FHA mortgage premium may rise to 2.05% and delay the recovery

 WESTMINSTER  Tagged with:
Apr 032012
 
FHA mortgage premium may rise to 2.05% and delay the recovery

Over the last five years of falling real estate values, the government and federal reserve has done everything in its power to prevent the price collapse. The FHA was pressed into service as a replacement for subprime lending, and it became the only financing available for first-time buyers with less than 20% down. The current FHA minimum down payment is only 3.5%, which effectively puts every buyer underwater when transaction costs are factored in. Since the FHA has originated over [Read More...]

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Lenders own $30 billion in California single-family homes

 NEWS, YORBA LINDA  Tagged with: , ,
Feb 092012
 
Lenders own $30 billion in California single-family homes

Over the last few years, I have decried efforts from crony capitalists to corner the single-family REO market by negotiating bulk sales directly from lenders or the GSEs. I still believe individual investors have a large role to play in cleaning up the mess, but after contemplating how large the problem really is, I am far less concerned that crony corporations could buy enough to impact the market. In California alone, each month lenders take back nearly $2 billion in [Read More...]

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Impending FHA bailout justified by saving banks

 COSTA MESA, NEWS  Tagged with:
Jan 112012
 
Impending FHA bailout justified by saving banks

The FHA has been the lender of last resort during the collapse of the housing bubble. Conventional lending dried up once they realized how lax lending standards became, and how likely it was that borrowers would strategically default and cause more losses. Without the FHA, a Las Vegas style crash of 70% or more would have been common to markets across the country. The banks would have been obliterated. The FHA insured many of the loans issued as prices declined. [Read More...]

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REO inventory at the GSEs and FHA growing out of control

 FOUNTAIN VALLEY, NEWS  Tagged with: , ,
Jan 092012
 
REO inventory at the GSEs and FHA growing out of control

Three recent news stories strongly suggest the GSEs have too many REOs, and they are working feverishly to prevent their REO inventory from growing out of control. First, the federal reserve has identified markets to sell bulk REOs to companies willing to convert them to rentals and hold them until the market recovers to sell off their REO inventory in bulk. Second, the FHA has waived the anti-flipping rule again to help them clear out their REO inventory. Third, Freddie [Read More...]

 29 Responses »

OC Republican John Campbell successfully lobbies for more government handouts

 HUNTINGTON BEACH, NEWS, OC BEACH  Tagged with: , ,
Dec 202011
 
OC Republican John Campbell successfully lobbies for more government handouts

The loan limit on FHA loans is now $729,750. The venerable FHA which was founded to provide loans for low to middle income Americans is now being used to subsidize the mortgages and the house prices of high wage earners in places like Irvine. The government should get out of the housing market. Even the government knows this, but when removing its support causes house prices to weaken, so does the resolve of those in government to get out of [Read More...]

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Should the GSEs rent REO instead of selling at very low prices?

 NEWS  Tagged with: ,
Jul 292011
 
Should the GSEs rent REO instead of selling at very low prices?

The government has choice to make with its REO. Based on past choices we have seen coming out of Washington, I suspect they will make the wrong choice, but with so much pressure to do the wrong thing, making the right choice is nearly impossible for most politicians. Government Weighs Turning Foreclosures Into Rentals By Nick Timiraos — July 22, 2011, 11:28 AM ET There’s an 800-pound gorilla in the nation’s hardest-hit housing markets: hundreds of thousands of foreclosed properties [Read More...]

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Who runs Buyer Town? What will happen when the conforming limit drops?

 NEWS  Tagged with: ,
Jul 192011
 
Who runs Buyer Town? What will happen when the conforming limit drops?

The following cartoon strip and commentary is the orginal writing of Soylent Green is People. My commentary will pick up at the end. Soylent Green Is People’s take on the falling conforming limit Will the 2011 Real Estate market hit a tipping point with the reduction in loan limits, or are we seeing much made out of nothing? It’s a bit of both I’d say. Numbers don’t lie. Let’s assume that current spreads between Portfolio Jumbo financing and Standard Conforming [Read More...]

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Fannie Mae and Freddie Mac are aggressively liquidating their REO

 NEWS  Tagged with: ,
Jun 272011
 
Fannie Mae and Freddie Mac are aggressively liquidating their REO

Last September I noted the GSEs were expediting their foreclosures and REO sales and this behavior was going to threaten the banking cartel. The GSEs are still at it, and they are undercutting bank REO pricing to sell their inventory. Take the property as is, or take nothing at all. Foreclosures for sale, all homes sold as is By Kenneth R. Harney, Friday, June 24, 8:21 AM Looking for a deal where the home seller pledges in advance to contribute [Read More...]

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Defining qualified residential mortgages: a battle over minimum down payments

 NEWS  Tagged with: , ,
Mar 212011
 
Defining qualified residential mortgages: a battle over minimum down payments

America was a frontier country. People flocked to America from Europe for the opportunity to own their land, something denied to most living in post-feudal Europe. The idea of having a piece of property with your own pink house is deeply woven into the American culture. it’s part of our history, and to this day, many identify home ownership with being American. I wrote about our modern perversion of ownership in Money Rentership: Housing and the New American Dream. Questions [Read More...]

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Fannie Mae and Freddie Mac should be dismantled in favor of private lending

 NEWS  Tagged with: , ,
Feb 172011
 
Fannie Mae and Freddie Mac should be dismantled in favor of private lending

Should the government provide loan guarantees to subsidize home ownership? The arguments in favor of government subsidies all come down to putting people into homes they cannot afford in a free market. The theory is that homeowners care more for their properties and community and are less likely to cause social unrest. There is no real evidence to support this idea, but expanding home ownership has been the cornerstone of government policy since before the Great Depression. The arguments against [Read More...]

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Lowering GSE and FHA loan limits will lower house prices

 NEWS  Tagged with: , ,
Feb 162011
 
Lowering GSE and FHA loan limits will lower house prices

During the housing bubble rally, the grass was greener and the light was brighter. At higher prices with boundless hope, we reached the dizzying heights of real estate wealth, a dreamworld of unlimited appreciation and personal spending power. Currently our housing market is completely supported by and dependent on government loan guarantees. By offering to assume all risk of loss, the federal government though the GSEs and the FHA is underwriting loans at historically low interest rates. This caused money [Read More...]

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