RealTown's RealTalk

Tom Hathaway writes in part:

What concerns me is that what HUD is now labeling as a "first time" home buyer are exactly the same folks to purchased homes using the B/C loop holes that began in the early 2000s. As time goes on, we are most likely to see ALL of those people once again buying homes they can not afford, hence the repeat of the same miserly we are going through right now, only about 3 years down the road. I for one don't want to see this happen again.

As a very successful lender here in the Memphis area told me, it is de' je vue all over again. It is time for HUD to realize that not everyone will ever be qualified to buy a home. There will always be those who just simply have other priorities in life and would rather drive a new car every year, use drugs, or take large vacation each year, instead of owning a home. Most of us have leaned that you can not do it all on a normal pay check.

All of this giving away of money is to those who do not deserve it is going to break the country and make it much harder for those who work hard and are responsible with their money succeed in the future. It is all about socialism.

Mark Jay comments:

More misinformation from Tom Hathaway!� HUD--among other things-administers the FHA mortgage insurance programs.� FHA mortgage insurance is NOT exclusively for "first time" homebuyers and HUD doesn't label "first time" homebuyers as such.� The First Time Homebuyer Credit is administered by the Internal Revenue Service.� The FTHC is part of the �American Recovery and Reinvestment Act of 2009 colloquially referred to as the "stimulus" package.� HUD FHA insurance programs and the ARRA 2009 FTHC are NOT the same thing or as closely associated as Tom Hathaway states.

It is a GROSS exaggeration and generalization to state that first time homebuyers in today's lending environment "are exactly the same folks to (sic( homes using the B/C…" mortgage programs.� FHA insured loans were never and are not now considered to be B, C or even Alt-A credit quality loans.� FHA has ALWAYS-for at least the last 35 years or so-essentially the same payment to income and debt service to income ratios.

Repeating the same misinformation over and over and over again as Tom does not make that misinformation true….

First time homebuyers using the FTHC will likely NOT result in a "repeat of the same miserly (sic) we are going through right now…" as Tom Hathaway suggests.� The down payment amount has an effect on default rates but that effect is not as great as the effect of the two income ratios; payment and total debt payment to income ratios, have on default rates.

There IS no "d�j� vu all over again" as Tom's successful Memphis lender asserts.� Tom's Memphis lender is delusional.� The underlying credit underwriting and collateral underwriting environment has changed-and for the better-so we WON'T have a repeat even with the effect of the First Time Homebuyer Credit on the amount of "skin" a buyer has "in the game" vis a vis the Mortgagee-who DOES have a lot of "skin in the game".� If a person buys a $100,000 qualifying property and applies an $8,000 FTHC to the purchase price leaving a $92,000 base mortgage how is the Mortgagee worse off than that same purchase price with a 3.5% down payment?� … And the person buying is certainly better off….

Lastly, Tom Hathaway writes "all of this giving away of money is to those who do not deserve it is going to break the country…."� Too much time listing to "talk radio" on Tom Hathaway's part.� All the people who will use the FTHC will pale in significance in cost compared to the money Bank of America, Citibank, or AIG received in bail outs.

AIG alone received around 170 billion dollars… that's BILLION with a "B".� If the money AIG received went to people who would be first time home buyers, you could give 170 million people One Million dollars EACH and the total would be 170 billion dollars.� Check the arithmetic… one million times one million equals one billion!� There are around 300 million people in America.� If you gave half the people in America 1 million dollars that would be LESS than AIG received.� I'll leave it up to you run the same calculations for B of A and Citi and the host of other investment banks commercial banks and other entities.� Why are the shareholders and management of AIG and others similarly situated more "deserving" then some guy or gal or a couple living in an apartment who want to by a 3 bedroom one bath 30+ year home with a garage for a couple of hundred thousand dollars?

Socialism?� Again, too much time listening to Rush and Sean and the rest of the regional humorist/satirist/rabble rousers… Below is what I wrote about America becoming Socialist as a result of some current policy initiatives underway and under consideration… and this is not to say I support all of these policies but those promulgating these policies got a lot of votes… enough votes to be able to implement these policies.� Yet little if any of these policies can be considered "socialism".

There ARE a few places in the world where there are little if any rules or regulations or policies or procedures. Where there is no Socialism and an EXTREME culture of individualism and Freedom. One of those places is Somalia. How would you like to live THERE? No President, no Congress, no court system, no banking system, no stock exchange, no "ridiculous FHA Fee Inspectors" to deal with. No speed limits. No car of boat or other vehicle titles. No protection of the weak and vulnerable or the young and old. Just the Law of the Jungle! Pirates, ethnic cleansers… No such thing as "Murder" because killing isn't against the law because there IS no law. No real estate industry, no mortgage industry… if you want a house you gather together a strong gang of heavily armed fellow freedom loving individuals, find the house you want, attack the inhabitants with automatic assault rifles, rocket propelled grenades and drive the current occupants out… if you're more heavily armed then they are…. And you might as well kill them so you don't have to worry about them returning with a counter attack.

So if you think America is turning socialist then pack up and move to Somalia-no socialism there.� Don't like the weather in Somalia?� Try Bosnia.� No socialism there either.� Just make sure you're of the "right" ethnic group so you don't wind up mutilated, dead and covered with lime buried face down in a shallow unmarked grave.

Mark Jay wrote:

AIG alone received around 170 billion dollars… that's BILLION with a "B". If the money AIG received went to people who would be first time home buyers, you could give 170 million people One Million dollars EACH and the total would be 170 billion dollars. Check the arithmetic… one million times one million equals one billion! There are around 300 million people in America. If you gave half the people in America 1 million dollars that would be LESS than AIG received. I'll leave it up to you run the same calculations for B of A and Citi and the host of other investment banks commercial banks and other entities. Why are the shareholders and management of AIG and others similarly situated more "deserving" then some guy or gal or a couple living in an apartment who want to by a 3 bedroom one bath 30+ year home with a garage for a couple of hundred thousand dollars?

Lindy in Houston writes in part:

Nope, 1billion is 1million x 1thousand... not a million x million. Jeez, this sure is a good thread... I must find time to read all of it, and click on all the links.

I wonder how many homes were sold nationwide in the past month, or year.... then divide that into the $170billion for AIG et al....and soon GM again.

AIG is an investor... why is our gov't more concerned with investors than it's people? Investors invest.... they know they are taking a risk... if they lose, it's on them. But to take the gov't's money, to shore up the investors.... omg, it's too sickening.

Mark Jay comments:

Lindy caught my mistake. My BIG mistake! There are now so many "0"s in discussions of this type business calculators don't have enough registers to be able to do the calculations. I'll have to start using scientific notation to add, subtract, multiply and divide these numbers if I'm going to continue discussion these BIG numbers. Avogadro's constant? Anyone remember THAT number? 6.02 times 10 to the 23rd power? You subtract exponents to divide numbers expressed in this way? College Chemistry? Anyway…

Still, I think my point remains. If AIG-just ONE American corporation-gets 170 BILLION then why complain about a measly-- UP TO-- $8,000 First Time Home Buyer's Tax Credit? Here's the correct arithmetic then, I hope… One million people getting $170,000 each is the equivalent to the 170 Billion AIG got? Is THAT the correct calculation? There are now a little more than 4 million properties listed on Realtor.com. In my area last year less than 50% of listed properties sold. In my MLS around 30,000 properties were listed last year and around 13,000 sold. How many homes will sell this year across America? IF AIG's check from the government is the equivalent of one million ordinary people getting $170,000 then you have some perspective on how big a deal the First Time Home Buyer's Tax Credit is.

The last time we had a credit freeze… actually not "we" but our grandparents… during the "Great Depression"; the government did little, if anything, to ameliorate the contraction and history illustrates what happened. While we're certainly all still struggling on average the government supporting liquidity and averting a complete credit freeze hasn't sent the economy into depression… and that's a good thing. It's yet to be seen what kind of reaction we'll have down line but for now things aren't like they were in the 1930's.

I'm surprised no one else caught my mistake….

Mark Jay wrote in part:

So if you think America is turning socialist then pack up and move to Somalia-no socialism there. Don't like the weather in Somalia? Try Bosnia. No socialism there either. Just make sure you're of the "right" ethnic group so you don't wind up mutilated, dead and covered with lime buried face down in a shallow unmarked grave."

T. Wayne Rudd comments:

I have to add my "two cents" in here. Mark Jay, I think you need to go back and study your college Government or Civics classes, because you seem to be confusing Socialism, Anarchy, Dictatorship, Communism and Fascism. The United States was formed as a Republic, and is growing further and further away from that, and closer and closer to a socialist FORM of government, under what amounts to a judicial, and, in my opinion, of late an executive, oligarchy. If you can't see that, I'm truly sorry for you, my friend. But you are correct, Somalia isn't socialist, it's anarchist. Having said all of that, is this really the forum for this discussion?

Mark Hay replies:

Is this really the forum for this discussion? No, not as "political" as T. Wayne is broadening it to. My comments were anchored in real estate brokerage… specifically the $8,000 First Time Home Buyer Tax Credit evidencing this country's march toward socialism. It's not… that criticism is simply the echo of AM Talk Radio which all of us salespeople who drive around in cars as part of what we do listen to instead of the Eagles, Elton John, ABBA and the rest of Oldies Radio… or the totally incomprehensible contemporary artists like Lady GaGa, Nas, Fity Cent and the rest.

Talk radio personalities are humorists/ satirists/ entertainers who have developed a utopian vision of how the world should be and characterize most everything that doesn't comport with their vision as being "socialism". An $8,000 First Time Home Buyer's Tax Credit is NOT growing further and further way from the principles of the representative republic our country was founded to be. It's just a temporary subsidy intended to stimulate the housing market. And the re-regulation of aspects of the economy are also NOT part of the Obama administration's march toward Socialism as Rush, Sean and others say. By the way, the first leg of the stimulus package was introduced by the Bush administration in September of 2008 nearly 2 months before the Dems won the election.

If you consider contemporary history to span the twentieth century and the twenty first up to today then the governance continuum would start with Stalinist Communism on the left to anarchy on the right. I think everyone "gets' that. Total freedom from government regulation IS anarchy. And the government owning and controlling everything IS Communism. Our economy re-regulating is NOT socialism, it's just rebalancing economic forces and impulses in a way that will better us all. Are those regulations debatable? Of course! And they ARE debated AND voted on by the representatives the voters elect and then we move on and see how things work out adjusting and maybe "rebooting" along the way periodically as mankind has always done throughout history.

Tom Hathaway decries the First Time Home Buyer's Tax Credit as "socialism" but then over the years has called for the most oppressive regulation of the brokerage business to the point of prohibiting Listing Broker's from actually SELLING the property they list… requiring that THAT function be carried out only by Exclusive Buyer's Agents.

Has anyone but me ever stopped by a truck stop filled with $17.00 per hour over-the-road drivers all listing to Rush and nodding in agreement and wondered how can that be? Why would truck drivers or salespeople all riding around listening to conservative utopian talk radio support that vision? The vision of no need to re-regulate investment and commercial banks, no need to regulate the health care delivery system in such a way that ALL Americans have health care coverage in the same what the ALL Americans have sanitary sewers and potable water at an affordable price? Why should mortgage brokers have the "freedom" to coach a real estate licensee… on a deal with a $200,000l mortgage… to included seller paid closing costs equaling a one percent loan origination fee, one point discount and $1,500 in "underwriting" fees and "processing" fees while counseling the buyer to "float" the interest rate until closing where the buyer winds up completely "tricked and trapped" into a jacked up rate that yields another two points back to the mortgage broker? …. Where the mortgage broker has the "freedom" to rake in close to $10,000 for ordering an appraisal, a credit report, collecting two months worth of paycheck stubs and back statements? Or would it be "socialism" to limit Mortgage Brokers at least completely and obviously disclose what they are making on a deal if not regulate that kind of price gouging out of business?

Not every regulation or provision of additional service or security by the government equals "socialism". And when "freedom" in a highly complicated economic system means the freedom to "trick and trap" those not "in the know" to their economic disadvantage then THAT freedom is just another word for predation.