention
Rate cuts won't make a huge difference.
The bottom end was buying houses with interest only teaser rates even while fixed mortgage rates were at an all time low.
Entry level housing is dead. Without the little fish, no move-ups.
And the fed has to watch inflation and the value of the dollar, they can't do what Greenspan did years ago and drop to 1.
Olecapt stating that SFH prices rose in Vegas is more proof. Median prices have momentary blips up as entry level dies and only higher end houses (people with money) are sold. It is temporary.
Vegas still has record level inventory levels. This is probably one of the worst markets in the country for sellers.
It'll be interesting to see who's right, is it the pessamistic sideliners or the optomistic buyers and sellers? Time will tell.... I think by waiting until 2011 might just be a little over the top... Maybe some markets will really take a hit but not all. All this doom and gloom generalization (if it happens) is really specific to certain areas and that's what's important. Figure out where those area's are if you want to take a risk, stay out if you don't.
I also think that constantly beating the drum of doom (media and certain others) is creating a stir at the moment will become boring as soon as a bigger story or a new president takes over.
I don't care how much I'm told the sky is going to fall, until it does it's not a reality, sorry.... and continuing to say it will not make it happen.
Jim, I really don't understand your logic here. You try to label people who are financially savvy "pessamistic sideliners" while you label everyone else "optomistic buyers & sellers".
Lets play your game and call a home a financial "investment". Aren't you supposed to buy low and sell high? What do you think these people on the sidelines are doing? They are smart and waiting for the prices to come down. You seem to advocate that there isn't a problem and its ok to buy now.
Are you trying to encourage to buy however not encouraging people to wait it out like they've correctly done and continue to do?
Fact is, the housing market is totally different than 3 or even a year ago. Mortgages are very difficult to come by. Lenders aren't recklessly allowing 100% financing anymore. Extremely good FICO scores are required.
This is all very healthy for the market. Not sure what or where your going w/your arguments???
Jim, I really don't understand your logic here. You try to label people who are financially savvy "pessamistic sideliners" while you label everyone else "optomistic buyers & sellers".
Lets play your game and call a home a financial "investment". Aren't you supposed to buy low and sell high? What do you think these people on the sidelines are doing? They are smart and waiting for the prices to come down. You seem to advocate that there isn't a problem and its ok to buy now.
Are you trying to encourage to buy however not encouraging people to wait it out like they've correctly done and continue to do?
Fact is, the housing market is totally different than 3 or even a year ago. Mortgages are very difficult to come by. Lenders aren't recklessly allowing 100% financing anymore. Extremely good FICO scores are required.
This is all very healthy for the market. Not sure what or where your going w/your arguments???
Ok, I'll play. Those that have waited on the sidelines have missed one heck of a runup and will most likely miss again waiting for the crash. So, following the stock idea, any decent stock trader will tell you never try to time a market you will get burned most every time.
What I was saying when reffering to the pessamists was the idea that the whole market is going to crash big time, that there's going to be some kind of fire sale on property in most markets. There is no evidence of that at this time.
There are corrections going on in some areas but most are holding pat, and from what I've been able to glean so far is appreciation is going to slow to 3-4% instead of double digits. SO? BTW, before you say it, yes some are selling short or forclosing but that is nowhere near the majority of sellers. Some are getting nervous and some just have to go so they will lower their prices a bit but to the extent the pessamists say? I just don't see it. Not yet....
Jim, I'm somewhere in the middle on this. I do agree that people shouldn't "time" the market, however even you would have to admit that if your renting and and in no rush to buy, why not wait till prices come down even further?
Not all people missed the runup. Alot of people were not in a position to buy when the runup started. Many people have only been in position for the past 3-4 years.
Depending on who you talk to, there is a "fire sale" so to speak in ALOT of markets. Sellers can't sell no matter what. People are getting desperate because they foolishly bought a home before they sold their original. Don't think this is really disputable.
What areas are holding pat? Can you tell me? Very, very limited areas compared to the country as a whole.
Montana is one, Tennesse is another,Texas is another. Mostly markets that have had historicaly low house prices. As for "real appreciation" I guess that depends on what you mean... 3-4% or 10-30%? IMO the market areas that are being hit real bad are in that boat for one of 2 reasons. One (like florida) is partially caused by flight of people out of the state and some reluctance of new buyers to purchase in an area where home insurance is almost as much as a house payment not to mention a long history of having a house one day and "poof" no house the next, not to mention a building frenzy. The other is markets where houses have exploded in price to a point higher than can be justified anymore. A good example is the SF bay area where a 25 yr old 1200 sqft rancher has run up to 3/4 of a million dollars. The funny thing is people are still paying close to that there. Yes, there has been a drop of 30k or so but that IMO is a drop in the bucket when you're talking 750k.....
Given your total confidence in the failure why are you so worked up? If you are correct it will cost next to nothing and have no effect. Why worry?
I'm not that worked up, I just hate to see good money go after bad.
Most of this is political pandering, and those who would potentially be helped most wouldn't be homeowners, it would be financial institutions who made poor decisions.
And while the mortgage companies share blame, borrowers who lied on applications and overextended need to take their lumps. Or don't you believe in personal responsibility? Of course you come from the land of hairdressers "buying" 19 investment properties so maybe your persepective is scewed. Speculators drove market appreciation, they will lead depreciation.
So it is easy to see why the call for more regulation is tempting. But it is also easy to descend into caricature, portraying borrowers as victims of villainous banks, brokers, rating agencies and hedge funds. By one estimate, half of all subprime borrowers lied about their income. Many chose to ignore the risk that house prices might fall.
..But two thoughts should stay the hands of over-eager reformers. Across the markets, self-correction is under way. Shares of the most egregious mortgage lenders have plunged and dozens have gone bust. Loan-underwriting standards are tighter. The riskiest subprime securities have almost no takers. These spasms are how the market cleans up its mistakes and learns not to repeat them. That sounds cold-hearted, but pain is a necessary part of this correction.
When politicians seek to deaden that pain and supplant those lessons with hasty fixes of their own, they almost always blunder."
IMO the market areas that are being hit real bad are in that boat for one of 2 reasons. One (like florida) is partially caused by flight of people out of the state and some reluctance of new buyers to purchase in an area where home insurance is almost as much as a house payment not to mention a long history of having a house one day and "poof" no house the next, not to mention a building frenzy.
What flight from Florida.
Most of Floridas problem is coming from flippers buying up presales for resale - they accelerated price appreciation and presented demand that wasn't really there. That is why condo towers all over Florida are standing empty, occupancy rates in some buildings stand at 20%. Housing bears have been warning that Florida had a problem for years.
Just remember something else - many Florida "investors" are from out of state - and they used home equity loans to pay for their investments. Floridas problems now are other states problems in a few more months.
The housing market won't be in balance until "investing in property" returns to "buying a house to live in", "withdrawing equity" returns to "taking out a second mortgage", and buying a refridgerator isn't seen as making "improvements in the value of my home".
I'm not that worked up, I just hate to see good money go after bad.
Most of this is political pandering, and those who would potentially be helped most wouldn't be homeowners, it would be financial institutions who made poor decisions.
It is actually not clear who takes the loss. I would think those who did the selling of the mortgaqge bundles will li8kely escape any liability. They sure had a role in how it all went down.
In the Vegas market it would appear more than half are owner occupied - that is from the short sale data. Very few of these will be the low tickler rate options. So some, if not most, would survive if reset to a reasonable fixed. Even many who are leveraged to over 100%. If we can leave the loss with those who earned it while keeping these folk in their homes it is probably a good idea.
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And while the mortgage companies share blame, borrowers who lied on applications and overextended need to take their lumps. Or don't you believe in personal responsibility? Of course you come from the land of hairdressers "buying" 19 investment properties so maybe your persepective is scewed. Speculators drove market appreciation, they will lead depreciation.
Personjal Responsibility is generally a conservative term for "screw somebody else". I will become a believer when the conservatives all line up to do away with the mortgage tax exemption. That will make them consistent and also assure they have no further say in politics for a while.
In general our "speculators" had lots of money and have long since left with large profits. Again from the short seller data something over 90% of the shorts are locally owned. Our "speculators" were heavily from CA, used leverage from CA runups and went on to Phoenix well before the market flattened. There are a few still holding the bag but basically only the brain damaged who entered the market after the start of 2006. Those who will lose had little or no role in the runnup.
So it is easy to see why the call for more regulation is tempting. But it is also easy to descend into caricature, portraying borrowers as victims of villainous banks, brokers, rating agencies and hedge funds. By one estimate, half of all subprime borrowers lied about their income. Many chose to ignore the risk that house prices might fall.
..But two thoughts should stay the hands of over-eager reformers. Across the markets, self-correction is under way. Shares of the most egregious mortgage lenders have plunged and dozens have gone bust. Loan-underwriting standards are tighter. The riskiest subprime securities have almost no takers. These spasms are how the market cleans up its mistakes and learns not to repeat them. That sounds cold-hearted, but pain is a necessary part of this correction.
When politicians seek to deaden that pain and supplant those lessons with hasty fixes of their own, they almost always blunder."
It is also easy for the Economist to resort to caricature. What caused the borrower to lie about his income? Was the buyer throughly warned about the dangers of a falling market and what would happen with an ARM? Did the granter qualify against the reset or the initial rate?
Lots of blame. Best to fix as much as is reasonable. That is where the discussion should lie. Where is that point.
It is actually not clear who takes the loss. I would think those who did the selling of the mortgaqge bundles will li8kely escape any liability. They sure had a role in how it all went down.
Sellers of the bundles, brokers all have liability. Their pain will/is coming with job losses. Plus many drank the Kool-Aid and "own" more than they can afford.
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In the Vegas market it would appear more than half are owner occupied - that is from the short sale data. Very few of these will be the low tickler rate options. So some, if not most, would survive if reset to a reasonable fixed. Even many who are leveraged to over 100%. If we can leave the loss with those who earned it while keeping these folk in their homes it is probably a good idea.
Like I said, no problem switching them to fixed (if they can afford it) nor forgiving prepayment penalties both of which would force the lenders to swallow the pain. Definitely against doling out cash to the overextended, whether from original mortgages or serial helocs. No reason why someone making $50k needs a $500k house on my dime. They can buy within their means or rent, they certainly won't go homeless. 100% mortgage holder doesn't "own" their house, the bank does.
Can't speak for LV, can tell you that NY tri-state is loaded with owner occupied teaser rates. All of the heated markets are, that is what helped them to remain heated.
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Personjal Responsibility is generally a conservative term for "screw somebody else". I will become a believer when the conservatives all line up to do away with the mortgage tax exemption. That will make them consistent and also assure they have no further say in politics for a while.
Happily get rid of the mortgage tax exemption, it penalizes renters and forces them to subsidize someone elses purchase and lifestyle. Home ownership is not for everyone and to encourage those with shaky finances down that route is ridiculous and counter productive.
Barking up the wrong tree with that one.
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In general our "speculators" had lots of money and have long since left with large profits. Again from the short seller data something over 90% of the shorts are locally owned. Our "speculators" were heavily from CA, used leverage from CA runups and went on to Phoenix well before the market flattened. There are a few still holding the bag but basically only the brain damaged who entered the market after the start of 2006. Those who will lose had little or no role in the runnup.
Can't speak for LV. Regardless, speculators drove appreciation. Their failures will drive depreciation, whether or not they are the same individuals. We are talking nationally here.
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It is also easy for the Economist to resort to caricature. What caused the borrower to lie about his income? Was the buyer throughly warned about the dangers of a falling market and what would happen with an ARM? Did the granter qualify against the reset or the initial rate?
Lots of blame. Best to fix as much as is reasonable. That is where the discussion should lie. Where is that point.
50% lying on a mortgage application isn't a caricature, it is a statistic.
Saying "the broker made me do it" doesn't mean the guy making $20k who said he made $100k on his loan doc should then be excused and handed a free house for his trouble.
People who pulled that kind of stunt overbid on houses (well it wasn't their money) and helped to push the market out of the reach of the more financially cautious causing plenty of pain. Now they should be given a free pass? And even if you do -the bottom end can't afford current prices without dodgy financing, take that away and the market is stuck.
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