Economy, Housing Market, Stricter Fico, Shelter Expenses, We Need a Resolution.
So, lately I’ve just been enamored by the housing market, economy & stock market & I’ve found a very informative educational & entertaining writer of Wolf Street. His commentators are just as informative, analytical, confrontation, eccentric & amusing. I’m being introduced to terminology such as bearish, bullish, v & u shaped, MBS, SPV & more & I can’t help but to be quiet when grown folk is talking bc I’m new to it all.
You know I’ve spoken on mortgage qualifications before & how I think in some cases qualifications need to be reworked. We know a lot of the major bankers have currently become stricter on qualifications & I think it’s backward. I think these new qualifications will only exacerbate the upcoming housing crash, or not, issue. If enacted bc of fear of COVID impact, that impact is now & only affects those currently holding mortgages. Regardless of the prime or subprime lending status of those mortgages joblessness and fear of future employment status is and will be the driving factor of the housing markets decline or neutrality. If we should get into an issue of high supply bc of future foreclosures, due to defaults & those unable to catch up after forbearance & listing their homes (if those missed payments are not tacked on the end of the loan, alert to run-on sentence) the higher qualifications won’t allow new buyers into the market, at which that point it will so desperately need. I’m new to this so I’m not sure of how the bonds that back the loans and blah blah blah work but 700 credit & 20% down is not a guarantee against illnesses or pandemics that cause job loss. Shelter is the number 1 expense of Americans, as is, most are paying 50% of their income towards it, not the 26% or 28% mortgage companies deem qualifiable for a loan. Another crippling housing requirement comes from some rental companies specifically in single or even multi-family homes that require you to make 3x rent to qualify, which isn’t feasible for most low-income renters considering inflation in everything but wages. At least most apartment complexes don’t have that criteria or a lot of people wouldn’t qualify to have a place to stay at all. A lot of new buyers entering the market don’t have a lot of income left over to save for down payments over the once 3-5% if at all. Im probably doing a lot of unstructured writing as my mind is all over the place and this was on the whim writing but our housing market from every aspect from renting to mortgaging needs to be reworked. As the title states we need a resolution and one possible way of going about it should be record of payment for shelter expenses and utilities, not so much credit card, auto loans, student loan payments or personal loans that are factored into credit scores. After all the 700 credit score can’t predict illness, joblessness or pandemics and this is not the subprime mortgage issue of the Great Depression. The Great Depression era to me sounded more like an issue with verifying incomes rather then the borrowers credit score or down payment being low, because had the borrower had the funds/income to pay the mortgage they wouldn’t have defaulted or been foreclosed on. So in short are credit scores the best determining factor of a successful home buyer?