Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Wealthy mortgage borrowers face cold shoulder from lenders

bloomberg.com

Post reply on HN
Print view View original

171–180 of 191 posts

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#171

Post by perl4ever »

tempsy wrote: post #133
SilasX wrote: post #35

Relevant points: >Stanley Middleman, chief executive officer of Freedom Mortgage Corp., one of the nation’s biggest home-lending companies[:] >“Whether the assets are good or not good is irrelevant because there’s no liquidity to buy them,”... >Wealthier buyers are proving to be just as likely to stop paying their mortgages. Approximately 5.5% of jumbo loans -- 131,000 borrowers -- have asked to postpone payments due…

This has nothing to do with actual credit risk. It has to do with the Fed’s decision as part of the stimulus package to buy mortgage backed securities backed by conventional loans but not jumbo loans. So banks have an out to sell bad conventional loans off their balance sheet to the Fed but have to take all the credit risk for jumbo loans even though those borrowers are more credit worthy and wealthier than your typi…

Distortion is a value judgement based on some probably arbitrary idea of baseline fairness. Is there anything substantive you could say about why this is distortion - i.e. is a bad thing?

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#172

Post by perl4ever »

BoiledCabbage wrote: post #57
gdubs wrote: post #54

Earlier quoted context omitted.

They’re not wealthy by the standard of the Bay Area, which is the point of the comment you’re replying to. Wealth is relative. Otherwise you could say that just about any American middle class family is wealthy — just look at the entire world’s population, where anyone making over something like $40k a year would be in the top 1%. Just to underscore the point, Palo Alto declares not too long ago that anyone making un…

> Otherwise you could say that just about any American middle class family is wealthy — just look at the entire world’s population Any middle class American is wealthy by the world's standard. The quality of life provided by middle class America is the life of the 1%. To not see this is to not understand how most of the world lives, and the challenges people face from being less lucky.

"The quality of life provided by middle class America is the life of the 1%"

It's been said many times before about similar statements, but this is not true or mathematically possible. I believe it's off by about an order of magnitude.

Middle class in the US is something like $45,200 to $135,600 in household income, which is roughly half the population.

Half the population is about 2% of the world population. And every American is not wealthier than everyone outside the US.

If you google something like "global income percentile" you will find a considerable amount of BS claims - the first one I found was on Investopedia. For fun or ideology or whatever, the meme that middle class Americans are in the top 1% is something that people will just go on the internet and lie about.

I didn't spend enough time looking to find really satisfactory sources, but in trying to find something relatively unbiased I ended up with something that suggested the US middle class might very roughly be around the top 10% globally.

Source: https://www.pewresearch.org/global/2015/07/08/a-global-middl...

(Note that in the terms of the linked article, it seems like the global middle class is a tier below the US middle class, so if about 85% of the world is "poor" or "middle class", then the remainder or 10-15% equates to the US "middle")

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#173

Post by bananabreakfast »

alexhutcheson wrote: post #152
nostrademons wrote: post #132

Earlier quoted context omitted.

You can check out the actual sale prices of recently-sold homes on Zillow: https://www.zillow.com/homes/recently_sold/house_type/ In the South Bay near Mountain View, there's basically no single-family homes under $1.5M, and the majority of houses go for $2M up. Many are in the $4M+ range. You can get cheaper in San Jose ($800K-ish for a run-down 2BR from the 50s) or Daly City (low millions), but most of the Peninsul…

Yeah my argument was that all the people who are buying those homes are significantly wealthier than the Bay Area median household.

The median Bay Area household cannot afford to buy a house, yes, but that does not mean that those buying houses are significantly wealthier. The Bay is far, far richer than you can imagine.

Buying a house for $1M is firmly middle class status. True lower class people simply cannot afford to live in the Bay at all.

To be in the top 1% in the Bay Area you have to make close $1M per year.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#174

Post by nickv »

bananabreakfast wrote: post #173
alexhutcheson wrote: post #152

Earlier quoted context omitted.

Yeah my argument was that all the people who are buying those homes are significantly wealthier than the Bay Area median household.

The median Bay Area household cannot afford to buy a house, yes, but that does not mean that those buying houses are significantly wealthier. The Bay is far, far richer than you can imagine. Buying a house for $1M is firmly middle class status. True lower class people simply cannot afford to live in the Bay at all. To be in the top 1% in the Bay Area you have to make close $1M per year.

Top 1% in San Jose is $964,238 (with the average person in the top 1% making $2,732,379), so right on target.

https://www.cnbc.com/2017/06/14/how-much-you-have-to-earn-to...

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#175

Post by nickv »

6gvONxR4sf7o wrote: post #167
ipython wrote: post #160

Earlier quoted context omitted.

Your numbers are way off - dangerously so. First, nobody is getting a sub-3% fixed 30 year mortgage right now - so your minimum for principal+interest on your 800k loan is already $3656 (assuming you can get 3% - every half% is going to cost you roughly another $350 per month) Next, your estimate for property taxes is similarly low. I don’t live in CA but where I live taxes are roughly 1% of the assessed value. Let’s…

Looking at three different calculators from googling "mortgage calculator," I get an $800k loan at 3.25% (higher than the rate I pay on mine in SF, but I paid the rate way down) coming to $3,482/mo for principal and interest. For property tax, i found this california property tax calculator [0], which says it's $6,490/year ($541/month) for a home assessed at $1M in SF. That brings us to $4023/mo. You're right I total…

That site is completely wrong about property taxes in California. The property tax is 1% plus a county and city level supplemental. For example, my property tax in Oakland is 1.3688%.

I have no idea how that SmartAsset got that rate. Literally it makes no sense and is comically wrong.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#176

Post by mackey »

6gvONxR4sf7o wrote: post #167
ipython wrote: post #160

Earlier quoted context omitted.

Your numbers are way off - dangerously so. First, nobody is getting a sub-3% fixed 30 year mortgage right now - so your minimum for principal+interest on your 800k loan is already $3656 (assuming you can get 3% - every half% is going to cost you roughly another $350 per month) Next, your estimate for property taxes is similarly low. I don’t live in CA but where I live taxes are roughly 1% of the assessed value. Let’s…

Looking at three different calculators from googling "mortgage calculator," I get an $800k loan at 3.25% (higher than the rate I pay on mine in SF, but I paid the rate way down) coming to $3,482/mo for principal and interest. For property tax, i found this california property tax calculator [0], which says it's $6,490/year ($541/month) for a home assessed at $1M in SF. That brings us to $4023/mo. You're right I total…

https://sftreasurer.org/property/understanding-property-tax

San Fransisco is 1.1801%, so 11,801 on a million dollar house.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#177

Post by nickv »

alistairSH wrote: post #109
api wrote: post #92

Earlier quoted context omitted.

Cost of living anywhere in the Bay Area is much higher than the national average due almost entirely to real estate.

As long as "much higher" is 2x the national average, Bay Area residents still come out ahead, especially on gross cash basis. Median household in SJ earns ~120k. Median for USA is ~$60k. Even if the SJ resident spend 40% on housing, they come out WAY ahead of the median household spending 25% on housing.

Housing is considerably more than 2x.

Average cost of a house in America is around $380k, average cost of a house in San Francisco is $1.7M according to Zillow. San Jose is $1.2M. Fremont is $1.1M. The cheapest (and not a great place to live and horrible commute) place in the Bay Area is Vallejo and that's still $450k.

So 3-6x more expensive depending on where you look generally.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#178

Post by ipython »

6gvONxR4sf7o wrote: post #167
ipython wrote: post #160

Earlier quoted context omitted.

Your numbers are way off - dangerously so. First, nobody is getting a sub-3% fixed 30 year mortgage right now - so your minimum for principal+interest on your 800k loan is already $3656 (assuming you can get 3% - every half% is going to cost you roughly another $350 per month) Next, your estimate for property taxes is similarly low. I don’t live in CA but where I live taxes are roughly 1% of the assessed value. Let’s…

Looking at three different calculators from googling "mortgage calculator," I get an $800k loan at 3.25% (higher than the rate I pay on mine in SF, but I paid the rate way down) coming to $3,482/mo for principal and interest. For property tax, i found this california property tax calculator [0], which says it's $6,490/year ($541/month) for a home assessed at $1M in SF. That brings us to $4023/mo. You're right I total…

My apologies on the mortgage calculation- you’re right on that.

I didn’t include HOA - depends on the community, some are as low as $100/mo, others are north of $400 but often those include amenities such as lawn mowing or internet/tv or golf/social club memberships

Disney is expensive - especially if you’re taking kids (kind of the whole point isn’t it?). The costs really do skyrocket once you add little people, which I never understood until I was knee deep in it :)

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#179

Post by tempsy »

perl4ever wrote: post #171
tempsy wrote: post #133

Earlier quoted context omitted.

This has nothing to do with actual credit risk. It has to do with the Fed’s decision as part of the stimulus package to buy mortgage backed securities backed by conventional loans but not jumbo loans. So banks have an out to sell bad conventional loans off their balance sheet to the Fed but have to take all the credit risk for jumbo loans even though those borrowers are more credit worthy and wealthier than your typi…

Distortion is a value judgement based on some probably arbitrary idea of baseline fairness. Is there anything substantive you could say about why this is distortion - i.e. is a bad thing?

No. What’s happening is that poorer, less creditworthy people are getting better rates and more likely to be approved than more creditworthy and wealthier people. That is a distortion.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#180

Post by BoiledCabbage »

borkt wrote: post #71
BoiledCabbage wrote: post #57

Earlier quoted context omitted.

> Otherwise you could say that just about any American middle class family is wealthy — just look at the entire world’s population Any middle class American is wealthy by the world's standard. The quality of life provided by middle class America is the life of the 1%. To not see this is to not understand how most of the world lives, and the challenges people face from being less lucky.

I’ve spent time a lot of people that live much better than me in what are considered third world countries, including overall quality of life, who make far less than I do. There are countries where money goes much further and family holds much greater value when compared to work than US culture (and laws) generally produces. They see friends and family for meals many times a week, their health care is affordable, and…

> They see friends and family for meals many times a week, their health care is affordable, and their jobs are more secure.

This is all true - and all of those are possible while still being wealthy. The peculiarities of US culture are different from being wealthy. As another example you don't need to have an obsession with guns to be a wealthy country, but the US does.

Post reply on HN