Fannie Mae is expected to announce Friday that it is scrapping a policy requiring higher down payments on home mortgages in areas where house prices are falling.

The change comes in response to protests from vital political allies of the government-sponsored provider of funding for mortgages, including the National Association of Realtors, the National Association of Home Builders and organizations that promote affordable housing for low-income people.

Those various groups have said the policy is hurting an already feeble housing market by shutting out too many potential buyers.

The current policy, adopted in December and now due to end June 1, limits loan amounts in areas with declining home prices, including most of the densely populated parts of the country.

For instance, if a loan program normally allows people to borrow up to 100% of the estimated property value, the maximum is cut to 95% in "declining markets."

http://online.wsj.com/article/SB121089649942297163.html


Good call. With 100% financing, everyone is a potential buyer! It isn't like that is what helped get us where we are today.

Besides, if the house loses value or the borrower defaults, the banks don't care, your tax money backs the loan.

Yay for everyone!

The other side is that I won't qualify for anything with a downpayment. I am, however, responsible with money. So, if I could buy something without a downpayment, but COULD afford the monthly payments, why not? I know the risk of the property losing value and owing more than it is worth.

For those responsible with money, but with no money set aside for a downpayment, I think it is OK. You just have to know if you can handle it.

Now, of course, we KNOW most people CAN'T handle it, and that is why foreclosures keep coming. And, of course, if you can't save money for a downpayment, you probably can't afford to fix the broken water heater, or the washer/dryer that may broke, etc.

Fuck it, I'm never buying a home.

The majority of homeowners do NOT foreclose. Most people CAN handle it Mike.

Devils advocate:

If you can't manage to save money towards a downpayment, how then are you responsible with money?

Say you want to be Chris's neighbor for $390,000. That requires a down of $19,500. You can't raise that cash? I suspect you can. You do have a Cobra to offload...

Well, yeah, I guess the numbers are waaaay in favor of people not forclosing. I just mean, right now, look around us. A lot of people want to live the american dream and own more than they can afford.

I guess it doesn't really affect me, as I'm not a homeowner. But, possibly looking to buy something in the distant future, of course, all you hear about now is the negativity.

Devils advocate:

If you can't manage to save money towards a downpayment, how then are you responsible with money?

Say you want to be Chris's neighbor for $390,000. That requires a down of $19,500. You can't raise that cash? I suspect you can. You do have a Cobra to offload...

My yearly income is rediculously low. Yes, I could sell my car and buy something for $4000. I suppose, there are ways. I don't have to spend the cash I do on rent either. But, right now, my priorities shifted away from buying a home and towards living a nice life. I'm not rich by any means. In fact, I'd say I'm damn near poverty. I just own a few nice things.

I'm responsible with money, I just don't make a whole lot of it. But yes, I could sell the cobra and save some more cash each month. I prefer the car to homeownership.

When it comes down to it, I have major commitment problems. I'm fine with a 5 year car loan. A 30 year mortgage would make me shit my pants every day.

Devils advocate:

If you can't manage to save money towards a downpayment, how then are you responsible with money?

Say you want to be Chris's neighbor for $390,000. That requires a down of $19,500. You can't raise that cash? I suspect you can. You do have a Cobra to offload...

$19,500 I could do. But, if we're back to 20% down, it becomes $78.000. No fucking way I have that amount.

Even 10% down is $39,000. Still too much for me.

A 30 year mortgage would make me shit my pants every day.

You get used to it.

You take home a lot more money too. Once you deduct interest, property taxes, DMV fees, and anything else you can think of your take home is much higher. I take home an additional $800 per month due to my deductions. That offsets the payment quite a bit.

You shouldn't have to sell your car to save up for a loan. If you have good credit , you should be able to get a loan for MOST of the price of a home. It's ridiculous to think that the average person can throw down 20-50k in a heartbeat for a house. With the cost of living in southern california, you would have to be making a lot of money to save that kind of cash up quickly.

It's ridiculous to think that the average person can throw down 20-50k in a heartbeat for a house.

Exactly. Even with a higher income, I don't know how some do it. It's a good thing I despise kids. If I had one of my own, we'd seriously be homeless and hungry. How the fuck does a family of four get by in this town?

Lil Cesars $5 pizzas.

You shouldn't have to sell your car to save up for a loan. If you have good credit , you should be able to get a loan for MOST of the price of a home. It's ridiculous to think that the average person can throw down 20-50k in a heartbeat for a house. With the cost of living in southern california, you would have to be making a lot of money to save that kind of cash up quickly.

People save for houses for 5+ years.

People seem to have no problem financing $60,000 for a car and paying it off over 8 years, yet ask them to save $60,000 for a house over 8 years and it's like NO WAY!!!

:mj:

Well, if you want to set the standard back to dropping 20% on a home , then get ready for your property values to return to where they were before people could finance 90%+. I for one have no desire right now to own anything. The market needs to stabilize. I work too hard for my money to disappear like that. It's hard enough seeing depreciation in the new cars we drive.

You shouldn't have to sell your car to save up for a loan. If you have good credit , you should be able to get a loan for MOST of the price of a home. It's ridiculous to think that the average person can throw down 20-50k in a heartbeat for a house. With the cost of living in southern california, you would have to be making a lot of money to save that kind of cash up quickly.

I disagree. We have moved from a society that places importance on fiscal responsibility to one that places importance on "look what I have", so much importance as to not even own it, but finance it.

We have an expectation that we deserve the finer things, new things, things we see on TV.

Shockingly, I agree with Chris. It is easier to spend money you don't have than to spend money you DO have. Everyone wants to live the bling bling Socal life, but do not make the money to support it.

I remember when I was little all the car ads on TV were about how much you could finance a new car for per month. Sadly, financing a car has gotten too expensive for many, so now they advertise rent.. err leasing a car.

Well, if you want to set the standard back to dropping 20% on a home , then get ready for your property values to return to where they were before people could finance 90%+. I for one have no desire right now to own anything. The market needs to stabilize. I work too hard for my money to disappear like that. It's hard enough seeing depreciation in the new cars we drive.

So, you'd rather finance 95% of 400k for a house in Escondido instead of putting 20% down on a 300k in said city? 90%+ financing to any idiot is what got us where we are today.

If you use your head and lock in a good 30 year rate, you can get a good deal on a large home . People with good credit should still be able to get 80/20 splits. If not, oh well. The market can chew on their empty houses collecting dust.

My fiance and I have been talking about buying a home for the last few months. She has outstanding credit, and mine sucks(yes I'm marrying above my level in that department), she makes twice as much as I do yet we know it would take us several years to save up the 20% down. Plus, our current condo has lost $100k in value over the last 6 months.

We came to the realization that without some major stroke of luck, we won't be buying a home in the next several years. We will focus on paying off our car notes, eliminating any and all debts, then ponder a house when we have ZERO overhead besides the condo payment.

DTI is important when getting a good loan. Work on that and plan ahead.

once my debt is gone, it will match my income. haha

:rofl: haha! nice.

We came to the realization that without some major stroke of luck, we won't be buying a home in the next several years. We will focus on paying off our car notes, eliminating any and all debts, then ponder a house when we have ZERO overhead besides the condo payment.

That's the plan the wife and I have. I was hoping to be debt free by the end of this deployment, but we decided it would be easier if she didn't work while I'm gone. So we'll see how far out of it we come.