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Government Failure

Discussion in 'Political Discussion' started by PatriotsReign, Nov 20, 2012.

  1. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    As government program after government program fail, taxpayers are always left on the hook for the loss. The FHA/HUD is just one prime example.

    The Latest Taxpayer Housing Bust - Yahoo! Finance

    What the hell is wrong with these people?

    We need to pass a law that states no government program can operate at a loss for more than 2 years. If it violates that policy, it must be dismantled.
     
    Last edited: Nov 20, 2012
  2. Nunchucks

    Nunchucks In the Starting Line-Up

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    Lets see, if I make enough money to afford the payments for a home in the greater boston area, lets say melorse. Lets say I can afford to buy a $450k home, except that I do not have the $90k to put down (your 20%).

    WTF? Seriously, I can easily afford the home, but I haven't had the time, as I am young to afford such a huge down-payment. Heck I could not afford 10%, but I can afford 3.5-5%. Don't you want me in a home, so I can raise my family, pay property taxes etc? Home owners are better citizens.

    The benefits for society are great.
     
  3. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    It's all about prudency chucks. So if you can "easily afford" a $450k home, that means you'd be making at least $150k-$200k/year. So you should "easily" be able to save 20% for a downpayment too.

    The default rate for people who put down 20% or more is much lower than for those who put down 3.5%.

    If you put down 3.5% on $450k, that would be a $15,750 down payment. Which means your mortgage would be $434,350. That's a hefty mortgage payment.

    Why do you think the current rate of delinquency is 25% for FHA loans vs. a much lower rate on private mortgages? Because privage lenders are more prudent and responsible (not counting the housing boom).

    Americans want as many people as possible to own homes...that is true. But we also want the best candidates possible to minimize taxpayer liability. Because unlike private mortgages, taxpayers are responsible when FHA/HUD goes into the red.

    And personally, I don't want to be responsible for other peoples' screw ups.
     
    Last edited: Nov 20, 2012
  4. Nunchucks

    Nunchucks In the Starting Line-Up

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    Except that it is taking me twice as long to save money for a house, because I am basically paying a mortgage payment on a $400k house for rent.
     
  5. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    That was a choice you made. You could have rented a modest apartment so you could save more. I'm not saying you made a wrong choice....but that you made "a" choice and all the pro's & con's that go with it.

    Welcome to the real world chuck!
     
  6. Nunchucks

    Nunchucks In the Starting Line-Up

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    Except that the real world allows me to put down 3.5-5% on a FHS loan,
     
  7. RI Patriots fan

    RI Patriots fan In the Starting Line-Up

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    Exactly....people have forgotten about the word "sacrifice". They want everything....now. Again, the entitilement society.

    My parents had to have 20% down on their home or a bank wouldn't even discuss giving them a loan. You had to prove to a bank that you were a good risk or you didn't get a loan.
    Now, the government still makes it easy for people to get loans who aren't willing to sacrifice or who aren't risk worthy.
     
  8. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    Your parents probably paid something like 20K for the home, so it is raisins and grapefruit..

    Perhaps we should have the potential homebuyers all wear sack cloth and ashes in the town square to show how much a sacrifice they are willing to make..

    Habitat for Humanity, requires 0 Down Payment, 0 financing and have few defaults on the 250,000 homes they have built... or course they and their families are required to fulfilll 250 hours of "sweat equity" before they move in.

    The houses are quite nice, well built and many times meet LEED qualifications..

    Perhaps it is better to think outside of the box, as creative solutions are somewhat better than the same old.
     
  9. DocHoliday

    DocHoliday In the Starting Line-Up

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    PR, if a program could be profitable it wouldn't be a government program.

    By definition a government program provides a service that the government feels is not occurring in the marketplace but worth the loss!

    I'm not defending FHA, I'm merely saying people that expect these programs to turn a profit are delusional. If it was profitable a private business would have taken care of it by now.
     
  10. RI Patriots fan

    RI Patriots fan In the Starting Line-Up

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    Actually it was 20k and my father made 5k a year so everything is relative. The house was very small by today's standards and we lived within our abilities.

    As for Habitat for Humanity, they are a christian charity...not a bank. Oh, and they require the following:

    • Be citizens or legal residents.
    • Prove steady income.
    • Have good credit.
    • Earn a monthly income that falls within minimum and maximum limits, depending on household size.
    • Sustain a savings account over a specified period of time.

    In addition, each partner family will be required to:

    • Invest sweat-equity hours in building his/her home and others.
    Make an affordable down payment.
    • Make timely mortgage payments.
    • Attend homeowner education classes


    How to apply for a Habitat for Humanity house | Habitat for Humanity Int'l


    If people were required to put 20% on a house, there would have never been a housing bubble.
     
    Last edited: Nov 20, 2012
  11. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    I know how Habitat is operationalized as I have worked for them and been a volunteer, served oin Boards of Directors and currently am part of their Disaster Corps.. the reality is that they have very little foreclosures..

    Have been involved in about 20 builds in the RI area, NOLA, LaFayette and Harrisburg, have never heard of a down payment or homeowner classes.. each affiliate operationalizes the needs of the community as they see fit.

    Habitat is a model that can be replicated and their model is used by several similar organizations..
     
    Last edited: Nov 20, 2012
  12. RI Patriots fan

    RI Patriots fan In the Starting Line-Up

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    Yes, but apparently they do require a down payment. It wouldn't make much sense to not require a down payment and then advertise just the opposite on their organizational website.

    BTW, I looked at the Habitat site for North Central Mass and they require a down payment as well (albeit a small one).

    Becoming a Homeowner - FAQs - Habitat for Humanity - North Central Massachusetts


    So, I guess it seems that down payments are an integral part of Habitat's philosophy.


    But again, what does this have to do with banks? The only reason that Habitat can make housing affordable is because of the charity of others. How exactly would this apply to the general housing market?

    Housing ownership is not a right. Housing ownership needs to be earned through hard work and sacrifice not goverment "guarantees".
     
  13. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    I could easily be operationalized for many low income and moderate income families who would enjoy home ownership.. there are many similar models out there like this, there is minimal foreclosure..

    The homes not cheap fascimiles of regular houses, as everything is new and everything is build exceeding local codes.. many are now LEED certified. They have to buy all the materials, there are occasional donations.. however for the most part everything is bought.

    The houses I have seen are quite nice, and there is no difference between them and any other house on the street. In Harrisburg was involved in a quad build, that even featured Hardyboard siding.. in that case the outside facade had to be architecturally similar to the houses in that neighborhood.

    As mentioned have been involved with several habitat affiliates as an employee, volunteer and board member and have never seen a down payment.. usually the down payment is considered as an in kind service, "sweat equity" which must be completed prior to the closing and moving in.
     
  14. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    Yup, you have the option of taking the easy way. Just don't complain about how big your mortgage is if you end up unemployed for a period.

    And don't screw up so you leave taxpayers holding the bill. Good luck!
     
    Last edited: Nov 20, 2012
  15. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    That's donky Doc and you know it. So are you saying that gov't services are SUPPOSED to operate at a loss?

    Is it ok that the post office has been operating at a loss? Of course not. I didn't say anything about "profit", I said the FHA is operating at losses over $16B and considering deliquency/default ratios currently on their books, losses could exceed $90B.

    You don't set up a gov't loan operation believing it's acceptable for it to LOSE money.

    The FHA didn't operate at a loss for decades when it first started. Why do you believe it's suddenly become acceptable?

    No gov't program is supposed to be profitable. Food stamps by definition is a spend only program. But a lending service isn't about giving money away. It's about providing loans for people who can't get from private sources.

    But if we're finding that defaults have steadily increased as down payment requirements have lowered, it just makes sense to RAISE that number. After all, that's the responsible thing to do.

    The FHA doesn't exist to help people who can't afford homes to get one. It is merely a means of helping people who CAN afford a home, to get a loan.

    No wonder they're in the red!
     
    Last edited: Nov 20, 2012
  16. Nunchucks

    Nunchucks In the Starting Line-Up

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    The risk of losing your job and not being able to pay the mortgage is there, whether you put 90k down or 5k down.
     
  17. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    The risk of not being able to afford to pay your mortgage if you lose your job is much higher when you opt to put less money down.

    What's your hurry?
     
    Last edited: Nov 20, 2012
  18. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    #24 Jersey

    Don't let PR fool ya, Nunchucks - he touts 20% but took advantage of half that amount when he bought his house - and his parents took advantage of a 3% down payment by buying their house in someone else's name under the VA loan program.

    People do what they can - and if they can buy a house with a low down payment, more power to them. If PR could take advantage of it, if his parents could take advantage of it, then you, too, can certainly take advantge of it....it's just a shame that you have to be chastised for doing the same darn thing.

    I guess PR thinks it's different when someone else does it.

    http://www.patsfans.com/new-england...27-biggest-drop-record-page6.html#post2501257

    http://www.patsfans.com/new-england...27-biggest-drop-record-page5.html#post2500725
     
  19. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey


    Well, it IS different if chucks is young. I was 50 when I bought my house. So yeah, if chucks is a young guy, his situation is totally and absolutely different than mine was. Also, I'm single and have one income. So if nunchucks is married with 2 incomes, it's totally WAY different...isn't it?


    Actually, it was a little more than 10%. I put down $35k on a $280k house. So it was 12.5% down.

    Why would I try to fool anyone? Hey, if chucks is over 50 like I was, then go for it! My situation was driven by the fact I couldn't afford a house anytime prior to 2010. Home prices aren't going to go anywhere fast...that much we know.

    But the fact is, 12.5% is a sheeitload more than 3.5%...isn't it?:D

    And yes, you don't have to agree...it's automatically assumed.

    Finally, I didn't say no one should do it, I said the gov't should have lowered FHA down payments to 3.5%. What I was trying to imply that putting 3.5% down isn't as SMART as putting 20% down...or even 12.5% down.

    Thanks for stopping by though...we don't have the pleasure of you comments too often anymore.
     
    Last edited: Nov 20, 2012
  20. wistahpatsfan

    wistahpatsfan Pro Bowl Player

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    #75 Jersey

    I just think it's funny how the same cast of characters piss and moan about government programs that loan money at low rates or even subsidize things like healthcare, housing, food, ...the stuff poor people can't afford to buy or may need a boost through a tough time...

    But when there's a thread about the government throwing money at defense contractors, banks, massive corporate farms and energy companies...well, those threads die a quick death if they even get started because FOX and Drudge never bring them up.

    But when the government gives low interest loans to people who marginally qualify...AMERICA AS WE KNOW IT IS OVER!

    Too funny.

    Anyone been watching the Ken Burns PBS series on the Dustbowl? Everyone should, but only voluntarily, of course.
     

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