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To: Tommaso who wrote (21935)	1/21/2005 2:11:40 PM
From: XBrit	Read Replies (1) \| Respond to of 116555

[OT kinda] California. Bought 1993, $230/mo property taxes forever. New next door neighbor, moving in Saturday, identical unit, $630/mo. Hey our schools are falling apart, but is this a great country or what? (mild sarcasm intended)

To: Tommaso who wrote (21935)	1/21/2005 2:43:08 PM
From: kikogrey	Respond to of 116555

I think they are proud to live in such wonderful expensive houses I guess I would be in that group but here's a different perspective. We bought our house in 1979 and since then several remodels and we end up owning free and clear a pretty expensive beautiful home in a great area in So. California. Our taxes are low and I feel like I never want to sell this home (cause I'd never afford this neighborhood again!). However, my point of view is somewhat different--I see my kids being screwed by these high home values. My oldest is newly wed and starter homes in her area (translation --outdated dumps) go for around $800,000. So what I'm seeing is lots of parents like me are sitting pretty on a paid for house only to see their kids (and grandkids) move out of state to afford a house. It's very hard to save up a downpayment from employment for houses in So. California so if the young kids don't win a lotto or get an inheritance they are SOL. I don't particularly see that as good. Yes, I feel good that I have a lot of equity in my home but I would rather that young people today could afford at least a starter home. My 24 y.o. daughter and I were having a conversation the other day about all the entitlement programs for the elderly, many of which I feel are not fair because some of the seniors have more money than they know what to do with but feel entitled to everything (many elderly I know feel that free health care and upteen zillion drugs are their God-given right).

To: Tommaso who wrote (21935)	1/21/2005 4:05:27 PM
From: mishedlo	Respond to of 116555

High cost of a low-payment loan WASHINGTON — Are low monthly payments on a home mortgage always good? Are you kidding? Of course they are, you might answer. But a report issued by a Wall Street firm suggests that some low-payment loans in today's hot market could cause problems for borrowers who don't really understand the risks they entail. FOR THE RECORD: Loan amount —A story in Sunday's Real Estate section, "High Cost of a Low-Payment Loan," miscalculated the increase on a sample loan after the initial payment period. The article said that the payment change from $1,167 to $2,184 was a $917 increase. It is a $1,017 increase. The report is from Dominion Bond Rating Service, a company that evaluates the risk characteristics of mortgage securities purchased by deep-pocket investors. Those bond investors now provide most of the funds lent to U.S. home buyers, and they view defaults and foreclosures as dread diseases to be avoided. The study focused investors' attention on two widely used loan features that reduce buyers' monthly payments or let them fudge their incomes: interest-only loans and no-documentation "stated-income" mortgages. "Some of the new mortgages we see are very scary," said Susan Kulakowski, a Dominion vice president and co-author of the report. "They allow people to qualify solely on the basis of a low initial payment" rather than on what they can truly afford. Then the mortgages turn into money-gobbling monsters that can push consumers into payment shock, default and foreclosure almost overnight. Kulakowski is especially concerned about the short-term "hybrid" interest-only loans now flooding the market to help consumers with marginal credit or income buy houses. Interest-only mortgages require no pay-down of principal for a set time at a low fixed-interest rate. Payments during that period typically are set well below what a borrower would pay on a conventional, 30-year fixed-rate loan. At the end of the initial period, which may be as short as two or three years, the loans convert to fully amortizing adjustable-rate mortgages at prevailing market rates. Principal reduction now kicks in, but because of the compression of the payback period — 25 to 28 years — and the addition of principal to the payment mix, the total costs can balloon 50% to 70%. Marginally qualified home buyers jolted with such payment increases within 24 to 36 months of their purchase "are very likely" to be pushed beyond their ability to pay the loan, Kulakowski said. Their only option may be to refinance, but since they may still not be able to afford market-rate payments, they could be stuck over their heads in house debt. As an example, Dominion's report tracked a popular "3/1" interest-only hybrid — closed in September — through a projected payment scenario over the next 10 years. The original loan was for $350,000, at a 4% payment rate for the initial 36 months. (The "3/1" designation refers to the initial three-year period of fixed payments on interest only, followed by conversion to a market-rate adjustable whose rate changes once a year for the remaining 27-year term.) The buyers' initial-period payment, which they used to qualify to purchase the house on their then-current income, came to just $1,167 a month. That is $773 a month less than they would have to pay on a competing, 30-year fixed-rate mortgage of $350,000 at September's lowest-available 5.28% rate. What happens after the 36th month? The payment rockets to $2,184 — an overnight increase of $917 that would put a severe strain on most new homeowners' budgets. In a faster-rising rate environment, the shock would be even worse. By year 10, according to Dominion's projections, the owners would be paying close to $2,700 a month. Kulakowski is concerned about other default-prone mortgage products too. Potentially worst of all are "stated-income" loans made to borrowers with marginal credit scores. Stated-income or no-documentation loans allow borrowers to dispense with the usual proof of income — W-2s from their employers, for instance — and proof of assets such as bank deposits. Dominion says no-documentation mortgages "were originally intended for self-employed borrowers" who owned businesses or had substantial income or assets they did not wish to list as part of a loan application. Recently, however, the concept "has been expanded to include salaried borrowers who cannot or will not show proof of income." Why don't people with W-2 documented salaries want to show them? Many are buying houses with prices they can't afford. And if the economy falters or their incomes drop, they will be the first into foreclosure. latimes.com

To: Tommaso who wrote (21935)	1/21/2005 6:15:06 PM
From: mishedlo	Respond to of 116555

Home sales to fall slightly in 2005, Fannie Mae says Company also expects slower home price appreciation By Robert Schroeder, MarketWatch Last Update: 11:47 AM ET Jan 21, 2005 WASHINGTON (MarketWatch) - Home sales should fall in 2005 thanks to a reduction in demand and modestly higher mortgage rates, mortgage finance company Fannie Mae said Friday. Fannie Mae (FNM: news) is projecting a decline in new home sales of more than 8 percent, to 1.1 million units-still the second-strongest year on record. Sales of existing homes, meanwhile, should fall by 7 percent to 6.15 million units, Fannie Mae economists David Berson and Orawin Velz said. Homeowners in most parts of the U.S. should see their homes' values increase by about 4 to 5 percent this year, the Fannie economists said. But they warned that there are "affordability concerns" in some housing markets and on both the east and west coast. The projected value increases are a significant departure from recent appreciation levels. Average U.S. home prices increased nearly 13 percent from the third quarter of 2003 through the third quarter of 2004, according to the Office of Federal Housing Enterprise Oversight. But high home price levels were bound to come down, Fannie economists suggested Friday. "A combination of record housing demand, fueled in part by a substantial rise in investor purchases, and increasing constraints on new supply has pushed up home price inflation to unsustainable rates over the past few years," they said in a report on economic and mortgage market developments released Friday. Other economists share Berson's and Velz's cooler outlook for the housing market. "There is going to be a passing of the baton on the economy. Housing will not be the engine it was," David Seiders, chief economist for the National Association of Home Builders, told a recent conference. Seiders told an audience at the International Builders Show that declines for housing should be modest and the level of activity should be "great." But he said both housing and the economy face "stiffer challenges" in 2005 than they did in 2004, particularly the higher course interest rates will set as the Federal Reserve continues to boost its fed funds target rate. The NAHB 2005 forecast calls for new-home sales to fall to 1.14 million from 1.19 million in 2004. Existing-home sales will also decline from about 6.6 million units to 6.4 million units. Housing starts will also drop back, to 1.88 million units from 1.95 million units in 2004. custom.marketwatch.com{4006F9AC-1850-42C9-B851-F187AF3A1EAB}&alias=/ht/nw