President Obama made a speech on housing yesterday full of great rhetoric about doing the right thing. Not detailed in his speech were a number of specific proposals the Administration hopes Congress will enact. One of these proposals in the list would allow banks to dump their bad loans on the US taxpayer through an expanded HARP-like program: Expand eligibility for refinancing to many hundreds of thousands of eligible borrowers who do not have government-backed mortgages by creating special programs through the Federal Housing Administration (FHA) or Fannie Mae and Freddie Mac. If you take a non-government-backed loan and refinance it through the FHA, it becomes a government-backed loan. The liability for future losses -- and there will be future…[READ MORE]

House prices are rising rapidly, and the cost of ownership is rising even more rapidly. realtors are busy stoking fears with "buy now or be priced out forever." Under these circumstances, it's easy to get stressed out and worry about what's outside of your control. I didn't buy an OC house at the bottom of the downturn. I knew it was a good time to buy, but for a variety of reasons, I was not in a position to buy when the market was ripe. Now that the cost of ownership is 30% higher, I am less motivated to buy a home, not more. Am I stressed about it? Not really. And you shouldn't be either. It’s Not Everyone’s Time…[READ MORE]

Mortgage interest rates are up 20% over this time last year, and house prices are also up 20%. The combination of the two has made home ownership 30%+ more expensive in just 12 months. Given that rents are up 2% and wages are stagnant, the dramatic rise in mortgage interest rates and house prices is crushing affordability. The undervalued condition homebuyers briefly enjoyed is quickly becoming a faded memory. I recently noted that Coastal California housing markets will hit affordability ceiling first. We are officially there. Even the mainstream media is reporting that home prices appreciation should cool due to this constraint. Due to the new qualified mortgage regulations, I would ordinarily say hitting this limit would be a barrier…[READ MORE]

What we probably really need a group promoting saving your money and not getting to races with the Joneses, but is a topic outside this blog. I'll the article do most of the description of the new group. New group being formed to advocate for homeowners' interests WASHINGTON — Do 75 million homeowners need their own advocate before Congress and federal agencies on issues such as the mortgage interest tax deduction, retention of low-down-payment loans and the start of tougher financing rules next January? A group of mortgage and real estate industry veterans, joined by leaders of national community development, fair housing and consumer groups, thinks so. They're set to launch an unusual effort — a national nonprofit organization modeled…[READ MORE]

In what will turn out to be an epic and precedent setting move, the city of Richmond, California, is moving ahead with plans to condemn the mortgages on underwater houses in an attempt to provide mortgage relief to its citizens. First, I want to say this is a spectacularly bad idea. I first wrote about this issue in June of 2012 in the post Robert Shiller has completely lost his mind. My problem with the idea is as follows: Yes, mortgage lenders need to write down the amounts owed by delinquent loan owners, but they don’t need to give them the house in the process. Lenders need to foreclose on delinquent borrowers and get them out of the property so…[READ MORE]

The goals of US government housing policy are to increase in resale value of houses and maximize the home ownership rate. Buying a home is characterized as the best investment a middle-class family can make, and home ownership has become synonymous with the American Dream. During the early 00s, on the surface conditions looked great. House prices were appreciating rapidly, mortgage equity withdrawal was fueling an economic boom, subprime lending was providing home ownership opportunities to everyone, and the American Dream was being recognized by a record number of Americans. For government officials, this was touted as the success of their policies. Critics of these policies were mocked or widely ignored as the ravings of madmen. Yesterday, I detailed how…[READ MORE]