End Crony Capitalism

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Brain -> End Crony Capitalism (8/18/2010 7:49:04 PM)
"the FHA, created in 1934 to make homeownership attainable for low- to moderate-income Americans, is now subsidizing Manhattan luxury condominiums." Hope they are putting low income people in them. End Crony Capitalism At 300 East 23rd Street in the exclusive Gramercy Park neighborhood of Manhattan, where to get into parts of the park you need a key granted just to residents, a new 98-unit luxury apartment complex has been built with an outdoor movie theater and panoramic city views. The problem is that not enough buyers are coughing up the $820,000 to $3 million the project's developers are asking for the privilege to own a unit in the building. But don't worry, the Obama administration is coming to the rescue. Last December, the Federal Housing Administration loosened its financing rules so that U.S. taxpayers would have the honor of backing loans with downpayments as low as 3.5%. Now rich Manhattanites can better afford condos in buildings with pet spas, concierges and rooftop lounges like the one in Gramercy Park, all on the taxpayers' dime. http://paracom.paramountcommunication.com/hostedemail/email.htm?h=0ef9800a816e4243ba2c924c04ae8cfc&CID=6759561717&ch=10814CDA293F92747C0667728F396FD3 The view from the south gate of Gramercy Park, looking north from Gramercy Park South (East 20th Street), with the statue of Edwin Booth in the center. The Gramercy Park Hotel is visible in the left background. (May 2007) [image]local://upfiles/392475/4C7B6CB1C9D64990B75EE1566B171F53.jpg[/image]

Archer -> RE: End Crony Capitalism (8/19/2010 7:27:11 AM)
On the taxpayer's dime??????Do you even understand the basics of what FHA does? they back the loans, the only way those loans come back and cost the taxpayer anything is if the borrower defaults. BIG problem with the story's emphasis. Quoted from your story "The FHA insures loans of as much as $729,750, and permits buyers to borrow up to 96.5 percent of the price. " Which means that even the very cheapest of the apartments in this building don't qualify unless the buyer puts down more than 3.5%. Because at 820,000 X 3.5% = $791,300 which does not drop the price below the upper end loan amount of $729,750. But that doesn't make for a good story now does it? And lets see what rules changed? Rule #1 that changed: The minimum under contract percentage for a building to qualify to be backed by FHA was 50% and is now 30% (Nothing in that changed who could get the financing towards the rich directly applies to rich buildings and poor buildings EQUALLY ) Rule #2 that changed: Rule was you could get FHA on only 30% of the apartments in any one building, now it says they can back the loans for up to 50% of the apartments in any one building. (again what in that change directly benefits the wealthy? it applies as much to the wealthy buildings and the poorest buildings EQUALLY.) WAY DOWN AT THE BOTTOM of your article “With apartments over $1 million, FHA isn’t going to help you,” Behin said. “You’d have to put down 30 percent to get the loan of $729,000. And if you have 30 percent to put down, a bank will loan to you without FHA.” So lets look at the real numbers here where is that break point. Lowest price unit in the example was $820,000 to get that down to the cap of 729,700 you would have to put down how much $90,300 That's over 10% meaning most conventional financing would approve and you wouldn't need FHA.

MrRodgers -> RE: End Crony Capitalism (8/19/2010 10:43:45 AM)
quote: ORIGINAL: Archer On the taxpayer's dime??????Do you even understand the basics of what FHA does? they back the loans, the only way those loans come back and cost the taxpayer anything is if the borrower defaults. BIG problem with the story's emphasis. Quoted from your story "The FHA insures loans of as much as $729,750, and permits buyers to borrow up to 96.5 percent of the price. " Which means that even the very cheapest of the apartments in this building don't qualify unless the buyer puts down more than 3.5%. Because at 820,000 X 3.5% = $791,300 which does not drop the price below the upper end loan amount of $729,750. But that doesn't make for a good story now does it? And lets see what rules changed? Rule #1 that changed: The minimum under contract percentage for a building to qualify to be backed by FHA was 50% and is now 30% (Nothing in that changed who could get the financing towards the rich directly applies to rich buildings and poor buildings EQUALLY ) Rule #2 that changed: Rule was you could get FHA on only 30% of the apartments in any one building, now it says they can back the loans for up to 50% of the apartments in any one building. (again what in that change directly benefits the wealthy? it applies as much to the wealthy buildings and the poorest buildings EQUALLY.) WAY DOWN AT THE BOTTOM of your article “With apartments over $1 million, FHA isn’t going to help you,” Behin said. “You’d have to put down 30 percent to get the loan of $729,000. And if you have 30 percent to put down, a bank will loan to you without FHA.” So lets look at the real numbers here where is that break point. Lowest price unit in the example was $820,000 to get that down to the cap of 729,700 you would have to put down how much $90,300 That's over 10% meaning most conventional financing would approve and you wouldn't need FHA. The FHA, Fannie, Freddie and ALL of the rest...should NOT exist at all...period and should never had existed. Their creation was justified in that it 'helps' buyers...buy. It did nothing of the sort. That default should be in a free market, not one guaranteed by the govt. even if it is only a portion of the balance. All these govt. housing guarantees have done is to empower home builders sell and lenders lend because the typically lazy, risk averse capitalists couldn't even trust themselves to lend properly on homes so investors needed to take the risk of the free market and have govt take it. That's just what is happening here, it's been happening for 80 years and the news is now only...the increase in the mortgage limit. Now the govt. is politically enabled to raise the mortgage amounts to over $700,000, a portion of which they guarantee...why ? Why not cap FHA and VA at say the first $200,000 and guar. only a portion of that as they do now ? As for this OP, what the bankers want...the bankers get. All the govt. does is subsidize (through the assumption of risk) higher and higher prices obviously now up to over $700,000 and thus...higher profits for investors. Residential real estate now has been and will continue to be one of the most if not the most impoverishing markets to ever exist in this country. Not only is it immoral for taxpayers to be involved in anyway with anything approaching the luxury of a $700,000+ mortgage guarantee , I also now can't get anymore heated up over the math you have as we shouldn't even be having this discussion. Note that isn't it convenient how the govt. steps in and feels the pain of the Gramercy's dev. ? Brings a tear to my eye to see our great plutocracy...I mean democracy at work especially with all of those $million of free-speech in the bank that I can 'speak' ha...SHOUT with and my condo dev. at stake. What a country !!

Archer -> RE: End Crony Capitalism (8/19/2010 11:02:38 AM)
The price cap at $729,000 was not a change that was made this time around, unless I missed something. We could likely agree that $729,000 is a ridiculously high CAP for the program, but that is the CAP in NYC where the market is priced pretty high to begin with. We might even agree that backing home loans is something the government should not be involved in except as a Veteran's Benefit. The real problem I've had with Brain's posting is that the example of the rich luxury apartments being bought this way is such a farsical example as shown when I took the numbers into account and showed that there are almost no apartments in the example building that qualified to be bought with an FHA loan without paying enough down payment that such a backer was not needed to obtain the loan to begin with.

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