patrick.net

Here is the core on the qualified mortgage rules now, none were in place before on a national level.

Below are the Ability to Repay Determinations:

1. Current or reasonably expected income or assets; income capacity and showing liquid assets to buy a home.

2. Current employment status. (The person should have a job and show stability in the same line of work for a certain length of time).

3. Monthly payment on the covered transaction.

4. Monthly payment on any simultaneous loan.

5. Monthly payment for mortgage related items.

6. Current debt obligations, alimony and child support.

7. Monthly debt-to-income ratio or residual income . ( 3-7 debt to income ratio)

8. Credit history (history or credit that prove timely payments have been made and not too much revolving credit card debt is a good thing)

If you follow this, you get legal protection going forward

It is hard to believe that banks did not do this with out any regulation.

I have read that the banking industry has always been heavily regulated, are you saying this is not true?

indigenous says

I have read that the banking industry has always been heavily regulated, are you saying this is not true?

Regulations and then their is regulations with teeth...

Those Qualified Mortgage Laws above and not allowing 40-1 Leverage which was the S.E.C. allowed in 2004

Housing speculation would not have happened.

That is the core that allowed the speculation factor to happen. Obviously people had to make the choice to do what they wanted to do. However, you take away a core aspect of speculation off the Grid with those 2 items above I mention

Why do you think I have fought against easing lending standards all these years. Humans by nature have it in them to speculate and want to make more $$$

It feeds off itself.... Issac Newton knew of this as well...

Madness of Men

That madness will always bring death on the pale horse

Speculation follows liquidity. Your friend Professor Sufi indicated that this was partly from HELOCs, others indicate it was from loose money policies that were created by CRA, not that actual laws but by the disposition of the lenders created by government implying that they were backstopping the loans.

Logan Mohtashami says

I have clients who make over 250K and they didn't have 20% down and they're in the top 10% income and net wealth of Americans

Than what the hell are they doing with all the money? Plenty of people make less and save a lot more.

indigenous says

Professor Sufi indicated that this was partly from HELOCs,

Cash out and equity extraction, a lot of that happened without income capacity to own the debt, none of that can happen now, even if you have plenty of equity in your home

FortWayne says

Than what the hell are they doing with all the money? Plenty of people make less and save a lot more.

Buying a home in so call $700K - 975K 20% down on that takes a lot of time to do, not to mention rent inflation is strong so shelter cost in So Cal is expensive.

indigenous says

Professor Sufi

House of Debt was a good book that he wrote

indigenous says

others indicate it was from loose money policies that were created by CRA, not that actual laws but by the disposition of the lenders created by government implying that they were backstopping the loans.

???

indigenous says

others indicate it was from loose money policies that were created by CRA, not that actual laws but by the disposition of the lenders created by government implying that they were backstopping the loans

:-) Not really, we are talking about 2nd lien loans and cash outs... like Professor Sufi talked in that conference video ( Not sure if you saw that) lending standards were very open to equity extraction and it went to low credit grade borrowers. If you haven't seen that video it's 20 plus minutes it was the conference in 2013 in Stanford

Seen it, he is sharp.

I'm getting two conflicting datums one of them or both are off.

Logan Mohtashami says

I have clients who make over 250K and they didn't have 20% down and they're in the top 10% income and net wealth of Americans

20% model isn't a valid one to have in America, that shipped sailed a long time ago

..if they can't save away $200k over a few years with 250k income then they are doing something wrong - have them talk to me :)

The economist for Trulia ran his own model and he said it would take 17 years for a first time home buyer to save 20% for a median price home using the cost of living index in high cost areas of CA.

Now, move up buyers have the equity of their home to put down for a home. However, as always if your home is going up in price so is the other home you're looking to buy and their simply isn't enough equity created by paying down in those first 5-9 years when you're paying down principal to make that much of difference

Logan Mohtashami says

The economist for Trulia ran his own model and he said it would take 17 years for a first time home buyer to save 20% for a median price home using the cost of living index in high cost areas of CA.

I was able to save away the 20% but it required sacrifices for a few (long) years that most people aren't willing to do. People in LA lease the most expensive cars and eat sushi three times a week and complain about not being able to save money. Drive an old car. Don't go out to eat daily. Skip a few vacations. Etc Etc...All my friends that complain about not being able to save enough money live a much "richer" lifestyle then us. Most people live WAY beyond their means. Now, what is tricky is if you don't make 250+. If your income is just about where your basic costs of living are (high in LA). - But that's where FHA comes in right Logan?

SubOink says

But that's where FHA comes in right Logan?

It's not just FHA, conventional loans can go to 3%-5% Down

2007-2011, All my high income home buyers were using FHA, which was really odd to see because FHA is a low level quality loan area.

However, since FHA was the only loan down payment player in town on a national basis they grew their market share from 5% to 40%

And got A paper borrowers, in 2012 Conventional loans came with a 5% down loans and FHA market share fell it's now between 10%-20%.

All those FHA clients have refinanced out FHA and now have conventional loans.

In terms of low down payment loans.

With any low down payment loans you're borrowing more and you're paying PMI, so yes you have access to loans but you also paying a lot high PITI cost for your home.

It took me a good 6 years to save for a 20% down payment of $92K but I didn't have high level student loan debt.

Only 4 clients I have had in 20 years had 20% down and all had $$$ assistance, I have never had one first time home buyer client that bought a home that 20% down that was saved which is hard for So Cal prices if you're trying to buy under the age of 32.

Dual income and dual borrowers I have had a few

Rent inflation makes it a lot harder to save that 20% down too.

If you have stocks options or a bonus paid package that obviously helps

It's very expensive cost of living in CA to have the capacity to save for that 20 percent.

for a first time home buyer

Logan Mohtashami says

It took me a good 6 years to save for a 20% down payment of $92K but I didn't have high level student loan debt.

Only 4 clients I have had in 20 years had 20% down and all had $$$ assistance, I have never had one first time home buyer client that bought a home that 20% down that was saved which is hard for So Cal prices if you're trying to buy under the age of 32.

Ok, under age 32 - definitely impossible unless parents shoot a downpayment. A luxury many of my friends had. But at that age if somebody handed you $100k, most go out and buy a car for $80k instead of saving. The way to do it is - two incomes. Save the wife's income 100% into the savings account.

SubOink says

But at that age if somebody handed you $100k,

Why a lot lotto winners are in worse shape after they win

For years I have had this fight with my wife. She wants a bigger home and I say...

We are two people married with no kids, 1330 square feet is plenty ... we have rental that gives us strong yield and has tons of equity, why do you want to ruin a good thing...

:-)

Logan Mohtashami says

Only 4 clients I have had in 20 years had 20% down and all had $$$ assistance

Wow. How do we ever return to the land of skin-in-the-game financing?

There are still the all-cash purchases, of course. Are they mostly Blackstone-type outfits, or those legendary foreign cash buyers?

HydroCabron says

There are still the all-cash purchases, of course. Are they mostly Blackstone-type outfits, or those legendary foreign cash buyers?

Cash buyers in this cycle have never been stronger, true.

A lot of that is due to the supply of distress homes in this cycle.

Blackstone owns roughly 40K of rental homes, nothing to big

Historically cash buyers have been 10% of the market place, it's been over average 30% plus this cycle, a lot home sales when you think of a 5 million dollar market place.

However, for 2 years now that % levels is falling and now down to 25%, so still high historically, but it's no longer growing since 2015 as a % of the market place

2005

"The CRA: Outstanding, and Needs to Improve"
Roberto Quercia, Janneke Ratcliffe, and Michael A. Stegman

http://www.frbsf.org/community-development/files/revisiting_cra.pdf

DieBankOfAmericaPhukkingDie says

The CRA is the leading cause of suicide and cancer among white people.

Everyone knows that.

Government programs raise everyone's standard of living, just ask the Bern

Everyone knows that...

*FED REMOVES REFERENCE TO GLOBAL EVENTS POSING RISKS TO OUTLOOK

Weaker dollar does wonders doesn't it ....

Facebook Live of the Fed meeting and as the article I wrote says, until they get more inflation, they won't raise

https://www.facebook.com/Logan.Mohtashami