@Osint613

·

2h

The Trump administration is exploring a plan to make mortgages transferable, letting homeowners keep their existing loan terms, rates, and lenders when buying a new house.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49423756)

yeah, letting people transfer loans instead of having to (((refinance))) at higher rates is a win.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49423825)

housing is way fucking overpriced cuz of handout shit like this

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424044)

another option to get the same effect would be to ride it out until more and more boomers start dying/sent to nursing homes.

lib option is to force a paradigm shift where everyone lives in shitty apartments in perpetuity

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49430358)

i doubt this would materially raise the rate of new mortgages. mortgages are already originated anticipating the possibility of prepayment if a buyer refinances when rates go down. transferability would only hurt the banking system by not originating as many loans, but it wouldn't significantly change the calculus on individual originations. the banks themselves transfer loans frequently. why would a bank care if your loan was on house X instead of house Y so long as the collateral was still sufficient?

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49423902)

I am not saying this will make mortgage rates skyrocket, but the directional effect on rates is clear and it will help older, wealthier buyers while hurting newer, poorer homebuyers.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49423975)

so for even the lucky youngs who bought starter houses on 2% mortgages and are trapped in their starter houses, they're fucked if they wanna upgrade.

this is really gonna favor boomers

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424017)

how would this favor boomers?

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424026)

they dont have to worry about getting a second mortgage at 6% rates.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424030)

and more importantly keeping out

illegal aliens

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424078)

and these new buyers have money

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424073)

the influx of new sellers/buyers are all people with leverage--their 2.5 mortgages. this provides them with the flexibility not to be an average seller or buyer. these people will be able to hold out for higher prices and compete with advantages as buyers

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49425140)

the only reason this shit even works in the US is cause of mortgage interest deduction and then cap gains exemption upon sale

otherwise its not even clear it wld be financially better than renting, so its massively subsisdized thru the tax system

and this shit drives up prices, u shld actually get rid of these tax benefits if u want to reduce prices

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49423913)

Should we “wait two weeks”?

Are “many people saying this”?

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424237)

1. It's not that hard. Almost all this debt is securitized. Just write a rule that the servicers/trustees can substitute out collateral upon certain paramaters and payment of like a $5,000 fee. Commercial loans already often permit this occasionally.

2. It'd be much easier on a residential loan. People stomping their feet about "diligence" really are missing (i) the new property will be subject to the same federal underwriting standards and subject to teh same "diligence" and (ii) that "diligence" is really just looking at the number on the appraisal. If you made the borrower pay $5,000 if transfer fees, taht would more than cover everything.

3. This is a "give" to people with low mortgages, but you're getting a win here in that they're selling their house and providing liquidity into the market. It's important to remember that these people don't have to sell the starter homes they bought at 2.8% interest. They can either continue to live in them, or just keep them as rentals.

The Trump administration is looking into this because the housing market is broken after handing out 3% mortgages to everyone and then jacking it up to 8%. Some of that is mitigated by rates going down to 6% - but things aren't improving. This will be the slowest year in terms of housing in 30 years, and the median FIRST TIME buyer is literally 40.

It's not helping anyone that people are sitting in these homes where essentially they're payment would double if they moved into the exact same house next door.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424239)

leave the market alone.

remove problematic regulations.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49425307)

just off the top of my birdbrain head, wldnt the banks lose TONS of money giving out loans at below market rates which is what they are essentially doing by letting faggots transfer lower interest loans

how the furk does that work for the jew banks, they wld just be subsisidzing prior homeowners loans by charging moar for new homeowners

this is just a ponzi scheme like SS/medicare

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49425560)

1. Scenario 1 - $500,000 3.0% loan that is not transferable. The borrower stays in the house. Bank has already made their fees. Bondholder collects 3.0% interest.

2. Scenario 2 - Borrower sells their house. Real estate agents collect fees. New buyer takes out a loan at 7% interest. Bank collects fees from new loan, new bondholders get 7% interest. Old borrower buys new house for $1 million. Take out new loan for $500,000 at 7%. Bank makes fees. Bondholders get 7% interest. Old bondholders continue to collect 3.0% interest plus $10,000 transfer fee. Plus you get people matched ecnomically to the best house fit for them rather than stuck because of their interest rate.

It's very easy to see some clear winners from this proposal. There are losers too, but you have to squint much harder to find them.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49426608)

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424877)

Lenders would be entitled to appraisals on the new collateral, and you could build in a margin of safety and charge a fee to port them. So if you borrow $1MM to buy a $1.2MM house and then buy a $2MM house after paying down $100K of principal, you could allow the borrower to port the $900K principal loan to the $2MM house, but require it go have a loan to value after any new money or second mortgage is applied that would make sure the $900K is by 10%.

This would be good for people like me who have 2.3% mortgages, but I’m not sure it’d lower home prices. It might increase liquidity by allowing people to sell their homes more easily.

But if you borrow $1MM secured by $1.2MM in real estate, you should be able to swap out the collateral if the LTV stays the same or is better, as long as you are willing to pay the transaction fees. The only issue I would foresee here is regional concentration risk. Like if everyone traded NY mortgages for Florida mortgages. RMBS deals are set up to have geographical diversity to protect against the risk of regional economic downturns, natural disasters, etc. But maybe you could require it to be within 100 miles of the original property or something.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424923)

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424939)

illegals aren't buying homes where people like XO posters would live

how would you make life difficult for megacorps buying houses or make it too expensive to own 3rd houses etc

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49424953)

they may not be competing with deranged lawyers for houses, but they are certainly competing with young people buying a first home and trying to start a family.

there are endless ways the government could fuck with the real estate industry. tighten lending to residential investors by classifying it as higher risk or putting low concentration limits on it. exclude FM/FM purchase of mortgages originating from a non-natural person. i assume finance policy nerds could come up with hundreds of them using existing law.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49425004)

How do all you libertarian nonthinkers rail against rent control constantly, and not realize the interest rate lock ins have to the exact same economic effect?

You have a class of people who have to stay attached to a certain property, or in essence, their rent will double?

It's an easy fix - which world is the economy better off?

1. Scenario 1 - $500,000 3.0% loan that is not transferable. The borrower stays in the house. Bank has already made their fees. Bondholder collects 3.0% interest. Borrower just lives in that house until they die even though it's no longer a fit for them.

2. Scenario 2 - Borrower sells their house to live closer to their new job or bigger house for their family. Real estate agents collect fees. New buyer takes out a loan at 7% interest. Bank collects fees from new loan, new bondholders get 7% interest. Old borrower buys new house for $1 million. Take out new loan for $500,000 at 7%. Bank makes fees. Bondholders get 7% interest. Old bondholders continue to collect 3.0% interest plus $10,000 transfer fee. Plus you get people matched ecnomically to the best house fit for them rather than stuck because of their interest rate.

It's very easy to see some clear winners from this proposal. There are losers too, but you have to squint much harder to find them.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49426632)

okay, sure

mortgages are not lines of credit. they are contracts based on certain property at certain interest rates at a certain time

the government needs to stay the fuck out of this

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49430247)

My biggest issue with this though is that I don't see it increasing affordability. The fundamental problem is lack of supply. Increasing the number of transactions doesn't necessarily decrease price. Maybe if there were some big mismatch between retiree housing and new single-family homes but I don't think that's the case here. The big winners here would be real estate agents.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49430290)

Regarding your second point, as I think about it, that is another reason to prefer my proposal (which is to allow borrowers to pay off their mortgages for less than face value when mortgage rates increase). Under my proposal, that would create an incentive for people to sell their house and rent or move to an assisted living center or something like that, which would increase the number of homes available for purchase. But if all you do is make mortgages transferable, then by definition you take one home off the market for every home you put back on the market, which doesn't do anything to increase the supply of housing.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49431406)

you didn't even set forth your scenarios as proposals

so, now looking at the second as a proposal, why would we want anyone to be able to pay off a mortgage

at less than face value

just because mortgage rates have increased?

why should the bank eat that risk?

why should the government get involved in something so common as residence loans?

the obvious answer is-they shouldn't.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49432376)

if they were to be treated as such, the market would treat them as such

to force the market to treat them as such is just typical dimwit theorists thinking they can outthink the market

in other words, stfu dimwit

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49432388)

The loans are all securitized. It really doesn't effect that securitization trust if the borrower keeps paying the same amount under the note, but you substitute out the collateral for a higher quality piece of collateral.

But IMO it fucks with everything if you allow early prepayment at a discount. You then have a loss on the loan - what class of certificates gets hit with the loss, etc?

Also a lot of people are holding these on their books because it effects their accounting treatment. They might not be as thrilled as you think if all the sudden they start paying off early.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49431646)

There are various structures to mitigate this. But it'd be easier to securitize loans if they could be ported but not refinanced.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49431697)

Prepayments are a risk that is underwritten and disclosed in the offering documents and modeled by the banks.

The bondholders never agreed (i) to accept less money in a prepayment and (ii) what classes of certificates would eat that loss.

It'd be an enormous mess.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49431966)

If you followed the rules, the subordinate certificates would take almost all the losses. I suppose you could re-do the laws to require all the bonds to reconfigure their waterfalls to account for your econ 101 efficient market hypothetheis bullshit, but why wouldn't a law firm take up the class A holders holding $500 mm worth of debt saying "the contract says i'm supposed to get all the principal up until the loan amount - this person paid less than the loan amount, ergo the senior bondholders should get all the money."

Or if you gave it all to the senior bondholders, the junior bondholders would flip out because your plan would effectually zero them out.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49432474)

BUT WHEN YOU PAY OFF A MORTGAGE FOR LESS THAN FACE VALUE AFTER RATES GO UP, NOBODY LOSES MONEY. THE BONDHOLDER ALREADY LOST THEIR MONEY, BECAUSE BONDS LOSE VALUE WHEN RATES GO UP. If you trade a $500k bond at 3% for a $350k bond at 7%, the value of the bond is the same. The coupon is the same. Literally nothing has changed and nobody lost any money. This is not fucking rocket science.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49432861)

They would be reviewed in the exact same way they were originally (not much, just checking the dollar amount on the appraisal).

It's not like these are commercial loans where banks actually did site visits and projections, etc.

The only decent point was you may shift the risk pool of the securitization if people moved geographic locations - but that doesn't see to be that material of a risk to me.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49431998)

The securitization never contemplated mortgages being paid off at a discount. So say someone owed $500,000 in principal and you let them get out for $350,000.

Does that $350,000 all go to the A tranche? Because all principal goes to them first? Because if that's the case then wouldn't the bond in the first loss position basically lose all their interests because all these loans are going at a "loss" and they're the first loss? Seems like that would be devastating to anyone holding that position.

I'm sure smarter people than me could fix it all, but it wouldn't be easy and would be subject to massive litigation.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49431991)

For example, a 30-year mortgage for $475k at 3% will result in a payment of about $2,000 per month. A 30-year mortgage for $300k at 7% will also result in a payment of $2,000 per month. In other words, as far as the bondholder is concerned, they are the same fucking mortgage. They will get $2,000 per month for the next 30 years. It makes zero difference that the "principal" is a different number. If you pay off the $475k mortgage at 3% for $300k and then use the $300k to write a new mortgage at 7%, absolutely nothing has changed. The bond's coupon is exactly the same. Nobody lost any money. The bondholder already lost that money when interest rates went up, because their bond that used to be worth $475k is now worth only $300k.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49432910)

That's not true at all. The bondholders are just entitled to certain rights to the thousands of mortgages.

The securitization docs specifically say that if there isn't enough principal to fully repay the loan, all that money goes goes first to the senior tranch (who get less interest) before th ey go to the next more junior tranch (who get more interest).

So under the current docs, say there is a loan with $500,000 balance and the borrwoer defaults, the special service sells the property for $350,000 after expenses. All of that $350,000 under the payout might go to the A tranch with with lowest tranche getting 0.

So what happens if you allow borrowers to just cash out for $350,000? Does that money go to the As or the Bs? Someone is going to pissed either way.

You keep just mentioning that you'd swap it out for another bond, which (a) isn't something the securitization can do and (b) where is this perfect market you're going to find the exact same bond, backed by the same collateral, with the same remaining term?

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49433186)

What you're saying would fundamentally change the nature of the cash flow of the securitization.

Essentially, let's pretend that you and I make a bet on the basketball game about how many three pointers Luka Donic will make. Then halfway through the game, the refs change the rules and say - okay, if you make it from 18 feet away, it's 2.5 points.

You can argue all day that its the same thing because people should be rewarded for taking longer shots, that it'd be good for basketball, that it makes no sense 21 feet is worth 50% more than a 20 foot shot, etc.

But it obviously breaks the deal we made regarding the bet on 3 pointers.

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49434782)

post the definition of a bond

(http://www.autoadmit.com/thread.php?thread_id=5796831&forum_id=2most#49443909)