patrick.net

Logan, can you explain this....

http://www.cnbc.com/id/102563222
"When you look at more moderate credit score borrowers, those with a FICO of between 660 and 720, that's a score that in a year like 2001 we would consider eligible for a purchase mortgage, but today we see a 37 percent decline in the number of loans in that category," said George.

Tight lending excluding TBTF. I'm expecting my zero interest loan this week.

Strategist says

When you look at more moderate credit score borrowers, those with a FICO of between 660 and 720, that's a score that in a year like 2001 we would consider eligible for a purchase mortgage, but today we see a 37 percent decline in the number of loans in that category," said George.

This right here is why I am trying to get Laurie Goodman to go on national T.V. with me and debate this topic. Once I get a one one one debate live on T.V. the rest is history.

Credit scores are the 3rd factor model in getting a loan and not a very important one if your debt to income ratio is good and you have good liquid assets.

You can have 780 Fico score but have no capacity to own the debt of a home but you can have 640 fico score and have the capacity to if your debt to income ratio is 27% and you're putting 10% down

Poor people don't apply for loans and the fact that Laurie is now going back to 2001 when she has no idea what loans were out there is very obvious now.

Residential lending is backed by two things

Income = Debt to Income Ratio
Liquid assets = Down payment, closing cost, liquid reserves

A fico score is total irrelevant in that equation, it paints a picture for a pricing model because poor people tend to have lower fico scores thus why
FHA
VA
GSE Loans all have a min of 620 fico

Professor Sanders and myself talked about this before he got interviewed on that CNBC article and this was a counter article to that

What he said in that article

"What the researchers are not really looking at is that although credit looks like it's tighter than it's ever been, the fact of the matter is that income is lower than it's been in a long time," said Anthony Sanders, a professor of finance at George Mason University who claims credit is no tighter than it was in 2001. "Therefore there are a lot fewer households that can even qualify for a loan, so they're not even applying."

His article after the CNBC one

https://confoundedinterest.wordpress.com/2015/04/06/mortgage-lending-on-the-planet-mars-why-todays-market-is-not-the-same-as-in-2001/

One day soon there is going to be live debate on T.V. on this issue and trust me once it's said and done, this entire tight lending thesis will Rest In Peace

They should be focusing on the horrible reasons that some loans are being called back, that is a legit issue but for the most part they don't have a clue what is going on with the repurchasing market

Call it Crazy says

When the majority of the "sheep" wake up to this fact, and realize that a house is shelter FIRST, and not their future retirement plan, then the housing market will return to sanity.

If people look at it as PITI cost of shelter everything is all good. Now that the system verifies income and assets we have a strong loan profile in this cycle. Just can't let these people get the speakers and not be challenged. This is a core reason why I challenge every single person when they say lending is tight

https://www.youtube.com/watch?feature=player_detailpage&v=iW5qKYfqALE

https://www.TD2_NmPevVs&feature=player_embedded

Barney Frank Congress 2005

https://www.youtube.com/watch?feature=player_detailpage&v=iW5qKYfqALE

Logan Mohtashami says

One day soon there is going to be live debate on T.V. on this issue and trust me once it's said and done, this entire tight lending thesis will Rest In Peace

You are very confident.

Call it Crazy says

Housing is the cost of shelter to your own capacity to own the debt.

When the majority of the "sheep" wake up to this fact, and realize that a house is shelter FIRST, and not their future retirement plan, then the housing market will return to sanity...

It's shelter FIRST, and future retirement plan SECOND. There I fixed it for you. I'm so nice. :)

Logan Mohtashami says

If people look at it as PITI cost of shelter everything is all good. Now that the system verifies income and assets we have a strong loan profile in this cycle.

Freeze. Hold that thought. "Now that the system verifies income and assets"
Implies tighter lending standards. I guarantee you if they bring back the same programs widely available in the 1990's our housing problems would be history.
Now the argument can RIP :)

Call it Crazy says

When the majority of the "sheep" wake up to this fact, and realize that a house is shelter FIRST, and not their future retirement plan, then the housing market will return to sanity...

Who still thinks this??

Strategist says

You are very confident.

Math,Data and Facts matters in these debates and I admit I have a great advantage since this is what we do for a living and I have all the data points to reference to my views.

90% of my debates with people in the past 100% of the them had no idea how the standards were with

GSE, FHA, and VA and the best is they all go check and then come back to me and say... wow you're right.

I am going to be the Galileo of this topic because my discipline will never allow me to deviate from the truth

Strategist says

Implies tighter lending standards

You're correct. We verify income now and no longer allow 100% loans that are stated income loans 2/28 & 3/27 and option arms which has a horrible default rate if the home owners couldn't refinance out of them

That's a good thing for this country and I will do my best to fight against any movement by the U.S. government to allow such garbage loans back into the system. Which I know 100% they won't since they have all been banned in America. This is a good thing for America and a bad thing for crooked financial types.

Stated incomes loans are being done every day with big down payments.

The days of fraud are over in America in terms of lying on your applications on your income. Now it's back to normal, which is

Paystubs
W2
4506-T
Bank Statements
Jobs

Tax returns
P&L YTD

Yes, this is the new America, the old days of lying are done!

IOW the worlds biggest case of the King's New Clothes.

I might add that housing is just one aspect of this story. War is another, TARP is another, Entitlements is another, ZIRP is another, Student loans is another, Public Transfers is another, and the one everyone claims is a conspiracy theory is the Fed.

With all of that we have an 18 trillion dollar GDP that is a real juggernaut that will probably survive the entitlement surge only because of this juggernaut, But theys going to have to be some changes or else it taint.

I think one of the big problems we will encounter, when depending on those most snake bit from the last crash to carry the next leg up for house prices,is that it's extremely hard to picture the kind of price appreciation we've known in the past, continuing into the future.

Everything is already prohibitively expensive. How can those emerging from credit jail be expected to buy with the assumption that appreciation will outpace debt service, even with rates already so low?

Its as fresh in their minds as anyone's, just how quickly the paper value of your house, can evaporate