Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 08-08-2008, 04:11 PM
 
2,197 posts, read 7,372,544 times
Reputation: 1702

Advertisements

I agree that many people should not own a home. People without a solid financial cushion shouldn't even consider buying a home... yet this is exactly who the government and brokers are now trying to push into the glut of houses. First-time home buyer credits, 3% FHA mortgages, DPA and financed closing costs are putting inexperienced home buyers with little upfront into properties they are going to have a tough time maintaining.

A home can easily cost $5000, $10000 or more per year in routine maintenance costs. Things break or get damaged and have to be replaced, sometimes immediately. These people don't have savings-- they could only afford 3% down! And what is the first thing many first-time homeowners do when they buy a home? Finance new appliances ($2000 or more), patio furniture ($500 and up) and a grill ($200), plus open credit card accounts at Home Depot and Lowe's. They paint and landscape and spiff up the place, which is great for pride of ownership but not so great for financial solvency. Then they have to have new furniture, so they open furniture store revolving accounts. They gleefully sign up for the "18 month, same as cash" offers, letting the interest accrue at 24.9%.

Fast forward, 18 months-- what is the likelihood that they will have this extra money sitting there waiting? Tack on that 24.9% for a year or two and see how appealing that new home is. The 18 month, SAC offers are like Option ARMS-- savvy leveraging tools for the financially astute; an invitation to disaster for new homeowners; a lucrative profit center for the institutions selling them. My fear: this new wave of first-time homeowners who can't even afford the down payment, will be the next leg down. I hope I'm wrong.
Reply With Quote Quick reply to this message

 
Old 08-08-2008, 06:15 PM
 
Location: Barrington
63,919 posts, read 46,483,367 times
Reputation: 20674
Quote:
Originally Posted by ashrob123 View Post
And for the record, HUD does not require that a percentage of the loans be subprime. Never have and never will. They require (rightly so) that they purchase loans that reflect a fair lending practices. Flawed, perhaps, but in now way is it to be taken as "get as many subprime loans as possible".

Ginnie Mae does NOT primarily insure subprime loans, quite the opposite actually. Ginnie Mae ONLY secures FHA, VA, RHS and PIH (Public and Indian Housing) loans which are rarely (if ever) subprime.
I am using sub prime in the broad sense that the borrower may not otherwise qualify for a loan, unless insured or gurananteed by some arm of the Government or if they did, would have to pay a substantially higher interest rate to balance the risk and thus, it would not be " affordable housing".

GNMA gurantees prompt payment of P/I to investors for loans primarily insured by FHA and VA.

HUD determines and mandates specific affordable housing goals to FNMA and FHLMC. HUD requires both FNMA and FHLMC to fund a specific percentage of loans to low, moderate-low and very low income buyers. There are also goals specifying a percentage of loans that must be FHA/VA insured.

These loans, including all FHA loans, generally have more lenient qualification requirements and lower down-payment requirements.

I do not blame FNMA or FHLMC. It's the culture that created the mania.
Reply With Quote Quick reply to this message
 
Old 08-08-2008, 06:21 PM
 
609 posts, read 2,112,378 times
Reputation: 248
Quote:
Originally Posted by KCfromNC View Post
Perhaps if your unique situation includes the overriding desire to lose money on the largest purchase you're going to make, now's the time to buy. If not, maybe it would be best to wait for prices to stop going down before jumping into such a large commitment. When even the people who make money from mortgages (Freddie and Fannie) tell you that home prices aren't even half way to the bottom, you should probably pay attention to them and ignore FUD and spin from people who only make money if you buy or sell a house.
Very nicely said.
Reply With Quote Quick reply to this message
 
Old 08-08-2008, 06:28 PM
 
Location: Los Angeles Area
3,306 posts, read 4,135,860 times
Reputation: 592
Although I agree that Frannie Mae and friends need not exist, this housing bubble was not really caused by them. Most of the exotic loans that sent prices to the roof where not being sold to the GSEs.

Anyhow, regarding buying a home with Frannie Mae et al. A month ago or so my grandma was telling me the story of when they purchased their home in Los Angeles 55 years ago. It was $15,000 and they had $5,000 saved and she said they had to "beg the bank" to give them the loan. In the end they got the loan and paid it off it 10 years. They weren't rich by any means.
Reply With Quote Quick reply to this message
 
Old 08-08-2008, 06:29 PM
 
Location: Barrington
63,919 posts, read 46,483,367 times
Reputation: 20674
Quote:
Originally Posted by goodbyehollywood View Post

I agree that many people should not own a home. People without a solid financial cushion shouldn't even consider buying a home...
FHA and FNMA ( in it's original Government agency incarnation) have been around for 74 years.

ARMs have been around since 1982.

No doc loans have been around forever.

The President appoints the chairman of the FRB.

Interest rates were reduced and kept on reducing in the aftermath of 9/11, to goose the economy and it all combined into the mania that drove the housing market.
Reply With Quote Quick reply to this message
 
Old 08-09-2008, 08:22 AM
 
2,197 posts, read 7,372,544 times
Reputation: 1702
Quote:
Originally Posted by middle-aged mom View Post
FHA and FNMA ( in it's original Government agency incarnation) have been around for 74 years.

ARMs have been around since 1982.

No doc loans have been around forever.

The President appoints the chairman of the FRB.

Interest rates were reduced and kept on reducing in the aftermath of 9/11, to goose the economy and it all combined into the mania that drove the housing market.
Your point is... what? And it has to do with the point that many people should not be homeowners... how?
Reply With Quote Quick reply to this message
 
Old 08-09-2008, 09:13 PM
 
37 posts, read 110,036 times
Reputation: 34
Quote:
Originally Posted by scone View Post
In order of the questions:

1. Rentals (see above.)
And who is going to own these rentals?

What is happening is one of the largest redistributions of wealth this country has ever seen. People who should never have owned homes in the first place (I'm sad to say) have lost/ are losing them. New regulations will ensure only Buyers who actually have at least 3% down will be able to buy (a good thing). People with trashed credit will be out of the ownership-loop for quite some time, boosting the rental market and making investing at these rock-bottom prices even more attractive for landlords, as reasonable yields become possible.

As a side note, I don't know why they don't teach credit education in schools, since the current decline has come about in part due to purchasers' ignorance, which left them exposed to predatory lending practices. We would not even be in this mess if home-buyers has borrowed what they could afford, understood the difference between negative-amortization and 30-yr fixed, and studied history: all markets go up and down. We just have short memories.
Reply With Quote Quick reply to this message
 
Old 08-10-2008, 04:24 PM
 
Location: near Portland, Oregon
472 posts, read 1,705,352 times
Reputation: 304
Quote:
Originally Posted by AngelAl View Post
As a side note, I don't know why they don't teach credit education in schools, since the current decline has come about in part due to purchasers' ignorance, which left them exposed to predatory lending practices. We would not even be in this mess if home-buyers has borrowed what they could afford, understood the difference between negative-amortization and 30-yr fixed, and studied history: all markets go up and down. We just have short memories.
Because we have not prepared young people for the realities of everyday business life. A math teacher spends more time on quadratic equations than on compound interest. And history teachers generally don't do economic history. Even my college history professors (that was my major) didn't know much about economics.
Reply With Quote Quick reply to this message
 
Old 08-10-2008, 07:56 PM
 
Location: Midwest
38,496 posts, read 25,687,384 times
Reputation: 10789
Quote:
Originally Posted by Mike Peterson View Post
You need to reread that article.

Nowhere in it did they state that prices would fall another 20%

Here is what it actually said.

"As a result, we now believe that national home prices will fall 18 to 20 percent peak to trough"
Check this out from the archives. What a hoot!

Top 10 cities: Where to buy now | 1 | Business 2.0

Top 10 cities: Where to buy now | 2 | Business 2.0
Reply With Quote Quick reply to this message
 
Old 08-10-2008, 08:23 PM
 
Location: Charlotte, NC
2,193 posts, read 5,037,594 times
Reputation: 1075
Quote:
Originally Posted by jojajn View Post

I thought the caution snippet was funny.

"CAUTION: Local politicians, notoriously cozy with builders, have green-lighted several master-plan communities for future development. If supply gets out of hand, prices will stall."

LOL.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top