Caribou Gear

Im bowing out

Best I can tell the administrations new rule will change the LLPA from the FHFA and that will increase fees for higher credit score borrowers and decrease fees for lower credit score borrowers on federally backed mortgages. Heaven forbid we incentivize paying your bills on time and being financially solvent. The story is picking up more coverage on a variety of news sources. With all the culture war stuff dominating the news cycle, it’s tough for things that actually affect people’s lives to make it to the top. I believe it takes effect May 1.
Nothing in these LLPA tables below looks unusual to me. The adjustments (and rates) reflect the probability of default. Adjusting these is normal. It is incorrect, and disingenuous, to suggest one group is paying more to fund another group. That is not happening. I suspect they are just being adjusted to reflect the most recent historical data. But like anything nowadays, it is political.
We saw in the GFC that borrower credit score was not a great indicator of default, and often “higher risk” Mortgages defaulted at a lower rate than those that looked higher in “quality”. Maybe those with high credit scores could afford better bankruptcy lawyers?

 
Nothing in these LLPA tables below looks unusual to me. The adjustments (and rates) reflect the probability of default. Adjusting these is normal. It is incorrect, and disingenuous, to suggest one group is paying more to fund another group. That is not happening. I suspect they are just being adjusted to reflect the most recent historical data. But like anything nowadays, it is political.
We saw in the GFC that borrower credit score was not a great indicator of default, and often “higher risk” Mortgages defaulted at a lower rate than those that looked higher in “quality”. Maybe those with high credit scores could afford better bankruptcy lawyers?

I am confused. You stated that the rates in the LLPAs reflect probability of default but then stated that borrower credit score was not a great indicator of default. Then why use credit score in the LLPA tables? Find some other better indicator. Isn’t probability of default a component of the risk assessment for lenders? Maybe bankers should just scrap the credit check requirement entirely.
 
1 square mile of bighorn basin desert, with a sweet little unabomber hut for 299k. One of you guys needs to jump on this!

Shaul is finally selling his place I see
 
I am confused. You stated that the rates in the LLPAs reflect probability of default but then stated that borrower credit score was not a great indicator of default. Then why use credit score in the LLPA tables? Find some other better indicator. Isn’t probability of default a component of the risk assessment for lenders? Maybe bankers should just scrap the credit check requirement entirely.
It’s not that there wasn’t a difference, just that we saw default rates for high fico and low fico weren’t as different as the score would suggest.

Attached is a link that explains the changes the best. The fee difference between high fico and low fico changed (narrowed) but high fico is still better off. Like the author, I don’t have an opinion on the change, but think it needs to be presented correctly. I agree it is confusing, but mostly at the higher LTV differences, not the Fico. I assume that is reflective of market prices and need to keep the mortgage affordable to a wide group of people.

For the TLDR crowd.
IMG_1806.jpeg
 
It’s not that there wasn’t a difference, just that we saw default rates for high fico and low fico weren’t as different as the score would suggest.

Attached is a link that explains the changes the best. The fee difference between high fico and low fico changed (narrowed) but high fico is still better off. Like the author, I don’t have an opinion on the change, but think it needs to be presented correctly. I agree it is confusing, but mostly at the higher LTV differences, not the Fico. I assume that is reflective of market prices and need to keep the mortgage affordable to a wide group of people.

For the TLDR crowd.
View attachment 273103
I recall the last time they tried to “help” folks buy homes they couldn’t afford and encouraged low starting equity - it didn’t end well for anybody- and particularly not those who were the target of the “help”.
 
God that carpet is heinous… and the tile on the counters in the kitchen
View attachment 273100
Why does it matter if you're only gonna be there 3-5 years?
why do you need such a big house for 3 people and 3-5 years?
I thought you were the hardcore legend/frugality king.
I'm so confused right now.
 
I recall the last time they tried to “help” folks buy homes they couldn’t afford and encouraged low starting equity - it didn’t end well for anybody- and particularly not those who were the target of the “help”.
Well, it’s part of their mandate. Previously, when they made those mistakes they were private entities. Now they are owned by the government (us) and the fees are to improve capital ratios. They generate billions $ in income and neither party wants to cut them loose to roam free again because they need the income for their favorite expenses.
I certainly have an opinion on the subject and it probably is pretty close to yours, but we can have a thread complaining about changes to the mortgage fee structure to help new buyers and simultaneously complaining housing prices are out of reach to new buyers. We get back to the discussion of everyone wanting, even expecting, a handout.
 
Not to mention flooring is probably on of the easiest most affordable things to change. Just saying that kind of stuff I don't even pay attention to when looking because I'm more than likely gonna change it anyway.
 
Well, it’s part of their mandate. Previously, when they made those mistakes they were private entities. Now they are owned by the government (us) and the fees are to improve capital ratios. They generate billions $ in income and neither party wants to cut them loose to roam free again because they need the income for their favorite expenses.
I certainly have an opinion on the subject and it probably is pretty close to yours, but we can have a thread complaining about changes to the mortgage fee structure to help new buyers and simultaneously complaining housing prices are out of reach to new buyers. We get back to the discussion of everyone wanting, even expecting, a handout.
The previous help was no document home loans created by Congress with government guarantees. Nothing private about that mistake.
 
The previous help was no document home loans created by Congress with government guarantees.
Not going to argue the GFC for the 1000th time. At that time before Congress took the approach to lessen rules, and we know the result. FNMA was and is a private, government sponsored enterprise. You can still buy the stock (not investment advice). You can also see in the chart where the government started to take a cut. Tax payers made out very well, and continue to. Without some government backing, mortgage rates would be much higher and the economy would be more volatile given housing large percentage contribution. So we either want some government involvement or we want to let the “free market” do its thing and endure the consequences. I think most choose the former and we mostly debate where the balance point is.

IMG_1807.jpeg
 
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