ChetSteadman wrote:I guess my wife and I are morons. When we bought our first house, back in 2006, we set our budget to allow us to have 20% down, and insisted on a fixed-rate mortgage. When we sold our house a few months ago (for a profit, no less), we took the equity out and put it in with the rest of our savings. Last month, we bought another house. Again, 20% down and a fixed-rate mortgage. Unfortunately, rates have come down since we locked ours in, but we're still sub-5.0. Both times we bought, we got a mortgage that was less than 2 years household income. Our current dti (house and escrow only) is .21. We can afford to pay all of our bills with just one of our paychecks. In other words, we're responsible.
How friggin' hard is this?
Chet, don't be fooled by diversionary tactics like this proposed rule. As you've shown, responsible borrowers with a moral standard above that of a cockroach (not implying yours is that low
) can and do accomplish the goal of homeownership every day of the year.
As I've posted before, the REAL issue in the housing market and the reason for the continued decline in values and continued increase in bank and credit union failures is the fully 60% of foreclosures that were STRATEGIC foreclosures. The industries (banking and housing) could have survived the NECESSARY foreclosures---those who lost their homes due to job loss, etc. What the industries could NOT withstand was the piling on (which continues) of the hundreds of thousands of moral-less individuals who decided to walk away from their obligation because they could no longer use it as an ATM. It has WAY less to do with DTI and way MORE to do with the collapse of the value system America was built on. Perhaps collapse isn't the right word....perhaps it was a slow erosion over the past 40 years of entitlement mentality and then the collapse came when some downward pressure was put on a weakened national moral compass. Either way, when you consider that fully 60% of those being foreclosed on could easily pay their mortgage you begin to see that rules like this proposed one are attempting to solve a problem that doesn't really exist...or at the very least solve a SYMPTOM of a problem instead of the root probelm itself.
Imagine 60% less homes on the market (or being held in bank portfolios and about to come onto the market)--housing prices wouldn't have collapsed (down more than 70% in some areas), the home construction industry wouldn't have collapsed, putting 500,000 construction workers out of work since mid-2007, causing more foreclosures and bankruptcies.
imagine bank/credit union losses 60% less than what they've experienced during this downturn. And in reality it would be an even bigger lift than the 60%, since the sale of actual foreclosed inventory would have been able to happen at higher prices because the market wouldnt' have been driven down to the point it's at without those 60% of additional foreclosures applying downward pressure.
There are lots of players at fault---but the strategic defaulters have taken a bad situation and poured gasoline on a fire...a fire that (much like the Wallow Fire in northeastern Arizona) is ZERO percent contained at this point.
