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Hoping Obama Housing Plan is For Real

 
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Joined: 14 Jul 2007
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Location: Greater Boston

PostPosted: Mon Feb 14, 2011 2:06 pm GMT    Post subject: Hoping Obama Housing Plan is For Real Reply with quote

Use this forum thread to discuss the following link.

Description: Hoping Obama Housing Plan is For Real
URL: http://paper-money.blogspot.com/2011/02/hoping-obama-housing-plan-is-for-real.ht ...truncated...
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=3390

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PostPosted: Mon Feb 14, 2011 6:26 pm GMT    Post subject: Reply with quote

Quote:
Particularly inspiring goals, especially in light of their political consequences, are the initiatives to eliminate any pricing advantages that the GSEs have previously enjoyed thus paving the way for greater private market competition and the inevitable wind-down of Fannie and Freddie, allowing the “conforming” loan limits to adjust back down in October 2011, establishing a target of 10% minimum down payment for government insured mortgages, elevating government directed rental initiatives to an equivalent status as home purchase programs and more directly targeting stable creditworthy households in need, and increasing FHA premiums and returning it to its original role as a premium-based balanced insurance fund.


Only 10% minimum down payment? That's pretty low....
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Renting in Mass



Joined: 26 Jun 2008
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Location: In a house I bought in December 2011

PostPosted: Tue Feb 15, 2011 6:13 pm GMT    Post subject: Reply with quote

It would be a lot better than the current 3.5%.

I'll be surprised if we see a 10% requirement within the next 5 years.

I agree that 10% is still too low.
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PostPosted: Tue Feb 15, 2011 10:18 pm GMT    Post subject: Reply with quote

Renting in Mass wrote:
It would be a lot better than the current 3.5%.

I'll be surprised if we see a 10% requirement within the next 5 years.

I agree that 10% is still too low.


Current 3.5%? Really? Why would any bank make these loans with only 3.5% down payment? Especially the market is still not stable now.

It's odd. Some people told me you can get a loan with only 3.5% down; but some say it's very hard to get a loan now even you have much larger down payment. Not sure which is right......
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admin
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Joined: 14 Jul 2005
Posts: 1823
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PostPosted: Tue Feb 15, 2011 10:24 pm GMT    Post subject: Reply with quote

CC wrote:

Current 3.5%? Really? Why would any bank make these loans with only 3.5% down payment? Especially the market is still not stable now.


Because the government (or more accurately, taxpayers) will pick up the tab if the buyer defaults.

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balor123



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PostPosted: Wed Feb 16, 2011 2:56 pm GMT    Post subject: Reply with quote

I haven't seen any stats lately but at one point FHA loans were a substantial (~50%) portion of the mortgage market.
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PostPosted: Wed Feb 16, 2011 5:04 pm GMT    Post subject: Reply with quote

balor123 wrote:
I haven't seen any stats lately but at one point FHA loans were a substantial (~50%) portion of the mortgage market.


FHA loans and VA loans accounted for 30-40% recently.

Link:
http://www.thetruthaboutmortgage.com/fha-loan-market-share-highest-since-1990/


admin wrote:

Because the government (or more accurately, taxpayers) will pick up the tab if the buyer defaults.

- admin

Thanks for the link!
But why would some people claim it's hard to get a loan now?
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admin
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PostPosted: Wed Feb 16, 2011 5:22 pm GMT    Post subject: Reply with quote

CC wrote:

Thanks for the link!
But why would some people claim it's hard to get a loan now?


Maybe they are using the bubble years as their frame of reference when all you had to do to get a loan was fog a mirror. I get the impression that lending standards are still a lot looser than they have been historically (though I don't know that for a fact). I used to always think (pre-bubble) that a 20% down payment was an essential prerequisite to buying, but now we have industry people claiming that mere talk of raising the requirements back to 20% would "absolutely crush the housing market." There will always be some people complaining about not being able to get a loan. If lending standards are looser than they have been historically, then I imagine that the people complaining now would have always been complaining, except perhaps during the era of NINJA loans.

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balor123



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PostPosted: Thu Feb 17, 2011 1:03 am GMT    Post subject: Reply with quote

Quote:
Another byproduct of higher down payments will be a reduction in what some families can afford—or a rethinking of whether they should buy at all, said John Courson, president and CEO of the Mortgage Bankers Association.

"Many people will turn to the multifamily market," he said. "Or if you don't have whatever is deemed to be the appropriate down payment, the alternative is to be a renter while you accumulate that. You can't put a formula down that is going to fit every borrower's profile."


Or maybe the prices of homes will come down and people will still be able to afford the same properties that they were buying before!

Note the reference to FHA constituting "about half" of the loans last year. Maybe 30-40% is "about half" to them, though I would describe it as "about a third".
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