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Old 06-11-2009, 12:42 PM
 
612 posts, read 1,009,524 times
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Quote:
Originally Posted by JG183 View Post
how exactly would this happen ?

I have yet to see one verifiable case where someone was let off free & clear from a "bad" purchase...
What's the penalty for foreclosure? A bad credit score? That's like a slap on the wrist. Normally, your penalty is losing your downpayment and equity.
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Old 06-11-2009, 12:54 PM
 
Location: Ridgewood NJ
592 posts, read 2,185,095 times
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Quote:
Originally Posted by theoakman View Post
What's the penalty for foreclosure? A bad credit score? That's like a slap on the wrist. Normally, your penalty is losing your downpayment and equity.
what you mean? you do lose whatever equity you put into it, just less with fha. Why are you so against that? at least it cushions the blow for everyone, instead of just hundreds of billions to the big banks.

And you guys keep confusing fha 3.5% with the no downpayment type mortgage during the boom. Do you really think anyone right now is leveraging themselves to the neck using the fha 3.5% to gamble on real estate, also i think the loan only works if it's your primary residence.

In addition, if the fha borrower defaults, they dont get a bail out. As i said already they do lose everything, just less. This is the risk the counterparty (government) took, and in return they charge you the premium on the fha loan.

What is so unfair about that? there is nothing wrong with fha loans and to the poster who said noone should get a house with only 3.5%, again WHY?
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Old 06-11-2009, 02:00 PM
 
Location: NJ
31,771 posts, read 40,580,083 times
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Quote:
Originally Posted by gagaliya View Post
what you mean? you do lose whatever equity you put into it, just less with fha. Why are you so against that? at least it cushions the blow for everyone, instead of just hundreds of billions to the big banks.

What is so unfair about that? there is nothing wrong with fha loans and to the poster who said noone should get a house with only 3.5%, again WHY?
i have no interest in cushioning the blow for "everyone" or giving money to the big banks. its my money and i want to spend it on stuff that i want. it infuriates me that my money is going to help people who made poor financial decisions while i try to make wise ones.

if they can only put down 3.5% they cant afford the house. let them show some discipline and save 20%.
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Old 06-11-2009, 02:10 PM
 
744 posts, read 1,404,228 times
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Quote:
Originally Posted by gagaliya View Post
what you mean? you do lose whatever equity you put into it, just less with fha. Why are you so against that? at least it cushions the blow for everyone, instead of just hundreds of billions to the big banks.

And you guys keep confusing fha 3.5% with the no downpayment type mortgage during the boom. Do you really think anyone right now is leveraging themselves to the neck using the fha 3.5% to gamble on real estate, also i think the loan only works if it's your primary residence.

In addition, if the fha borrower defaults, they dont get a bail out. As i said already they do lose everything, just less. This is the risk the counterparty (government) took, and in return they charge you the premium on the fha loan.

What is so unfair about that? there is nothing wrong with fha loans and to the poster who said noone should get a house with only 3.5%, again WHY?
Because low and no down payments are what got us in this financial collapse in the first place.

The government is not charging a high enough premium to cover the risk. Yet again risk is underpriced. When a bank does it I don't really care, good for them they can go bankrupt when the loans default. When the government does it I do care, because they'll take my money to cover their losses.

If you are upside down on a loan, you are better off walking away (aside from credit score/history issues - which mean you aren't unless you are upside down by a large amount). Clearly requiring 3.5% instead of 20% increases the chance of the loan ending up upside down at some point.
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Old 06-11-2009, 04:14 PM
 
86 posts, read 247,609 times
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Quote:
Originally Posted by CaptainNJ View Post
i have no interest in cushioning the blow for "everyone" or giving money to the big banks. its my money and i want to spend it on stuff that i want. it infuriates me that my money is going to help people who made poor financial decisions while i try to make wise ones.

if they can only put down 3.5% they cant afford the house. let them show some discipline and save 20%.
explain then how paying of your student loans is "making poor financial decisions"? explain please how serving the country in the armed forced is "making poor financial decisions" (VA loans also government backed and also require around 3.5% down)?

---
and i think you have some anger towards a stereotype because you have not said for example, that mortgages given to young doctors and lawyers that completely ignore student loan debt as "making poor financial" decisions. these loans let them buy with far less than 20% and with little or no income on record as well as ignoring 60K, 80K, or 100K in student loan debt.

so your stereotype of the FHA loan seeker is just that a stereotype, why is that, why do you have it towards FHA/VA loans and not any of the tens of other loan options out there that let buyers start with less than 20%
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Old 06-11-2009, 04:15 PM
 
86 posts, read 247,609 times
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Quote:
Originally Posted by sholden View Post
Because low and no down payments are what got us in this financial collapse in the first place.

The government is not charging a high enough premium to cover the risk. Yet again risk is underpriced. When a bank does it I don't really care, good for them they can go bankrupt when the loans default. When the government does it I do care, because they'll take my money to cover their losses.

If you are upside down on a loan, you are better off walking away (aside from credit score/history issues - which mean you aren't unless you are upside down by a large amount). Clearly requiring 3.5% instead of 20% increases the chance of the loan ending up upside down at some point.
do you know by how much or are you just assuming?
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Old 06-11-2009, 04:29 PM
 
86 posts, read 247,609 times
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as far as i understand it, FHA's are not exponentially more risky than conventional loans. the REAL risk, is when people do not put down ANY MONEY AT ALL, this can come from the gov, businesses, sellers. once the buyer has to come up with something, the risk is reduced to just slightly higher rates than with a conventional loan, which are NOT risk free by any means.

the biggest risk (despite stereotypes) comes from SELLER PAID downpayment, which current FHA rules do not allow.

less stereotypes more facts:
http://www.nytimes.com/2009/03/04/yo...pagewanted=all

Last edited by jigglypuff; 06-11-2009 at 04:40 PM..
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Old 06-11-2009, 05:09 PM
 
744 posts, read 1,404,228 times
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Quote:
Originally Posted by jigglypuff View Post
do you know by how much or are you just assuming?
Which part?

How much under water to be worth walking away? Depends on the finances of the person.

How much more likely are you to be under water if you put down 3.5% as opposed to 20%? Almost 6 times obviously.
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Old 06-11-2009, 05:23 PM
 
86 posts, read 247,609 times
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Quote:
Originally Posted by sholden View Post
Which part?

How much under water to be worth walking away? Depends on the finances of the person.

How much more likely are you to be under water if you put down 3.5% as opposed to 20%? Almost 6 times obviously.
no, by how much are FHA loans more likely to default. that is what you were talking about in that post, FHA defaults and its impact correct? you were saying that FHA and VA loans
Quote:
Because low and no down payments are what got us in this financial collapse in the first place....

If you are upside down on a loan, you are better off walking away (aside from credit score/history issues - which mean you aren't unless you are upside down by a large amount). Clearly requiring 3.5% instead of 20% increases the chance of the loan ending up upside down at some point
.
how more likely are they to default than conventional fixed rate loans.

plus do you know the difference between an fha 30 year fixed and a 100% financed ARM??? you seem to think they are the same thing or very similar.
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Old 06-11-2009, 05:24 PM
 
636 posts, read 1,421,793 times
Reputation: 167
Quote:
Originally Posted by sholden View Post
Because low and no down payments are what got us in this financial collapse in the first place.

The government is not charging a high enough premium to cover the risk. Yet again risk is underpriced. When a bank does it I don't really care, good for them they can go bankrupt when the loans default. When the government does it I do care, because they'll take my money to cover their losses.

If you are upside down on a loan, you are better off walking away (aside from credit score/history issues - which mean you aren't unless you are upside down by a large amount). Clearly requiring 3.5% instead of 20% increases the chance of the loan ending up upside down at some point.
Agreed. Only problem is the government is bailing out the banks too. AND, they are cutting the Federal Reserve rate so even private loans essentially get bailed out.

People claim we need government loans for people to buy a house, and yet, easy credit props up prices. Sure, more people have houses, but we owe a lot more on them than we would have. Same thing with student loans. Is there any wonder why college is so much more expensive?
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