Originally Posted By vbdad55 as for net details - it basically is an FHA run bail out that will allow people with good credit (but now over their heads) to convert ARM's and such to fixed rate loans at reasonable rates.
Originally Posted By Mr X >>so I guess the Democrats are the idiots for this, and Bush an idiot to listen to them. Could it just be possible that for once the two parties got it right ?<< On the contrary, I'm convinced that both parties got it wrong. The housing markets and wall street need to let this unwind naturally. There will be a lot of pain, but it's the only way...any interference will simply prolong the pain and make it worse in the end.
Originally Posted By Sport Goofy << as for net details - it basically is an FHA run bail out that will allow people with good credit (but now over their heads) to convert ARM's and such to fixed rate loans at reasonable rates. >> Which essentially means that no one will get bailed out since there is really no accounting trick that will allow any of these subprime loans to reset at "reasonable" rates, and most of the people getting the loans lied about their credit history and income in order to get them. The biggetst problem in the subprime market isn't ARMs, but the teaser interest-only rates that are resetting. There is an entire population of people who financed their home on an interest-only ARM schedule where there was never any hope of making the payment once the principal on the debt kicked in. The majority of people in default can't afford their homes under any rate circumstance if someone requires them to pay more than just interest in their payment.
Originally Posted By fkurucz <<This is what is always said. Eventually you would think it has to be true, but it never seems to come to pass.>> I'm sorry, but its mathematically impossible for someone with a 60K income to afford a 500K house.
Originally Posted By fkurucz <<as for net details - it basically is an FHA run bail out that will allow people with good credit (but now over their heads) to convert ARM's and such to fixed rate loans at reasonable rates.>> Thats assuming that Joe 6 Pack can service his 500K mortgage @ 6% with his 70K annual household income. Its going to be a bloodbath in California.
Originally Posted By vbdad55 <There is an entire population of people who financed their home on an interest-only ARM schedule where there was never any hope of making the payment once the principal on the debt kicked in. The majority of people in default can't afford their homes under any rate circumstance if someone requires them to pay more than just interest in their payment.< and having a close friend who owns a multi state mortgage brokerage firm I know a lot of what you ay to be true -- it is not ALL however and I am fine with helping those who need it. Those who fudged incomes, those who knew they could not afford the house when more than interest became due, those speculating on nutso real estate yearly double digit increases etc..-- I am not interested inhelping them anyway. while what you say may be more prevalent in a speculative market like the west and east coast - I can tell you in the midwest we never saw those ridiculous house price increases. My house - in one of the nicest areas around Chicago, has doubled in price -- in 19 years ! Not in 6 years like my friends has in Irvine.... My rate of increase is likely higher than many other areas around me -- I would like to help those whose jobs have been sent to India and Brazil for instance until they can recover.
Originally Posted By vbdad55 <Its going to be a bloodbath in California< however there are also many people who have made a killing there...in veyr short order. Above I mentioned m best friend andhis family that moved to Irvine 6 years ago. Bought a house for $560K - today it is selling for $1.3M -- to me that is insane and the market there needs a major correction. I really don't understand how anyone buys housing there - as a % of income it is crazy
Originally Posted By jonvn "its mathematically impossible for someone with a 60K income to afford a 500K house. " That may be, but this does happen every so often. House prices may even drop a bit. But they're not likely to drop a whole lot. Every 20 years or so.
Originally Posted By Dabob2 <Those who fudged incomes, those who knew they could not afford the house when more than interest became due, those speculating on nutso real estate yearly double digit increases etc..-- I am not interested inhelping them anyway.> I agree with you, but that second category... there's the rub. How can you prove they didn't know? It constantly amazes me how few Americans understand their own financial status. Hell, half of Americans can't find the US on a world map or something like that, right? I think a lot of people will plead ignorance ("I didn't know after the third year that the payment was going to balloon like that") and sadly... many of them will be telling the truth. Sorting out who's deserving of help and who's not is one of those details I was talking about earlier, that I haven't really seen either party address.
Originally Posted By Mr X It amazes me that people will take on the grave responsibility of a gigantic debt without knowing exactly what they're getting into. Frankly, if they are that stupid, they deserve to get buried. I really hate stupid people anyway...especially the ones living in McMansions they don't deserve and could NEVER afford. It sickens me, actually, when I think about all the GOOD people who scrimp and save and do their homework and actually pay for their home RESPONSIBLY... Where's the bailout for THEM!!!!???? (I'm tempted to call all those friends and family that fall into the catagory I just described and tell them to WAIT 90 days before paying another dime, because King George will take care of resetting THEIR loans as well!)
Originally Posted By fkurucz >>"its mathematically impossible for someone with a 60K income to afford a 500K house. " That may be, but this does happen every so often. House prices may even drop a bit. But they're not likely to drop a whole lot.<< I would be very surprised if those 500K "starter" homes do not drop to 300K or less, especially in the not so desireable areas like the Inland Empire. Even at 300K they it will be a major stretch for an average family to buy them with a conventional mortgage. Also of interest is the fact that once again good credit and down payments will be required. How long will it take Joe 6 Pack to save 60K for a 20% down payment on a 300K house? It will take years. Get over it folks, the party is over and won't be back for many, many years. This bust will make the 90's bust look like a party, and it took about 6 years or so for SoCal to recover frm that one.
Originally Posted By fkurucz <<I really don't understand how anyone buys housing there - as a % of income it is crazy>> It can only be done with the toxic, suicide, negative amortization, 0% down sub prime loans that are no longer available. You can't make a 4000 / month payment on a 60-70K annual income. There would be no money left to eat, etc. The MOST someone in that income range should be paying is 2000 per month, and even that is stretching it. When we were in that range we had a 1500 per month payment, and that made things tight!
Originally Posted By fkurucz So anyway, with no more suicide loans available there are no more buyers. What percentage of the population has a household income of 150K or more, which is what is required to buy a 500K house with a conventional loan, and who also has saved 100K for the down payment for that starter house? Answer: close to zero. <<I really don't understand how anyone buys housing there - as a % of income it is crazy>> I have heard of familes doubling up to buy and share a house. I guess the new California dream is to share a 1300 sq ft house with your cousin and his family.
Originally Posted By fkurucz <<because King George will take care of resetting THEIR loans as well>> I still don't see how he will be able to help people who can only afford their house if the interest rate is 1%. And he can't do that without the Fed's help, and that would trigger hyperinflation.
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Originally Posted By Mr X **0% down sub prime loans that are no longer available.** They ARE still available though, at least til Countrywide goes bankrupt or gets swallowed whole by Bank of America... <a href="http://www.countrywide.com/RetailLoans/HotProducts.asp?product=80-20_nodown&menuitem=7" target="_blank">http://www.countrywide.com/Ret ailLoans/HotProducts.asp?product=80-20_nodown&menuitem=7</a> However, they HAVE changed the wording somewhat. No more "no doc" (no more lying in other words) and they removed the word "easy" from the ad.
