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Author Topic: Housing Market Issues  (Read 5964 times)
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WalkingFumble
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« Reply #40 on: March 12, 2008, 05:31:47 PM »

Quote from: unbreakable on March 05, 2008, 10:29:49 PM

Personally, I don't think the forclosures are hurting the banks... I think the fact that nobody is buying houses is what's hurting them.  A forclosure means the bank is essentially "buying" your house at a pretty steep discount.  But where they get hurt is when they can't sell your house at all, or when the amount they lent out is more than the cost of the home. 

thats not true, and it is true.  you dont own your house till you pay that last payment, the bank does.  so really, a foreclosure means the bank wont be getting the rest of the money for the house, and they still keep the house.  then it hurts them if they cant sell the house, or take a loss selling it for less than what they paid for it.
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denoginizer
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« Reply #41 on: March 12, 2008, 05:54:04 PM »

Sure it hurts the banks.  They don't care about the physical property.  They care about the interest on the loan, or selling the loan to other institutions.  Not to mention the extra back-end costs of processing a forclosure. 

I would argue that many of the homeowners get off much better than the banks.  Many times they live in the house for a year without making payments before the forclosure happens.  Also they often owe more than the house is worth due to second mortgages or declining property values. So they get out from under a bad investment. Sure a foreclosure kills their credit rating.  But many of them will find ways to get another loan in the future despite that.

The main problem with many sub-prime loans is many of the recipients of the loans should never have gotten a loan in the 1st place. 20 years ago they never would have gotten those loans due to bad credit ratings or poor income to dept ratios.  Now just about anybody can get a home loan.  Getting approved for a loan is not an entitlement, it should be earned with a sound financial record.  Mortgage companies have gotten away from that philosophy over the last 10 years.
« Last Edit: March 12, 2008, 05:56:00 PM by denoginizer » Logged

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Blackadar
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« Reply #42 on: March 12, 2008, 06:43:19 PM »

Quote from: denoginizer on March 12, 2008, 05:54:04 PM

The main problem with many sub-prime loans is many of the recipients of the loans should never have gotten a loan in the 1st place. 20 years ago they never would have gotten those loans due to bad credit ratings or poor income to dept ratios.  Now just about anybody can get a home loan.  Getting approved for a loan is not an entitlement, it should be earned with a sound financial record.  Mortgage companies have gotten away from that philosophy over the last 10 years.

This is true, but you make it sounds like it's their fault they received the loans.  While they may have no business getting such loans, it's not really their fault if they do.  When someone approaches you and says "you've been living in a slum/renting for 10 years and you can afford your own beautiful home", how many are *really* going to argue with that?

I suggest you read this: http://www.newsweek.com/id/121512

Here's an excerpt: lenders like his company, which underwrote loans offered up by brokers and resold them to giants like Countrywide, spent much of their workdays trying to spot the stupid tricks brokers routinely used to get unqualified borrowers approved for loans. They'd say a buyer intended to live in a house when it was really an investment property. They'd falsify the buyer's income by having a relative pose as his employer, or use scanners and software to forge W-2 forms. They'd find ways to hide debts (like a car payment) by looking for a credit report that omitted key data. They also routinely gamed the appraisal system, encouraging appraisers to look for "comparables" that were far nicer homes in better neighborhoods—all in an effort to drive up the appraised value of the home they were mortgaging.
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« Reply #43 on: March 12, 2008, 06:53:14 PM »

Quote from: WalkingFumble on March 12, 2008, 05:31:47 PM

Quote from: unbreakable on March 05, 2008, 10:29:49 PM

Personally, I don't think the forclosures are hurting the banks... I think the fact that nobody is buying houses is what's hurting them.  A forclosure means the bank is essentially "buying" your house at a pretty steep discount.  But where they get hurt is when they can't sell your house at all, or when the amount they lent out is more than the cost of the home. 

thats not true, and it is true.  you dont own your house till you pay that last payment, the bank does.  so really, a foreclosure means the bank wont be getting the rest of the money for the house, and they still keep the house.  then it hurts them if they cant sell the house, or take a loss selling it for less than what they paid for it.

But most banks have already made their profit from the loan.  Rather than lending the money to the homeowner, the simply broker the loan.

And besides that, if the banks actually DON'T want the property... why aren't they working with homeowners to NOT foreclose?  This only happens in a very limited number of cases.  It's kind of absurd to think a bank would allow itself to get into a situation in which it would not make money from a loan.

As I said earlier, look up "ninja loans".  If there is any mortgage meltdown, the lenders brought it on themselves with their own irresponsible practices.  But I really view the entire thing as a scam where they conned America in order to bilk bigtime money from foreign investors.  Then the real topper of the payday is when the scammers get bailed out by BushCo's fiscal conservatives throwing around even more gub'ment money.
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denoginizer
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« Reply #44 on: March 12, 2008, 07:43:28 PM »

Quote from: Blackadar on March 12, 2008, 06:43:19 PM

Quote from: denoginizer on March 12, 2008, 05:54:04 PM

The main problem with many sub-prime loans is many of the recipients of the loans should never have gotten a loan in the 1st place. 20 years ago they never would have gotten those loans due to bad credit ratings or poor income to dept ratios.  Now just about anybody can get a home loan.  Getting approved for a loan is not an entitlement, it should be earned with a sound financial record.  Mortgage companies have gotten away from that philosophy over the last 10 years.

This is true, but you make it sounds like it's their fault they received the loans.  While they may have no business getting such loans, it's not really their fault if they do.  When someone approaches you and says "you've been living in a slum/renting for 10 years and you can afford your own beautiful home", how many are *really* going to argue with that?

I suggest you read this: http://www.newsweek.com/id/121512

Here's an excerpt: lenders like his company, which underwrote loans offered up by brokers and resold them to giants like Countrywide, spent much of their workdays trying to spot the stupid tricks brokers routinely used to get unqualified borrowers approved for loans. They'd say a buyer intended to live in a house when it was really an investment property. They'd falsify the buyer's income by having a relative pose as his employer, or use scanners and software to forge W-2 forms. They'd find ways to hide debts (like a car payment) by looking for a credit report that omitted key data. They also routinely gamed the appraisal system, encouraging appraisers to look for "comparables" that were far nicer homes in better neighborhoods—all in an effort to drive up the appraised value of the home they were mortgaging.

I agree that there is plenty of blame to go around.  But I have a feeling that many of those borrowers knew deep down that they could not afford those loans.  And having relatives pose as the buyer's employer would generally have to be done with that buyer's knowlege.  As usual there is no single entity soley responsible for this mess.  But the home buyers themselves have to take some of the blame for defaulting on the loans.  I have always told my wife that no matter what happens to us financially, our mortgage will always be the first thing we pay every month.  Even before groceries. 
« Last Edit: March 12, 2008, 07:47:07 PM by denoginizer » Logged

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Blackadar
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« Reply #45 on: March 12, 2008, 07:56:24 PM »

Quote from: denoginizer on March 12, 2008, 07:43:28 PM

I agree that there is plenty of blame to go around.  But I have a feeling that many of those borrowers knew deep down that they could not afford those loans.  And having relatives pose as the buyer's employer would generally have to be done with that buyer's knowlege.  As usual there is no single entity soley responsible for this mess.  But the home buyers themselves have to take some of the blame for defaulting on the loans.  I have always told my wife that no matter what happens to us financially, our mortgage will always be the first thing we pay every month.  Even before groceries. 

And you know I've never said the homebuyers who knowingly got mortgages over their means were blameless.  We entirely agree there's plenty of blame to go around.  My beef is that Bush & Co. keep bailing out investors, banks and the financial markets at the expense of John Q. Public, even those of us who aren't in default of our mortgages.  His big-business-welfare-state policies are screwing up the economy in many ways at the direct expense of the average citizen. 
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denoginizer
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« Reply #46 on: March 12, 2008, 08:20:54 PM »

Quote from: Blackadar on March 12, 2008, 07:56:24 PM

Quote from: denoginizer on March 12, 2008, 07:43:28 PM

I agree that there is plenty of blame to go around.  But I have a feeling that many of those borrowers knew deep down that they could not afford those loans.  And having relatives pose as the buyer's employer would generally have to be done with that buyer's knowledge.  As usual there is no single entity solely responsible for this mess.  But the home buyers themselves have to take some of the blame for defaulting on the loans.  I have always told my wife that no matter what happens to us financially, our mortgage will always be the first thing we pay every month.  Even before groceries. 

And you know I've never said the homebuyers who knowingly got mortgages over their means were blameless.  We entirely agree there's plenty of blame to go around.  My beef is that Bush & Co. keep bailing out investors, banks and the financial markets at the expense of John Q. Public, even those of us who aren't in default of our mortgages.  His big-business-welfare-state policies are screwing up the economy in many ways at the direct expense of the average citizen. 

I honestly don't know enough about economics to say whether or not helping the banks and investors also helps John Q Public  I will defer to those who know better on that issue.  I am only talking about the mortgage crisis.  I'm just not convinced that it is the obligation of the Federal Government to bail out consumers who take out loans that they cannot afford to pay off.  When many of them knew they couldn't afford them all along. 

http://www.usatoday.com/money/economy/housing/2008-03-09-foreclosures-walk-away_N.htm

Quote
Nationwide, more than half the borrowers who lose their homes through foreclosure never answered their lenders' calls or letters, according to Freddie Mac. And an MBA analysis found that 23% of loans in foreclosure last fall were to homeowners who had no contact with their lenders, and that an additional 18% were to absentee owners.

The numbers help explain why it's so difficult to reverse the trends of rising foreclosures and falling property values. Even some homeowners who can afford to pay their mortgages are defaulting, Lauria says, because their house might have lost 30% of its value, and they figure it will be a long time before it's worth what they paid for it.

"They say, 'If I play my cards right, I can live here free for 12 months, maybe longer' " before the lender can foreclose, Lauria says. "Our challenge isn't contacting the borrower. I can talk to them, but they stick their tongue out at me."
« Last Edit: March 12, 2008, 08:51:33 PM by denoginizer » Logged

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« Reply #47 on: March 12, 2008, 08:22:58 PM »

Quote from: Blackadar on March 12, 2008, 07:56:24 PM

Quote from: denoginizer on March 12, 2008, 07:43:28 PM

I agree that there is plenty of blame to go around.  But I have a feeling that many of those borrowers knew deep down that they could not afford those loans.  And having relatives pose as the buyer's employer would generally have to be done with that buyer's knowlege.  As usual there is no single entity soley responsible for this mess.  But the home buyers themselves have to take some of the blame for defaulting on the loans.  I have always told my wife that no matter what happens to us financially, our mortgage will always be the first thing we pay every month.  Even before groceries. 

And you know I've never said the homebuyers who knowingly got mortgages over their means were blameless.  We entirely agree there's plenty of blame to go around.  My beef is that Bush & Co. keep bailing out investors, banks and the financial markets at the expense of John Q. Public, even those of us who aren't in default of our mortgages.  His big-business-welfare-state policies are screwing up the economy in many ways at the direct expense of the average citizen. 

Perhaps its not best to help out every company, but the federal government really should be doing baleouts of the financial market on the whole - after all we've seen what happens when government takes a distinctly non-interventionist tone towards economic policy.
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« Reply #48 on: March 12, 2008, 08:28:51 PM »

Quote from: CSL on March 12, 2008, 08:22:58 PM

Quote from: Blackadar on March 12, 2008, 07:56:24 PM

Quote from: denoginizer on March 12, 2008, 07:43:28 PM

I agree that there is plenty of blame to go around.  But I have a feeling that many of those borrowers knew deep down that they could not afford those loans.  And having relatives pose as the buyer's employer would generally have to be done with that buyer's knowlege.  As usual there is no single entity soley responsible for this mess.  But the home buyers themselves have to take some of the blame for defaulting on the loans.  I have always told my wife that no matter what happens to us financially, our mortgage will always be the first thing we pay every month.  Even before groceries. 

And you know I've never said the homebuyers who knowingly got mortgages over their means were blameless.  We entirely agree there's plenty of blame to go around.  My beef is that Bush & Co. keep bailing out investors, banks and the financial markets at the expense of John Q. Public, even those of us who aren't in default of our mortgages.  His big-business-welfare-state policies are screwing up the economy in many ways at the direct expense of the average citizen. 

Perhaps its not best to help out every company, but the federal government really should be doing baleouts of the financial market on the whole - after all we've seen what happens when government takes a distinctly non-interventionist tone towards economic policy.

Why?  There's no doubt that a "guiding hand" is the best way to go when it comes to the financial sector, but why a bailout?  And furthermore, why provide a bailout using methods that puts the burden and pressure on the middle class?
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« Reply #49 on: March 12, 2008, 09:15:30 PM »

I would rather see the government not bail out anyone.

When the government continues to bail out investors who make poor investments, that just weakens the market (and rewards fraudulent behavior, as well).

These guys are making millions/billions because, allegedly, they know what they are doing.  Since they get paid the big bucks, why does my tax money have to go toward making sure they don't skin their knees when they fall?  As all the free marketeers keep saying, the market solves everything.  So let the market replace these guys with somebody who can do their jobs better than they can.

If we can't bail out the little guy, we shouldn't be bailing out the big guy either.  But if we have to bail out one, I'd rather see us bail out the little guy, since a person who gets out of financial trouble is more likely to learn a lesson.  Nothing has ever proven that bailing out people making very bad (but extremely large) investments has prevented them from making future bad decisions.

Case in point: lowering interest rates and borrowing huge amounts of cash from the Fed created this crisis.  So what was their solution?  To lend out another $200 Billion.
« Last Edit: March 14, 2008, 12:30:30 AM by unbreakable » Logged
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« Reply #50 on: March 14, 2008, 12:31:59 AM »

When even Reuters starts calling your plan "too little, too late", you really know you are in trouble.

We can probably also file this under "yet another reason deregulation is a stupid fucking idea".  If someone wants to start championing deregulation, I'd rather they start with traffic and parking tickets, then work their way up from there.
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Blackadar
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« Reply #51 on: March 18, 2008, 02:03:56 AM »

And more corporate welfare over the weekend...the Fed backs $30 billion in lousy Bear Stearns bad debt while JP Morgan gets to buy them at an absurd rate of $2 per share, let investment companies get loans from the Fed for the first time ever (this is a BIG one - the taxpayers now virtually guarantee investment companies they won't lose money as long as this remains in effect) AND cut the lending rate a quarter point.  Nice way to devalue the currency even more.  Now there's talk of a full point reduction in the federal funds rate, again putting more pressure on inflation.  Didn't cheap credit get us into this problem?  So the solutions is more cheap credit?  Of course, we could normally turn to foreign investors to prop up our economy.  But the declining dollar has made our securities less attractive.  And that goes back to the decision to print too much money - otherwise known as the M3 rate - that this administration stopped publishing statistics on in 2006. 

And, of course, now that Bear Stearns got bailed out, if Lehman gets in trouble, they'll get bailed out with taxpayer money too. 

Of course, there's still been NO help for the middle class or the struggling homeowners.  Just think, a bit of help to the homeowners would have reduced the number of foreclosures, keeping the value of homes and the subprime mortgages higher and may have helped prevent this entire problem.  Simply put, help to the homeowners could have made the debt less risky...and Bear Stears wouldn't have had the liquidity crunch that "forced" a taxpayer bailout.  Instead we have an economy in full-fledged recession, with rising real inflation and a huge squeeze on the middle class....

Yep, ain't Republican fiscal policies grand? 
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« Reply #52 on: March 18, 2008, 03:39:49 PM »

Quote from: Blackadar on March 18, 2008, 02:03:56 AM

And, of course, now that Bear Stearns got bailed out, if Lehman gets in trouble, they'll get bailed out with taxpayer money too. 

You probably mean when, not if.  Here's my favorite Lehman story:

Quote
Florida Got Lehman Help Before Run on School's Funds

It was the first day of November and Coleman Stipanovich's world was coming undone. Florida school districts and towns had begun pulling their cash out of the $26 billion money market fund he supervised, after they learned it held subprime-tainted debt.

Stipanovich, who earned $180,214 in 2006 as executive director of the State Board of Administration, was in New York in confidential meetings with Lehman Brothers Holdings Inc., the largest U.S. underwriter of mortgage-backed bonds. Lehman was proposing ways to help the state manage the risk of its debt investments, according to a letter the bank sent to Stipanovich after the meeting.

What Stipanovich, 58, hadn't told his boss, Florida Chief Financial Officer Alex Sink, was that Lehman Brothers was the same firm that had sold the state fund $842 million of mortgage- backed debt in July and August. Those securities defaulted within four months, and totaled more failing debt than any other bank sold the state, Florida records show. ``At the time, I never knew it was Lehman Brothers that actually sold us these investments,'' Sink says.

Sink also was unaware that former Florida Governor Jeb Bush, who incorporated Jeb Bush & Associates in February 2007, a month after completing his second term, had been hired as a consultant to Lehman Brothers in June. Bush is the brother of President George W. Bush.

Like I keep telling people: wherever the Bushs go, loan scams follow.  There's a really good reason administration bigs like Cheney have been short-selling America from day one.
« Last Edit: March 18, 2008, 03:42:14 PM by unbreakable » Logged
Blackadar
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« Reply #53 on: March 19, 2008, 01:32:32 AM »

What may be most depressing is that while no one has been able to come to the defense of the Republican fiscal policies or poke holes in the stats I quote, some people will go to the polls in November and mindlessly pull the lever for McCain - aka Republican "sheep".  Very sad...

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« Reply #54 on: March 19, 2008, 04:15:44 PM »

You can lead a man to reason, but you can't make him think.
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