Anonymous Feb 29th “In Obama’s Plan to save the homeowner.”
Due to job transfer, I'm trying to buy a house in Oregon (Portland metro). Fannie/Freddie/et. al. are trying to "stabilize" prices by offering homes above market and refusing to negotiate. To lure in buyers, they offer 0% down, no closing costs, no appraisal loans. Sound familiar? HAFA short sales dictate price, but pay the seller cash to move out and offer deed in lieu if the short sale doesn't work out. And Fannie/Freddie/et. al. don't disclose serious defects. I tried to buy a Fannie home - turned out to be in a flood plain - no disclosure. So the house goes in and out of contract, with Fannie hoping to find the sucker who doesn't discover the flood plain. If they wait 'til summer, when the waters recede until next winter, they'll probably get their wish. Kicking the can, indeed.
Meanwhile, Realtors are back to their old games. Every property "has an offer coming in," and agents swear that most houses sell within 2 days of list unless they're seriously defective. Half the inventory is short sales. There's another 100% of current inventory somewhere in the foreclosure process.
The risk in a low-rate environment is that buyers generally buy on payment - when rates rise, payments have to rise or prices have to fall. 4% mortgages are far below historic norms. We are creating a new generation of underwater homeowners, with NAR collecting their 6% tip as the housing Titanic takes on water. Low rates are a godsend if you're going to stay put for 30 years, but the average homeowner will be short-selling in 7 years when rates revert to normal and salaries haven't kept pace with rising rates and inflated home prices. How long can the 3% loan keep the ship afloat? I am actually hearing agents repeat 2006 asking prices (so high that houses didn't sell even in the greed bubble of 2006!) and saying "look what a bargain it is now!" Are buyers still that stupid?
Here is a Previous Post of mine, from a few years back, that shows that the predatory animal (Fannie Mae) hasn't lost its touch! Buyer beware. They are going to give you the deal of a century----the one that nobody else wanted!
A hat tip to the anonymous author.