Freakanomics? I think not!
Today, I bring you a very valuable mortgage/economy lesson.
Hey.. you.. yeah YOU.. get back here! Don’t worry, this won’t be too painful and I promise to show a lot more boobies than your High School Social Studies teacher ever did!
Now — do I have your attention?
Good —
Okay, so here’s the deal…
HUD is shutting down the Down Payment Assistance Program, as of October 1st.
What does that mean?
Well, as simple as possible, DPA’s give “gifts” of $$ to new home buyers to help them get into their first home for less cost.
I don’t want to get too technical, because Slappy over there is already starting to lose interest in this subject. See.. his eyes are glazing…glazing… glazing.. and he’s gone.
Geesh…
Okay.. Slappy’s back now…
The thing is — you all know that the mortgage industry has been in the toilet since the big “Sub-Prime (bad credit) bubble” burst a while back.
Well, since then — Brokers (folks like my company that can shop your loan with LOTS of lenders to get you the best rate) & Lenders (the companies that actually loan you the money) alike have been going belly up!
Business is bad people — really, really bad.
Like I mentioned here, my company hasn’t paid some of it’s bills for over 90 days!
It’s a wonder to me that the phones and utilities haven’t been shut off by now.
We barely get our health insurance premiums paid before they are canceled.
And we haven’t closed a SINGLE LOAN this month.
Ummm.. yeah, that’s pretty bad, right?
Well, take away the DPA programs and it’s going to go from pretty bad to ABSOLUTELY ABYSMAL.
Like– 9th circle of Hell bad.
(what? there are boobies there, you just have to look… closer..closer… oops.. too close! Saw something you didn’t want to see, didn’t you? ha…ha..)
Why do I say that this is such a drastic issue?
Since the Bubble Burst, lenders did away with their 80/20 programs (go ahead, try to get a First mortgage in conjunction with a Second Mortgage and tell me how that goes for you)
So, what has been fueling our already AILING mortgage / home buying industry?
FHA loans people!
And those loans have ALL been using DPA programs.
Statistically speaking (and I should know because I run the reports) — 82% of the loans my company has closed in the LAST YEAR have included some version of down payment assistance.
Now I ask you —
If the Government gets rid of the DPA programs…what EXACTLY do you think is going to happen to our (already) failing mortgage/housing market?
Ummmm…yeah… didn’t take long to figure that one out, did it?
So — to the BIG WIGS in our Government who are getting ready to KILL the mortgage industry-
These Boobies are for you!
+++++++++++++++++++++++++
Basically folks, the government is trying to force home buyers to put up 10%-20% of their own money as down payment.
This was how things worked back in the 50’s & 60’s, sure, but in todays day and age, there is no way!
The idea is that the borrowers will be putting much needed CASH back into the economy with their $10,000 – $35,000 down payment.
The problem is — NO ONE has that much cash, that they are willing to put into a home.
Why?
Because they are too worried about losing their JOBS and needing money to LIVE ON!
Or they are worried about a failing Social Security system and they want to make sure they have money for retirement.
Take your pick, there are plenty of reasons.
The flaws in this plan are so transparent, and yet, they are moving full speed ahead!
+++++++++++++++++++
That’s your mortgage/ economic lesson for today.
Class dismissed.
So now basically all of these young, first time buyers, either have the 10 percent or they keep renting???
Even when I purchased this home…I didnt want to give them all of my cash. Screw that.
Thank you for the lesson.
Now get back to that Resume of yours missy.
peace
#2
You know what would have made this post even better? Words. (Or did you have words in there already? I don’t know.) This post gets an A+ regardless.
i love mortgage/economics class!!
oh and yeah, that pretty much keeps me in my rental … as long as the owner doesn’t foreclose on the fucking thing!! that happened to some people down the street. they were paying their rent and the owner was … pissing it away i guess and the bank foreclosed … locked the house up … and almost didn’t let the renters get their stuff back!!
You don’t have to tell me. I was looking into buying a house this year and my mortgage broker told me I qualified for $100k. Here that will buy you NOTHING. I have about $2200 saved so I can’t put anything down. That will just about cover my inspection costs. So even though I have people calling me telling me how THIS IS THE TIME TO BUY!, try buying on a public servant’s salary, with no second salary (no husband don’t you know) and school loans to pay. And then aggrivate the f-ing hell out of me by telling me that ILLEGAL immigrants are getting their education for free around these parts.
Mmmkay – first of all, I LURVE my mortgage company. We’ve been with them since we purchased our home, and their agent (one who lives near our area) actually talked us OUT of an ARM when we expressed interest in it. If she hadn’t, we absolutely wouldn’t have our home now. We’re getting a 6.6% interest rate, and no one can beat it right now, so I am ever eternally grateful to my mortgage company!!
Secondly, we had some money to put down from Scott’s 401K, but it wasn’t the full 10% needed, so we pay the stupid PMI. I know we could get that taken off now if we wanted to, but why can’t people use that instead of having to have the whole downpayment?
I, personally, have issues with FHA – up around here they make it seem like all you have to do is go to a class and you get a house…they never talk about the specifics of their deal, and most of the people whom had an FHA loan that I’VE known have ended up losing their home, so I’m no FHA lover.
Anyway, I LOVE my mortgage company – I love my specific lender – and after this little mortgage lesson, I’m ready to send her flowers!!!
BTW – why didn’t we have pics of YOUR boobies?!
what did you say? I was too focused on the boobies!
Seriously, the economy has me frightened silly. I feel like one false move and I could lose my house.
There’s no housing bubble. I was told that a million times for nearly 10 years. Then it burst..
I hate my mortgage company. I want to bomb their office. Or maybe just poison their coffee. But I knew what I was getting myself into, so I guess it’s my own damn fault that I have a shitty mortgage.
Thanks for the boobies!
First of all thanks for the Boobs, I love Boobs. My line of work (construction trucking) is suffering as well.
I worked 3 days last week and I’ll be lucky if I get 3 this week.
Ok…I missed the lesson for the boobie. Not apologizing cause you violated the first rule of marketing. Never show the message around the tits. Message looses EVERY TIME!! But, in agreement with TruckinDog, my parents lost their trucking business this year because of gas prices. It is lucky we are not in a RECESSION!!! I am going back to talking about sex. Least I understand that!~~Dee
Come on Kitty,
Just because this is your livelihood don’t tell me you cannot see the wisdom is disqualifying those who don’t meet the minimum income requirements from obtaining these loans. If they cannot afford to save and wait a little longer to move into that McMansion then they should not be borrowing the money they have no way to repay. This is how we got into the trouble (nationaly and genericaly) we are in currently. Just because it was done this way in the 50’s and 60’s do you think it should not be that way today. When our parents were first adults they worked, waited, and saved for the things they wanted. i.e….housing, new cars, nice stuff (tv, tech.,vacations). Today young people expect to have everything they grew up with immediately. What happened to earning what you have???
It’s not really what keeps my attention but you could have been a great Jr.High teacher
sista #2 — well, there *are* other dpa programs out there. Many funded by local county govt, etc.. but those programs have already run out of funding for THIS year!
I have an interview with the radio people next Tues!
Jon — yeah, there were words! meaningful ones too, but that’s okay, at least I had your attention for SOMETHING!
thatgirl — yep, I have the same worry. I rent from a guy that has 16 properties and talks about how hard it is for him because of taxes that keep going up. I totally feel for your neighbors!
detail medic — yep, yep! and let’s talk about what this “bubble burst” has done to property values! People who refinanced their house 2 years ago with an appraised value of $300,000 are NOW trying to refinance and being told their property is only worth $225,000! NOW they are upside down in their property value/refinance amount! So they can’t even SELL their home, much less refinance it.
Randi — I’m really glad to hear that. There are LOTS of good people in the mortgage industry and you have one. It’s just that the BAD ones have caused so much trouble.
And yes, that is part of the “theory” behind getting rid of the dpa programs. They (the ubiquitous they, the collective they) THINK that if a borrower has MORE of their own funds invested in the property they won’t just “walk away” from it as easily. While it’s a good theory, in practice it’s not really why people are going into foreclosure. If they have no money because they lost their jobs — they have no money.
Teri — yeah…. the economy IS scary. But we “peons” seem to be the only ones worried about it. The rich & the govt folks just don’t give a damn because they aren’t living it with us.
Nobody — trademark? WOW, you have a trademark on your name?? too cool!
You are welcome for the boobies. Thanks for reading my lesson.
Trukindog — you are welcome. I figured I’d have YOUR attention. ha.ha..ha.. Yeah, I feel your pain. I keep waiting for my paycheck to bounce.
sexywhispers — hee.hee.. well, I was trying to teach AND give gratuitous boobies!
The “R” word is one that SHOULD be discussed at this point. I think it just hasn’t been officially announced so people are hiding their heads in the sand and ignoring it.
Sunshine — I agree that people who can’t afford those homes shouldn’t be getting them. And trust me, with the stricter underwriting guidelines now, people who are EXCELLENT borrowers are having a really tough time getting loans, so that’s not the problem. By getting rid of the DPA program, they are punishing EVERYONE for a few bad people. It’s an overreaction that is going to upset the apple cart across the board. It won’t solve the problem, it will only create more.
We can never go BACK Sunshine. That’s why it’s called forward progress. I agree that there is a sense of entitlement in the younger generation, but unless you plan on overhauling the entire nation, resetting the entire govt system and bringing back ALL the people who were in power back in the 50’s and 60’s and then mind wiping every citizen of the US — we can never go back. Wishing for the “Old Days” and talking about how it was done “Back Then” won’t solve the problems we have NOW!
The Keeper — Why thank you — although, if I taught like this in school (in todays world) you’d be watching me on the news as I was arrested for “seducing young boys” or some such thing. ha.ha.ha..
I told my husband about this last night – and saying how lucky we were to have bought our house last year – WITH the 10% cash down. And he tells me that stepson is thinking of buying a $250,000 house in Idaho because they can “afford” it. I’m not sure what universe that kid is living in. He delivers pizza for a living. His wife works for an art supply store. They have a kid. AND they don’t even LIVE in Idaho! I’m pretty sure that it’s that kind of thinking that got the government programs into this mess in the first place.
Sayre — yes.. that is EXACTLY the bad kind of loan thinking. During the “ARM” (adjustable rate mortgage) boom, I watched a single mother who had no income other than child support get at $150,000 house. **I** can’t even get into a house for that and I make good money! But then, I wasn’t willing to sell out for a 3.5% rate that would balloon to 11% in 5 years!
Oh, and please explain why I only qualify for a loan that will cost about $850 a month when I currently pay about $1200/month in rent. PLEASE tell me. This is not new either – a friend of mine had the same problem years ago in qualifying for a loan.
So…I want to motorboat mortgages? I’m so confused.