Bring back pre-boom financing
Letter to the Editor
By Inman News, Monday, January 3, 2011.Re: 'Homeownership no longer a must' (Jan. 3)
Dear Editor:
Some interesting points, but the basic problem for the housing market is missed. There is not a lack of willing buyers -- there is simply a lack of financing.
The buyers are willing but simply unable to buy due to virtually no financing for the self-employed, investors, people with less than perfect credit, and most importantly the "buy plus bail" prevention guidelines that prevent millions of honest homeowners from keeping their old home as a rental and taking advantage of this market.
Fannie Mae, Congress, etc., could have the housing market recover in nine to 12 months if they would simply bring back the products and underwriting guidelines of the normal market prior to insanity of 2003-07.
Joe Bingham
Bingham & Co. Inc.
Denver, Colo.
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Submitted by Dean Harrington on January 3, 2011 - 4:17pm.
Joe nails it here. There is common-sense lending opportunities being ignored. I wrote about it myself back in August.
http://www.shamrockfinancial.com/deans-desk/the-ability-to-repay-a-falle...
Submitted by Victor Lund on January 4, 2011 - 7:36am.
If you really want to see movement here, you need to support data licensing to RPR and CoreLogic. Those two companies are in a nationwide hunt to get permission to build a solution that will reopen the capital markets that back home loans.
Treasury, Investment Banks, and Lenders are all clamoring for an automated valuation model that is accurate. The only way to gain the accuracy that they need is to combine active and sold listing data from the MLS. The public record data that they use now is low and quality and sparsely comprehensive.
Victor Lund
Partner
WAV Group
http://waves.wavgroup.com
http://www.wavgroup.com
Submitted by John Burchardt on January 4, 2011 - 10:22am.
Unfortunately Joe, we need the standards from pre 1998...the days before fico/credit scores. Through these last four years, I have been utterly amazed at the fact that no one has laid the blame on this mathematical farce. I can't believe how stupid the entire financial has become.
In the old days, we looked at a credit report, the borrowers' income and LTV. Blemishes had to be explained & documented and if the loan made sense, we funded it. Then came the great algorithm that was going to be the savior for the whole world...this great new mathematical formula will tell you point blank are these borrowers RATS or citizens! While this great new number will also tell you if you should raise a person's credit balance or lower it, now you have the power to dictate whether you client's score goes up or down. It will also tell you if a person is a good risk as a driver, or will be a better employee...Wow what number!
Our lives as a nation will improve greatly once we all demand to known by more than a number.
John Burchardt
LocalHomesForSale.com
Submitted by Antoine Pirson on January 4, 2011 - 11:20am.
I think Joe and John are correct. I also wrote about this topic some time ago, and blaim banks for creating the problem in the first place.
Now, banks could get us out of this problem very easily if they only wanted to. Banks are not willing to lend (although they advertise differently of course),and Fannie and Freddie are nuts in their requirements for buy backs.
The examples are plenty, and we all know about them. I even wrote a letter to the CEO of Wells Fargo, and received a cookie cutter letter from his secretary they are always happy to receive comments from their clients??????
Antoine E Pirson, Broker, MBA
Submitted by M C on January 9, 2011 - 11:52am.
Yes we need the federal government to get out of the way of citizens solving the problem created and not perpetuated by the politicians and their muscle aka, Regulators.
The housing collapse was due to politicians putting the 1977 CRA on steroids. The fact that they made Wall Street create loans for the UNDERSERVED (no money down & bad credit)that everyone knew were bad loans. Loans banks would not do historically until forced by the politicians or sue their institutions under ECOA.
Wall Street served their Political Masters well. They created the the liquidity for these garbage loans with the blessing of the Politicians that went back to their UNDERSERVED constituents and said you can Thank Me with your votes.
Fact: Wall Street, banks, loan originators, appraisers and Realtors (both the good & bad like every walk of life) have been around for many decades of our successful housing market.
What changed was President Clinton eliminating the Glass-Steagall Act, and then forcing Wall Street to create loans for the UNDERSERVED.
Want to fix the housing market, eliminate the federal regulators as they have proven to only be puppets to politicians--damn the citizen in their world.
Submitted by M C on January 9, 2011 - 11:53am.
CORRECTION:
Yes we need the federal government to get out of the way of citizens solving the problem that was created and perpetuated by the politicians and their muscle aka, Regulators.
The housing collapse was due to politicians putting the 1977 CRA on steroids. The fact that they made Wall Street create loans for the UNDERSERVED (no money down & bad credit)that everyone knew were bad loans. Loans banks would not do historically until forced by the politicians or sue their institutions under ECOA.
Wall Street served their Political Masters well. They created the the liquidity for these garbage loans with the blessing of the Politicians that went back to their UNDERSERVED constituents and said you can Thank Me with your votes.
Fact: Wall Street, banks, loan originators, appraisers and Realtors (both the good & bad like every walk of life) have been around for many decades of our successful housing market.
What changed was President Clinton eliminating the Glass-Steagall Act, and then forcing Wall Street to create loans for the UNDERSERVED.
Want to fix the housing market, eliminate the federal regulators as they have proven to only be puppets to politicians--damn the citizen in their world.
Submitted by Gary Frimann, CRB, CRS, GRI, ABR, ABRM on January 9, 2011 - 12:30pm.
We do need to lighten up on lending standards. I think we should even bring back 100% financing, although it should be with tight ratios, and INCOME VERIFICATION! It was 100% with stated income that caused the problem. 100% financing will bring in a ton of buyers,make it fixed rate, and allow these people to get on board. No N/O/O unless there is 30-40% down. I think a lot of the problem stems from insiders, such as Realtors writing their own loans as well as loan originators writing their own loans. Sent a false signal to the market. Show tax returns and bank statements to show income so Brokers do no lie about their agent's income. A ton of inventory would disappear and price appreciation would return, resulting in a lot less walking away.
Gary Frimann
Broker / Owner
EAGLE RIDGE REALTY /
SIGNATURE HOMES & ESTATES
http://www.EagleRidgeRealty.net
http://www.SignatureHomesAndEstates.com