Comments on: The invidious “down payment requirement” meme http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/ 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: traducere daneza http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-53612 Mon, 29 Sep 2014 14:00:39 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-53612 Wedding ceremony in which primarily through with body mass, It’s a particular warning flag about related intensity(Recommendations safe you might be with the weight and height). “That standard could be 15 when, Waterbury utters. Folks who wants do that a great many, Come up.

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By: QuietThinker http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46807 Mon, 29 Apr 2013 20:22:19 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46807 @Sechel History has recently shown us that without some skin in the game “LTV, DTI, documentation” is quite likely to be more fairy tale than substance.
Unfortunately there is currently a shortage of real bankers, ones who can do real honest underwriting of loans. The employees of today’s megabanks are not trained as bankers, but as corporate climbers. They know that, since their employer has no skin in the game, they will never be held responsible for the quality of their loan underwriting.

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By: Sechel http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46788 Fri, 26 Apr 2013 10:40:13 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46788 I don’t see any value in the 5% rule and effectively it will be gamed anyway. As an investor in mortgages what I should care most about is the LTV, DTI, documentation and servicing. If the bank decides to retain 5% or not is not that interesting. As far as the non-retained loans that get sold, I believe Wall Street will turn to REITS, and have them retain the 5%, so in the end not that important.

What I find discomforting about the LTV discussion however is talk that this protects the borrower, when it really serves to protect the true lender, those that own the mortgage debt. I expect we’ll hear pleas and lobbying from the usual cast of characters in favor of lower downpayments(The NAR, National Home Builders Ass, etc in other words, those that benefit, but are not exposed to default risk and only seek to maximize sales volume)

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By: silliness http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46787 Fri, 26 Apr 2013 10:27:21 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46787 If there exists a class of mortgage bond investors (outside the US government), then they should be willing to pay loan processors to provide mortgages which have minimal risk of default. Maybe they could even do it themselves! (oh wait, we used to call those businesses banks or savings and loans). But if the only investors willing to do this are the government, then let’s scrap the whole mortgage deal and let the housing market adjust to a new reality. Of all the things that government should do in the USA, the last one is loan me hundreds of thousands of dollars to buy an overpriced house and then give me a tax deduction that only serves to make the loan amount more expensive. (if I factor in my mortgage interest deduction I can afford a larger monthly payment.) Silly!

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By: onthelake http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46786 Fri, 26 Apr 2013 06:02:27 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46786 Sheesh MiltonRecht is utterly totally BEYOND CLUELESS!

Loans are not the same thing as a house or real property or tangible personal property. ONly a complete nitwit would try to analogize a loan to selling real or tangible personal proerty!

A loan is where Party A lends money to Party B and what A “owns” is the right to collect the amount of the loan plus interest!

The risk is whether the loan will be paid back + interest.

Having to retain 5% ownership is only retaining a 5% interest in the money that will be repaid (principal and interest.) That measn the bank that made th eloan gets back 5% of what it lent plus 5% of the interest paid.

It has no responsbilites like paying property taxes or anything else. It jsut has to wait to get back its 5% in principal and 5% of the interest!

Gawd help us all if such fools can vote!

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By: GRRR http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46783 Thu, 25 Apr 2013 20:23:40 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46783 It’d be easier to force lenders to pay an equal amount of PMI required of buyers, as an originator insurance, for the life of the loan.

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By: TimothyS http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46778 Thu, 25 Apr 2013 16:12:45 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46778 Felix is not a bank, much less a systemically important one that’s too big to fail, and he doesn’t have his own federal deposit insurance nor credit facilities at the Federal Reserve. In short Felix doesn’t need Dodd-Frank, but banks do — and they need a stronger Dodd-Frank, actually.

Banks that want to resell 100% of their loans can write 20% down mortgages. What’s wrong with 20% down? It’s a classic lending standard that has effectively limited banking risk and real estate bubbles for decades. Individuals who cannot afford 20% down have an excellent option called renting (which requires a security deposit by the way), or they can find a bank willing to take at least 5% of the (higher) risk. This sensible rule isn’t at all controversial: it’s basic, time-tested prudence. The fact banks are complaining about such reasonable regulation is reprehensible.

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By: Mikey111 http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46776 Thu, 25 Apr 2013 15:50:58 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46776 @milton — The bank is mediating the transaction that would not be able to happen without bank assistance. The seller is merely transferring ownership and is not responsible for determining whether the new owner is a good credit risk. That’s the responsibility of the lender. The lender gets generously compensated for this service from both sides of the transaction and should bear some long term responsibility for making this bet on the new buyer, as the law was trying to do.

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By: Mikey111 http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46775 Thu, 25 Apr 2013 15:46:34 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46775 @milton — The bank is mediating the transaction that would not be able to happen without bank assistance. The seller is merely transferring ownership and is not responsible for determining whether the new owner is a good credit risk. That’s the responsibility of the lender. The lender gets generously compensated for this service from both sides of the transaction and should bear some long term responsibility for making this bet on the new buyer, as the law was trying to do.

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By: VirtualThumb http://blogs.reuters.com/felix-salmon/2013/04/25/the-invidious-down-payment-requirement-meme/comment-page-1/#comment-46774 Thu, 25 Apr 2013 15:34:12 +0000 http://blogs.reuters.com/felix-salmon/?p=21482#comment-46774 The only reason the author is concerned that banks should have “skin in the game” with regards to the quality of the mortgages they fund (and subsequently sell) is probably becuase he’s determined that the funcitonality of the modern free market allow participants to “prey” on the ignorant (or the ill-informed). Hey, if the bond market is dumb enough to keep purchasing securities backed by mortgages of questionable credit quality, why should banks not continue to generate said mortgages (and the profits that come from their resale)? The free markets will ensure that the most informed will make the most money, and their relative success will be judged by the amount of money they make.

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