Biden : let’s cause a housing crisis
 

https://hotair.com/jazz-shaw/2023/04...credit-n544318

Here we go again

If your going to start a family or buy your first home how can you vote for these commies. Redistribution of wealth is in every thing that they do, not generational wealth but the kind most of us take part in. The middle class American dream under attack.

It's just the liberal way: Reward incompetence or irresponsibility and punish competence or responsibility.

These idiot people didn't learn anything from the 2008-2009 depression. This is exactly how the mortgage problem started then, granting home equity and other mortgage loans to people who's credit was risky to bad, or in many cases fraudulent applications.


Like then this will end badly for the rest of us.

Economically illiterate, delusional, and dangerous.

HERE IT COMES!


https://townhall.com/tipsheet/katiep...d-way-n2622197

What could possibly go wrong?

Figured this would have a thread.

Just want to let you all know that isn't how any of what is happening works.

It also wasn't "quietly" done. We've known about this for months and it already applied to refinances back in February.

Then tell me how it’s done……

These aren't fees.

What is happening is on the back-end of loan pricing Fannie and Freddie are flattening the curve spreads. When pricing was on the floor it wasn't much a issue but now the difference between a 700 and a 740 is waaaaaay too large.

Its a simple fact that when rates are 3% there is little room in the spread for pricing adjustments but when they're at 6.5-7% there is a ton. Its pricing out obviously qualified borrowers.

Biden will spin this as making it easier for people with smaller down payments and dinged credit to get loans. Meanwhile Republicans will call this a tax, fee, wealth distribution etc. Both are wrong its just flattening yield spreads through Fannie and Freddie.

People with sub 680's are rarely going through Conventional Mortgages as it is because underwriting has tightened up and rates on govie loans like FHA are stronger anyway. I actually struggle to get Freddie approvals on sub 680s... sub 660 and you can basically forget about it.

As far as the downpayment stuff here is a little secret. 20% down has always been the worst rate on the sheet. It's worse than 5, 10, 15, and 25% down. They're all better and have been since I've been in the industry.

Like I said we've already been operating with these rate changes on refinances since February.

These go live for purchase transactions on May 1st.

Thanks.

Question, these sub 680’s will be brought back into the market by this Biden change? Or are they opting for new products?

Are the ARMS back and if so, (I know some never went away) if not where do the sub 680’s run to? Or are they just out of the game completely?

Under 600’s gotta be drawing dead right? FHA loans still malleable and 595’s able to get in? From your post it seems not?

I’m having lunch with a real estate agent friend next week. He says things are picking back up. I would think this Biden rule has to bring some back into the market…..but at what cost?

From the article link above:

“ It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’ That’s a hard conversation to have,” one worried Arizona-based mortgage loan originator told The Post.

“It’s unprecedented,” added David Stevens, who served as Federal Housing Administration commissioner during the Obama administration. “My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move.”

In order;

The issue isn't the rate with the sub 680's its actually getting the automated underwriting systems (AUS) to even take them. Freddie has Loan Product Advisor (LPA) and Fannie has Desktop Underwriter (DU). Typically we aren't even getting approvals on them.

ARMs are basically 90% of what I'm doing right now. Typically 7/6 ARMs where the rate is locked for 7 years. They still get ran through AUS. Most of these people will have to turn to FHA or Rural Development for approvals and even then they rarely will defeat a conventional offer.

FHA doesn't have a minimum credit score but approvals below 620 are rare. Lowest FHA I've ever seen accomplished was a 565. In my 10 years I've witnessed maybe 10 below 600 ever...

To your quotes;

A lot of people in the industry are as psychologically damaged by the rate increases as the public. They are what they are though and inventory still pends up in rapid time.

I'll give a example from yesterday though about why this makes some sense. I had a 24 year old kid who submitted for a preapproval. Lives in Connecticut, already owns a house, has two credit cards, and a paid off auto on her credit report.

Score, 717.

Perfect payment history on everything but her lack of history by being young and the fact she has zero balances on her credit cards hurts her score (yes this is a thing). Her rate on a 7/6 was 5.625. If I bump her score to a 740 its 5.25.

That's a wild swing from A paper to A+ paper.

Finally, at the end of the day Fannie and Freddie sell these loans on the secondary market. If the weighting were to create too many bad deals in the bundles nobody would buy them.

I don't suspect that will be the case.

Thank you. Good to hear from someone on the inside.

It still looks like a rough landscape to be traversing.

Btw, I want to hire that 24 yr old…….too bad she is so far away

From elysiantraveller:

"Finally, at the end of the day Fannie and Freddie sell these loans on the secondary market. If the weighting were to create too many bad deals in the bundles nobody would buy them."

But that is exactly what happened in 2007-2009. The big banks and finance companies buried C-F rated borrowers in their A-A+ tranches when they sold their mortgage portfolios. To the tune that some of the A rated tranches had up to 30% bad paper. And Fannie Mae went bankrupt and had to be bailed out. It could happen again.

People with C-F rated credit don't qualify for mortgages anymore. We don't do stated income loans anymore.

Those outcomes aren't realistic possibilities anymore for a multitude of factors. They're a good talking point for getting people fired up and scared though.