Will Housing Ever Be Looked at As Shelter Ever Again?

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Here in SoCal it's looking like speculator heaven again is coming. People are now conditioned to expect govt to bail them out if the market downturns again-so there is no downside risk. So now housing is like Wall Street-Privatize the profits and socialize the losses.

http://www.latimes.com/business/money/la-fi-mo-bubble-markets-20130412,0,1113017.story?track=rss

http://www.latimes.com/business/realestate/la-fi-harney-20130414,0,7587309.story

"Home-buying tactics last seen during housing bubble are returning

They're back after barely a decade: escalation clauses in real estate contracts, "naked" contingency-free offers and low-ball-priced listings designed to pull in dozens of bidders and turn routine sales transactions into auctions.

These are all techniques last seen with frequency during the frothiest months of the housing bubble in 2004-05, when prices were rising at double-digit rates, buyers thought they couldn't lose money in real estate and mortgage financing was available to anybody who could sign a loan application.

Now they are reappearing in some of the hottest sellers' markets from coast to coast — the byproduct of severe shortages in houses listed for sale combined with strong demand by qualified purchasers

To get a leg up in such situations, some buyers, sellers and their agents are using techniques that can be effective but also come with drawbacks and snares. Among them:

Contingency-free and contingency-light offers. Carl Medford, an agent with Prudential California Realty in the San Francisco East Bay market, says these are almost routine for buyers determined to win a bidding competition. He calls them "unprotected" contract offers.

Essentially the idea is to strip away some or all of the customary contingencies in an offer that might irritate a seller or render the buyer's bid less attractive. The financing contingency, which makes the entire transaction dependent on the buyer obtaining a satisfactory loan and appraisal, often is the first to go if the bidder is confident of qualifying for a mortgage, has been preapproved or is willing to pay what could be a lot more than market value.

Many buyers also are willing to delete the inspection contingency, which Medford considers much more risky, because the bidder agrees to fly blind with no way out of the deal if costly defects — tens of thousands of dollars' worth potentially — later arise. Tracy King of Teles Properties in northeast Los Angeles says she knows of buyers who have waived the inspection contingency and later discovered sewer lines clogged with roots and a chimney cracked so badly that it was condemned.

Escalation clauses. These are add-ons to contract language that keep bidders in the competition, even when the price soars well beyond the original asking amount.

Typically the bidder agrees to match and exceed any verifiable, bona fide competing offers by set increments — say, $500 to $1,000 — up to some maximum amount.

The upside: Properly used, they work. Bidders with the highest maximums often get the house.

The downside: If you need a mortgage, the appraisal could be a problem because it's likely to come in lower than the purchase price. Be prepared to throw extra cash into the deal upfront.

Low-ball listings. Rather than list a house at the price that comparable recent sales in the area indicate it's worth — say, $495,000 — the sellers, advised by their agent, cut that to $479,000, hoping to stimulate a bidding war. Some shoppers immediately spot the house as a "bargain," and multiple offers push the final price to $520,000.

Good for the sellers, right? Probably. They get top dollar.

But the ultimate buyers end up committed to a contract requiring them to pay what may be $25,000 over the likely current appraisal value — and that could have negative consequences for the buyer and the seller."

DynoDon
Joined:
Jun. 29, 2012 9:24 am

Comments

"It’s mostly speculation. The investor share of the market is now bigger than ever, even bigger than 2005-2006 at the peak of the bubble."

"Investors have always played a role in the housing market, but their presence was often small. Currently, cash buyers—largely investors—make up about 32% of sales nationally, according to the National Association of Realtors. In Southern California, a favorite target for investors, absentee buyers accounted for 31.4% of purchases last month, up from an average of less than 17% between 2000 and 2010, according to DataQuick MDA, a real-estate research firm"

http://www.counterpunch.org/2013/04/16/housings-breakout-year/

chilidog
Joined:
Jul. 31, 2007 3:01 pm

There's a dirty little secret for the average citizen. With the wealth inequality rising for the past 20 years and watching the Wall Street wealth machine, average Joe wants to play too. They will wrap themselves in the flag and declare home ownership to be the foundation of the American dream. They will support whatever the bailout of the day is. The reality is that it is now probably entrenched in the American psyche to make money off your home. Average Joe will push for tax breaks, mortgage deductions, principle reductions, artificially low interest rates-anything to make more money off selling a home. The American Dream is now making money off your home-not in owning it.

DynoDon
Joined:
Jun. 29, 2012 9:24 am

Interestingly, foreclosed properties are being bundled. Buy the bundle that includes multiple properties, and get a huge discount. It's a speculators dream. That's what's driving the housing market. 'Tis another bubble in the making.

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm

What about government insured reverse mortgages? Is that not an easy way to get retirement money, if one owns their home and is willing to put up with the paperwork? I can see people getting their home as their only investment, and then getting a reverse mortgage on it!

micahjr34
Joined:
Feb. 7, 2011 3:57 pm

Reverse mortgages have very specific rules and their own problems.

"To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan. You can find a HECM counselor online or by phoning (800) 569-4287."

http://www.forbes.com/sites/carolynrosenblatt/2012/07/23/hidden-truths-a...

Also the govt is losing money on them.

http://money.usnews.com/money/blogs/the-best-life/2013/01/07/government-...

"Reverse mortgages, long criticized for high fees and other anti-consumer features, turn out to actually be the opposite—such a good deal that the government is nearly $3 billion in the hole on outstanding mortgages. As a result, the Federal Housing Administration (FHA) will later this month unveil sharp curbs on its loan product, called the Home Equity Conversion Mortgage (HECM).

When the new rules are issued, consumers will need to take a close look at the terms of these loans. While the specifics of the changes have yet to be announced, they will lead to consumers being able to access a smaller share of their home's equity when they take out a reverse mortgage. In addition, lenders will probably be required to set aside a portion of the borrower's home equity to pay future property taxes and home-insurance premiums. And there may also be limits that restrict lower-wealth borrowers from taking out a HECM.

The FHA (and thus taxpayers) has been losing the most money on the most popular HECM loan: a fixed-rate loan known as the Standard HECM loan. This type of loan will be halted under the new rules. Most borrowers thus will be required to consider a newer reverse mortgage called the HECM Saver.

The HECM Standard loan often carries steep insurance fees and other charges. But it pays out a higher percentage of a homeowner's equity than the Saver, which charges nearly no insurance fees and is less costly to consumers. But it is also a more conservative loan to the FHA because it pays out a smaller percentage of an owner's equity than does the HECM Standard loan. This provides the government a bigger cushion against loan losses that could eventually lead to costly insurance claims by private lenders."

DynoDon
Joined:
Jun. 29, 2012 9:24 am

DynoDon,

Thank you for the response. It was informative.

micahjr34
Joined:
Feb. 7, 2011 3:57 pm

Keep in mind I am exposed to the SoCAL housing market where refi and the home equity loan was king. Expensive housing doubled in value. In any given hour these days on TV or radio, you will hear several ads for mortgage refi's. Here in SoCAL, homes are looked at as a way to make money. It may not be the same in other parts of the country. But there may be another bubble-speculators and hedge funds have been buying up foreclosures and other cheap properties for rental. It will be interesting to see what happens to the market when the prices rise high enough to chase away the speculators and only real buyers are left.

DynoDon
Joined:
Jun. 29, 2012 9:24 am

"A little-known component of a U.S. immigration reform bill snaking its way through Congress could bolster foreign retirees' ability to purchase Florida homes."

http://www.heraldtribune.com/article/20130513/ARTICLE/305139988/2055/NEW...

"The bill would allow foreigners who purchase $500,000 or more worth of property, maintain ownership, reside in the U.S. for more than six months a year and who are at least 55 years old to apply for a visa that would permit them to stay in the U.S. year-round."

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Money-The World's Greatest Lubricant!

DynoDon
Joined:
Jun. 29, 2012 9:24 am

Wait wait wait, I thought the real reason for the housing mess was predatory lending, robo signings and the bundling of mortgages? None of those items seem present here. So, are we now saying maybe that wasn't the real issue? Maybe it was ridiculous speculation and the average Joe trying to make a quick buck by taking a gimmicky mortgage or home equity loan. Nah, can't be. That would require some amount of personal responsibility. And we all know, the mortgage crisis was all about victims. They were surely not responsible for their own actions.

I've gotta get some CA real estate listings and get ready for my bailout!

Conservative_Th...
Joined:
Jun. 15, 2012 11:01 am

Robo-signings was after the housing bust.

Get your nonsense straight.

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Be prepared-the next asset bubble burst will be in 2-4 years. Frame your current 401K statements-they will look ugly when the bubble bursts. Oh to be a govt employee with that guaranteed secure pension.

DynoDon
Joined:
Jun. 29, 2012 9:24 am

To understand why housing can become very expensive, consider the situation where 5 housing units are available and 500 workers need them. The algorithm that the landlord executes is keep increasing the price until only 5 people can afford the 5 units.
To bring down the cost of housing, you should get to a situation, where if 500 housing units are needed by workers > 600 units are available and now competition among landlords start to the benefit of the renters.
The point I want to make is 1 floor of commercial space creates demand for 10-25 floors of residential space, this is often underestimated and the housing never gets build. This results in a chronic shortage of housing.
In modern offices, you can have 1 person every 2-4 m^2, but a family of 4 needs > 100 m^2 to live comfortably. This means 1 floor of commercial space creates demand for 25-50 floors of residential space of the same surface area.

Housing should be added on top of steel framed buildings, so they exceed 17 stories, because then, the incremental cost of adding 1 floor of apartments starts going down.
We need a state law that forces every city to be balanced and that forces every city to house its workers and students (number of housing units > (4 * number of jobs) + number of university students), the law should not allow any University or college to expand without supplying the additional housing required by the expansion. Cities with housing deficits should not be allowed to have height limits on residential apartment buildings.
Every city and university should think of itself as a cruise ship or a small island and be required to house all its workers and students.
Another possibility is to get US census figures on the number of people living in the US and the number of jobs. The ratio should give an approximate estimate of minimum acceptable number of housing units/job. There should also be a slight surplus of housing in every city to house people displaced due to catastrophes.

Forcing a developer to set aside 20 units of affordable housing when > 20000 people need them is a drop in the bucket. What proportion of affordable housing needs is this policy solving? All the eco/green programs won't work if you don't tackle overpopulation, housing deficits and suburban sprawl and honestly take into consideration the full cost of transportation.
Simple example on how to make housing expensive: build office space to employ 25000 people and build housing for only 100!! here you created demand for 100000 housing units ( 25000 and their families), but you built 100 units, thus you created a shortage of 99900 housing units. Another way, housing costs are increased is by increasing the cost of production. Frequently, city bureaucracies force housing developers to conduct study after study after study that end up adding millions of dollars to the cost of construction, then imbecilic city regulations force housing developers to build large amounts of parking space, that also greatly adds to the cost of construction (1 parking space costs around $30000 to build) and then these same politicians want to encourage people to go car free!!
The U.S. antitrust laws are supposed to prohibit this scenario. The main act that was passed in Congress is called the Sherman act. According to the book " Antitrust Law " by Philip Areeda and Herbert Hovenkamp(http://www.amazon.com/Antitrust-Law-Phillip-E-Areeda/dp/073552694X)
call number kf1649 a741 copy 1 page 4, the general goal of the Sherman Act is to promote "competition" and "maximize consumer welfare by encouraging firms to behave competitively".
It seems to me that zoning laws that enact a maximum height limit and put other restrictions on housing do the exact opposite of the Sherman Act: They minimize consumer (consumers of the housing commodity) welfare by encouraging firms (providers of the housing commodity) to behave NON competitively.
From the state of California booklet on antitrust:
On page 3, under " Other agreements among competitors ", I notice that output limitations are almost always illegal. Cities, in the name of Landlords and Property Owners, enact zoning laws that limit the amount of housing using height limits, allowing only single family homes etc. The consequence of these zoning laws is it is impossible to build enough housing to house all the workers and students who work or go to school in that city. No matter how you cut it, a City does not have the RIGHT TO SIMULTANEOUSLY ALLOW THE BUILDING OF OFFICES AND UNIVERSITIES AND PROHIBIT THE BUILDING OF THE NECESSARY HOUSING to meet the demand generated by those buildings. To protect consumers, construction of offices and universities should be accompanied by the construction of more than enough housing to meet the additional demand for housing generated by the additional construction of offices and universities. I believe this matter is the MOTHER OF ALL ANTITRUST cases. The antitrust laws should be clarified and amended to ban housing deficits and force every city to be balanced and be capable of housing all its workers and students.

Thanks in advance.
Thanks for listening.

Thank you very much. If you have any questions, please don't hesitate to contact me.

http://www.balancedcities.org/
http://www.nodextrose.org/
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Visualize that the smoke of cigarettes is unpleasant to other people.
Visualize that peoples' civic duties do NOT include having to breathe the smoke from cigarettes.
Visualize that astrologers, fortune tellers, tarot card readers, psychics and palm readers are Crooks, Fools or Both.
Visualize using the Metric System.
Visualize that Skepticism is a virtue and that faith is NOT.
Visualize taking the stairs instead of the elevators.
Visualize walking instead of driving.

www.balancedcit...
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Mar. 31, 2013 6:35 am

From above:

Visualize that the smoke of cigarettes is unpleasant to other people.
Visualize that peoples' civic duties do NOT include having to breathe the smoke from cigarettes.
Visualize that astrologers, fortune tellers, tarot card readers, psychics and palm readers are Crooks, Fools or Both.
Visualize using the Metric System.
Visualize that Skepticism is a virtue and that faith is NOT.
Visualize taking the stairs instead of the elevators.
Visualize walking instead of driving.

Poly replies: Well, I'm not so certain about psychics. One told a friend of mine he'd be riding an elephant within the year. We scoffed at the absurdity.

Lo and behold, a circus came to town six months later and the place he worked for insisted he ride an elephant as a promo for the business! He rode one down the primary business street. The look on his face was priceless.

People should envison a world that works for everyone...and see what comes from doing so.

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm

In another sign housing is overheating, home “flipping” is red hot again and hitting levels not seen since just prior to the mortgage meltdown. Nationwide, almost 180,000 homes were sold and then resold last year — the highest level since 2007.

In fact, according to RealtyTrac, flipping in a dozen metro areas — including New York, Los Angeles, San Diego, Miami and Jacksonville, Fla. — exceeded peaks set in 2005, when investors took advantage of low interest rates and easy credit.

http://nypost.com/2016/03/12/obama-is-setting-us-up-for-another-housing-...

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Flipping was not the problem and I would argue it is good for neighborhoods as it fixes up the eyesores on the block. It provides jobs and fixes up what are often unsafe homes.

What drove the '07 crisis was unqualified buyers getting loans with low introductory rates that ballooned after a few years to a payment that they could not afford.

gumball's picture
gumball
Joined:
Dec. 12, 2013 10:02 am

In rural America, houses may be viewed as shelter, but in surburban America, housing is viewed as something to profit off of. That's why all these programs to provide affordable houses for low income people are doomed to fail-everyone gets caught up in making money.

DynoDon
Joined:
Jun. 29, 2012 9:24 am

"rentier", the term is what this is- next door to serfdom......it is the next level of neo-liberal ownership theory, to own not only the wealth but the peoples as well. This bypasses the Fascist, back to serf-dom. The old European principality. ...........has anyone noticed the first Ukrain/Crimea, then/(now too) Armenia/Azerbijan(a phony state btw, as is all ww1 Seikes -Pekoe, this is phony ww2), now Macedonia flaring in Europe. This is not accident. ......Ukraine, Armenia, Macedonia....this is not accident......this is more flame fanning....for ww3 as the powers see even the limits of rentier economy.....and phony paper dollars.....

thankyou,

mrs.vonderhoffholz

mrs.vonderhoffholz's picture
mrs.vonderhoffholz
Joined:
Aug. 3, 2015 6:12 pm

Ah good ol' Socal. In my neck of the woods housing is still decrasing in price. Next to no new construction is happening. Homes stay on the market for over a year. Nobody is buying on spec or flipping.

I live in a gated community in Arkansas where the population is middle aged and elderly. This is a place where speculation doesn't pay. Land use is for raising cattle and is only valuable for that purpose. Nobody is knocking at the doors of ranchers with the vision of turning their land into 5000 sq ft homes. It's a great place for selling pickup trucks though.

Combad57's picture
Combad57
Joined:
May. 29, 2012 11:50 am

In SoCal, we are constantly bombarded with commercials for refinancing.

DynoDon
Joined:
Jun. 29, 2012 9:24 am

The Federal Housing Finance Agency said on Thursday that it would move to reduce the loan balances for thousands of borrowers who owe more than their homes are worth.

http://www.nytimes.com/2016/04/15/business/thousands-of-underwater-borrowers-to-get-relief.html?_r=1

The agency, which regulates the government-controlled mortgage finance companies Fannie Mae and Freddie Mac, said about 33,000 people were expected to be eligible for the principal reduction program. It will be a one-time offering for seriously delinquent borrowers, to help them with what the agency’s director, Melvin L. Watt, said “could well be their final opportunity to avoid foreclosure.”

Homeowners must meet certain criteria to qualify, including having an outstanding principal balance of more than $250,000 and being more than 90 days delinquent on mortgage payments as of March 1.

“The national housing market has significantly improved in recent years but there are still areas of the country where home values have not recovered and negative equity remains a real problem,” Mr. Watt said.

The program will “allow an opportunity for delinquent, underwater borrowers in these areas to avoid foreclosure and save their homes,” he said.

........................................................................................................................

I looked at my calendar and it says today is April 15, 2016,

chilidog
Joined:
Jul. 31, 2007 3:01 pm

As the country spirals down the rabbit hole economically. it seems that the people who pay off their contracted loans for anything are suckers. Between corporations, students and homeowners getting bailouts from the taxpayers who actually fulfill their obligations, it now seems ill advised to pay off your debts. Of course, if you are not a member of the forementioned special classes, you will get your car repossessed or evicted if you don't pay. There will soon be a booming industry in car repos once all the subprime car loans start going bad. The car industry is resorting to bad lending practices again to keep car sales high.

DynoDon
Joined:
Jun. 29, 2012 9:24 am

The last housing bubble began inflating in 1997 and lasted 10 years before finally bursting in 2007, in a monumental collapse that crashed markets the world over.

Analysts say the current real-estate bubble started in late 2011, when housing values bottomed. Since then, real median home prices have rebounded to a level that is only about 8% below their pre-crisis peak, which was an all-time record.

http://nypost.com/2016/03/12/obama-is-setting-us-up-for-another-housing-...

Like the last bubble, this one is fueled by artificial demand from government-induced lax lending standards and accommodative interest rates set by the Federal Reserve.

“The result has been a rapid increase in real, inflation-adjusted home prices, with prices up nationally about 16.5% since the home-price trough in 2012,” Pinto said.

He notes that once prices hit 20% or higher, historically, a painful drop in prices follows.

“Home prices are subject to the law of gravity,” he said. “What goes up must come down.”

Pinto noted that prices for entry-level homes have climbed by an even higher 19%, making it harder for low-income borrowers to buy without taking out a high-risk loan they ­really can’t afford.

When home-flipping numbers go up, it is usually an indication that the housing market is in trouble.

- Chief economist at Windermere Real Estate

Yet these kinds of borrowers are qualifying for such home loans thanks to the liberalization of credit terms. New federal rules regulating mortgages under President Obama’s “financial reforms,” despite claims of toughness, are not limiting the volume of high debt-to-income loans. While the rules do recommend a DTI ceiling, they never set minimum down-payment or credit-score requirements.

Today’s relaxation in mortgage-underwriting standards is largely a function of government housing-policy changes at FHA, Fannie Mae and Freddie Mac, which dominate the nation’s mortgage activity.

As in the last easy-credit cycle, we are seeing “the promotion of policy to push firms to seek riskier products to promote growth,” Wells Fargo Chief Economist John Silvia said.

All three agencies have slashed down-payment and other requirements under pressure from Obama regulators, who include, most significantly, former Congressional Black Caucus leader and Obama appointee Mel Watt, head of the new Federal Housing Finance Agency, which now controls Fannie Mae and Freddie Mac.

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Last year, Fannie Mae launched a new subprime-mortgage product called HomeReady that caters to recent immigrants with weak credit and limited income.

http://nypost.com/2016/03/12/obama-is-setting-us-up-for-another-housing-...

The new loan program, which offers “income flexibility,” allows borrowers for the first time to bundle income from roommates and relatives to meet qualifications for income. They only have to put 3% down, and can use gifts from nonprofit groups to subsidize their down payments.

“There is no limit on the number of non-borrower household members who can be present on a single transaction,” Fannie advises originators. And even then there is “documentation flexibility,” a frightening echo of last decade’s “no-doc loans.”

At least before the crisis, your income had to be your own. But now, as a renter, you can get a conventional home loan backed by Fannie by claiming other people’s income. All you have to do in exchange is take a four-hour online course on the responsibilities of homeownership.

You don’t have to show personal financial independence. You can be maxed out on credit cards and even live in government-subsidized housing. Just as long as you round up enough income-earners and pool ­finances to help meet a debt-to-income ratio of up to 50%.

And you don’t need good credit.

“If the borrower’s credit score is less than the minimum credit score required,” Fannie tells loan underwriters, “the lender may develop an acceptable nontraditional credit profile” that takes into consideration timely payments on electricity bills and car insurance — and even gym dues — in lieu of payments on credit cards and loans.

Under HomeReady, you can even qualify for a “cash-out refinance” of your mortgage, a type of loan that led to over-leveraging and a wave of defaults during the mortgage crisis.

Now you can get a conventional home loan backed by Fannie Mae by claiming other people’s income.

Why would Fannie offer the same kinds of poorly underwritten loans that forced it into bankruptcy? Because HomeReady aligns “with our housing goals” set by Watt, it says in its Home­Ready literature. These are the same government affordable-housing quotas that plunged Fannie and Freddie into the subprime market under the Clinton administration.

It’s all part of a government campaign to ease access to home loans for recent Hispanic immigrants — including those living here illegally. In fact, HomeReady caters to illegal immigrants by allowing borrowers to waive Social Security documentation.

The National Association of Hispanic Real Estate Professionals, a pro-immigrant lobbying group, is praising the move, arguing it will bring tens of thousands of Hispanic families into the home market who have been “skipped over” by stingy (meaning prudent and responsible) lenders.

“It’s very encouraging,” NAHREP Chief Executive Gary Acosta said. “It demonstrates that Fannie has done a lot of work on the issue of identifying ways to qualify more people.”

NAHREP is also lobbying heavily for watered-down credit scoring that “take[s] into account the unique spending and savings patterns of Hispanic borrowers,” and it may get its wish.

Watt, who as a congressman once demanded Freddie Mac back loans for welfare recipients in his North Carolina district, has instructed Fannie and Freddie to come up with “alternative credit-scoring models” to FICO and approve more home buyers. “We have the pedal to the metal” on adopting a new model, Watt said.

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Home-loan approvals hinge on FICO credit scores, which have a strong track record of predicting risk, says Pinto, who formerly worked as chief credit officer at Fannie Mae. They are the bedrock of the modern financial system.

http://nypost.com/2016/03/12/obama-is-setting-us-up-for-another-housing-...

But the Obama regime views FICO scoring as too strict, “unfairly locking” millions of low-income minorities and immigrants out of homes. So it’s pressuring Fannie and Freddie, which control 57% of primary-home-purchase loans and set the underwriting standards for the entire mortgage industry, to abandon reliance on FICO for a more accommodating standard for evaluating credit risk.

Watt and other regulators look favorably on “nontraditional credit,” such as rent, utility payments and other factors that studies show have little value in predicting default risk. The administration’s goal is to basically inflate credit grades by the end of 2016, and promote an estimated 20 million unbanked and “unscorable” from the rental market to the mortgage market.

The plan, of course, would inject a massive source of new risk into the financial system and potentially speed another mortgage collapse.

“This is not a great group, credit-wise,” Pinto said. “You’re picking up a lot of young people just out of school, and a lot of immigrants and minorities who tend to have poor credit.”

Just because a loan applicant is suddenly scorable under a new, easier standard tailored to their “unique” credit habits, it doesn’t mean he or she is suddenly creditworthy, he pointed out.

“These are really risky borrowers who don’t hold up well under economic stress,” Pinto added.

But the affordable-housing zealots in the administration don’t care.

The Federal Housing Finance Agency, the Department of Housing and Urban Development and the Federal Housing Administration, as well as the Justice Department, are running a full-court press on lenders. They’re hell-bent on “expanding the credit box,” which has shrunk since the last government-led housing bust, especially for low-income minorities, and the only way to do that is to inflate credit scores.

Watt hopes a decision can be made on transitioning to a new credit-scoring model sometime over the next few months.

The hope is that the new standard will lift scores by as much as 100 basis points, thereby qualifying millions of low-income African-Americans with subprime credit and Hispanic immigrants with thin credit for home loans.

Of course, those same minority homeowners will be hit the hardest when the entire house of cards collapses.

Once again, real-estate prices are outstripping income. But this time, income levels are much lower — real wages fell again in February — and when the bubble bursts, the pain will cut deeper.

edit

chilidog
Joined:
Jul. 31, 2007 3:01 pm

I take issue with the New York Post's emphasis on Hispanics, immigrants, and other minorities.

They're going to make sure everybody takes the needle, even white folks.

Cueing Meghan Trainor: "It's all about the banks, bout the banks. All the right junk in all the right places."

chilidog
Joined:
Jul. 31, 2007 3:01 pm

The Thom Hartmann Program - Aug 30th 2018

It seems it's all racism, all the time w/the GOP...Neo-Nazi robocall hits Iowa on Molly Tibbett’s murder: “KILL THEM ALL. ” Richard Wolff drops by about the National Debt. Is it a disaster or an OK thing? Also - Trump & The National Enquirer - Is the Economy Here To Serve Us Or Are We Here to Serve the economy?

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