The Housing Bubble Always Pops Thrice…

…or something.

We’ve been Through the Looking Glass for so long now I forget how many times we’ve bumped the fake bottom in 07.  Shedlock has the awesome charts, here we are in Housing starts in ’11-

housing starts CR

Someone should have played the Frozen soundtrack for Bernanke and Yellen and we would’ve been on the plateau end of a nice recovery by now. Let it Fxckin’ Go already. Instead we have miles to go to bottom out housing prices.

Importantly, extra requirements were added so well documented citizens have to jump through hoops, and if you have good credit they don’t want you-

…New government rules have mortgage lenders checking, and double-checking, the income status of borrowers. Now more than ever, lenders want to ensure that home buyers have the ability to repay their loan obligations…

Personally I think all that was needed was removing the high risk low underwriting loans backed by tax dollars. Jamie Dimon wants to lend to everyone with a pulse? Great, but not on my back jack. But instead we got extra regs and the undocumented applications got bumped up and okayed increasing the risks of another national bubble and accompanying collapse even more likely, while hampering the middle class ability to function (as does everything Ive seen DC do since 1999):

First we had the GSEs ‘ease’ down payment requirements. Then the creation of all new!! lending vehicles.

…In what the companies billed as “a new effort dedicated to building a better American housing system,” Quicken and Freddie announced what they called an “innovative solution” to “meet the needs of emerging markets, including millennials, first-time homebuyers and middle-class borrowers.”

What’s “innovative” about Quicken and Freddie’s “solutions”, you ask? Well for one thing, they’re willing to give millennials a home loan with just 3% down…(emphasis in the original)

Next we reached beyond prime, alt prime, subprime….we needed a new score to reach lower.

…PRBC’s alliance with Fair Isaac is an important step toward freeing mortgage lenders from the expensive and time-consuming, manual underwriting procedures they encounter when they try to lend to people who have little or no documented credit experience…

Oh yes FREE the lenders from these chains of underwriting credit risks backed by we US taxpayers-

… to provide rental payment and bill payment histories as part of its FICO Expansion Score suite…

… FICO Expansion Score will incorporate these new data elements when calculating the credit risk of individuals who have minimal or no credit history on file. The FICO Expansion score uses non-traditional credit data to create a score that aligns with the FICO credit score used today by most mortgage lenders,…

So, voila! new FICO scoring to give credit to ‘nontraditional’ borrowers i.e. people without a credit history. Now you can meet income requirements by pooling together ‘earnings’ with people who don’t even live with you!

But they needed something more. Something new. Something absolutely ridiculous, and as always they met the challenge-

Introducing the ZERO DOWN FRIENDS & FAMILY LOAN!!!! ZeroHedge snarked so hard they mustve fallen out of their chairs over the press release and really what the hell else can we do in the face of such madness?

In its latest ‘offering’ letter for HomeReady Mortgages, Fannie Mae offers what it calls ‘innovative underwriting flexibility’…

  • Offers an innovative new feature that supports extended family households: will consider income from a non-borrower household member as a compensating factor in DU to allow for a debt-to-income (DTI) ratio >45% to 50%.
  • Allows non-occupant borrowers, such as a parent.
  • Permits rental income from an accessory dwelling unit (such as a basement apartment).
  • Allows boarder income (updated guidelines provide documentation flexibility)….

And the TBTF boarded the party train to Housing Bubble Mach 3-

…The bank most recently made the decision to move its minimum FICO requirement on Federal Housing Administration-backed mortgage loans to 600 from 640 for retail purchase customers, Vickee Adams, a spokesperson for Wells Fargo, said….

Notice its on FHA loans, backed by you and I. Not to be outdone the bidding war to lower credit standards expanded to Carrington

…lowered its minimum FICO score to 550 and expanded its guidelines on a number of FHA, VA and USDA loan programs in order to better focus on underserved borrowers, typically those in the sub-640 FICO score range….

So to be clear, cough, they are ELIMINATING loans to GOOD CREDIT RISKS and EXPANDING to ‘underserved’ LOW CREDIT borrowers (emphasis mine)-

…Carrington will eliminate conventional and jumbo loans from its wholesale product line and limit its acceptance of wholesale submissions with FICO scores above 680 starting on April 1, except for VA loans.

According to the lender, one in three consumers have a FICO score below 650, and Carrington is dedicating most of its resources to this effort….

And still, no one is coming to the party that HUD Secretary Prospero is desperately trying to throw. The GSEs are giving interviews to anyone who will listen loudly proclaiming that it is an Incredible time to Refi!! Buy Now or Forever Be Priced Out!!

…One thing seems certain: we aren’t likely to see average 30-year fixed mortgage rates return to the historic lows experienced in 2012. The all-time record low – since Freddie Mac began tracking mortgage rates in 1971 – was 3.31% in November 2012. Conversely, the all-time record high occurred in October of 1981, hitting 18.63%. That’s more than four times higher than today’s average 30-year fixed rate of 4.32% as of March 20….

Housing would have recovered 6 years ago if the rxtards in DC and state capitols nationwide along with their financiers had just LET THE MARKET CORRECT. But why rehash a dead horse?


Because these fools wobbling finger is back in the fire (and theyre dragging our taxpayer axxes along for the burn).

So no plans to do anything meaningful to stop the student debt tidalwave (BigGovs biggest source of revenue now is those loans) or importation of millions of workers suppressing US wages, which are KEY to a booming housing market. No sign of getting out of the way so the prices can FALL yes FALL to their natural levels in our ZERO GDP economy.  And everyone instinctively knows this and is sitting and waiting for the next drop. Watch Fannie and Freddie and FHA try to rope a dope consumers:

  • The net share of respondents who say that it is a good time to buy a house fell 2 percentage points to 33% as more Americans say it is a bad time to buy
  • The net percentage of those who say it is a good time to sell a house fell 8 percentage points to negative 1%

but the monkeys keep playing the organgrinder music- Freddie says

…Mortgage rates are officially at their lowest level since February of last year, giving homeowners who have still not refinanced another shot to save money, Freddie Mac’s latest Primary Mortgage Market Survey recorded….




But Yellen (who whispers ZIRP when no one is looking) just told us she didn’t think student loans were a reason Millenials aren’t buying houses (but in 2014 she thought it was a concern). Larry Summers thought it was urgent we address student loans to fix housing in 2014 as well.  But now they don’t want to say that. So what do they think is the reason?

…Of the reasons given for not purchasing a home, 56% said they don’t think they can afford the type of home they want, 34% said they are paying off debt and 28% said they don’t need a home yet.

The study showed that more Gen Xers have put off purchasing their home than Millennials because of debt. Whereas 32% of Millenials, aged 18 to 34, have put off buying a home due to debt, about 43% of Gen Xers, aged 35 to 49, have postponed due to debt.

The Bank of America Homebuyer Insights Report also showed that it’s a good time to buy a home, but no one cares. …

No instead millenials will live in boxes and every illegal will get a house.

The lobbying for loans for illegals is endless. In 2005 the home loans for illegals picked up steam.

…Despite heated political debate in Washington over illegal immigration in the United States, an increasing number of banks are seeing an untapped resource for growing their own revenue stream and contend that providing undocumented residents with mortgages will help revitalize local communities. It’s a win-win situation, they say….

Since 2013 there have been countless pieces pushing the meme that giving every migrant a 30 yr mortgage will ‘fix housing’.  Using statistics from NY and California is frankly bogus IMO because that’s hot Chinese and Russian money buying real estate. Which is ending BTW.

…California and New York are the states with the greatest demand in foreign-born homeownership. From 2000-2010, immigrants made up 82.2% and 65.1%, respectively, of the increase in homeowners in those states…

And on the back end Real Estate Lobbyists fearmonger a COLLAPSE!!!! in housing if illegals are deported. Hey axxholes, we should give a VA loan to VETS for those houses not FHA loans to illegals.

 if all unauthorized workers were removed, spending would decline by more than $100 billion per year compared with the baseline, or the current projections if no change was made, and more than $175 billion per year compared to the reference case.

“The removal of all present and future unauthorized immigrants caused a significant decline in the U.S. population. The departure of current unauthorized immigrants would leave many dwellings vacant, and the reduction in future population growth would reduce the need to build additional housing units,” the Bipartisan Policy Center explained.  …

New Rule, remember when Bill Maher was funny?, if I see the words BIPARTISAN POLICY I yell run like crazy and we jet.

What other rosy forecasts does this group have if we embrace the illegals and learn to love third world status? Magical thinking Episode 3trillion-

… immigration reform would also: spur economic growth, reduce federal deficits, expand the labor force, offset aging of the workforce and increase long-term wages, the center said.

“Immigration reform would cause the U.S. economy to grow an additional 4.8% over a 20-year period, including 2.8% in the first decade (as measured by gross domestic product, or GDP). Annual average growth would…

If we believed this, which we don’t because we aren’t fools, and our taxes local and federal keep rising to pay for social services for these illegals-but if we did believe this tripe, how long would this boost last? How long would these loans be made good on?

It will last right up until TPP kicks in.

…The Administration could also simply act on its own to negotiate foreign worker increases with foreign trading partners without ever advertising those plans to Congress. In 2011, the United States entered into an agreement with South Korea—never brought before Congress—to increase the duration of L-1 visas (a visa that affords no protections for U.S. workers).

Every year, tens of thousands of foreign guest workers come to the U.S. as part of past trade deals. However, because there is little transparency, estimating an exact figure is difficult. The plain language of TPA provides avenues for the Administration and its trading partners to facilitate the expanded movement of foreign workers into the U.S.—including visitor visas that are used as worker visas….

As the jobs continue to pour over the border heading south and the illegals return home as our economy keeps flatlining and TPP brings in MOAR unskilled labor, this time from Asia, these new pooled resource loans to anyone with a utility bill will all go bad. Gird your home equity’s loins.

We need Trump and we need him fast.


April 7, 2016. Tags: , , , , , , , , , , , , , , . CITI, citigroup, Economy, FDIC, Finance, Foreclosures, Housing, Immigration, Labor Department, migrant crisis, Obama Administration, Politics, Popular Culture, refugee, TARP, Taxes, Wall St.


  1. Fannie & Freddie: Too Little, Too Late - replied:

    […] wrote last week about the new housing bubble. They are funding mortgages for people who clearly cannot afford to pay the loans back. Then they will dance away, blame the mortgage signers and when the houses are abandoned and the […]


  2. Fxcktards On Parade: Fannie & Freddie Announce Mortgage Debt forgiveness for ‘certain’ borrowers 8 years after it would have helped the economy… | Moderate in the Middle replied:

    […] wrote last week about the new housing bubble. They are funding mortgages for people who clearly cannot afford to pay the loans back. Then they will dance away, blame the mortgage signers and when the houses are abandoned and the […]


%d bloggers like this: