Fannie Mae and Freddie Mac

rolling closing costs into the loan as well?

Jensenman wrote: IIRC, there were some companies loaning up to 125% of a home's value at one point. WTF was THAT all about?!?!?

[disclaimer] I can answer your question but understand that doesn't mean I support or endorse this or any lending practice [/disclaimer]

Most of the 125% programs I've ever seen were second mortgages. Typically they were for home improvement (increasing the value of the collateral) or reducing the cost of existing debt load.

In the most simple sense, the argument was this: if you were a strong enough borrower that the bank would lend you $40,000 for a depreciating asset like a car, or perhaps even lend it unsecured such as credit cards - why wouldn't we give you a slightly better rate and keep you as a customer in exchange for getting a lien on your home. Otherwise you were going to get that money somewhere, the bank wanted to keep you as a customer and if you were asking for a consumer loan they would be bending over backwards for your business.

Switching back to purchase loans:

For a while there, no downpayment was considered no big deal and it got out of control. Now prices have softened and people are feeling the pain. There has been a big shift towards requiring more significant borrower investment and that's probably good - but I'll restate my point - we can't realistically go back to 20% down minimum.

Keep in mind, the Veterans Administration has offered qualified military 100% financing for a very long time with managable risk. Low or no downpayment by itself does not mean disaster.

blu droptop, you and billy3esq need to consult on disclaimers.

Hmmm. I could see buying a fixer upper for cheap, borrowing 125% of the current value, using that to bring the property up to standards and thus raise the value to where it would at least match the loan amount. But to pay off a car, credit cards etc... not just no but HELL no.

Jensenman wrote: Then there was the highway contractor in Colorado who had to use a certain percentage of minority owned subcontracting companies or face fines and possibly not get any more federal contracts. He could cover Native Americans for just about everything he did but he had to hire a black owned subcontracting company to build some of the guardrails in order to comply with the percentages set forth in the contract. There wasn't one in all of Colorado and none of the out of state companies were willing to travel. So he was facing huge fines for being late as well. Sheesh, can't win.

Might want to check that story. My wife is the chief estimator/project manager for a good-sized highway contractor in Colorado. Yes, she has to use a certain percentage of Disadvantaged Business Enterprise (DBE) subcontractors. Those are companies owned by minorities, including women. But there's no regulation about which minorities. Black, hispanic, native, whatever. And it doesn't matter what they do - dirt work, guardrails, traffic control, whatever. I think it's a percentage of total cost. Once you have your DBE quota, you've got your DBE quota.

Keith

(edited to fix an error in the acronym)

Check out the story of Adarand Construction, then get back to me.

http://www.inc.com/magazine/20011101/23613.html

No, this isn't the exact incident I'm referring to but this guy's problems stem from the same policy. Of particular interest: the $10,000 bonus paid by the highway department for the main contractor agreeing to use a minority owned subcontractor who submitted a higher bid. That's called 'bribery' anywhere else in the world and can lead to jail time. Unless, of course, you are the government agency.

For the Supreme Court decision, try http://www.law.cornell.edu/supct/html/93-1841.ZO.html

Maybe things have changed, I dunno. But the fact remains that the policies of that time put a big kink in road projects in the area and somewhere out there is the story of the project held up because there was no black owned subcontractor.

That backs up my statement. You don't need to hire x black companies, x hispanic companies, x female companies and x Klan companies. You simply have to have x% minority owned companies. I suspect the black owned subcontractor story is a bit of an urban legend that mostly gets passed around because it's the sort of thing people want to believe. Colorado has a lot of hispanics (should that be capitalized? I'm not sure) but not a big black population.

My wife's company uses a broker to buy certain products, like oil. The broker never touches the product. Why? Because the broker is a woman, and it helps meet the DBE regs. Does it make sense? Not from some viewpoints, but it's how things work.

carguy123 wrote: You are so off base as to not even be funny. Keep in mind this is a quasi-governmental agency and it doesn't play by the same rules as does free enterprise. They are TOLD how they will do business. And they are definitely not "jokes of a company" as without them you and tens of millions of others would not be homeowners.

Car guy, funny that you say I have it all wrong as we are saying the same thing. I will not dispute that Fannie/Freddie helped you sell mortgages and houses, in fact that is what I said. You see it as a good thing I see it as a bad thing. I have a problem with fractional reserve banking in general so the idea of artificially creating a way for banks to loan out even more money is utterly stupid. You say I could not have a house without this system. I say without this system home prices wouldn't be anywhere are high as they are.

I see a system where the govt encourages us to go into debt (tax break on mortgage interest, but we get taxed on interest we earn) - change that to the opposite way around and encourage personal saving instead of debt then guess what? The banks have more deposits and therefore more money to lend.

I know they always were quasi-governmental agencies..that's why I said they were jokes of companies. Stockholders and CEOs get all the upside and the American people assume all the risk - that is a joke.

TJ wrote:

carguy123 wrote: You are so off base as to not even be funny. Keep in mind this is a quasi-governmental agency and it doesn't play by the same rules as does free enterprise. They are TOLD how they will do business. And they are definitely not "jokes of a company" as without them you and tens of millions of others would not be homeowners.

I have a problem with fractional reserve banking in general so the idea of artificially creating a way for banks to loan out even more money is utterly stupid. You say I could not have a house without this system. I say without this system home prices wouldn't be anywhere are high as they are.

Well you are right about prices. The prices would be nowhere nearly as high and you probably wouldn't be living in your own home either.

Most people wouldn't have been able to take tax deductions for all these years either so their tax costs would have been much higher and then they wouldn't have made all that appreciation from the increase in housing values and. . . I just can't go on.

I stand by my first statement, you are so far off base as to not even be funny.

We'd all be better of with the price of a loaf of bread at 25 cents too, but that ain't gonna happen.

Bread at $0.25 a loaf is about right if we still had a dollar that was worth anything and was backed by gold like it is supposed to be. Not going to happen - more likely a loaf of bread will cost $25 eventually since we can't stop creating more and more dollars.

I'm gonna call canoe on the last two posts.

CSK = Canoe Sanoe Kanoe?

canoe? or flounder? or you just wanted an excuse to dredge up a thread that was abandoned 4 months ago?

Strizzo wrote: canoe? or flounder? or you just wanted an excuse to dredge up a thread that was abandoned 4 months ago?

definitely canoe. they offending posts have been removed, so the "those last two posts" line no longer makes sense. the canoeist was the thread dredger.

well that makes a lot more sense now, i was wondering wth mtn was talking about

Nothing to see here... move along, move along... nothing to see here...

Second time canoe peddler dredged it up. Gonna lock it down.