Comments on Fund My Mutual Fund: US Banks in Plans to Freeze Suprime Rates

why not 3% down for everyone? No one who does not ...

2007-11-30T13:01:00.000-05:00

why not 3% down for everyone? No one who does not make $150K or more allowed to do no doc loans. Or some LTV level. Why not disallow no doc loans for any 2nd home. Simple regulations. Simple common sense. If you can't pay a historic low 6% mortgage rate basically you should not be part of the home ownership society. Unlike what Bush says not everyone 'deserves' a home. Some people simply cannot afford it. Thats the reality. Does everyone 'deserve' a Porsche? There is a difference between 'deserving' a roof over your head (yes everyone deserves that) vs a $350-$600K home on a $40K income.

Anyhow I digress. Enough soap box - the more I see, the more I never cease to be amazed :)

James, we don't allow regulation here. It's alway...

2007-11-30T12:57:00.000-05:00

James, we don't allow regulation here. It's always bad. Remember that. Only after things implode do we worry about it and only then for a few months when its politically convenient. Then back to free markets fix everything.

James as for your happiness about the plan, how would you explain this to people (now called suckers) who bought homes on the same street with a 6% fixed. They are now going to be paying for next (nearly decade) 3000-4000 more a month.

What would you say when the housing market comes back to life, and subprime borrower got away with paying nothing and can sell the house for a premium. Whereas neighbor next door has to pay 3000-4000 more a month for next 3-4 years, and hence made far less profit. When the latter neighbor was the one who was pragmatic and conservative. I'd love to see what we will say to all these people. Look, you made a safe decision, but when your neighbor sells his house he is going to make out far better than you since he is paying below rental rates for a 2800 sq foot home for next 7 years... so he can book all the profits to his pocket. So he wins on the way in (paying very little in monthly mortgage) and he will win on the way out (booking more profits than you since he is so far more leveraged than you). You, Mr Responsible - well you lose.

For example in France banks require that the month...

2007-11-30T12:51:00.000-05:00

For example in France banks require that the monthly loan payment should be no more than 33% of your revenues.

This is brilliant! It really is. I very pragmatic ...

2007-11-30T12:49:00.000-05:00

This is brilliant! It really is. I very pragmatic way to do a soft landing.

The only thing that is missing is some rules to avoid this same situation to happen again in the future.