Have Housing Prices Topped..link

[Rich Hahn]

http://moneycentral.msn.com/content/Banking/P56902.asp

 

[les horowitz]

Countrywide wants to do away with downpayments

http://realtytimes.com/rtcpages/20030219_d...ownpayments.htm

What's interesting is their admission that for many new buyers much of the closing costs, including the downpayments and points, are coming from the builder.

 

[Farm Gal]

Good link Les:

I'd like to pin-point these these consecutive quotes from your link as worthy of further thought:

The Countrywide chairman said it is "meaningless" to require targeted borrowers to come to the closing table with as much as 10 percent of the purchase price in cash, especially since much of money comes from a relative or some other third party.

I don't care who it comes from: I personally think that SOME (not neccesarily 10%) quantity ought to come from some place: Friends and family tend to put a bit more responsibility on the back of the borrower than their signature on a bank loan anyway.

"It's often not their money anyway, yet we put them through this torture," Mozilo said.

FINE! It causes the borrower to reach out and either be personally responsible OR have connections/obligation to someone they theoretically have a desire to continue the association with!

A downpayment "doesn't help the integrity of the loan at all," he added, explaining that troubled borrowers are often forced into foreclosure because it costs more to sell their places than they will lose in equity by handing the keys back to their lenders.

AHH you mean the realtors and other persons fees which often get lumped into the transaction 'market value'

It would seem to me that the system as it was with real appraisals with appraisers who were responsible and not quite as pressured to MAKE THE DEAL WORK, was in fact a fairly efficient system!

What HAS changed is the lack of face time from the 'responsible' appriasers with their clients...

Personal integrety and association is of far less import than speed and making the deal.

Step back and see where exactly the black hole in the system lies...

Appraisers for Consumer Education B)

it is time and past for impelmentation of a non-legislated return to ethics...

AI is no longer fulfilling that role, Naifa ditto,

can't legislate it. <_<

Hard to control it.

best clean up from within.

 

[aprazer]

How can this guy honestly say the downpayment is meaningless? Doesn't the downpayment reduce the monthly payment? Wouldn't that make it less likely that the borrower would default?

The traditional wisdom is that the downpayment is what keeps people from walking away. If you have zero equity, you have little to lose. Still seems like a sound policy to me.

People get into trouble when values decline and they have borrowed the maximium. With zero down, when values decline there are a greater number of people in the same leaky boat. I'm sure he and his cohorts will be circling the boat.

 

[jtrotta]

aprazor

yep, they needs ta contribute or the Banks will take whatever cash they have and use it fer play; now if there is "absolutely no money involved" - the Risk becomes dramatic and the Banks should be held 100% responsible for bein the driving force. Now if we compound that with no appraisal or an AVM appraisal - they should be held 100% responsible, not just the Bank; the Board of Directors; the Investors; et al.

another words I don't want em pickin my pocket cause they got stupid; lets check wit some Congress people an see if there Free from harm on this.

h34r:

 

[Mike Garrett RAA]

It's never the bank, it's always the govenment or government sponcered private corporations like Fannie Mae or Freddie Mac.

Once upon a time, a home buyer was required to have a 20% down payment. The along came FHA which said 10% down...later dropped to 5%, and now little or nothing. VA was for veterans as a perk for serving in the military with no down payment but the veteran was still responsible for closing costs.

Now....No down payments, no closing costs paid for by the borrower, and no appraisal. Gee, no wonder foreclosures are higher than ever. The madness continues!

Banks have merged until there are only a handful and they are national in nature. They borrow money from the Fed for almost nothing yet are allowed to charge 29% on credit cards, $30 late fees if a $5 payment is one day late. The madness continues!

 

[Walter Kirk]

Banks and mortgage companies only make money if they lend money. Since these institutions no longer lend their own funds there is no downside risk to them if they lend more money.

 

[Restrain]

The easiest thing to get into around here is the Mfg. box. No equity, no risk. They just walk away. There are whole subdivisions that are in default. You do away with downpayments, etc., you generate volume, but when things get hard, there will be no equity in the home due to the added fees, etc on top of the sales price. So the buyer walks, and we do the REO.

Roger

 

[Rich Hahn]

You know...
its almost easier to buy a home then rent one..With first, last and damage deposit, plus credit scoring.

I recently did a REO where the former owner was approved by Countrywide with unemployment payments as income(I dont know the correct term for unemployment compensation) and some roomate rental agreements. All costs rolled in. ZERO to negative equity. She made like 3 payments before the roomate thing didnt work...

 

[Terrel L. Shields]

We have seen sales dropping about 20% per week for the past two weeks in my area, so there is going to be some price pressure soon unless that reverses. Builders have gone nuts and ask the moon for construction. I have seen bids up to 20% difference....i.e. $63 per SF vs $75, in fact, the $63 builder usually does a better job. And the illegals that usually do the actual work are making $4-5/hr, if they are lucky. Mex with a genuine Green card might make $8. That is less than white boys were making 10 years ago in the same job before so many Mexican builders came out of California.

Colored 29 gauge sheet metal that I bought for $34.95 in 2001 to build a barn cost me $54.95/SQ last month after a storm hit the barn and damaged it. Same source. Same carpenter, about $1 per SF more to add onto the barn.