tag:blogger.com,1999:blog-3098264341625381422.post8720477986168221347..comments2024-03-18T17:01:07.165-07:00Comments on The Provocateur: The Fed's Mindless New Mortgage Regulationsmike volpehttp://www.blogger.com/profile/02999118519606254362noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-3098264341625381422.post-42846832228691800692008-07-24T09:51:00.000-07:002008-07-24T09:51:00.000-07:00I can agree with much of what the last anonymous p...I can agree with much of what the last anonymous poster is saying however I will disagree that this is the reason the fed made these new rules. As I said, the banisment of stated loans is largely ceremonial since the market banished them all on its own.mike volpehttps://www.blogger.com/profile/02999118519606254362noreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-86720730375177595492008-07-23T22:52:00.000-07:002008-07-23T22:52:00.000-07:00Stated income loans are being stopped for reasons ...Stated income loans are being stopped for reasons other than the mortgage meltdown... In fact, this is somewhat of a vehicle for the IRS to increase their income 100 fold...<BR/><BR/>Most self employed borrowers, which make up a huge sector of the population, write off all of their income as expenses, hence showing virtually no income at all. Many of them make a very comfortable living, I would be living better also if I wrote off all of my fuel, meals, toilet paper, and so on...<BR/><BR/>if they dont want to pay taxes, then dont let them own houses...sounds great to meAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-84235617246610071912008-07-15T12:56:00.000-07:002008-07-15T12:56:00.000-07:00That's all good and well, Timm, and there are thos...That's all good and well, Timm, and there are those banks that hold their portfolios. Usually, those aren't large banks and they usually don't necessarily have a large portfolio of banks. <BR/><BR/>That said, in order for the market as a whole to provide loans to as many people as possible, banks need to not only sell loans to each other but to fannie mae/freddie mac. Banks would simply not have enough money to continue funding loans if they had to hold onto most of their loans.mike volpehttps://www.blogger.com/profile/02999118519606254362noreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-54935356918009379712008-07-15T12:49:00.000-07:002008-07-15T12:49:00.000-07:00Mike, thanks for your patience with me. When we bo...Mike, thanks for your patience with me. When we bought our first home in Wisconsin a little over 15 years ago, the mortgage company held the note. In fact, they told us they very rarely ever sold their loans. This was one of the reasons we chose to do business with them. If there was ever a problem, we could walk into a local office and discuss it with a human face to face.<BR/><BR/>We then moved to Florida a couple years later and decided to build a home. We went to our local bank and sat down with the VP and worked out a building loan that was acceptable to us, the bank and the builder. This loan was automatically converted to a mortgage upon completion of the house. That mortgage was again held by the bank. Both of our first two mortgages were done through FHA with minimal down payments.<BR/><BR/>It wasn't until we moved again and bought our third house that we started having every mortgage sold immediately. I have a feeling that in the "good old days", banks generally held the mortgages and treated them as a good conservative investment with steady long term returns. They were an asset to hold as the banks were more than just middlemen who were trying to turn a quick buck on each mortgage.<BR/><BR/>Please remember that I am coming at this from the perspective of a consumer. I am in the boat business, which means I am mentally retarded! I guess I am just thinking that a return to more conservative and more local banking may be in order. I understand the need for guidelines, but much of these are to insure the saleability of the loan later. I don't know what the solution is, but I am pretty sure it isn't more government dictates from those masters of financial management in Congress!Unknownhttps://www.blogger.com/profile/16789230727614362007noreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-27969135849352973482008-07-15T08:32:00.000-07:002008-07-15T08:32:00.000-07:00A few things, Timm. First, if banks were forced to...A few things, Timm. First, if banks were forced to hold loans, there would be no liquidity and you could forget any sort of aggressive loan. Fannie Freddie and all this selling allows banks to always have cash for the next loan. <BR/><BR/>Second, you may in fact have a unique situation however banks can't work on "special circumstances". There are just too many loans to do. As such, they need specific guidelines. You either meet them or you don't.mike volpehttps://www.blogger.com/profile/02999118519606254362noreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-91327146342201640502008-07-15T08:27:00.000-07:002008-07-15T08:27:00.000-07:00In our situation, I didn't have one year of histor...In our situation, I didn't have one year of history (the banks were actually asking for two). My wife was working and we would have qualified for the mortgage on just her salary. Unfortunately, she also hadn't been at work for a year so they wouldn't count her salary either. We weren't considering my income at all as we wanted to be sure we could pay our bills if my business didn't work out. <BR/><BR/>In hindsight, if we had waited for a year, we probably couldn't have afforded to buy any longer as the prices here in Florida skyrocketed. Our $52,000 house became a $120,000 house. We would not have bought a home as we could not pay a mortgage of that amount safely on her income alone. We had moved to this area from Maryland specifically because of the low housing costs at the time.<BR/><BR/>I guess I'd like the bankers to have a little more flexibility to look at special cases like ours and still be able to do something. I know these loans were abused by many lenders/borrowers and they should both lose their shirts for being so stupid. The government should not be bailing them out or backstopping their foolishness.<BR/><BR/>One surefire way to stop the bad loan practices would be to require the lender to hold the mortgage for a certain length of time before it could be sold, say 10 years. They would be far more cautious if they were actually on the hook for the bad loan. Now the loans are sold before you even close on the property. Kind of makes it hard to develop a business relationship with "your" banker!Unknownhttps://www.blogger.com/profile/16789230727614362007noreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-91733984794471979682008-07-14T21:09:00.000-07:002008-07-14T21:09:00.000-07:00Here are few things about stated loans. I think th...Here are few things about stated loans. I think there is a proper time and place for them. I think that small business owners, those with commissions or other unpredictable income, and those with multiple properties are right for it. Of course, when it started it required very high credit scores and large down payments or equity. <BR/><BR/>Where it went bad and became abused is when it was opened to W2 earners who simply received a regular salary. If you open it up to those folks, it is simply for someone to lie. Furthermore, it was opened up to those with lower credit scores and with low or even no money down. <BR/><BR/>It is like anything else. Once it became abused it blew up.<BR/><BR/>As for the Fed. It is simply too little too late. Nothing they did today did anything to contain a financial meltdown.mike volpehttps://www.blogger.com/profile/02999118519606254362noreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-27679001600101484532008-07-14T20:25:00.000-07:002008-07-14T20:25:00.000-07:00I have been in the mortgage industry for over 30 y...I have been in the mortgage industry for over 30 years as both an escrow officer and title insurance agent. When "no doc" loans first creeped in to the marketplace, I thought lenders were crazy. I have been proven right in a most unarguable way.<BR/><BR/>Any self-employed person can get a fully conforming loan with one year's tax return and a financial statement. That should not unduly inconvenience any responsible borrower. If you are self-employed it is only prudent to know what your income can reliably expect to be before you commit to a loan you may not be able to afford.<BR/><BR/>Any business owner with a one year financial history and an 800 Beacon score can write their own ticket for a low interest loan at their local bank.<BR/><BR/>The Fed's regulations are too little and too late, but let's be thankful the Fed acted at all before we had a total financial meltdown.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3098264341625381422.post-51196336630091516262008-07-14T12:46:00.000-07:002008-07-14T12:46:00.000-07:00I also think it is a mistake to outlaw no doc loan...I also think it is a mistake to outlaw no doc loans. The no doc loan was the only way my wife and I could buy our present home. After being a homemaker for 6 years, my wife had no recent income to show. I was starting a new business and didn't have two years of business records to show my income. The no doc loan allowed us to buy a larger home than the one we were renting while saving $250 month on rent payments compared to our mortgage. Plus we are gaining equity. <BR/><BR/>Why did we qualify? We had a good down payment and a 800+ credit rating. Our 15 years of credit history showed we were responsible and a good risk. The government should mind its own business and allow private transactions to remain just that, private!Unknownhttps://www.blogger.com/profile/16789230727614362007noreply@blogger.com