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February 08, 2008


Bonnie Erickson

Tom, I think your shudder will become quaking in our boots!

Thomas Johnson

Banks are so capital impaired that they can't lend. Prices will decline until the average price falls under the new FHA guidelines, an effort to save housing in an election year. It seems that FHA will become the lender of last resort.

If HUD gets these FHA houses back in mass, we will have huge amounts of government owned housing. I shudder to see what becomes of that mess.

Bonnie Erickson

Glenn, I don't think there's an easy fix for the present problems of foreclosures and short sales. Even the things the government has currently instituted will only help a narrow segment of the foreclosure market and seems a bit "stop gap" to me. One of the things mentioned by MGIC was the loss of business due to the 80/20 mortgages which prevented the need for mortgage insurance.


Kind of surprised that MGIC has been hit so hard with losses - considering the alleged advantages of a second mortgage, HELOC, etc. over the past several years.

Seems like the lenders are going back to the "old mentality" of ability to payback (income), history of paying debts (credit scores), and enough security or equity (down payment and maybe closing costs).

Sound fairly reasonable - but will this solve the present problems of unsold foreclosures and short sales? Or is this common sense approach a little to late?

Bonnie Erickson

Yes, Kristal, some buyers will not get a chance once the new guidelines are in place. You're in one of the restricted markets as well. I still have not clarified if St. Paul is not restricted. So often they lump us together as one city.

Kristal Kraft

My broker advised us with homes under contract to see if we can move up the closings to beat the deadline. When mortgage qualifying requirements change, it could mean some people will get left out in the cold.

Your blog offers a good explanation as to why. Thanks Bonnie! Nice job, as usual.

Bonnie Erickson

Steve, I truly can't imagine why anyone would want assurance that the thousands of dollars they are giving to someone won't be pilfered away! (Straight sarcasm, for those who are wondering!)

Stephen Gross

Down payments and good credit needed to borrow hundreds of thousands of dollars? That's crazy talk!

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