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Thread: Freddie Mac. Betting against home owners.

  1. #31
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by MaggieD View Post
    This article is incomplete, to say the least. At most, it's deliberately misleading. Read this:



    Freddie has underwriting guidelines. I think we all know what that means....minimum standards for when Freddie with accept a loan into its portfolio. Underwriting standards include things like debt ratio of the borrower, down payment requirements, minimum credit scores, et al. Makes sense, right? In fact, if they'd held to reasonable underwriting standards prior to the housing market collapse, it may not have even happened.

    Freddie making it harder to refinance makes absolutely perfect sense. Look at the example they give us: the Silversteins. Most short sales are the result of refinancing into a lower rate (usually) while, at the same time, pulling money out of the equity of one's home. Like using the equity to pay off credit cards, etc., etc. If it wasn't for that reason, which is a poor excuse, then it's because they decided to sell their home and let the bank take a loss on their mortgage. Not exactly the way to endear one's self to Freddie...who probably even took the loss.

    So Freddie says, "If you've had a short sale in the last two (or is it four...not really clear in the article), we aren't going to lend you any money. And remember, that short sale trashed their credit because it left their lender holding the bag.

    This article, as I've laid this out here, in my opinion is deliberately misleading...or else written by someone who doesn't understand underwriting. Freddie is in the business of guaranteeing loans. It's their mission. They want to do that. But, hopefully, they've learned a valuable lesson: Don't lend money to people who can't buy lunch.

    And, as for the Silversteins whining, look at it this way: Somebody buys a car through the finance company. After six months, they "turn the car in to the finance company" because they can't afford to pay for it anymore. Then they whine because they can't get another car loan.
    Oh, so Freddy Mac is making it more difficult to refinance through them, and the homeowner without good credit can't refinance anywhere else.

    It seems to me that's how it should be. People with poor credit should be paying more than people with good credit. Credit shouldn't be overly easy to come by. People borrowing for mortgages that they couldn't afford was, after all, the main cause of the housing crisis.

    One of the factors that sparked the great depression was easy credit also.

    It's time individuals and government started living within their means, it seems to me.
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by Dittohead not! View Post
    Oh, so Freddy Mac is making it more difficult to refinance through them, and the homeowner without good credit can't refinance anywhere else.

    It seems to me that's how it should be. People with poor credit should be paying more than people with good credit. Credit shouldn't be overly easy to come by. People borrowing for mortgages that they couldn't afford was, after all, the main cause of the housing crisis.

    One of the factors that sparked the great depression was easy credit also.

    It's time individuals and government started living within their means, it seems to me.
    That's a perfectly good arguement for how things should be done, but they weren't. The question now is how we handle it.

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    Re: Freddie Mac. Betting against home owners.

    It's all about money! They knew long before hand that the housing bubble was going to burst. They even tried to pop it a few times. But too many other 'financial' reasons that kept it going. Of course their going to bet against their own customers, too much money to be made! Especially since they can't loose, thanks AIG!
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by Dittohead not! View Post
    I'm not sure I understand that either. How can they keep homeowners from refinancing at a lower rate? They can refuse to refinance themselves, of course, but there are tons of lenders out there. Why not go to the credit union or a private bank and do a refinance?
    Because no one has the 20% down payment that has been made legally mandatory by the Frank-Dodd bill.

    The government is, "helping", us again.
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by MaggieD View Post
    Don't misunderstand. I'm in favor of the upside-down homeowner catching a break. It should have been done immediately. Right now, the housing market is suffering the Chinese water torture of all these short sales and foreclosures trickling steadily into the marketplace holding down housing values. In many areas of the country, rather than stabilizing, housing prices are still in a slide.

    I actually agree with Perry. And the fact is, it wouldn't cost the banks even half as much as it's costing them now.

    But, make no mistake, if banks actually did begin forgiving principle enmasse, the public would be outraged.
    The issue with those empty houses is greed, though. They WOULD sell...if the banks would move on them. Have you tried to BUY a short sale? Banks drag their feet, because they are making less profit on them. Essentially, they make the buying process as hard and tricky...and expensive...as possible, in order to try to NOT sell them...to hang onto them till the market starts making a comeback. Of course, they are legally REQUIRED to have them available for sale...but there are no rules on just how miserable they can make the entire process.

    Let's look at some FACTS. No one is buying these houses at their CURRENT price, which is STILL bloated from the housing bubble. A house in a normal neighborhood, and 1/8th of an acre, that cost less than 1K to build back in 1953...should NOT be priced at over 200K today. That's a bubble price...and yet, that's what banks are asking for some of these houses, and MORE. So, they are not selling them. Which suits them just fine. A bank is losing nothing on the house by not selling, aside from some property taxes. Compound that issue with the fact that the banks are ALSO the ones that issue the loans, and have made that process damn near impossible for anyone making LESS than 80K a year (you need a WHOPPING 20% of the sale price of the house up front, and an average credit score of over 750)...and then mix in the fact that MOST of these houses are "middle class" houses....which, in CT, means anywhere from 150K to 350K, and you know what you get? The people that can afford to buy houses are also wealthy enough to buy the houses that AREN'T sitting in foreclosure...and the people that WOULD buy the houses that ARE sitting in foreclosures and short sales, can't qualify for the loans...what do you get?

    Now, in NORMAL economics, when you have a product that is priced too high, and then fails to sell...you REDUCE the price, or go belly up. But not so with housing, because who owns them? Banks. And banks don't have to worry about going belly up, do they?
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

  6. #36
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by KevinKohler View Post
    The issue with those empty houses is greed, though. They WOULD sell...if the banks would move on them. Have you tried to BUY a short sale? Banks drag their feet, because they are making less profit on them. Essentially, they make the buying process as hard and tricky...and expensive...as possible, in order to try to NOT sell them...to hang onto them till the market starts making a comeback. Of course, they are legally REQUIRED to have them available for sale...but there are no rules on just how miserable they can make the entire process.

    Let's look at some FACTS. No one is buying these houses at their CURRENT price, which is STILL bloated from the housing bubble. A house in a normal neighborhood, and 1/8th of an acre, that cost less than 1K to build back in 1953...should NOT be priced at over 200K today. That's a bubble price...and yet, that's what banks are asking for some of these houses, and MORE. So, they are not selling them. Which suits them just fine. A bank is losing nothing on the house by not selling, aside from some property taxes. Compound that issue with the fact that the banks are ALSO the ones that issue the loans, and have made that process damn near impossible for anyone making LESS than 80K a year (you need a WHOPPING 20% of the sale price of the house up front, and an average credit score of over 750)...and then mix in the fact that MOST of these houses are "middle class" houses....which, in CT, means anywhere from 150K to 350K, and you know what you get? The people that can afford to buy houses are also wealthy enough to buy the houses that AREN'T sitting in foreclosure...and the people that WOULD buy the houses that ARE sitting in foreclosures and short sales, can't qualify for the loans...what do you get?

    Now, in NORMAL economics, when you have a product that is priced too high, and then fails to sell...you REDUCE the price, or go belly up. But not so with housing, because who owns them? Banks. And banks don't have to worry about going belly up, do they?
    Trying to purchase a home in foreclosure (or a short sale) in the Chicago area is a whore's nightmare. Make an offer. Wait two weeks or more for a counter. Banks are not organized. There's no one in a decision-making position. Everything's by committee, for God's sake. There is a very real carrying cost to banks sitting on these properties, though...and, of course, the foreclosure process itself if they have to go there.

    Overall, I completely agree with you that banks have totally mishandled the process. A guy's upside-down to the tune of $300,000 mortgage versus $200,000 value. Bank forecloses. (That's where the real cock-up is.) People get to live in the homes for 12-14 months while foreclosure moves like a turtle....not paying their mortgage. Banks are losing THAT money...plus the legal fees to actually foreclose. Then they have to spend $10-$20,000 to get the house ready for sale...then they price it at their own whims instead of listening to Realtor values and it continues to sit. It must cost them $200,000 when it's all over. Orrrrrr, they could rework the mortgage with the current owners, forgive principle and only be out $100K. I can't figure it out.
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  7. #37
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by lizzie View Post
    They shouldn't have financed in the first place if they couldn't afford to buy a house. If you can't afford the terms of a contract, never sign it.
    99% of the time, I am inclined to agree with this, but you can't just sit back and say that we aren't in slightly extraordinary times, no? Most folks having trouble now bought within their means...but unbeknownst to them, there was a crash looming that would result in them being unemployed, and in their home value going below the purchase value by over 150%.

    I mean, look at me...I've now been out of work for over 6 months, and believe me, I'm as kung fu a guy as you're ever gonna meet on the internet, lol. I've been working since I was 15, and I have NEVER been unable to find a job, or out of work, for more than a week or two, tops. Even in areas with little commerce, like Greer, SC, I have been able to get work...based on my attitude, previous history, and rock solid references from previous employers. I'm the guy that married the prom queen, despite being a dragon lance reading nerd all through high school. I'm the guy that moved to CT from FL with about 800 bucks to his name, and 5 years later, I've got 2 new cars, a house, a son and a daughter. I'm a winner. I'm not saying this to say, hey, look at me, I'm awesome...I'm saying this to say that it's not simple apathy, lazyness, or lack of marketable skill sets that are keeping people unemployed in todays current economic climate. So, how did I end up unemployed? The business I worked for went out of business. You ask that question enough, and I'll promise you THAT is the answer you're gonna GET, in many cases. That, or the business shrunk, downsized, etc. Yes, SOME people bought too much house. SOME people took loans they really shouldn't have. But I think you'll find that the majority are people who took a loan within their means, and then lost their jobs. Through NO fault of their own. Those jobs were lost as a direct result of the housing market crisis, and the resulting recession. Should these people be the ones that have to pay for the mistakes of an administration YOU and everyone else helped into power? Should THEY be the ones that have to pay for the dishonest, scandalous, greedy business practices that caused this mess?
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

  8. #38
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by MaggieD View Post
    In the eyes of the lender, a refinance is no different than a new purchase. A short sale requires the cooperation of the bank wherein they realize they're not going to get all the money you owe, but they figure it's better to negotiate a loss than take it in foreclosure. The Silversteins were probably only able to buy another home because they were able to pay a really high interest rate. They surely wouldn't have qualified for standard rates...and should be delighted to have even gotten a mortgage. More than likely, that high interest rate loan was through a mortgage broker who had an investor who was willing to take the risk. Standard mortgage with lower rates? No surprise they can't get one.
    I doubt the Silverdteins are a good example of the majority, though. They sound like folks who flip houses...and use government backed loans to do so.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

  9. #39
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by lizzie View Post
    Doesn't matter. I'm not willing to try and build it again. If people signed contracts to buy homes, then couldn't afford the terms, it was their shortsightedness that caused the problem. Now that they've screwed up their credit even more, there is absolutely no incentive for lenders to refinance, nor should they be forced into doing so. THe American taxpayer is already on the hook for far too much money in the way of bailouts.

    I hope you never make a big purchase, then lose your job due to the company going under, due to an economic collapse, due to poor policy making, and the fraudulent business practices that resulted, and find yourself in the "short sighted" bus. Because then you might have to see just what, exactly, your words taste like, and I doubt they'll taste very good to you.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by Dittohead not! View Post
    Oh, so Freddy Mac is making it more difficult to refinance through them, and the homeowner without good credit can't refinance anywhere else.

    It seems to me that's how it should be. People with poor credit should be paying more than people with good credit. Credit shouldn't be overly easy to come by. People borrowing for mortgages that they couldn't afford was, after all, the main cause of the housing crisis.

    One of the factors that sparked the great depression was easy credit also.

    It's time individuals and government started living within their means, it seems to me.
    Meanwhile, we're scrambling to get the big three to start tracking and issuing FICA scores on pre paid debit cars, lol.

    So, no, sadly, that is NOT the direction we are headed.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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