miss out on my "conversation with Daniel"...
Don't you dare miss it...!!!
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Daniel, that is only a small part of the story, that you left out.
First, look at your 2nd chart, in 02 when non-agency securitized investment bank RE loans took off, the "govt loans = FHA & VA, dropped like a rock. Between 04 & 07 when the non-agency RE loans shifted from 80% prime into 73% subprime & ARM, FHA's low down RE loans, properly insured against defaults, almost stopped being issued. Bad govt, good Wall Street, Eh?
In Jan 08 the non-agency RE system imploded, and by July the ONLY source of RE funding became 85% + from FMae&FMac. However, the brilliant minds who had been pushing/selling non-agency subprime low down RE loans shifted all of their business over to FHA - which jumped from below 5% of the RE market back up to over 50% of the market. Those are the "bad" loans that FHA and everyone of U.S. are worried about.
So, what we are REALLY seeing is FHA doing what it was intended to do when it was created in the middle of the Great Depression - making RE loans available, at an insured price, to those with low down payments.
And, what you did NOT mention, is that MOST of those new FHA loans over the last year were to brand new home buyers using the Buyers Tax Credits!
This bad, new, govt program that you are so worried about has been in existence longer than anyone who will read your article, or will ever apply for a loan.
{and, yes, we still really like your columns!}
First, look at your 2nd chart, in 02 when non-agency securitized investment bank RE loans took off, the "govt loans = FHA & VA, dropped like a rock. Between 04 & 07 when the non-agency RE loans shifted from 80% prime into 73% subprime & ARM, FHA's low down RE loans, properly insured against defaults, almost stopped being issued. Bad govt, good Wall Street, Eh?
In Jan 08 the non-agency RE system imploded, and by July the ONLY source of RE funding became 85% + from FMae&FMac. However, the brilliant minds who had been pushing/selling non-agency subprime low down RE loans shifted all of their business over to FHA - which jumped from below 5% of the RE market back up to over 50% of the market. Those are the "bad" loans that FHA and everyone of U.S. are worried about.
So, what we are REALLY seeing is FHA doing what it was intended to do when it was created in the middle of the Great Depression - making RE loans available, at an insured price, to those with low down payments.
And, what you did NOT mention, is that MOST of those new FHA loans over the last year were to brand new home buyers using the Buyers Tax Credits!
This bad, new, govt program that you are so worried about has been in existence longer than anyone who will read your article, or will ever apply for a loan.
{and, yes, we still really like your columns!}
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Second, please take another look at your 1st chart, bcuz when you say, if you do, that when we "exclude govt purchases" that's what it looks like, it most certainly is NOT.
First, between o3 and 1-5-08 FMae&FMac were less than 50% of those mortgages under your pink line. AFTER 1-5-08 FMae&FMac rose to 85+% of all of those pink loans.
Second, in July 08 - you know when China stopped investing US$ 35 Billion a month into FMae&FMac bonds - your Pres, the W, "nationalized" both Fannie and Freddie. From that day on ALL of the RE loans available to U.S. were "government guaranteed loans"!!!
Third, you say: "Taking out the influence of the government guarantees, mortgage applications for purchases are at 1995 levels."
Daniel, IF, as you suggest, we were to, or had, eliminated all government guaranteed RE mortgages, there would have been NO lending at all, at any price, to any of U.S. after 1-5-08. None, nada, nyet, zed, zero.
If you think real housing demand is weaker now, what WOULD it have been if W and the FED had done nothing.
First, between o3 and 1-5-08 FMae&FMac were less than 50% of those mortgages under your pink line. AFTER 1-5-08 FMae&FMac rose to 85+% of all of those pink loans.
Second, in July 08 - you know when China stopped investing US$ 35 Billion a month into FMae&FMac bonds - your Pres, the W, "nationalized" both Fannie and Freddie. From that day on ALL of the RE loans available to U.S. were "government guaranteed loans"!!!
Third, you say: "Taking out the influence of the government guarantees, mortgage applications for purchases are at 1995 levels."
Daniel, IF, as you suggest, we were to, or had, eliminated all government guaranteed RE mortgages, there would have been NO lending at all, at any price, to any of U.S. after 1-5-08. None, nada, nyet, zed, zero.
If you think real housing demand is weaker now, what WOULD it have been if W and the FED had done nothing.
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The Government Is Still Propping Up Home Buying
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