Comments on: So Much For Free Markets: Federally Sponsored Mortgages at 90% Share http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html Mon, 23 Nov 2009 03:54:45 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Sion http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9486 Sion Fri, 13 Jun 2008 04:13:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9486 Does this mean that the banks with all the mortgage derivatives on their sheets are betting on loans held by FM and FM?<br/><br/>Who stands to lose all their money if the meltdown continues?<br/><br/>Are we looking at a dollar crisis ultimately? Does this mean that the banks with all the mortgage derivatives on their sheets are betting on loans held by FM and FM?

Who stands to lose all their money if the meltdown continues?

Are we looking at a dollar crisis ultimately?

]]> By: Anonymous http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9468 Anonymous Thu, 12 Jun 2008 21:29:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9468 Forgive what must be a stupid question, but I honestly don't know: How does this affect private mortgage insurers? Do people not have to get it when their loans are insured by the GSEs? Or is the opposite true?<br/><br/>--linda Forgive what must be a stupid question, but I honestly don’t know: How does this affect private mortgage insurers? Do people not have to get it when their loans are insured by the GSEs? Or is the opposite true?

–linda

]]> By: daveNYC http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9465 daveNYC Thu, 12 Jun 2008 17:46:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9465 If their increase in market share is due to all other players running for the hills, I'm not sure there's anything that could be done that wouldn't be even worse for the whole home loan business. If their increase in market share is due to all other players running for the hills, I’m not sure there’s anything that could be done that wouldn’t be even worse for the whole home loan business.

]]> By: Tom Lindmark http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9460 Tom Lindmark Thu, 12 Jun 2008 16:38:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9460 The Post article has some misinformation concerning FHA downpayments. The standard is 3% down, however, one third of FHA's loans were extended under down payment assistance plans. These allow a non-profit to gift the 3% down so in effect you have a 100% loan. Additionally, FHA allows seller contributions equal to 6% of the loan balance.<br/>In Arizona, the home builders are flogging the down payment assistance program to death. All new advertisements for new homes feature 100% financing. Additionally, the builders are advancing the extra 6% to cover closing costs or pay off judgments and collections in order to qualify for the FHA loan.<br/>The downpayment assistance program is a circular financing scheme. The seller makes a donation to the charity plus a "handling fee" and the charity makes the gift to the homeowner at the closing table. For the record, FHA would like to see this program go away as the default rate is triple the default rate of its 3% down program. The Post article has some misinformation concerning FHA downpayments. The standard is 3% down, however, one third of FHA’s loans were extended under down payment assistance plans. These allow a non-profit to gift the 3% down so in effect you have a 100% loan. Additionally, FHA allows seller contributions equal to 6% of the loan balance.
In Arizona, the home builders are flogging the down payment assistance program to death. All new advertisements for new homes feature 100% financing. Additionally, the builders are advancing the extra 6% to cover closing costs or pay off judgments and collections in order to qualify for the FHA loan.
The downpayment assistance program is a circular financing scheme. The seller makes a donation to the charity plus a “handling fee” and the charity makes the gift to the homeowner at the closing table. For the record, FHA would like to see this program go away as the default rate is triple the default rate of its 3% down program.

]]> By: Ken Houghton http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9458 Ken Houghton Thu, 12 Jun 2008 16:28:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9458 3% is fine <strong>if</strong> you can qualify for all the other FHA requirements—which are more stringent than those of WaMu or MoziiloWide or The Big C.<br/><br/>There's a reason their share has gone up: FHA only takes worthy credits, and the we-don't-give-a-**** (to quote Patti Smith) crowd is effectively out of business.<br/><br/>More FHA should be viewed as a GOOD thing—it means credit is important in the market again. 3% is fine if you can qualify for all the other FHA requirements—which are more stringent than those of WaMu or MoziiloWide or The Big C.

There’s a reason their share has gone up: FHA only takes worthy credits, and the we-don’t-give-a-**** (to quote Patti Smith) crowd is effectively out of business.

More FHA should be viewed as a GOOD thing—it means credit is important in the market again.

]]> By: Flow5 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9457 Flow5 Thu, 12 Jun 2008 16:23:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9457 JUNE 1980: Dr. Leland James Pritchard, Ph.D. Chicago 1933, M.S. Statistics, Syracuse:<br/><br/>"One of the principal purposes of the Act (DIDMCA) was to provide the housing industry with a reliable source of funds. That may be achieved through various governmental and quasi-governmental corporations. But the role of the S&Ls in housing finance will probably diminish significantly. <br/><br/>By becoming commercial banks and having a larger spectrum of loans to choose from, the S&Ls will act like banks and whenever possible eschew “borrowing short and lending long”. Sources of mortgage funds will shift from the subsidized rates heretofore provided by the small saver to “bond-backed” sources which will reflect the higher interest rates prevailing in the loan-funds markets. These factors combined with higher trend rates of inflation should result in a pronounced upward trend in mortgage financing costs." <br/><br/>So it took you all 28 years to figure this out? JUNE 1980: Dr. Leland James Pritchard, Ph.D. Chicago 1933, M.S. Statistics, Syracuse:

“One of the principal purposes of the Act (DIDMCA) was to provide the housing industry with a reliable source of funds. That may be achieved through various governmental and quasi-governmental corporations. But the role of the S&Ls in housing finance will probably diminish significantly.

By becoming commercial banks and having a larger spectrum of loans to choose from, the S&Ls will act like banks and whenever possible eschew “borrowing short and lending long”. Sources of mortgage funds will shift from the subsidized rates heretofore provided by the small saver to “bond-backed” sources which will reflect the higher interest rates prevailing in the loan-funds markets. These factors combined with higher trend rates of inflation should result in a pronounced upward trend in mortgage financing costs.”

So it took you all 28 years to figure this out?

]]> By: Anonymous http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9450 Anonymous Thu, 12 Jun 2008 14:54:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9450 Welcome to 21 century. Gov. Inc. rules. Welcome to 21 century. Gov. Inc. rules.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9449 Anonymous Thu, 12 Jun 2008 14:21:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9449 And Fannie and Freddie are masters of accounting games and definition changes. Lowest delinquency rate, no problem, we'll just change the definition again. Let homeowners extend payment for another 120 days, but because we spoke to them, they're not considered delinquent.... tuck it all under the rug. The public is either too apathetic or too stupid to realize it. And Fannie and Freddie are masters of accounting games and definition changes. Lowest delinquency rate, no problem, we’ll just change the definition again. Let homeowners extend payment for another 120 days, but because we spoke to them, they’re not considered delinquent…. tuck it all under the rug. The public is either too apathetic or too stupid to realize it.

]]> By: etc http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9447 etc Thu, 12 Jun 2008 13:13:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9447 anon 8:48am,<br/><br/>Never say never. In the past, the US has restricted private ownership of bullion, ownership of foreign stocks and other securities, and imposed windfall and war profits taxes. And best of all, prior to the beginning of the debt bubble in 1979, prevented bankruptcy judges from reducting mortgage debt on primary residences. Lots of countries have explicitly defaulted on large debts explicitly (Argentina) or implicitly through inflation (Germany).<br/><br/>It is childs play to enhance debtors rights in bankruptcy by allowing judges to reduce debt on primary residences (after all, other types of debt can be restructured, including corporate debt), by increasing exemptions to, say the generous levels provided in Florida, and let FNM and FRE go belly up.<br/><br/>And as for people crying expropriation. Investors (foreign or domestic) didn't pay for a guarantee, so they can't complain about interference with property rights. As everyone knows, only Ginnie Mae securities actually have an enforceable guarantee. anon 8:48am,

Never say never. In the past, the US has restricted private ownership of bullion, ownership of foreign stocks and other securities, and imposed windfall and war profits taxes. And best of all, prior to the beginning of the debt bubble in 1979, prevented bankruptcy judges from reducting mortgage debt on primary residences. Lots of countries have explicitly defaulted on large debts explicitly (Argentina) or implicitly through inflation (Germany).

It is childs play to enhance debtors rights in bankruptcy by allowing judges to reduce debt on primary residences (after all, other types of debt can be restructured, including corporate debt), by increasing exemptions to, say the generous levels provided in Florida, and let FNM and FRE go belly up.

And as for people crying expropriation. Investors (foreign or domestic) didn’t pay for a guarantee, so they can’t complain about interference with property rights. As everyone knows, only Ginnie Mae securities actually have an enforceable guarantee.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally.html#comment-9446 Anonymous Thu, 12 Jun 2008 12:57:00 +0000 http://www.nakedcapitalism.com/2008/06/so-much-for-free-markets-federally-sponsored-mortgages-at-90-share/#comment-9446 The GSE are keeping SFH from falling to levels beyond what anyone can imagine. Not a good omen for future real estate pricing. The GSE are keeping SFH from falling to levels beyond what anyone can imagine. Not a good omen for future real estate pricing.

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