Aces High Bulletin Board
General Forums => The O' Club => Topic started by: 33Vortex on June 09, 2008, 11:58:28 AM
-
Would like to hear what you got to say about this. Why did the US housing market collapse??? I live in Europe and would like to hear from US citizens your opinion on this.
-
Answer: People treating the housing market like the stock market.
If you or I invest a bunch of money in the stock market, and that stock tanks, we lose our investment. In the case of the housing market, the stock people were investing in was the roof over their head.
People who in no way should have been able to qualify for a mortgage, were given adjustable-rate (or interest-only) mortgages on the assumption that the housing market would continue to climb at yearly double-digit rates of return. The house they planned on selling after 3 years and raking in a 25% - 50% return on their investment suddenly was worth no more than the day they bought it. Not only that, but their mortgage payment increased 50-100% when the interest rate reset after that 3-year period. Suddenly unable to pay their mortgage (ie. living beyond their means), banks foreclosed.
-
Yup. And instead of allowing these people to wallow in their own stupidity, the US Government will attempt to bail them out with OUR money.
"Nature abhors a moron." Mencken (I really like this guy)
-
Would like to hear what you got to say about this. Why did the US housing market collapse??? I live in Europe and would like to hear from US citizens your opinion on this.
Really it's not a collapse, although many people call it that. It's more of a correction for the bubble caused by speculators and questionable mortgages. The houses became overvalued for a time and now it is correcting.
-
Yup. And instead of allowing these people to wallow in their own stupidity, the US Government will attempt to bail them out with OUR money.
"Nature abhors a moron." Mencken (I really like this guy)
I thought it was the banks who got support ? I'm wrong ?
-
Correct, Correct, and Correct.
In addition to (and probably more significant) bailing out the people who took out these mortages, we the people are bailing out the lenders...the banks. IMHO they should be made to suffer the consequences of their actions....but then again how would that have an effect on other things?
-
Answer: People treating the housing market like the stock market.
If you or I invest a bunch of money in the stock market, and that stock tanks, we lose our investment. In the case of the housing market, the stock people were investing in was the roof over their head.
Except if I invest in the stock market, typically I do it with my own money rather than the bank's. One of the big problems was the bank's got cold feet after realizing how badly exposed they'd let themselves become to shaky loan deals. Almost overnight, they started applying some common sense to loan acceptance criteria and suddenly, all those people with variable rate loans looking to refinance at the end of their introductory period found they no longer qualified. When their rates jumped from 1% to 5 or 6%, they were screwed.
-
I believe that another scenario is that so many people have lost their jobs, they had to do something..so they went in the house building business...hence too many houses and not enough people to buy them...hence...supply and demand.
Also...greedy CEOS....they rolled the dice on sub-prime loans ...the loans went down the tubes...the banks and
lending institutions lost their arses...The past CEOS now sit in the tropics somewhere enjoying life
while many people suffer from their bad decisions.
-
What? Are you saying that your government is paying the BANKS for their stupidity to loan money to the wrong people?
-
Donzo,
Isn't it one step farther. We are supporting the Wall Street banks who bought basically junk bonds built on the junk mortgages. So the bailout has hit both the mid-stream lenders/underwriters and the large profit-greedy wall street banks.
The bailout on the per-person level has been much, much slower.
-
What? Are you saying that your government is paying the BANKS for their stupidity to loan money to the wrong people?
Basically.
-
What? Are you saying that your government is paying the BANKS for their stupidity to loan money to the wrong people?
Yes.
shamus
-
Great, another way for the banks to milk taxpayers on money, sheesh.
-
I believe that another scenario is that so many people have lost their jobs, they had to do something..so they went in the house building business...hence too many houses and not enough people to buy them...hence...supply and demand.
Also...greedy CEOS....they rolled the dice on sub-prime loans ...the loans went down the tubes...the banks and
lending institutions lost their arses...The past CEOS now sit in the tropics somewhere enjoying life
while many people suffer from their bad decisions.
Wrong. The construction industry is what it always has been. Except for the very large guys (which even then it still affects them greatly), the industry comes and goes as the value of houses goes up, and the inflation goes down (or doesn't rise as quickly).
The problem wasn't with the number of houses, but the sizes. People were trying to live beyond their means at all levels. An upper middle class family of 4 doesn't need a 4500 square foot new house to live. And unless they actually have the money they shouldn't go for it. For the same reason that a lower class person shouldn't try to get a smaller house under a sub prime loan.
People got burnt all the way around*. Hopefully they'll have learned from it.
*That is except for the biggest companies in home production and sales. A lot of them like Toll, Ryan, and Pulte had a bad habit of putting up a house that should have cost $300 to build, for $200, and selling them for $600 to $1,500. They'll take a hit to their enormous profit margins, but not much else.
-
One can argue that it's the banks that give ppl credit that are to blame. All banks want us to take loans, it's good for the economy, it's good for the banks. All banks profit from lending, so they want to lend us more money. So who's to blame, the people for taking the loans offered by the banks, or the banks for offering the loans?
-
Yes...the banks lent money like idiots..well kind of..now we have the tax payers bailing out the banks...arghhh
it was the Mighty NINJA LOAN!!! No Income No Job No Assets a group of lenders was handing out money to anyoen with a pulse
Im in great shape, Im a broker representing Bank Owned properties...we are on fire selling homes right now..Investors and First time home buyers are reaping the benefits...lowest mortgage rate in 30 years is a good thing there is a very large chunk of folks paying cash for homes out here...its amaizng to see folks pay 2-3-400k cash....
.Liek teh WuTang Clan sang....CREAM...dolla dolla Bill Yall --
Cash Rules Everything Around Me
-
Correct, Correct, and Correct.
In addition to (and probably more significant) bailing out the people who took out these mortages, they should be made to suffer the consequences of
Give me one example of the govt bailing out someone with these mortgages, please.
I believe Straffo is correct.
-
CASH is god, especially in a economy like the US. CASH is what runs the world.
FACT
Edit: Who controls the CASH then you think? (http://hem.bredband.net/turnik/icons/icon_hm.gif)
-
Yes...the banks lent money like idiots..well kind of..now we have the tax payers bailing out the banks...arghhh
This is what really pisses me off. We are bailing out the banks... why not save the home owners before they lose their home? If we did this, home values would decline less because neighborhoods wouldn't be filled with foreclosed homes. Sure you could argue that the homeowners made their own bed and should take their medicince but by that token, shouldn't the banks as well?
It's infuriating.
-
Wrong. The construction industry is what it always has been. Except for the very large guys (which even then it still affects them greatly), the industry comes and goes as the value of houses goes up, and the inflation goes down (or doesn't rise as quickly).
The problem wasn't with the number of houses, but the sizes. People were trying to live beyond their means at all levels. An upper middle class family of 4 doesn't need a 4500 square foot new house to live. And unless they actually have the money they shouldn't go for it. For the same reason that a lower class person shouldn't try to get a smaller house under a sub prime loan.
People got burnt all the way around*. Hopefully they'll have learned from it.
*That is except for the biggest companies in home production and sales. A lot of them like Toll, Ryan, and Pulte had a bad habit of putting up a house that should have cost $300 to build, for $200, and selling them for $600 to $1,500. They'll take a hit to their enormous profit margins, but not much else.
I dont know where you live ...but in my community, houses were being built in every nook and crany they could find....We have streets here that not one house is being built....supply and demand....too many houses not enough folks to buy them.you may be right about the size though...more like the price too!
-
I didn't say that houses weren't being built. It's just that they aren't currently profitable for small builders. Big outfits can still put up lots of crappy houses and make decent profits.
But these companies aren't going to stop construction on houses already being built. They are going to finish them knowing that sometime in the future they will sell. They probably won't start many more until the market picks up.
Or at least they'll start building smaller or more economical houses to compete with the lowered prices of foreclosed homes.
-
I find it hard to imagine anybody being surprised that the market has turned as it has. Any first year economics student can define the elements that conspired to develop this recent "crisis".
Low rates, consumerism, poor oversight, delusional optimism, even C.E.O compensation factored into our allowing our domestic R/E market to get way over leveraged. As far as the prime culprit, I'd say delusional optimism and shareholder hypersensitivity are the most culpable. But just as a fire burns out when the fuel is spent the overheated market is now out of fresh kindling. It will correct in time but it may be a bloody march until then for some. For others it's a great opportunity.
-
In the govt's view, bailing out a few lending institutions was cheaper than the national grief caused by a run on ALL the banks. How and why that situation was allowed to happen is what needs to be discussed
-
I think it's more than just who gets the bail out money.
Whether we like it or not, modern economic systems run on credit. That's partly why growth happens so consistently in the developed world -- if I have a great business idea, I don't have to save up ALL the money before starting it. I can gather some seed money, and borrow the rest to get the thing jump started. That's the whole idea behind a "business plan", which I understand entrepreneurs need to develop and present to the bank before getting their loan. In short, the bank is supposed to assess the likelihood of success before lending the money, to make sure the bankers have a good chance of getting their money back.
Which is how its supposed to work.
The reason the banks are getting support is simple. It's not that the fat cats get money, its that without access to credit, economic growth dries up. That means fewer business starts, less expansion of current business, and less opportunity for recovery. On top of the "whole economy" effects, Inadequate growth directly affects the regular guys up and down the street ---
1. A flat economy drives down wages. Our population is growing, so when new jobs dry up there's an increasing supply of workers relative to jobs -- and competition for jobs drives down wages. Supply and demand...
2. Flat economy means less demand for everything, which cuts jobs further. When times are tight, people buy less...and they get conservative even when they think times MIGHT get tight. When purchases go down, producers need fewer workers, and after layoffs the times get even tighter.
3. Since demand for stuff drops, the prices end up falling. Even companies that stay afloat end up seeing lower profits (fewer sales, and less profit per sale). Lower profits mean belt tightening for them, and belt tightening for them means job loss for us -- layoffs, etc.
4. More layoffs means more unemployment. More unemployment means less demand for goods and services, which means less production needed, which means more layoffs....
From what I've read, the government KNOWS it stinks to bail out the risk takers who created this mess. (Here I'm talking about the policy guys and economists, not the politicians who spend their days strutting like peanoodles on display.) But the alternative to the bailout could be -- for real -- a world wide depression, not just some recession. If not handled properly this mortgage crisis could lead to an honest to goodness economic meltdown. Bailing out individuals who borrowed too much doesnt have direct economic impact, so its money down the drain...but bailing out lenders keeps them solvent, which keeps other lenders from panicking and completely shutting down THEIR loans, which keeps the economy from sliding into disaster.
It's ugly, and its not "fair" but there may not be an alternative
-
Would like to hear what you got to say about this. Why did the US housing market collapse??? I live in Europe and would like to hear from US citizens your opinion on this.
ARM's would get my vote. And the housing market hasn't collapsed :) Its stagnant in most places, but its not collapsing :) Thats American media propaganda.
-
Really what happened was greed. Bank lending money.......then figuring they could sell the Mortgage.
Those that bought the Mortgages....to make money of course got burned.
Dumbest thing I ever saw was to purchase something with a floating interest rate.
-
Would like to hear what you got to say about this. Why did the US housing market collapse??? I live in Europe and would like to hear from US citizens your opinion on this.
My version is that the US government let an organization like the Fed take control of something that it has no reason to run....the interest rates....This caused massive shifts in US Tbills not being purchased by overseas investors to keep the USD strong against other currencies. That was one of the reasons that the Euro and several other currency's have over taken the USD as the benchmark currency for the transactions of the world. Letting this same organization continue to have control is not good for anyone...shades of 1929 coming sooner than we want to believe in my opinion.
But what do I know...I took advantage of the interest rate situation but I intended to stay in it until it was paid for or until I had to upgrade...unfortunately for me or fortunately depending on how you read the next part we sold that house after two years since we were due to have our third and final child and the mother in law was moving in. SO now we have a large house with a larger 30 year mortgage and three outstanding kids.
-
I think it's more than just who gets the bail out money.
Whether we like it or not, modern economic systems run on credit. That's partly why growth happens so consistently in the developed world -- if I have a great business idea, I don't have to save up ALL the money before starting it. I can gather some seed money, and borrow the rest to get the thing jump started. That's the whole idea behind a "business plan", which I understand entrepreneurs need to develop and present to the bank before getting their loan. In short, the bank is supposed to assess the likelihood of success before lending the money, to make sure the bankers have a good chance of getting their money back.
Which is how its supposed to work.
The reason the banks are getting support is simple. It's not that the fat cats get money, its that without access to credit, economic growth dries up. That means fewer business starts, less expansion of current business, and less opportunity for recovery. On top of the "whole economy" effects, Inadequate growth directly affects the regular guys up and down the street ---
1. A flat economy drives down wages. Our population is growing, so when new jobs dry up there's an increasing supply of workers relative to jobs -- and competition for jobs drives down wages. Supply and demand...
2. Flat economy means less demand for everything, which cuts jobs further. When times are tight, people buy less...and they get conservative even when they think times MIGHT get tight. When purchases go down, producers need fewer workers, and after layoffs the times get even tighter.
3. Since demand for stuff drops, the prices end up falling. Even companies that stay afloat end up seeing lower profits (fewer sales, and less profit per sale). Lower profits mean belt tightening for them, and belt tightening for them means job loss for us -- layoffs, etc.
4. More layoffs means more unemployment. More unemployment means less demand for goods and services, which means less production needed, which means more layoffs....
From what I've read, the government KNOWS it stinks to bail out the risk takers who created this mess. (Here I'm talking about the policy guys and economists, not the politicians who spend their days strutting like peamanthings on display.) But the alternative to the bailout could be -- for real -- a world wide depression, not just some recession. If not handled properly this mortgage crisis could lead to an honest to goodness economic meltdown. Bailing out individuals who borrowed too much doesnt have direct economic impact, so its money down the drain...but bailing out lenders keeps them solvent, which keeps other lenders from panicking and completely shutting down THEIR loans, which keeps the economy from sliding into disaster.
It's ugly, and its not "fair" but there may not be an alternative
That's a fair synopsis, Simaril. The only thing I would add to it is to factor in inflation. When Prices for base needs' for the average family, such as Housing or fuel go up, Everything else starts' to go up around the board.
Skyrocketing Housing prices didn't help. But one of the base factors' in our modern economy, fuel, is really starting to tell. Retailers, having to pay more to have their goods' shipped, are having to charge more. Thusly, the price of living goes up, wages' hike as needed...You see how th vicious circle isn't really a circle at all, but a spiral.
-
Answer: People treating the housing market like the stock market.
If you or I invest a bunch of money in the stock market, and that stock tanks, we lose our investment. In the case of the housing market, the stock people were investing in was the roof over their head.
People who in no way should have been able to qualify for a mortgage, were given adjustable-rate (or interest-only) mortgages on the assumption that the housing market would continue to climb at yearly double-digit rates of return. The house they planned on selling after 3 years and raking in a 25% - 50% return on their investment suddenly was worth no more than the day they bought it. Not only that, but their mortgage payment increased 50-100% when the interest rate reset after that 3-year period. Suddenly unable to pay their mortgage (ie. living beyond their means), banks foreclosed.
Yup thats it.
Houses. Is alot like the stock market.
Your better off investing in stock for the long term and not the short term gain
Unless your a day trader.
And very good at it.
Example. I bought my house at $127K 15 years ago. Other houses in the neighborhood just like mine were going for 135 at the time.
Mine was a fixer upper/uckily Im pretty handy with most things and was able to do the work myself.
But even now with the market the way it is. My exact same house is currently selling for $300-325K.
At the markets height it was selling for almost 400K
Those who bought at the markets height thinking the market would just keep going up cant get what they paid for it now.
While I can still sell my house for almost 3 times what I paid for it.
Also I was smart enough at the time to insist on a fixed rate even though way back when initiallyI could have gotten an adjustable at a cheaper rate.
Personally I'd rather know what my payments are going to be every month rather then count on the whims of the market. Even if it means initailly paying more.
In hindsight I was completely correct inasmuch as the market has swung back and forth. In the end I probably saved myself tens of thousands of dollars.
Sometimes your better off beng the tortoise.
And another way housing is like the market.
You dont loose money unless you sell low
-
OK< now I have to laugh.
The cuss word filter took changed what I typed == "PeacoKK" (mispelled to avoid a repeat) and turned it into "peamanthings"
:lol :lol
-
Finally found story THIS (http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html?hpid=topnews) is what did it, above all else:
In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.
Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.
Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is now roiling the U.S. economy.
The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.
ad_icon
Today, 3 million to 4 million families are expected to lose their homes to foreclosure because they cannot afford their high-interest subprime loans. Lower-income and minority home buyers -- those who were supposed to benefit from HUD's actions -- are falling into default at a rate at least three times that of other borrowers.
If I had a frikkin nickel for every sob story I saw in paper a few years ago about 'The American dream' being beyond the reach of today's young people....
-
You know, that's a fair assessment. I can't tell you how many 20-somethings I've seen around here in $450,000 houses and no real visible means of support. This has been going on for a number of years now and what I thought was happening IS happening. Now it's all making sense to me..the "have it now" generation is getting it now.
-
I'm no economist, but I knew something was wrong when overnight a cornfield could be turned into a lot of "Luxury Townhouses Starting from the low $400,000's".
I love the names they come up with: "Brookwoode Estates (Phase III)" or "Aspen Acres at Colonial Farms".
-
The problem was really fairly simple; banks made questionable loans with variable interest rates over a thirty year term to families with incomes of between $75,000 to $100,000 a year so that they could buy homes valued well in excess of $500,000. The families securing such loans had no intentions of keeping said homes for the full term of the note, viewing the purchase as a short-term investment which could be sold in a highly volatile market for an obscene profit.
The only problem was, the s-h-i-t blew up...
-
another thing no one is touching on is that in the areas hardest hit.. kalifornia and florida say....
It has a lot to do with regulation and taxes. I built my home..two homes.. 20 years ago and it is under prop 13.. a bill that was voted in that said taxes could never go up so long as you owned the home.. to keep old people from being driven out for one thing.
My tax burden is about $1,000 a year for the places... it is about 5 times that for friends with less of a place.
regulation... it now costs about 70 grand in fees to break ground.. you don't own a thing and it costs 70 grand.
Then.. there is the fact that people qualify for homes with both incomes. the divorce rate is 50%.. do the math. You can't afford to pay child support and support two homes.
Then their was the overinflation of value.. as shuckins pointed out.. it was thought that the places would appreciate forever.. you were considered foolish to not buy the most expensive place you could qualify for since.. 10% a year appreciation on a 500k home is a lot more money made than 10% on a 200k home.
Another thing that happened is that with the inflated values... people were encouraged to take out some of that equity (or all of it) to pay bills.. buy toys.. fix up the place. "home improvement loans" when the value went down... you now owed twice what the place was worth... fine if you stayed married and at the same job and didn't have to move for work or whatever but a disaster waiting to happen.
All in all tho.. it is not as bad as it is being made out to be... prices will come back up.. all the homes in forclosure are really only like 1%..
lazs
-
We just sold a bank owned hoem that was forclosed on a plastic surgeon. He made over 500k a year. He went out and was buying homes...that all went to hell..he was so leveraged that he lost teh hoem he lived in...
3300sqft, 5 bed 3 ba with pool and spa /waterfall........sold for 432k...highest it sodl for in past was 670k
My soon to be father in law has beena broker for 30 years, He had about 30+ properties he owne din the Sacramento area..sold all of them excpet a few 2 years ago...He has now since bought that 30 back..at atleast 1.2 the costs he sold them for.
Millions are going to be made from thsi market!! yaaaa!!!! Count me in
You can buy duplexs out here rent them the next month and have positive cash flow...great times: )
-
I agree with Glenn Beck's assessment.
http://www.cnn.com/2008/US/06/11/beck.foreclosures/index.html
-
http://www.youtube.com/watch?v=FX9Uei89TuE&feature=related
I agree with Ron Paul. To me the Feds chairman seem very confident and doesn't really care what he says, only because he know that whatever this congressman says or do, the system will not change. What Ron Paul says is nevertheless true, and it is something every american citizen should take into consideration. Also ask yourself, who are the profiteers using this system?
Edit: You may also want to watch this. http://www.youtube.com/watch?v=MqzRB-stQNs&NR=1
-
ALL purchased housing is speculation. It doesn't matter if it's a variable or fixed rate loan it's still a speculation. The owner is speculating that the property will at least be worth the purchase price. They are speculating the the value will increase or in worst case scenario, remain the same as long as they own it.
Those poor slobs who bought on a variable rate loan speculated that the interest rate would stay low or go lower. That is extreme leveraging of the investment the same as those folks who bought stocks on credit in the 20's. When the value came into question the loan became due on demand. No cash to make up the difference or pay it off, you lose, it all.
Those who gambled on flipping the house and that includes those who got an interest only loan, were like a professional gambler. They rolled the dice on the investment. If they sold before the mortgage bubble popped they made out. If not, then the bills are coming due.
Those with a fixed rate loan hedged the bets by maintaining a less risky investment with a lower rate of return (ie. higher initial interest rate). That's like buying a mutual fund instead of long shot penny stocks. It's still a gamble but the risk is mitigated by the diversification of the fund or the stability of the loan vs value in the case of the house. Those folks are not hurting unless they lost their income. Unfortunately in the case of an economic down turn a loss of income can be a real possibility. This is not a case of an extreme gamble like bad loans, it's just a bad break and could happen to most anyone.
Unless you can pay cash for your house, and I seriously doubt anyone here did short of an inheritance, you are borrowing money you do not have to get the house today. Still speculation but you get to choose the degree of risk involved.
-
I understand there is a mortgage problem. I hear and read about it on the news. I have still yet to meet someone who is late in payments and in foreclosure. I dont even know anyone who knows someone who is going through those hardships. Still, I understand its a problem. What percentage of homes are being or have been foreclosed recently? Anyone seen a stat?
-
What? Are you saying that your government is paying the BANKS for their stupidity to loan money to the wrong people?
THAT is the primary problem.
-
Yeah, and why did it happen in the first place? Well, low interest rates of course! Who sets the interest rates? Duh!
It's a artificially created situation that didn't need to happen! The profiteers are in this case, the banks (as always). Just look at how the government now bail out the banks paying them (more of) your money.
Is this pattern not possible to see through all the media coverage focusing on the wrong issues?
"The great masses of the people, will more easily fall victim to a big lie, than a small one." - Adolf Hitler
-
Yeah, and why did it happen in the first place? Well, low interest rates of course! Who sets the interest rates? Duh!
It's a artificially created situation that didn't need to happen! The profiteers are in this case, the banks (as always). Just look at how the government now bail out the banks paying them (more of) your money.
Is this pattern not possible to see through all the media coverage focusing on the wrong issues?
"The great masses of the people, will more easily fall victim to a big lie, than a small one." - Adolf Hitler
And exactly HOW did these evil banks force people to sign contracts for things they could not afford? The economy can't yet be blamed for all this, though that won't stop CNN. It can only be blamed on people who are too effing stupid to understand contracts, or were too cheap to hire a real estate lawyer to help them in the first place
-
What cause the housing collapse GREED :aok
-
Give me one example of the govt bailing out someone with these mortgages, please.
It's coming.
-
And exactly HOW did these evil banks force people to sign contracts for things they could not afford? The economy can't yet be blamed for all this, though that won't stop CNN. It can only be blamed on people who are too effing stupid to understand contracts, or were too cheap to hire a real estate lawyer to help them in the first place
You don't see the forest for all the trees. Raise your head and look at the bigger picture, people will always be stupid. Look at how this is taken advantage of instead of looking at how stupid they are.
Doh! :aok
-
You don't see the forest for all the trees. Raise your head and look at the bigger picture, people will always be stupid. Look at how this is taken advantage of instead of looking at how stupid they are.
Doh! :aok
An adult can't be taken advantage of...this is rather a purging of the financial gene pool ;)
-
An adult can't be taken advantage of...this is rather a purging of the financial gene pool ;)
You don't think one businessman can take advantage of another, adult mind you, businessman? This is how the banks view their customers, "business". They take care of your money, and profit on your work and savings. The idea that you will one day get all that money back (and more) is highly questionable. :lol
-
If you're taken advantage of, you've only yourself to blame (Well, yourself and the FDIC, it seems)
-
What caused the US Housing Market collapse?
"For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."
1 Timothy 6:10
Regards,
Sun
-
What caused the US Housing Market collapse?
"For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."
1 Timothy 6:10
Regards,
Sun
:aok
-
If you're taken advantage of, you've only yourself to blame (Well, yourself and the FDIC, it seems)
Again, you're looking at individual-level instead of the whole picture. We alrady went through that didn't we, why repeat yourself?
-
I am so against a bailout. I live in a small and very affordable house. Why should I bail out someone who went beyond their means and purchased a McMansion. Why should I bail out a lender who didn't have enough sense to not loan these people the money. The government bailouts is absolute Socialism or maybe even communism.
But back to the question. I think the housing collapse was caused by simply people buying more than they could afford and lenders getting greedy. This is not new stuff. This happened in the 80s with credit cards. The lenders started giving credit cards to everyone. Subsequently there were many who couldn't pay or couldn't handle the responsibility. In the short term the results are the financials look great but only in the short term.
-
Greed and lack of old fashioned virtues all across the board.
-
The government bailouts is absolute Socialism or maybe even communism.
Have to disagree, it's not socialism nor communism, not even democracy... it's super-capitalism. Who cares about the opinion of the people as long as the ones with influence agree?
-
Ok, here's a rundown on the math behind these mechanisms.
http://www.youtube.com/watch?v=F-QA2rkpBSY&feature=related
-
Housing market round these parts is doing awesome.
-
Well, that's just great then! :aok
-
Again, you're looking at individual-level instead of the whole picture. We alrady went through that didn't we, why repeat yourself?
You've yet to explain why, hypothetically, I and several million other taxpayers should pay for the mess you got yourself into?
-
You've yet to explain why, hypothetically, I and several million other taxpayers should pay for the mess you got yourself into?
Umm, me? I live in Sweden, you know Europe? And I don't think that your government should pay a single cent to the bankers who authorized those loans.
-
Umm, me? I live in Sweden, you know Europe? And I don't think that your government should pay a single cent to the bankers who authorized those loans.
Sweden...then I'm not terribly sure what stake you have here...at any rate, nothing happens bad to the bankers...they get their bonuses and walk away....the borrowers who are upside down on overpriced homes with payments more than they can afford are getting bailed, which hacks me off beyond reason--when I grew up, it was a rule that your mortgage payment oughtn't be more than a week's pay--I spent 3 years living in an apartment when I moved here from FLA before I found a home that fit such a profile...could have gotten a 250k home with an ARM, bought a brand new car, charged all the furniture...just like the folks going under right now. (Alas, these institutions can't be allowed to fail,,,,just REALLY hacks me off that it was allowed to happen, aGAIN)
-
I thought this lady pretty much summed it up:
A couple years back, one of the larger mortgage companies lobbied Congress NOT to regulate the home mortgage market. Congress' concern was that there as an exposure to overspeculation and feared it could cause economic chaos, so they wanted to close some of the holes still open despite Fannie Mae and Freddie Mac and FDIC guarantees. The mortgage firms pressured Congress to back off on its legislation and rely on the open market to control itself, citing that there had been no history of trouble and no pre-existing problems and the manpower required for compliance by the companies would be a drain on their bottom line. There was also an argument that Sarbannes-Oxley would have a deterrent effect to any fraudlent actions that might be contemplated.
A year later, a number of mortgage backers, dealers, and investors are either being sought for bank fraud or left holding loans that are upside down. Because home ownership covers such a broad spectrum of American society, it is dragging the other industries down with it because of the impact on the credit institutions. When you add in the rising cost of fuel (and therefore the rising cost of living), to the current cash and credit crunch, you have a society that doesn't have money to spend/invest in other ventures, and the economy slows.
Which is where we are now.
In a "what-if" scenario, if Congress had reined-in the mortgage credit cowboys, I believe the impact would've been lessened somewhat. Now Congress has to rescue the nation's largest government-backed mortgage corporations to fix something that could've been addressed in 2006.
And the company that lobbied? It was one of the first ones to go bankrupt when the tide turned. Countrywide Financial.