Replies (25)
- klarek the realist
- Contributions:7044
Hopefully they increase the down payment requirement. 3.5% is way too low.
- George Raymondo, "The Loanranger"
- Contributions:186
Increase the FHA mimimum down payment? I don't know how many loans you originated over the last 10 years, but I can tell you while most lenders and brokers were doing sub-prime, I stuck to Government Loans and my default rate has been consistently less than 2% which is way better than most lenders. FHA is and was a better loan for lenders and borrowers alike. At least they had to prove their income.
- Dan, "the_country_hick"
- Contributions:4827
I believe combined that government supported mortgages are over 80% of the whole market. Something is very wrong when the government is the only one willing to make loans. It appears interest rates should be higher and the government should stop accepting this kind of risk.
"About 56% of mortgages for a home purchase were FHA-insured in 2009"
"About 56% of mortgages for a home purchase were FHA-insured in 2009"
- klarek the realist
- Contributions:7044
George, the default rate was that low because the deadbeats were taking out option ARMs. Now it's a burden for taxpayers. Why should we subsidize home ownership? This is stupid and has to end.
- kristisar
- Contributions:110
The Federal Housing Administration doesn't make loans. They insure them, and the insurance is paid for by the borrower. In addition, the FHA was started after the stock market crash in 1929 to pull us out of that housing slump. They are doing the same now. Id like anyone critcal of FHA loans to consider what the market would look like right now without them.
- jal74
- Contributions:1077
Actually the serious deliquincy rate for FHA loans is increasing, and fast towards 9% - which is absolutely sad if you ask my opinion
http://www.nationalmortgagenews.com/dailybriefing/2010_257/fha-revises-default-rate-1022862-1.html
So George, while you personally may see low default rates, FHA in general sees very high default rates, which isn't surprising given the 3.5% DP and low FICO requirements
regards
http://www.nationalmortgagenews.com/dailybriefing/2010_257/fha-revises-default-rate-1022862-1.html
So George, while you personally may see low default rates, FHA in general sees very high default rates, which isn't surprising given the 3.5% DP and low FICO requirements
regards
- Dan, "the_country_hick"
- Contributions:4827
kristisar,"Id like anyone critcal of FHA loans to consider what the market would look like right now without them."
I actually can picture it. Prices would be down to where they are both affordable and in line with historic standards. The bubble effect would be gone. House prices would then be a true value. People would buy knowing the bottom was in.
Since instead FHA is holding the market together at still far to high prices we are seeing people (like me) not being willing to buy in a declining market. The government mortgages and other housing policies are hurting the real estate market by not allowing it to work as it should and allow prices to go lower.
I actually can picture it. Prices would be down to where they are both affordable and in line with historic standards. The bubble effect would be gone. House prices would then be a true value. People would buy knowing the bottom was in.
Since instead FHA is holding the market together at still far to high prices we are seeing people (like me) not being willing to buy in a declining market. The government mortgages and other housing policies are hurting the real estate market by not allowing it to work as it should and allow prices to go lower.
- MrQster
- Contributions:23
Eventually the FHA will be poised to take the place of Freddie and Fannie. The government will continue to make the mistakes of the early 2000s. They will keep homes unaffordable for the average working American unless the American family mortgages their future income and savings for 30 years.
We the tax payers will bail out the FHA in the near future for trillions as the housing market takes it cyclical periodic downturn that it normally takes. This will encourage strategic defaults as FHA loans don't require much of a down payment. Sadly the government does not learn from history and its recent mistakes.
We the tax payers will bail out the FHA in the near future for trillions as the housing market takes it cyclical periodic downturn that it normally takes. This will encourage strategic defaults as FHA loans don't require much of a down payment. Sadly the government does not learn from history and its recent mistakes.
- kristisar
- Contributions:110
Just want to make sure I have this right... Dan wants the market to fall further, and MrQster thinks that the market has not yet taken it 'cyclical periodic downturn'? I don't know where you live, but where I live, I can rent a one bedroom 700sq ft apartment for about $680. The mortgage on my 3 bed, 2 1/2 bath 1560 sq ft house is $800. I rent the two other rooms to friends, and trust me, its for more than $120 total/month. Looking @ it that way, I am actually making money over renting, not to mention tax benefits and blahblahblah. Its a brand new home, so I have $0 maintenance cost... truely. So just try to understand that for some of us out there, homebuying is absolutely affordable. If you don't want to do it, awesome. But I am sooo sick of hearing that homes are still priced too high and aren't affordable- affordable means I can pay for it. Value means I can pay for it and I want it. My home has value to me, even if the market decreases more. I am all for getting a good deal, but if fence sitting means I don't get what I want, what good does that do me?
- klarek the realist
- Contributions:7044
Id like anyone critcal of FHA loans to consider what the market would look like right now without them.
Home prices would be lower, so less people would be overpaying for houses. The lower the prices, the sooner the market will rebound. More people would be investing their own money into the houses, thus far fewer would be underwater. The taxpayers wouldn't be taking a hit from the risky loans, so it would save them a lot of money.
How's that?
Home prices would be lower, so less people would be overpaying for houses. The lower the prices, the sooner the market will rebound. More people would be investing their own money into the houses, thus far fewer would be underwater. The taxpayers wouldn't be taking a hit from the risky loans, so it would save them a lot of money.
How's that?
- sunnyview
- Contributions:26843
"Value means I can pay for it and I want it"
That's not value. I can pay retail for a Rolex (shutter), but that doesn't mean it's a good value. The government's job is not to subsidize people with marginal credit or unstable finances. FHA should not be a way to dump bad debt on the government while other companies collect their cut and walk away. Freddie and Fannie already saw how that worked out for them.
Buying a house is not a human right. Renting is a viable alternative. FHA should focus on helping borrowers who have learned their basic lessons with credit or people that are buying their first house.
That's not value. I can pay retail for a Rolex (shutter), but that doesn't mean it's a good value. The government's job is not to subsidize people with marginal credit or unstable finances. FHA should not be a way to dump bad debt on the government while other companies collect their cut and walk away. Freddie and Fannie already saw how that worked out for them.
Buying a house is not a human right. Renting is a viable alternative. FHA should focus on helping borrowers who have learned their basic lessons with credit or people that are buying their first house.
- klarek the realist
- Contributions:7044
But I am sooo sick of hearing that homes are still priced too high and aren't affordable- affordable means I can pay for it.
Prices in many areas are still way too high. I'm sooooo sick of hearing that they aren't. Why else do you think prices started declining after the (awful) first time homebuyer tax credit ended?
Your definition of "affordable" is pretty silly. You can "afford" a house because you're not actually paying for it, same as the grape-picker in CA that bought a $700k house on a $12k salary. Yeah, he could "afford" it too. Doesn't mean anything.
FHA needs to go away. Short of that, they need to increase the down payment requirement to 10%. What's wrong with that?
Prices in many areas are still way too high. I'm sooooo sick of hearing that they aren't. Why else do you think prices started declining after the (awful) first time homebuyer tax credit ended?
Your definition of "affordable" is pretty silly. You can "afford" a house because you're not actually paying for it, same as the grape-picker in CA that bought a $700k house on a $12k salary. Yeah, he could "afford" it too. Doesn't mean anything.
FHA needs to go away. Short of that, they need to increase the down payment requirement to 10%. What's wrong with that?
- kristisar
- Contributions:110
Whoa, first off, how dare you say I can't afford my home? I qualified on my own, put my own money down, and made payments on my own until a friend had a family emergency and moved in so he could save some money to send his folks since his father had a stroke. Don't you presume to know my financial situation because I have roommates. Congrats on making sure I will absolutely not give any credence to anything you say now, after an ignorant comment like that. As far as your how's that, all it told me is that you neither understand supply and demand, nor the psyche of the average American consumer/investor. Sunny- value is personal. You don see the value of a Rolex. I understand that. But as someone who is certified to sell them, I can tell you there are plenty of people who do, and happily fork over $10k for one. You would never pay that, and hell, neither would I. But I do know a substantial amount about the product, and I do see the value to some. Its not a human right to buy anything, and I never claimed it was. But your viable alternative of renting would have me wasting money. Can you at least agree that buying is also a viable option?
- Kent Shelman, "Kent Shelman REMAX"
- Contributions:63
I believe the scales will be tipping back towards conventional loans because FHA is raising it's mortgage insurance rate.
- sunnyview
- Contributions:26843
Overpaying by handing over retail price for a Rolex does not benefit me as a consumer if I can get the same product at a lower price. Value as a marketing term may be subjective, but value as an investment concept is numbers driven.
Renting is not "wasting money" when the price of houses is dropping or the cost of renting is significantly lower than the costs of buying. Anyone like me who sold high and rented during the bubble bust cashed out paper equity into real money. Once the market dropped, I bought a better property lower while my neighbors who overpayed or did not sell stayed stuck. My dollar went farther and I got a better value.
I was happy to pay rent and what I paid in rent was not wasted money contrary to what agents said at the time. Agents will almost always recommend buying. Buying and renting are both viable options but buyers need to study their market well enough to know which is a better value.
Renting is not "wasting money" when the price of houses is dropping or the cost of renting is significantly lower than the costs of buying. Anyone like me who sold high and rented during the bubble bust cashed out paper equity into real money. Once the market dropped, I bought a better property lower while my neighbors who overpayed or did not sell stayed stuck. My dollar went farther and I got a better value.
I was happy to pay rent and what I paid in rent was not wasted money contrary to what agents said at the time. Agents will almost always recommend buying. Buying and renting are both viable options but buyers need to study their market well enough to know which is a better value.
- sunnyview
- Contributions:26843
Here is another article on FHA defaults increasing from the Washington Post. Some lenders have a much higher default rate than others, but the current threshold of 200-300% of the local average default rate here is ridiculous.
The FHA situation is similar in the student loan industry here. For profit colleges milk the government underwritten program, take their tuition upfront and stick the taxpayer with the bill.
I have no problem with government loan programs helping people whether is be FHA or Sallie Mae. What I do have a problem with is loans being made to people who are poor candidates, taking their fat fees upfront and skating down the road leaving the taxpayer holding the bag.
The FHA situation is similar in the student loan industry here. For profit colleges milk the government underwritten program, take their tuition upfront and stick the taxpayer with the bill.
I have no problem with government loan programs helping people whether is be FHA or Sallie Mae. What I do have a problem with is loans being made to people who are poor candidates, taking their fat fees upfront and skating down the road leaving the taxpayer holding the bag.
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
Investors with CASH are driving the housing market.
Happy funding, Rudi
Happy funding, Rudi
- kristisar
- Contributions:110
You're absolutely right, renting is not a waste of money when its significantly less expensive, but in my life, its not. I specifically gave my own real life example and whther you look at it from a sentimental or dollar value, spending less money for a place to live = worthwhile. And quite frankly, I have no sentimental hold to my home. Its shelter, and cheap. But I know others don't feel that way. As far as the rolex, are you aware there are concrete benefits to buying from a retailer? For most people, paying more but knowing its not a gray market piece and that it has all authentic parts is worth it. Certified Rolex retailers are not allowed by contract to discount. So if its discounted, it is gray market, and most people are unaware that Rolex- and I don't know how they do this, but they do- are able to confiscate any timepiece sold gray market. It if has unauthorized parts, they will remove them, replace them, and charge you for it. So the $1000 you saved up front could costs thousands later if you ever need it serviced. And you will. Totally off topic, but yeah. I have a love/hate relationship with them
- klarek the realist
- Contributions:7044
Whoa, first off, how dare you say I can't afford my home?
Who said that? We said your definition of affordability is silly. Don't assume that's a personal attack about your finances. Just because I can borrow money to buy something doesn't mean it's personally affordable. Otherwise, you're saying that all those people that bought during the housing bubble with loans more than 20x their income were in a position of buying "affordable" homes.
your viable alternative of renting would have me wasting money.
You don't understand economics. Rent or buy, you're paying for a roof over your head. You're "wasting money" on taxes, interest, repairs, etc. It doesn't matter, but saying that one should own because renting is throwing money away is the hallmark of a new homeowner that has gobbled up realtor propaganda.
Who said that? We said your definition of affordability is silly. Don't assume that's a personal attack about your finances. Just because I can borrow money to buy something doesn't mean it's personally affordable. Otherwise, you're saying that all those people that bought during the housing bubble with loans more than 20x their income were in a position of buying "affordable" homes.
your viable alternative of renting would have me wasting money.
You don't understand economics. Rent or buy, you're paying for a roof over your head. You're "wasting money" on taxes, interest, repairs, etc. It doesn't matter, but saying that one should own because renting is throwing money away is the hallmark of a new homeowner that has gobbled up realtor propaganda.
- Frederick1971
- Contributions:39
Your comment about paying retail on a Rolex is funny. Buying a Rolex at retail is actually cheaper than on the black market, so long as you can wait in line, sometimes 7 years.
- kristisar
- Contributions:110
Lol looking for a stainless steel Daytona? Yeah, we had a guy that was offered $14k cash for it within a day of purchasing it for $10k. Waiting list is 4 pages long. Other than that though, you should be able to get a Rolex with little to no wait. Klarek, I give up on trying to talk to you. Unless you care to find an example, a real life situation, where someone who makes 12k a year got a 700k mortgage on their own. Under that circumstance, I will make a post retracting everything I said and say you're a genius. Doesn't even have to be a grape-picker.
- sunnyview
- Contributions:26843
Not that it matters, but this article from 2007 has a strawberry picker making 14K a year buying a 720K house here. During the sub prime boom, minority and non English populations prime targets for questionable loans here.
FHA used to be a fine program. The FHA inspectors would not pass a house without a serviceable roof, plumbing etc. Today that is not so. Many people buy a house that needs immediate repairs that they cannot afford. FHA needs to be retooled.
FHA used to be a fine program. The FHA inspectors would not pass a house without a serviceable roof, plumbing etc. Today that is not so. Many people buy a house that needs immediate repairs that they cannot afford. FHA needs to be retooled.
- kristisar
- Contributions:110
I'm on my phone, and it won't show the article past a few lines. Did he take out the loan on his own? Even tried to google the guys name, but all that came up was a Peruvian footballer, some singer, and a scathing Yelp review about a guy in Chula Vista
- sunnyview
- Contributions:26843
Article says "So how did Ramirez, the strawberry picker with an annual income of just $14,000, purchase a $720,000 home in Hollister without any money down?
He had help, for one thing. Although Alberto Ramirez was the only one to sign the purchase agreement and the only one named on the loan documents, he actually bought the house with his wife Rosa Ramirez, as well as their friends Jesus Martinez and his wife. However, even in a good month, the Ramirezes and Martinezes together don't earn much more than a combined $6,500, and their official monthly payments were around $5,200."
He had help, for one thing. Although Alberto Ramirez was the only one to sign the purchase agreement and the only one named on the loan documents, he actually bought the house with his wife Rosa Ramirez, as well as their friends Jesus Martinez and his wife. However, even in a good month, the Ramirezes and Martinezes together don't earn much more than a combined $6,500, and their official monthly payments were around $5,200."
- klarek the realist
- Contributions:7044
I give up on trying to talk to you. Unless you care to find an example, a real life situation, where someone who makes 12k a year got a 700k mortgage on their own. Under that circumstance, I will make a post retracting everything I said and say you're a genius.
Now that sunnyview has been kind enough to prove that I was right, don't feel obligated to call me a genius, many people heard about that story (and many others). Just give me a tiny benefit of the doubt, and assume that I'm not lying to you.
Now that sunnyview has been kind enough to prove that I was right, don't feel obligated to call me a genius, many people heard about that story (and many others). Just give me a tiny benefit of the doubt, and assume that I'm not lying to you.
FHA loans continue to drive the housing market
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- 5.0/5.0
- (2 reviews)
Contributions:424Here's an article from the Wall Street Journal talking about FHA financing, discussing the pros and cons of FHA, how it has helped the real estate market during the down turn and the changes that are taking place this month. It's a good read if you are thinking about buying a home in the near future. Let me know your thoughts.
WSJ article
clear skies,
doug reyolds
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