'I Don't Think the Legislature Should Get Involved in Bailing People Out'
From the SF Chronicle:
Although Congress is also moving to rein in subprime lenders, [Paul] Leonard [director of the Center for Responsible Lending] called on California legislators to take action including regulations that would prohibit lenders from making offers that buyers cannot eventually afford. "We wouldn't allow consumers to buy a toaster or some other product that had a 20 percent chance of failing on them," he said.
...
[L]awmakers in Sacramento seemed uncertain whether consumers need new protections from loan products that have also allowed millions of buyers into a market that previously was not open to them.
"A borrower comes into a lender's office and is interested in the American dream," said Sen. Lou Correa, D-Santa Ana. "And as long as real estate is going through the roof, can you honestly say that they shouldn't (take out a subprime loan)? That's a tough one."
...
Sen. Dave Cox, R-Fair Oaks (Sacramento County), pointed out that homes are lost for a variety of reasons including a loss of employment, divorce or failing health.
"I hope we don't move into a direction of calling people who default on their loans victims," he said. "I believe that there are some risks that the borrower assumes and the lender assumes on a loan that gets people into houses.
"I don't think the Legislature should get involved in bailing people out."
12 comments:
But, this from http://news.yahoo.com:
The Ohio Housing Finance Agency intends to launch a refinance program on April 2 to accept applications from lenders. That program would be funded by taxable bonds issued probably later that same month in an amount likely around $100 million, said Bob Connell, director of debt management for the agency.
The aim is to allow low- to moderate-income mortgage holders who have not entered the foreclosure process to refinance their mortgages at a fixed rate likely around 6.75 percent, Connell said.
. . . . .
Other states are implementing, drafting or considering similar measures.
A taxpayer bailout to keep real estate prices high.
"A borrower comes into a lender's office and is interested in the American dream," said Sen. Lou Correa, D-Santa Ana. "And as long as real estate is going through the roof, can you honestly say that they shouldn't (take out a subprime loan)? That's a tough one."
No, Sen. Correa, easy financing is the CAUSE of prices going through the roof, not a solution.
Per Ohio, if a borrower only could qualify at a teaser rate, how would a fixed 6.75% refinance solve their problem?
"We wouldn't allow consumers to buy a toaster or some other product that had a 20 percent chance of failing on them,"
This is a stupid analogy. It's not the product (the loan) that is failing, it's the consumer's ability to pay for the product that is failing.
"The aim is to allow low- to moderate-income mortgage holders..."
Once again I'm screwed. Too rich to be considered poor and too poor to be considered rich. Just tax me baby, tax me til I bleed.
Rant off.
Hey, I don't think there should
be any bailout for anyone!! Lenders
or homeowners. The lenders should
of known better and common sense
should of kicked in for home buyers. I saw it coming and have
been stuck renting. Why should
my tax dollars bail everyone out
that didn't use common sense. No
one bailed me out in the early nineties when the market tanked.
I had to keep paying on my house
for 7 years as I watched the price
contine to drop untill it finally
came back up and I could sell and
get the heck out. No bailouts is
my vote.
Diggin
Source for the 14,600,000 new households is a oft cited Joint Center for Housing Studies of Harvard University report titled The state of the Nation's Housing 2006.
Another oft cited number - annual demand equals 1,900,000-2,000,000 new housing units needed per year. Why - 500,000 housing units our of current total of 115,000,000 are taken out of service each year. 100,000 second home market each year. 1,400,000 new households each year.
A friend of mines simple view of things - easy credit allowed approximately one full year of demand to come into the market early, therefore prices ran up chasing under supply. Now, normal 1,000,000 vacant homes equals 2,000,000 vacant homes. Things are out of whack by about one year, but the market may take 2-3 years to take this excess out of the market, unless builders cut back further.
Hey CBA the Joint Center for Housing Studies of Harvard University is just a bulshxx front propganda machine for the housing industry. Check out their board memebers, when you get a credible source please post it.
Policy Advisory Board- Member Companies
--------------------------------------------------------------------------------
84 Lumber Company
Andersen Windows
Armstrong Holdings, Inc.
Beazer Homes USA
Boise Cascade, LLC
Boral Industries
The Bozzuto Group
Bradco Supply Corporation
Builders FirstSource
Building Materials Holding Corporation
Canfor Corporation
Centex Corporation
CertainTeed Corporation
Champion Enterprises
Countrywide Financial Corporation
Crosswinds Communities
Fannie Mae
Fannie Mae Foundation
Federal Home Loan Bank of Boston
Fortune Brands - Home and Hardware
Freddie Mac
GAF Materials Corporation
Georgia-Pacific Corporation
Gibraltar Industries
Hanley Wood, LLC
Hearthstone
The Home Depot
Hovnanian Enterprises
Huttig Building Products
Jeld-Wen
Johns Manville Corporation
KB Home
Kimball Hill Homes
Kohler Company
Lafarge North America
Lennar Corporation
Louisiana-Pacific Corporation
Marvin Windows and Doors
Masco Corporation
Masonite International Corporation
McGraw-Hill Construction
Meritage Homes Corporation
MI Windows and Doors, Inc.
Moulding and Millwork, Inc.
Move, Inc.
National Gypsum Company
Oldcastle Building Products, Inc.
Owens Corning
Pacific Coast Building Products
Pella Corporation
Pro-Build Holdings, Inc.
Pulte Homes
Realogy Corporation
Reed Business Information
Rinker Materials
The Ryland Group
S&B Industrial Materials S.A.
The Sherwin-Williams Company
Stock Building Supply
Temple-Inland
UBS Investment Bank
Weyerhaeuser
Whirlpool Corporation
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Member List
Policy Advisory Board
PAB Mission Statement
It may be time to get the people and companies who created this mess to pay the price....
http://biz.yahoo.com/ap/070327/beazer_homes_investigation.html?.v=5
Beazer homes mortgage division is under investigation for fraud. Hmmm, that can not be happening in Sacramento can it?
> Per Ohio, if a borrower only could qualify at a teaser rate, how would a fixed 6.75% refinance solve their problem?
Could be refi'd over 30, 35, 40 years, and unlike most legitimate lenders, the govt would probably loan more than 100% of the current value. In 5-10 years, when the house is worth 75% or less of the mortgage value and the owner walks, the taxpayers take the loss.
Perfect storm - you do make a relly good point but who else would fund a study on housing needs?
Not the Sierra Club.
Perhaps this should be funded by a govt grant.
$100 Million is chump change when you consider over $2 Trillion was loaned (2004-2006) as resetting hybrids, arms, no money down, and "pick your poison" loans. But the fact that a state government agency is willing to bail out their constituents sets a dangerous precedence. anon1137 is right on. These people wouldn't qualify at the 6%+, can't pay, and will walk on the government as easily as they walk on the lender. You might as well help them payoff their equity lines, car loans, and credit cards at the same time. Hell, throw in food stamps and cheese chits for a year just to make sure. Its sad that so many people... prime, subprime, you name the prime...got themselves into this mess. It's not the governments' responsibility to pick up after those that made decisions on their own.
cba...thanks for the data, but unfortunately to me and imho its irrelevent compared to present and past issues that have created the overhang we face today. It becomes relevent when the market sifts through all the BS, inventories stablize, buyers start buying, and sellers quit leaving the keys under the mat.
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