'ThatHawaiiGuy'
What has to happen is that asset values have to reset in the housing market. In order for a bank to make a non recourse loan on a house, here is what has to happen.
1. The bank needs a cushion on the asset that allows for market fluctuation in addition to the risk of having to go through a foreclosure sale. That means a borrower should have to put down 20% to cover market and foreclosure risk without relying on other parties to cover mortgage insurance etc.
2. The purchaser should not be allowed to borrow to make the down payment.
3. Maximum term on a loan should be 30 years. No exotics, jumbos, ARMs etc. Save the gambling for Vegas.
If we're going to desire to live in a stable financial world, the loan has to be between you and the bank, not involving third parties that may or may not be able to perform when duty calls. External reliance has obviously failed ie mortgage insurers. So have the rating agencies that give the "all clear"
4. The loan should stay with the bank that wrote the loan, not swapped around repackaged with a ribbon on it.
5. Tax incentives should be phased out. Whose idea was it to make interest tax deductible anyway? Is debt supposed to be sexy? While this makes a house more affordable, more affordable pushes up the price of the house, increasing the down required for first time buyers.
6. Get the government out of home buying aid/programs, let the free markets work.
Yeah it is all plain vanilla, but the end result is a loan that is less risky to the bank, does not artificially reward real estate ownership, lowers housing prices to a more realistic level.
Derb
News 
Market Data 
Discover 
AI
