H.R. 6254 - The Lunacy in D.C. continues...

Posted: Wed Jun 18, 2008 5:04 am

You're not far off there, catherine. Preston's gonna have to replace or re-hire the 400K+ Kemp laid off to handle the influx FHA's getting and going to get. This legislation would just make that so much worse and more necessary.

Don't get me wrong - I'd love to see 400,000 jobs open up for ethical folks in the mtg biz. But seriously, do we need/want the government to do all the thinking for us here? This is just plain stupid, and it doesn't take an actuarial or a compliance specialist to see the rock being lodged in the rail junction... much less the potential derailment that will ensue.

They've done enough for now - sit back and let the industry fix itself. It's already happening.

Demolition Man Joined: 13 Dec 2007 Posts: 2388

Robin wrote:

You're not far off there, catherine. Preston's gonna have to replace or re-hire the 400K+ Kemp laid off to handle the influx FHA's getting and going to get. This legislation would just make that so much worse and more necessary.

Don't get me wrong - I'd love to see 400,000 jobs open up for ethical folks in the mtg biz. But seriously, do we need/want the government to do all the thinking for us here? This is just plain stupid, and it doesn't take an actuarial or a compliance specialist to see the rock being lodged in the rail junction... much less the potential derailment that will ensue.

They've done enough for now - sit back and let the industry fix itself. It's already happening.

It is things like this that will keep this from being a "cycle" and instead make it a "disaster". We are tilting on the edge right now but if everyone doesn't keep their hands off we are in for trouble.

Wait... isn't that how we got here to begin with? Everyone manipulating the system?

C-4 Joined: 10 Dec 2007 Posts: 1454 Location: Dallas

I don't do FHA, nor do I plan too any time soon. I only run in to a few FHA needed loans a year and the investment and hassle are just not worth it to me.

That being said, what's the big deal about opening the entry to others?

From what I can tell, from your postings, your pull through percentage is pretty low already. I really do not understand how 1 in 3 get approved and how you would not know that just from taking the application. This would seem to be the bog in the system, maybe someone could explain.

I understand that a bunch of ill trained brokers and LO's will be sending in files but that is for the investors to sort through. If I had a 30% pull through with my investors, thye would cut me off like a bad habit.

Dud? Joined: 04 Jan 2008 Posts: 14 Location: western ny

What does this mean for states that have requirements that brokers must be approved correspondents in order to originate FHA? Would this trump state requirements?

C-4 Joined: 19 Jul 2007 Posts: 1468

I sure this bill get's no where.

There are still a bunch of crooks out there and FHA is the vehicle for them to continue this shenanigans.

Posted: Wed Jun 18, 2008 4:03 pm

Catherine, I agree with you on many points, except the overbuilding issue. Overbuilding is not responsible for the real estate crash, but moreover, inflation and bogus 'can you fog a mirror' lending. Inflation has caused households to combine creating larger household sizes and urban crowding. Furthermore, a lack of wage and employment growth has impacted migration rates- especially in high cost or economically distressed areas. The higher inflation and unemployment rates, the greater the increase to crowding rates. Even as prices fall, inflation usurps buying power which results in the need for even lower prices.

Its a vicious cycle that can only be resolved by increased wages (unlikely with growing illegal immigration and third world outsourcing), decreased prices, and lower inflation. The only way to solve this issue and kick start the economy is to rip the band-aid off, and let housing and commercial real estate prices correct.

Consider this: if $250,000 homes sit vacant in an area and do not sell, but would fly off the market at $125,000, the problem would clearly be over-pricing as opposed to over-building.

While there has been over-building in some economically disadvantaged, under-populated areas, it is generally not the case in densely population areas that actually have affordable housing shortages.

Of course, by allowing every lender and broker to participate in FHA without any real respect or enforcement of RESPA, QC, or responsible underwriting concurrent with reduced premiums for the highest risk borrowers and failure to terminate seller funded down payment grants, will allow enable brokers and lenders to rape and pillage to their heart's content- leaving the legitimate players holding the bag (reputation wise).

We all know about the big fat YSPs and loose underwriting via AUS TOTAL Scorecard.

It would be easier and better for our economy if we could just send these a**h****s billions of taxpayer money directly, and save everyone the grief.

Posted: Wed Jun 18, 2008 4:48 pm

Do_the_math wrote:

Catherine, I agree with you on many points, except the overbuilding issue. Overbuilding is not responsible for the real estate crash, but moreover, inflation and bogus 'can you fog a mirror' lending. Inflation has caused households to combine creating larger household sizes and urban crowding. Furthermore, a lack of wage and employment growth has impacted migration rates- especially in high cost or economically distressed areas. The higher inflation and unemployment rates, the greater the increase to crowding rates. Even as prices fall, inflation usurps buying power which results in the need for even lower prices.

Its a vicious cycle that can only be resolved by increased wages (unlikely with growing illegal immigration and third world outsourcing), decreased prices, and lower inflation. The only way to solve this issue and kick start the economy is to rip the band-aid off, and let housing and commercial real estate prices correct.

Consider this: if $250,000 homes sit vacant in an area and do not sell, but would fly off the market at $125,000, the problem would clearly be over-pricing as opposed to over-building.

While there has been over-building in some economically disadvantaged, under-populated areas, it is generally not the case in densely population areas that actually have affordable housing shortages.

Of course, by allowing every lender and broker to participate in FHA without any real respect or enforcement of RESPA, QC, or responsible underwriting concurrent with reduced premiums for the highest risk borrowers and failure to terminate seller funded down payment grants, will allow enable brokers and lenders to rape and pillage to their heart's content- leaving the legitimate players holding the bag (reputation wise).

We all know about the big fat YSPs and loose underwriting via AUS TOTAL Scorecard.

It would be easier and better for our economy if we could just send these a**h****s billions of taxpayer money directly, and save everyone the grief.

I agree with most of what you say and ESPECIALLY the sending of these TRILLIONS right to us taxpayers vs. what they are doing with it now.

We are over one TRILLION ALREADY as we speak from August and that is the money I read about, tons more behind the doors that we aren't reading about I am sure

anyhow totally disagree with you on overbuilt............we were doing shows on people buying 4 and 5 homes and flipping them,

if values are falling to 50% (and they will get to your area too, history shows it) THAT IS ONLY SUPPLY AND DEMAND

accounting 101, you produce too much of a product, PRICE FALLS

oil is produced everywhere, value falls

NOW we only thought things would rise AND EVERY SINGLE LOAN SOLD FOR THE LAST 10+ YEARS WAS WRITTEN AND SOLD ON THAT PREMISE, AND BOY WAS IT WRONG.................

that 250,000 house will fall to 90,000 and FLY OFF THE SHELF FOR SOME, BUT THERE ARE TOO MANY OF THEM, THERE WILL STILL BE OVER SUPPLY, but more will sell when you drop the price..............you open the category to tons of lower income people than the 250,000 payment could reach.

I think $125,000 is still toooooooooo high, and SO DO THE BUYERS OUT THERE RIGHT NOW, they know that prices are falling and that catch a falling knife line applies here

WE OVERBUILT CRAZY and when the supply is gone, houses will be back in demand, we built for over 15 years, how long do you think until we don't have a glut.............

Posted: Wed Jun 18, 2008 5:19 pm

The type of expansion that you speak of was fueled by speculation and mortgage fraud. The fact that speculators were buying up properties supports that housing prices are out of whack to incomes.

Just because there are thousands of unsold homes in areas and thousands more coming online due to foreclosure, doesn't mean there is an oversupply, but moreover, that demand can't meet price. In many areas, such as So Cal, building prices exceed what buyers can actually pay. Therefore, rather than purchase or rent their own home, families are forced to combine households. Density and crowding levels support this.

While you may have overbuilding in some areas, in many areas there is actually a housing shortage, and I wouldn't be surprised if people started living in tent cities as homeless rates continue to rise.

If a price cut will work off inventory, then its a matter of price. When no amount of price cutting will move inventory- its oversupply. The population supports available housing units- but the masses have been elbowed out of homeownership.

If prices have to correct 40-70% doesn't matter. Financial gravity will do what financial gravity has to do to restore equilibrium.

You can't look at a market where prices have been inflated to unaffordable levels by speculators and blame the languishing of properties on the market as soon as the funny money fraud loans are gone, and blame it on overbuilding- especially in the face of housing shortages.

However, I will concede that overbuilding in certain speculative markets has added to the inventory burden- however, I postulate that prices would be forced to correct in these areas based on the supporting economic base regardless of whether there was overbuilding.

Posted: Wed Jun 18, 2008 5:36 pm

Do_the_math wrote:

The type of expansion that you speak of was fueled by speculation and mortgage fraud. The fact that speculators were buying up properties supports that housing prices are out of whack to incomes.

Just because there are thousands of unsold homes in areas and thousands more coming online due to foreclosure, doesn't mean there is an oversupply, but moreover, that demand can't meet price. In many areas, such as So Cal, building prices exceed what buyers can actually pay. Therefore, rather than purchase or rent their own home, families are forced to combine households. Density and crowding levels support this.

While you may have overbuilding in some areas, in many areas there is actually a housing shortage, and I wouldn't be surprised if people started living in tent cities as homeless rates continue to rise.

If a price cut will work off inventory, then its a matter of price. When no amount of price cutting will move inventory- its oversupply. The population supports available housing units- but the masses have been elbowed out of homeownership.

If prices have to correct 40-70% doesn't matter. Financial gravity will do what financial gravity has to do to restore equilibrium.

You can't look at a market where prices have been inflated to unaffordable levels by speculators and blame the languishing of properties on the market as soon as the funny money fraud loans are gone, and blame it on overbuilding- especially in the face of housing shortages.

However, I will concede that overbuilding in certain speculative markets has added to the inventory burden- however, I postulate that prices would be forced to correct in these areas based on the supporting economic base regardless of whether there was overbuilding.

You make great points, we have a front row seat to see how it truly plays out...............

Wrecking crew Joined: 13 Feb 2008 Posts: 1736

This bill is ludicrous. Why did I bother getting the only full eagle in the county? Now the c**p shop up the road that would never qualify for approval could make an application and run for months against me - 90% of the foreclosures in the county track back to that shop.

When everyone is struggling for survival and your company has invested in compliance, recruitment of quality LO's, etc., it's rediculous to open the gate to any one that can't meet the same criteria.