bostonbubble.com

[john p]

http://www.bostonrealestate.net/blog/index.php/2008/03/07/hud-publishes-new-loan-limits-how-this-impact-the-boston-housing-market/

If you look at the limits towards the bottom of the link above, you can get a sense of what price points might be affected.

An overlay is "What do you need to qualify for these Jumbos, and who's around to give them out?".

There has got to be a source that has statistics on the profiles of buyers, sellers etc. that qualify for the types of loans available and the associated risk factor with today's current prices.

This is my biggest blind spot: the available mortgage options to people.

I know when people were reaching, they offered things like ARMS and piggyback notes were popular for people with a 5% down payment; they would do a piggyback note for 15% to avoid PMI. I don't know if this option is available today, and if so, for how many people?

I would guess that having a big down payment is going to be the biggest problem to get financing given that many younger first time buyers have so many bills and have a hard time saving an amount beyond 5%. Before, it seemed that the target was the monthly payment; I wonder if the down payment is becoming a bigger conern?

Does anyone have any insight on the current state of affairs in mortgages for Massachusetts and what things are drifting towards?

[john p]

http://money.cnn.com/2008/05/28/real_estate/short_sales_long_waits/index.htm?postversion=2008052811

I thought the FED's action didn't have an affect on mortgage rates

http://money.cnn.com/2008/05/29/real_estate/0529_mortgage/index.htm?postversion=2008052912

Note 15 year notes are increasing; they align with trade-up buyers or those that want to refinance and who own most of their homes; my guess those that bought before the bubble and are set for retirement in the next 15-20 years.

http://money.cnn.com/2008/05/28/real_estate/mortgage_applications.ap/index.htm?postversion=2008052807

Nice risk factor charts on this link:

http://www.pmi-us.com/media/pdf/products_services/eret/pmi_eret08v2s.pdf

shuffling of the deck at PMI, Fannie Mae? Changing ideology creating a pause when we need decisive action?

http://calculatedrisk.blogspot.com/2007/10/economist-berson-leaves-fannie-mae.html

Great insight on this article:

http://www.allbusiness.com/banking-finance/banking-lending-credit-services/6622483-1.html

[JCK]

john p,

My very limited sense, from a recent refinance, a lot of options are still available for people with good credit, at least in the conforming market.

I think the 0% down days are done for everyone, but if you have good credit I believe it's still possible to play around with risky products like piggyback HELOC on top of an ARM.

The jumbo market may be a somewhat different story, but keep in mind that there are now these "jumbo/conforming" loans available for not too much more than the conforming loan rates. To be honest, I have no idea what the credit/down payment/income requirements are for these loans.

[john p]

How about the 5% down, 15% piggyback @prime rate (to avoid PMI) and the 30 year fixed?

I would imagine that a good portion of first time buyers would have a hard time with down payments north of 5%.

Thanks.

[john p]

Another architectural nerd analogy:

You know those ceiling grid systems you see in your office? Well I was in a group that was asking a manufacturer about metal ceiling tiles. A big concern is that they don't "pillow" or sag in the middle. One person asked about the size of the perforations (little holes they drill into the metal tiles, kind of like a speaker). The manufacturer said that at first, the perforations made the tile stronger because they reduced the weight in the tile, but if the holes got too big it lost diaphram strength.

Now, I think when you consider the new wealth redistribution, the regional risk assessment for house prices, and the changing interest rates due to price point, you'll see that certain price points and regions are better supported than others and things have changed since last year. I mean, the intent of the jumbo was to reflect the higher cost of living areas; it did help to some degree, but the increased risks to the perceived higher priced areas has limited lending and put greater downward pressure so a certain economist's risk assessment can actually affect the future market. It's almost like the only think they need to fear is fear itself. Going back to the perforations, these risk assessments and outlooks drill more holes into those tiles or add more to them. I think that each price point and region will react differently because of the changing landscape of incomes, and aligning mortgage options. I mean look at how 15 year notes are increasing.

Now, think about how when the market's change, organizations like Moody's get economists like Mark Zandi and this new guy at PMI. Imagine the paradigm shift that goes on in these organizations when a new chief economist comes in. Their perception becomes many's reality.

In addition to perforations, the metal ceiling guy talked about "memory" in the metal. What this referred to was when you punched the perforations, it pushed and pulled the metal and created a deformed surface. They actually had to roll over the metal after the perforations to flatten it out and iron out the "memory". In economics we get echos because people make analogies to other parts of history. I wonder how much of this self fufilling prophecy is good and what areas we need the FED to iron out and describe to us so we don't misinterpret and create echos based on "memory". What is the right impression and the right memory and to just bring in chief economists that align with the current weather might not be appropriate...

[john p]

http://www.boston.com/realestate/news/articles/2008/06/02/why_home_purchases_fall_apart_at_last_minute/

[john p]

Nice overall explanation:

http://blog.mariah.com/2008/05/economic-data-and-its-effects-on-mortgage-rates/

So the current thinking is fear of inflation trumps falling house prices.

http://www.freddiemac.com/news/finance/

REO's versus foreclosures:

http://globaleconomicanalysis.blogspot.com/2008/05/wamus-suspect-mortgage-pool.html

Nice timeline:

https://www.wellsfargo.com/com/research/economics/mortgage

[john p]

http://www.bankrate.com/bosre/static/rate-roundup.asp

from link above: