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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (70885)	10/3/2006 9:37:59 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

Most engineers I know can pay over 50% of their income in housing, so be it? What is your problem with this what exactly do you suggest? should the regulations be rewritten so that "most engineers" known by Lizzie Tudor can borrow as much as they want, but the rest of the population must adhere to stricter lending requirements? ok to restrict my mortgage based on some crazy scheme that seems to apply to a lot of people you know but nobody I know. i don't know why you infer that these are people that "i" know but you don't. (though i am happy to concede your superior familiarity with geek workaholics) believe it or not, when i talk about a broad subject like lending regulations, i take what is called a "macro" perspective, which means i don't think regulations should be determined based on what would have pleased me personally when i was 25 years old, or what might please my coworker. this "macro" concept means trying to look at the big picture--that is, forget about what happened to you 15 years ago, forget about your coworker. look at society at large. look at history. look at what has worked, what hasn't worked. and decide accordingly. if you set lending up to 50% DTI, you will create problems--that's a sure thing!

To: Lizzie Tudor who wrote (70885)	10/3/2006 11:39:21 PM
From: TimbaBear	Read Replies (1) \| Respond to of 110194

....but the government felt that it was ok to restrict my mortgage based on some crazy scheme ..... Were you applying for a government-backed loan (FHA, VA)? If not, then the government had nothing to say about your loan. If you were, the DTI limits for FHA are (and were then) 41%, and the VA had no max DTI, they had what they called "residual income guidelines" and your income would have exceeded any parameters there. If you are talking FNMA-type loan guidelines, those are conventional loans underwritten to set standards. Those standards only have to be adhered to if the originating source wants to immediately sell the mortgage to FNMA. Otherwise the originaotrs have quite a bit of discretion in standards. But in no way is the "government" involved in saying "yes" or "no" to you. The FNMA guidelines for DTI were 36% unless you were applying for the max LTV loans. If you were making all that money and were a geek that didn't have any outside expenditures, then you wouldn't be needing the max LTV would you? You seem to have a gripe with DTI limits being used for high income, but if you make more, the same percentage applied to your income level means you can buy much more house. I mean someone bringing down $5,000/ month has an $1,800 limit in which to fit housing and all other credit obligations. In your example of $16,000/month that means $5,760 to cover housing and all other credit obligations. Since each additional $665/mo of P&I buys another $100,000 of mortgage (7%, 30yr fixed), that's quite a bit more house if one just stays within the guidelines. With more money down, demonstrated ability to save, and great credit, I've seen that DTI stretched to 50% in conventional products. In the last few years 100% purchase money and no income verification combined with interest-only and negative amortization products to virtually remove any notions of DTI limitations. Timba