Not the fault of liberal policies, unless you believe fairy tales about banks being forced to lend to minorities leading to the collapse of our economy thirty years later.
Please accept my apologies for posting this and making a A TOTAL FOOL out of you and your silly post. I have no intention of making these fine threaders LAUGH THEIR ASSES OFF AT YOU, especailly since I am an unknown poster, and quite sensitive and my ego and feelings are hurt very easily.
If you didn't believe it then, would would believe it now, along with the REPARATIONS and BLACKmail from the Pigford settlements (reparations)?
businessinsider.com
Here it is for you if you are too ignorant or lazy to use a link:
The US Government Is in the "No-Money-Down" Mortgage Business The Fed was very clear in its statement that it wants mortgage rates to go down. But anyone with a pulse knows that the problem in the housing market is not that rates are too high. Dropping rates another 25-50 basis points is not going to help all that much if you can't get the 20% down you need to finance a house, let alone get a nonconforming loan or, God forbid, a jumbo loan. With banks feeding into the market "REO" homes they get from foreclosures, it will be several years until we get close to a bottom in housing. But new homes are being built. So what gives?
This week I went to a fund presentation on new-home construction and sales. I was invited by a very knowledgeable real estate consulting firm (John Burns), and I was interested to know, how do you raise money in this market for new-home "spec" construction? The numbers and the company sales history they presented looked very impressive, but I could not figure out how they were closing the rather significant number of homes per development they did. No one else I knew of was close, from what I have seen (I watch these things). When the person who presented sat down, I looked at the mailer they send out by the millions. They send it to apartment renters. It says, "Why would you rent an apartment when you can buy a new home for $699 a month with NO MONEY DOWN?" And at very low rates, I might add.
These are starter homes, smaller but quite nice. (Note: a lot larger than the houses I grew up in with three siblings!) But they are on the outskirts of town, and that triggered a thought in the back of my head. Joan McCullough had tipped me to this.
"Are you using USDA financing to get the no-money-down?" The short answer was yes, along with FHA (3% down) and VHA. And what, you may be asking, is USDA financing? And how do I get some?
The USDA is the US Department of Agriculture. They currently have $24 billion they can use for government-guaranteed financing of homes (up from $12 billion last year). This is not Fannie or Freddie, this is the good old US D of A. As in farms and stuff (and food stamps and housing and… basically they got all these odd mandates long ago, when congressional agricultural committees wanted to expand their power). From Real Estate Economy Watch:
"Founded in 1949 to spur home sales and development in rural areas, the US Department of Agriculture's popular direct and guaranteed rural housing loans today are one of the few places in America you can still get a mortgage with no money down at competitive rates.
"Borrowers don't have to be lower income; in fact they can make slightly more than the median. To qualify for the government guaranteed loans, borrowers can earn up to 115 percent of the median income for the area. Nor do they have to buy in a rural area. They can live relatively close to a major urban area or in a popular resort community, however qualifying areas were recently redrawn to comply with the program's rural mandate.
"Best of all, no down payment is needed to get financing through approved lenders, which makes the USDA program more attractive to borrowers who qualify than FHA." (emphasis mine)
And there are actually subsidies available, so that you might not need to make the entire payment. Now, you can't use this to buy a McMansion. You have to be in a rural area, which has come to be defined as outside the city limits (except in certain areas). There are income limits. The program does attempt to help lower-income families, and I am not trying to be snarky here, but these are government-guaranteed loans (read: taxpayer-guaranteed) at 100%, being handed out in areas where in the city homes are going into foreclosure and need someone to live in them, yet right outside the city you can buy this cute new home. Which is a situation more or less guaranteed to keep home values down in the rural outskirts, yet we want first-time buyers to snap these up!
The intention here is all well and good. And the buyers are seeing it as a way to reduce their monthly payment, and a house is still the American Dream. And, over time, it will be. If they stay in them long enough and don't need to move, etc. I just think the unintended consequences (there are those words again, as we're talking about a government project) are likely to be larger than anyone thinks.
I invite you to go to rurdev.usda.gov. Look around. Notice that 4 of the first 5 press releases on the home page have the words job creation in their titles. Plus a lot of other current buzz words, like energy, environment, etc.
This whole side trip got started with our analysis of the Fed and its recent actions. Let's quickly return, before moving on to Social Security. This week's action is not useful. It falls under the category of "Let's do something to show we know there is a problem." It will provoke suspicion or opposition among those of a conservative monetary bent, probably hurt small and medium-sized banks (as it drives down the yield curve, which bankers depend on to make money), and lower interest rates for savers.
Read more: businessinsider.com |
