This page has been archived and commenting is disabled.
Freddie Mac Announces 95LTV loans, Re-bubble – With This Option You Too Can Join the Underwater Club In As Little As Three Months!!!
This is part one of my update on residential real estate mortgages,
whose credit conditions have seen a marked improvement over the past
year. Of course (yes, you know there is always a but), I believe the
improvement is the result of the rampant government intervention in the
mortgage markets. As we shall see in part two for this update, even with
rampant intervention some of the major mortgage institutions are so
sick as to appear to be beyond mere assistance. Brace yourself for
Financial Meltdown 2.0, open source edition.
Is it really a Housing Double Dip if Conditions Never Stopped Getting Worse?
Many analysts have speculated housing would reenter a “double dip”
courtesy of falling home prices, decreasing home sales, increasing
housing inventory, and other issues that have not been resolved since
the collapse of the housing market began nearly three years ago.
Inevitably, housing policy at the federal level has completely failed to
support any regeneration of demand.
Mortgage Rates Can’t Find Rock Bottom: WSJ
- The Freddie Mac survey of 30 year mortgage rates has shown new record lows in rates for 11 straight weeks
- 15, 10, and 5 year rates have also continued their free fall as employment data fails to ease fear in the housing market
Figure 1: Courtesy of Freddie Mac
Figure 2: Courtesy of the Kansas City Federal Reserve Branch
Figure 3: Courtesy of the National Association of Realtors
Housing Prices Climb amid Falling Home Sales (the government’s hidden bid at work): CBS
- Foreclosures continue to increase, July home sales fell by
27%, employment conditions are not getting better, and home prices found
a way to rise 7% - Robert Shiller claims the San Francisco market is “booming” after
climbing 21% since 2009 (but don’t ask about the record drops in 2008) - If you are wondering where your unemployed neighbor is spending all
of his free time, check and see if there is a distressed homeowners
convention in town
Figure 4: Courtesy of the National Association of Realtors
Federal Reserve Still Watching Foreclosure Data: International Market News
- Average property vacancies have increased from 114 days in 2006 to 954 days in 2010
- Data is positively skewed thanks for foreclosure
forgiveness programs, so when/if “owners” are kicked out or leave their
underwater mortgages, the “vacancy turnover” will rise considerably - Current homeowners should be very concerned about the effects on
their property values as extended vacancies pent up seller demand and
ramping foreclosure inventory drive neighborhood home values lower
One Last Shot at Housing Stimulus: Mortgage News Daily
- Freddie Mac has announced it will allow refinancing at the record low rates under current conditions at up to 95% LTV
- Similar programs have proven to be ineffective, and the 95% LTV perk will not be accessible for debtors already underwater (and if you take the 95% loan, you can join the underwater homeowners in as little as 3 months in many locations!)
- New home financing only blows a larger bubble, as overall housing (over)supply continues to haunt the real estate market
Figure 5: Courtesy of the National Association of Realtors
Previous rants on this topic:
- A New Spin on Bank Fraud: Banks Defrauding Their Investors, Auditors and Regulators, Which Also Helps Delinquent Mortgagees
- As I Made Very Clear In March, US Housing Has a Way to Fall
- Developing Implications on Loan Accounting Law: Mark to Market, Mark to Model, or Mark to Market Crash?
- Recent Mortgage Loss and Credit Performance Commentary
- Is the Threat to the Banks Over? Implied Volatility Says So
- advertisements -
Dr. Housing Bubble adds to the topic:
The $9.1 trillion bailout price tag – American households have lost $6.8 trillion in residential real estate values while mortgage debt has increased. The banking Stockholm Syndrome.
95 % never went away. It has been shown as available on all the rate sheets throughout the downturn.
Or course meeting the FICO & DTI requirements and getting the appraisal to come in where it needs to be is the big challenge now isn't it?
Notes from the field -- a Savannah RE investor tried the HomePath program and found the assholes at Fannie expected to get 2007 prices for properties that were in many cases just wrecks. These tools are living in fantasy land, but I'm sure there is a willing pool of idiots and rubes who will buy overpriced properties under this fine program.
Priceless!
Dupe due to "guru meditation".
Reggie: One thing that might be worth mentioning: those folks who got suckered in by the April tax credit have gotten hit by a triple whammy, generally. First, housing prices dipped after April. Plus, they could've gotten a cheaper loan. And third, they can't refinance, because lenders like 6 months of "seasoning" before they'll do a refi. I know a few people who bought back then, and are pissed that they can't refinance.
Actually I am not sure why anyone would even use that program? There is another program here http://www.freddiemac.com/sell/factsheets/relief_refi.html and you can go up to 125% LTV on your first.
In my case, I am going to refi my first at a lower rate and I am probably at 97% according to the Freddie auto-estimator (which is suprisingly low for what homes have been going for in my neighborhood). I have a second on top and that doesn't enter into the equation.
So the program is useful to get a better rate / lower monthly payments which is also useful if you think that cash is a better thing to have in hand right now (the deflation before the inflation)
I have a family and have to live somewhere, even if I wanted to move, I can't so why not have a lower monthly outlay that sets me up to be better able to rent it out should I be forced to move in the future.
Of course if I ever loose my job... well, same story as 2005 and I understand that is the point of the article, that the gov shouldn't be underwriting risky loans.
I think you're on to something here. I would say "the interesting part are for the folks who can't pay their taxes and some guy comes along and buys the property for $5,000 bucks." imagine that: a $500,000 home bought for $5,000! you might think "Uncle Sam thinks this is discrimination" or something like that! Of course this story has been very cleverly reported on by a guy by the name of Felix Salmon. Those "making this trade" were more than happy to admit to it. I'm sorry...did someone mention something about "too much spending in Washington" and "who's going to pay for that"?
LIKE YOU SAID REGGIE.... that's y i tell www.boombustblog.com is the place to go for best investment research //..nice to see ur post..here...
Existing home sales are stalled for a lot of reasons, not the least of which is the fact that so many are underwater. Once they find out they can't sell for enough money, the sign goes down and that's it.
It's a death trap, it's a suicide rap.
Just like you said it would be, Reggie.
Just like you said it would be, Reggie.
LOL like the lender is actually going to tell you if your loan is owned by Freddie or Fannie
Who even knows if these links are accurate either? They all lie to your face because of their greed. But good luck if you are checking.
Wow, one of the words for my captcha was "Pillaging". LMAO
Swell - let's re-live 2008-2010 every 3-years for the rest of my natural life because we can't let real estate depress to reasonable price levels. Ever.
Awesome.
"whose credit conditions have seen a marked improvement over the past year"
"The Freddie Mac survey of 30 year mortgage rates has shown new record lows in rates for 11 straight weeks."
So are are you still forecasting a big fall in real estate? Things still seem to be bubbling along here in Australia, without a great amount of help from the RBA, not saying they aren't inflating the currency though.
@AUD
So life is good in China's coal mine, aka Australia? Nothing like being in control of your own destiny, aye mate?
I'll vote for the guy who swears to put them and AIG into runoff. I don't care if he has a predilection for farm animals.
And if you want to re-fi a never late Freddie owned mortgage with an 800 score and you have a couple hundred K of equity with no pullout, you get banged for a couple grand in fees. Fuckerz.
These people need to have moral hazard shoved right up their asses.
Locked in at 3.75%, close either this week or next.
And yeah, I got about 2 grand in upfront fees and probably another 2 grand in YSP after they sell the loan to Freddie or Fannie that they'll keep but that's their business.
They don't work for free. Although it'd be sweet if they did.
+4.45%
i locked in at 4.25% .... should be done in a few weeks
Somebody wouldn't be too upset about a good long strech of inflation so long as it doesn't go hyper.
buy buy buy beyatches
No no, DO NOT ReFi if you have a good plan. First, ask the bank to see the original paperwork. No paperwork, stop paying, enjoy the 'free' home. If it is held by MERS you may be able to 'own' your home for free once again.
If you (stupidly) refi without checking to see original paperwork or seeing if MERS is involved then you just voluntarily gave the banksters have new paperwork pwning you and your home until it is paid off.
In any event, make sure you have a lawyer and/or up to defending yourself (pro-se) in court.
They will try to foreclose OR sue you for a deficeincy.
If they simply say "oops, you're right, we're going away now", I want to know the name of the bank!
Right on!
How noble...the guy with truth in his name out to game the system. Nevermind that you know you owe the money right......
No, this is BS! I say default if you can. We have a system that has gamed us over and over and over. We have lost 96.3% purchasing power from our dollar. Rumblefish, I don't mean to be rude but this line of thinking is so middle-class....do what appears to be right even in the fact of the obvious theft. Banks and Corporationd legally default all the time. Why is it so wrong to take advantage of the situation - they are doing it to us....every damn day.
We must learn from our Masters. Only by following their illustrious leadership and the example they so benevolently has set for us all - in every way - can we become as exalted as they are: Untainted by plebiean work, Above the Law, The employers of vast numbers of serfs and slaves, Free of any obligation to anyone. Exalted!
Priceless!
Honk if I'm paying your mortgage.
http://www.youtube.com/watch?v=GidBfE5JU3s
Courtesy of Sponge Bob:
http://www.youtube.com/watch?v=vdED3rVgIu4
Bernanke's cell phone ring tone?