Obama to rethink policies that encourage homeownership

[Ziner]

http://www.usatoday.com/money/economy/h ... 1_cv_N.htm

In favor of more low income rental subsidies.

I didn't want to clog that other thread with it. So I will put it here. I had a long ass post written up for it, but then I decided I didn't have the energy to duke it out. But since I brought it up I will put it here for discussion.

Won't disagree that lending practices need to be reconsidered. A 41% debt to pre-tax income is insane IMO for FHA loans. However, if you take away the 3.5% down payment don't expect to get younger people in the market for a long time to help relieve the pressure for all the people that can't afford their house. With out the new home buyers foreclosures will surely rise as more homeowners abandon their home, driving everyone's houses down even farther. The market needs to be stabilized before any of this is even considered. Good luck waiting for people who graduate from college to pay on student loans, barely find a job and be really lucky if they get a decent wage, and then save 20% for a house... which if you live in some of the cities I have is probably around $40,000 cash minimum plus some buffer. He needs to encourage home ownership for people who can afford it and can make the payments and get those in the house who can't afford it in a house they can afford or back in the rental market.

Classic over reaction by Washington. For decades home ownership has been a solid way to put away money and develop wealth. However, because the last few years have been brutal we feel as if we need to shift away from it. Makes my head hurt. I think I got all my points out. Just frustrating. Attempting to save to buy a house myself and this is just discouraging. I'd like to do it the right way and be able to be comfortable when owning a home and not stretch myself to the limits. However if I can't go FHA and need more money down its gonna be a long long time before I can buy. Sucks too, could have had more money in my pockets if we weren't so rich that we didn't qualify for the full student loan deduction or the tuition deduction... but then again my wife and I are loaded we are more than happy to pay more in taxes so we can put off buying a house. Maybe we should pop out a few kids that we cant afford to get the child deduction, then perhaps we would be not rich enough to afford the rental subsidy and we could take that money to save for a house.

[FUDU]

Just go section 8 every time all the time, at this point we might as well.

[waborat]

Classic over reaction by Washington. For decades home ownership has been a solid way to put away money and develop wealth. However, because the last few years have been brutal we feel as if we need to shift away from it.

Not sure if this is right^ Zeen?

My wife and I bought our first house in '92 and had to have minimum 12% down, clean credit & a 40% D2I:...We were hoping to buy a year earlier when we found out this info and we didn't do jack-shit for 12 months...I mean nothin, no restaurants, no bars, no gifts...We pretty much ate @ home and watched a ton of movies in our rental to try and get our debt paid and save up 20% and not have to pay the ridiculous PMI...

We did it and bought a 85K starter home and fixed up any problem areas...3 years later, were able to sell it for a little profit and jump into something larger...Once again, we had 20% down and refinanced twice in the first decade of ownership...In a couple more years our house will be paid off...

I guess what I'm saying is IMO these banks need to make it tough again and not just let anyone buy a house who really can't afford it...Maybe with the values going way down this will entice new home buyers to actually save a little more, watch their debt and realize what a commitment it is to own a home instead of just expecting it to be a right...

I'm sure Officer Rich can add a lot more light on the subject

[mattvan1]

Classic over reaction by Washington. For decades home ownership has been a solid way to put away money and develop wealth. However, because the last few years have been brutal we feel as if we need to shift away from it.

Not sure if this is right^ Zeen?

The question to ask is why have the last few years (really the last 20 months or so) been brutal? Because at some point long ago the morons in DC decided that EVERYONE needed to be able to experience the joys of home ownership - not just those who saved their money and could afford the downpayment and P&I every month, that was much too difficult and after all, home ownership in the good old US of A was a RIGHT of bein' 'Merican. So the crooks at Fannie and Freddie were enabled by Congress and they ran wild and the sub prime fiasco began. I'm sure you know the rest by now...........

What we need to shift away from is loaning money to people, especially via ARMs, who are bad credit risks. We also need to make it illegal for some types complex investment instruments, like Collateralized Debt Obligations, to be created for which the SEC fell alseep and only and handful of Wall Street types actually understood.

All that needs to happen is for the dooshes in DC to stay the fuck outta our lives (for the most part) for awhile and let the market stabilize.

BTW, this is a bi-partisan rant. There is blood on hands of Dems and Repubs alike, and Clinton, Bush, and Obama all contributed to the epic collapse of the real estate market - which at one time was a solid investment strategy. No longer. Thanks Washington.

[Ziner]

Perhaps I made my argument too focused on the down payment. I think low down payments certainly have their faults, but I think this entire thing has been a hurricane of activity that can't be nailed down to one thing. The decrease in interest rates sure did have an awful lot to do with the rise of home ownership as well as the advent of all of these different types of ARMs. I am not convinced that increasing down payments is going to do one damn bit of good. First off there are a lot of people that need out of their home, the only way to do that is through new buyers, you do not get new buyers or stabilize the market by putting them out of the market for another few years. What you do is make sure people can make their payments and stabilize the job market. The first part is why I pointed out the absurdity of allowing people's Debt to Income to be 41%, calculate what that payment would be for you all and then tell me that the down payment is the problem. Someone with a 700+ credit score and a Debt to Income of 25-30% does not appear to be a risky loan to me even with 3% down. Fix the job market and there is even less risk to that loan.

I have more, just not the time to expound on it.

[waborat]

Someone with a 700+ credit score and a Debt to Income of 25-30% does not appear to be a risky loan to me even with 3% down.

The rating & ratio are fine (also gotta look at job history)...

But if I'm a bank, there's no way I'm giving out a loan when someone only puts down 7.5K on a quarter-mil house...

There's no risk to the buyer except his future credit if he defaults and the way things are going in this country I'm sure PBO will nix that mark off ol' Joe 6-pack as well

[Ziner]

You know you are probably right. Overall higher down payments might be good for the long term, but I still contend that short term it is disasterous. You can not put off new home buyers for 2-3 years when there are millions of homes that need sold. Want to keep watching home prices drop, tell all those people they need 20% to buy underwater houses. If they are going to do this why not get rid of the mortgage interest deduction that some advocates have brought up, go all the way. Get rid of your deduction and give it to low income renters, they dont get enough as it is. You already have a house why do homeowners deserve a special deduction when renters dont.

I think alot of my thinking is bitterness to be honest. I am on the doorstep of buying a home and then I see this and perhaps it just kicked me back down the street so I might not even close anymore. And honestly it is probably mostly an overreaction, it is just the mindset that pisses me off. The idea of discouraging home ownership in favor of subsidies for low income renters is just frustrating.

[waborat]

I think alot of my thinking is bitterness to be honest. I am on the doorstep of buying a home and then I see this and perhaps it just kicked me back down the street so I might not even close anymore. And honestly it is probably mostly an overreaction, it is just the mindset that pisses me off. The idea of discouraging home ownership in favor of subsidies for low income renters is just frustrating.

Buying a home is a mental roller coaster ride, but you guys are on the right path...

It is nice to see lenders taking a tougher look though

[Orenthal]

You know you are probably right. Overall higher down payments might be good for the long term, but I still contend that short term it is disasterous. You can not put off new home buyers for 2-3 years when there are millions of homes that need sold. Want to keep watching home prices drop, tell all those people they need 20% to buy underwater houses. If they are going to do this why not get rid of the mortgage interest deduction that some advocates have brought up, go all the way. Get rid of your deduction and give it to low income renters, they dont get enough as it is. You already have a house why do homeowners deserve a special deduction when renters dont.

I think alot of my thinking is bitterness to be honest. I am on the doorstep of buying a home and then I see this and perhaps it just kicked me back down the street so I might not even close anymore. And honestly it is probably mostly an overreaction, it is just the mindset that pisses me off. The idea of discouraging home ownership in favor of subsidies for low income renters is just frustrating.

I think this is mostly bitterness, because it seems what you are advocating is the kind of logic the government tries and fails with everytime. The housing bubble was a 30 plus year ride of ever increasing home values, that bubble has to burst, and it is best if that happens short and quick. Making the standards tough but rational is the only approach. Aiming for a managed soft landing will be impossible because the government will try to please everyone.

I'm in the same boat Z. Was very close to pulling the trigger on a couple houses when the big tax credit was available. Didn't have the 20%, but kept looking at that short term 8 grand payoff. Being single I am without another wage earner, and buying without that 20% down could have lead to some painful stress month to month.

IMO Wabo has it right. People will have to sacrifice. Not trying to be a dick, but aren't you going to Napa (or was that another poster)? Saving that 20% means having no fun, and believe me I am not having any fun.

The collapse of home values (not sure what those values are like in Boulder) will make those 20% dp's more reasonable. That is the self correcting mechanism a free market provides. I just can't feel sorry for people who overextended. Most, not all, of those people are the cause of the fine print needed to tell them what X payment will be on a home loan with X%, or what 36 payments of a home security system will be during a 3 year contract. IOW people have had responsibility removed from so many decisions by claiming ignorance. Time for people to fail. Fear of failure is what is needed in this market.

...and fuck with property taxes so damn high, at least in many East Side suburbs, perhaps renting is the smarter long term play.

[Orenthal]

Also I was easily approved for a $150,000 dollar home (prolly near the average 4 bedroom Midd. Hts. home), even though realistically there was no way I could afford it. Again I just don't sweat for a second the people who looked at that and jumped, not really analyzing if they could make that work. Also don't accept that foreclosure kills a neigborhood.

The areas of Cleveland killed by foreclosure were already dumps that no one wanted to live in, or were well on there way to becoming those all on their own. Foreclosure in Solon, Strongsville, blah blah, just gives people with capital the opportunity to get that asset at a better price. Desirable communities won't have a problem. Puts people who should be renting back in that market, and deflates artificially high housing prices.

Part of it gets back to the "right of homeownership". A house should be looked at as a asset. If one loses on a speculative stock, no one cares, if a person buys an overpriced house their financies couldn't handle we need a bailout...

ETA
Why the fuck does anything need susidized? Stop with this fucking subsidizing of low income stuff. Taxes are used to stop activity, subsidies to encourage. Haven't we learned anything from Econ 101. Leave it to Democrats. Like the whole War on Poverty has been such a huge success. If it were up to me I would start bulldozing every low income/project I came across. Stupid Ohio City and Tremont. /end soapbox

[Ziner]

I think this is mostly bitterness, because it seems what you are advocating is the kind of logic the government tries and fails with every time. The housing bubble was a 30 plus year ride of ever increasing home values, that bubble has to burst, and it is best if that happens short and quick. Making the standards tough but rational is the only approach. Aiming for a managed soft landing will be impossible because the government will try to please everyone.

The stock market bubble burst too, did that all of a sudden become a long term investment? There is no soft landing here. If you raise these downpayment requirements these people that are stuck can not get out of their house, it is going to prolong the pain. That is why the 8K made so much sense. It gave incentive to the people that didnt fuck up and gave the assholes a chance to get out of their mistake with out bringing down the neighborhood.

I'm in the same boat Z. Was very close to pulling the trigger on a couple houses when the big tax credit was available. Didn't have the 20%, but kept looking at that short term 8 grand payoff. Being single I am without another wage earner, and buying without that 20% down could have lead to some painful stress month to month.

IMO Wabo has it right. People will have to sacrifice. Not trying to be a dick, but aren't you going to Napa (or was that another poster)? Saving that 20% means having no fun, and believe me I am not having any fun.

Yes, going to Napa, I figured that would be brought up. A huge majority of it will be paid for with Airline and Hotel miles. Yes I will be spending money, but me getting a home or not is not dependent on a few hundred here and there. We have cut back a bunch of the other garbage in order to be able to still save even with the trip.

The collapse of home values (not sure what those values are like in Boulder) will make those 20% dp's more reasonable. That is the self correcting mechanism a free market provides. I just can't feel sorry for people who overextended. Most, not all, of those people are the cause of the fine print needed to tell them what X payment will be on a home loan with X%, or what 36 payments of a home security system will be during a 3 year contract. IOW people have had responsibility removed from so many decisions by claiming ignorance. Time for people to fail. Fear of failure is what is needed in this market.

...and fuck with property taxes so damn high, at least in many East Side suburbs, perhaps renting is the smarter long term play.

Housing prices in Boulder are not set by a true free market. There are population and building controls. The city of Boulder is absurd to purchase a house in. 350K for a 3 bd 2 bath not in spectacular shape, I shit you not. Those controls cause a spike in demand in the cities that are reasonable for us to look at with where my wife works. We will pay probably 275K for a 3 bd 2 ba single home. Not buying a condo around here, awful purchase, about 6 million on the market and they are still building more.

And I agree, I feel no compassion for those who overextended, however if you dont get them out of their home it is going to cause an even bigger mess. Millions in foreclosure... those people will drive down the price of everyones home who did it right. How would you propose we fix that with out new buyers? I did residential mortgages for 2 years, I saw the idiots, I laughed at them, but now I am here potentially looking at more obstacles to purchasing a home while our tax dollars are paying for interest rate modifications (I have seen them as low as 2% on 400K mortgages, I work as a mortgage trustee) so they can stay in their home and pay for their mortgage balance to be reduced because they are upside down... Fuck that. Keep the 8K and incentivize those who havent fucked up yet.

Saw your post, I disagree on the foreclosure thing. Wife's father just had his house appraised, appraiser told him straight up he couldnt get a value he needed (or even close to the previous value that was appraised) to take some cash out for other debts because most of the houses that sold in the area were foreclosures... couldnt justify a higher or even the same value. It isnt a garbage neighborhood.

[FUDU]

OJ it isn't hard at all to make the argument that if one is single it is better financially for them to rent forever.

[Ziner]

OJ it isn't hard at all to make the argument that if one is single it is better financially for them to rent forever.

If you look at it completely financially, maybe. Did you take in to account the tax deduction though? Historically housing prices rise, I'd be surprised if this stagnant to no growth is the new normal, at least long term.

If you look at it quality of living, I disagree completely Between people's complete lack of regard for cleanliness, others property as well as the nasty smell of foods wafting throughout the halls, it certainly isn't mentally. And I live in the the nicest apartment with probably the highest rent in the area. People are inconsiderate, gross, and assholes.

[Orenthal]

OJ it isn't hard at all to make the argument that if one is single it is better financially for them to rent forever.

If you look at it completely financially, maybe. Did you take in to account the tax deduction though? Historically housing prices rise, I'd be surprised if this stagnant to no growth is the new normal, at least long term.

If you look at it quality of living, I disagree completely Between people's complete lack of regard for cleanliness, others property as well as the nasty smell of foods wafting throughout the halls, it certainly isn't mentally. And I live in the the nicest apartment with probably the highest rent in the area. People are inconsiderate, gross, and assholes.

I agree with Ziner as for quality of life, and on the financial side I look at a home as an investment. Having both an accounting and construction (and being single) background gives me a somewhat different perspective on home ownership. One that I am sure is of the smallest of percentage of home buyers.

As for your previous reply to me Ziner. The stock market has always been seen as inherent with risk, so when the bubble burst the calls for government intervention were slim. Housing has been sold to us, and tinkered with, to the point of perceived zero risk. However that real risk has to be assumed by the lender and borrower, and if the borrower fails both should suffer. That is how it should be. I want no soft landing, history is full of short but painful corrections. Usually the economy would surge ahead after this short deflation period to climb substantially past previous highs.

History is also filled with engineer/tinkers who manage initial declines, pushing the problem down the road, inflating that bubble all along. That 8,000 dollar credit was just such thinking. It shifted demand, and that demand was still full of people buying with little money down. Now the credit is over and there are even fewer buyers, the problem still exists, and home prices will go down further faster. Fannie and Freddie are still helping people get into homes, and banks are still willing to sell to people that really cannot afford to buy. Your article pretty much sums that one up, as these are future (next year) proposed changes.

The Napa thing was just to bring a personal/tangible element to the table as an example. As I obviously have no f'ing clue about your finances I wasn't making any "point shaking finger" movement at you. Being a true Republican I don't believe in telling anyone what they can do, only what they should have done. (insert smiley that makes this have humorous tone)

On Boulder, ouch, I knew it was much higher then Cleveland, which never really enjoyed the astronomical rise in prices of more desirable locations. Which only helps in that the fall is somewhat less steep.

I don't think any example can be given to me that would change my opinion on doing nothing, and letting the bottom fall out. IMO the bigger problem is the lack of jobs and I see the problems as very exclusive. IOW the housing problem would be happening without the job issues, not implying that job losses don't make the housing problem worse. If that last statement makes any sense.

Either way Obama is wrong on his fixes for both issues, and IMO the routes he is taking actually makes both worse.

[aoxo1]

Houses are man made prisons.

Real rate of return on housing is something like 1.5% historically, IIRC.

Of course, gotta factor in the equity build you are getting.

I would love to see a stronger rental market, which has been uniformly terrible everywhere I've lived (overpriced apartment complexes, very little in the way of houses/condos for rent, esp long term).

Are prices not stable where you guys are? Out here they are stable/up for the year.

[Ziner]

As for your previous reply to me Ziner. The stock market has always been seen as inherent with risk, so when the bubble burst the calls for government intervention were slim. Housing has been sold to us, and tinkered with, to the point of perceived zero risk. However that real risk has to be assumed by the lender and borrower, and if the borrower fails both should suffer. That is how it should be. I want no soft landing, history is full of short but painful corrections. Usually the economy would surge ahead after this short deflation period to climb substantially past previous highs.

The problem I have and will have with a hard landing is it hurts everyone, not just the borrower and lender. In fact I would argue short of a crappy credit score it doesnt hurt the buyer all that much financially, especially if they put little down. Let me also add that alot of loans made in 2007 and 2008 that we FHA loans actually had no downpayment because of this little down payment scheme that was going on with non-profits providing a down payment through the sales price and other gimmicks. I have read that the FHA loans made more recently had an average credit score of about 690 up from about 620 ish.... IIRC

I still contend that foreclosures hurt all the people around the house. And foreclosures do not just exist in poor communities. The occur all over. This article discusses some of the costs by homeowners near foreclosures as well as the indirect cost to cities due to loss of property tax of them, thus driving up property tax rates of neighbors

http://www.mortgagenewsdaily.com/622008 ... _Costs.asp

History is also filled with engineer/tinkers who manage initial declines, pushing the problem down the road, inflating that bubble all along. That 8,000 dollar credit was just such thinking. It shifted demand, and that demand was still full of people buying with little money down. Now the credit is over and there are even fewer buyers, the problem still exists, and home prices will go down further faster. Fannie and Freddie are still helping people get into homes, and banks are still willing to sell to people that really cannot afford to buy. Your article pretty much sums that one up, as these are future (next year) proposed changes.

I certainly see your point, you look at it from the hard landing perspective. I look at it that if the 8K gets homeowners in the house who can afford the monthly payment and gets a homeowner out who couldn't, it is a net good, while still not directly rewarding the person who bought the house they couldnt afford. Which is the reason I hate the HAMP modifications and the new HAFA modifications even more. Don't like rewarding people who screwed up (even if they contend it wasnt their fault). The 8K at worst gives new people a chance to make the payments and stabilize the market. Like I said, I really see your point though. I think you can see the opposite view even if you dont agree.

The Napa thing was just to bring a personal/tangible element to the table as an example. As I obviously have no f'ing clue about your finances I wasn't making any "point shaking finger" movement at you. Being a true Republican I don't believe in telling anyone what they can do, only what they should have done. (insert smiley that makes this have humorous tone)

Nah, I know, I was just defending myself, didnt take it as personal. Its fair fodder, I shared it then bitched about not having the savings yet to comfortably afford a home. I am not going to stop my life and not do anything for years to save for a house, I will save and sacrifice where I can, but I am not going to blow my 20's when I dont have kids and sit inside every weekend and not see the world. As much as I bitch, I still have a good life. I just like to whine every now and again.

On Boulder, ouch, I knew it was much higher then Cleveland, which never really enjoyed the astronomical rise in prices of more desirable locations. Which only helps in that the fall is somewhat less steep.

Here is a little Boulder info for you and aoxo since he asked.

http://realestate.yahoo.com/Colorado/Boulder

Prices aren't dropping, they are rising. Look at the madness of the median home in Boulder. 469K. Ouch. You can imagine how that effects the surrounding communities. That is why I am not being a snob when I say to get a house that we would live in for 5 years (which I wouldnt buy if we werent going to be) We would be looking to spend 275-300K. 20% and feel comfortable would take a hell of a long time. Prices in Denver have actually dropped in recent years http://realestate.yahoo.com/Colorado/Denver It is just that living in Denver would be over an hour commute in traffic each way for the wife. Not really an option. There is much more affordable options south of Denver, but that is even less of an option. The positive thing is if we found a house in Boulder I would be confident of the value increasing with the population and building controls. Good for homeowners already in, bad for anyone looking to buy there or near.

Back to my foreclosure argument did you see the discrepency in the price of houses for sale and the prices of the houses in foreclosure in Denver. Almost 100K difference, and while a lot of them are likely in the shittier areas as you suggest if you scroll through them there are about 500 of the 3000 over the median price of the house for sale in Denver. I realize it is just one city, but that implies to me it isn't just a poor neighborhood problem. Of course you would expect more to be in low income areas but that is still 16% over the median home price. I would also argue that the other people who own in the low incomes will have more problems overcoming a decrease in home value exacerbating the problem.

I don't think any example can be given to me that would change my opinion on doing nothing, and letting the bottom fall out. IMO the bigger problem is the lack of jobs and I see the problems as very exclusive. IOW the housing problem would be happening without the job issues, not implying that job losses don't make the housing problem worse. If that last statement makes any sense.

Either way Obama is wrong on his fixes for both issues, and IMO the routes he is taking actually makes both worse.

Completely agree on the job issues. You fix that and everything stabilizes. Good thing the stimulus is here to save that day. I think we can both agree that was a complete disaster and waste of money. Love the people out to crush the supply-siders while their Keynesian stimulus has fallen flat on its face, at least they way they have implemented it. Hilarious. They got their real life economics project to test all their theories and have embarrassed themselves... I sure as hell don't know how to get it back going, but I am confident that the assholes in Washington don't either. Just keep throwing money on it, that is bound to work. My guess, would be to give the economy some time and for the GOP to win the house for no other reason than that it will cause gridlock in Washington and give Wall Street and businesses confidence that nothing sweeping will take place. There is one thing Wall Street and businesses like, it is knowing that nothing will happen. They can then make long term plans and use that cash they are sitting on.

Perhaps my longest post on this board. I am not proofing it, deal with my bad grammar and incorrect tense use.

[waborat]

I am not going to stop my life and not do anything for years to save for a house, I will save and sacrifice where I can, but I am not going to blow my 20's when I dont have kids and sit inside every weekend and not see the world.

And that's your choice and I respect that...

Unfortunately, a lot of young people think the same way you do and that's why it's gonna be harder for them to get into ownership in the future...

It isn't that hard to sacrifice for a little while and it's amazing how fast you can save money when you're budgeting and leaving out all the stupid shit that we feel we need to be satisfied with life...

So you give up a few night's out, vacations & (God-Forbid) smart phones for a year or two to get into house? Once you sign and take over residence, talk about really "starting your life"...

And after you've done it and saw how you had to sacrifice, it makes it much easier to save in the future because you're always second-guessing yourself on whether you really "need this or not?"...

OT, this is why I feel "big" weddings are the biggest waste of money for young couples...Save your money and have your family give you monetary gifts to use for your first house...Jump start your life together wisely and not be in a major hole right off the bat...Probably keep more marriages together longer?

OTII, and stay in your effing houses!!! Unless you get transfered and have to move, how bout sticking around in you dwelling and actually create some equity...Another problem I've had the past 10 years is watching everyone buy a house and then move out 3 years later because they could make 50K on what they bought...They all moved into something "bigger & better" and now a lot of those same people are screwed...Probably make for a stronger community if people didn't move around like ants

[Ziner]

It isn't that hard to sacrifice for a little while and it's amazing how fast you can save money when you're budgeting and leaving out all the stupid shit that we feel we need to be satisfied with life...

So you give up a few night's out, vacations & (God-Forbid) smart phones for a year or two to get into house? Once you sign and take over residence, talk about really "starting your life"...

Completely agree with the smart phones. My phone is a Zack Morris Saved by the Bell phone in comparison to what is out there now (too old for that reference? ). I refuse to take anything but the free phone. Verizon now charges an additional 9.99 a month for any phone that uses a little bit of data or has the capacity to. I already pay $40 a month for internet (can I at least consider that a necessity, I work at home?). I don't need to pay an additional $30 a phone so I can have it there too.

You know the thing is it isn't as if I am bitching about saving money, what irks me is that I have budgeted and laid out a plan to put money away based on the status quo and now there is discussion about changing that because of the mistakes of everyone else. On top of that they want to turn around and give money to the low-income renters to boot. Forgive me for being a little pissed, and like I said up thread, this is all just discussion and may not happen, but this place was dead and the general concept pissed me off for two reasons. One because of what I have laid out for myself and two the idea that we are going to take funding away from getting people be self-sufficient or at least promoting the idea, to getting more people reliant on the government. A point that has been largely glossed over in this thread thus far.

So forgive me if I am a little bitter, here I am watching everyone take their mortgage tax deductions, their child exemption (when they use more tax dollars anyway), their home loan modification on the house they cant afford, forgiven principal on a house they are upside down on, and here I am saving so at some point I can be a responsible homeowner and they want to say to me... come up a ton more money if you want to join this party. You aren't worthy. I could have bought with the 8,000 credit and decided it wasn't worth the risk. I want to be comfortable, which brings me to my next point

[Generation Y comment forthcoming]- The reason I am saving so much is when I get to the point of owning a home I don't want to not have a life and "really start my life". Why the fuck should anyone buy a house if they have to scrape by to make the payments. I want to be in a position to make the payments, go on trips, go skiing, and live my life. I don't want what aoxo referred to as a man made prison. I believe he meant it in the context of not being able to sell and getting stuck, but I mean it as if that house is my life. I want to live life, sure I want a house and willing to sacrifice a good amount to get it, but that is only to get to the point where I am not a foreclosure or bankruptcy danger because I have cash reserves. I refuse to go to bed at night under my new roof and worry about where the payment is coming from. Owning a home isn't going to ruin my life. IMO when you buy a home and have to "really start your life" you couldn't afford that home to start with. Perhaps your opinion of not being able to afford a home is not having 20% down, difference of opinion. Lower the Debt to Income ratios allowable and increase the reserves needed and I venture to guess that would go along way in preventing foreclosures even with 3.5% down.

And by the way, its our first vacation in two years and you would be amazed at how little we are actually spending. We will still put money away next month after taking the trip and after paying $800 in ski passes as they are due too, we can still save because we are cutting out all other activities that aren't necessary in this month. In the normal month we are putting away 4 figures into savings and both have 11% of our salaries going in to our 401Ks. We are, IMO, doing the right things and being responsible. Just don't change the rules on me this late in the game because others fucked up. Not only because it sucks for me, but in my opinion is a bad idea for the housing market as a whole.

[Erie Warrior]

Why the fuck should anyone buy a house if they have to scrape by to make the payments.

Was doing that for the past 6 months. I've always been a bit of homebody anyway, but as soon as we closed on the house, we started staying in all the time. Spending money on home improvements instead of beer and burgers.

I don't regret the decision at all. The main purpose of going out is to chase pussy. I've found it easier to catch in 1300 sq ft.

Just too many assholes populating this country. Renting necessarily puts me in close contact with a larger number of assholes, and I don't like that. I can make sacrifices on wants, I needed to get away from apartment people.

[Ziner]

Why the fuck should anyone buy a house if they have to scrape by to make the payments.

Was doing that for the past 6 months. I've always been a bit of homebody anyway, but as soon as we closed on the house, we started staying in all the time. Spending money on home improvements instead of beer and burgers.

I don't regret the decision at all. The main purpose of going out is to chase pussy. I've found it easier to catch in 1300 sq ft.

Just too many assholes populating this country. Renting necessarily puts me in close contact with a larger number of assholes, and I don't like that. I can make sacrifices on wants, I needed to get away from apartment people.

That's fine if you did that, we are roughly the same age and that is your approach, I would just prefer to not have my life come to a halt when I buy. It isnt even about chasing tail, just going to dinner still, taking trips, and having the money for the ski pass I must have every year that is close to $1000 total for the two of us. The good thing for you is you don't have to deal with assholes. Like I said I consider my apartment pretty nice, but it is a 400 apartment place (thats all the have out here unless you rent a house) and people are fucking awful. Just so gross and inconsiderate I can't fault anyone for wanting their own place. It is all priorities, you couldn't take it and got the eff out, I'd rather deal with it for a bit longer and still go out. To each his own. I was probably a little harsh in my comment, thanks for pointing it out. Every situation is different, as long as you make your payments you arent the problem.

The bottom line is more incentives for low income renters while discouragement of homeownership is not the way to go IMO.

[Erie Warrior]

Like I said I consider my apartment pretty nice, but it is a 400 apartment place (thats all the have out here unless you rent a house) and people are fucking awful. Just so gross and inconsiderate I can't fault anyone for wanting their own place.

That's it, in a nutshell. We decided that sacrificing some of our social life was better than living with social degenerates.

We looked at buying for a few years, and I was of the same opinion you are. Why can't 2 college educated people with stable employment and credit scores near 800 own a house? I was pissed because we had the 3.5% DP, but not the money for the closing costs. So we sat in our apartment and waited. Then the housing market collapsed, and they passed the $8000 tax credit for first time buyers. Bingo.

So now we sit on our porch and drink beers and grill burgers in peace, instead of listening to yelling at all hours of the night, having our cars broken into, watching rats eat cock roaches (really an unsettling experience), having trash and dog shit everywhere and watching a pack of latch key children run unattended through the apartment complex.

[CAVSTRIBEBROWNSin07!]

About 18 months ago, I started a company which assists people with getting their loans modified under Obama's HAMP plan (amongst other mortgage settlements). At least 50% of my clients are people who were never at any point able to afford their mortgage payments, most of whom had no-doc loans. They are all very behind on their payments - some havent made any payments for as long as 25 months. We sit here and get them a 2% rate and all the late fees/attorney's charges waived, without them having to put down any lump sum to cure the delinquency. EOD these people all bought homes they couldnt afford, lived payment-free for upwards of a year, and now get a sick unheard of rate with no repercussions but a damaged credit score.

Another 10% of my clients are people who are just taking advantage of the system - not making their payments so they can be considered for the mod and its lower payments.

This whole program was a mess from the beginning. Less than half of my clients are people who are genuine victims of the recession, and they are always seemingly the hardest to get approved.

[Ziner]

We looked at buying for a few years, and I was of the same opinion you are. Why can't 2 college educated people with stable employment and credit scores near 800 own a house?

Because you arent an asshole. You probably could have gotten in to a home, but it wouldn't have been the right decision. That is what I find frustrating. I look at it the same way educated, stable employment (now that my wife got out of the paper industry and in to medical device industry, no layoffs coming there) and both have scores in the 720-780 range and all of a sudden they are talking about moving my finish line back a few miles. Meanwhile the people who said eff it and bought the house on a fucked up loan get their rate modified and their principal forgiven. There are changes that need to be made, but don't screw the good people in the process is all I ask.

In chicago apartment living in a 3 flat was fine. Knew our neighbors, only had 2 and they were all cool. These large complexes are brutal. This one isnt as bad as what you described but about twice a month I want to punch someone in the face. I know one thing, however much the ladies are that clean this place are grossly underpaid, and I have no clue what they make. Cleaning up dog shit and piss in the hallways shouldn't be in the job description.

[Ziner]

About 18 months ago, I started a company which assists people with getting their loans modified under Obama's HAMP plan (amongst other mortgage settlements). At least 50% of my clients are people who were never at any point able to afford their mortgage payments, most of whom had no-doc loans. They are all very behind on their payments - some havent made any payments for as long as 25 months. We sit here and get them a 2% rate and all the late fees/attorney's charges waived, without them having to put down any lump sum to cure the delinquency. EOD these people all bought homes they couldnt afford, lived payment-free for upwards of a year, and now get a sick unheard of rate with no repercussions but a damaged credit score.

Another 10% of my clients are people who are just taking advantage of the system - not making their payments so they can be considered for the mod and its lower payments.

This whole program was a mess from the beginning. Less than half of my clients are people who are genuine victims of the recession, and they are always seemingly the hardest to get approved.

Why should anyone make their payments? Other than not being an asshole. You do have a really interesting perspective. Here is one for you. My dad is retiring shortly and was paper rich but cash poor, so he refi'ed as much equity out of his house on purpose to pay off some things and improve his cash flow until he retires and can pay off the house in full. However, he was talking to an attorney friend and he told him the real way to go is to take cash advances on your credit cards to pay off the few student loans he has for my sister and just declare bankruptcy and pay cash for his next house. Once he retires he wont need loans, screw the credit history.

Talk about a effed up incentive. If he didnt have a little pride he would do it, how many people wouldnt think twice and do it?

[CAVSTRIBEBROWNSin07!]

I see that one all the time. For example: I have a 60 year old client who owns a $700K home in NJ, and 6 investment properties, all in the $150K-$250K range. We got his primary down to 2.25%, one of the investment properties down to 2% (its in his wife's name, they claimed they dont live together, and both filed as primaries), and 2 of the other 5 have also been approved, one lowered to principal only for 5 years, at which point a 5% kicks in, and another down to a fixed 4.5% for the life of the loan, down from 7.5%. (Still working on the other 3 - US Bank and Wells Fargo are bitches.)He's already taken out all the loans he'd ever need, so he basically said to hell with my credit score. In the long run he's gonna save probably hundreds of thousands of dollars.

The most fucked part of the process is that this guy does not deserve to be bailed out at all. He intentionally fell behind to get the reduced payments. Meanwhile I have a married couple who is 2 months behind, had a nice income up until 08 when he lost everything (all of which is verified by his tax returns), now both are working and are at about a 50% DTI, they have a legit hardship, all their finances are easy to document, seemingly the ideal case - and they've been denied twice now.

[Ziner]

(Still working on the other 3 - US Bank and Wells Fargo are bitches.)

Hell yeah we are! Don't you dare make our profits go down because of this bastard.

I'll tell them to flag all deals coming from that CAVSTRIBEBROWNSin07 guy.

Seriously though, pretty messed up. I love the fact that people with investment properties get modifications. OJ was right, too much confidence that there is zero risk. Wish they would have bailed out my 401K about a year and a half ago. Problem is if that guy goes in to foreclosure it costs everyone more. If you want to game the system, the system can be had right now.

[Cerebral_DownTime]

Buying a house is way cooler than renting. It's a fact.

Apartments are played out.

[Ziner]

and there goes Wabo's head

http://www.bloomberg.com/news/2010-08-1 ... sales.html

The Federal Housing Administration agreed in March to insure mortgages for apartments at the 98-unit Gramercy Park development, known as Tempo. That enables buyers to make a down payment of as little as 3.5 percent in a building where apartments range from $820,000 to $3 million.

“It’s a government seal of approval,” said Gollinger, a director at the Developments Group of New York-based brokerage Prudential Douglas Elliman Real Estate. “We need as many sales tools as we can have these days, and it’s one more tool.”

The FHA, created in 1934 to make homeownership attainable for low- to moderate-income Americans, is now providing a lifeline to new Manhattan luxury condominiums after sales stalled. Buildings featuring pet spas, concierges and rooftop lounges are applying for agency backing to unlock bank financing for purchasers. The FHA guarantees that if a homebuyer defaults on his mortgage, the agency will pay it.

[waborat]

and there goes Wabo's head

BOOM!!!

Believe me Z, I wouldn't want to be in your shoes right now dealing with this first time buyer's BS...

Year's ago was tough & draining to buy, nut at least the bank's were looking out for their well-being which made it easier for us to know what we could afford without giving up all the vacations & other extracirricular activities...

Like EW said above, once you're in your own place your priorities change on what you want to do with your time & money a bit...

BTW, I really enjoy angry Ziner

[Orenthal]

Ziner can't even debate your last couple posts as all of them are money. Basically boils down to people getting shit they don't deserve, or getting let out of horrible decisions with no consequence. Meanwhile people who play it smart/correct get hosed. Even though I spelled out my doubts about the effectiveness of the $8,000 credit, at least that was a bone that "better people" could take advantage of.

Lil sidenote... When I was looking for a home in Cleveland I tried calling the Cleveland HUD office and Cleveland City Hall to see if there were any programs I could take advantage of. Seems like Cleveland only wanted to subsidize the lowest of the low when it came to people moving into their city. A college graduate isn't the type of person the City of Cleveland desires to live in its city. Freaking Parma would have offered a $10,000 GRANT to move there! Just had to live there for 5 years. Available to ANY first time home buyer. Freaking Parma probably gets 10 times the bang for its buck out of thos HUD dollars then Cleveland, which basically flushes the money, but probably keeps about 20-30 people in jobs that produce nothing.

Too bad that just about all socialist policies play out the same way. Vent! Just remember we are still better then all those losers.

[FUDU]

OJ is so right, anymore Cleveland wants lazy POS' running around this town. This city is so desperate for real leadership and vision it is sickening. I spend the better part of two weeks in SoCal recently (mostly in SD area) and my God are we missing the boat when it comes to making use of that big puddle of water to our north. I'm not trying to say we could be SD but we could be so much better off with a vision of what to do near the lake in terms of entertainment revenue and even business revs as the lake could be a big attraction for a new start up alternative energy company.

We're just fucking dumb, IOW we are Detroit, minus Devil's Night....until early December anyway.

[Erie Warrior]

my God are we missing the boat when it comes to making use of that big puddle of water to our north.

No shit. Once you live near water, you begin to see it's a culture. And it produces a TON of money. Burke needs to be developed. Marinas, guide services, boat rides, jet ski rentals, boat slips, water front restaurants/ bars... what an unbelievable waste.

Over time, the money generated from personal property tax on boats and trailers would offset the money needed to develop that area. Or, they could do what Hampton does, and remove the tax and let people keep there boats within the city for free. The marinas here are full of boats from all over the state because boat owners get a tax break by keeping them in the city. Generates money for everyone involved.

[Fire Marshall Bill]

...and here I thought Ziner was a hippie who lived in a tent...

I get the pissing money down a rathole part but as an observer here I'm also wondering if the homes that the dregs of society basically have given to them on the taxpayer nickel are anything any of you guys would even want to move into?


400 unit apartment complexes....?

I'd move to a new city first

[Fire Marshall Bill]

my God are we missing the boat when it comes to making use of that big puddle of water to our north.

No shit. Once you live near water, you begin to see it's a culture. And it produces a TON of money. Burke needs to be developed. Marinas, guide services, boat rides, jet ski rentals, boat slips, water front restaurants/ bars... what an unbelievable waste.

Over time, the money generated from personal property tax on boats and trailers would offset the money needed to develop that area. Or, they could do what Hampton does, and remove the tax and let people keep there boats within the city for free. The marinas here are full of boats from all over the state because boat owners get a tax break by keeping them in the city. Generates money for everyone involved.

I mentioned this in another thread.

When I still had my tickets with 4 friends driving up from Erie it was always a topic of conversation.

Cleveland just may be the biggest waste of waterfront property on all 5 of the Great Lakes and that airport along I-90 is example 1A.

I took a motorcycle trip around Lake Erie a few years ago with some friends and the fact the city is so close to waters edge and the elevation so low making for multitudes of areas of easy access make it easily developed. Its quite possibly the best of any other city's

I like air shows too but, for your own sakes, tear that shit up, plant some trees and build some fucking condos and marinas and hotels. Hire a landscape architect and create a wildlife habitat...and I'm serious as a freaking heart attack. Thats how its done.

Its the fucking waterfront people....if you build it they will come.

I know because they come to little ol Erie for the same reasons and when you start buying out of town adds letting guys know that there are 20 lb Walleye being caught by the bushel you'll see boats in every parking lot

BTW, I've been hammering large mouth every weekend a 10 minute drive from home

[leadpipe]

my God are we missing the boat when it comes to making use of that big puddle of water to our north.

No shit. Once you live near water, you begin to see it's a culture. And it produces a TON of money. Burke needs to be developed. Marinas, guide services, boat rides, jet ski rentals, boat slips, water front restaurants/ bars... what an unbelievable waste.

Over time, the money generated from personal property tax on boats and trailers would offset the money needed to develop that area. Or, they could do what Hampton does, and remove the tax and let people keep there boats within the city for free. The marinas here are full of boats from all over the state because boat owners get a tax break by keeping them in the city. Generates money for everyone involved.

I mentioned this in another thread.

When I still had my tickets with 4 friends driving up from Erie it was always a topic of conversation.

Cleveland just may be the biggest waste of waterfront property on all 5 of the Great Lakes and that airport along I-90 is example 1A.

I took a motorcycle trip around Lake Erie a few years ago with some friends and the fact the city is so close to waters edge and the elevation so low making for multitudes of areas of easy access make it easily developed. Its quite possibly the best of any other city's

I like air shows too but, for your own sakes, tear that shit up, plant some trees and build some fucking condos and marinas and hotels. Hire a landscape architect and create a wildlife habitat...and I'm serious as a freaking heart attack. Thats how its done.

Its the fucking waterfront people....if you build it they will come.

I know because they come to little ol Erie for the same reasons and when you start buying out of town adds letting guys know that there are 20 lb Walleye being caught by the bushel you'll see boats in every parking lot

BTW, I've been hammering large mouth every weekend a 10 minute drive from home

Chicago has Navy Pier and million dollar homes.

We have cats fishing for sheephead.

Hard to understand why one is successful.

Gotta wonder what the developers of this city were thinkin'

Christ.

[Fire Marshall Bill]

Elect me mayor of Cleveland and I'd spend 100K on a development plan and sell that airport for $1.00.

No tax incentives. No tax free properties. No help with loans or funding from the local taxpayers. Put up or STFU

Force the buyer/s to Go Green. For example. No asphalt. Only biologically safe permeable pavers north of I-90.

me and wabo love this idea, btw..... : )

Right now you can get LEEDS grants and low interest long term loans for doing exactly this even for home driveways. The developers would qualify and it totally eliminates the need for retention ponds now demanded by the EPA.

Its a fine place for windmills too, don't ya think? Build a hotel and or take up lake frontage?? Put up a windmill at your own expense for your own benefit as well as the public's.

Wanna build a marina? Private or not, you have to provide some public acess to the waters edge.

See: SONS of Lake Erie

http://www.sonsoflakeerie.org/




Elect Fire Marshall Bill Now!



This message brought to you by the committeee to elect Fire Marshall Bill

Antwan Jackson
Chairman

[waborat]

me and wabo love this idea, btw..... : )


Elect Fire Marshall Bill Now!

Where do I sign up

[Fire Marshall Bill]

me and wabo love this idea, btw..... : )


Elect Fire Marshall Bill Now!

Where do I sign up

http://www.youtube.com/watch?v=oXOyFHYw ... re=related

[swerb]

There's a lot of people to blame for the housing crisis that has destroyed the economy.

There's the investors that kept pushing the envelope with exotic high LTV products for borrowers with shit credit, foolishly thinking that homes would keep appreciating at levels we'd never seen before.

There's the mortgage brokers that steered borrowers into the products that weren't best for them just to make more commission.

There's the moron borrowers that not only bought way over their heads, but did so with no down payment.

There's the rating agencies that gave top grades to these mortgage backed securities filled with shit loans.

There's the hedge funds, that kept gobbling these crap securities up on credit alone (driving rates lower), hedging them with the credit default swaps that started the meltdown.

There's the Greenspan Fed, who sat back and watched this all happen.

And then there's who I see as the biggest culprit, and that's the federal government ... who for some strange reason became obsessed with everyone in this country owning a home. While subprime and stated income loans get most of the bad rap, Fannie and Freddie (government sponsored orgs) were gobbling up 80/20 loans, and other very low down payment products that are defaulting at insane levels right now.

Why are we encouraging people who can't afford homes to buy them? Up until a couple years ago, borrowers that couldn't get approved for a credit card were getting approved to buy homes worth several hundred thousand dollars, without putting anything down. Think of how insane that is. And what the hell is wrong with people renting?

Every single housing related policy the Obama administration and that idiot Geithner has banged out has been a total disaster. And they will continue to be going forward.

I am actually in favor of government playing a big role in the housing finance system. Especially right now, with values beaten down and underwriting standards back to reasonable levels. No better time to get in the game. And the housing finance industry needs the government guarantee on FHA and standard 30 year fixed rate loans to keep rates low to help get the housing market out of this mess, and to allow people to continue to refinance into lower rates. The economy needs it as well.

Obama has a big decision coming up with what to do with Fannie and Freddie. They've promised to put something before Congress by January, and it will be a hot button issue this election season.

[FUDU]

BTW are the Feds done sticking their noses into 3rd Federal's business, GD talk about a sign of the times.

[swerb]

BTW are the Feds done sticking their noses into 3rd Federal's business, GD talk about a sign of the times.

Third Fed has got some serious problems. Sadly, I listened to a good chunk of their conference call with the analysts.

They have a massive concentration of home equity loans in their portfolio. With values down, and the cost to foreclose, those things do delinquent, your chances of getting even 10-20 cents on the dollar are slim. They no longer are doing HELOC's, fixed rate loans over $417,000, or subordinating their second mortgages for borrowers who want to refinance their first mortgage. Also, their loan delinquencies on all loans are still rising, while almost all lenders are seeing delinquencies start to subside.

[FUDU]

I brought it up b/c they are so conservative, almost notoriously so. If there is one lender who has not taken chances and gotten themselves and their clients in over their head in this recent mess I would think it was them. I view the feds getting involved as nothing more than them sticking their noses into our business just b/c, and all under the guise of "we're doing it to look out for the little guy" after the whole melt down of the market.

Are you suggesting they have just put themselves in a dangerous spot or have gone about things in a questionably ethical way which caught the attention of the feds?

[swerb]

I brought it up b/c they are so conservative, almost notoriously so. If there is one lender who has not taken chances and gotten themselves and their clients in over their head in this recent mess I would think it was them. I view the feds getting involved as nothing more than them sticking their noses into our business just b/c, and all under the guise of "we're doing it to look out for the little guy" after the whole melt down of the market.

Are you suggesting they have just put themselves in a dangerous spot or have gone about things in a questionably ethical way which caught the attention of the feds?

I'm not suggesting they've done anything unethical. They've made poor business decisions.

35% of their loan portfolio is equity lines of credit. Most of those loans are fully accessed to 90-95% of the value of the home. And not today's value. And when these type of loans go bad, your chance of recouping any of the funds are next to nil. The holder of the first mortgage (to 80% of the old value) a lot of times isn't even going to come out whole.

In addition, all the while Third Fed was writing more mortgages than anyone in NE OH, they really have been antiquated in the back office. Their technology, collections people, servicing units ... they are all areas they've tried to save $$$ on.

If unemployment/delinquencies stay high, or move higher ... or values on homes don't start to increase, Third Fed could be in some serious trouble.

The investigation of them by the Fed is more than warranted. Even though Stefanski has done a good PR job stating the opposite.

The conf call is out there in the public domain. If you're bored enough to listen it, it is eye o+pening.

[FUDU]

WOW I had no idea they wrote so many mortgages through all this, I figured just the opposite seeing as how strict they were with me and a few others I know.

[jb]

Classic over reaction by Washington. For decades home ownership has been a solid way to put away money and develop wealth. However, because the last few years have been brutal we feel as if we need to shift away from it.

Not sure if this is right^ Zeen?

My wife and I bought our first house in '92 and had to have minimum 12% down, clean credit & a 40% D2I:...We were hoping to buy a year earlier when we found out this info and we didn't do jack-shit for 12 months...I mean nothin, no restaurants, no bars, no gifts...We pretty much ate @ home and watched a ton of movies in our rental to try and get our debt paid and save up 20% and not have to pay the ridiculous PMI...

We did it and bought a 85K starter home and fixed up any problem areas...3 years later, were able to sell it for a little profit and jump into something larger...Once again, we had 20% down and refinanced twice in the first decade of ownership...In a couple more years our house will be paid off...

I guess what I'm saying is IMO these banks need to make it tough again and not just let anyone buy a house who really can't afford it...Maybe with the values going way down this will entice new home buyers to actually save a little more, watch their debt and realize what a commitment it is to own a home instead of just expecting it to be a right...

I'm sure Officer Rich can add a lot more light on the subject

Buying one right now for 10% down. PMI for 7 years but when you use OP%, you play by OP rules.

Call me crazy , but after 2008 we need some action, and selling homes to people who can't afford them is retarded and what got us in this mess. I couldn't agree more with Rob's last ppgh.

[jb]

About 18 months ago, I started a company which assists people with getting their loans modified under Obama's HAMP plan (amongst other mortgage settlements). At least 50% of my clients are people who were never at any point able to afford their mortgage payments, most of whom had no-doc loans. They are all very behind on their payments - some havent made any payments for as long as 25 months. We sit here and get them a 2% rate and all the late fees/attorney's charges waived, without them having to put down any lump sum to cure the delinquency. EOD these people all bought homes they couldnt afford, lived payment-free for upwards of a year, and now get a sick unheard of rate with no repercussions but a damaged credit score.

Another 10% of my clients are people who are just taking advantage of the system - not making their payments so they can be considered for the mod and its lower payments.

This whole program was a mess from the beginning. Less than half of my clients are people who are genuine victims of the recession, and they are always seemingly the hardest to get approved.

Why should anyone make their payments? Other than not being an asshole.

Z-man, try living with a credit score < 700. You can't finance a gum ball.