The Fed now owns nearly 1/3 of all U.S. mortgages • Hacker News Board

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#191

Post by sethammons » Wed, Sep 09, 2020, 1:41 PM UTC

sokoloff wrote: post #167

glofish wrote: post #149

Earlier quoted context omitted.

Initially it does have the effect you state: > prospective buyers that couldn't afford 20% but can afford 5% are now able to buy a house? hence the measures are popular and very visible. Long term however (just as with subsidies and scolarships for education) all lead to pushing prices up. Perhaps the buyers in the market could pay 10% but now that they only have to pay 5% the remaining 5% slowly (say over a few year…

> Perhaps the buyers in the market could pay 10% but now that they only have to pay 5% the remaining 5% slowly (say over a few years) gets factored into the purchase price so that the down payment is the same as it were for 10%. Are you proposing that the effect is to nearly double house prices in a few years? If today’s price is $500K and buyers could pay $50K down, in a few years, that place would need to be $1M fo…

I believe op is saying that a person could “afford” a $500k house at $100k down at 20% would happily instead put $25k down (or $28.75k, to keep numbers accurate at a 5% down) on a $575k house.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#192

Post by HashThis » Wed, Sep 09, 2020, 1:47 PM UTC

The way crony capitalism theft works is to look for a way to steal. The way to steal is now clear. Manufacture blow-up mortgages and they blow up on the mortgage buyers (Fed).

S&L 1980s bailouts were an exact copy of 2008 Mortgage bailouts. Theft in creating mass blow-up real estate loans. This is a proven crony capitalism way to steal.

When the Fed has to politically buy them, then crony capitalists will find a way to get them buying blow-up mortgages in 5 or 10 years.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#193

Post by pyronik19 » Wed, Sep 09, 2020, 1:50 PM UTC

black_puppydog wrote: post #179

qeternity wrote: post #153

Earlier quoted context omitted.

> Out of curiosity, why wouldn’t we want the government managing mortgages for the whole country? > Real estate seems like a pretty important part of the economy... You just answered your own question. Governments do not have a history of distributing scarce resources effectively. You need various market forces. > the government artificially making housing more accessible for potential first time buyers creates a vir…

> Governments do not have a history of distributing scarce resources effectively. To be fair, "various market forces" also don't have the best track record of distributing resources, especially scarce ones. Somehow those always end up being "distributed" into the same few hands...

[flagged]

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#194

Post by sethammons » Wed, Sep 09, 2020, 1:51 PM UTC

CydeWeys wrote: post #161

postingawayonhn wrote: post #58

Earlier quoted context omitted.

> For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximately) for a house. Assuming they had the same deposit available they would theoretically be able to pay 300% more. Of course they probably wouldn't be able to demonstrate their ability to service a loan that large.

They're not gonna pay 300% because they wouldn't be able to pay even the first monthly mortgage payment. Buyers aren't stupid -- they'll take advantage of low money down but they won't get themselves into a mortgage that they literally already can't afford the payment on from day one. No, the way mortgage problems typically happen is that the payments are initially affordable but then something changes (typically job…

Waves from 2005 where people literally could not afford the loan they just were given. I knew a couple of people who just planned on flipping so didn’t worry about the inability to service the loan.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#195

Post by hardwaresofton » Wed, Sep 09, 2020, 1:52 PM UTC

code4tee wrote: post #132

wonder_er wrote: post #86

Earlier quoted context omitted.

> Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection Millenial here. 100% agreed with this. Feels like a big blind spot in the boomer crowd. They don't seem to see the seething, roiling, overpowering resentment their entire generation is receiving from many, many people that currently don't have much power in society . A politician wants to win office…

If student loan debt was treated like any other debt then few if any students would get loans, unless their parents had assets to put up as collateral. So long as the financial burden of education falls on the student first then this is unlikely to change. From a financial perspective it’s a terrible product to sell... tons of money to someone with little to no financial assets, iffy prospects of sufficient future in…

> If student loan debt was treated like any other debt then few if any students would get loans, unless their parents had assets to put up as collateral. So long as the financial burden of education falls on the student first then this is unlikely to change.

Right, and an investment in the public school systems and community colleges would make them more affordable. If what the government wants is more lower income families in higher education there are many ways to achieve it. The current system encourages the astronomical increase in inflation adjusted cost of education.

> From a financial perspective it’s a terrible product to sell... tons of money to someone with little to no financial assets, iffy prospects of sufficient future income and no underlying assets that the bank can put a lien against in case of default. The problem is not the loans, it’s the whole higher education system that needs a total overhaul including the utility and price of higher education. The current system is based on the idea that many people’s parents encountered where a good summer job and maybe a bit of savings was more than enough to pay for a decent college degree!

This is literally what governments and regulation are for -- do things that are not profitable in the short term (ex. inventing GPS, the internet, etc) for strategic advantage.

In 10/20/30 years, the countries that do the best will be the ones with more intelligent/flexible lower and middle classes -- we can already see rapid cannibalization of industries happening on a large scale.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#196

Post by Nbox9 » Wed, Sep 09, 2020, 1:54 PM UTC

olliej wrote: post #82

JackFr wrote: post #25

Earlier quoted context omitted.

Taxpayers don’t need to bail out the Fed. The Fed literally creates money ex nihilo.

... um, taxpayers are the fed. So any time the fed takes on a debt made by a business at anything other than a discount the fed is bailing out bad business decisions, and that means the taxpayer is paying for it. If the fed just “prints money” to cover those debts the real value of the USD collapses, and that hurts individual taxpayers more than the big businesses being bailed out.

The Fed provides stability around the USD market. It deploys a wide variety of polices that attempt to manage inflation, deflation, liquidity, and overall confidence in the USD. Without this stability the USD would be significantly less valuable as a medium of trade, a store of value, and as a tool for reconciling debts.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#197

Post by throwaway6734 » Wed, Sep 09, 2020, 1:55 PM UTC

scrumbledober wrote: post #34

JMTQp8lwXL wrote: post #18

I would be curious to see analysis for what home prices would be with 0 Fed intervention. Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection, that the housing market is some form of a pyramid scheme, where you had to get in early to have a chance.

well as a 30 year old looking for my first home who grew up in the bay area... yeah that's exactly what I feel.

Consider Baltimore. There's some tech work in the city + a good chunk between Baltimore & DC. Areas like Locust Point, Roland Park, Hampden, Fells Point, etc.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#198

Post by mtcoopee » Wed, Sep 09, 2020, 1:55 PM UTC

_Anken wrote: post #183

refurb wrote: post #54

Earlier quoted context omitted.

I would be curious to see analysis for what home prices would be with 0 Fed intervention. It is an interesting thought experiment. From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit. For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximatel…

> It obviously benefits buyers in non-hot markets. It's pretty nice to put $7500 down in the mid-west for a house. Unfortunately banks won't loan what they see as small mortgages like that. This leaves the lower priced homes only available to landlords buying cash. I live in a home like this myself - all the banks would happily loan me $215,000 with $35k down, but no bank would loan me $15,000 to buy a $50k house. Th…

That's what FHA is for, allows you to put 5% down. When I bought my first home, I put down 2000 in 2015 using FHA + state grants.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#199

Post by pnutjam » Wed, Sep 09, 2020, 1:57 PM UTC

disgruntledphd2 wrote: post #181

code4tee wrote: post #132

Earlier quoted context omitted.

If student loan debt was treated like any other debt then few if any students would get loans, unless their parents had assets to put up as collateral. So long as the financial burden of education falls on the student first then this is unlikely to change. From a financial perspective it’s a terrible product to sell... tons of money to someone with little to no financial assets, iffy prospects of sufficient future in…

Student loan treatment only changed in the mid-noughties (under GW Bush), how do you account for the existence of student loans before that?

exactly, he's assuming everyone will declare bankruptcy if they can, which is untrue. Most people declare bankruptcy way later then they should have and suffer accordingly. People don't want to walk away from debt, they just don't have the money.

Student loans are stupid anyway. Why build this system that is basically a shadow tax. We should be able to figure out a way to pay for this and collect the funds with regular taxes.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#200

Post by pnutjam » Wed, Sep 09, 2020, 2:01 PM UTC

vonmoltke wrote: post #127

rocqua wrote: post #101

Earlier quoted context omitted.

If you want to make student loans more accessible, the trick is not to stimulate student loans be legalizing the loan-sharking of students. This way you are just encouraging students to take a bad deal. You are making the system more accessible by offering really bad options. If the reasoning is "It is a good idea to have high education", then stimulate that directly. At the very least, have government-backed or gove…

> In my country (the Netherlands), student loans are given by the government. Over 90% of American student loans are also issued by the federal government.

My daughter got a scholarship that covers her tuition 100%, so she only needed loans to cover room and board. Federal oans were still not enough to cover this, in one of the least expensive state schools. My credit sucks and we didn't qualify for a cosigned loan to cover the extra. Luckily the school offers a reasonable payment plan and I'm taking advantage of that.

She is just living in a dorm with a standard meal plan. Between this extra out of pocket cost and the books, I can't see how a lower income family could afford college.