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2009-11-14 — huliq.com
"A looming problem is that FHA loans from 2006 and 2007, which were often backed by down payments made by sellers, rather than the buyers, are more than 2x as likely to default as those where the buyer is fully responsible."
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Comments:
Bunk at 06:56 2009-11-15 said:
This idiot thinks that the main purpose of the FHA is to help poor people to purchase homes. That is the mentality that helped cause this crisis. FHA was created to promote home ownership by allowing qualified people to obtain mortgage. It was not created to help poor people buy homes. It was not intended to dilute lending standards. It is frightening to me that we still hear these arguments after all the harm that has been caused to the US by making loans to unqualified people. I don't know if this article was written because of stupidity or due to the greed of the real estate industry. Permalinkmattroberts at 01:43 2009-11-16 said:
Somehow we've evolved to the point where we believe that everyone should have a home, whether they can afford it or not. Not only is that flawed logic, it is the exact thinking that in large part got us to where we are today with the mortgage meltdown. It used to be that you had to scrimp and save for a 20% downpayment and then still qualify for the PITI. Now, we're at a place, where "poor" people should have homes. Well, if they are poor (and I truly emphathize with their situation), then they probably can't afford a home and all the never ending expenses that seem to pop up; expenses such as repairs that are not quoted to them when they buy a home. From a purely risk-based loan perspective, without any significant skin in the game (3.5% downpayment) is not enough, they are a bad credit risk. That is what got us into this mortgage meltdown...people buying homes at levels they couldn't afford. To those folks, including the author of this original post, would you lend your own money to folks with shaky credit and little to no skin in the game? Probably not, but if you are, put your money where your mouth is and start making private loans to these folks. You'll make a mint! Usually, the folks who suggest that everyone should own a home are really saying that everyone should own a home and those who can't should be subsidized by the government, which is to say those of us who have money. It is a pure "Robin Hood" mentality. Remember, home ownership is not a God given, nor constitutional right, nor is it something that wealthy people should subsidize for poor people. Look, life is tough and it is not always fair and sometimes you don't get everything you want. Maybe if we went back to a place where (unless you are mentally and/or physically incapacitated) you reap what you sow; you get what you earn. A friend was repeating a story he heard on Glenn Beck, of the the father with two sons, one made lots of money and the other made none. The father took money from the rich son and gave it to the poor soon to "even things out" and make it fair for both. Seems it got to the point where the rich son said "why work, it's only going to be taken away so that my quality of life will go down," and the other son said "why work, Dad keeps giving me money." Is this the kind of America we really want? Permalinkadd a comment | go to forum thread
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