Voice of Housing - All Comments

re: Housing Assistance 2012: Another Herculean Task for the FHA

Frank Ceizyk — Fri, 03 Feb 2012 03:37:07 GMT

Why is there no debate about the failure of the residential real estate valuing process? We continue to analyze a 3-4 month period without a historical overlay which forces these drastic up and down cycles, and makes the valuing process little more than a speculative snapshot of what is going on RIGHT NOW. Any other asset of investment (or even speculative) grade quality would demand a 1-5-10 year performance review---WHY DOES THIS CONTINUE TO NOT BE THE CASE as we continue selling houses with 96.5% leveraging in declining value markets? I keep getting the sinking feeling that the investment value of the collateralized asset (a home) is irrelevant to the bigger goal of trading large pools of securitized debt, mitigating toxic loan losses and generating a steady flow of real estate commission sales revenue...somebody talk me down...

re: Housing Assistance 2012: Another Herculean Task for the FHA

steve iler — Thu, 02 Feb 2012 23:46:44 GMT

Of course the underwater loans will be shifted from the banks' balance sheets to the taxpayer via FHA. The taxpayer is the unsuspecting patsy in the game. Everyone else wins--banks, law firms, politicians,, the Fed, government bureaucrats. What's not to like? The show must go on! Years from now we can all repeat over and over, "No one saw this coming." Well, it is a crisis, and something has to be done. Besides, the banks will "be forced to pay a fee." The politicians are always looking out for the taxpayers and negotiating on their behalf.

re: Mr. President, it's Time for a National Housing Policy

CompetitionBenefitsConsumers — Thu, 02 Feb 2012 23:02:16 GMT

Frank, The Fed's monetary policy was the root cause of the boom and bust. If rates had remained steady at 7.5% or so as they were in the 90's there would not have been a housing boom or bust. Low rates drove APPRECIATION, which masked inherent sub prime risk by masking delinquencies and defaults because sub prime borrowers could always refi, or sell, leading to high ratings of these products, leading to demand for these products by investors, leading to ever lax guidelines for more of these products. The demand by investors came first, then, as the guidelines loosened, all sorts of people discovered they too could be in the real estate game, until the FED methodically ratcheted up rates starting in mid 2004. Every time Greenspan announced he was going to raise rates the frenzy to buy became stronger until the average buyer could not afford the inflated values AND inflated rates at just under 7% in mid 2006. Then WEEeeeeee it all came down. This is all factual information. It wasn't the Originators, it wasn't the Real Estate Agents, and it wasn't the Appraisers that created such a huge national bubble and bust. There was only one common factor in every market across the nation, and that was interest rates, which are manipulated. The correlation of interest rates and home values is not coincidence. All the new laws designed to prevent it from happening again will be ineffectual.

re: What Should the Government do to Address the Inventory of Foreclosed Properties?

Steve Dalia — Tue, 31 Jan 2012 01:51:56 GMT

Reducing the FHA monthly mortgtage insurance would asssit greatly, as well. Homeowners could afford higher purchase prices if the government asssited to keep these premiums lower...and certainly not increase them. Additionally, many FHA refinances are not cost effective at much lower interest rates becasue of the more than doubled premiums. Streamline refinances are also strongly affected. HOW ABOUT OFFERING THE SAME MIP PREMIUM TO FHA REFINANCES?

re: What Should the Government do to Address the Inventory of Foreclosed Properties?

Frank Ceizyk — Sat, 28 Jan 2012 20:31:36 GMT

You could also allow borrowers with more than 4 financed properties to cash out existing free & clear properties. Most of these investors have over 20 years of buy/rehab/keep/casfhlow and have free & clear inventory because they already know when to buy and when to sell. The programs that exist require rates in the 6-7% rate. Offer them at mark ups .5% above the best conforming non-owner occupied rates and buy/keep investors can cross collateralize distressed inventory using equity in existing, cashflowing properties, instead of entering into the cumbersome, lengthy timeline required by 203k financing.

re: Mr. President, it's Time for a National Housing Policy

Frank Ceizyk — Fri, 27 Jan 2012 00:14:38 GMT

And Ray J--I know you were joking, but the truth is, the government will intervene if as an industry we continue to just ridicule their efforts or just say "let it deflate".

re: Mr. President, it's Time for a National Housing Policy

Frank Ceizyk — Fri, 27 Jan 2012 00:10:11 GMT

Ray J--if that is true then how can we truly call housing an investment for buyers? Vacant neighbhorhoods, rational defaults, credit histories destroyed--that is a greater net benefit for what majority? Absent a large down payment, we will create "at purchase resale" upside down borrowers as soon as every loan closes (how many FHA loans purchased since 2008 are likely to have resale equity?). Housing appreciation OR AT LEAST STABILIZATION and a shining of a spotlight on all of the remaining shadow inventory HAS to be the goal if we are going to continue to sell housing as an investment. Competition: The Fed did not represent the buyers negotiating prices from 1998 to 2007, did they? The same speculative forces that drove houses up beyond reasonable levels are at work now driving down prices down. Modifications, short sales, foreclosures and HVCC guidelines all work against each other in determining the value of the asset on the long road through loss mitigation. Dodd Frank is flawed because its focus was only on lending--the speculative tactics use to drive up assets to fantasy values with 100% leveraging all the way, and the subsequent resale of these "no risk" investments to every Tom, and Harry without a clue about what they were buying was the thing that "got us here". At this point HARP 2.0 and other programs being offered by this administration to mitigate the effects of owning a large debt burden are the best bet for preventing rational defaults. But a 1% rate is small consolation for owning an asset that is worth 50% or more less than the debt on it...the bleeding has to be stopped.

re: Mr. President, it's Time for a National Housing Policy

CompetitionBenefitsConsumers — Thu, 26 Jan 2012 01:17:55 GMT

Repeal Dodd-Frank and establish a policy where the government gets out of the private sector. The government has already turned the industry into a cash cow with the new mortgage tax - permanent G Fee increase and MIP increases. Can you imagine where this will lead? The manipulation of interest rates by the FED is what got us here. More manipulation by the government or the FED will not solve our problems. We need more, smaller banks and they need to pay the price if managed poorly, no bailouts, they will behave differently when there is no safety net. Industry is weighed down in a quagmire of legislation creating economic inefficiencies. Efficiency is the key to prosperity. The government is the nations single largest employer (!), it’s not efficient and in economic terms produces nothing to create wealth. When a healthy economy is restored housing and many other ills will be healed like magic! Principal reductions are ridiculous – way too much money, and where would it stop? Principal reductions would result in everyone trying to prove how little their house was worth! I’d rather not see any more dependency created, but if I had to suggest something, a better idea is to refinance the underwater borrowers via HARP etc., and use money paid by the existing holder of the note to get it off their books which would be used to buy the rate down, to say .5% below market. This gives the borrower a lower payment as if they owed less, the investor does not have to take a huge hit (which principal reductions would create, affecting demand and rates), it will cost taxpayers nothing and prevents the moral hazard of everyone trying to prove how poor they are, or are in worse shape than they are in order to get more. This may be enough to keep people in their homes – although it won’t help those hoping to move to find work!

re: Mr. President, it's Time for a National Housing Policy

Ray J — Thu, 26 Jan 2012 00:09:11 GMT

Well, then what do you do with another million units of inventory coming through the foreclosure pipeline over the next two years? Seems like anyway you slice it housing will still be subject to deflationary forces. Will rates go lower and guidelines ease? Is housing appreciation really the ultimate goal? Maybe lower rent and deflation in housing has a greater net benefit for the majority.

re: Mr. President, it's Time for a National Housing Policy

Justin Kennedy — Wed, 25 Jan 2012 20:49:19 GMT

my thoughts, imagine what this large pool of rentals will do the the rental markets. will it be cheaper to rent than to buy? slowing down the 1st time buyers markets. other rental units will see a decline in cash flow which may cuase a slow down in rental/investment purchase . plus, you will see another large round of housing related layoffs as the inventory declines. you can imgaine NAR/MBA will be fighting you every step of the way.

re: Mr. President, it's Time for a National Housing Policy

Ray J — Wed, 25 Jan 2012 20:13:28 GMT

I was being sarcastic Frank. It's another scheme. The taxpayers take the losses, miss out on the lowest prices, the profits go to private capital and then working people rent at higher prices than if the market cleared in a different way. I suppose it's either that or serious deflation.

re: Mr. President, it's Time for a National Housing Policy

Frank Ceizyk — Wed, 25 Jan 2012 19:12:01 GMT

I like it Ray--call it the "Reinvest in American Neighborhoods" fund--should be relatively easy to show that working people would be buying in at historical price "lows" and with the foreclosed inventory cleared out, surrounding neighborhoods should begin to realize a slow but steady rate of appreciation, making the fund an actual "INVESTMENT" vehicle, slowing down the suction power of the negative feedback loop. Next step: how we make the offload process work?

re: Mr. President, it's Time for a National Housing Policy

Ray J — Wed, 25 Jan 2012 16:42:21 GMT

Market distortions, that's a good one. How many centrally planned policies are distorting the market right now? A lot more than just the MITD, that's for sure. Yes, suggesting alternatives is a great practice, FC. So, what's the plan. How about we offload billion dollar blocks of foreclosed homes to private equity, hedge and sovereign wealth funds for pennies on the dollar. Then, they can rent to working people at market rates and convert the fund into a REIT and sell it to those same working people as a retirement fund product. I think that's the operative national housing policy we need to be aware of at this time...

re: Mr. President, it's Time for a National Housing Policy

Frank Ceizyk — Tue, 24 Jan 2012 23:09:36 GMT

OK Brian-YOU OBJECT. I just can't find the part where you suggested the alternative? How about: Mr. President: Here is our cohesive industry wide proposal for a National Housing Policy that will START with restoring INVESTMENT VALUE to homeownership...and then provide the details...after 4 years of this cluster#%@$ spineless retreat we must have an industry vision to begin a bold, visionary counteroffensive, right?

re: Mr. President, it's Time for a National Housing Policy

Padmewan McGregor — Tue, 24 Jan 2012 16:17:22 GMT

A coherent national housing policy should start with capping, then withdrawing federal subsidies for homeownership, i.e. the mortgage interest tax deduction. These subsidies distort the market by leading people to overinvest in house, which in this economy adds unnecessary friction to the labor force.