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Bailout mutates into FHA "modernization"


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2007 May 6, 10:24am   17,487 views  135 comments

by Patrick   ➕follow (59)   💰tip   ignore  

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Now we hear that the the Federal Housing Administration wants to keep the subprime shell game going by eliminating downpayments entirely:

FHA Modern is So Subprime

What is wrong with FHA subprimization?

Private lenders have realized the risk in subprime and increased their demands on the borrowers, upping downpayment requirements. But now the government wants to step in with federal guarantees for loans that don't require downpayments at all anymore. Can the government assess lending risks better than banks can? I don't think so.

The justification is that the FHA needs to take back market share from other lenders, market share that it lost in 2001-2005. This is silly. The taking-back is already happening, with existing guidelines, because private lenders don't want to touch certain customers anymore.

The use of federal loan guarantees moves the problem from today's budget to tomorow's budget. It hides the federal liabilities in rosy assumptions that the housing prices won't fall, like it did in its model of subprime lending - we know now how that worked. Why repeat the error on a bigger scale?

The making of a downpayment is a blessing for all, the borrower, the lender, and the public:

- The borrower has shown that he can earn and save that kind of money.
- The borrower gets a better feeling for the true price of the house.
- The lender knows that the borrower has skin in the game and will fight to keep his mortgage from defaulting.
- If the borrower has to move unexpectedly, he is less likely to be underwater and be forced to come up with money for a short sale: the ability to move is good for the economy.
- It reduces leverage in the whole financial system.

Regards,

Peter T.

#housing

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126   Different Sean   2007 May 9, 11:51am  

Malcolm Says:
Skibum, I have to say I admire someone who actually can use the word ‘preposterous’ and still sound cool.

his very assertion was preposterous. a self-reflexive sentence...

127   astrid   2007 May 9, 12:48pm  

DS,

That may no longer be the case. My mom knows two pretty big mortgage brokers here and their businesses are down sharply.

128   skibum   2007 May 9, 1:41pm  

unfortunately, the most salient and regrettable aspects of your posts are large arrays of non sequiturs and a profound inability to connect the dots. the irony is that your posts concerning me seem to be huge displays of projection…

Seems to me this pretty accurately describes your own posts.

129   Different Sean   2007 May 9, 4:15pm  

astrid Says:
That may no longer be the case. My mom knows two pretty big mortgage brokers here and their businesses are down sharply.

i wonder how the subprime specia1ists are going… there will always be some demand for those loans, altho there could be a shake-out of MB numbers if there have been a lot of new recruits in recent times…

130   Different Sean   2007 May 9, 4:20pm  

Seems to me this pretty accurately describes your own posts.

not at all. maybe you should read up on the 'diseases of civilisation'. you are talking about empty calories in an age of obesity and claim this 'benefits the poor' when in fact the poor could be looked after a whole lot better in the most affluent country on earth. you are failing to walk the talk, and even talk the talk, when it comes to healthy, nutritious eating. clearly the 'post-80s' nutritive medical training was lost on you. this is an era when even mcdonalds is now forced to serve salads to stay in business. in finland, it is compulsory to serve salads at all restaurants, for instance. would you tell me what the daily preferable number of standard serves of fruit and vegetables is? you are clearly in no way associated with any kind of preventative efforts in your country, sorry, just acting as an elitist doctor on a high salary talking about 'the poor'...

131   skibum   2007 May 10, 12:42am  

you are clearly in no way associated with any kind of preventative efforts in your country, sorry, just acting as an elitist doctor on a high salary talking about ‘the poor’…

DS,

CLEARLY, you continue to miss the point. I in NO WAY EVER stated that empty calories benefit the poor. I was making the argument that the poor nutritious content of processed food is yet another bad outcome of mass farming. GET A CLUE through your thick brain. As I've now stated 2-3 times, I have never advocated that the current state of nutrition in the US is healthy or good. Jeez, can you even read and interpret an argument? Can you understand sarcasm?

Instead, you've read my posts through your narrow-minded knee-jerk liberal filter of a brain and turned it personal by constantly attacking me as an "elitist doctor on a high salary." Smacks of bitterness and sour grapes to me. Besides, unlike Ha Ha, you have no idea what my salary is.

132   Different Sean   2007 May 10, 11:28pm  

Leave it to DS to turn a perfectly decent discussion into yet another “the evils of corporations” derailment. Yes, the net result is inferior quality, and of course corporations benefit, but you are wrong about cost. There is no denying that food is cheaper as a result for the poor in the US. It is well documented that processed food has significantly higher calorie per price than fresh food in the current system. They are empty calories often, but from a pure substinence standpoint, processed foods are cheaper. That’s just nutty.

so this was irony? OK, whatever...

133   skibum   2007 May 11, 1:16am  

so this was irony? OK, whatever…

Again, you're taking quotes out of context and fitting them to your own arguments. You really do miss the forest through the trees. You either are just that clueless, or you might make a great politician. Maybe they are one in the same.

134   Different Sean   2007 May 11, 8:42pm  

I'm not entirely sure what point it is you were trying to make -- at any time, about anything, then. Perhaps you should just enunciate a clear statement about your views of the poor, empty calories, what constitutes good nutrition, the nobility of corporations, and so on.

Your constant self-corrections and so on start to sound like Alice In Wonderland --

`And how exactly like an egg he is!' she said aloud, standing with her hands ready to catch him, for she was every moment expecting him to fall.

`It's VERY provoking,' Humpty Dumpty said after a long silence, looking away from Alice as he spoke, `to be called an egg -- VERY!'

`I said you LOOKED like an egg, Sir,' Alice gently explained. `And some eggs are very pretty, you know, she added, hoping to turn her remark into a sort of a compliment.

`Some people,' said Humpty Dumpty, looking away from her as usual, `have no more sense than a baby!'
...
'There's glory for you!'

`I don't know what you mean by "glory,"' Alice said.

Humpty Dumpty smiled contemptuously. `Of course you don't -- till I tell you. I meant "there's a nice knock-down argument for you!"'

`But "glory" doesn't mean "a nice knock-down argument,"' Alice objected.

`When _I_ use a word,' Humpty Dumpty said in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.'

`The question is,' said Alice, `whether you CAN make words mean so many different things.'

`The question is,' said Humpty Dumpty, `which is to be master -- that's all.'

135   skibum   2007 May 14, 1:55pm  

I’m not entirely sure what point it is you were trying to make — at any time, about anything, then. Perhaps you should just enunciate a clear statement about your views of the poor, empty calories, what constitutes good nutrition, the nobility of corporations, and so on.

I'm done with trying to debate with you and your closed-minded point of view. You stopped making sense long ago.

Your constant self-corrections and so on start to sound like Alice In Wonderland —

Self-corrections? Now you're just making $hit up.

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