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Is There a Problem Looming with FHA Loans?

I'm seeing a lot of FHA streamline refi's that are going bad now.

In these cases, the servicers saw a borrower who was having difficulty, moved them into a refi hoping to reduce their rate a bit and buy them a payment holiday.

They were in the early stages of distress, and things haven't gotten better.

In addition, FHA and VA loans are not eligible for the Treasury mod program, so any borrower who's had a substantial income decrease is not going to get much in the way of payment relief.

Ben is correct that no safety net is a BIG problem. They're not going to address that issue any time soon, because then you'd REALLY see a decline in lending.

Home Sales: More Reasons to Disbelieve the NAR

Does NAR compile the CPI, as well?

Same advisory board, maybe.

The Assault on Ethical Home Appraisals, Part Deux

[We see low appraisals as a key issue we think will disrupt closings and hurt pricing for some time given the more stringent appraisal guidelines enacted last month.]

Well at least we know who to blame.

Why hasn't someone from the administration had a talk with these appraisers?

I suppose they could squeeze the appraisers out of the process somehow, like they've done with the foreclosure avoidance refis.

We'd all be better off if the government funded the loan, backed it, originated it, marketed the property, etc.

We've gotta make this process incorruptible. Only the federal government should be trusted with such important work. This is important, and we cannot tolerate any delay.

The Assault on Ethical Home Appraisals, Part Deux

[The realtors have a lot of friends in Congress and since we seem to be headed back to the good old days when politicians in exchange for a few bucks let industry write their own regulation]

I'm sorry... I wasn't aware that had ever gone out of style.

Home Buyers: Conspicuously Missing Legislation

I don't disagree at all with the concept of buyers having skin in the game.

However, a price will have to be paid to accommodate this shift.

The average American has a small-to-negative savings rate.

What's the median home value now? 180,000?

180,000 * 5% = $9,000.

I look at people's personal financials all day long.

Most people don't have a month's worth of expenses saved up, never mind a 5% down payment.

If we're going to move in that direction overnight, then we're going to have to wait awhile for people to buy houses.

Big Banks in Trouble: Huge Mortgage Write-Downs Seem Inevitable

Most people don't even know what the "current" value of their house is. ]

Maybe not... while they're current. But they take a KEEN interest in how much they owe once they do fall behind on payments. Don't think for a minute that people aren't doing the math to see if the LTV is within their tolerance level.

Many borrowers were stupid enough to take the loan they were given. But they're not stupid enough to keep it.

Back in the U.S.S.A.

[The cost and expense of living in any country are part and parcel of the benefits one enjoys for living there.]

I hear this kind of statement frequently, and seems that the reasoning is to excuse our government for its stupidity, favoritism and incompetence.

And this excuse is usually offered to excuse yet another intrusion of the government into our lives... "It's a small price to pay."

I disagree with this premise TO MY CORE.

There is often little-to-no relationship- perhaps an INVERSE relationship between the stupidity, over-taxation and pointless regulation we endure and the benefits that we enjoy as a result of living here.

Southern California Home Prices Rise? Beware of 'Misleading Medians'

[Oh no, home prices are rising again", said the realtor as they approached the first of their six stops during an afternoon of house hunting.]

Most realtors have mastered the art of "How to Lie with Statistics" without having ever read the book.

Most MLS's don't keep terribly good data, to begin with. The way they calculate average time on market is SEVERELY skewed, for example. So, most "conclusions" they reach "based on the "market data" are often overly optimistic.

Trusting a realtor's opinion on whether you should buy or not is similar to asking the mortgage broker whether or not you can afford the loan that you "qualify" for.

Do your own homework.

Or don't, and maybe Pappy Obama will come to your rescue, too.

More on the Scarcity of Land Debate

[But we do not really have a land shortage. ]

Flint, MI thinks it needs to raze about 40% of its housing.

This is being hailed as a model for other areas of the country.

Others will follow.

How the Homeowner Could Be Protected

[so I doubt that a change in status from homeowner to renter would suddenly make the occupants into a menace.]

Choices and decisions as a renter are different... why perform regular, suggested maintenance on the furnace and other items if you don't own it? Owners care for their homes differently than renters, and that will cost whoever's left holding the bag. A "good" tenant does not maintain a home like an owner, nor does he prepare a home for sale as a homeowner would, to maximize its value.

[Forcing them onto the street just creates a huge inventory of housing]

You make it sound like they're going to end up in a homeless shelter. That's hardly the case. People have many more options than you're acknowledging.

And I suppose with the plan you've endorsed, we'll ignore the strong possibility that these properties will be worth less once the tenant decides to leave.

Take your OWN money, buy some of these defaulted notes at face value, and then follow this plan. Report back to us on your progress periodically.

The capital backing these mortgages is just as much belonging to the investors as the home belongs to the homeowners. If they'd prefer to have what's left of their money and the borrower has defaulted, they have every right to cash out.

I doubt they'll choose to fund mortgages again.

'Rationing': A Dirty Word

[David argues that there are three main ways that the health care system already imposes “rationing” on us]

Yes, unlimited wants, limited supply... understood.

But are you suggesting that the federal government is a BETTER supply chain manager?

If so, please provide specific examples of the federal government's prowess in action.

The Debt-Deflation Threat

[“A goodly chunk of this excess debt — bringing credit into realignment with the permanently new and lower level of household net worth — is going to have to be paid down (or defaulted on).” ]

BK filings were up nearly 30% according to a recent report, and they had been up 33% back in August. I believe that only 27 percent of the filings were Chapter 13.

So yeah, that debt is being reduced, though not necessarily paid down.

Ken Lewis: The Government Made Me Do It!

Actually no, the people are NOT the government.

Perhaps they should be, but they're not. And they haven't been for a long time.

OTOH, perhaps they should not be. So many of those who vote have absolutely no grasp of the issues at hand. We've brought this on ourselves by relinquishing / "delegating" the repsonsibility of monitoring important affairs.

And no, watching Colbert, The Daily Show, and the Tonight Show do not qualify as keeping oneself informed.

Mortgage Mods Still Not Working

Minimizing recidivism rates requires a substantial investment in education, planning, and follow-up.

It's called work.

Meanwhile, modern day alchemists are working to develop a "model" to avoid doing said work.

Good luck on that one.

Housing on Fire - Can Someone Please Explain?

[Someone buys a house for $200,000; loses it through foreclosure; sees the bank sell it for $50,000; rents it from the new owner for $1000 a month and two years later buys it back from them for $125,000.]

Ahhh... such an elegant business model. However, even in the days of easy money, lease-purchase transactions were only successful 20% of the time, at best. Granted, if you buy low enough, and the renters are plentiful, you can replace them. But after the 2nd, 3rd, or 4th renter, the place begins to look less like a home and more like a rental, the credit quality of the subsequent tenant/"buyers" begins to decline, and at a certain point, the asset begins to lose its luster.

A few additional assumptions are also being made: 1- prices will not fall further, 2- Interest rates will remain low, 3- FHA will continue to make poor lending decisions, 4- The "buyers" will actually do what they're told at the seminars.

That last point is a bit tricky. Towards the end of the bubble and the beginning of the crash, a lot of ARM-owners were not able to qualify for lower long-term rates because they didn't take the steps necessary to EARN those kinds of loans. People are often willing to do "whatever it takes" at the outset, but very few deliver.