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... only moral play is to screw the banks as much as possible
and at least help yourself to some of that tax payer benefit.
Unfortunately, the banks win no matter what you do.
One of the reasons that there was a bubble and crash is that you don't
actually owe the bank in the first place. The bank sold your loan before
you ever got the key in the door after signing stuff at the title company.
The bank wins if you keep paying - they get fees.
The bank wins if you default ------ they get fees.
The bank wins if you short sell ---- they get fees.
Freddy and Fanny should be abolished.
All mortgage loans should be retained by those who issue them.
All home purchases should require a minimum of 10% of the money down.
... AND ...
Quote:
Originally Posted by aneftp
Gotta love government sponsored loans.
The government should get out of the mortgage-guarantee business.
Freddy and Fanny should be abolished.
All mortgage loans should be retained by those who issue them.
All home purchases should require a minimum of 10% of the money down.
... AND ...
The government should get out of the mortgage-guarantee business.
This was typical life before the New Deal, 75 years ago.
Most mortgages were retained by the institutions who issued them. As such, the funds available for mortgages were directly tied to deposits which, at the time, were not protected by the government and bank runs were common.
Most mortgages required a 50% downstroke.
Most mortgages had a 5 year balloon payment at which point it was either paid off or refinanced at interest rates higher than the current rates.
Most folk were lifetime renters with no hope of owning anything.
And despite it all, about 50% of all property eventually went into foreclosure during the Great Depression.
Government intervention in the 30's, created a middle class.
I really think the government should still stay in the mortgage business but with a reduced role. I think the last report I heard were up to 60% of all loans made in 2010 were with less than 3.5% down (FHA/VA loans). And up to 90% of all loans were government backed loans if we were to include Fannie/Freddie. I think 10% down for a government loan is a fair way to start things. I am sure the Mortgage/home builders/realtors national association will fight tooth and nails against this (they think short term and not long term).
There will always be a private mortgage market. But private mortgage markets will return in force when 20-25% down will become the norm again.
In foreign countries, they require up to 50% down on homes. I know my brother has 2nd condo in Malaysia and he needed around 50% down for that condo.
But 10% down is a good start.
Think about this. Most parts of the county at down around 15- 20% from "peak". I know some places in Arizona, the boonies in California, Vegas, some parts of Florida are down 30-50%. But most other places are down at most 20%.
If people would have put down 10% even at peak...add 5-6 years of paying into the principal. They would have at least 20% "equity" in the home after 5 years. So with a 20% decrease in housing prices, they would still be "even" and not underwater on their mortgages.
I really think the government should still stay in the mortgage business but with a reduced role. I think the last report I heard were up to 60% of all loans made in 2010 were with less than 3.5% down (FHA/VA loans). And up to 90% of all loans were government backed loans if we were to include Fannie/Freddie. I think 10% down for a government loan is a fair way to start things. I am sure the Mortgage/home builders/realtors national association will fight tooth and nails against this (they think short term and not long term).
There will always be a private mortgage market. But private mortgage markets will return in force when 20-25% down will become the norm again.
In foreign countries, they require up to 50% down on homes. I know my brother has 2nd condo in Malaysia and he needed around 50% down for that condo.
But 10% down is a good start.
Think about this. Most parts of the county at down around 15- 20% from "peak". I know some places in Arizona, the boonies in California, Vegas, some parts of Florida are down 30-50%. But most other places are down at most 20%.
If people would have put down 10% even at peak...add 5-6 years of paying into the principal. They would have at least 20% "equity" in the home after 5 years. So with a 20% decrease in housing prices, they would still be "even" and not underwater on their mortgages.
10% minimum down will crush prices. Cool idea IMO. People that can save up $25-$50K(down, closing, light cosmetic work...no bleeping upscale faux rich crap like granite) will make hay and be well able to pick and choose middle class homes in middle class neighborhoods. The turds that can't save much and are on 3.5% down loans will be ejected from consideration. Woo hoo....final leg down, here we come!
Perhaps prices will drop enough that 10-20% down will be the same as 3.5% at peak. Bet it will work out that way in some neighborhoods.
How messed up is that?
I do think that "owners" would be much less likely to strategically default if they had more than zero to 3.5% at stake.
Well if you look at past crashes, theres a tendency to over correct.
Where I'm looking at the moment, prices remain slightly out of reach for me on 3bd/2ba 1500 sq ft.....$350-550K depending on the neighborhood.
So 10% at the moment is 35-55K(and probably 25K more for closing and light cosmetic work/landscaping).
3.5% is ~$12.5-$19.5K.
But prices in 1998 for these areas was $175-275K. So 10% of that is $17.5K-27.5K.
So your notion is not far off the mark.
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