"Back to the future!"
Certainly interesting to see history repeat itself isn't it?
A new MIT study is asserting the last recession was caused by prime borrowers with unreal expectations of continued large appreciation after they purchased. Isn't that basically a Ponzi scheme, where some poor schmuck at the end is going to get stuck with a home that's over-valued?
Doesn't take a brain surgeon...though we have one.
But once again, it is buyers creating a buble.
FHA limits have had to increase the last several years to keep pace with this super inflation. HECM limits have been following the FHA limit. If either adjusts, it's usually in January.
The life of loan FHA MIP has done it's job and strengthened the FHA fund. It may not be fair to hold an FHA borrower's feet to the fire past 78% LTV while not doing so for a conventional buyer.
Regarding HECMS, the principle limit factor was reduced based on age and interest rates that provides less cash to the borrower, while UW is much like a standard mortgage these days. HUD also started auditing each loan submission in 2019 requiring if needed, a second appraisal that is charged the customer. It was that or cut the PLC again this year. So it's not s gravy train.
Back to the bubble....it's a scary thing to see 30 year old stick built homes selling for a minimum of $500k with no such thing as affordable housing here in CA.
Some employed people are moving out of rentals and into regular hotels. What happens when the job runs out? Crash, burn and bail; repeat.
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