Good news or bad news for us...... - Posted by Corey (ND)

Real Estate Investing Real Estate Financing
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Posted by william on January 21, 2004 at 12:08:31:

This may seem cold hearted but in the long run it is good. Why? Because the more programs that enable low income people, or people with bad money management skills, to buy homes means the more foreclosures and motivated sellers down the road. It is politically expedient to propose such a program. It sounds good and easy and is a godsend for some people. But just like an investor, the more your leveraged, the more debt you have, the higher the peobabilty that the cards will tumble. CREIs shoould be there to pick up the pieces.

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Good news or bad news for us… - Posted by Corey (ND)

Posted by Corey (ND) on January 21, 2004 at 09:37:39:

I guess this is either good news or bad news for RE investors. All depends on how you look at it. On one hand there will be MANY more repos, on the other hand fewer renters.

President Bush’s call for the removal of down payment requirements for FHA first-time home buyer mortgage approval drew support Tuesday from the head of a national housing assistance program.

The down payment and closing costs for Federal Housing Administration insured loans would be wrapped into the loan amount and spread over the life of the loan under a proposal made to Congress.

“We are pleased Mr. Bush has finally seen the light and seems prepared to remove this unnecessary and often debilitating hurdle for lower-income families,” said Scott Syphax, chief executive officer of Sacramento, Calif.-based Nehemiah Corp.

The proposal was announced Monday by John Weicher, assistant secretary for the Department of Housing and Urban Development, at the International Builders Show in Las Vegas.

Part of HUD’s 2005 budget request would eliminate the statutory requirement of a minimum 3 percent down payment for FHA-insured mortgages for first-time home buyers.

Many families who rely on FHA financing can afford the monthly payment, “but for one reason or another they simply haven’t had the ability to come up with the down payments,” Weicher said.

While the measure may lead to the end of the down payment assistance industry, it is the right thing to do, Syphax said, as it will help millions of Americans achieve home ownership.

Families would still have to meet FHA qualifications and participate in home ownership counseling.

They also may pay more than in a standard FHA loan, Weicher said. Home buyers would pay a premium of 2 1/4 percent of the amount of the loan, and the interest rate they pay would be 75 basis points annually higher than the base rate of the loan for the first five years.

Las Vegas News | Breaking News & Headlines | Las Vegas Review-Journal (I think you need to register to read the LVRJ)

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Re: Good news or bad news for us… - Posted by jasonrei

Posted by jasonrei on January 22, 2004 at 20:53:41:

I’d imagine good news when I sell a home. Good news in that there may be more preforeclosures.

Bad news in that we’ll have to foot the bill.

The govt will do what it’s going to do.

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Re: Good news or bad news for us… - Posted by Doug Pretorius

Posted by Doug Pretorius on January 21, 2004 at 14:34:27:

We’ve had 100% mortgages in Canada since at least the middle of 2002 (that’s when I first heard about it).

It has completely eliminated the pool of good credit/no down payment buyers. But the pool of no-credit buyers remains the same, which was our target market anyway.

I can’t believe Mr. Syphax calls a down payment a “unnecessary and often debilitating hurdle” to homeownership. Amazing!

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Re: Good news or bad news for us… - Posted by Kawika Ohumukini

Posted by Kawika Ohumukini on January 21, 2004 at 12:28:08:

What that’s saying is that people can probably make the monthly payments but they can’t save for the downpayment. Why? Because of the massive personal debt numbers. People are using their credit cards and refinancing to no end. Personal savings is way down.

If people can’t pay down their credit cards what makes the gov’t think they’ll pay a larger mortgage payment?

This may be one more factor in an increase in foreclosures along with all the other standard market cycle elements.