President Obama Explains How FHA's 3%-Down Mortgages Are Great For America - Live Feed

Tyler Durden's picture

Will we never learn? "Helping more folks in Phoenix realize the American Dream and own their own home."


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As we noted previously...

When we commented on Mel Watt's Einsteinianly-insane plans to reform FHFA, allowing bad creditors to buy houses (again) with only 3% down-payments (again), we expected nothing but echoes as the "it's everyone's 'right' to own a home"-meme gets played out for all to see in this goldfish-like societal memory that has entirely lobotomized the actions (and impact) of when this idiocy was trued before. However, a funny thing happened this week... called an 'election'. And The Republicans have been quick to take note of Obama-appointee Mel Watt's (replacing acting director Ed Demarco - who had some less-politik plans for real reform) plans with House Financial Services Committee Chairman Jeb Hensarling exclaiming he was "extremely concerned," about Watt's "efforts to force taxpayers to back high-risk mortgages with ultra-low down payments," concluding this plan "must be rejected."


Excerpts from Mel Watt's remarks...

Demand in today’s market is also limited by former homeowners who found themselves unable to keep up with their mortgage payments during the financial crisis, including many who lost their jobs during the recession or faced reductions in their income.  Many of these individuals not only lost their homes, but also seriously damaged their credit.  Many filed for bankruptcy.  Although some of them may be back on their feet in terms of income, their impaired credit records constrain their ability to return to homeownership. 


A less quantifiable factor on demand is the psychological impact of the housing crisis across the country.  Many people watched their friends or loved ones lose their homes or suffer financial hardship in the housing crisis, and this has deterred them from entering the homeownership market. 


Bottom line, there is no lack of rational explanations for why demand for homeownership is down, and these explanations will continue to change and evolve in the months and years ahead.  While things will not change overnight, it is my hope that many creditworthy individuals and families who are currently renters – but have the ability to pay a mortgage and become homeowners – will have the opportunity to pursue homeownership and will decide to do so.


A shift in this direction will not only be beneficial for our economy and overall housing market, but homeownership and paying down a mortgage remains a way that many individuals and families can save and build and retain wealth over time




the fact that home prices are still low in many locations, and the fact that interest rates are low, now is a great time for realtors to be actively encouraging their customers who can afford it to become homeowners.


I also announced recently that the Enterprises are working to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97 percent.  As I said earlier, there are creditworthy borrowers in today’s market who have the income to afford monthly mortgage payments but do not have the money to make a large down payment and pay closing costs.  Purchase guidelines that allow for 3 percent down payments will provide an opportunity for access to credit for some of these borrowers.

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And here is Hensarling's terse response...

House Financial Services Committee Chairman Jeb Hensarling Friday criticized Federal Housing Finance Agency Director Mel Watt for supporting a plan that alters some housing finance industry lending standards.


In a speech Friday, Watt said Fannie Mae and Freddie Mac will seek to back loans with down payments as low as 3%.


"I am extremely concerned about Director Watt's efforts to force taxpayers to back high-risk mortgages with ultra-low down payments as little as 3%," Hensarling said in a statement.


"Such loans are inherently risky because the borrower has almost no financial cushion against a personal or economic downturn, vastly increasing the likelihood they will walk away from the loan once it gets significantly underwater," he added.


Hensarling continued to assail Fannie Mae and Freddie Mac as poorly functioning relics of an earlier age in mortgage finance.


"Since their spectacular collapse in 2008, Fannie Mae and Freddie Mac have continued to exist only through the massive financial support of taxpayers and a strict focus on sound underwriting. To abandon that focus now is an invitation by government for industry to return slipshod and dangerous practices that caused the mortgage meltdown in the first place and wrecked our economy," he said.


Hensarling said the chief statutory obligation of the FHFA is to ensure the safety and soundness of the Fannie Mae and Freddie Mac.


"Clearly, this initiative is directly contrary to that mission, and must be rejected," Hensarling said.

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Meanwhile, for all of 2014, Greater Las Vegas Association of Realtors reported that 36,550 total properties were sold through its MLS. Lynam noted that was the lowest number of sales in at least six years, down from 47,685 sales in 2009; 44,045 in 2010; 48,798 in 2011; 45,698 in 2012; and 41,477 in 2013

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Welcome to the new old normal 'Murica... buy those homes... lever up... spend the HELOC... die a debt serf...

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jcaz's picture

...He can't even spell FHA....

knukles's picture

Anybody but me notice the goobermint's mafioso tactics?
Close down a business because it's too risky and hurts people (cheap shitty mortgages, re Angelo Mozilla) and then once there's no private sector competition, take over the business?

Am I the only one sees this as nothing more than the goobermint trying to Control Everything?
Just think off all the unqualified minority "folks" manning the paperwork barricades to protect people from themselves.

Fucking great.
Just great.

TeamDepends's picture

Game over man, GAME OVER!!!

McMolotov's picture

"OMFG he's got his sleeves rolled up again! He's so down-to-earth and dreamy!"

What a fucknozzle this guy is.

sodbuster's picture

You know what? Heck yes!! Why not??? If we, the taxpayer can backstop Fraud Street derivatives, why the f**k not? I don't give a shit anymore.

Quinvarius's picture

Actually, I don't either.  I am just waiting for my chance to seize power.  The sooner this falls apart, the sooner I usher in the golden age.

Yes We Can. But Lets Not.'s picture

Kind of ironic that this spindly, awkward, dislocated-looking dipshit Obama will in the end have social and economic dislocation as the core of his legacy.

The guy is dislocation incarnate.

TruthInSunshine's picture

If 3% down is good, 0% down is better.

Just have taxpayers back $0 down, $0 payments for first 120 months,
0 % interest, 50 year mortgages for all homebuyers.

This shit is E-Z, bitchez.

lincolnsteffens's picture

I think the Pres. should sign an Executive order making it mandatory that everyone gets a home with 0% down and monthly payments that go to the new home "owner" instead of the lender. This way not only can some folks get a house free but they can get a monthly stipend to spend any way they want.

Do I need to say "sarc. on" to avoid some idiot thinking "hey this steffens must be an idiot"??

Cheduba's picture

I'm sure glad Blackstone has stepped in to keep those house prices so low and affordable.

asteroids's picture

Obozo and the banks want debt slaves. They WANT you enslaved to any kind of debt payment for the rest of your adult life. A mortgage payment fits the bill. They print up fiatscos out of thin air, then "lend" it to you at interest. Then you spend the rest of your life paying off absolutely nothing. Amazing.

saltedGold's picture

Elbow deep in someone's ass

KnuckleDragger-X's picture

The smartest man in the room strikes again. Gotta have a neighborhood to burn down....

CaptainObvious's picture

Ah, but if da gubmint runs the business:

1)  MOAR jobz!!!1!1!

2)  MOAR public sector union-protected jobz!!!

3)  MOAR Democrat voters!!1!!

4)  Total control!!!!

The end game of this will be a massive hoard of gubmint workers sucking up the tax dollahs of the one remaining productive worker, who will commit suicide after burning down his business and destroying all of his own property so da gubmint leeches can't have it.  We can then replace the 50 stars on our flag with Wyatt's Torch.

Theta_Burn's picture

We notice..but has Rick Santelli noticed?

The circle is complete.. different crop of deadbeats, different crop of .gov subsidies.... as the churn turns...


NoVa's picture

remember Student Loans ?  complete takeover of the industry about 4 years ago, and look at the exponential rise in young adult student debts.  

EPA taking over coal fired power plants -   then Oblamo puts people like him in permanent positions to run the now Fed owned industries.  


HUD has had 3.5% down mortgages for years.  Expansion to FNMA and FHLMC is risky becuase they have no capital!  every quarter, Treasury takes as a divident all profits.  

Take a look at the Balance Sheet of Fannie or Freddie - $3.2 TRILLION of Liabilities covered by $6.2 Billion of equity.  Debt to Equity ratio of 516 X (with a giant X multiple)


Miffed Microbiologist's picture

Yeah Knuks and we can't even sled in the snow anymore. I guess I should be thankful with this drought our seasonal creek is dry. Of course I'm sure the government can find a way to fine me for the potential of some kid drowning in the future. Who knows, maybe some unfortunate nitwit could face plant in the sand out there and asphyxiate himself. Truly an attractive nuisance for idiots that need gov protection.


knukles's picture

And then we gots GovMoonBeam and his railroad to a high-speed nowhere*.
No sleds but plenty of waste.

What have we become?


*  OK next step in the railroad idiocy .... I'm getting a very subtle hint that they're going to add numerous additional stations along the inland route (All aboard, Fresno to Tulare with intermediate stops at Fowler, Selma, Kingsburg, Traver and Visalia.)  How the f* is it gonna be "high speed" with London Underground distance stops fop all intents and purposes?  Ah, the Hand of Brack reaching out to the peasantry of California.  And associated construction companies.

Miffed Microbiologist's picture

Why I came back to this state is beyond me. I must have some synaptic function problem or fell on my head as a kid one too many times. Yup, Tulare as a stop makes plenty of sense. I'm sure there is no end of people who wish to stare at nothing and smell cow shit from the feed lots. Progressives and math are two things that never seem to intersect.


drendebe10's picture

.... the liar in chief fudgepacker repeatedly shows it is dumber than a box of cat turds.... between it and botox face pelosi, it is a faast foot race for the nation's most ignorant political "leader"... and beet faced bonehead boner ain't far behind either.

SethDealer's picture

the biggest problem in america is we have too many people with 0 skin in the game. Too many sub prime borrowers get house with 0 down and dont give a shit about the house or payments. Too many peoople not paying anything in taxes so they vote for more free shit. If we would demand that every cisitzen over 18 pay a minimum of $100 and file a 1040 then I guarantee things would change. pass a drug test, have high school diploma, and pay minimum $100 in taxes to be eligible for anything. I guess I am dreaming

sbenard's picture

ONe of the lessons of history... is that we don't learn the lessons of history!

TeamDepends's picture

That clown again?

Richard Chesler's picture

The other intrepid socialist leader...


tarsubil's picture

Haha. Obama has cut the deficit by two thirds people? What else do you want from him?

It's all a big joke. Idiocracy is already here.

Buckaroo Banzai's picture

$483 billion deficit in FY2014? And yet somehow, Federal debt increased by over a trillion dollars last year. Hmmm.

Reminds me of the same budget shenanigans that Clinton pulled.

CaptainObvious's picture

"The deficit has gone down by two thirds"

Don't ya just love Common Core maff?

Why are all the "folks" standing behind the TOTUS all not people of color?  Doesn't the TOTUS know that #BlackLivesMatter?!

Gah, I can't watch any more of this shit.  Obammy's voice is like a needle being jackhammered into my gray matter.

neuronius's picture

Waa??? Amazing the "deficit" has gone down 2/3rd since he became President, yet our debt has nearly doubled.

Sounds like a broken budget.  That, or magic accounting.


disabledvet's picture

put a time constraint on a "war effort"?


For example " three years to defeat ISIS."


The language is one of "forever" as these matters never end.

Tin Hat Salesman's picture

saying he rents and has 2 years left on his lease and wants the deposit back is actually funny

madbraz's picture

and no matter what he does, will not be evicted

Bollixed's picture

We could have elected Don Lapre or Kevin Trudeau and gotten the same quality garbage as the Salesman-in-Chief spews.

knukles's picture

I was thinking more along the lines of true diversity and inclusiveness, like David Duke who since his old Grant Wizard of the KKK days has since reformed and is now a "liberal" in the Louisiana State Senate.

ZomBiEHiGH's picture
ZomBiEHiGH (not verified) Jan 8, 2015 1:18 PM

"We plummeted'd some folks"

ChanceIs's picture

We overleveraged some folks?

We overextended some folks?

We placed some folks in some houses the mortgages for which they had no possible hope (or change for) of repaying?

We groundhoged some folks?

If I had ever been here before
I would probably know just what to do
Don't you?
If I had ever been here before on another time around the wheel
I would probably know just how to deal
With all of you
And I feel
Like I've been here before
Like I've been here before
And you know it makes me wonder
What's going on under the ground, hmmm
Do you know? Don't you wonder?
What's going on down under you
We have all been here before, we have all been here before
We have all been here before, we have all been here before
We have all been here before, we have all been here before

CSNY circa 1972

economessed's picture

And for my next trick, I shall increase the appraisal value while robosigning this stack of title transfers....

CaptainObvious's picture

Aha.  So which one of the white "folks" behind Obammy is Linda Green?  I bet it's the empty-gazed gap-toothed blonde on his left. 

Barnaby's picture

"Lowering the bar, even DeVry Graduates can afford a hoam these days."

"Afford" being the operative word. 40 years of indentured assitude.

silentboom's picture

Hey, hey at least devry graduates have a real skill and less debt unlike college graduates.

Barnaby's picture

Skill is irrespective of tech school education, don't forget that. I know hundreds of goons from my own dear university who aren't worth the goat they slaughtered to write his credentials on.

madcows's picture

the average college freshman reads at the 7th-grade level.

FoodStampPrez's picture

Home ownership is a good thing for America. Just look at the cities where rental properties make up a majority of the market. Ugly.

The problem isn't the down payment, or the lending standards. The problem is the Fed and central planning. There aren't enough decent paying jobs for people to afford houses at the current prices, even with ridiculously low mortgage rates.

End the Fed...then let's see how affordable home ownership becomes!

QQQBall's picture

Are you too stoopid to figure out that subprime car buyers increase auto prices and that financing at a loss elevate/support asset prices - in this case its homes. Cities need to allow multi-generational housing. Smaller main house, carriage unit ove rthe garage and attached granny flat. Three generations live on the same property in separate units. Everyone lives comfortably in less than 2,500 SF total. Ultimately, this increases the affordability of ownership.


If rates were to rise, effective demand for home ownership would drop, which would depress prices. This is Obomber ppushing subprime borrowers into the market to support prices.