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Fannie Mae Is At It Again: Loan-To-Value Ratio Now Higher Than During Housing Bubble
Submitted by Anthony Saunders, via The Burning Platform blog,
At last. Residential mortgage (1-4 unit) lending is almost back to zero percent growth!
It has been a tough time for mortgage lenders since the passing of Dodd-Frank and the creation of the Consumer Financial Protection Bureau (CFPB). The Urban Institute has this chart showing that the absence of risky loans in the economy is the answer.
Now, hold on one second! I am unclear as to how Laurie Goodman and company define “risky,” but low down payment loans are more risky than 20% down payment loans empirically. I don’t know if the Urban Institute counts 3-5% down payment loans as risky in their chart.
Why mention loan down payment lending? Because Fannie Mae and Freddie Mac are the primary purchaser of single-family mortgages since the housing bubble burst. The FHA is an insurer, not a loan purchaser.
Here is some empirical evidence from Fannie Mae mortgage-backed securities (MBS). Here is the average loan-to-value (LTV) ratio for Fannie Mae 4% coupon MBS:
At least for 4% coupon Fannie MBS, the average LTV is higher now than during the housing bubble! So much for the story that Fannie and Freddie are “too tight” with mortgage credit.
Now, in terms of credit (FICO) score, Fannie 4% coupon MBS is higher today than during the housing bubble. But it continues to decline.
But how low should Fannie and Freddie expand (drop) their FICO box?
It is like a raccoon riding on the back of an alligator.
The raccoon hopes that the economy doesn’t tank and home prices fall (again).
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But that's what the Fed wanted - a housing bubble to go with the stock and bond bubbles. We are so rich that we can handle debt and unfunded liabilities of $1,400,000 per taxpayer.
Gonna be soome real inexpensive property on the market soon. Bubbles imploding are to be taken advantage off.
Rinse, repeat.....
Who is selling MBSs for Fanny Mae mortgages? Seriously, who are the criminal fucking morons?
Progressive Business Management/Government Borg Style Expansion. See the pattern?
Drive the private sector out of business, based upon the premise that their practices are illegal, fraudulent, of harm.
Then in the vacuum left in the businesses demise, establish/expand government businesses to do the very same thing, or worse, in the name of social justice or whatever.
Fabian Socialism at it's Very Fucking Best!
And you wonder why the illegal immigrants are needed for the Democratic Left Wing Votes, eh?
Now, why are the Progressives talking about a 4% wealth tax?
Funny how "market failure" seems to set in exactly in those sectors the left wants to control and exploit. The student loan business got federalized too.
I have been thinking about how the Government will be able to allow millenials with student debt to buy.
The solution is to exclude the student loan payments from the debt to income ratio.
Solves everything and makes you a debt slave forever and gets rid of all those pesky ratios.
ElVaq, I think the point sometimes missed is that in this debt fuelled world, you HAVE TO KEEP CREATING DEBT.
In some way shape or form, theis beast needs to keep creating debt to survive.
Securitization is the aspecct of keeping the debt moving, think about it as velocity of debt...if the plates stop spinning, they fall.
So, I think we haven't seen anything yet. We became comfortable with trillions in a couple of years.
Next year, when the my Rupee buys a Quadrillion dollars, we'll all be well on our way....
What weird names to give to lending agencies anyways....
Zero One:
https://www.youtube.com/watch?v=AqO8IxnHLUs
Toronto/Canada real estate sindicate :) ...
not all morons are criminal
well, it is a great situation that FNF have billions of equity capital behind their liabilities, in the event of higher than expected credit losses! Moer Capital than 2006/2009! HAPPY DAYS are here again and more marginally qualified borrowers are getting High LTV home loans! Especially those targeted for HUD goals.
oh - wait - they don't have any equity as they have already transfered all earnings up into Treasury to hand out as Bread & Circuses for the FSA.
NoVA
There's never been a better time to buy your next foreclosure.™
Population growth of core and younger populations has broken down across nearly all advanced nations…but to maintain a flawed system based on perpetual growth (which now has at least a decade of population declines ahead of it…and likely far more), the central banks have committed to prop up asset prices by outright buying, interest rate rigging allowing record buybacks, etc. But what the central banks have failed is to produce is any sustainable demand for their excess supply. So, central banks have likely already taken total ownership of all asset prices absent the real ongoing non-credit fueled ability to create further end-demand for real stuff…and the centrally controlled mismanagement of prices will likely rival Stalin’s USSR or Mao’s China for economic futility....and the propaganda apparatus likely to surpass Goebbels efforts.
http://econimica.blogspot.com/2015/06/random-thoughts-as-we-circle-drain.html
Heard there is also an epidemic of white women identifying as "African-American", you know what that means... New subprime candidates!!
Thank god the smart people are in charge......
Yea Bitchez! This raccoon wants a ocean front 16 bedroom villa.
No window treatments please.
See the real problem here is, we need to revive all the previous dead people who took out mortgages to take out mortgages again.
Problem solved....
The U.S. Gov and the FED should allow Fannie and Freddie to reduce all outstanding mortgages to the fed funds rate and start stimulating this economy.
Abolish the Income tax and they will spend.
There's your raise. Cost to do so - ZERO
Except for all of the unemployed MIC, MIL, FBI, DEA, ATF, DHS, IRS, FDA, USDA, etc... employees. That'll be your cost. It's going to happen one way or another, but there are always costs. TANSTAAFL.
The free lunch has already happened it was called QE. Reducing mortgage interest rates to the FED funds rate (via policy) is QE for everyone else. It will boost inflation, M2 and drive economic activity in consumption. It's the proverbial 'helicopter drop'. I'm not a Keynesian sociopath, but if I were I would consider this move to keep the can rolling down the road. Sure this would burn the counter parties future profits on the usery value of their MBS assets but better to get the return 'of' your money than not at all. Inflation risk will drive the value of these assets down and they will likely get dumped, that's when the FED should come in and buy them from the open market. Again very inflationary but better to the Keynsian than a deflationary Minsky melt down.
He alligator, dive,dive,dive !
The racoon thinks its an alligator. If he says it often enough, maybe everyone will belive him. It seems to work for Jenner and that lunatic white/"black" woman. That works until the alligator gets hungry.
this whole non-sense about making the loans "more sturdy" is bullshit. here in jersey, u can still a 5% down loan like candy & plenty of 0-downs still going around. nothing more than a re-flation of the bubble. no problems dealt with. so glad i sold my house last year. i was looking at a few properties down by the shore area. then self-examined my head & said "self, have you lost your mind again?!" ill be sitting this one out. when she loses control of interest rates & the dollar at the same time, shit gets real. people have been buying houses the last 5 years for the wrong reason: they are doing it based on the monthly payment relative to renting when you are supposed to purchase a house based on the price of the property relative to the future outlook on housing.
i have several friends who are real estate brokers. when the taper-tantrum hit a few years ago, they went from ultra-busy, to not a single customer in a 2-3 month window. thats when the fed came back into the market with more QE to drive rates lower. they are scared shitless of losing the reflation trade in the housing market. once rates go up (ummm, for the WRONG reason ie. inflation) people are gonna be beyond trapped in these houses they thought they were getting a deal on V renting an apartment.
"you are supposed to purchase a house based on the price of the property relative to the future outlook on housing."
Wrong. You can't let the economy control every aspect of your life, buddy. You purchase a house based on how much you can afford now and in the furture, and how much you are willing to pay. Unless it is an investment (sorry! despite what the government tells you, your primary residence where you intend to raise your family is not an investment), you shouldn't care too much about future flucuations in price.
(sorry! despite what the government tells you, your primary residence where you intend to raise your family is not an investment)
Not a chance. Any time you purchase an item on credit, it is a de jure investment. At the very least, you have to concede that it is speculation. The fact that the investment also has personal utility is irrelevant, despite being superficially compelling.
If you do not treat your home purchase as an investment, then you wind up being underwater. The "I just wanted it" or "it fulfills my needs" arguments are nonsense. These are the things that lead consumers astray in every purchasing decision.
Further, while you may choose to tell people that we ideally should not care about fluctuations in price, your neighbors blink when the shit hits the fan. It would be a nice theory if you lived in a bubble, however risk aversion dictates a different set of outcomes, every single time. You know that out of control municipal government we have? Shucks, who cares, I love my house... et al. You're the guy who is 80 years old still living in a dilapidated neighborhood who tells everyone how much he loves his house. Things change and it's just a place to take a shit and enjoy a warm shower.
I just paid mine off.....go figure
So did I. But the skyrocketing property tax increases and maintenance costs (new roof, etc) is starting to offset it.
So, these costs would not have occured had you not paid off the loan?
"So, these costs would not have occured had you not paid off the loan?"
I guess you missed the word "skyrocketing". Maybe he couldn't forsee government sticking their hands even further into his pocket? I don't see why you're antagonizing the guy anyway.
Right, a house is never paid off.
"will we ever learn?"
no - humans are the dumbest species on the planet
Dumbest, most gullible and easily-led. That about sums it up, yes.
Its different this time...they promise.
still would say 75% of US consumers with enough cash on hand for a downpayment do not have the FICO score to meet the lender requirements thus rents will continue to move up and landlords will get fatter and fatter.
Can no one spell anymore?
Too Loose, Too tight , etc. It isn't to loose, to tight, etc.
Doesn't anyone proof read and have some knowledge about da English language.
And worse than this stuff - remember that Congress (in the "must pass" budget bill of Dec 2014) allowed the Banks to again engage in high risk trading backed up by the taxpayer. Anyone who doesn't think Wall Street is designing new securitization products around this is stupid. (and guess who's stupid?).
We gots to make prezzy el bozo looks good....He be still having some transformin' too do!!!
Toronto/Canada there you go ...
well, duh
of course. fannie and freddie are tools for banksters to leverage and generate extorted wealth. so, ya, they are using them.
Sure. But my mom has 10,000 shares of FNMA, just waiting and hoping (and waiting and hoping)
that some judge will do the right thing and prosecute the Federal Government for their
Federalization of housing loans, and as a result, her stocks will soar.
Meanwhile, I've been trying to get her to dump that stock before it all goes to 0.
Just imagine if there was a Federal Hybrid banking organization that would oversee the distribution of
Federal Student Loans?!!!
Those who forget the past are doomed to repeat it. Not only didn't they learn, but they convinced themselves what they did was right.
Courtesy of a Common Core education (and I quote);
"Goldilocks's Three Credit Bears
Credit To Loose, To Tight, or Just Right (% Default Risk)
Source: Urban Institute...Census Bureau..."
Perhaps if the moronic idiots working in our government could learn
proper ENGLISH grammar and spelling, they would know that the title SHOULD be:
"Goldilocks' Three Credit Bears
Credit Too Loose, Too Tight, or Just Right (% Default Risk)"
...And here I thought that, finally, someone used the word
"loose", properly, in a sentence e.g.;
"The Blackhawks didn't 'loose' the series", or,
"He was going to 'loose' his shirt."
Why are you crackers microaggressing against my ebonics?
MASSIVE DEFLATION (COLLAPSE) IS THE CURE.
-----
Everyone who claims "high prices" are great for the economy is a liar who benefits from their lies. Everyone who actually believes these propaganda lies is flat-out STUPID. Paying more for goods and goodies only means you can buy fewer goods and goodies (slower economy now) or you get deep in debt very fast, which means your ability to spend in the future is consumed today (slower economy soon).
Artificial booms are the disease.
Natural collapses are the cure.
Let the collapse happen.
-----
Of course the real cure is to exterminte human predators, but humans are too stupid to do what makes sense.
Well, just thank the unions and the federal government for high prices.
30 years ago, a Union Electrician working in Chi town would make $47 / hour, while a non-union
Surveyor (most surveyors are non-union) was making $10 / hour.
When one can no longer afford to call an electrician or a plumber due to highly overpriced skill sets (thanks to unions),
then one will look to a neighbor or themselves to do the work.
And everyone asking for $15 / hour to flip a hamburger will soon find themselves securely unemployed forever.
So the SEIU and other unions are just killing themselves, and the government laughs all the way to the bank (literally),
because they achieve ultimate power and control over the serfs.
but it's different this time.
First of all, let's get one thing straight. Banks don't lend money. BANKS DO NOT LEND MONEY. It is created out of thin, fucking air by a simple keystroke. Stop this charade already. Once everyone realizes that they are taking a big red, white, and blue dick up their ass every minute of every day, things become a little clearer.
Encore, encore, it was great the first time it should be even better the 2nd.
I miss the days of reading ZeroHedge and talking about munching popcorn when it all blows up. My wife is onto anti-GMO anti-carb diet these days so no popcorn for me. And I've grown really tired of waiting for the collapse. Their Ponzi extending ability is truly amazing.
I've grown really tired of waiting for the collapse
Who is waiting?
It is a slow motion train wreck.
I'll bet that you have the attention span of a gnat and that you read the end of the book first, to see how the story ends...instead of enjoying the suspense of the book.
As for me...Pass the popcorn...I am actually enjoying the unfolding drama...laughing at these clowns as they entertain us with Bread and Circuses,
So I have patience.
There is no Final Act...eh...that you will survive. There is no other side. That is just a false hope. Most all goes up into the flames of a Hellish Inferno. Nukes have a habit of doing that.
For any survivors the Nuclear Winters will be the long, slow, painful way of dying.
Looking forward to that. Yes. I am looking forward to that imminent demise. (Now I prefer the Hellish Inferno myself. I want it quick.) Nobody leaves Earth alive.
So pass the popcorn and don't be such a chump by allowing your wife to tell you what to do. That is just so...so...so mangina.
If you want to eat popcorn then eat popcorn.
Is she the dictator and wears the pants in your home? (Now that is really sad.).