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Lawrence Yun keeps blaming slow home sales and declining prices on "overly tight" or "too stringent" lending standards.
Other than going back to the standards that existed before we got into this mess, has something else changed?
What's really unreasonable right now?
Of course good ole' Larry and his criminal partner in crime (Dick Gaylord) are going to say that. The economy and fundamentals be dammed.....everyone is ENTITLED to own a home, regardless of their income, credit, or willingness to pay, right?
Don't worry Larry! I loved that prediction which you said that things will improve after 1Q'08....(like you said and many naive realtors believed you)
From Yun's perspective, the unreasonable part is that lots of formerly dues paying NAR members are no longer making any commissions on house sales. That's all the thinking that seems to go in to any of his analysis. Any conclusion he comes to using that approach that happens to correspond to reality is merely coincidental.
In this case, you've run across one of his rationalizations that doesn't make much sense when you really think about it. Maybe some people don't have experience of a normal RE market, but he's got no excuse not to understand history.
Honestly requiring some money down is a good thing. People have to have a monetary investment in their homes. I also think a return to realistic ratios is important. There are so many people that are spending 50% of their income on a house. That is so bad for people. I love having my house, but I in no way shape or form, would spend 50% of my income to make a mortgage payment.
So...reasonable is some money down, good ratios (30% debt to income), and common sense documentation requirements.
Honestly requiring some money down is a good thing. People have to have a monetary investment in their homes. I also think a return to realistic ratios is important....So...reasonable is some money down, good ratios (30% debt to income), and common sense documentation requirements.
I do understand your theory on this, however I think there are some instances where someone not having the upfront cash should not be an insurmountable barrier to home-ownership. In my own situation, if I had not been able to get an FHA no-money-down loan in 1993, I would have never been able to buy my own home.
At that time in my life, I was recently divorced with 3 minor children, no child support, and a steady but not great income from my employment. I lived paycheck to paycheck.
I managed to scrape enough cash together for closing costs ($5,000 to $6,000), but had no money to put down. My mortgage payment ended up being less than my rent. And I have been a responsible home-owner, always paying on time, ever since.
I do understand your theory on this, however I think there are some instances where someone not having the upfront cash should not be an insurmountable barrier to home-ownership. In my own situation, if I had not been able to get an FHA no-money-down loan in 1993, I would have never been able to buy my own home.
At that time in my life, I was recently divorced with 3 minor children, no child support, and a steady but not great income from my employment. I lived paycheck to paycheck.
I managed to scrape enough cash together for closing costs ($5,000 to $6,000), but had no money to put down. My mortgage payment ended up being less than my rent. And I have been a responsible home-owner, always paying on time, ever since.
Stories like yours are heartwarming, but not persuasive. Part of the current housing problem is as a result of owners having no "skin" in the game, seeing the value go down, then deciding that it was better to walk away, thus making the problem worse for everyone else. They'd be less likely to do that if they had real money invested in the house.
I do understand your theory on this, however I think there are some instances where someone not having the upfront cash should not be an insurmountable barrier to home-ownership. In my own situation, if I had not been able to get an FHA no-money-down loan in 1993, I would have never been able to buy my own home.
At that time in my life, I was recently divorced with 3 minor children, no child support, and a steady but not great income from my employment. I lived paycheck to paycheck.
I managed to scrape enough cash together for closing costs ($5,000 to $6,000), but had no money to put down. My mortgage payment ended up being less than my rent. And I have been a responsible home-owner, always paying on time, ever since.
I think there is a difference between someone that doesn't have a lot of upfront cash, but the payment is under the 30% debt to income ratio and they have great credit. Students that graduate from grad school, med school, law school...may not have a lot of upfront cash, but have solid jobs and can make payments. As long as ratios stay down, then things should be fine. Pushing the ratio's as happened in the boom was insanity.
I still think that situations like yours need to be the exception rather than the rule. You obviously had a track record of reliability for the lender to give you a loan.
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