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bluering
Trad climber
Santa Clara, Ca.
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Feb 25, 2009 - 10:28pm PT
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TGT's right IMO. I'm not a banking person though.
20-25% is pretty big money in CA housing prices. Not going to be alot of new buyers if you've got to come up with $100K to put down.
Then move out of Cali. This is the problem!!!
Everyone thinks everyone is ENTITLED to a house...you're not!!! You have to work at it, if you can't afford one, then rent and work until you can.
Do I have a house? No. Do I complain? No. I am working at it though. People making less than me with shitty FICO ratings get the loans though, and I gotta pay taxes to help them out...Bullshit!
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jstan
climber
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Feb 25, 2009 - 10:39pm PT
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As I remember ARMS are fairly new. Before then term certain fixed was all there was. Then we made war on poverty and Asia and set us on the path for 1976-1983. Perhaps we need to realize we need ARMS only when some huge mistake is made.
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happiegrrrl
Trad climber
New York, NY
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Feb 25, 2009 - 11:07pm PT
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What about the special deals that were made for vets returned after WWII. Was that the start of our belief system that us feel we were entitled to home ownership? Would vets under TIG's imaginary "start Over" plan be out of luck, or would we provide them with lower cost mortgages?
(Nothing against the special deals for those who have been in the military. I actually believe that the least our country can do is to reward them for their service. Particularly those who served in times of combat).
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stevep
Boulder climber
Salt Lake, UT
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Feb 25, 2009 - 11:19pm PT
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Actually I rent as well, bluering. And I don't live in CA.
And I'd be only too happy for prices to continue to freefall in CA. Maybe then I'd be able to move back if I wanted to.
But that would also mean alot more people going underwater on mortgages. Not sure we want that.
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TradIsGood
Chalkless climber
the Gunks end of the country
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Topic Author's Reply - Feb 26, 2009 - 04:55pm PT
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TGT - The reference was to why the lenders of 30 years ago failed and why they would fail again today.
You can't make money lending at rates lower than you are paying to borrow it!
That is the huge risk that your 30 years ago traditional lender took. He borrowed at 3% and lent at 8%, and everything worked fine until that fine day when money market funds started paying 10% and every depositor withdrew his 3% money and parked it in the MMF for 10%.
The thrifts ran out of money, before all the depositors could withdraw their money BECAUSE he could not force the mortgage borrowers to repay their loan.
FSLIC (the savings and loan and savings bank equivalent of FDIC) ran out of money and the government invented Resolution Trust Corp to hold all of the assets of the failed thrifts and sell them off, at a loss, of course, eventually reaching $150 billion dollars.
So the short answer to the short question "Where will you find a lender to write fixed rate mortgages?" is nowhere, without the securities markets to move the ownership of the paper to somebody who wants long term paper.
Aside - FDIC reported their bad news today.
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mizzfelt
climber
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Feb 27, 2009 - 01:36am PT
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FHA is the way to go. LTV up to 96.5% with a 620 credit score. You will have MI above 80% with any loan. Higher conforming loan limits apply with certain counties; Marin, Contra Costa, Alameda, San Mateo and Santa Clara. Check with your local banker or broker. The higher loan limit is capped at $729,950 but the standard limit allows a loan amount to $417K. Interest rates are in the low 5's. BofA and Wells are anticipating lower rates as they're hiring every FHA Underwriter they can get their hands on.
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