Higher Down Payments not answer (charge, business, principle, employment)

[Norm Barnes]

FICO probably has no biases or knowledge based reliability. If it did it would be taken off the street. I object to rate determined by credit score. Rate can not justify risk. The Credit score tool allows creditors the ability to increase rates even though nothing over time has shown that increased rates justify risk. If you apply to me and you are a worker for Verizon or ATT my comfort zone is better than if your a Manager for Blockbuster. Faulty decisions can be made based on years of employment and how long at residence. Do you remember the problems in Texas and Florida -- ongoing problems -- how can this knowledge be evaluated by a credit score system. I know of a company who accepted an application from an employee, processed and got a mortgage approved knowing he was on shaky ground but all the parameters had been met and thus the mortgage was made. Within a year the company let him go and his ability to pay the mortgage was nihil and the family lost the home. In former days we issued a verification which inquired as to his "likeliness to continue". If this was answered honestly two things may have occurred: 1) He wouldn't have gotten the mortgage; and, 2) He could have cleaned up his act or found another position without the stigma associated with termination. Bankers like easy. Credit scores make it easy. Too easy and sometimes too hard. I still see Ads and you probably like me will think it crazy but its out there. "Credit problem -- No Problem". I remember when Teachers availed themselves of an Answer Key that they placed over a card and it showed the answers that were correct. A genius determined he would check all the blocks and thus got a hundred until someone looked carefully at his card and realized what he had done. What I'm saying is you devise easy someone else will devise circumvention. All said an done I say Underwriters are the Answer. Bring sensibility back to lending -- tell the Federal Reserve Board what you think or the next debacle will be in 4 years and the new answer will be higher crredit scores.

[Norm Barnes]

Okay the Fed has solved the mortgage problem. How? Increase DP requirement from 3% to 5% on Home Purchases. There is an obvious flaw but I'm not going to point it out. It deals with Seller Contribution. Anyway let me figure? hmmmmmmmmm!!! 3% on 200K would be $6,000 and 5% would be 10K -- that's 4K difference! So if everyone who is now past due would have placed another 2% down on their FHA mortgage they would not have had to worry about decreased housing values, loss of jobs, marital strife, unexpected or unforseen financial problems. Well folks they did it again. Now how about we all hunker up to give our great financial geniuses a 4K raise maybe we can make them more honest and smarter.

[Norm Barnes]

[quote=texdav;18382025]But its the governamnt guarbteed loans and privte insured loans that all are in trouble.

Recent developments show how shallow the Fed and Regulators analysis of the mortgage crisis had been. I had said from the start that modest reduction in home values might be needed for affordability but wholesale reductions could and would be catastrophic. The downward values will continue spiralling downward until a Real Estate Market evolves. The FHA is getting a bad wrap -- the fault lies with those who realized that FICO scores was gimmicky. They alluded to 100% trust in that system and stole the confidence of Wall Street. I did mortgages for years and never even considered FICO until maybe the last 7 - 8 years. FICO is mirrorwork at its finest. The Gov has to emancipate the housing market or what we see is the "Eve of Destruction".

[CaptainNJ]

get rid of government and taxpayer backed securities. government is what caused the problem.

[Norm Barnes]

[quote=le roi;18528163]i got a good chuckle out of this

we're not trying to "save the housing market."

The housing market consists of homes new and resales. It consists of existing housing, under construction and proposed construction. All of these strategic markets have an influence on values. We are looking for a more reliable means of generating mortgages and in recent years that interpretation has been changing to a "cheap" way to generate mortgages. I got out of the service in 1969 and the greatest debacle I recall was S&L problem and the high rates that came about I believe in the late 70's. We indeed are trying to save the housing market because it creates jobs. We are also looking to the ability to get on track with housing to stabilize home values. This makes sense I take it you disagree and I will respect your opinion. A home selling for 172K in 2007 is selling for about 130K in a normally busy market and it is dead. How much further would you like to see it go before some effective action is taken. I'm sorry I'm not chuckling.

[Vegas Joe]

Originally Posted by Norm Barnes

In your castle, on your yacht, earning residuals from the book you just wrote — well you don't have to read this. I have been in the mortgage business since 1969 seen crises in the credit market but none so great as the last. Sensibility in lending can be at "0" Down Payment it just requires an individual to make an intelligent decision. Intelligent decisions aren't made at the 498 credit score level or at the 720 Level they are made with a conservative analysis of all the facts. FHA is a brilliant plan as it existed until it became the waste depository for the errors of the past and had existed in harmony for generations. I believe if you want to make strides to full employment you don't cripple housing further but advance it and not by nonsensical program of no documentation or unrealistic credit acceptance. Don't make mortgage application a game of "Liars Poker". Review the tax code. 1040A standard deduction allowance can cause one to not consider home buying – tax and interest benefits are absorbed and though it does balance the paying field for homebuyer and renter the buyer advantage has gone or dissipated. Is this wrong — I'll leave it to the pros to decide? I’d ask all that read this forum drop a line to your congressman to exercise extreme caution in radically changing the housing programs and if they were to be modified they be modified by removing the “No Doc” -- “little or no truth loans”. Our children deserve homes as we did. Congress watch your step you always seem to tweet that part of a program that’s not broken and break that which is sensible and has stood the test of time. Sensible lending may require more people which banking seems to abhor they like predictions based on factors that variate so greatly you have cause to make big mistakes but don't blame a working mechanism that had been fouled up by nonsensical gambles. Give me sensible FHA, FNMA, FHLMC programs and I'll show you improved employment numbers.

I cannot even tell you how much I disagree with this. First of all it was the FHA, Fannie and Freddie that caused this mess. As far as I am concerned buying a house should be no different than buying anything else. The government needs to get the hell out of the mortgage business and let the private market do this. The private market will not do non sense like "no doc, no down and 105%" loans. They only do that when they can dump the risk off on Fannie and Freddie. They would require steady employment history, a decent credit score and down payment. You are right in that they should not change the programs. They should be eliminated. FHA, Fannie and Freddie should be shut down. Let banks make loans and take the risk.

[Vegas Joe]

Originally Posted by Norm Barnes

Okay the Fed has solved the mortgage problem. How? Increase DP requirement from 3% to 5% on Home Purchases. There is an obvious flaw but I'm not going to point it out. It deals with Seller Contribution. Anyway let me figure? hmmmmmmmmm!!! 3% on 200K would be $6,000 and 5% would be 10K -- that's 4K difference! So if everyone who is now past due would have placed another 2% down on their FHA mortgage they would not have had to worry about decreased housing values, loss of jobs, marital strife, unexpected or unforseen financial problems. Well folks they did it again. Now how about we all hunker up to give our great financial geniuses a 4K raise maybe we can make them more honest and smarter.

The minimum down payment should be 10% plus closing cost.

[slackjaw]

Originally Posted by Norm Barnes

How? Increase DP requirement

DP requirement is always the same... two guys, one chick.

Sure there are variations in race, girl facing heaven or earth, etc. but the basics have been the same for a long time.

[Norm Barnes]

[quote=Vegas Joe;19524711]"...... The private market will not do non sense like "no doc, no down and 105%" loans............

Joe. You are so wrong. Private Mortgageteers and packaging B-, C and D Mortgages for the secondary market caused the problem. Do you khow long FHA, VA and many of the other FNMA and FHLMC stood the tests of time? FHA doesn't even have a no doc -- the closest they come is a Refinance that finances the balance without closing costs or an appraisal. (Makes sense they are into it anyway and gives a person an opportunity to get a lower rate without packing costs)

Option One (Owned by H&R Block), American Home Mortgage Servicing Corp (Wilbur Ross & Co LLC), New Century Financial (Home 123 Corporation) and a littany of others showed up in the market with a credit score driven mortgage menu. These are all private Corporation. FHA, VA, FNMA and FHLMC only set the rules. The mortgages are generated by outside funding sources. The quality of FHA has slipped and all the products slipped when mortgage underwiriting pigeon holed risk based on credit score rather than a sound analysis of the facts. Vegas Joe you've gotta believe loans have and can be underwritten sensibly and the government needs to regulate lenders but with "Teeth and Grit"and not be nandy pandy get in bed with you architects of the problem. There's a term churning. Its common to the Investment market. Buy-sell, buy-sell, reap profit. These B-, C, D lenders created their own renewable market by mortgaging at higher rates with an offer of a lower rate if they paid on time. Then they could sell off the names of the borrower or refinance the mortgage of the borrower time and again and make "LARGE" amounts of monies in churning or referral. There were no ethics here just greed and as it became more commonpalce and easy -- the greedy got greedier, the good corrupt. Do you believe some of these companies are still doing business and some of the executives are now at the helm of insurance companies. The next crisis -- "INSURANCE COMPANIES" - their education came from the mortgage business and high profits at great risk. In short -- Hi Mr. Consumer!!! Now turn around -- touch your toes - this won't hurt a bit!!!

DP and rate not a motivator to reduce delinquency. Housing Value slide must be stopped or if you own a home you'll feel it and it won't feel good. Incidentally are you from Vegas? How are the values out there?

[Norm Barnes]

Pssst!!! PSsst!!!! PSSSst! You -- up on the hill!!! You gotta listen my life depends on it. " More down payment" is not the answer. Better supervision could be a part of the answer. Yeah I know!!! Watching Lending Institutions is like watching a bunch of 2 year olds they all want their way. You just have to "Buck up" and make them mind. If they want two of something they probably can get by with one; if they think something would be easier its probably gonna cost you; and, if you ask them what they think they'll tell you a bold face lie. You can take that information to the bank.