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If At First You Fail Miserably & Blow Up The Financial System, Do It Again!

Tyler Durden's picture




 

Via Jim Quinn's The Burning Platform blog,

Having government entities provide low down payment mortgages to people who can’t afford to buy a house is always a good move.

Keynesians like Krugman approve wholeheartedly. The housing market will get a nice boost and the working taxpayers will fund the bad debt through Fannie and Freddie. You own Fannie and Freddie. Everyone wins.

In case you forgot, the closing costs to sell a house are usually 8% of the home price. So these home buyers are immediately 5% underwater when they move in.

Sometimes I can’t believe I live in a world this fucked up. And no one notices and no one cares.

Where are the Republicans we elected to stop this shit?

*  *  *

Guest Post by Anthony Sanders


Fannie and Freddie officially approve 3% down payment mortgages (for 1st time homebuyers and lower incomes)


Here we go again! Mortgage giants Fannie Mae and Freddie Mac have now officially approved 3% down payment mortgages.

According to Brena Swanson at Housing Wire,

“The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3% down. These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices,” FHFA Director Mel Watt said.

 

“To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness. In addition, the new offerings will also include homeownership counseling, which improves borrower performance. FHFA will monitor the ongoing performance of these loans,” Watt continued.

What are these compensating factors? Lower down payment mortgages required higher credit scores among other things. Also, the 3% down loans are intended only to first-time buyers, buyers who haven’t owned a home for at least a few years and those with lower incomes. Many of the loans will also require borrowers to undergo home-buyer counseling before making a purchase.

But will this work? Not unless the labor market increases substantially.

mbapinv

 

House price growth is slowing, but is still over 2x wage growth.

cswageF

 

Let’s hope low downpayment loans perform better than the last time!!!!!

 

 

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Tue, 12/09/2014 - 16:53 | 5534091 GFORCE
GFORCE's picture

Such a ridiculous world. Never mind; the economy will turn down bad after 2015 and these morons will reap all they sowed.

http://otdon.blogspot.co.uk/

Tue, 12/09/2014 - 16:56 | 5534095 SWRichmond
SWRichmond's picture

Think of the debt-slaves we will create when we blow this fucker up.  You need cash to sell your house.   Muahahahaha.

Tue, 12/09/2014 - 16:57 | 5534102 viahj
viahj's picture

add to this that they can have a soft 2nd to cover that 3% down payment and closing costs. 

Tue, 12/09/2014 - 17:06 | 5534138 NoDebt
NoDebt's picture

There is no way we're much more than a year from Payment Optional ARMs coming back on the scene again.

Tue, 12/09/2014 - 17:12 | 5534172 ZerOhead
ZerOhead's picture

The definition of insanity is doing the same thing over and over again and expecting a different result...

Tue, 12/09/2014 - 17:21 | 5534192 macholatte
macholatte's picture

The definition of insanity is doing the same thing over and over again and expecting a different result...

 

So would I NOT be insane if I went out and bought the most expensive house I could "qualify" for and then made no payments and simply waited for the place to go underwater and then "renogiated" my loan or waited for the next gubmint bail out of losers like me? Huh?

Or are the insane people the ones who pay their bills?

 

Tue, 12/09/2014 - 17:29 | 5534225 ZerOhead
ZerOhead's picture

As long as you don't use your own money buying it and live there 5 years without making a payment there is a strong argument to be made that you are not insane but merely taking advantage of an insane situation.

Kind of like the bankers that are going to make billions and then have to get bailed out again...

Tue, 12/09/2014 - 20:09 | 5534764 smlbizman
smlbizman's picture

what can go wrong with mel (1) watt at the helm....

Tue, 12/09/2014 - 17:38 | 5534270 MillionDollarBogus_
MillionDollarBogus_'s picture

You are suggesting that taking on debt you never intend to pay off is ok..??

Make a big mess and let everyone else clean it up..??

Your poor mother...

 

Tue, 12/09/2014 - 18:18 | 5534424 wrs1
wrs1's picture

The US govt is doing it.................

Tue, 12/09/2014 - 18:42 | 5534485 Bemused Observer
Bemused Observer's picture

And if the US govt jumped off the Brooklyn Bridge, I suppose you'd go too?

Tue, 12/09/2014 - 22:15 | 5535143 forexskin
forexskin's picture

uh, they have jumped - just havn't hit the water yet. since we're tied to them, why not have a glass of fine bubbly on the way down?

Tue, 12/09/2014 - 17:14 | 5534174 Pool Shark
Pool Shark's picture

 

 

And to think, there are some who still believe a hyperinflation is coming.

When this bubble bursts, there will be a huge deflationary collapse; everyone will be selling anything they can get their hands on to pay their bills...

[Think 2009 on steroids...]

Expect houses (and most other assets) to get very cheap...

 

 

Tue, 12/09/2014 - 17:26 | 5534226 nuubee
nuubee's picture

This is indeed what I'm waiting for. However, I expect that keeping all your cash in the banking system waiting for those asset prices to drop is still a bit too risky.

Tue, 12/09/2014 - 17:46 | 5534256 ZerOhead
ZerOhead's picture

After the bail-ins deflation will be followed by desperate money printing of such magnetude it will make Gideon Gono look like a fiscal conservative. Either that or the US economy dies and the bankers and financial elite along with them.

Think war and/or massive infrastructure spending.

"No interest rate normalization during my lifetime" ~ B.S. Bernanke 2014

"Buy gold" ~ Alan Greenspan 2014

"The poor should buy financial assets"  ~ Janet Yellen 2014

Tue, 12/09/2014 - 17:46 | 5534297 Pool Shark
Tue, 12/09/2014 - 17:59 | 5534307 ZerOhead
ZerOhead's picture

Ka-poom

Followed by death of the dollar, American Empire and it's consumption based economy into a multidecadal depression at best.

Get yourself some nice rural digs when the time is right.

Tue, 12/09/2014 - 20:27 | 5534817 AGuy
AGuy's picture

"When this bubble bursts, there will be a huge deflationary collapse; everyone will be selling anything they can get their hands on to pay their bills..."

Unlikely, There will be bigger bailouts, bigger than the 2008. To believe the bankers and the politicans won't do more bailout is downright insane. People will default on their bills first and beg for gov't handouts. The politicians will oblige with mortage, student loan, auto loans... bailouts as the did with home mortagages back in 2008. The Oil price collapse is going to cause long term problems for the economy. Energy companies having experienced the recent drop are going to be extremely reluctant to invest in future development and exploration. make of the Shale producers are likely to go bankrupt because of there huge debt load and no margins on new wells. Well probably have to wait until oil runs back up to 150/bbl and some gov't gaurentees before they start drilling again.

 

 

 

Tue, 12/09/2014 - 23:39 | 5535337 Tek Kinkreet
Tek Kinkreet's picture

That's how we bought a home with cash savings outright during the last turndown, no banksters! The place is worth 6x what we paid for it now, more if you bubble price it.

Tue, 12/09/2014 - 17:58 | 5534352 corporatewhore
corporatewhore's picture

I loved losing my home in 2010.  Please let me do it again!

Tue, 12/09/2014 - 19:30 | 5534633 BringOnTheAsteroid
BringOnTheAsteroid's picture

How'd you lose your home? 

Did you borrow more than you could affords to payback?

Then I begin to wonder, are the banks at any more fault than people who line up around the block to borrow massive amounts of money.

Why don't people go without, save money gradually and then borrow for a house when they have a 20-30% deposit. If you can't come up with the deposit you don't buy a house, simple.

We're all in it. We're all equally culpable. We'll all pay the heavy price.

Tue, 12/09/2014 - 23:49 | 5535351 Tek Kinkreet
Tek Kinkreet's picture

Most people bought what they could afford with their good jobs. The irresponsible ones lost their homes right away. The rest that fell after were good people that bought responsibly, but when the crash took the jobs, well...

If you ask me, the banksters are doing it on purpose. Notice they and their crony friends are the ones that benefit by buying up all the cheap real estate and assets when the bubble goes pop. It is a plant and harvest just like farming, only they are farming us. Looks like it's planting season again! The banks made out like bandits due to derivatives, insurance, loan, and mod scams.

Tue, 12/09/2014 - 17:09 | 5534153 AldousHuxley
AldousHuxley's picture

There is a good reason why Warren Buffet only put in $800k in a house.

 

House = asset tax...what do you think that 1.X% real estate tax is?

House = maintenance costs on individuals instead of pooling resources as you'd in high rises.....home depot founder is rich thanks to everyone buying tools sets instead of the repair man

 

House = insurance...

 

House = yard work...you want to spend your weekend cutting grass?

 

House = LIABILITY....real rich never count primary residency as part of their net worth.

 

House = investing in US ponzi scam.....park your money in the states so you can't escape to better worlds. With home equity and 401k, US government got all your networth wrapped up in US dollar denominated assets

 

House = perpetual bull....when market goes south, where is your short protection?

 

House = the primary source of wealth created by citizens to back the printing press. The mortgage you are paying is supported by your own damn labor for 30 prime working years.

 

 

Tue, 12/09/2014 - 17:13 | 5534162 NoDebt
NoDebt's picture

Yeah, it's a good thing that landlords don't pass any of those costs along to their tennants as part of the monthly rent.

The reason you purchase a huge house is because you have serious amounts of money to launder.  Taxes and running costs are almost irrelevant to the purchase decision.

Tue, 12/09/2014 - 21:27 | 5535001 AldousHuxley
AldousHuxley's picture

are you one of those "homeowners" with a mortgage who think they own the place?

 

for most people renting 1 bedroom and saving the difference in the market while enjoying the tax payer funded libraries and parks is better for the long haul rather than slaving away for house they can't afford.

 

landlord = risk premium

 

there is nothing inherently profitable as the owner versus consumer. you can pass down the cost all you want but when housing bubble bursts, renters will be able to choose market discounted rates and short homebuilder stocks versus a home "owner" stuck with underwater mortgages.

 

BUT most people should buy what they need anyway. Renting a bicycle $1/day is better than buying a Porsche on 30 year interest bearing credit and showing off to others how you are the car owner now.

 

PLUS REAL landlord is the US GOVERNMENT and her owners...the ones who appoint politicians.

Tue, 12/09/2014 - 23:35 | 5535324 Tek Kinkreet
Tek Kinkreet's picture

There are even some first time homebuyer's programs for low income that add up to 5% to the principle so they have 0% down payment. Same as before, sigh.

Tue, 12/09/2014 - 16:59 | 5534110 Rakshas
Rakshas's picture

...... remind me again what happened the last time some dumb fucker said let them eat cake........

Tue, 12/09/2014 - 21:28 | 5535007 AldousHuxley
AldousHuxley's picture

they ran out of cake

Tue, 12/09/2014 - 16:58 | 5534111 Usurious
Usurious's picture

we debt-slaved some folks.....

Tue, 12/09/2014 - 17:02 | 5534122 insanelysane
insanelysane's picture

but, but, but, but the real estate market is hot right now with inventory being bought the minute it becomes available.  (so we're told by the MSM)

Tue, 12/09/2014 - 17:15 | 5534171 AldousHuxley
AldousHuxley's picture

in subprime maybe.

 

in prime cream of the crop places with good public school districts, there is ZERO inventory.

 

You can build homes in the middle of nowhere all you want, but don't be surprised if your kids end up working for 3rd world workers with no college debt because they didn't waste their education on subjective arts and political propaganda.

Tue, 12/09/2014 - 19:05 | 5534548 plane jain
plane jain's picture

Yep. Took us awhile to find something. Buyers offering over asking, sellers avoiding FHA financed buyers, fair priced properties in good condition selling in less than a week.

Something like 70% of the school teachers in this district have a masters degree or better. My child is in the talented and gifted program with an excellent teacher and 9 more years of school to go. AFAIK there isn't any tax break for private school tuition payments.

Tue, 12/09/2014 - 21:40 | 5535040 AldousHuxley
AldousHuxley's picture

either pay premium for good schools or pay private tuition....that's the price middle class is paying to enjoy cheap oil and chinese made goods (since funds are diverted away from education quality into other tangible benefits)

 

and when your kid turns 18, college are waiting for you to garnish your wages for another 4 years and it usually is more than your annual mortgage payment.

 

Wait untili the kids enter grad school.

 

 

Tue, 12/09/2014 - 16:59 | 5534112 yrad
yrad's picture

I work in this industry and this is a non-story. FNMA and FDMC have been doing 3.5% down payment FHA loans since before 2008. So, they drop it .5% and it's a big story?

They also carry LIFE LONG PMI, it never drops off no matter the LTV.

Tue, 12/09/2014 - 17:03 | 5534127 insanelysane
insanelysane's picture

I loved paying PMI on my first house!

Tue, 12/09/2014 - 17:10 | 5534155 Bollixed
Bollixed's picture

LIFE LONG PMI

Just think of how many 66" big screen TV's you could buy with that over the life of the loan.

Brings tears to my eyes...

/s

Tue, 12/09/2014 - 17:14 | 5534179 Jim Quinn
Jim Quinn's picture

Non-Story because the FHA has been doing this so succesfully. Right shill?

October 2013

Today, the House Financial Services Committee held a hearing on the Federal Housing Administration’s (FHA) first-ever taxpayer-funded bailout approximately $1.7 billion. Despite long-standing concerns about its solvency, the FHA has not taken the necessary steps to mitigate its losses. FHA currently has several means at its disposal to minimize losses to its insurance fund, yet the FHA has not fully utilized these tools. As a result, American taxpayers are now on the hook for a $1.7 billion bailout.

 

Wed, 12/10/2014 - 00:40 | 5535438 yrad
yrad's picture

Hey angerboy. Don't blame the poor fuck who got kicked out of his home. Blame the banksters who took their loan, chopped it up into pretty pieces and sold the trash to Chinese jerkoffs. Otherwise, it would have been just another smuck who walked away from their mortgage, a dime a dozen and contained!

Tue, 12/09/2014 - 17:27 | 5534234 Thom_333
Thom_333's picture

There´s plenty more of that where it came from. Finance and banksters that is.

Tue, 12/09/2014 - 18:06 | 5534390 Jack Burton
Jack Burton's picture

" Global banks’ international claims on the nonbank private sector – the sum of cross-border lending and foreign-currency loans extended by their local affiliates – have topped $9.5 trillion"

Indeed, that much debt to be paid off in rising dollars! Dollars that will need to be obtained by trade, i.e. exports. Jeusus, this will be interesting to say the least.

Tue, 12/09/2014 - 18:15 | 5534415 Jack Burton
Jack Burton's picture

I heard a good analysis of the currency devaluation game, driven by a need to export nations out of their dollar debt situations, and obtain some domestic growth. Since most all nations are playing, or told by the IMF that they need to play this devauation and export game, one bright young spark ased the obvious question. "To Whom will the exports go and who will buy them all?" With each nation told that they need to export to cope with fiscal debt problems and lack of growth, where is the fucking market for all these EXPORTS? Mars? Jupiter?

I know one thing, a nation with 150 million people eager to buy imports and many sporting the real foreign exchange to pay for the imports, i.e. Russia, have been black balled out of Europe and thus most all EU exports to Russia are nearing a stand still.

This is a hopeless fucking game. The game of export, if everyone is playing it, who can get a net balance of trade surplus? How do they perform that trick. With all nations told to cut wages, and devalue currencies, the domestic consumption market weakens in said nation, and how in hell do they buy foreign goods too, since wage reductions are part of IMF demands to cure sick economies. If I am right, the IMF is a gang of fucking Banker cunts, who are just stripping as much national wealth as they can before the nations they lend to collapse in a pile of dent shit.

Tue, 12/09/2014 - 21:47 | 5535061 AldousHuxley
AldousHuxley's picture

defer consumption and buy assets. you will regain hope. let other blind consumers perish.

Tue, 12/09/2014 - 16:56 | 5534097 Seasmoke
Seasmoke's picture

Q. How do you steal from someone who had no money ?

 

A. Just give it to them. 

Tue, 12/09/2014 - 16:55 | 5534098 NoVa
NoVa's picture

Happy Days Are Here Again!

 

Tue, 12/09/2014 - 16:57 | 5534103 p00k1e
p00k1e's picture

The ‘problem’ for banking is we’ve got the Internet and can reference these scams from the previous cycle.

‘90 days same as cash’ for down payments soon…. 

  

Tue, 12/09/2014 - 16:57 | 5534106 Payne
Payne's picture

Too little, too late, housing is headed down again this will do little to stem the tide.

Tue, 12/09/2014 - 17:12 | 5534175 NoVa
NoVa's picture

that is why they have aggressivly, abruptly change the product offerings.  

they'll take a 1 to 3% deliq rate, so the other 97 to 99% performing loans can continue the real estate ladder.  If they don't bring in 1st time home-buyers now, who will be in the home ownership market in 5 years when boomers are looking to sell out????

 

sarc off / This policy helps many different social-economic segments of society as well as economic drivers.  I I disagree with the GSE actions taken because there is no equity capital behind them.

If Wells, Chase, other big lenders were to pursue such products - more market power to them.  Bottom line problem is .gov still has both hands up in the market.

NoVa 

Tue, 12/09/2014 - 16:59 | 5534108 Panic Mode
Panic Mode's picture

This time is different. STUPID!

Tue, 12/09/2014 - 16:59 | 5534113 Frozen
Frozen's picture

The greed that demanded luxury and living like a king has made prohibitive keeping a home.

Tue, 12/09/2014 - 17:00 | 5534115 astoriajoe
astoriajoe's picture

To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness.

 

BWAAAAHHHHAAAAA

Tue, 12/09/2014 - 17:07 | 5534128 NoDebt
NoDebt's picture

Well, when you say it like THAT it sounds all bad and stuff.

Tue, 12/09/2014 - 17:02 | 5534116 NoDebt
NoDebt's picture

"Many of the loans will also require borrowers to undergo home-buyer counseling before making a purchase."

Yeah, here, let me help you with that:  

ARE YOU OUT OF YOUR FUCKING MIND?!?!?!  WHAT IN THE HELL IS SO IMPORTANT ABOUT OWNING YOUR HOME THAT YOU ARE WILLING TO SIGN UP FOR A REALLY REALLY BAD MORTGAGE TO SATISFY THAT CRAVING??  I SWEAR TO GOD ALMIGHTY THAT RENTING FOR A WHILE UNTIL YOU CAN COME UP WITH A LARGER DOWN-PAYMENT WILL BE A WAY WAY BETTER WAY TO GO IN THE LONG RUN.  DO YOU UNDERSTAND THE WORDS THAT ARE COMING OUT OF MY MOUTH RIGHT NOW??  ARE YOU COMPREHENDING ANY OF THIS SHIT!?!?!

Ok, sign here, here..... and here.  Congratulations, you're approved.

 

Tue, 12/09/2014 - 17:11 | 5534161 p00k1e
p00k1e's picture

Open a ‘home-buyer counseling’ center before the big rush.

  

Tue, 12/09/2014 - 17:12 | 5534164 Bollixed
Bollixed's picture

I think they have to sign it before they can see what's in it.

Tue, 12/09/2014 - 17:18 | 5534203 froze25
froze25's picture

Kind of like making 2 extra payments a year applied to princible you cut your morgage time in half.

Tue, 12/09/2014 - 17:51 | 5534321 corporatewhore
corporatewhore's picture

this counseling sounds like visiting with the good priest when you marry a non catholic and have to sign your life away or BURN IN HELL FOR ALL ETERNITY, promising to bring up any children as roman catholic.

Tue, 12/09/2014 - 18:27 | 5534441 Bemused Observer
Bemused Observer's picture

There should be a form in amongst all the other mortgage forms with this exact statement, complete with all caps. Buyers should be required to sign this form.

But I wonder if people might not feel a need for home ownership going forward. The ones who do probably already have a house, and the new 'buyers' have gotten a good look at all the hassle and grief of being stuck with a huge, illiquid, and unaffordable asset.

People don't seem to have a pressing NEED to buy right now. And if they've been paying any attention, they're aware that the housing market is inflated. They're waiting for prices to tank, not for better deals on bloated mortgages.

But we'll see...if there's one thing I've learned, it's that people sure are funny when it comes to money...

Tue, 12/09/2014 - 20:13 | 5534772 Harbanger
Harbanger's picture

"... RENTING FOR A WHILE UNTIL YOU CAN COME UP WITH A LARGER DOWN-PAYMENT WILL BE A WAY WAY BETTER WAY TO GO IN THE LONG RUN."

It made sense in the past but now it depends on which loses value first, the dollar or the property you bought.  With the current low interest rates it only makes sense to save more cash and wait if you expect deflation and a strong currency.  RE will still protect you in hyperinflation vs having saved the cash value of the house.

Tue, 12/09/2014 - 17:01 | 5534117 qsteak
qsteak's picture

How long was it from when Fannie went to 5% mortgages before the whole financial world exploded in 2008?

Tue, 12/09/2014 - 17:05 | 5534135 NoVa
NoVa's picture

Low Down loans started in 2003 or so.  I saw the crash in 2006 and left Mortgage Banking industry in 2006.  When I left, my exit interview was like - the buffalo herd is heading towards the cliff, Thelma & Louise style.

 

Tue, 12/09/2014 - 17:17 | 5534193 Bollixed
Bollixed's picture

I got a 3% down loan in 1996. Plus PMI. Remodeled and refied to get out from under the PMI and the higher rate. My neighbors were very happy to see that house brought back to decent standards.

Tue, 12/09/2014 - 17:54 | 5534265 cowdiddly
cowdiddly's picture

I got a 22% down 15yr mtg  loan in Oct 2007, made extra pmts for the first 3 years, never refinanced even at 6% interest although I did try twice and all I hear was excuses.. I have 46 pmts left for about $5300 in total interest. Now that the remaining interest equals about the closing costs to refi which would amount to paying it upfront and start a new loan I get an offter to refi about once a month. now they will be getting the bare minimum payment or I might throw it all on credit cards late  next year when I get  a couple more of those free interest for 18 month  balance transfer  at 3% offers.

Then if im in a good mood, I won't send them back their unpaid cards. fooking bastiges.

Tue, 12/09/2014 - 17:58 | 5534350 Bollixed
Bollixed's picture

Tell you what I wish I had done...taken the $80k in cash I put down on the property I bought in 2005 and bought APPL.

I could afford a Senete seat today...

Tue, 12/09/2014 - 18:14 | 5534393 cowdiddly
cowdiddly's picture

Looking back, my biggest mistake was not buying Microsoft @ <2 dollars when I seen Windows 3.1 come out and knew that was it. If I would have bought stock with the money instead of the shitty software and upgrades since DOS 2.0 and about 10 splits latter Steve Ballmer or the new Indian dude would be buttering my balls with lotion today.

You only live twice Bond, James Bond

Tue, 12/09/2014 - 18:23 | 5534418 Bollixed
Bollixed's picture

Lol, that's a funny description of the outcome.

My biggest mistake was clearly my first wife.

Wed, 12/10/2014 - 00:15 | 5535396 Tek Kinkreet
Tek Kinkreet's picture

yup, 2003ish

Tue, 12/09/2014 - 17:00 | 5534118 NoVa
NoVa's picture

This is great news - and well thought out by policy makers.  

The ladder to real estate riches and american dreams can resume!  Further, the GSEs (Fannie / Freddie / Ginne) have more than sufficent equity capital to pay for future potential credit losses, just like last time.  Only this time is much safer becuase the FHFA and Treasury has already sucked all cash & non-cash profits out of the GSEs for the last 4 years.

 

Bullish!

 

Tue, 12/09/2014 - 17:03 | 5534119 falak pema
falak pema's picture

These two WS specialists don't live in the same world; one of them is from Mars 

http://www.businessinsider.com/oppenheimer-market-strategy-dec-2014-2014-12

Is it Oppenheimer's John Stolzfus or is it Jim Quinn ?

Tue, 12/09/2014 - 17:03 | 5534124 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

BTFATH

Needed to goose the incentive for the proles to go all-in right at the tippy top.  This will end well.

Tue, 12/09/2014 - 17:02 | 5534126 22winmag
22winmag's picture

And the pimps at the National Association of Realtors say "doo do doo do doo do do doo..."

Tue, 12/09/2014 - 17:07 | 5534142 Quantum Nucleonics
Quantum Nucleonics's picture

One of the reasons that Harry Reid blew up the Senate rules was to put Mel Watts in place to do this.  Mission accomplished.  The scary thing is that these people really believe that Fannie and Freddie's doggy lending practices didn't have anything at all to do with the last housing bubble.  It was all those dirty stinking f%cking bankers.  To some extent, ZH perpetuates that notion.

Tue, 12/09/2014 - 17:08 | 5534152 Dr. Engali
Dr. Engali's picture

No worries. The workers in part time U.S.A can't afford the 3% down as it is. Sounds like we need a new program.....Obamadownpayment.

Tue, 12/09/2014 - 18:09 | 5534402 lakecity55
lakecity55's picture

"Obolaloans."

Tue, 12/09/2014 - 17:17 | 5534188 Peter Pan
Peter Pan's picture

Are the house prices inflated?
If so the 3% is BS.

Tue, 12/09/2014 - 17:17 | 5534189 nuubee
nuubee's picture

Sounds like a good time to go 3% down on a boat loan. I'll go liveaboard and claim it as a first-time homeowner. Might even pull out some 401K money to make the downpayment. Sure, it sounds crazy...

Tue, 12/09/2014 - 17:20 | 5534205 Berspankme
Berspankme's picture

Be careful. Last time I was boating I lost a lot of shiny metals

Tue, 12/09/2014 - 17:22 | 5534214 nuubee
nuubee's picture

That's horrible, I guess King Poseidon is a significant counterparty risk in those cases.

Tue, 12/09/2014 - 17:17 | 5534194 Pumpkin
Pumpkin's picture

Fail??  It only looks like a fail from your perspective.  Those who engineer these things do not share your perspective.

Tue, 12/09/2014 - 17:24 | 5534222 Bemused Observer
Bemused Observer's picture

Tell you what, write another article a year from now, and tell us how things turned out...
I wouldn't be at all surprised if the housing market somehow fails to recover, in spite of this nice new inducement.

Having to put down less to buy an over-inflated piece of crap isn't going to lure in buyers with unsteady or declining incomes. That only works when you allow the masses the illusion of increasing wealth, which apparently they won't. THEIR vision of the perfect economy features inflating asset prices, but declining labor costs, which is like saying you want sunshine without light or heat. Incompatible.

Bottom line, it won't work.

Tue, 12/09/2014 - 17:28 | 5534235 Theta_Burn
Theta_Burn's picture

Can we que up that "who wants to pay the deadbeats mortgage clip" that Santelli made so long ago?

You see Rick we deadbeats are the grease required to keep the shit show on the road.

I bet a million mortgage defaults on red...

Tue, 12/09/2014 - 17:39 | 5534271 Roger Shermanator
Roger Shermanator's picture

"Also, the 3% down loans are intended only to first-time buyers, buyers who haven’t owned a home for at least a few years and those with lower incomes."

Oh... you mean those who haven't owned a home in the last 6-7 years?  Hmm, I wonder what happened 6-7 years ago... meh, best not to think about that and just go buy some more stawks.

Tue, 12/09/2014 - 17:44 | 5534288 Joebloinvestor
Joebloinvestor's picture

Should be a qualifier attached about "and hasn't defaulted".

Tue, 12/09/2014 - 17:47 | 5534301 corporatewhore
corporatewhore's picture

How about discounting the asking price of these fine homes by the more than 50% overvaluation and negatively affecting all those real estate whore agents livelihoods and those who survived the 2007 "great recession" (bullshit) which continues to this fucking day.

Tue, 12/09/2014 - 17:42 | 5534281 Joebloinvestor
Joebloinvestor's picture

They can't lead with a LIE about employment, so they use home ownership.

I will be surprised when and if they ever start using common sense.

Tue, 12/09/2014 - 17:50 | 5534316 FreeNewEnergy
FreeNewEnergy's picture

I am enjoying this shitshow immensely while still basking in the afterglow of 65 months (yes, that's 5 years and five months) of rent-and-tax-free living courtesy of Bank of America. Ta-da. Yes, I'm a deadbeat, but I'm an inherited deadbeat. My father died in July 2009, paid 2 years on his 20-year commitment to Cuntrywide and then BAC, but after taking a good look at his loan docs, I said, "no fucking way, Jose" and promptly defaulted.

Bank went for foreclosure in March 2010, I sued them back in June 2013, since then we've been "negotiating" over a "cash-for-keys" kind of deal, but, but, but, it gets even better. My greedy sister (also have a not-so-greedy brother who's also an heir) hired a lawyer to review the deal, and he's putting the kibosh on it, for some reason, and won't talk to me, since I'm only the executor of the estate. Of course, my sister swears she's only trying to protect her "interests."

So, just got another adjournment from the court until Feb. 25, 2015, at which point I will resume my lawsuit and counter their latest Hail Mary, a Motion for Summary Judgement. Laughing my ass off over that, as summary judgement precludes that there are no objections and no arguable issues. My fraud lawsuit against the bank only delineated 33 points of arguable matter.

Then there's the violation of consent decrees...

So, I find it kind of humorous that Fannie/Freddy are restarting the Ponzi while the last one is still in the works.

This should turn out well. I'm actually thinking I should contact Guiness about setting the world's record for living in a foreclosed home. I think I may have another two good years to go.

Tue, 12/09/2014 - 17:55 | 5534338 corporatewhore
corporatewhore's picture

be grateful you are appearing before a judge who may  know the law or in a state where there is some consumer protection.  Most of those who lost their homes in the MERS debacle never stood a chance to fight the gross miscarriage of real estate law and the whoring of our legal system.

Good luck and fight the good fight!

Tue, 12/09/2014 - 18:14 | 5534410 FreeNewEnergy
FreeNewEnergy's picture

Thanks, it's been fun, doing it all pro se, but I'm in upstate NY, and the judges are sort of OK. The bank is so upside down and there are so many issues of fact which substantiate my claims of fraud, they're likely to just puke it up and sign over the deed at some point.

Let's put it this way: they've gone through three lawyers so far and paid over $20K in taxes (I, and Emperor Cuomo thank you) on a house assessed at $82K (they priced it at $116K in 2007 - therein part of the fraud), which is probably only worth $60K on the market, if that. So, they're kind of fucked. Plus, I checked all the documents and ALL, EVERY ONE of the signatures are either rubber stamped or outright (robosigned) frauds.

And, we haven't even gotten to the discovery phase yet. Fun times for everyone!

Tue, 12/09/2014 - 18:10 | 5534396 q99x2
q99x2's picture

How long does it take for them to kick you out? That's important to know when making a decision on whether to rent or to buy.

Tue, 12/09/2014 - 18:46 | 5534499 KittyStix
KittyStix's picture

"Pay down on real estate" 

That is so passe. 

ANY good negotiator "should" be able to walk into close and walk out with money and nothing added to a mortgage.

We walked in with a $7 grand check and walked out with a $7 grand check. NO PMI, NO FEES, NO Down. That was 10 years ago and will be paid off in 4 more years.

Boom! 

Tue, 12/09/2014 - 19:15 | 5534579 Ewtman
Ewtman's picture

The housing market has not been recovering and, as the article purports, a new bubble is being created that look sjust like the old bubble...

 

http://www.globaldeflationnews.com/inflation-vs-deflation-part-3how-the-...

 

Tue, 12/09/2014 - 19:28 | 5534626 honestann
honestann's picture

The people who need counseling are the honest, ethical, productive, benevolent human beings who see all this fraud, yet instead of getting their butts outta dodge, stay in the USSA and end up being the ones who ultimately pay for all this fraud.

Hey, if you are one of the few honest, ethical, productive, benevolent human beings still standing, wake up and drag your butt outta dodge!  You will be so glad you did, and very soon at that.

Tue, 12/09/2014 - 22:05 | 5535110 kelley805
kelley805's picture

Honest Ann

Do you live in the US or did you already get out of dodge?

 

Wed, 12/10/2014 - 01:08 | 5535482 honestann
honestann's picture

I left about 3 years ago, spent about 90% of my life savings to create a self-sufficient place to live in the extreme boonies (in the southern hemisphere), about 125km from the nearest human being and about 200km from any population of hundreds.

My place cannot be reached by land vehicle, which is no problem because I bought a tiny little high-tech airplane that lets me fly anywhere I want to go, gets about 70mpg at economy speed (~240kph), only needs 80 meters of straightaway to takeoff or land, and can fly over 4000km non-stop.

It's a great life.  I only see human beings once every month or three when I fly to "town" to pick up supplies and anything I ordered from afar.  Or when I take a long trip somewhere special (always somewhere with sparse population).

I know not everyone loves solitude like I do, but... people really do have too great a tolerance for living the crappy life, and too little tolerance for anything different, no matter how wonderful.

Wed, 12/10/2014 - 01:44 | 5535536 Anusocracy
Anusocracy's picture

You did what I dreamed of.

Except for the flying.

Tue, 12/09/2014 - 19:55 | 5534718 pakled
pakled's picture

"And no one notices and no one cares"

 

I care.

Tue, 12/09/2014 - 20:26 | 5534808 Clesthenes
Clesthenes's picture

“Do it again!”

Right on target.

It’s really business as usual: sucker people into home ownership with unrealistic down payments; inflate RE prices 100%-200% (it used to be 10%-30%) with low interest rates induced by the Fed; after 2-3 years, jack up rates by a factor of 2 or 3; and those sucker get whip-lashed out of their homes and are saddled with a huge debt or ruined credit.

 

My advice: this is a very bad time to buy RE.  Wait for the Fed to raise rates; watch the market crash; then you’ll be able to buy RE at 20%-50% current prices. 

Tue, 12/09/2014 - 21:50 | 5535064 bmr22
bmr22's picture

Working tax payers now that is funny. Working where McD Spawl-Mart the local gas and go. Too funny

Tue, 12/09/2014 - 22:19 | 5535154 Tom in AZ
Tom in AZ's picture

Why don't you whine about the scam of getting 8 f*cking % for closing costs for doing esentially nothing, including register the sale except to that other fraud, MERS?

Wed, 12/10/2014 - 00:33 | 5535368 Tek Kinkreet
Tek Kinkreet's picture

Gotta love that corporate fascism. It's a plant and harvest just like farming, only they are farming us. Looks like it's planting season again!

The banksters who run the government are doing it on purpose. Notice they and their crony friends are the ones that benefit by buying up all the cheap real estate and assets when the bubble goes pop. The banks made out like bandits due to derivatives, insurance, loan, and mod scams.

And we will sit through it and do nothing while they rape us and our future...again. Dracarys already!!!

Wed, 12/10/2014 - 00:19 | 5535402 theyjustcantstop
theyjustcantstop's picture

those newly americanized need houses also.

Wed, 12/10/2014 - 02:19 | 5535578 noben
noben's picture

Well, with falling gold and oil prices, SOMETHING has to mop up all that fiat liquidity sloshing around the place.

Might as well be RE.  That way, when TSHTF, the sheep can be fleeced one more time and get their homes repo'd.  In the meantime, the FIRE industry gets to stay on the Merry-go-Round, keep their jobs and bonuses.  Yipee-kai-yeah!

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