October 14, 2008

HousingPANIC Stupid Question of the Day

Should 20% down be required by law?

Bonus: Does anyone remember the 105% mortgages just a year or so ago? I'd sure love to see what percent of those are now in default...


Anonymous said...

Exactly 143% of them are in default.

Anonymous said...

The laws of the free market dictate that a downpayment of 20% is a good idea to make sure the debtor has a stake in the agreement. This free market law is punishable with insolvency.

The problem is that we don't have a free market and yet the free market gets the blame. We have a system that promotes easy credit and bails out the banks that broke the free market laws and became insolvent.

Now we're seeing more government intervention because of course the government will always point the finger at other scapegoats and never itself. The population is so dumbed down and pig ignorant, how could they know any better?

So no Keith. You should know better yourself that free markets have laws of their own that worked perfectly well until well meaning socialists invented the idea of the "ownership society" and the idea that everyone deserves to own a home.

Anonymous said...

No. It shouldn't be a law. Any lending institution that wants to risk their business by giving out 100%+ loans, feel free to. But NO bailout from the government. The banks did this because they KNEW they had a bailout coming. Pretty obvious.

Anonymous said...

No -- putting 20% down should not be required. Being ABLE to put it down should be though for any federally backed mortgage. Exception: 10% of mortgages issued by Freddie & Fannie can be for 10% down to otherwise qualified buyers in order to encourage an ownership society.

Anonymous said...

20% down payment in cash that is verified to have come from buyer earnings would go a loooooong way toward giving the housing market a loooooong overdue enema (IMHO). Money talks and bullshit walks.

Smug Bastard

Anonymous said...

Those 105% mortgages were all completely safe-- the realtors and brokers had all researched it.

Refuse to buy overpriced said...

That, plus income verification, could have prevented this entire mess.

Anonymous said...

When are you going to start the website creditcardPANIC?

Credit card companies (and their "victims") will finish off what little finanical life our country has left.

Anonymous said...




Anonymous said...

Absolutely. 20% Down and the mortgage a bank should give should not be more than 2.8 times yearly earnings minus the mortgager's debt.

Owner Earnings said...

I'd vote for a law to require 20% down as long as alllll the other regulation on real estate goes away.

The 20% down law would do more than a 1,000 regulators overseeing fannie or freddie

Anonymous said...

Yes, 20% downpayment should be mandatory provided that house prices return to their normal values. It's hard to eke out $80K downpayment for a starter home that costs $400K when you make only $70K a year.

If people can't save for a 20% downpayment, they shouldn't own.

whitetower said...

Are you kidding -- just last fall the Democratic Congress increased the Fannie Mae loan limits and eliminated the FHA 3% down requirement.

Obama wants to have a moratorium on foreclosures; McCain wants to buy-out mortgages close to foreclosure.

We're apparently in an era where people believe that they are entitled to a free house, which is to say, socialism.

In not too many years the US will be as poor and inefficient as Europe.

Anonymous said...

I think that you're going to see more multitiered pricing so the richer folks get choice and then the poorer folks can pick up the rest at affordable prices and the poorer folks can be bought out by richer folks. so I see a whole new economy here where pricing is done differently.

jim said...

No. But any bank selling those should lose any and all fdic protection, or bailout.

mphill said...

YES! I've said this for years. A home is not a right, especially when you are financing it. If people had 20% of their money on the line foreclosure would barely happen, and home prices would be 50% of what they are currently.

But, socialist congress will continue to treat it like its a right (especially for minorities). I'm not convinced we will have a massive correction to normalcy with Obama on his way to Washington.

He'll be paying people to live in homes by the end of his first term. :(

Anonymous said...

It's a tough question to answer because a certain number of people are responsible enough and know what they are getting themselves into without having to put down 20%.

The problem is mixed. The majority of the American people refuse to inform themselves in regards to the matters at hand. In this case, the mortgage that they are or were trying to obtain. Couple that with companies that knowingly took advantage of this and you have today's housing market.

Basic regulations are always needed to ensure that professionals are behaving professionally as opposed to preying upon the unsuspecting.

At the end of the day, the easiest solution is for the American people to wake up. If we empower our intellectual properties we can work together to take back our country from the countless crooked government officials and corporate executives.

Anonymous said...

I love how everyone now says they saw it coming.

I wonder how many see the next shitstorm when those fuckers reset.

Credit Suisse? What's that?

Anonymous said...

well, it is indeed a stupid question.

Why 20%
why not 26%
or 16%
or 34%
or 7%

a person should be able to afford a home so long that approx. 30% of his/ her income goes to cover housing costs.

what went wrong in the bubble time was that people where spending more then they where earning and thought 'no biggie i can always re-finance'.

Miss Goldbug said...

Most certainly! Back in the 1960's most people put down more than 20%.

We have to go back to thinking that houses are not investments- but only places to live.

Anonymous said...

I remember being heavily scrutinized and criticized by bank examiners on loans I made to peeps with 20% to 30% down....and no late pays!
What happened to all those nasty old-time examiners?

Schiff was on CNBC tonight...he was really fired up.

Anonymous said...

I've had a thought.

Although I often think the middle class needs to keep more of their wages (and especially the poor).

What we've seen here, long time hp'ers, over the past 3 years is that when idiots get more money they spend it like monkeys, like the monkey money, more houses, more speed boats, more granite countertops, more vacations. enough is never enough. more more more,consumption.

To the point that it just causes nothing, or inflation.

I wonder, actually ask myself. Why will not they use money to free themselves from burden. Free themselves to tractor creative dreams. Not follow but to branch out. Leave the heard, leave the Jones'.

Anonymous said...

The TED SPREAD is currently at 4.30 basis points.

It can not stay at these high level.


A gauge that measures the scarcity of cash eased. The difference between the rate banks charge for three-month dollar loans relative to the overnight indexed swap rate, the so-called Libor-OIS spread, narrowed to 3.44 percentage points, from 3.54 percentage points yesterday.

The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, narrowed 21 basis points to 4.36 percentage points. It was 4.64 percentage points on Oct. 10, the most since Bloomberg began tracking the data in 1984.


The yen gained broadly on Wednesday on renewed investor risk aversion, after U.S. stocks and commodities fell on fears of a sharp slowdown in economic activity due to the credit crunch.

The euro fell against the yen and the dollar as hedge funds sold the single currency after data from Germany showed a bigger-than-expected slide in investor sentiment in October, suggesting the euro zone's top economy may be in for a prolonged slump.

The euro may drop 13 percent versus the yen as global credit markets will remain depressed even after U.S. and European officials made as much as $3 trillion available to unclog lending, Citigroup Global Markets Inc. said.

The euro may fall as low as 120 yen by the end of 2008 as investors favor the relative safety of the Japanese currency, reinforcing technical charts that signal the euro is vulnerable, said Tom Fitzpatrick, global currency head of strategy at Citigroup Global Markets in New York.


As business students, we've been conditioned to follow the Dow Jones Industrial Average to gauge the performance of the market and the economy. The media has played a huge part in promoting the volatility in the Dow, but the current crisis is a function of tight credit. The focus should be on the TED spread, which directly measures credit conditions and is a widely watched barometer of interbank lending.

Anonymous said...

And those French bastards still have the nerve to snob people:

Sneaky Frenchman Pretends to Be Realtor. He finagles rent money out of folks on South Beach.
He's French, goes by Chris or Christian, and might just be the ballsiest criminal on South Beach. Last month, he hacked into a lockbox outside an apartment that was available for rent, took the keys, and plastered his cell phone number on signs near the building.

Then he rented the place out ... to four different people ... in two days.

The first hint that something was amiss came in early July, after Benmeleh listed a South Beach apartment at 826 Euclid Ave. on Craigslist. Soon a very confused young woman phoned: "I saw your ad, and it's kind of weird, but I put down a deposit on that apartment yesterday and haven't heard anything since."

Benmeleh quickly agreed to meet her at the peach, two-story Art Deco building. Peering through the windows, they saw furniture, a TV set, and many other signs that someone was living there. Indeed the realtor soon learned the Gallic villain had even promised to hand over the TV set "for free" to a renter.


Anonymous said...

If a person has less than 20% down
than they should have mortgage insurance . I think 5% is the lowest that they should go ,with mortgage insurance with it . You can ask for the mortgage insurance to be removed once you have 20% equity or more . On a fixed rate late you can gain equity as time goes by in paying down the loan even if the market doesn't appreciate every year .

High risk needs insurance ,but the insurance companies need to prove ability to pay the claims . None of this credit default swaps casino bets with no money to back
it .

Anonymous said...

Yeah, how about 125% loans . . . like the 6 that I have.


Anonymous said...

If 20% down payment on a mortgage was required by law then allot of Hedge Funds would not have to lose so much money on redemption in recent months.


Absolute Capital Management Holdings confirmed it is to close its Absolute East West Fund and the Absolute Octane Fund as of October 31, due to the level of redemption requests received from investors in those funds.

Anonymous said...

If 20% down payment were required then PMI risk would have to be so high.


PMI Fall 2008 Risk Index Indicates Rising Foreclosures and Unemployment Intensifying Risk of Future Home Price Declines

Fort Lauderdale-Pompano Beach-Deerfield Beach; FL A 99.5

Riverside-San Bernardino-Ontario; CA 99.5

Orlando-Kissimmee; FL99.4

Miami-Miami Beach-Kendall; FL99.3

Tampa-St. Petersburg-Clearwater; FL 99.0

Las Vegas-Paradise; NV 98.5

Los Angeles-Long Beach-Glendale; CA 98.5

Santa Ana-Anaheim-Irvine; CA 97.7

Jacksonville; FL 97.5

Phoenix-Mesa-Scottsdale; AZ 96.3

Sacramento-Arden-Arcade-Roseville; CA96.3

San Diego-Carlsbad-San Marcos; CA95.9

Oakland-Fremont-Hayward; CA 94.4

San Jose-Sunnyvale-Santa Clara; CA 87.1

Providence-New Bedford-Fall River; RI-MA 72.4

San Francisco-San Mateo-Redwood City; CA 71.6

Anonymous said...

None because that would make the banks look bad.

Anonymous said...

More to come - Alt-A and Prime.

This was NEVER a subprime mortgage problem, that was just a taste of the real garbage loans coming down the pipeline.

LovePug said...

No, don't require it by law. But the mortgage interest deduction should go bye bye.

Anonymous said...

No. If a bank wants to take the risk of lending 100% or 110% or hell 200% of a home's value, the govt should not tell the bank it can't.

On the other hand that loan should also be NOT be guaranteed by the government in any way.

Instead what O'Bama will do is have it both ways. Allow 125% mortgages and guarantee them. You know, cuz anything else would be racist.

Anonymous said...

We've only just BEGUN!

{strumming the tune of DELIVERANCE on banjo}

Anonymous said...

re anonymous 9:51 PM

saying the population is pig ignorant is highly offensive to pigs. the population wishes it was merely pig ignorant.

Anonymous said...


Anonymous said...

Any bank that does not have 20% down on mortgage loans, should have their FDIC insurance yanked.


If they want to take risks, let them do it but NOT WITH OUR MONEY.

Anonymous said...

If the government, err taxpayer like me, is on the hook, yes, at least 20% should be law.

Anonymous said...

Do I have the wrong web site?
I thought this was a Lending Tree page. Is this where I can apply for a no down payment, interest only, negative am, 110% ARM, 50 year mortgage, with a $50,000 HELOC for a CA 1920's craftman in Berkeley listed at $750,000?

Just asking ...
(People actuall did this 3 years ago).

Anonymous said...


Anonymous said...

It should be a free market, and no law should prevent lenders from demanding less than 20% downpayments. The government, however, subsidies houseownership, and these subsidies should be formulated to discourage less than 20% down and discourage strongly less than 10% down. An exception could be VA loans, because veterans have earned little before and, therefore, were not able to save as much, but their personal history is known to the govenment.