FHA Mortgage Insurance Premiums may triple

User Forum Topic
Submitted by HLS on June 12, 2010 - 9:25pm

June 11, 2010
The House of Representatives overwhelmingly passed an FHA reform bill to triple annual premium payments to 150 basis points, a move designed to bolster the insurer's finances.

(On a $400K loan the monthly charge would go from $183 to $500)

For any mortgage involving an original principal obligation that is less than 90% of the appraised value of the property, this premium may be required to be paid for the first 11 years of the mortgage.
If the downpayment is less than 10%, the premium will be assessed over 30 years.

The final tally on the vote for the FHA Reform Act (H.R. 5072) was 406-4.

In a statement, HUD secretary Shaun Donovan said the bill would enable the Federal Housing Administration to "reform its current mortgage insurance premium structure by shifting some of the upfront cost to the annual premium—a move that will increase FHA's capital reserves and reduce risks" to the government insurance fund. With the House bill passed, the Senate must come up with its version of the measure.
**
8.5% of FHA single-family loans were 90 days or more past due in April
**

Submitted by jpinpb on June 13, 2010 - 12:40am.

That's one way to force people to put more money down.

Submitted by Huckleberry on June 14, 2010 - 10:52am.

HLS wrote:
June 11, 2010
(On a $400K loan the monthly charge would go from $183 to $500)
**

HLS, you meant annual charge, not monthly, correct?

Submitted by HLS on June 14, 2010 - 11:19am.

Huckleberry wrote:
HLS wrote:
June 11, 2010
(On a $400K loan the monthly charge would go from $183 to $500)
**

HLS, you meant annual charge, not monthly, correct?

Annual premium would go from $2200 to $6000.
I cannot imagine that this will pass as proposed. It will not help the artificial market the govt is desperately trying to protect.

FHA is like assigned risk auto insurance, it allows people with very little money and a low credit score to get a mortgage. It may get more expensive. They may be facing huge losses that have not been disclosed yet.

With a decent credit score, Fannie/Freddie are far better loans, but you need a higher credit score to qualify for 5% down. The mortgage insurance premium needs to be factored in as well.

The real fear is that FHA has allowed people to buy homes in the last few years who will default if the market continues to fall and people remain unemployed.

There was no need for FHA loans prior to 2007 when 100% financing, stated income and 2nds were available. They were a tiny part of the financing market. Less than 5% (?) Recently I think that FHA is around 35%.

Submitted by andymajumder on June 14, 2010 - 11:41am.

They need to be careful how they reduce more people from relying on FHA loans....but I don't see how things will not get worse from here.
37% of all loans in SD county in April were FHA loans...I am quite sure in the sub 500K market the share of FHA loans is much larger, these are all people with bought with 3.5% - 5% down. Now even if insurance premiums go up half as much as what you mentioned here (FHA loans are already quite expensive), FHA buyers will shrink considerably which in turn will shrink the no. of buyers significantly (there's no way suddenly more buyers with high downpayment are going to emerge). This will definitely pull prices lower and thus take a lot of the existing FHA owners who have bought in the past couple of years with 3.5% down underwater and lead to more people walking away and foreclosures....another downward spiral. I would suggest people with 20% downpayment should now just hold tight and watch this play out.

Submitted by HLS on June 14, 2010 - 11:58am.

It should be clear that FHA/Fannie/Freddie DO NOT make housing affordable as they were intended to do, they make housing unaffordable by allowing prices to remain inflated.

The govt CANNOT let housing collapse completely. It is too large a part of the economy. They will drag out the pain for years and hope that the more recent buyers will be a better risk than the previous buyers.

The longer it takes, the more stable the market becomes and they look like they fixed it.
Many established areas will find their own bottom through normal supply and demand, sooner rather than later.
If unemployment gets worse, housing will get MUCH worse.

Housing market is just a cross between a Ponzi scheme and multi level marketing that allows many people to profit, but some people do get burned.

Submitted by scaredyclassic on June 14, 2010 - 12:34pm.

can one infer then that current FHA loans are a screaming good deal? They're 1/3 the price of what they're going to be, right? Seems like pretty cheap money...relatively speaking....

Submitted by bearishgurl on June 14, 2010 - 12:57pm.

HLS wrote:
. . . There was no need for FHA loans prior to 2007 when 100% financing, stated income and 2nds were available. They were a tiny part of the financing market. Less than 5% (?) Recently I think that FHA is around 35%.

HLS, I don't recall putting ANYONE into an FHA in the late eighties to early nineties or early 2000's or even a seller having an existing FHA loan in SD.

At some point since 2000, the FHA loan limit must have SOARED because the limits set by FHA were always too low to be of any use in this area.

I DO remember builder Lane Kuhn selling the entry-level "cottages" around Eastlake Shores in 1987/88 with FHA loans. The prices were $88K to 97K and some of my co-workers bought them and asked me to review their Reg-Z's when they first went into escrow. At that time, the FHA loan limit was probably around 97,500 to 103,500 and FHA charged ALL the MMI up front which was about 4 pts. of a 93,600 loan. or $3744. the lump-sum MMI was wrapped into the loan, causing the 96.5% loan to be 100.5%. There were no monthly MMI payments. Most of these co-workers got rid of their MMI in the nineties by getting the property reappraised and received a portion of their up-front prem. back in the form of a rebate.

The "cottages" were the ONLY SFR built out there that qualified for "FHA" financing. Don't know about the condo complexes but I think Villa Capri and Camelot did also, when they were new.

HLS, what is the purpose of obtaining an FHA loan if the MMI is so exorbitant that it adds several hundred dollars a month onto the mtg. payment without loaning any more money? In my mind, this is just a extra non-deductible expense like HOA or MR.

What happened to paying the MMI premium up front?? I haven't been following FHA developments over the years.

Submitted by scaredyclassic on June 14, 2010 - 4:21pm.

this would have made scaredycat a little nervous about buying a house. but walter white doesn't give a damn.

Submitted by garysears on June 14, 2010 - 8:39pm.

I think this effectively raises the interest rate on all FHA loans by 1.5%. How is raising the minimum down payment not better? Raising the minimum down payment would save more money in the long run (if that is the goal, but I'm not sure what the real goal is here).

I wonder if the 3.5% down buyers will be quicker to walk on an underwater house when they see that extra 4k per year extra down the drain for the foreseeable future.

I think if enacted this changes the rent/buy numbers significantly for the marginal crowd (if anyone does numbers).

Submitted by HLS on June 14, 2010 - 11:03pm.

Way too simple to say that it adds 1.5% to the rate. It makes a 5% loan a 7% loan. It varies with the rate.
***************
what is the purpose of obtaining an FHA loan if the MMI is so exorbitant that it adds several hundred dollars a month onto the mtg. payment without loaning any more money?
What happened to paying the MMI premium up front??
*****
FHA is the ONLY game in town with a crappy credit score. With only 5% down you need 700+ with F/F.
FHA will allow much lower scores but you will also pay 2.25% funding fee up fron with FHA.
The funding fee can be added to the 96.50% loan.
The MI will be paid over the life of the loan. On any FHA loan MI is currently mandatory for 5 years, regardless of equity.

It appears that the new proposal is to pay it for 30 years if you buy with less than 10% down OR 11 years with 10% down. (the proposal is absurd)

The purpose ? To sell homes to foolish people who don't realize that they are overpaying because this idiotic financing is available.
The govt relies on uneducated, financially illiterate homebuyers to keep the Ponzi scheme going.
Why else would they limit loan mods to 31% of income BUT approve new buyers at up to 50% of their income? Only to stretch out the fall in prices, expecting a large % to default in the future.

F/F are losing billions, FHA cannot be far behind. Most FHA losses are being covered up like cat poop in a litter box. 100% of the losses are on loans originated in the last 5 years, but an easy modification avoids booking the loss. Extend and pretend. Perpetuate the myth.

The American dream has turned into a nightmare for many. George Carlin said it best, "You'd have to be asleep to believe it"

If FHA didn't exist, housing prices would be lower.

Submitted by bearishgurl on June 15, 2010 - 12:13am.

HLS wrote:
. . . FHA is the ONLY game in town with a crappy credit score. With only 5% down you need 700+ with F/F.
FHA will allow much lower scores but you will also pay 2.25% funding fee up fron with FHA.
The funding fee can be added to the 96.50% loan.
The MI will be paid over the life of the loan. On any FHA loan MI is currently mandatory for 5 years, regardless of equity . . .

The purpose ? To sell homes to foolish people who don't realize that they are overpaying because this idiotic financing is available.
The govt relies on uneducated, financially illiterate homebuyers to keep the Ponzi scheme going.
Why else would they limit loan mods to 31% of income BUT approve new buyers at up to 50% of their income? Only to stretch out the fall in prices, expecting a large % to default in the future.

F/F are losing billions, FHA cannot be far behind. Most FHA losses are being covered up like cat poop in a litter box. 100% of the losses are on loans originated in the last 5 years, but an easy modification avoids booking the loss. Extend and pretend. Perpetuate the myth.

The American dream has turned into a nightmare for many. George Carlin said it best, "You'd have to be asleep to believe it"

If FHA didn't exist, housing prices would be lower.

Thanks, HLS, I didn't realize FHA accepted low credit scores. I guess since there's no "subprime" market anymore and FHA's loan limit is so high, these bad risks can now use FHA.

I still don't understand how borrowers think paying the MMI (and "funding fee," if applic.) is a good deal.

Why would ANYONE want to buy property with only 3.5% down?? Why not just RENT and save more $$ and later obtain a loan with better TERMS??

The FHA program rules are defeating the apparent "movement" to get solvent borrowers in properties who will not be "underwater" again a minute and a half after escrow closes.

It's just mind boggling!!

Submitted by HLS on June 15, 2010 - 6:04am.

We aren't dealing with too many people who think.
FHA is the new subprime. Without it, the houisng market would collapse.

We are dealing with a society that has an entitlement attitude and thinks that their civil rights are violated if they can't get a mortgage.
Greed and foolishness is rampant. People think they are looked down upon if they are a renter.

The wise ones have been renters the last 5-6 years and have no money in the stock market. How UNAmerican is that ?

The recent move to "address risk" at FHA was if a credit score is below 580, you need 10% down. Above 580 3.50% down is still possible, and the seller can only contribute 3% of the sales price instead of 6%.
This is a very, very, sick situation.

http://portal.hud.gov/portal/page/portal...

Submitted by eavesdropper on June 15, 2010 - 6:29am.

bearishgurl wrote:
....What happened to paying the MMI premium up front?? I haven't been following FHA developments over the years.

bearishgurl, not sure, but I believe that, currently, there is a two-part premium: a substantial amount up front at closing, and a monthly premium payment until equity in home reaches a certain point. Sorry to be so vague: normally I would check it out, but am up to my neck in studying, so will have to leave clarification to the experts. Any takers?

Submitted by eavesdropper on June 15, 2010 - 6:53am.

HLS wrote:
We aren't dealing with too many people who think.
FHA is the new subprime. Without it, the houisng market would collapse.

We are dealing with a society that has an entitlement attitude and thinks that their civil rights are violated if they can't get a mortgage.
Greed and foolishness is rampant. People think they are looked down upon if they are a renter.

The wise ones have been renters the last 5-6 years and have no money in the stock market. How UNAmerican is that ?

The recent move to "address risk" at FHA was if a credit score is below 580, you need 10% down. Above 580 3.50% down is still possible, and the seller can only contribute 3% of the sales price instead of 6%.
This is a very, very, sick situation.

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016

HLS, I've noticed what you term as the "entitlement attitude" also, and it doesn't appear as though the rocky financial shoals we've been experiencing recently have been a deterrent to borrowers or lenders. I kept hearing that the days of zero percent down were over, but that's not what I'm seeing. What I'm especially struck by is the attitude of very young adults (20-22) who are living with their parents, and insisting that they have to buy a house before they can move out (sheltering that $25K annual salary from income taxes can be challenging). I admit to spitting up a little in my mouth when I watch "House Hunter"-type shows, and hear an appalled 21-year-old college dropout complain that the kitchen doesn't have granite or stainless, and there's only two bathrooms, and neither has double sinks!

Yes, I'm older than dirt, but I remember just wanting to get the hell out of my parents' house at any cost. If an apartment had affordable rent and at least intermittent running water in its ONE 4' x 3' bathroom, I signed on the dotted line. Buying was something you saved for, and, when you bought, a substantial amount of your capital was in that property.

Just like Social Security and Medicare and some other entitlement programs have been expanded far beyond their original purposes and provisions, so has government funding of home ownership. I am alarmed by what appears to be the Feds filling the home financing void left by skittish financial institutions.

Do you know who it was in Congress that sponsored this recent initiative on the mortgage insurance increases? I never fail to be shocked by the appallingly low level of financial IQs among our elected officials. Is it possible that none of the large number that voted on this can comprehend what an increase of $450 and up will do to people's ability to cover their monthly mortgage payment? And this is on top of the exorbitant hikes in property taxes in some areas where local governments are attempting to increase revenue.

Submitted by scaredyclassic on June 15, 2010 - 7:05am.

So going forward are price declines a reasonably sure thing?

Best guess?

Submitted by blahblahblah on June 15, 2010 - 7:25am.

The government will get out of the housing business when it gets out of the medical business, the war business, the energy business, the education business, the food business, the air travel business, and too many more for me to remember.

It will eventually get out of all of these, but not by choice. It could be next week, it could be 80 years from now. Rome had a 400-year slow-motion collapse.

Ya gotta live somewhere. Might as well get an FHA loan, I say.

Submitted by eavesdropper on June 15, 2010 - 8:04am.

CONCHO wrote:
The government will get out of the housing business when it gets out of the medical business, the war business, the energy business, the education business, the food business, the air travel business, and too many more for me to remember.

It doesn't bother me so much that they're in these things (some things are just facts of life), but it gets my knickers in a twist when opportunistic politicians allow for unlimited expansion of expensive programs. For example, there are far more people applying for disability benefits under Social Security/Medicare, than there are retirement benefits. And quite a few of those are pre-school kids!

The fallout from this limitless growth is that we've become a society in which motivation to take care of ourselves and our own is becoming a scarce commodity. There are quite a few large studies that have been following cohorts of seniors and pre-seniors for several years. They show that the younger ("boomer") generation cohort (in their 50s) in the study is reporting much higher rates of disability than did the older cohort (in their 80s) for the same conditions.

What really twists my knickers to the seam-busting point is when I meet up with, or read about, "conservative" citizens complaining bitterly about government intervention in their lives, but who are receiving SSI, food stamps, Medicaid/Medicare (and usually bitching because the payments are too low). I've been seriously ill in my life, but continued to work and was fortunate enough to have employer-assisted health care coverage. But if I should become disabled in the future, why is it the government's job to take care of me? I may have to sit on the street in my wheelchair pan-handling, or I may die from lack of health care, but that's what life was until the mid-20th century.

That being said, I believe that we are morally compelled to take care of our truly needy fellow citizens, and am willing to pay extra taxes to do so. But I stress "truly needy", and I will do my utmost to stay out of that category for as long as I can. And as a fortunate citizen of this great nation, I will comply with whatever policy is adopted by the citizenry via their votes for government officials, whether or not it agrees with my personal mores and ethics.

I really wish the hypocrisy and the double-standards would stop, and that those screaming about excessive government intervention would revise their personal expectations of that intervention, and start taking care of themselves and their families.

Submitted by eavesdropper on June 15, 2010 - 8:23am.

walterwhite wrote:
So going forward are price declines a reasonably sure thing?

Best guess?

Housing prices? I believe that they will be a fact of life for at least 2 or 3 more years in the DC area where I live. Unfortunately, supplies of bank-owned properties in many of our areas have swollen to a really uncomfortable point, and what I feared most has come to pass: the banks are listing them at prices 25% or more below comps. This is following market-driven drops of 20 - 30% or more per year since early 2008. We're starting to see more people of all income levels simply ceasing to pay their mortgages, and waiting for the banks to come after them. So supplies of bank-owned properties will continue to increase for the foreseeable future.

We downsized in 2008 in an effort to avoid being stuck with the large family abode in our 60s, and trying to sell it at the same time as the rest of the boomers who bought the majority of them. We were dealing with sellers who hadn't gotten the memo about the real estate bust, and had to really fight to get a realistic price on what we bought (we couldn't afford to rent, tax-wise). We knew we'd experience a drop, but it's alarming how much and how fast - and it's due primarily to increases in supplies of bank-owned properties. For now, we're okay: no plans to sell for at least another 10 years. But our neighbors who need to move for work, or unavoidable personal issues, are really screwed.

Submitted by UCGal on June 15, 2010 - 10:42am.

eavesdropper wrote:
HLS wrote:
We aren't dealing with too many people who think.
FHA is the new subprime. Without it, the houisng market would collapse.

We are dealing with a society that has an entitlement attitude and thinks that their civil rights are violated if they can't get a mortgage.
Greed and foolishness is rampant. People think they are looked down upon if they are a renter.

The wise ones have been renters the last 5-6 years and have no money in the stock market. How UNAmerican is that ?

The recent move to "address risk" at FHA was if a credit score is below 580, you need 10% down. Above 580 3.50% down is still possible, and the seller can only contribute 3% of the sales price instead of 6%.
This is a very, very, sick situation.

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016

HLS, I've noticed what you term as the "entitlement attitude" also, and it doesn't appear as though the rocky financial shoals we've been experiencing recently have been a deterrent to borrowers or lenders. I kept hearing that the days of zero percent down were over, but that's not what I'm seeing. What I'm especially struck by is the attitude of very young adults (20-22) who are living with their parents, and insisting that they have to buy a house before they can move out (sheltering that $25K annual salary from income taxes can be challenging). I admit to spitting up a little in my mouth when I watch "House Hunter"-type shows, and hear an appalled 21-year-old college dropout complain that the kitchen doesn't have granite or stainless, and there's only two bathrooms, and neither has double sinks!

Yes, I'm older than dirt, but I remember just wanting to get the hell out of my parents' house at any cost. If an apartment had affordable rent and at least intermittent running water in its ONE 4' x 3' bathroom, I signed on the dotted line. Buying was something you saved for, and, when you bought, a substantial amount of your capital was in that property.

Just like Social Security and Medicare and some other entitlement programs have been expanded far beyond their original purposes and provisions, so has government funding of home ownership. I am alarmed by what appears to be the Feds filling the home financing void left by skittish financial institutions.

Do you know who it was in Congress that sponsored this recent initiative on the mortgage insurance increases? I never fail to be shocked by the appallingly low level of financial IQs among our elected officials. Is it possible that none of the large number that voted on this can comprehend what an increase of $450 and up will do to people's ability to cover their monthly mortgage payment? And this is on top of the exorbitant hikes in property taxes in some areas where local governments are attempting to increase revenue.


Eavesdropper... we must be the same generation (the older-than-dirt generation.) I also moved out as soon as I could with low expectations of working plumbing... and also get disgusted seeing the house hunters episodes that imply double sinks and granite are "minimum" standards.

And I also spent my high school years listening to the Ramones... but here in San Diego. Gabba Gabba Hey!

Submitted by jpinpb on June 15, 2010 - 12:30pm.

HLS wrote:

F/F are losing billions, FHA cannot be far behind. Most FHA losses are being covered up like cat poop in a litter box.

HA-HA. Good one. I'll have to use it sometime.

bearishgurl wrote:
Why would ANYONE want to buy property with only 3.5% down?? Why not just RENT and save more $$ and later obtain a loan with better TERMS??

I'll tell you many whys. B/c coming up w/20% down 10 years ago was easier than coming up w/even 5% down today when looking at price of houses. B/c banks are making it difficult to lend. B/c the government is bent on propping up housing, so housing is still unaffordable for many and FHA is a way to get your foot in the door. For those who want to buy, but are uncertain of the real estate market, losing 3.5% is less risky than 10-20%.

Why not wait? I'll give you an example. Suppose you graduated college in 2001/2002. The real estate market was started its incline. You don't have a steady job yet and you're focused on getting your career squared away doing the right thing. By the time that happens, prices seem absurd. You continue to rent and save, hoping to find something that makes sense. Finally the bubble pops around 2008. Now the government is throwing money to keep it up and people are losing jobs left and right. Your own job may be in jeopardy. So you wait some more.

That's all you've been doing is waiting for 10 years. FHA starts looking good when you've been waiting that long. That's what the government wants you to do is get an FHA loan.

Or you can continue to wait. I'm going to assume scaredy's username. I'm scared I'll be in a senior home by the time this real estate mess resolves. At least I won't have to worry about buying anymore. ;)

eavesdropper wrote:
Yes, I'm older than dirt, but I remember just wanting to get the hell out of my parents' house at any cost. If an apartment had affordable rent and at least intermittent running water in its ONE 4' x 3' bathroom, I signed on the dotted line. Buying was something you saved for, and, when you bought, a substantial amount of your capital was in that property.

I can so relate. I moved out when I was 18 into a small, run-down apartment and was thrilled about that. And I just saved. Seems like another life now when you look back.

CONCHO wrote:
Ya gotta live somewhere. Might as well get an FHA loan, I say.

There you have it.

Submitted by bearishgurl on June 15, 2010 - 12:37pm.

UCGal wrote:
Eavesdropper... we must be the same generation (the older-than-dirt generation.) I also moved out as soon as I could with low expectations of working plumbing... and also get disgusted seeing the house hunters episodes that imply double sinks and granite are "minimum" standards.

And I also spent my high school years listening to the Ramones... but here in San Diego. Gabba Gabba Hey!

If you guys are older than dirt, than I must be petrified wood.

Like eavesdropper,I got my own place when I was 18, a couple of mos. BEFORE my HS graduation.

My first (1br) apt. ($140 mo.) in Denver had avocado green shag carpeting with matching appls. and bean bag chairs with green striped wallpaper in the "Dining area" which matched my green/brown striped vinyl 5 pc. dinette perfectly! To complement my "decorating scheme" I had two black velvet posters in the living room with black (purple) light tubes shining on them, a giant orange-ball lamp on a chain hanging from the ceiling, two floor-to-ceiling beaded macrame plant hangers with "lush" spider plants in them made by my bestest friends. The only things of value in there were my two 3' high JBL wood floor speakers, my Harmon Kardon reciever, my "Technics" strobe-lighted turntable and my extensive collection of LPs all showcased in a fabuloso plywood and cinder-block "entertainment center" assembled by me. The landlord let me paint the baseboards and moulding green, as well.

My first apt. in SD was a lg. studio with a brass Murphy bed and hot-water heat near Laurel St. It had a panoramic view of the bay and I-5, quonset huts, underbellies of jets, and SDGE incl. for $140 mo. Later, I rented a two-car "tandem" gar. on Albatross for $50 mo. Whenever a plane flew over our roof antenna, my TV screen would turn to "snow" - LOL! My building didn't have access to "Mission Cable" at the time.

Submitted by DWCAP on June 15, 2010 - 12:55pm.

Just to add a few reasons, not really defenses, to my 'slightly younger than dirt' generations behavior.

1) I am guessing both eves. and UCGal are white. My mom talks about moving out of the house 2-3 days after HS, which was the first chance she got. It is definatly a cultural expectation, where as my GF (not white) ended up in a fight with her mom when she graduated from college because mom wanted her to move home. Same thing for two or three of my Latino friends. Different strokes for different folks one could say. Infact, a filipina co-worker couldnt get OUT of the house until she got married. Both families wouldnt have it. They are both 30 and just now getting married.

2) Income and job prospects for youth are dim and decreasing. HS dropouts use to be able to work flipping burgers or cleaning offices or whatever. But now there is a steady supply of HS grads looking for those jobs because their cashier jobs and such are being filled by college grads. Even the early 80's recession didnt have the kind of labor stagnation that this one has. Unemployment under the age of 25 is like 20% right now. Itll only get worse too as all those kids hiding in unpaid internships or grad school start having to get real jobs.

3) Those shows only show the worst/dumbest/most watchable people. No one would watch the responsible 22 year old pulling up an excel file and figuring out 'I will have to rent'. Every generation has its idiots, dont judge the whole one on the bad apples. You wouldnt judge every new mother on 'octo-mom' would you?

4) They are only doing what their baby-boomer parents taught them, and edged on by their 'oh-so-trustworthy' government/media. You can complain about their culture of expectations, but those expectations are older than they are.

Submitted by UCGal on June 15, 2010 - 1:16pm.

DWCAP - yes - I'm white... pasty white. But my parents were HORRIFIED when I moved out 2 weeks after my 18th birthday... mainly because I didn't go straight to college. They put up roadblocks (didn't let me take the bed and dresser from my parents house - I had to buy used stuff), but I was determined.

BG - LOL on the LPs displayed in the oh-so-stylish cinder block and board shelving system. I had that as the primary design element of my first studio. I got quite the deal on it - $125/month for a studio in this place... I swear I'm shocked it hasn't slid off the cliff yet.
http://maps.google.com/maps?hl=en&q=3901...
(It's not the upscale blocks of Witherby nice Mission Hills stock - it's the dead end of W. California... then you look down and see a little 4-plex of studios perched half way down the cliff.)

Everytime I drive by on the freeway I laugh that the building is still there.

Submitted by DWCAP on June 15, 2010 - 2:18pm.

HLS wrote:
We aren't dealing with too many people who think.
FHA is the new subprime. Without it, the houisng market would collapse.

We are dealing with a society that has an entitlement attitude and thinks that their civil rights are violated if they can't get a mortgage.
Greed and foolishness is rampant. People think they are looked down upon if they are a renter.

The wise ones have been renters the last 5-6 years and have no money in the stock market. How UNAmerican is that ?

The recent move to "address risk" at FHA was if a credit score is below 580, you need 10% down. Above 580 3.50% down is still possible, and the seller can only contribute 3% of the sales price instead of 6%.
This is a very, very, sick situation.

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016

FHA is a crock, and should be killed. But then again, F/F are failed institutions in the most obvious way possible, and yet they are bigger than ever. Economics isnt the name of the game, politics is. Until the taxpayer bills come due no one will have the balls to do the right thing.

And people are looked down upon as a renter. They dont think they are. Now, they are obviously doing the right thing, and have been born out by 2008-now, but the mentality hasnt changed. I still hear friends say dumb things like 'throwing away money on rent' all the time.

Submitted by blahblahblah on June 15, 2010 - 3:45pm.

A few general principles:

1) Once government gets into something, it will never get out of it (until it eventually collapses under its own weight).

2)Any time the government tries to provide "affordable" XYZ, you can be sure that the price of XYZ will increase.

3) Borrowing and spending money that doesn't exist will debase the value of the currency eventually. That money has to end up somewhere, often where you least expect it.

Ignore these at your own peril. You may be totally correct as you wander the streets of SD 40 years from now, shouting at passersby - "It's the damn government intervention! That's why your houses all cost 10 billion dollars!" They'll shake their heads and ignore you as they head back to their 10 billion dollar crappy condos in Normal Heights, maybe stopping to pick up a thousand dollar six pack of beer on the way.

Submitted by scaredyclassic on June 15, 2010 - 5:09pm.

heh heh....i suspect you're right. but i'll be drinking the cheap stuff -- $500 a 6 pack. saving up for my downpayment. any day now...

Submitted by blahblahblah on June 15, 2010 - 5:43pm.

walterwhite wrote:
heh heh....i suspect you're right. but i'll be drinking the cheap stuff -- $500 a 6 pack. saving up for my downpayment. any day now...

Hahahaha. In the future, King Cobra malt liquor will be $100 a can.

BTW if you haven't seen "Idiocracy" it deals with this in detail.

Submitted by scaredyclassic on June 16, 2010 - 11:25am.

this seems an odd situation. are all the people bidding on houses who are trying to get them fha going to back out (or even be able to back out) if the rule changes before their loans are finalized?

contracts generally have an interest rate contigency but not a fee contingency, right? fha loan limits are pretty high around murrieta temecula, cover some pretty fancy housing, wondering if this will clear out some of the competition for the mid-level housing...

Submitted by andymajumder on June 16, 2010 - 3:51pm.

I am sure even if this passes, there will be a future date when these new rules will come into effect and people who are able to get their loans before that date will pay the lower premiums. Really curious to see if this passes in the same format in the Senate, because I really do think this is going to hurt home prices quite a bit in places like San Diego. I have been watching the market closely here and have already observed that condo or townhome communities which are not FHA approved seems to be selling at a discount compared to ones which do....buy that itself I can see that disqualifying FHA buyers shrinks the buyer pool quite a bit, also I guess folks with higher downpayment tend to negotiate harder. It will be a interesting few months for the housing market.

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