not bottom until 2014?
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NEW -> Contingent Buyer Assistance Program
123 makes a good point freedom. Home purchases are much more than pure financial decisions... I'm a pretty savvy guy financially, at least compared to the Average Joe, and I'll probably end up buying with the expectation that the value of my next purchase will depreciate some. Why would I do this crazy thing?! To keep my wife happy and to plant some long-term roots in a neighborhood.
And if the wife ain't happy - NOBODY is happy! :lol:
Wait, now I'm ignorant?
Whether Ipo or ABC buy something is a whole different situation!!!
This comment was about "Foreign Smart Money" coming in and rescuing the RE market
Are either of you using "FSM"? No-you are both locals who have specific needs for housing. You are not FSM investors
So ABC and Ipo, am I still "ignorant"? What can I say to regain your approval??? Will you say a little prayer so that I don't end up stupid, but can become smart like you two?
I don't consider your comment 'picking a fight' BUT if you take the time to actually read Section 1402 (as I have), and see how it will work (DTI not 35% BTW), and how it wipes out any existing 'seconds' as against the property, and the new loan is a max of 90% LTV against a today's appraisal PLUS in loan amounts up to $700,000+ ... LENDERS will jump on that ('cause FHA ins will protect their future losses (when today they face a BIG loss on loans like those which will be saved) - BORROWERS will LOVE the new smaller sized loan (everything above 90% LTV get's wiped out until sale or re-fi 'someday' in the future) and smaller payments now ... ya gotta READ the fine print ... it's really GREAT and will help tons of folks Nationally and even there in itty-bitty OC too.
Okay, example time for Irvine. The homeborrower bought the $1.1 Million dollar home in Northpark on questionable financing, naturally, they are in trouble. Luckily, home values have fallen and let's assume they've fallen 28%. That $1.1M home now is about $792K. A LTV of 90% will make the loan $712,800. Let's call it $700,000 just to meet requirements. At 6.5%, the Mortgage payment is $4505/month. Add $700/month in property tax. Another $100 in HOa. We'll skip mello-roos but they likely have them.
Total up front out of pocket is $5305. Applying at 28% front-end DTI requires an income of $18,946/month. Annual income of $227,000.
Oh wait, backend DTI time... how high will FHA go?
At 36%? They can carry another $1500 in regular recurring debt/payments. Car payments, child support, day care, etc. What is $1500 in Irvine, a BMW payment and one kid in day care?
At 40%, they can carry another $2200. Okay, that's a car payment, child care and a student loan...
I remember many postings from LM and MdM on what they see with people's DTIs. Frankly, even with cramdowns, I don't think people will qualify.
No, lenders will not JUMP on it, unless they are in the habit of jumping off cliffs. To protect themselves from future losses, they would have to admit to their present loss, decide to take the loss, and have reserves to make up for losses due to HUGE principal writedowns and unpaid interest which has been entered as income.
Borrowers would love a smaller loan, but they will not qualify for any loan, small or smaller. They lied to get the loan in the first place and to qualify for the new loan, they will have to admit to fraud. Did you notice that no where in the fine print does the new law excuse any fraudulent borrowers from prosecution?
Did you ever ask a banker why they would rather foreclose on a property than writedown principal, even though all statictics show it costs less to rework a loan and writedown principal?
Yeah... ditto on what awgee said.
Sounds like a good IHB homework assignment.
Pretend you are banker Jones and you are holding 1000 mortgages, 100 of which are having a difficult time making their payments. And you, Mr. Jones forgive some of the principal on 10 of those loans ...
What happens with the other 90 who were having a difficult time?
What happens with the 900 who can make their payments just fine?
And what if some of those loans are now collateral in collateralized debt obligations? And those CDOs are collateral for other CDOs?
That might help, but like so many ideas for the banks, people do not seem to understand how banks operate. They are bureaucracies. Bank management follows procedure so that bank management does not get fired. They do not make decisions. They enforce policy. If policy says to foreclose, they will foreclose. If policy says to offer a workout, they will only workout per written policy. Can you imagine?
ipoplaya_IHB
New member
irvine123 said:
123 makes a good point freedom. Home purchases are much more than pure financial decisions... I'm a pretty savvy guy financially, at least compared to the Average Joe, and I'll probably end up buying with the expectation that the value of my next purchase will depreciate some. Why would I do this crazy thing?! To keep my wife happy and to plant some long-term roots in a neighborhood.
CalGal_IHB
New member
I agree with Ipop. I realize renting is the smart thing to do right now, however, I feel like I'm living in limbo. I'm looking forward to owning a house again. I REALLY miss owning a house. I know people hate hearing this - but money isn't everything. Life flies by so fast that we should enjoy it as much as possible.ipoplaya said:
And if the wife ain't happy - NOBODY is happy! :lol:
EvaLSeraphim_IHB
New member
Or as BK says: "Happy wife, happy life." 
freedomCM_IHB
New member
ipoplaya said:
Wait, now I'm ignorant?
Whether Ipo or ABC buy something is a whole different situation!!!
This comment was about "Foreign Smart Money" coming in and rescuing the RE market
Are either of you using "FSM"? No-you are both locals who have specific needs for housing. You are not FSM investors
So ABC and Ipo, am I still "ignorant"? What can I say to regain your approval??? Will you say a little prayer so that I don't end up stupid, but can become smart like you two?
Secret_IHB
New member
no_vaseline said:
I don't consider your comment 'picking a fight' BUT if you take the time to actually read Section 1402 (as I have), and see how it will work (DTI not 35% BTW), and how it wipes out any existing 'seconds' as against the property, and the new loan is a max of 90% LTV against a today's appraisal PLUS in loan amounts up to $700,000+ ... LENDERS will jump on that ('cause FHA ins will protect their future losses (when today they face a BIG loss on loans like those which will be saved) - BORROWERS will LOVE the new smaller sized loan (everything above 90% LTV get's wiped out until sale or re-fi 'someday' in the future) and smaller payments now ... ya gotta READ the fine print ... it's really GREAT and will help tons of folks Nationally and even there in itty-bitty OC too.
PadreBrian_IHB
New member
The law states you have to currently have a DTI of above 35%. Many of the alt-a people will be.
I suspect the FHA will run out of the 400,000 loans in the first 6 months. The loan handouts will start in oct. So we will know soon enough how it's working.
I suspect the FHA will run out of the 400,000 loans in the first 6 months. The loan handouts will start in oct. So we will know soon enough how it's working.
No_Such_Reality_IHB
New member
Secret said:
Okay, example time for Irvine. The homeborrower bought the $1.1 Million dollar home in Northpark on questionable financing, naturally, they are in trouble. Luckily, home values have fallen and let's assume they've fallen 28%. That $1.1M home now is about $792K. A LTV of 90% will make the loan $712,800. Let's call it $700,000 just to meet requirements. At 6.5%, the Mortgage payment is $4505/month. Add $700/month in property tax. Another $100 in HOa. We'll skip mello-roos but they likely have them.
Total up front out of pocket is $5305. Applying at 28% front-end DTI requires an income of $18,946/month. Annual income of $227,000.
Oh wait, backend DTI time... how high will FHA go?
At 36%? They can carry another $1500 in regular recurring debt/payments. Car payments, child support, day care, etc. What is $1500 in Irvine, a BMW payment and one kid in day care?
At 40%, they can carry another $2200. Okay, that's a car payment, child care and a student loan...
I remember many postings from LM and MdM on what they see with people's DTIs. Frankly, even with cramdowns, I don't think people will qualify.
awgee_IHB
New member
Secret said:
No, lenders will not JUMP on it, unless they are in the habit of jumping off cliffs. To protect themselves from future losses, they would have to admit to their present loss, decide to take the loss, and have reserves to make up for losses due to HUGE principal writedowns and unpaid interest which has been entered as income.
Borrowers would love a smaller loan, but they will not qualify for any loan, small or smaller. They lied to get the loan in the first place and to qualify for the new loan, they will have to admit to fraud. Did you notice that no where in the fine print does the new law excuse any fraudulent borrowers from prosecution?
Did you ever ask a banker why they would rather foreclose on a property than writedown principal, even though all statictics show it costs less to rework a loan and writedown principal?
no_vaseline_IHB
New member
Yeah, what Awgee said.
graphrix_IHB
New member
no_vaseline said:
Yeah... ditto on what awgee said.
IrvineRealtor_IHB
New member
Sounds like a good IHB homework assignment.
awgee_IHB
New member
IrvineRealtor said:
Pretend you are banker Jones and you are holding 1000 mortgages, 100 of which are having a difficult time making their payments. And you, Mr. Jones forgive some of the principal on 10 of those loans ...
What happens with the other 90 who were having a difficult time?
What happens with the 900 who can make their payments just fine?
And what if some of those loans are now collateral in collateralized debt obligations? And those CDOs are collateral for other CDOs?
FairEconomist_IHB
New member
awgee, the bank's solution is to be arbitrary. Rework some loans and foreclose on other based on criteria nobody else can figure out (flipping coins would work great). Be extra mean, though, if it's a voluntary default. As long as people are unsure of how the bank will treat them they'll only default when they really have to.
awgee_IHB
New member
FairEconomist said:
That might help, but like so many ideas for the banks, people do not seem to understand how banks operate. They are bureaucracies. Bank management follows procedure so that bank management does not get fired. They do not make decisions. They enforce policy. If policy says to foreclose, they will foreclose. If policy says to offer a workout, they will only workout per written policy. Can you imagine?