I wholeheartedly agree.

And when the reckless ones crater, let someone else pay for it.

First they ignore you.
Then they laugh at you.
Then they fight you.
Then you win.
–Mohandas Gandhi

I’ll save you the time.

I agree with you, Steve, but I think we’re addressing two different points. I don’t think the value of a mandatory down-payment is in its ability to select for credit-worthy buyers — I think it’s a good idea because it would better tie the market to fundamentals.

Once upon a time, buyers had to obtain private mortgage insurance whenever they couldn’t make a 20% down payment. This acted as a price control, as it made homes more expensive for people who were stretching beyond their means.

The PMI laws still exist, but they’ve been weakened by decades of legal meddling and easy credit. I really don’t see why it’s controversial to suggest that these types of finance limits should be strengthened.

There’s a public interest in ensuring that stupid people don’t overextend themselves. It isn’t a victimless crime.”

Those are called negative externalities, and the government is already interfering in the market – by supporting them. It starts with granting banks the privilege of lending out money they don’t have, which illegally makes depositors into involuntary lenders. Originally, people who deposited funds at irresponsible banks were forced to bear the inevitable costs. Today, the government socializes the costs onto the rest of society via taxpayer bailouts and inflation. And what about the mortgage interest deduction? You think tax cuts are great? Good, I agree with you. Now cut my income and capital gains taxes. What’s good for the goose…

Of course, no one cries about all this government inteference when it benefits them.

It isn’t nearly as direct. My neighbor eats potato chips, gets fat, and dies of a coronoary after thirty years. He takes out a suicide loan and drives up comps by $50,000 in one week.

“You can’t legislate stupidity.”

A straw man argument if there ever was one. Requiring a down-payment isn’t “legislating stupidity” more than any other law.

And before you try, I should warn you: if you try to drag this debate into the Internet Libertarian Ideological Rathole (i.e. all laws are oppressive), I will mock you heartily, then ignore you completely. So don’t.

You could say the same thing for your unhealthy neighbor…his choices are raising your insurance costs and other medical costs. Your taxes will be raised to pay for his medical care and the welfare his wife and children will collect when he dies young without life insurance…yadda, yadda, yadda…it is the same thing. You can’t legislate stupidity.

"golly" straight, Justin.

They are going to nix the AMT anyway, and this would go a long way towards balancing out those lost tax revenues.

The Federal mortgage deduction may help us little people a little, but it helps those with mongo houses much, much more. It’s a huge subsidy for the well-off, and encourages second homes and McMansions, in order to make the mostest.

Slash it, or at the very least make it a credit and shrink it down so that it actually does help people afford their first house.

“Setting a required LTV requirement still requires both an accurate appraisal (which would also need regulation) and the loan being repayable (which would require government underwriting standards).”

I don’t see the argument for either of these things. If there’s a law requiring a mandatory down-payment on a mortgage (e.g. 20% of appraised value), there would be no more incentive for an appraiser to overestimate the value of a home than there is right now. In fact, there would probably be less pressure for corrupt appraisals, because the buyer would have an incentive to reduce the appraised value of the home (this is the “normal” check on appriasals in a balanced market).

Similarly, loan “repayability” is a red herring — requiring buyers to put down 20% would probably only serve to enhance the quality of the buyers. We’re in a mess right now because banks were too lenient, not because they were putting up barriers to finance.

“I think 100% LTV loans have a useful life beyond the housing bubble and should not be regulated away. This is similar to the way that 10 years ago few would have bought a car without a downpayment, whereas now this is the commonplace.”

Eh? Why is this a good thing? Does my neighbor really deserve a new Escalade on a Kia budget?

100% loans (and other “exotic” mortgages) were traditionally a specialized finance tool of the rich; I don’t see why they’re an inalienable right of the middle-class ‘merican consumer.

When my neighbor eats too many potato chips, he inflates his waistline. When he takes out a suicide mortgage to pay for a home he can’t afford, he inflates my cost of living. When he goes bankrupt, he costs me money.

There’s a public interest in ensuring that stupid people don’t overextend themselves. It isn’t a victimless crime.

Sure did, infohammer. I’m also looking at Zillow, seeing lots and lots of listings that have shot up over 30, 40 and even 50 days! Many are priced under their Zestimate!

If this area is cooking, the heat is coming from flippers being burned!!

Rent control is a poor solution to the problem. Its main advantage is that it can be implemented locally, while better solutions would require changes to federal law.

A better solution to rental pricing is for the federal government to rescind its subsidies for home ownership: get rid of the mortgage deduction, dump the federal mortgage agencies, and kill federal funding for suburban freeway projects.

The federal government’s heavy meddling in real estate has been a driving force behind the creation is suburban sprawl, in addition to distorting the rental market. Rent control is a way of distorting the rental market back towards a norm, but it just ends up creating a mess of a different kind.

That’s a, uh, pretty big drop. But don’t worry, investors still have confidence in Seattle real estate.

Did you see the March MLS report? Ballard (area 705) has 17% YOY appreciation…that the second highest in all of Seattle! Prices shot from 425K to 499K in one year!! This area is just cooking right now….

I concur. Unfortunately, there are more low-lifes clamoring for their share of the pie than there are resonable responsible people. The price is that the responsible are getting the shaft from this inflationary, bail-out everyone in need, enrich the survivors of the 911 event for no rational reason at all, dump money into select corporations,tax-tax-tax GOVERNMENT manipulated ECONOMY…it’s all just taxpayer money, who gives a rip? So much for the free-trade economy…anyone who thinks that’s what we have is smokin’ crack.

As far as I can tell, Ron Paul is the only wise member of Congress when it comes to the economy.

Yeah…it will go for way more then 575K! They priced it very low….

Hot is the new cold, I guess….

That house (6312 NE 30th)is priced at $230 per square foot. A really good deal. By those standards, your house would be priced well under what you paid for it. It would be pretty easy to flip that place for $330/square foot — hence the interest. I’d consider it if I wasn’t worried about depreciation and the income of myself and my SO was 1.5x what it is currently.

The cash buyer is probably a flipper with a couple successes under his/her belt.

In the vast majority of cases, these are both tools for 100% financing of home purchases. A mandatory down-payment law would still drastically reduce the market for these types of loans.

I suppose that someone could make a mandated minimum down-payment, and then take out an option-ARM, but I doubt it would happen very often. Certainly, requiring a 20% down payment would still limit the ability of most buyers to overextend, simply because the size of the mandatory down-payment would grow with the cost of the purchase!

http://seattle.craigslist.org/see/apa/308355925.html

http://seattle.craigslist.org/see/apa/308152534.html

http://seattle.craigslist.org/see/apa/307703206.html

The house right behind me just sold: 7311 18TH AVE NW 98117. Only two bedrooms, 1120 sq.ft. It was actually flipped…bought last June for $340…sold for $445 9 months later for nearly 100K more!

I was walking by this cool farmhouse today: 6312 30th Ave NW

The owner was standing outside….she was really nice. She told me they had just put it up for sale and already had loads of people calling…many offering to pay for the whole thing in cash! It’s really nuts….there’s still incredible demand for good houses.

I also notice today that zillow revised the value for my house…it shot up another 16K in just one month! Now stands at $549,788. That’s $167,359 more then when we bought it this month in 2005.

Synpathetic…remember you bet me my zillow value would tank???? Nice prediction…. Laughing Laughing Laughing Laughing Laughing

http://tinyurl.com/2slrbr

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