The Collected Works of Author and Blogger Larry Roberts

Archive for January, 2017

Did Trump raise the FHA insurance premium to screw California? Higher FHA mortgage fees hurt real estate markets most in areas that did not vote for Donald Trump. In one of his first acts as President of the United States, Donald Trump suspended the lowing of FHA mortgage insurance premiums scheduled by outgoing president Obama. If Trump had done nothing, on January 27th, FHA mortgage insurance premiums would have dropped from 85 basis points to 60 basis points, a significant reduction. In effect, Donald Trump raised FHA insurance premiums with his decree. Why did he do this? Lowering FHA insurance premiums would help first-time homebuyers and working-class families on the margin afford a home of their own. Is the real…[READ MORE]

Rising mortgage interest rates repel first-time homebuyers Rising mortgage interest rates caused an alarming 10% decline in potential first-time homebuyers. Over the last several years, most pundits predicted mortgage interest rates would rise. With the exception of the taper tantrum, a 1% rise in mortgage rates during a six-week period in mid-2013, mortgage interest rates trended consistently downward, nearing record lows again just before the election. Paired with the flawed predictions of rising rates, market analysts were always quick to assure everyone that rising mortgage interest rates would have no impact on the housing market. The economy is strong, they said. Incomes are rising, they said. Nothing could hold back the housing recovery juggernaut. Well, guess what? It was all bullshit.…[READ MORE]

Federal Reserve's Dudley predicts return of HELOC abuse The Federal Reserve’s Dudley believes people will forget the lessons of the housing mania and return to profligate home equity spending. When people lose money (or foolishly waste it), they often behave differently after the incident. Wise people actually take action to prevent a recurrence of the tragedy. For example, if a thief breaks into someone’s house, the homeowner installs better locks or alarm systems to avoid a future loss of property or worse. However, when the crime is more complex than breaking-and-entering, or when the government is the facilitator of the crime, it can be much more difficult for the victims to protect themselves, but it’s just as necessary. Ben Bernanke reflated…[READ MORE]

The weak case for occupancy after foreclosure Some progressives want people to occupy houses they don’t own and don’t pay for. It’s sad when someone is forcibly evicted from their family home. People develop strong emotional attachments to real property, so many people feel compassion and empathy for those enduring such a difficult loss. Since nobody wants to feel the pain of loss, many people suggest we should stop foreclosures — or at least the evictions after the fact. (See: Should evictions be banned to stop hurting people’s feelings?) When people rally to stop foreclosure, they forget there is a next chapter to the story. What happens to the family and the house after the foreclosure? First, the house doesn’t…[READ MORE]

Yesterday's Baby Boomers were better off than today's Millennials Millennials are worse off than Baby Boomers were at this stage in their life cycle. Growing up in the Midwest, I remember the relative prosperity of ordinary families in the 1960s and 1970s. Working-class families supported themselves on union labor contracts granting them a high quality of life. A sole breadwinner without a college education could make enough money to buy a house, two cars, recreational vehicles, and family vacations. Today, working-class families with two breadwinners can’t afford any of those items today, and even those with higher educations struggle to make ends meet. I remember the arguments against unions in the 1980s. Their power was excessive in the 1970s, they held…[READ MORE]

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