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ML
2124 Posts |
 Posted - 05/16/2008 : 8:53:41 PM
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Dodd Optimistic About Housing Deal
WALL STREET JOURNAL
By DAMIAN PALETTA
May 16, 2008 2:59 p.m.
WASHINGTON -- Senate Banking Committee Chairman Christopher Dodd (D., Conn.) said Friday he was cautiously optimistic lawmakers could finalize a housing rescue package by next week.
"We're not there yet," he said in an interview. "We're pretty close. I think we are going to be in good shape."
His bill would allow the Federal Housing Administration to expand its government insurance program to help more people refinance into federally backed loans. It would also overhaul supervision of mortgage-finance giants Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks. The legislative package would likely mark the government's central response to the housing crisis.
To broker a deal, Sen. Dodd has been in close discussions with Sen. Richard Shelby of Alabama, the panel's ranking Republican, as well as other lawmakers on the committee in an effort to get a consensus before they can bring legislation to the Senate floor. He described the process as like trying to play "eight-dimensional chess," because of the views of the different interest groups and lawmakers.
"I've been around long enough that if you get too confident, it gets like frogs in a wheelbarrow," he said. "Things bounce around on you."
The bill would have huge implications for Fannie Mae and Freddie Mac, companies that have endured several tough quarters and are emerging from sizable accounting scandals. The legislation would give their regulator more authority over the companies' portfolios and capital holdings. Both firms have a reputation in Washington for fiercely defending their powers, and Sen. Dodd described the companies as "aggressive" during the process.
"They are up here chattering away -- 'what's in the bill, what's not in the bill?'" he said. "I have to spend half my day whacking down rumors. I've stood and defended Fannie and Freddie. Without them…this crisis would be a lot worse than it is. There is a lot at stake here, and there is a lot of exposure…I know there is resistance within Fannie and Freddie for those, but…They are going to have a stronger regulator."
Separately, Sen. Dodd said his initial impressions of Steve Preston, the White House's nominee to lead the U.S. Department of Housing and Urban Development, are favorable. The two met recently and Sen. Dodd could have a hearing on Mr. Preston's nomination as soon as next week.
"I've heard good things," Sen. Dodd said. "I was impressed by him
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propertylender.c
1064 Posts |
Posted - 05/16/2008 : 9:05:14 PM
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| As long as stated income stay away, housing prices must collapse for this market to turn around. |
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VVance
1670 Posts |
Posted - 05/16/2008 : 9:15:36 PM
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| I wonder if they're going to include income subsidies to all the loan officers who have suffered due to the credit crunch......ok......just figured if they want to hand out money.... |
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DaveDeal
66 Posts |
Posted - 05/17/2008 : 06:40:27 AM
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quote:
Originally posted by VVance
I wonder if they're going to include income subsidies to all the loan officers who have suffered due to the credit crunch......ok......just figured if they want to hand out money....
Not from Dodd. If he had it his way there would be no brokers, only banks. Say, I wonder who his campaign contributors are? |
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CoolMtgGuy
1959 Posts |
Posted - 05/17/2008 : 06:58:09 AM
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quote:
Originally posted by propertylender.com
As long as stated income stay away, housing prices must collapse for this market to turn around.
Why is that? Please elaborate. |
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ehm3
951 Posts |
Posted - 05/17/2008 : 08:33:24 AM
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quote:
Originally posted by CoolMtgGuy
quote:
Originally posted by propertylender.com
As long as stated income stay away, housing prices must collapse for this market to turn around.
Why is that? Please elaborate.
because in most of the hot markets, the average income did not support the ability to purchase the average priced home. Stated products allowed for an artificial price runup. It was basically a Ponzi scheme that was destibned to fail.
Take Cali for instance: Statewide, the median household income is around 55k/yr ($4580/mo). The median home price is around 400k. So even with 20% down to avoid mortgage insurance, you are looking at a $1900/mo P&I. PITI would probably be in the $2300-$2500 range, so your debt ratio for housing alone is over 50%. That is economically impossible to sustain. So prices will need to come down to a level where that 55k/yr household can afford the payments. Realistically you are probably looking at median home prices at sub-$300k to see a turnaround. |
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propertylender.c
1064 Posts |
Posted - 05/17/2008 : 08:49:45 AM
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quote:
Originally posted by CoolMtgGuy
quote:
Originally posted by propertylender.com
As long as stated income stay away, housing prices must collapse for this market to turn around.
Why is that? Please elaborate.
The majority of the loans that were taken out the last five year were stated income.
Why were they stated income?
Because people could not afford the house otherwise.
The bottom line is if you are making $100,000 a year and you are putting down 20%, the maximum amount you should BUY is $300,000.00.
(That means the loan amount would only be $240,000.00).
How many people in this country make $100,000 a year?
How many people in this country make $100,000 a year and have a 3% downpayment (let alone 20%)?
In the Los Angeles, $100,000 is minimum just to survive when you count living expeses such as food, insurance, rent, etc.
I hope I have explained it well. |
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