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[...] QRM: How to Shrink Home Sales By a Third – Speaking of Real Estate [...]
Thank you for the post. While I think forcing a 20% down payment is too much, you make a great point about sound underwriting being the key!
[...] Could QRM Proposals Sink Housing? [...]
[...] compared with 4605 in the same month last year. The median price of homes sold in M more… QRM: How to Shrink Home Sales By a Third – Speaking of Real Estate (blog) – speakingofrealestate.blogs.realtor.org04/18/2011QRM: How to Shrink Home Sales By a [...]
[...] proposed regulations? On top of the already improved practices instituted in 2009, we are talking tenths of percentages in reduction of default rates. The costs, however, are extensive delays, flat sales and stagnant [...]
Are these people blind to what is right in front of them? Sound underwriting is of course what we need, not a reduction in elegible buyers. Once again we are looking at something that widens the gap between good credit worthy families who are lower income and those who are in a better position. Do they not deserve a chance to have a small piece of the American dream! In a year when banks, that we bailed out are having the best years in a long time, the small person, middle Americans, are once again asked to bear the load! Or should I say the brunt!
I would be surprised if your stats on foreclosures vs. downpayment were the same if you used the previous 10 years. 1992 – 2002. Don’t know how you can justify using a period in US history where there was so much fraud in the sale of homes and a time of diminishing values? Perhaps that is the reason for all of the loan defaults.
I think the proposal of the lenders holding 5% of the loan on their books would ensure more thorough underwriting! The lenders were not worried if the buyers had sound credit or good payment history if they could sell that loan off asap! They really stuck it to the government entities who backed those loans. That’s why our economy is in this sad shape now, because of greed.
Requiring a down payment is okay but I agree that most people would never be able to buy if they require 10 – 20% down!
Requiring 20% down payment is no guarantee of better loan performance? It is more a hedge against loss for the banks. While this may be good for the banks…the question is, at what cost? How many highly qualified potential buyers will be left on the side lines because they do not have 20% down. In California where the median home value is in the $300k range, 20% would be $60k. I believe this proposal is short sighted. They are walking over $’s to pick up pennies.
[...] Here’s a post suggesting that home sales would shrink by a third under the proposed regs, which would require 20% downpayments: Any time you can improve loan performance it’s a good thing, but to get these small levels of improvement, the market for home sales would have to shrink enormously, between 6.6 percent and 14.7 percent in the case of requiring a minimum 10 percent down, and between16.7 percent and a whopping 28.8 percent in the case of requiring a minimum 20 percent down. The market would shrink that much because requiring those higher down payments would drive huge numbers of households out of the market. [...]
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