The subprime companies made their profits
during the last 10 years, they did very
well. When property values started to
adjust, as they should, since real estate
has been rediculously overpriced in many
markets since the late 90’s, the subprime
companies cut and ran.

The dirty truth is that most forclosed
loans are FHA or VA loans, that is insured
by the taxpayers. Nobody wants to talk
about the fact that as Washington has tried
to cram the idea that EVERYBODY is entitled
to own a home down our throats, it is
government insured loans which have
loosened the underwriting, credit and down
paymentment requirements to irresponsible
levels. FHA and VA has become a no down
payment loan with lax credit requirements
and lax income requirements. The result?
Rampant foreclosures on Taxpayer insured
loans. Many never have a payment made
before they go into foreclosure. But
lenders and Realtors have already made
their commissions. And guess what? They
can turn around and sell the property all
over again to the next unqualified buyer.

Take a look at he FHA “Preforeclosure
program” for instance. Under this program
the homeowner on the verge of foreclosure
gets and incentive (from you the taxpayer)
of $500 to sell his home on which he is
at least three monthes behind on the
payment. The Realtor only has to pay the
BANK 82% of the CURRENT APPRAISED VALUE
which these days is LESS THAN THE CURRENT
MORTGAGE BALANCE. This results in a
DEFICIENTCY of around 20 to 40%! On a
$200,000 loan were talking about $40,000
to $80,000 which YOU THE TAXPAYER have to
pay the BANK for the borrower to get out
from under the loan he/she never should
have qualified for in the first place.

As usual the taxpayer picks up the cost
of bad policy and they don’t even know
they’re getting screwed. This is called
government waste and corruption.

Now these idiots want to allow YOU THE
TAXPAYER to underwrite and insure even
MORE bad loans! You’re getting screwed
and even SPENCER isn’t allowed to tell you!

dennis hammond

I encourage you to go and read the bill rather than listen to hearsay as to what it accomplishes. It does so much more than “raise loan limits and extend terms”. It gets rid of downpayment requirements for FHA loans. Maxine Waters has been pushing this for some time to promote home ownership among those that cannot afford to save for a downpayment. It actually loosens the lending requirements that you have been promoting. Read it Jim.

Maxine waters. Yeah that’s someone I want
handling my checkbook. As for any Change
to FHA underwriting or “down payment requirements” as I stated, they’ve already
turned the program into a “Giveaway for the
POOR!” You can call FHA–Subsidized housing
for the poor and unqualified. Noidea clearly
identified the agenda of the American
Socialist Party (Democrats) “From each
according to their ability- to each according
to their need” and a free house at taxpayer
expense.

Thanks for aptly clarifying that Noidea!

Ultimately, the inevitable result of any democracy is mediocrity. “Return to the mean” rules. Of course, even as people do get smarter (if they do, which certainly wasn’t apparent in the last election), the mean simply rises and we have the same problem.

What’s the solution? Drink. Do drugs. Fry your brain. Don’t worry!

As a mortgage professional with seventeen
years experience in the Denver metro real
estate market, I can tell you the loan
underwriting and qualification process
exists not only to protect the investors or
taxpayers but also the prospective borrower
or home buyer. The traditional
qualification process determines if the
prospective home buyers are ready and
capable to engage in home ownership and
the disipline and responsibility which
accompanies this significant undertaking.

Borrowers were rated on five categories:

1) acceptable credit history:
First time homebuyers were scrutinized
specifically
2) adequate income:
debt to income ratios include the
proposed mortgage and all installment
debt and revolving debt (like credit
cards) Income was documented with paystubs
and W-2’s not simply stated on the ap.
3) Time on the job:
In the past, two years of consistent
employment was the minimum requirement,
employment gaps had to be adequately
explained (for self employed it was FIVE
years with NO decline in income.)

4) Down payment:
An adequate down payment had to be in the
bank, documented and SEASONED indicating
that the borrowers SAVED the down payment
from their income. 3 to 10% of the sales
price was the norm. First time
homebuyers were never allowed less than a
10% down on conventional financing, 3%
for FHA. Gifts toward down payments were
limited.

5) Reserves:
Borrowers had to document that after
closing they had in the bank 6 months
worth of payments, just in case their
income was disrupted or the borrowers were
laid off or fired from their jobs.

These underwriting criteria have largely been
replaced by what are called “Stated income”
loans for conventional financing and in
many cases automated underwriting on both
conventional and Government loans.

The net effect is much less scrutiny and
much lower qualification requirements. These
criteria are not PUNITIVE they serve to
determine if borrowers are SUITED for home
ownership or if they are very likely to go
into foreclosure. Forclosure serves no one
except those who profit from “Churning”
foreclosure inventories.

Throwing common sense underwriting out the
window to lower the bar for prospective home
buyers is akin to throwing the baby out with
the bath water and has served to send
default rates through the roof and cost
taxpayers a fortune.

A fact of life is if you don’t meet the
qualifications for loan approval you
aren’t cut out for homeownership.
And as a matter of fact not everyone is
responsible enough, stable enough or has
adequate earning power to buy a home.
And that’s just the way it is, despite how
hard liberals and politicians seeks votes
might close their eyes and wish.