A 4.5 percent mortgage for all?

I think after the ACORN/CRA mess the 4.5 deal should go to new purchases for first time home ownership, not rental property deals. No more false bubbles. Home ownership is finally possible with prices coming down within reach again. No more manipulations of the market. Let it run itself the way it should have and people will make money and banks will thrive safely and no bailouts will be needed ! ! !

This program should apply to refinancing aswell. I am tired of paying 7% interest rate to countrywide and my outrage is similar to that over the $700 billion bailout for financial Industry.

I meant to add that there should be no forcing banks insurers such as Fanny and Freddie or others to carry port folio's reflecting a percentage of poor ninja loans. NO BANK OR INSURER SHOULD CARRY AND SUCH LOANS so the US BANKING SYSTEM CAN RUN LIKE IT USE TO BEFORE CRA AND ACORN TOOK HOLD OF THEM.

OK, I'm going to sell my house to myself. It's currently held by my wife and I as joint tenants but we can sell it to me. That will be a purchase and not a re-finance, right?

If they do it, it better be for all...not just new home purchases. That would be a slap in the face to the borrowers out there that are paying 7% (or 6.75%) in my case and have been responsible about paying our mortgage every month.

"This program should apply to refinancing aswell. I am tired of paying 7% interest rate..."

If you can't afford a 7% rate it's the house you can't afford not the nortgage.

How about if these low rates apply to refi cashout or equity loans specifically to be used for home additions/remodeling or energy improvements?

That will put more people back to work and stimulate the economy.

This is a terrible idea. The prices of homes need to come down. A starter single family home should not cost $300,000 +. Home prices were artifically inflated due to the low interest rates of the past 5 years, and the mortage industries lax lending practices.

The Gov't shouldn't get involved and artificially set interest rates lower than what the market will bear. This will only stretch the problem out even longer.

And to the person who had the idea of extending this rate to cash out refinances: What are you thinking? The last thing the average American family needs is another cheap way to get even farther in debt.

Elmo,
Well, there is real estate transfer tax and a bunch of other costs involved in a sale/purchase. Do you really want that?

Call me crazy, but if they decide to do this it would seem pretty simple:
Base it on residency.

If you are buying a home for your primary residence-cha-ching here is your low interest rate.
If you are refi-ing your primary residence to pull some equity, put on an addition, or just get a lower rate- cha-ching, here is your lower interest rate.
If you own rentals, flips, time-shares, investment properties, whatever, no dice. Deal with the rate you have and if you cant stand that rate, then sell.
Thoughts?

I will be irate if this only applies to new purchases. I understand they want to stimulate home purchases, but how can you say "you get 4.5%, but everyone else gets stuck with whatever they had"?

And now that this is out there, this will have the opposite effect on the housing market. Who would close on a house now at a higher rate, knowing something better is around the corner -- and knowing that you can't get that lower rate later as a refi?

The program sounds great but will never happen in the above text as the lending instutions will find ways to put add ons its, just like they have found extra charges at the banks in the last few years.

It would be fair to allow all to participate on their primary place of residence, as long as they have good credit and the income to make the mortgage payments and at least 10% cash downpayment.

It should not apply to speculators or second homes. They should be required to pay whatever the market demands.

In 2004 I landed a 4.75% rate on a 15 year fixed.

HERE COMES THE DISCRIMINATION LAWSUITS!
YOU HAVE TO MAKE 4.5% AVAILABLE TO ALL TYPES OF LOANS !

When will congress understand this problem! This is not about mortgages but jobs. Some people can not pay their mortgages because they don't have jobs. The US is losing jobs. Bailing out the mortgage industry will not solve any job issues. So this is what I propose, reduce the payroll tax for businesses for 6 months by 2% retroactive two months ago and new hires and only payout if the employee is still hired four months from now. This will make business think twice about laying off workers and it will reward businesses that are not cutting back. This plan would help all business that is labor intensive.

Elmo....It does not matter whether the home is in your wifes name or not. it takes 2 signatures to sell and if you are married this will not fly.

One thing people are overlooking is that many of these homes will not appraise for re-fi. As far as speculations, 30 year fixed where not the loans desired for speculation, it was the ARMs. They took the lower interest in hopes of flipping within the term of the ARM. I don't believe that market exists anymore and doubt you will see much in speculation for some time again. I believe they should make the 4.5 available to all. The banks have been sucking up fed money at 1.5 for sometime now...it is time to spread it to the little people.

mortgage payments and at least 10% cash downpayment.
Posted by: Pat H | December 4, 2008 10:08 AM

Pat...Times have changed. You can no longer find anything less than 80% loan to value anywhere out in the market. I don't care how good your credit is......the days of 95% loans are gone. For now!

4.5% mortgage rate for all!!

I thought we had a capitalist system here in this country? This is entitlement at it's finest. In the old days, you had to EARN the right to a low rate mortgage - now they'll be given out like trick or treat candy at Halloween. This is just extend the housing bubble. That's it, I'm moving to Moscow - at least they get what capitalism truly means.

It should not apply to speculators or second homes. They should be required to pay whatever the market demands.

Posted by: Pat H | December 4, 2008 10:08 AM

May I ask what is the difference between a home buyer who could not afford their payments and a speculator who could not afford the payments? Solid speculating does nothing to the market. I own 6 homes and put mortgages of about 25% loan to value on each one and have no trouble making the payments. Why should any solid borrower not be allowed to take part? I supply work for repairmen who maintain these homes, I pay 20K a year in taxes so why would solid speculators not be allowed?

OK I am sick of rewards being heaped on everybody EXCEPT those of us who behaved responsibly by buying a house we could actually afford and continuing to pay the mortgage. My reward, apparently, is that I get to sit in my conservative investment and watch my friends buy houses that cost less, at 4% mortgages, while filthy financial pirates get bailed out with billions of dollars of my tax money. This whole thing is a huge black eye for responsible citizens.

I thought we had a capitalist system here in this country? This is entitlement at it's finest. In the old days, you had to EARN the right to a low rate mortgage
Posted by: Teddy Baseball | December 4, 2008 10:35 AM

While I agree that it should be made available to all, it is just untrue that in the old days you had to earn a good rate. There have been many options available over the years to make things affordable to different types of borrowers. First time buyers etc. That is why they have had progams such as FHA, HUD, and such.

makes a lot of sense to set a 4.5% rate to refinance existing mortgages and (main) home purchases. The economy could turn around in 90 days..this is the best idea I have heard so far. By lowering my monthly mortgage I would have more money to spend at the end of the month..

I certainly hope this would apply to BOTH Conventional and Jumbo loans. Unfair to favor only 1 party to this deal. I am all for it if it is both.

This is exactly what I have been saying all along. The government should bail out the people not the banks. Give Americans a fresh start all over again.

TEDDY BASEBALL - Your an idiot! Go ahead and try moving to Moscow where it has become extremely Capitalist in recent years. I just got back from working there for the past 18 months, my apartment was $7000/mo. rent for a one bedroom. Do you have any idea what Capitalism is without some regulation? It's current day Moscow where everyone steal from everyone else, and whoever is willing to go thre furthest has the most. That includes stealing, polital corruption and even simple mob violence to get ahead. I would love for you to move to Moscow and tell me what you think. Your a moron.

If inflated home prices were driven by cheap credit, moral hazard and excess secondary mortgage market liquidity how will a federally funded program extending cheap credit and excess liquidity help rationalize inflated home prices. Home ownership is an earned responsibility with attendant risks. The government should not interfere by further supporting bloated house prices. This is America, right? Where individual responsibility is cherished and risk is both rewarded and punished. Let the market forces work. Throwing tax payer dollars away to subsidize home buyer greed and speculation is simply unamerican.
The government's role should be to promote fairness and equality in the process which includes proper qualification of mortgage applicants and adequate disclosure. Fraud and misrepresentation by mortgage brokers and lenders should be punished, but investors in failed assets should suffer the attendant risks of their investments. Bailouts and subsidies just raise the risk of moral hazard and cost of doing business in the future.

Say NO to ALL mortgage subsidies.

Great idea for those that are refinancing their ARM's. This should have been brought up sooner, perhaps the banks could have avoided so many foreclosures.

and excess liquidity help rationalize inflated home prices.
Posted by: SK Hammer | December 4, 2008 11:36 AM

I think you are little too upset here. First off, this will do absolutely zip for liquidity in your home. Which by the way has probably affected you already. The value of your home has already dropped probably 20% or more which means less to use on home repairs, home improvements, and maybe college for the children. If forclosues continue and they are in your neighborhood your value could go down a great deal more. The "only" requirement on these should be that they are for "qualified" borrowers. Period. You suffer from the "last one in close the gate" syndrome. Young people should be able to live the same American dream as anyone else. The only thing mandatory is that they are qualified.

It's not discrimination when you don't give loans to people who can't afford them. Rush Limbaugh has the perfect solution for people who can't afford a home>RENT.

The High School ,drop out, Mortgage Brokers are gonna get fat rich again. The proposed rate for purchase is great, not so sure for refi. The refi would need to be flat out refi, no cash back of any sort.

Of course rate would apply for good credit worthy, employed individuals!

4.5% should be offered for refinancing. If I get that percentage, I'd have more $$ to spend and boost the economy

How about for those of us barely surviving?? Allowing us to re-fi at a lower rate would allow additional money to pay credit cards and other debt. I wouldn' t care if it was a straight re-fi without cash back. It would be an additional couple hundred dollars per month to put towards other debt.

Part of me would love to see these low rates extended to everyone, but that would be irresponsible and just create more bad loans. These loans need to be made on set loan-to-value and loan-to-verfied income standards. I am not sure if refinancings are realistic becuase there are people with loans that are more than their homes are worth. I think the only way to accurately value a home now is to have an actual arms-length sale that sets the value and then allow for a loan of up to 80% of that. If you could accurately appraise an existing house, I would be willing to allow the refinancing of loans that are worth less than 80% of the home value. But, I don't think that is possible in this market.

This is like drinking alcohol to cure a hangover-- it may work in the short run, but ultimately it creates an even bigger headache.

The just-ended housing bubble was created with cheap mortgage money combined with loose standards for qualifying borrowers and the usual compliant appraisers.

The effect of injecting large amounts of cheap money into the mortgage markets would be to resume and extend the housing bubble.

But even with 4.5% money, one eventually runs out of borrowers who are both willing and able to pay. And so, this newly inflated bubble will ultimately collapse, just as all bubbles do-- because eventually it must stop growing, because eventually no one has more money to put into it.

And so, the effect of this plan would be to perhaps extend the housing boom for another year or two-- until it again collapses again, with even larger losses.

Hey, does anyone here wanna buy a nice portfolio of mid-grade CDOs?

I find it interesting that everyone wants to be bailed out. Even though the banks offered sub-prime loans, which they had for years and years before all this...does not mean you should have taken one out. If you make $30,000 a year you should not have a $400,000 home. It's common sense. Now for those of us who work our butts off for what we have, have to possibly watch the selfish and greedy people get lower rates and relish in the fact that they got something for doing the wrong thing. So no one learns a lesson and in 15 years we will go right back into another recession...as history has shown. Thanks to all the "i deserve it" people out there. Get a grip.

I absolutely do not support lowering mortgage rates at all! Don't people understand basic economics? Low rates and "no money down" is what got people to buy homes they couldn't afford in the first place. Now we're trying to fix it by helping people be even MORE greedy? House prices are already at 5-year, if not more, lows because of all the foreclosures and defaults. If you want a great house deal, buy a foreclosed home through public auction, don't try to get the government to force the banks to lower rates.

we should have gotten one of these and split it. i will eat most of it b/c it's here, but woul dhave been just fine with half!

If you make $30,000 a year you should not have a $400,000 home.
Posted by: A. | December 4, 2008 12:52 PM

I hear this a lot. If banks make loans ONLY to QUALIFIED buyers, this can not happen. If you are qualified I don't see the big deal.

bill r>the problem being is that there are banks who are making loans to people for home that are out of reach because they know they are being insured at the top and have nothing to lose. Unless the Obama team solves that we are going to be bailing out banks forever. We have to stop giving out loans to those who can't afford them PERIOD...where is your OBAMA ON THAT ONE!?

and at least 10% cash downpayment.

Posted by: Pat H

As a veteran, I would take exception to that 10% downpayment requirement.

Military personnel hardly earn any money. In exchange, they get a "no payment down" benefit. By requiring that you'd need 10% downpayment to qualify, you'd be taking away that benefit.

As with so many other postings here, there's a lot that needs to be negotiated.

I just hope the VA has someone at the table.

No one should be getting mortgages without downpayments. That is fiscally irresponsible and leads to the kind of problems we have seen this past year. If you hardly earn any money, you need to buy a home you can afford not skimp on the downpayment. I would support the VA giving grants to veterans to make downpayments, but no waiving the need for a downpayment. Loans with no equity behind them are financially dangerous.

bill r>the problem being is that there are banks who are making loans to people for home that are out of reach because they know they are being insured at the top and have nothing to lose.
Posted by: Teresa | December 4, 2008 1:46 PM

Teresa...Somehow this whole thing is getting out of hand. May I remind people, prior to this crisis....mortgages worked fine. But the emphasis must be put on "good common lending practices". If qualified properly, no one can buy a home "out of reach". Mortgages have been around for a very long time. The reason this crisis happened was banks forgot good lending practices.

Where did we end up with the questions about a downpayment? I saw nothing that was mentioned about it. *0% loan to value is all that is out there. As far as my fellow veteran, the VA is there for you and will not change.

How about stopping all this bailout BS and taking responsibility for one's actions? I lost out on 300 shares of WAMU. That was the risk I took. I was responsible and paid off my mortgage by making more good decisions than bad ones. Stop stealing my money and future financial security to support people that make bad decisions. Suck it up and learn from your mistakes.

correction....80% loan to value is all that is out there.

Teddy Baseball, under-regulated capitalism is what got us in this mess. Our banking system apparently worked fine in the early 60's when we last had 4.5% interest rates on mortgages. Banks would be in better shape if more borrowers could afford to pay their loans

The rate cut must be for everyone and include Jumbo loans, because it would create more jobs by increasing spending from the extra money people save every month.

Where to start? Even if a 4.5% rate is offered, not everyone will or should qualify. Lenders have put in strict guidelines now to charge a risk premium for anyone with a lower than 740 credit score. Today a 740 gets a 5.125% 30 year and a 699 gets 5.5% or higher. Make the 4.5% for everyone, but it will be a "base" rate.

ERIK for economic advisory team!

Just talking abou this has pushed down the return on the 10-year t-note and sent rates on a nationally median-priced home ($183,000) to 5.25% with 740+ credit score and 20% down. A little more blabbing, and we might see 4.5% anyway.

This is an outrage. Extremely low mortgage rates is what partially got us into this mess in the first place. If housing prices go up again, who will be able to afford the houses? The government is so stupid. Let the market do what it does naturally. The market says homes were to overpriced. Leave it alone, you stupid socialist government.

I agree that if banks do the right thing that we are are going to be better off. Lets hope that happens.

At least it would put the millions of unemployed Underwriters back to work.

It's about time ! I say drop it even more, to 3 percent .
My bank had to be bailed out and gave them $30,000.00 in the last two years in intrest on my present mortgage.
They should have done this a long time ago. I will buy a new car with the savings others will buy other things, that how you save the economy, the banks borrow at 1 percent . two percent profit should be enough.this is the lowest rate since the sixties they say, but what where the home prices then?. life got too expensive,it's time to make life more reasonable again.

We should get a better interest rate like 1% at least temporarily 1 to 5 years. A lower interest rate will help the economy, millions of home owner will have more disposable income to buy other products and services. If banks borrow money at 0,1 or 2 percent from the Fed why not the Tax Payers? is our own money anyway.

Refinancing will put extra discretionary income in hands of those that are responsible with their mortgage payment. More money to spend in stores -> more jobs

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