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alstry (35.68)

Kiss Housing Values GOODBYE!!!!!!

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November 05, 2009 – Comments (12)

Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.
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The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

http://www.fanniemae.com/newsreleases/2009/4844.jhtml?p=Media&s=News+Releases

Who will want to pay 2X-3X the rate for an underwater mortgage plus property taxes and insurance when the can rent for a fraction of the cost?  Who will want to pay $200K for a house that their neighbor is renting for $800 per month????

Factoring maintenance,property taxes and insurance....we are getting much closer to the point where the economic value of houses will be practically FREE!!!!!

12 Comments – Post Your Own

#1) On November 05, 2009 at 12:40 PM, brickcityman (< 20) wrote:

Great... now all we need is a rationale for why Financial stocks can keep going up and we'll have a nice little bow on this package!

 

 

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#2) On November 05, 2009 at 1:15 PM, alasker (< 20) wrote:

I dont know the specifics so I may sound stupid-

but if you trade a real asset for a lease to freddie/ fannie- can they start making securitized like mortgages- lease backed securities (LBS)? How do you figure out what a "market rate" is? What happens if the feds want to raise your rent? Why would freddie/ fannie decrease the value of the assets on their books- the homes that are bundled as mortgage backed securities?

Also- if you sign over your deed to the feds- could that be used as collateral against our federal debt?

So not only do the feds want to own the car companies, financial companies, the health companies, student loan companies... now our homes. So much for Thomas Jefferson.

just rambling

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#3) On November 05, 2009 at 1:19 PM, alstry (35.68) wrote:

As I say....it is not the end of the world......simply the end of the world as you know it.

The real question is what exactly is new world going to look like, and what is going to have value....because in this one asset prices are imploding.

None of this is hard to see.....simply hard to accept.

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#4) On November 05, 2009 at 1:41 PM, dudemonkey (57.40) wrote:

When you say "kiss housing prices goodbye", do you mean a real goodbye where something never comes back, or an alstry goodbye which lasts sometimes as many as 10 hours?

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#5) On November 05, 2009 at 1:43 PM, Entrepreneur58 (50.97) wrote:

<<>>

So when your toilet backs up, do you call Obama?

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#6) On November 05, 2009 at 2:03 PM, booyahh (< 20) wrote:

When you say "kiss housing prices goodbye", do you mean a real goodbye where something never comes back, or an alstry goodbye which lasts sometimes as many as 10 hours?

 This is clearly an alstry goodbye. 

i.e. when prices go back up, he'll ramp up the fear factor and warn us even more loudly of an impending crash.

Residential housing has bottomed. Commercial real estate is still crashing, but residential real estate is recovering.

And ignore the Japan analogies, because Japan never had large scale immigration - in fact its population is shrinking year after year. In America the population is growing, and so the empty houses will get bought up, thereby driving the prices back up.

 

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#7) On November 05, 2009 at 2:08 PM, alstry (35.68) wrote:

America's Welfare/Unemployment Population is Growing Rapidly....its income earning population is EVAPORATING!!!!!!

Perficient Inc Reports an 95% Profit Drop

Huge Charges Drag MGM Mirage to Big Loss

Still Waiting for Details on Merck’s 16,000 Job Cuts

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#8) On November 05, 2009 at 2:11 PM, alasker (< 20) wrote:

its not unprecendented. None of us live forever so what is property worth- only as much as you can enjoy it while you are alive. There are small islands in the pacific where the king gives you land, you live and work it, and upon your death it gets turned back to the state. You never own anything- its given to you- you are just borrowing it. You can't resell land and take the money out of country.  

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#9) On November 05, 2009 at 2:25 PM, davejh23 (< 20) wrote:

"And ignore the Japan analogies, because Japan never had large scale immigration - in fact its population is shrinking year after year. In America the population is growing, and so the empty houses will get bought up, thereby driving the prices back up."

This could be true, but this could take years.  Some areas are so overbuilt that it could take 10+ years for population growth to catch up with existing supply.  Within the next 10 years, there is a good chance that mortgage rates will increase to at least 7-8% ("normal"), and there's a decent chance that we will never have 5-6% mortgage rates again.  A period of 10%+ mortgage rates would decrease affordability by 50% from current levels, and no amount of immigration will drive prices up at that point.  I live in the state with the fastest growing population in the country, and prices continue to fall...nationwide, housing may be near a bottom, but not everywhere...

 

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#10) On November 05, 2009 at 2:25 PM, alstry (35.68) wrote:

alasker...

It is interesting how we are moving away from a private property rights nation to a government owned/rental country.

Again, none of this was hard to see coming....simply hard to accept.

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#11) On November 05, 2009 at 2:26 PM, bullnada (< 20) wrote:

booyah,

 Housing has bottomed?  Love to here your theory. What part of the world are you in? Your thoughts on option arm and neg am loan reset.

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#12) On November 05, 2009 at 3:05 PM, bullnada (< 20) wrote:

Booyahh,

  You may want to listen to the Peter Schiff video

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