Give it to me all..... the more that you have down, the more things will work out, that you won't leave your home. And as an investor, I will feel much better. Give it to me, every dime.
Here is my point. There have been a few articles written in the last week or so and several of the comments are screaming for more skin in the game. These comments aren't just coming from realtors and loan officers, thinking that this will help correct the foreclosure market and the housing market, but this is also coming from the government.
There was an article written last week titled : Proposal would boost FHA Down-payment requirement. Some Congressman wanted to raise the FHA downpayment to 5%, adding 1.5%. Hence what propelled me to write : FHA loans to 5% down?
Now, do we really think that an extra 1.5% down will correct and or help the foreclosures? In my opinion, I don't think so. Lenn Harley gave a good comment in my FHA 5% down article. Here is a snap shot of what she stated...
"ZERO down payment loans are no riskier than 20% down loans IF THE MORTGAGE COMPANY HAS FULLY DOCUMENTED THE BORROWERS INFORMATION AND DETERMINED THEIR ABILITY TO REPAY. - Ability to repay. What a concept."
Bingo... and here is what angers me with those on Capital Hill that apparently have no clue and or just don't do their research. Did anyone read this article by Kenneth R. Harney. Who's most likely to walk away from their mortgage? -
Wow, someone actually did some research that might blow your socks off per se. Yes, common sense says that more skin in the game would be best, more practical. I don't mind opinions, but assumptions without doing your research and or putting 1 and 1 together does get my blood boiling. Besides, here is a hint to who might walk away: "It's probably not who you think."
Let's take it a step further. Howard Sumner wrote : deliquency and foreclosure study. In this article they talk about the different types of real estate markets and where they see foreclosures most.
Real Estate SOLUTIONS ???
So how can we help correct this real estate market and keep foreclosures from happening? There will be many that will say more money down, because that is how it was done 20-30 years ago. 2 things on that blind statement. First off, this is 2009, not 1970 or even 1990. The cost of living is more expensive now. Secondly, FHA still allowed for less money down than your conventional loans in the 70's and 80's. So how come there weren't tons of foreclosures then? Is it the down payment? I don't think so, just an excuse.
-- Maybe lower debt to income ratios a little?
-- Possibly qualify borrowers just as we do for VA loans? In the calculations, we have to find out family size and to use utility/electric costs also.
-- Esko Kiuru wrote this article : Mortgage Lenders now more inclined to lower principal. Please read this, because this can be a good solution.
-- Claudette Millette shares this article with us : New Housing bill will force loan modifications. At least the lenders will have to explain specific options. Claudette states - "All lenders will be required to perform what the bill terms as a "net present value" test for all seriously delinquent borrowers." - Bravo... it's a start.
-- I wrote this article 3 months ago, Call To Action - We must fix this real estate market ourselves. I made a pledge and I am still working on this. We need to put our heads together and make the gov't realize more issues and not the common sense approaches.
Food for thought to a main solution….
Did we ever come to realization that a lot of these messes are because of unemployment? The loss of jobs and income? Our government spending habits? And that we need to focus on small businesses, which are a large part of America's work force.... Besides, if we ask for 1.5% more upfront, doesn't that deplete the savings of a borrower that could use that extra money for fixing up the house? For moving? For emergencies?
My main reason for writing this blog? Please read this, which was mentioned above : Who's most likely to walk away from their mortgage?
Lenn Harley wrote this : Raising the downpayment for FHA insurred loans to 5% is ok?
Lenn adds some good insight to this with some good discussion. People, we need to stand up and fight this, letting the gov't know not only how we feel, but what they could possibly do to the real estate market.
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For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
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