Federal Retreat On Bigger Loans Rattles Housing Bulls
More underwater homes...
It's about time taxpayers stopped subsidizing expensive mortgages, though that hasn't stopped industry trade groups (the NAR), who are pounding doors all over Washington with sob stories of the wealthy and forlorn.
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MONTEREY, Calif. — By summer’s end, buyers and sellers in some of the country’s most upscale housing markets are slated to lose one their biggest benefactors: the deep pockets of the federal government. In this seaside community of pricey homes, the dread of yet another housing shock is already spreading.
“We’re looking at more price drops, more foreclosures,” said Rick Del Pozzo, a loan broker. “This snowball that’s been rolling downhill is going to pick up some speed.”
For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree.
But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.
Michael S. Barr, a former assistant Treasury secretary, said the federal government’s retrenchment would be painful for many communities. “There’s always going to be a line, and for the person just over it it’s always going to be an arbitrary line,” said Mr. Barr, who teaches at the University of Michigan Law School. “But there is no entitlement to living in a home that costs $750,000.”
May 12, 2011 at 12:43 AM
Reader Comments (7)
American families who are insured through their jobs average health care costs of $19,393 this year, up 7.3%, or $1,319 from last year, according to independent actuarial and health care consulting firm Milliman Inc.
http://finance.yahoo.com/news/Health-care-costs-for-cnnm-2207369420.html?x=0&sec=topStories&pos=9&asset=&ccode
Read more: http://www.cbsnews.com/stories/2011/05/11/national/main20061955.shtml#ixzz1M6uS3HA0
http://www.bloomberg.com/news/2011-05-11/home-sellers-become-u-s-lenders-of-last-resort-for-credit-damaged-buyers.html?source=patrick.net#related_categories_tags_top
Profit excluding some costs will be 37 cents to 39 cents a share in the fourth fiscal quarter, while sales will be about $10.8 billion to $11.1 billion, San Jose, California-based Cisco said today on a conference call. Analysts on average had predicted profit of 41 cents and sales of $11.6 billion. Cisco slipped in extended trading.
http://www.bloomberg.com/news/2011-05-11/cisco-quarterly-profit-exceeds-analysts-estimates.html
http://www.startribune.com/business/121507529.html
The Zillow report was fascinating and I think one of the main things that were missed from the report was the fact that metro areas still in bubbles actually look healthier than they are:
http://www.doctorhousingbubble.com/housing-bubble-pops-again-california-1700000-homes-with-negative-equity-50-percent-of-florida-homes-in-negative-equity-yet-bubble-markets/?source=patrick.net