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Frank Boettcher

On Sun, 12 Oct 2008 18:56:31 -0700 (PDT), wrote:

But they *did* have skin in the game. The same as you or I... keep
paying or lose your home.

Frank Boettcher wrote:
No, I had to put 20% down on my last home as a requirement to avoid
PMI and to get the payment to something I could afford. *They
essentially had the same situation as a renter. Nothing substantial
down, If you can't do it, just walk away, nothing lost except I got to
move.

I remember buying my first home. *1971, 24 years old, college graduate
with a first entry level professional job, good work record, no debt,
good credit, proof of savings for down payment and closing costs, I
was trying to borrow $18,000 and the PITI would be $123/month. *I was
making $700/month and was in the Marine Corp reserve making another
$30 or so. *Mortgage was to be an VA/FHA combo, available to
reservists. *

I was turned down. *Builder (who was also my landlord and friend of
the family) drove me 180 miles to Jackson to have an appeal interview
with the FHA people to try to get me in the house. *After the
interview they approved the loan.

How did we get from that to where you could get a "liars loan" from a
street corner loan originator, where you don't even have to show proof
of income, assets, credit worthiness or anything to get a loan.

Root cause my friend, simple as that.
Frank

Sorry, but it just plain isn't.

You seem to be insisting that the "root cause" is that poor people who
could not ordinarily qualify for a mortgage were flooding into the
housing market, because the gov't was forcing banks to offer them
loans that they could then shrug off.

yes, If the government wanted to do social experimentation they should
do it outside the private market.

And you're saying this is
because of a law passed by Congress in the 1970s. Long time comin'
huh?

Yes, it often happens that way.

Well, I just can't see this as a smoking gun.

Sorry for that. If many are like you we will be doomed to repeat..

1st- the rate of default, as a percent, has not gone up all that
much... less than a 10% increase overall IIRC

Won't take the time to research to dispute those figures, but doesn't
take much to tilt the scale, open the flood gates.

2nd- even if you take a dim view of poor people getting mortgages, and
insist they would take a mortgage no more seriously than they would
paying rent, it's hard to fathom why they would go to the trouble...
it's time consuming and complicated to apply for a mortgage.

Loan originators make it fairly easy these days.

Once you create a root cause and open the door, then anyone who can
profit by it will. If you can't see that I can't help. but that is
all contributing factor not root cause.

I think I posted earlier that an individual left my employ, gave up
twelve years tenure and a bright future as one who "adds value to
something that is mined or grown" to become a loan originator. This
confused me, I didn't know why, thought this was just a bank clerical
job. No, he said, you can make a ton of money, the gov has fixed it
so any warm body can qualify, I make my commission and the loan gets
passed on to Fannie and Freddie.

"Mortgage" company sprang up in peoples homes. Just a place to pass
the paper on.

Did they
do it just to **** off us whiteys?

I never mentioned race. It has to do with whether an individual meets
the lenders standards. The lender should be whomever will have to
accept and hold the risk. That's the way it was for hundreds of years
before this social engineering experiment.

3rd- Mortgage defaults have hit the middle- and upper-middle class as
hard as the lower income brackets, especially people who did cash-out
refinances, people who bought upgrade houses & second (or third)
homes. Many defaults are due to adjusted ARMs or balloon payments
coming due, and the homeowner's conclusion that they're better off
walking away from a seriously upside-down property.

If the market had not been superheated by the root cause, that would
not have happened.

4th- banks were certainly not forced to offer 125% financing, home-
equity lines of credit, zero-down & interest-only mortgages, and all
the other nifty ways to live beyond one's means that sustained
consumer spending thru the past ten years.

And they wouldn't have, if all those home sales were not heating up
the inflationary monster.

5th- investment banks & hedge funds were not forced by the gov't to
over-leverage these new mortgage-bundle-based investments on the
goggle-eyed assumptions that real estate values had no ceiling
(especially after "warning shot" crash in California).

Had to put the "junk" (often disguised as AAA obligations) somewhere.
And as mentioned, once you create a system, open the door, then
whomever can profit by it will.

FWIW I bought a house with VA assisted finacning too. What a pain...
I'll never do that again. Our VA seems to be one of those
bureaucracies that spends all it's time & effort telling you why you
can't have what they're obliged to givo you... other parts of the
country seem to have a better bunch in office.

Can't comment on that, my next two homes that were associated with
transfers, were done conventionally. 20% down, and there ain't no way
I'm going to load up those properties with additional debt and risk
losing that equity. You see I have an incentive to be conservative.

Regards- Doug King