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What the heck are you doing up so late?
sdtfs, what about you? I'm heading off to bed now.
Best Wishes.
I thought only trolls work at night.
Good post.
Well, I am on CST, and I am up.
But CR has the idea. PT or CST, best to bed.
Nitey Nite all.
I guess at this point the MBA wants their base to make enough money to keep their lights on. Isn't app volume down again?
Any port in a storm, as they say.
C'mon everyone, it's only 2AM here in the pacific northwest!
I had NO idea that the DAP % was so high. That's an amazing scam. Who are those charities? Are there national players? Are they associated with particular builders?
The dollar has been abandoned against the euro.
I would be very, very, very careful about investing in US equities.
If I were bolder, I would say "Black Monday, here we come."
CR,
There is a moral authority to your's and Tanta's voices that sounds as loud as Paul Krugman's or George Herbert's, for example, from the NY Times.
You two are a beacon of justice and intelligence and even hope in a country that has horribly lost its way.
Ding, dong, the DAP is dead!
The really high recent FHA delinquency rate is undoubtedly related to this practice. When will we learn that cutting corners in mortgages wreaks havoc? It wreaks havoc on both the borrowers and the markets, and therefore on other homeowners in the area.
Kudos to you, CR, for pointing out MBA's position. They have not recently been a light unto the householders!
"I'm also amazed that the MBA would oppose this ruling:"
why are you amazed at this? It would seem logical to me that all in the housing industry would cherish these sorts of programs.
I don't know if there is any formal relationship between the MBA and the FHA, but if nothing else FHA loans allow first time buyers to buy homes, and the sellers of those homes can then go and get a mortgage for a different home, likely using a mortgagor that belongs to the MBA.
Taking away DAP will likely reduce the # of FHA loans which will reduce the number of first time buyers which can put a cramp on move up buyers...
(or was your amazement more along the lines of being continually surprised at the willingness for humans to continually screw each other over for a buck? and with how bold they are at it?)
OT
IKB deutche industriebank reports that they'll lose nearly a billion dollars on te subprime mortgages this year.(wish I had a link but it's the paper versin of the Int. H-T
Ooops!
When it comes to gov. creativity there seems to be no limits. I had the pleasure of working for a company that was directly involved with FHA and VA.(custodian broker) If you think that 'Nehemiah' is bad, than you dont know much. If I told you that VA used to finance their repo properties for 50-60% (sometimes higher-I have seen 120%) over the VA appraised value, you wouldnt believe me. I don`t blame you. I had seen gov. stupidity at work where I came from, but I have to admit these organisations were a shocker even for me.
Everyone wanted the DAP, not just brokers, but also bankers, realtors, developers, house builders, community development agencies and other quasi-govrnmental agencies.
This will provoke a steepening downleg in the data. What if people actually had to personally acumulate 10-20% of the price of a house to buy it?
How many people have 25 to 50k in their account? Talk about a time-delay between desire and satisfaction. Is anyone adult enough anymore to defer gratification that long?
Think about the crimp in spending habits if a person in their 20's or 30's not only had to pay off student loans, accumulated a down-payment and keep credit cards under control.
How can the party continue?
These charities ran the gamut from the well meaning and clueless to captives of the builders and organizations like "your Black Muslim Bakery" run by the late Yusuf Bey,a politically astute and amoral child rapist and criminal.even the well meaning did quite well doing good.The law of Unintended Consequences has always been strictly enforced.
IKB deutche industriebank reports that they'll lose nearly a billion dollars on te subprime mortgages this year.(wish I had a link but it's the paper versin of the Int. H-T
IKB expects 700 million loss from credit crunch - IHT
IKB expects €700 million loss from credit crunch - The New York Times
O O O it was much more interesting than that - IRS got really interested in the "for profit" marketing arm of one of the key players.
Bob Herbert
This is the MBA protecting what they perceive to be their turf...and from CR's graph they do seem to have the last 4 years of it...maybe more.
No "maybe" about it, no? (maybe) Until broader implications (eg massive foreclosures) present themselves, professional organizations will extract professional fees from their clients (those so un-professional members of the public).
I used to think this was a cynical view of professionals who, after all, have all that expensive education and need to be reimbursed for those tedious ethics courses...but I'm wising up now, you?
Please take a moment to visit
http://www.supportdownpaymentassistance.org/
and let them know how you feel.
They seem a bit... upset over there...
Why on earth would you be astonished the MBA would oppose this? They're going to oppose anything that reduces the number of people who qualify for a mortgage, and thus the number of people putting money in their members pockets.
It's what they exist for.
Just think.......if you can convince about 35 of these "organizations" to give you $15,000 each to get into a home, you could buy a house cash!
It's capitalism baby!!!!!!
CNN 'in the money' just now had someone on, telling people what a great way to buy a home, you save and the nonprofits match your money. Getting something for nothing. No questions and no warnings by the hosts of the show. It was, buy now and here is how you can finance if you have no money.
But that was the Business section . The Real Estate section contained such gems as the guy who bought a house in 2000 for 135k, added on, but was froced to sell for a mere 500k vs the 700k he wanted, describing himself as a victim of the real estate market. Or that article on how buyers are in the driver's seat and can negotiate great deals, with the example of the young women who made a lowball and negoiated her way to paying --the list price! Fabulous.
Another bullet in the Bubble
FHA didn't have the balls to ban DAP's when it might have done some good six or seven years ago.
So now it's going along with the self righteously indignant to try and get those evil sellers/lenders to the moderate income (albeit) impecunious working stiff buyers of 'merica.
The good news is the bottom will be reached faster. The bad news is that a bunch of folks will hurt mightily, and it won't just be the vile and contempuous penniless would-be home buyers.
Short everything...
Conflict: My ox has been gored mightily.
The hosts of these shows should have to wear warning signs on their chests saying: "'Beware, I do not know of which I speak"
I know of a great nonprofit condo project which is helping to stabilize a neighborhood in my community that was drifting toward being a high crime area. A fund of money donated by private individuals is used to match, dollar for dollar, the down payment of working class people. When the condo is sold the money reverts back to the fund including interest. The program is a great success and I'm especially connected to it since a close friend of mine died of a heart attack last year and had designated his entire estate for use in the mortgage fund.
It would be a shame to see a federal rule squash a loan program that wasn't predatory and was socially beneficial. We need every tool we have to keep our cities from deteriorating.
Gareth - FHA isn't banning all DAP - only the 90-something percent of DAP that is seller-funded. Charities that get their funding from unrelated parties, government programs, etc., are still allowed.
Again, the most comprehensive work on the subject of the "non-profit" DAP programs is at
http://www.gao.gov/new.items/d0624.pdf
Question:
I read the whole 2005 GAO study and no where did the document ever say what the actual FHA dollar losses were. What are they & or where does one find this data?
Seller funded donated down payments resulted in approximately twice the loss rate of standard loans, and other donated down payments resulted in about a 50% increase in losses but no projections from the sample show the dollar amounts. I can think of other loan categories that FHA makes that could have twice the loss rates as their average loan(eg. specific redline areas, certain cities, perhaps ethnicities or certain marital statuses) but that have not caused the reaction this program has.
All lenders accept that they are going to have some level of loss or they'll make no loans so does this higher loss rate endanger FHA or has it helped achieve FHA's goal of getting more moderate income people into ownership housing?
Excuse me while I puke ..."Ann Coulter?" Bleeh.
Thanks for the heads up on this story.
Mike
Ric
If you go to HUD's website and search on "2006 actuarial" you'll find their estimates of net profit on a life cycle basis. There should also be something in last year's President's budget submission at OMB's website, where HUD calculates that they are swinging from "profit" to "loss" unless they get rid of these programs.
Underwriting on the basis of race or local geography is illegal. But no private lender would long tolerate one "program" cross-subsidizing another (we lose money on our ARMs but make up for it on our FRMs????)
And I've never seen evidence one way or the other for the percent of targetted groups served by these programs. But the "non-profits" themselves have funded numerous studies by think tanks showing how great they are, and none of them have provided any income or demographic breakdowns of program use. I'd think that if they looked particularly beneficient towards targetted groups we would have heard about that by now.