Cheap Mortgage Financing Going, going gone!
Did anyone catch this article in last weekend’s LA Times? “Under the Obama administration plan, Fannie Mae and Freddie Mac's function in financing home loans would be largely taken over by private companies in five to 10 years.
This is what caught my attention: "I think people need to put money down, I have no quarrel with that. It is not clear with me that it needs to be 10% in order for mortgages to be safe," said Green, who is a former Freddie Mac official.
So Mr. Green, "isn't clear” that smaller down payments have a higher risk of default? He "isn't clear” that a homeowner with a down payment of 20%, or 30% is less likely to default than a home owner with a 5%, or 10% down payment?
No wonder Freddie Mac had to be bailed out. I don’t think you need to be a JPL Rocket Scientist to be “clear” that home buyers with larger down payments are less likely to default.
And yes, apparently we do need to move to the private sector for mortgage financing. And obviously they aren’t going to want to lend their money for 30 years in the 5% range. I certainly wouldn’t lend my money for 30 years at that rate; not with the inflation train coming.
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This is what caught my attention: "I think people need to put money down, I have no quarrel with that. It is not clear with me that it needs to be 10% in order for mortgages to be safe," said Green, who is a former Freddie Mac official.
So Mr. Green, "isn't clear” that smaller down payments have a higher risk of default? He "isn't clear” that a homeowner with a down payment of 20%, or 30% is less likely to default than a home owner with a 5%, or 10% down payment?
No wonder Freddie Mac had to be bailed out. I don’t think you need to be a JPL Rocket Scientist to be “clear” that home buyers with larger down payments are less likely to default.
And yes, apparently we do need to move to the private sector for mortgage financing. And obviously they aren’t going to want to lend their money for 30 years in the 5% range. I certainly wouldn’t lend my money for 30 years at that rate; not with the inflation train coming.
Related Posts: What is an annual percentage rate
When is the best time to buy real estate
Adjustable loans the tricks and the traps
Posted by Phyllis Harb at 2/15/2011 3:25 AM 
Categories: All about Money, Interest Rates, Lenders, A Buyer's Perspective
Tags: freddie mac and fannie mae to be phased out
Categories: All about Money, Interest Rates, Lenders, A Buyer's Perspective
Tags: freddie mac and fannie mae to be phased out
Let's see...Fannie and Freddie are the government-engineered agencies largely responsible sending the nation towards bankruptcy. Lots of money sloshing around. And now they're hiding documents. It's not hard to guess what evidence is being hidden or destroyed, but I applaud determined efforts to dig out the specifics.
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