OT: 2 part question

[PooPopsBaldHead]

Yes.
...except it seems like all the residential construction in my metro is either single family homes that are priced over $300,000(and often over $500,000), or townhomes that are $180,000 to $400,000.
The concept of a single family home for $180,000 is seemingly gone. Heck, new construction $225,000 homes seem to be relatively rare too.

I get it- profit margin exists at higher pricing. But dang it seems like a disservice to the community to only provide townhomes if you cant afford a $300,000 new home.

We can't build SFR for less than $300K anymore in 95% of the country. It's just not possible due to labor, materials, and regulations. I keep beating this dead horse, but the most hidden cost in home construction is IRC codes. IRC is the "International Residential Code" that every 3 years puts out a new list of all the codes you have to meet to build a new home. Local jurisdictions then adopt these codes and make it the standard. The really fun ones add all kinds of other local stuff to the IRC codes.

Since 2009, IRC code changes have increased the cost to build a home by 30% on average in the US. So before we talk about material, labor, and land inflation... You are already 30% more expensive to build a home. That $150/SF house in 2009 now costs $195/sf... Add in the inflation and you are really looking at a minimum of $250/sf.

IRC

Below is a link to a breakdown of the 2021 IRC cost increases. If you are in Dallas or Miami that new red tape will cost between $6000 and $14,000 to the homebuyer. So to split the difference, your home is now $10,000 more expensive to build overnight when that code is adopted by your city or county.

2021 IRC Cost Impact

 

[paindonthurt]

Yesterday I turned to my wife and said 'how the hell are our kids going to afford to buy a home?' and I was about 88% serious. They will be able to, Im sure. And we will help, Im sure.
But really, it seems completely out of reach right now so itll only look even more difficult in 6-10 years.

When I say this, I mean single family home. And I mean in a non-shltty area. Starter homes are great and they will likely get one, but even then- those things have risen in price well beyond what we could have afforded when we bought our first home a year after college.




I guess a 40 year would reduce the monthly amount and allow more people access to higher cost real estate. But dang- 40 years?!? Thats insane to think of. Its adding on 1/3 of the life of a long mortgage. Thats really a lot of time.

Agree, but I will add there's systemic risk here. This is essentially subprime loans on steroids, as the mortgage holder is very likely to be significantly underwater if there's a housing downturn. BIG difference in risk if there's a substantial down payment requirement. From a policy perspective, any govt backed bank (and let's be honest, that's now all of them) needs strict regulation to accompany this.

I'm really genuinely interested in the lefts take here. Not trying to start a political debate.

Do you guys see this as a good idea or a bad idea for the consumer?

 

[jethreauxdawg]

- For those that want to keep screaming about surging housing costs, there are a hundred houses within 5 miles of me listed for < $200k. Affordable housing is out there once you realize that a 22 year old fresh out of college doesn’t have a god given right to waltz right into a 3500 sq ft home with a pool

A coworker was recently complaining that she’ll never be able to buy a house. I pointed out that there are much cheaper houses for sale outside the trendy area of East Memphis/Midtown she wants to live, and a “cute older home” with various amenities isn’t a necessity.
That was received so well I didn’t point out the fact that spending $200/month in cigarettes doesn’t help the down payment either.

 

[paindonthurt]

I think it's both.

Again, I work with lots of investors. The 40 year loan is perfect for them. Lower the monthly, increase cash flow.

Fair enough.

I just personally cant see how this is good for buyer who can only purchase a home by using a 40 year loan. Don't get me wrong. I'm all for free market, but below is my prediction.

This is being done to help "lower income people in 'need'". In 10 years, it will cause some sort of problem and everyone will scream bank greed.

Its a simple fact of life. If you can't afford something, you shouldn't buy it. If you choose a 40 year mortgage and it bites you in the @$$ in 20 years, its not the banks fault. Its the fault of the individual who made a stupid purchase.

For example, I can afford a 15 year note, but I choose 30 year. I earn more on my money than i pay the bank. BUT if i get in a bind, i can pay off my house or at least pay my note for an extended period of time with limited monthly income.

 

[Boom Boom]

I'm really genuinely interested in the lefts take here. Not trying to start a political debate.

Do you guys see this as a good idea or a bad idea for the consumer?

It Depends and Relative To What have entered the chat.**

I don't see allowing banks to do this in the current political and regulatory framework as a good idea. I'm sure some consumers would benefit from it. I believe most that partake of it would be worse off for it. Banks would make more money.....until there's another crisis, but then they'll get bailed out of course. So, net negative for the consumer (with exceptions), net negative for the taxpayer, positive for the banks. That probably means Congress authorizes it tomorrow.

I am also against policy that juices home prices. Mostly because we already do that a good bit, prices are out of whack, etc. I am honestly puzzled why new builds are still low while prices are so high. I doubt that disparity will resolve itself nicely. I think eventually there will be a building boom, leading to a bust. 40y mortgages would probably make that worse.

 

[paindonthurt]

It Depends and Relative To What have entered the chat.**

I don't see allowing banks to do this in the current political and regulatory framework as a good idea. I'm sure some consumers would benefit from it. I believe most that partake of it would be worse off for it. Banks would make more money.....until there's another crisis, but then they'll get bailed out of course. So, net negative for the consumer (with exceptions), net negative for the taxpayer, positive for the banks. That probably means Congress authorizes it tomorrow.

I am also against policy that juices home prices. Mostly because we already do that a good bit, prices are out of whack, etc. I am honestly puzzled why new builds are still low while prices are so high. I doubt that disparity will resolve itself nicely. I think eventually there will be a building boom, leading to a bust. 40y mortgages would probably make that worse.

I actually agree with you.

This is a terrible idea for everyone besides the crooks in congress and the banks.

Again I’m all for free market but the people choosing to utilize 40 year loans aren’t smart enough to realize it’s a bad idea.

 

[Seinfeld]

A coworker was recently complaining that she’ll never be able to buy a house. I pointed out that there are much cheaper houses for sale outside the trendy area of East Memphis/Midtown she wants to live, and a “cute older home” with various amenities isn’t a necessity.
That was received so well I didn’t point out the fact that spending $200/month in cigarettes doesn’t help the down payment either.

Right, and don't get me wrong, I'm not trying to ignore the difficulties that people are facing these days when it comes to housing. They're real, and things aren't getting easier. That said, just like a 22 year old doesn't HAVE to have a $75k crew cab, there's affordable housing out there in many communities

I just don't when we suddenly reached the point where a brand new college grad was supposed have the luxury of pointing to where they want to live, dictating what job they will have, and telling their employer exactly how much they'll be making

 

[paindonthurt]

Right, and don't get me wrong, I'm not trying to ignore the difficulties that people are facing these days when it comes to housing. They're real, and things aren't getting easier. That said, just like a 22 year old doesn't HAVE to have a $75k crew cab, there's affordable housing out there in many communities

I just don't when we suddenly reached the point where a brand new college grad was supposed have the luxury of pointing to where they want to live, dictating what job they will have, and telling their employer exactly how much they'll be making

It’s been a slow process and they are pulling the really sticky duct tape off slowly vs ripping the band aid off.

People don’t want to admit it but it’s how we got to the housing crisis in 2008. Everyone was greedy from consumer to congress to government to banks.

 

[mstateglfr]

I'm really genuinely interested in the lefts take here. Not trying to start a political debate.

Do you guys see this as a good idea or a bad idea for the consumer?

This is a terrible idea for everyone besides the crooks in congress and the banks.

Again I’m all for free market but the people choosing to utilize 40 year loans aren’t smart enough to realize it’s a bad idea.

I am on the left only relative to this forum's overall position. I am not at all on the left relative to elsewhere. Just think thats worth mentioning yet again.

Anyways, like most things when it comes to economic decisions and societal offerings, my view on whether this is a good idea or bad idea is that...it depends. Yup, its a view that some may think is me punting, but its genuine because there is no single answer that fits all situations. I can see instances where this is beneficial to consumers. I can see instances where this is detrimental to consumers. So yeah, it depends.
I absolutely think this will hurt people if there is a significant real estate correction or if it allows people to buy more house than they can actually afford.
At the same time, I dislike the idea of telling people how they should spend their money. I know I would be criticized for how my family spends some of its money because our interests and priorities dont align with everyone else's. If someone wants to lock themselves into a 4 decade mortgage, should I support not allowing that to happen? Hmm, genuinely not sure.

As for your last comment posted above, its tough for me to accept your claim of being 'all for free market' when you dont want the 'free market' to offer a product due to people not being smart enough to know it could be bad for them.
Those things dont align, no matter how much arguing and deflecting is done.
If you are for the free market, then you need to fully embrace this as just one more option within a suite of varying mortgage products. You need to accept that it isnt inherently 'good' or 'bad' because the free market will decide based on use over time.
Allow me to respectfully suggest that you are, in fact, in favor of regulated markets. I know, thats a dangerous thing to admit because you may feel like you have to turn in your R card as a result, but rest assured it is OK to be conservative and also recognize that markets benefit with regulation.


And now is the time to be a little pedantic and point out that we do not have a 'free market' right now, nor have we had one in our lifetime. That term is a misnomer and is used as a weapon.

 

[johnson86-1]

Right, and don't get me wrong, I'm not trying to ignore the difficulties that people are facing these days when it comes to housing. They're real, and things aren't getting easier. That said, just like a 22 year old doesn't HAVE to have a $75k crew cab, there's affordable housing out there in many communities

I just don't when we suddenly reached the point where a brand new college grad was supposed have the luxury of pointing to where they want to live, dictating what job they will have, and telling their employer exactly how much they'll be making

I don't know about all that, but I do feel like I was part of the first generation that expected to essentially start their standard of living out of college at the level that it took their parents 20 to 30 years to get to. I'm not sure if that's accurate or not; maybe earlier generations did the same thing and it's just hard to tell because standards of living were so different. But I remember thinking it was crazy the homes and cars some of my peers bought out of college. Many of them were of course were getting money from their parents, but even many of the ones that I don't think were receiving money basically moved into houses that their parents would have been happy to swap with them, except for potentially the location.

While housing in many places has gotten more expensive, I think a lot of people outside of popular metros are despairing about not being able to afford a house as nice as their parents, not really about actually being priced out of housing.

 

[SouthFarmchicken]

1. Do you think banks should be allowed to do 40 year mortgages?

2. if yes, do you consider the bank greedy for offering 40 year or do you consider them doing a service to consumers to help lower monthly notes.

Why shouldn’t banks be allowed to be do a 70 year mortgage?

 

[paindonthurt]

Why shouldn’t banks be allowed to be do a 70 year mortgage?

I didn’t say they shouldn’t be allowed.
I asked if people thought they should be allowed to do a 40 year.

i personally think they should be allowed to do whatever they want in certain instances but unfortunately a large percentage of Americans are dumb.

 

[Boom Boom]

Why shouldn’t banks be allowed to be do a 70 year mortgage?

These 40 year mortgages may end up being refinanced into 70 year mortgages.

 

[paindonthurt]

I am on the left only relative to this forum's overall position. I am not at all on the left relative to elsewhere. Just think thats worth mentioning yet again.

Anyways, like most things when it comes to economic decisions and societal offerings, my view on whether this is a good idea or bad idea is that...it depends. Yup, its a view that some may think is me punting, but its genuine because there is no single answer that fits all situations. I can see instances where this is beneficial to consumers. I can see instances where this is detrimental to consumers. So yeah, it depends.
I absolutely think this will hurt people if there is a significant real estate correction or if it allows people to buy more house than they can actually afford.
At the same time, I dislike the idea of telling people how they should spend their money. I know I would be criticized for how my family spends some of its money because our interests and priorities dont align with everyone else's. If someone wants to lock themselves into a 4 decade mortgage, should I support not allowing that to happen? Hmm, genuinely not sure.

As for your last comment posted above, its tough for me to accept your claim of being 'all for free market' when you dont want the 'free market' to offer a product due to people not being smart enough to know it could be bad for them.
Those things dont align, no matter how much arguing and deflecting is done.
If you are for the free market, then you need to fully embrace this as just one more option within a suite of varying mortgage products. You need to accept that it isnt inherently 'good' or 'bad' because the free market will decide based on use over time.
Allow me to respectfully suggest that you are, in fact, in favor of regulated markets. I know, thats a dangerous thing to admit because you may feel like you have to turn in your R card as a result, but rest assured it is OK to be conservative and also recognize that markets benefit with regulation.


And now is the time to be a little pedantic and point out that we do not have a 'free market' right now, nor have we had one in our lifetime. That term is a misnomer and is used as a weapon.

If you aren’t against men playing in women’s sports and can’t state that explicitly, clearly and concisely, you are left.

if you aren’t against illegal immigration, you are left.

i can name a bunch of things that you are far or not vocally against, but I’d be wasting my time and frankly it doesn’t matter.

 

[The Cooterpoot]

1. Do you think banks should be allowed to do 40 year mortgages?

2. if yes, do you consider the bank greedy for offering 40 year or do you consider them doing a service to consumers to help lower monthly notes.

Depends on if rates are manipulated to push more people to a 40 year term. After all, banks are now going to be forced to lend to unqualified borrowers again (government investors). Are they going to attempt to offset that risk?
How about wages increase so people can afford a home? Seems like a better solution. Capitalism has its issues. It's not perfect.

 

[mstateglfr]

If you aren’t against men playing in women’s sports and can’t state that explicitly, clearly and concisely, you are left.

if you aren’t against illegal immigration, you are left.

i can name a bunch of things that you are far or not vocally against, but I’d be wasting my time and frankly it doesn’t matter.

- I am not in favor of trans-girls playing on girls teams in high school. I dont have an opinion on the issue when it comes to private organizations because those organizations should have a policy and they are private.
- I am not in favor of illegal immigration.

Since it doesnt matter, you dont need to name more, but you sure shat the bed on the examples you provided.
Once again, I am to the left of the overall position of this board, but I am hardly left of many in society. Earlier in this thread I responded to the claim about Biden's mortgage policy and will absolutely say, without ambiguity, that if it results in what was claimed, I will dislike it.

All the above isnt important here though. You said you wanted to hear my view on the issue and I provided it. Instead of responding to the view, you got pissy about the reality that I am hardly to the left of many in society.
Deflection is understandable since you would otherwise need to come to terms with the reality that you are in favor or regulation.

 

[mstateglfr]

How about wages increase so people can afford a home? Seems like a better solution. Capitalism has its issues. It's not perfect.

That just leads to inflation. Pay the lower 25% more and the middle 25% gets more since they do more/are more qualified than the lower 25%. Pay the middle 25% more and the upper 40% gets more since they do more/are more qualified than the middle 25%.
The top 10% will continue to just exponentially gain more wealth regardless so they dont even have to be included in this example.

Increase in pay results in increase in costs. Increase in costs results in increase in prices. Increase in prices results in watering down the increased wages.

I am saying what will happen because it is what has happened and is happening.
We just went thru 2.5 years of all this with Trump Checks and Biden Bucks as well as employment fulfillment challenges.

 

[FQDawg]

I work in real estate, but mostly with investors. My usual lenders are telling me this new push will lower rates for people with below-average and those with excellent credit scores (780+). The people getting screwed will be the people with "good" credit. The 730-760 people will get the shaft.

All of this is designed to get first-time buyers into homes. And who's the burden going to fall on? You guessed it...

So I'll admit I haven't read a lot on this topic (so it's possible I'm off base) but my understanding from what I have read is that a lot of the criticism of this (perhaps purposefully) leaves out some important details.

One, and perhaps most importantly, it only applies to the mortgage insurance - not the whole mortgage - for people who take out new FHA loans. And that's usually fewer than 10% of home loans. So, for 90% of new borrowers, this new fee structure basically doesn't exist because they don't have FHA-backed loans. It should go without saying that if you already have a mortgage, this doesn't affect you at all.

Also, the changes are literally a fraction of a percentage point - 0.3% if I remember correctly. So even if some of those costs are shifting to other borrowers - which I'm not sure is actually the case - it's by minuscule amounts. And, again, it would only apply to those people with new FHA backed loans, not loans from conventional lenders.

 

[jethreauxdawg]

I'm really genuinely interested in the lefts take here. Not trying to start a political debate.

Do you guys see this as a good idea or a bad idea for the consumer?

If you aren’t against men playing in women’s sports and can’t state that explicitly, clearly and concisely, you are left.

if you aren’t against illegal immigration, you are left.

i can name a bunch of things that you are far or not vocally against, but I’d be wasting my time and frankly it doesn’t matter.

- I am not in favor of trans-girls playing on girls teams in high school. I dont have an opinion on the issue when it comes to private organizations because those organizations should have a policy and they are private.
- I am not in favor of illegal immigration.

Since it doesnt matter, you dont need to name more, but you sure shat the bed on the examples you provided.
Once again, I am to the left of the overall position of this board, but I am hardly left of many in society. Earlier in this thread I responded to the claim about Biden's mortgage policy and will absolutely say, without ambiguity, that if it results in what was claimed, I will dislike it.

All the above isnt important here though. You said you wanted to hear my view on the issue and I provided it. Instead of responding to the view, you got pissy about the reality that I am hardly to the left of many in society.
Deflection is understandable since you would otherwise need to come to terms with the reality that you are in favor or regulation.

Children, take it outside. We’re trying to stay on point.

 

[aTotal360]

So I'll admit I haven't read a lot on this topic (so it's possible I'm off base) but my understanding from what I have read is that a lot of the criticism of this (perhaps purposefully) leaves out some important details.

One, and perhaps most importantly, it only applies to the mortgage insurance - not the whole mortgage - for people who take out new FHA loans. And that's usually fewer than 10% of home loans. So, for 90% of new borrowers, this new fee structure basically doesn't exist because they don't have FHA-backed loans. It should go without saying that if you already have a mortgage, this doesn't affect you at all.

Also, the changes are literally a fraction of a percentage point - 0.3% if I remember correctly. So even if some of those costs are shifting to other borrowers - which I'm not sure is actually the case - it's by minuscule amounts. And, again, it would only apply to those people with new FHA backed loans, not loans from conventional lenders.

I really don't care how many homes or who is taking out the loans. Strapping a single extra red cent on middle America to subsidize riskier loans is a step in the wrong direction.

 

[mstateglfr]

Children, take it outside. We’re trying to stay on point.

Sorry- my comment that he may in fact support regulated markets seemed to really trigger him. Didnt think it would lead to that.

 

[Leeshouldveflanked]

Lots of empty commercial real estate in most cities. Some larger cities 25-30% of commercial real estate is vacant. Turn that into affordable housing.

 

[FQDawg]

I really don't care how many homes or who is taking out the loans. Strapping a single extra red cent on middle America to subsidize riskier loans is a step in the wrong direction.

But that's my point... As I understand this new policy, it's not "strapping a single extra red cent on middle America." It's just lowering one small fee that a small number of borrowers pay for a small part of a FHA-backed loan.

 

[paindonthurt]

Depends on if rates are manipulated to push more people to a 40 year term. After all, banks are now going to be forced to lend to unqualified borrowers again (government investors). Are they going to attempt to offset that risk?
How about wages increase so people can afford a home? Seems like a better solution. Capitalism has its issues. It's not perfect.

How about let the market go down organically.

 

[PooPopsBaldHead]

So I'll admit I haven't read a lot on this topic (so it's possible I'm off base) but my understanding from what I have read is that a lot of the criticism of this (perhaps purposefully) leaves out some important details.

One, and perhaps most importantly, it only applies to the mortgage insurance - not the whole mortgage - for people who take out new FHA loans. And that's usually fewer than 10% of home loans. So, for 90% of new borrowers, this new fee structure basically doesn't exist because they don't have FHA-backed loans. It should go without saying that if you already have a mortgage, this doesn't affect you at all.

Also, the changes are literally a fraction of a percentage point - 0.3% if I remember correctly. So even if some of those costs are shifting to other borrowers - which I'm not sure is actually the case - it's by minuscule amounts. And, again, it would only apply to those people with new FHA backed loans, not loans from conventional lenders.

It's not FHA, it's FHFA which is basically Fannie and Freddie, or virtually all conforming loans. The change is not is not to mortgage insurance but something called and LLPA fee's or Loan-Level Price Adjustment. It's based on the risk of the loan. These fees have always existed its just now the matrix is closing to less of a spread between high credit and low credit. The mortgage insurance rates are staying the same.

Here's a heat map on how much the fees are changing by credit score and LTV. Green means your fee is going lower and red means higher. At first glance it looks crazy that the less than 639 credit score with only 5% down is going to make it risky, but this same cohort is still getting hammered with their mortgage insurance.




Here's what the new LLPA chart will look like.



In the past there was about a 1% discount on a conventional loan with 20% down if you had a 720 vs 680 credit score. Now it's a .5% gap. But ultimately, the people in the read are paying a little more for their mortgage tomorrow than they did yesterday and vice versa fot the ones in the green on the heat map. The problem I have with it is all first time homebuyer's are getting a break which is good, but if you are those higher LTV folks with śhitty credit don't deserve any help. The ones able to put 10-30% should all be slightly red, yet the bad credit ones are getting a break... If you can put 30% down on a house and have ****** credit, you deserve to use some of your cash to pay higher fees in my book.

If you really want to nerd out like I did, here you go:

LLPA Matrix

 

[paindonthurt]

- I am not in favor of trans-girls playing on girls teams in high school. I dont have an opinion on the issue when it comes to private organizations because those organizations should have a policy and they are private.
- I am not in favor of illegal immigration.

Since it doesnt matter, you dont need to name more, but you sure shat the bed on the examples you provided.
Once again, I am to the left of the overall position of this board, but I am hardly left of many in society. Earlier in this thread I responded to the claim about Biden's mortgage policy and will absolutely say, without ambiguity, that if it results in what was claimed, I will dislike it.

All the above isnt important here though. You said you wanted to hear my view on the issue and I provided it. Instead of responding to the view, you got pissy about the reality that I am hardly to the left of many in society.
Deflection is understandable since you would otherwise need to come to terms with the reality that you are in favor or regulation.

I’m proud of you for making a definitive statement. Keep it up!

 

[paindonthurt]

Children, take it outside. We’re trying to stay on point.

I’m trying to stay on point to but I genuinely wanted a direct answer bc here’s what’s going to happen.

In 20 years this will blow up or someone will be a bad person for taking advantage of poor people. But one side is pushing for these things. We should all be against it.

 

[FQDawg]

It's not FHA, it's FHFA which is basically Fannie and Freddie, or virtually all conforming loans. The change is not is not to mortgage insurance but something called and LLPA fee's or Loan-Level Price Adjustment. It's based on the risk of the loan. These fees have always existed its just now the matrix is closing to less of a spread between high credit and low credit. The mortgage insurance rates are staying the same.

Here's a heat map on how much the fees are changing by credit score and LTV. Green means your fee is going lower and red means higher. At first glance it looks crazy that the less than 639 credit score with only 5% down is going to make it risky, but this same cohort is still getting hammered with their mortgage insurance.

View attachment 332244


Here's what the new LLPA chart will look like.

View attachment 332245

In the past there was about a 1% discount on a conventional loan with 20% down if you had a 720 vs 680 credit score. Now it's a .5% gap. But ultimately, the people in the read are paying a little more for their mortgage tomorrow than they did yesterday and vice versa fot the ones in the green on the heat map. The problem I have with it is all first time homebuyer's are getting a break which is good, but if you are those higher LTV folks with śhitty credit don't deserve any help. The ones able to put 10-30% should all be slightly red, yet the bad credit ones are getting a break... If you can put 30% down on a house and have ****** credit, you deserve to use some of your cash to pay higher fees in my book.

If you really want to nerd out like I did, here you go:

LLPA Matrix

We may be talking about different things, then. Because what I read was specifically about mortgage insurance on FHA-backed loans. And it's what was "in the news" when people first started complaining about the "Biden mortgage plan." At least that I saw.

This isn't the article I originally read a few weeks ago but the gist is the same: https://thehill.com/business/3876339-what-is-the-fha-mortgage-fee-cut/

 

[The Cooterpoot]

That just leads to inflation. Pay the lower 25% more and the middle 25% gets more since they do more/are more qualified than the lower 25%. Pay the middle 25% more and the upper 40% gets more since they do more/are more qualified than the middle 25%.
The top 10% will continue to just exponentially gain more wealth regardless so they dont even have to be included in this example.

Increase in pay results in increase in costs. Increase in costs results in increase in prices. Increase in prices results in watering down the increased wages.

I am saying what will happen because it is what has happened and is happening.
We just went thru 2.5 years of all this with Trump Checks and Biden Bucks as well as employment fulfillment challenges.

Pay has lagged way behind inflation for damn near forever. I don't buy into the that crap because the government controls it all. But, the elected officials will damn sure run on getting wages up.
When the cost of living is so high people must indebt themselves to survive, you're a slave to the government.
Plus, fewer jobs but higher pay is a bigger swing on rates and costs. We've got too many jobs.

 

[dorndawg]

I really don't care how many homes or who is taking out the loans. Strapping a single extra red cent on middle America to subsidize riskier loans is a step in the wrong direction.

Don't mean this as a "gotchya" but how do you feel about the mortgage interest deduction? It's a government handout that lets a ton of folks buy a house they couldn't otherwise afford.

(Yes, noting this has been reduced recently by the increased standard decution.)

 

[The Cooterpoot]

Don't mean this as a "gotchya" but how do you feel about the mortgage interest deduction? It's a government handout that lets a ton of folks buy a house they couldn't otherwise afford.

(Yes, noting this has been reduced recently by the increased standard decution.)

It's also no longer available on home equity lines. Not a lot left of those deductions.

 

[johnson86-1]

Don't mean this as a "gotchya" but how do you feel about the mortgage interest deduction? It's a government handout that lets a ton of folks buy a house they couldn't otherwise afford.

(Yes, noting this has been reduced recently by the increased standard decution.)

I'd actually be fine with doing away with the mortgage interest deduction because people way overvalue it when justifying a house purchase (especially with the current standard deduction limits) and it just further distorts housing, but it's not a handout. And it's a benefit available to renters because interest is deductible as an expense for non-owner occupied residential units so it makes sense that it would be deductible for rented and owner homes or for neither.

Although if they did away with it for owner occupied housing it would in most jurisdictions be offset some (or completely) by differential tax rates applied to owner occupied housing versus rental housing, which don't make a ton of sense except that renters don't realize they pay those taxes and renters are less likely to vote in general.

 

[PooPopsBaldHead]

We may be talking about different things, then. Because what I read was specifically about mortgage insurance on FHA-backed loans. And it's what was "in the news" when people first started complaining about the "Biden mortgage plan." At least that I saw.

This isn't the article I originally read a few weeks ago but the gist is the same: https://thehill.com/business/3876339-what-is-the-fha-mortgage-fee-cut/

We are all talking about LLPA except for you then. It's the one in all the headlines because it involves credit scores. Lower scores getting a cut and higher scores getting an upcharge. That's why everyone is worked up. @aTotal360 was saying in his post you responded to how the the 730-760 credit score cohort is getting the shaft. That's all about LLPA fee matrix changes. And its not just FHA, but all FHFA buyers which is virtually everyone that's not going jumbo or va these days.

What you quoted was just an actual cut in the MIP for every FHA borrower regardless of credit score. This one didn't get a lot of attention because there was nothing to get worked up about. The two combined are really giving a boost to all first time/fha homebuyers that are putting 5% down. The biggest boost is to the 639 and below credit score group though. But a person who has a 720 or above credit score and 10% or more to put down is footing the bill.

Here's the official Biden release in February on MIP, nothing to do with credit scores.
MIP Reduction

This is what the rest of us are talking about, of course it takes a UK media outlet to explain it properly though... Many of the US outlets were screaming the low credit score people would end up with lower fees than high credit score people.
LLPA Adjustments Article

 

[johnson86-1]

That just leads to inflation. Pay the lower 25% more and the middle 25% gets more since they do more/are more qualified than the lower 25%. Pay the middle 25% more and the upper 40% gets more since they do more/are more qualified than the middle 25%.
The top 10% will continue to just exponentially gain more wealth regardless so they dont even have to be included in this example.

Increase in pay results in increase in costs. Increase in costs results in increase in prices. Increase in prices results in watering down the increased wages.

I am saying what will happen because it is what has happened and is happening.
We just went thru 2.5 years of all this with Trump Checks and Biden Bucks as well as employment fulfillment challenges.

Wage increases don't lead to inflation if they are the result of productivity gains. We have had inflation because we've done stupid stuff to inflate the money supply while at the same time doing things to reduce production. As we get further away from all the problems we voluntarily created because the vast majority of our bureaucrats and politicians are ignorant, we will see real wages increase again.

 

[mstateglfr]

Pay has lagged way behind inflation for damn near forever. I don't buy into the that crap because the government controls it all. But, the elected officials will damn sure run on getting wages up.
When the cost of living is so high people must indebt themselves to survive, you're a slave to the government.
Plus, fewer jobs but higher pay is a bigger swing on rates and costs. We've got too many jobs.

This most recent example counters what you claim though. Pay increased significantly and inflation followed. It isnt that easy, obviously, since a global economy and pandemic were involved. But still, pay increased significantly and inflation followed. This was seen in real time in articles- media reported on how pay, especially at the lower end(under $25/hour) was increasing at breakneck speeds. Then eventually media reported on how inflation was negating recent pay increases. Then media reported on how inflation had outpaces many of the recent pay increases and those people were effectively worse off compared to before.

I dont know what you are referring to when you claim that government 'controls it all'. What is 'it'? If you mean they control pay and inflation, thats absurd.

I am not sure if cost of living is so high that people are effectively slaves to the government. That seems to be more of an emotion based comment and assessment of our economy and society versus a well reasoned comment and assessment.

As for there being too many jobs right now, I really dont know what to say to that. Like, Im at a loss because I dont understand what you are basing that on and based on many prior conversations, dont know if you have a basic understanding of reality. You would need to provide details to explain what you mean.

 

[FQDawg]

We are all talking about LLPA except for you then. It's the one in all the headlines because it involves credit scores. Lower scores getting a cut and higher scores getting an upcharge. That's why everyone is worked up. @aTotal360 was saying in his post you responded to how the the 730-760 credit score cohort is getting the shaft. That's all about LLPA fee matrix changes. And its not just FHA, but all FHFA buyers which is virtually everyone that's not going jumbo or va these days.

What you quoted was just an actual cut in the MIP for every FHA borrower regardless of credit score. This one didn't get a lot of attention because there was nothing to get worked up about. The two combined are really giving a boost to all first time/fha homebuyers that are putting 5% down. The biggest boost is to the 639 and below credit score group though. But a person who has a 720 or above credit score and 10% or more to put down is footing the bill.

Here's the official Biden release in February on MIP, nothing to do with credit scores.
MIP Reduction

This is what the rest of us are talking about, of course it takes a UK media outlet to explain it properly though... Many of the US outlets were screaming the low credit score people would end up with lower fees than high credit score people.
LLPA Adjustments Article

Thanks. I appreciate the clarification.

 

[paindonthurt]

Don't mean this as a "gotchya" but how do you feel about the mortgage interest deduction? It's a government handout that lets a ton of folks buy a house they couldn't otherwise afford.

(Yes, noting this has been reduced recently by the increased standard decution.)

We should do away with all deductions for personal income.

Our tax system is overly complicated for no real good reason.

There is no reason a person who only has income on a w2 should need an accountant. Simplify the tax system. That got started last term but..............

 

[Boom Boom]

This most recent example counters what you claim though. Pay increased significantly and inflation followed. It isnt that easy, obviously, since a global economy and pandemic were involved. But still, pay increased significantly and inflation followed. This was seen in real time in articles- media reported on how pay, especially at the lower end(under $25/hour) was increasing at breakneck speeds. Then eventually media reported on how inflation was negating recent pay increases. Then media reported on how inflation had outpaces many of the recent pay increases and those people were effectively worse off compared to before.

I dont know what you are referring to when you claim that government 'controls it all'. What is 'it'? If you mean they control pay and inflation, thats absurd.

I am not sure if cost of living is so high that people are effectively slaves to the government. That seems to be more of an emotion based comment and assessment of our economy and society versus a well reasoned comment and assessment.

As for there being too many jobs right now, I really dont know what to say to that. Like, Im at a loss because I dont understand what you are basing that on and based on many prior conversations, dont know if you have a basic understanding of reality. You would need to provide details to explain what you mean.

Causation and Correlation have entered the chat.**

 

[aTotal360]

Don't mean this as a "gotchya" but how do you feel about the mortgage interest deduction? It's a government handout that lets a ton of folks buy a house they couldn't otherwise afford.

(Yes, noting this has been reduced recently by the increased standard decution.)

I'm 100% for any tax-paying, American citizen taking monies that the govt is giving out. They take more from us than they need.

 

[Boom Boom]

Wage increases don't lead to inflation if they are the result of productivity gains. We have had inflation because we've done stupid stuff to inflate the money supply while at the same time doing things to reduce production. As we get further away from all the problems we voluntarily created because the vast majority of our bureaucrats and politicians are ignorant, we will see real wages increase again.

Good enough place to insert this that I found recently. I had no idea M2 went that high (though I suspect some other measures are more muted).

ETA: basically the story is M2 and inflation were correlated in the 70s, not really at any other time, and then a massive spike in 2020 led to a not-so-massive inflation spike. It's really not data that anyone would say is provably correlated unless it tells a story they like.