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| User Info | CORRUPTION: More FHA Bad Underwriting Proof in forum [Ticker] | |||
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Genesis Posts: 71403 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/1455-C....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-09-22 08:50:18
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Green415 Posts: 23 Incept: 2008-04-14 
San Francisco
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Good ticker. Should be "estoppel."
2009-09-22 08:55:37
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Buckeye Posts: 304 Incept: 2008-03-03
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The 4.25% rate looks really good. Time to refinance again!
2009-09-22 08:57:34
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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Note that is an adjustable rate.
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-09-22 08:58:28
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Themortgagedude Posts: 3930 Incept: 2007-12-17 
saint louis
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I don't have so much problem with this one. 67% ltv. Borrower knows they are putting the house on the line for the money. They will be able to pay. Better question here is on our taxation policy. This person most likely has income which is not being taxed. Fair Tax anyone? ---------- "These are interesting times. We don't trust the government, we don't trust the legal system, we don't trust the media, and we don't trust each other! We've undermined all authority, and with it, the basis for replacing it! It's like a six-year-old's dream come true!"
2009-09-22 09:01:34
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Karlmarxghost Posts: 2633 Incept: 2009-01-26
Stealing Your Property
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Government collusion to enrich banks and screw us peons? Get outta here!!! Just wait till Cap N Trade and these Health Exchanges pass into law. Youll see a hell of a lot more wealth and resources funneled from us peons to the financial institutions.
---------- My views are my view and mine alone. Karl or ticker forum does not endorse or necessarily agree with my views. DO not trade on my views or take them personally.
2009-09-22 09:02:12
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Green415 Posts: 23 Incept: 2008-04-14
San Francisco
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estoppel comment was meant for the MERS ticker, sorry (I'm on blackberry)
2009-09-22 09:08:28
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Anti Posts: 1286 Incept: 2007-10-09
Online
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"Such a lovely house.." is there a You Tube link?
---------- Health is better than health insurance http://gerson.org/ Over the past 60 years, thousands of people have used the Gerson Therapy to recover from so-called “incurable” diseases such as cancer, diabetes, heart disease and arthritis.
2009-09-22 09:14:02
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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I tried to find one and couldn't. You folks have all seen the PSA though I think.... I know I have - many times. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-09-22 09:16:29
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Unknownsailor Posts: 20 Incept: 2009-04-06 Kadena AFB, Okinawa
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I note without comment (or surprise) the State...
2009-09-22 09:18:20
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Mortgageguymn Posts: 181 Incept: 2009-03-09
North Coast
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Cash-out could mean consolidating an existing second mortgage. That's not what the lay person would think of as "cash-out", but that's how loans are underwritten. The non-housing debt might consist of installment debt with only 11 months left or child support that will end in a year. We don't know. I agree with you that this won't represent a loss to FHA. Lending someone money at 4.25% with which to consolidate their other debts should only be considered "predatory" if it should be considered the lender's fault that the person spends too much. "Stop me before I spend again" is not a plea that I have much sympathy with. If you want to make the case that the government shouldn't be in the lending business, I might agree with you, but if you want to argue that lenders should police borrowers' personal spending habits that seems pretty close to the nanny-state approach, akin to outlawing cheeseburgers because they're bad for you.
---------- "Neither a borrower nor a lender be." - Harold Hecuba
2009-09-22 09:40:14
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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They government should not be making loans that on a DTI basis are unsustainable.
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-09-22 09:41:11
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Spurlockrj Posts: 9 Incept: 2009-03-08
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Karl - off topic - numerous bond guys saying how treasuries might be a buy here again. Can you comment on this? What I see is: (1) risk that the dollar might go lower so you would get paid back with dollars which are worth less, (2) U.S. continues to issue massive new debt with the risk that rates might spike higher over time and the value of bonds drop accordingly, (3) inflation - just measured by the CPI - could rise and off set the low interest rates that bonds are currently paying. About the only reason I see to buy bonds is to avoid buying into an extended stock market, volatile commodity market or a questionable real estate market. Got cash? What do you do with it?
2009-09-22 10:06:47
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Mortgageguymn Posts: 181 Incept: 2009-03-09
North Coast
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"The government should not be making loans that on a DTI basis are unsustainable. " Even if the government has no risk and the resulting loan is better for the borrower than their current situation? I'd bet that if you polled the forum, if people put aside their understandable tendency to defer to KD, most people would not understand how it would be better to leave the borrower with X in monthly payments than to cut their payents to 2/3 X, "unsustainable" DTI notwithstanding. And I put "unsustainable" in quotes because we don't know if some of the borrower's non-housing debts will soon be gone through normal attrition. ---------- "Neither a borrower nor a lender be." - Harold Hecuba
2009-09-22 10:10:25
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Ggg71 Posts: 27 Incept: 2009-06-03 Swampscott, MA
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Everyone is missing the point arguing over whether this is a good loan or not. The question you should be asking is, why is the government backing this loan? We need to get back to a model where individuals have relationships with their local bankers. It should be the local bankers job to understand and interpret the mitigating circumstances of the loan, and set the interest rate accordingly. This is the problem with the whole global finance revolution. There are real people behind these loans, and to think that you can just hold up a credit score, and a front-end and back-end ratio and make sound judgments about the quality of a loan is completely ridiculous. This loan may make perfect sense, or it may make zero sense. The point is you can't tell from these numbers.
2009-09-22 10:37:55
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Do_the_math Posts: 1045 Incept: 2007-08-09
Canyon Lake
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Karl- can you get the page that contains the Underwriting Analysis Report? This will show the amount of reserves and whether the payment in increasing or decreasing. It will also show the qualifying rate used. Even at a 67.61% LTV, this DTI is too high. Equity doesn't help make the payment when borrowers can't access it. The equity pad is only $60,458, and that isn't that much of a pad going into a declining market. I also noticed there is an outstanding judgment. Equity cannot be used as means of paying back the loan nor can it be used as a reason to make a loan that is not financially sustainable. As far as cash out due to lien consolidation goes, seasoned seconds are not considered cash out on FHA loans. Only unseasoned seconds and equity lines with substantial withdrawals during the last 12 months are considered cash out. Understand also that this is an adjustable rate mortgage, and its important to know whether AUS used the start rate or 2% over the start rate. Adjustable rate mortgages are riskier than fixed rate loans, and if the start rate was used, the loan would be all the more toxic. Pay close attention to note #4 and the fact that the underwriter's signature is not required on the 92900-LT unless the loan is manually downgraded. This is program abuse, but its not on the part of the lender. Lenders are supposed to be able to rely on AUS so long as all information used is verified and correct. Now here is the wake-up- just over 80% of August 2009 endorsements were underwritten via AUS TOTAL Scorecard. Here is the August FHA Outlook report, and you will find the information on page 4: http://www.hud.gov/offices/hsg/comp/rpts.... This is a typical example of an AUS recommendation, and AUS is being used on just over 80% of FHA loans. ---------- "Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem." -Kentucky Senator Jim Bunning Last modified:
2009-09-22 11:44:15 by do_the_math
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Do_the_math Posts: 1045 Incept: 2007-08-09
Canyon Lake
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Its important to point out 24 CFR 203.33 which states:Quote:TITLE 24--HOUSING AND URBAN DEVELOPMENT http://edocket.access.gpo.gov/cfr_2009/a.... No where does it state that EQUITY may be considered as a means of repayment. FHA is bound by the law to ensure that the borrower's income is sufficient to make the mortgage payments and other long term obligations. Based on the information provided, the borrower's income is between $2200 and $2400 a month (depending on whether the note rate or 1% over was used for qualifying). At $2200 a month, the borrower would have about $1020 left over per month for income taxes, social security, insurance, utilities, maintenance, food, transportation, phone, health care, clothing, savings, etc. At $2400 a month, the borrower would have $1219 left over for the first year. However, the P & I payment could increase by 25% in just 2 years. After 2 years, if the borrower's income and monthly debts remained constant, the borrower would have $1035 a month left over. But if the borrower qualified at the start rate, they'd be left with just $832. See the problem? Whether this is sustainable would depend on the borrower's family size, work related commute and costs, lifestyle, etc. However, when borrowers have debt without savings, its usually an indication that their income is inadequate to maintain their lifestyle- especially on a cash out. While I understand that the borrower is ultimately responsible for their own decisions, FHA should never enable borrowers to commit financial suicide on the taxpayer's dime. Its better to decline the loan even if it means the borrower has to sell the property. Even if the borrower's debt consolidation results in overall lower monthly expenses, its important to consider whether or not the borrower had to resort to credit usage to maintain their lifestyle in order to carry the higher debt load. If so, the decrease to payments is not a compensating factor. A decline to housing and monthly obligations is only a compensating factor when it is accompanied by savings and minimal debt/credit use. Note: Post and math corrected to show that FHA ARMs qualify at 1% over the start rate. ---------- "Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem." -Kentucky Senator Jim Bunning Last modified:
2009-09-22 12:31:41 by do_the_math
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Future_shock Posts: 1141 Incept: 2007-10-16
Texas
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Just heard an ad on the radio today these guys are doing refinances via FHA. http://www.westlandfinancialgroup.com/se.... The radio ad pitch was no asset verification, no income verification.
2009-09-22 17:01:01
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Uwe Posts: 1029 Incept: 2009-01-03
Philly Burbs
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Quote:The question you should be asking is, why is the government backing any loan? Fixed that for you. -Uwe- ---------- “Political tags - such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth - are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire.” - Heinlein
2009-09-22 23:35:20
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Do_the_math Posts: 1045 Incept: 2007-08-09
Canyon Lake
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The question isn't so much why the government is backing loans as it is why is the government backing bad loans.
---------- "Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem." -Kentucky Senator Jim Bunning
2009-09-23 14:20:13
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Tesla Posts: 8174 Incept: 2008-04-03
Delaware
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Government backing of loans pushes up the price of houses. Government needs to get out of the business of backing loans. There's this thing called PMI that used to work just fine.
---------- "Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams I'd rather die on my feet than live on my knees. - Emiliano Zapata
2009-09-23 14:45:09
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Abn0rmal Posts: 2320 Incept: 2009-01-10
DFW Online
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Government backing of loans pushes up the price of houses. Government backing of loans pushes up the price of college. Prepaid health care pushes up the price of medical treatment. Business taxes and regulations push up the price of hiring American workers. I'm starting to see a pattern.
2009-09-23 14:54:17
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Tesla Posts: 8174 Incept: 2008-04-03
Delaware
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Really ? Well, that's racist, you know. 
---------- "Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams I'd rather die on my feet than live on my knees. - Emiliano Zapata
2009-09-23 15:02:55
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Do_the_math Posts: 1045 Incept: 2007-08-09
Canyon Lake
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Tesla, government insured loans also used to work just fine. The problem with the FHA program now is underwriting and overall government corruption (or incompetence- take your pick). And agency loans aren't fairing any better. Private MI can't support the type of losses generated by industry underwriting, so the government stepped in to continue Ponce Scheme style lending. Tighten government insured loan underwriting standards, procedures, and loan limits, and the program might not only survive but may encourage the market to adjust faster. Also, I don't find Jbyer's comments racist. The statement about business taxes and regulations pushing up American wages is true. American's can't complete with illegal immigration and outsourcing. I would also add that the American inflationary environment also pusses up the cost of American wages via cost of living demands. All fair statements. ---------- "Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem." -Kentucky Senator Jim Bunning
2009-09-23 16:40:10
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Tesla Posts: 8174 Incept: 2008-04-03
Delaware
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I didn't say they didn't work; I'm saying the backstopping caused prices over the years to rise more than otherwise warranted, as it enabled people to put less down and opened the market to more homebuyers, putting pressure on house prices. I bought my first house in 1981. Since I only had a 10% down payment, my interest rate was higher, I had to pay PMI, and consequently I had to buy less house than I'd have preferred. Any less than 10% and the bank would not have given me a mortgage and I would not have been in the market for a house. IIRC, the house cost about $45k. The racist comment - that was a joke 
---------- "Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams I'd rather die on my feet than live on my knees. - Emiliano Zapata
2009-09-23 17:09:06
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