Comments on: How the mortgage industry lies with statistics http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Andy124 http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-48956 Mon, 06 Jan 2014 10:34:18 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-48956 Choosing the right mortgage should be based on your capacity to pay on time and you to choose a good mortgage is very important since this is a long term commitment. Make sure you find a mortgage service with small interest rates. If you want to find a simple service that will find the lower rates for you I recommend
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By: huntert http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-28438 Tue, 12 Jul 2011 16:24:39 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-28438 Absolutely great article. I read a lot of blogs and statistics and this took me a while to wrap my head around exactly what you were saying because of how absurd the lobbyist’s delivery is. I am very impressed by the fact that you caught the subset structure in the graph. WHAT A JOKE!!! Thank you very much.

I will be mentioning this article in my blog…

www.thecashflowisking.com

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By: AnthonyGuarino http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-28159 Tue, 05 Jul 2011 13:57:55 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-28159 Felix accuses the Coalition for Sensible Housing Policy of making arguments it’s not, in fact, making. We are not saying that low down payment loans aren’t riskier than higher down payment loans. Industry statistics – including the data in Mr. Salmon’s blog post – show that the greater the down payment, the less likely a loan ends up in default.

What the chart in the white paper shows is that low down payment loans that follow strong underwriting and product standards (e.g., no negative amortization, no interest-only features, protection from sharp payment increases, full documentation of income and assets, etc.) can be exempted from risk retention without exposing investors or the broader housing market to undue risk.

The red bar in the chart in our white paper shows the performance of mortgages originated from 2002-2008 that DO NOT meet ALL of the standards and features outlined in the note in the original chart. The other bars show the performance of mortgages that meet ALL of these product and underwriting features.

Within this second group of bars, the blue bar shows how loans performed that met all these standards, plus had a 20 percent down payment or more; the green bar shows loans that met all the standards plus had a down payment of at least 10 percent; and the purple bar shows those loans with at least a five percent down payment. Naturally, loans with strong standards AND at least 20 percent down performed best. But – and here’s the bottom line – the chart also shows that including loans with lower down payments BUT WITH STRONG STANDARDS in a QRM definition won’t create excessive risk.

Our point, – and this is a policy judgment with which Mr. Salmon may disagree – is that requiring a 10 or 20 percent down payment IN ADDITION TO strong underwriting raises the cost and reduces the availability of mortgages for otherwise creditworthy families, but does so with only minor improvements in overall default rates. The Coalition believes this is an unnecessary trade-off that would have a disproportionate impact on moderate income and minority families and would undermine efforts to create a sustainable housing recovery.

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By: kisno http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-27972 Mon, 27 Jun 2011 18:04:31 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-27972 Beautiful work Mr. Salmon–your stats professor would be proud. Now let’s see if we can get this out there to the “right” people.

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By: NeilK http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-27954 Mon, 27 Jun 2011 11:28:33 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-27954 I firmly believe that a higher down payment is needed when Home prices are inflated and speculative. But I also believe that when the Home prices are normal (as they are at this time), affordability and a borrowers credit history should be a deciding factor rather than a down payment. The percentage of down payment should be used purely as a tool to control speculation rather than as a tool to control the banking system.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-27939 Sat, 25 Jun 2011 20:28:06 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-27939 “To even suggest people take huge hits on their only major investment of their lives is lunacy.”

Is it better, then, to support prices at a level that bankrupt us all? Young, old, renters, homeowners alike?

One way or another, you pay for the cost of what you live in. A rise in real estate values has minimal impact on those who already own, but it makes housing much more expensive for those who do NOT already own. Turn this around, and a decline in real estate values could be a net positive — if it happens slowly enough to avoid triggering another wave of defaults.

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By: vforv http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-27938 Sat, 25 Jun 2011 18:57:55 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-27938 The numbers don’t mean anything. Since the banks abused the system with bad loans. They intentionally went after the unqualified to an extreme degree, for profit, and then crashed the market. The charts show how giving bad mortgages continued to escalate.

A return to qualifying standards before the run on bad loans and high profits, is the simple solution.

1 or 3 percent down is still a great way to get people into homes, if they qualify with minimum incomes like before. To even suggest people take huge hits on their only major investment of their lives is lunacy.

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By: txgadfly http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-27914 Fri, 24 Jun 2011 21:18:00 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-27914 If the purpose of Federal guarantees on mortgages is to make housing more affordable for more people, why not require the sales price to be under the median sales price for the past 12 months? Why subsidize the upper half of the income spectrum? They do not need it.

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By: rjfisher http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-27912 Fri, 24 Jun 2011 20:06:34 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-27912 very easy to say increase the DP to 20%, but in most markets (in a good neighborhood with good schools, etc) close to the left and right coasts that means a DP of at least $60,000. For the average american in those markets, that’s just not feasible as alot of them have burned through some of their nest egg over the past few years due to unemployment. $60k for them might take 5 years for them to buy. I can see a change from the FHA 3.5% to say 10%, but 20% is a HUGE difference and if passed get ready for another big decline in home prices.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/06/23/how-the-mortgage-industry-lies-with-statistics/comment-page-1/#comment-27910 Fri, 24 Jun 2011 19:50:10 +0000 http://blogs.reuters.com/felix-salmon/?p=8761#comment-27910 Perhaps that is where these proposals are coming from, Thucydides?

The banks realize that real estate is STILL overpriced, and that another drop of 20% (or more) would truly hammer their books. They are willing to do or say anything to prop up the market — including a continuation of risky lending practices.

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