Blaming the homeowners for their own ignorance!

[WillowTree]

better hold on to your house, this ride is going to get very bumpy.

 

[busara]

better hold on to your house, this ride is going to get very bumpy.

but... i dont have a house! what can i hold on to?

 

[Tech_Esq]

I'm thinking there were a lot. my proof? the cost of this bailout. 700 billion so far, that is $2300 dollars so far for every taxpayer and they say that's just the start, it could go to 3 trillion. now you tell me. oh and edited to add Nancy Pelosi wants to put the ceiling for each homeowner at 700,000 dollars.. so that's where I got my figure

I think we should all understand what we are buying for 700 Billion dollars (besides a pig in a poke).

Short history, Fannie and Freddie were pressured by Congress to increase the numbers of loans they were making to minorities and socially disadvantaged people. That's fine as policy, but since many of the socially disadvantaged loan seekers didn't meet the standard criteria for a mortgage, the question from a financial institution standpoint was, "How do we make a loan we can't make?"

The answer was much the same as meat producers found when they asked, "How do I sell meat people won't buy?" They both made sausage. I won't go into the gory details of meat sausage, after all the financial sausage is so much more revolting.

So, once a market was created where mortgage paper could be bought and sold as a security, everything was easy. They took a few "subprime" mortgages and packaged them with a bunch of "real" mortgages and sold the bundle as a security. Ah Ha! So, if a couple subprimes go bad in the bundle, no big deal, it just effects the price of the security, right? Ummm....to a point. And, guess what we just reached, THE POINT!

So, what we are buying, besides the aforementioned PIG, is $700 Billion worth of these financial sausage bundles. The only good news is that some, and maybe even most of the sausage is good meat.

Now how you separate the good meat from the fat and gristle in the sausage is beyond me. But that is the task the government intends to take on.

 

[WillowTree]

but... i dont have a house! what can i hold on to?

your checkbook? see Care she will help you.

 

[DiamondDave]

The stock market only gives jobs to those working in it.

Why are the rest of us bailing them out? That $700 billion would be better used elsewhere, even in the hands of those in adjustable mortgages that WANT to keep their homes and can afford to do such if they could get a fixed rate mortgage....

then less homes would default and my home value would not continue on this spiral downward.....

helping the homeowners is the only way I WOULD BENEFIT from a bail out, it would have to be a bail out of the homeowners by giving them conventional mortgages/rates to pay...

and i still don't agree to any of this, just saying bailing out the bankers doesn't help me one iota....

And I contend it is not the government's place at all.. bailing out the institutions OR the individuals...

Both made their beds.. both have to lay in them... one of the negatives of freedom that goes hand in hand with the positives of freedom

Those who made STUPID decisions as individuals should not be given the bailout of a similar deal as those who did right all along... just because some touchy-feely liberal gets a good feeling because of it... if they have to lose their house, or get a refinanced loan at 8% instead of the 5.5% that people who did not default get, SO BE IT... consequences to actions...

And if fraud is uncovered by Realtors or lenders.. .prosecute the HELL out of them.. it is a criminal act... but fraud is not going to be the general case here... it will be a very rare instance indeed

 

[busara]

your checkbook? see Care she will help you.

but my book is pretty empty cause im paying off student loans. wheres my bailout? maybe if i stop paying ill get some money.

damn, i hate this crap. wall street can go take a shit in the ocean

 

[Tech_Esq]

The stock market only gives jobs to those working in it.

Why are the rest of us bailing them out? That $700 billion would be better used elsewhere, even in the hands of those in adjustable mortgages that WANT to keep their homes and can afford to do such if they could get a fixed rate mortgage....

then less homes would default and my home value would not continue on this spiral downward.....

helping the homeowners is the only way I WOULD BENEFIT from a bail out, it would have to be a bail out of the homeowners by giving them conventional mortgages/rates to pay...

and i still don't agree to any of this, just saying bailing out the bankers doesn't help me one iota....

Believe me I understand the frustration. I think the conventional wisdom is that if we bail them out, then we will get to return to a system where we can get money (return of liquidity to the market) so things (big things like houses and buildings) will be able to be bought and sold again.

The implied threat (it might not even be implied anymore) is that if we don't then the market will melt down and Katie bar the door. Who knows where it will stop? Not saying I buy that. But I think that's the conventional thinking on the "why bail them out" question.

 

[Tech_Esq]

And I contend it is not the government's place at all.. bailing out the institutions OR the individuals...

Both made their beds.. both have to lay in them... one of the negatives of freedom that goes hand in hand with the positives of freedom

Those who made STUPID decisions as individuals should not be given the bailout of a similar deal as those who did right all along... just because some touchy-feely liberal gets a good feeling because of it... if they have to lose their house, or get a refinanced loan at 8% instead of the 5.5% that people who did not default get, SO BE IT... consequences to actions...

And if fraud is uncovered by Realtors or lenders.. .prosecute the HELL out of them.. it is a criminal act... but fraud is not going to be the general case here... it will be a very rare instance indeed

I understand the frustration, but do you realize the shit soup you would make of the housing (and it is wishful thinking that only the housing market would be effected) market if you did that?

I hate the idea of bailing these bastards out too. But, that isn't the solution. I certainly am willing to listen to a more free market solution than what is going to happen though.

 

[Care4all]

but... i dont have a house! what can i hold on to?

YOur opportunity, if in good credit standing, is to buy a house now, when the market is down.... it will be a very good investment someday....especially since you are buying in to the LOW....

 

[busara]

YOur opportunity, if in good credit standing, is to buy a house now, when the market is down.... it will be a very good investment someday....especially since you are buying in to the LOW....

only a little over a year out of school. lots of student loans. and not sure where i would like to permanently live (for several yrs in a row, at least). i have good credit, but at the moment i cannot take on more debt. it is highly unfortunate

 

[WillowTree]

but my book is pretty empty cause im paying off student loans. wheres my bailout? maybe if i stop paying ill get some money.

damn, i hate this crap. wall street can go take a shit in the ocean

ooh but take heart my friend. the people who are in the student loan business are in line with their hands out too..

 

[busara]

ooh but take heart my friend. the people who are in the student loan business are in line with their hands out too..

where is this line and how can i get in it?

 

[WillowTree]

where is this line and how can i get in it?

I mean the people in the business of giving student loans..I think what we are going to see is any entity who ever made a loan, will now want the taxpayer to foot the bill. it's crazy. And, I just heard on the TV that Obama wants to proceed with the tax rebate stimulus package. So, again, here we go, we are going to give tax rebates to people who don't pay taxes, it's all "above my paygrade".

 

[Tech_Esq]

only a little over a year out of school. lots of student loans. and not sure where i would like to permanently live (for several yrs in a row, at least). i have good credit, but at the moment i cannot take on more debt. it is highly unfortunate

My advice, don't wait too long. I bought my first house at 28. It was a terrifying experience (I was still in law school). It was just before the last downturn like this in the early 1990s. In the DC area, things aren't cheap, so I bought a $150,000 house for no money down and on a VA loan. (Yep, that would be subprime wouldn't it). But, we held it through all the bad times for 11 years. Neighbors all around us were sending jingle mail to the banks. At one point the houses on both sides of us and behind us were owned by the bank.

But, we were determined to keep the house at all costs. It finally paid off and we sold it for $110k more than we bought it for. When we bought the next one, we made sure we strengthened our financial position.

 

[Tech_Esq]

I mean the people in the business of giving student loans..I think what we are going to see is any entity who ever made a loan, will now want the taxpayer to foot the bill. it's crazy. And, I just heard on the TV that Obama wants to proceed with the tax rebate stimulus package. So, again, here we go, we are going to give tax rebates to people who don't pay taxes, it's all "above my paygrade".

This definitely a Huey Long moment -- "Don't tax you, don't tax me...TAX THAT FELLER BEHIND THE TREE!!"

 

[Care4all]

And I contend it is not the government's place at all.. bailing out the institutions OR the individuals...

Both made their beds.. both have to lay in them... one of the negatives of freedom that goes hand in hand with the positives of freedom

Those who made STUPID decisions as individuals should not be given the bailout of a similar deal as those who did right all along... just because some touchy-feely liberal gets a good feeling because of it... if they have to lose their house, or get a refinanced loan at 8% instead of the 5.5% that people who did not default get, SO BE IT... consequences to actions...

And if fraud is uncovered by Realtors or lenders.. .prosecute the HELL out of them.. it is a criminal act... but fraud is not going to be the general case here... it will be a very rare instance indeed

i seriously doubtthat the underpriveledged got in to an adjustable mortgage at 5.5 %, they probably got in an adjustable at around 7% because of their lower credit ratings, then once it started to adjust up, they are more than likely paying an 11% or 12% adjustable rate, because of their higher risk...

But what the hell do i know, this was how it was just a few years ago, when we refinanced our home in to an adjustable....the rate we qualified for, the 5.12% was due to the fact that both of our credit ratings, our FICO scores were close to 800 at the time....

I seriously doubt the disadvantaged had even built up their credit rating yet, thus the much higher percentage/rates for the adjustable loans....

My first mortgage that i ever took out was in 1981 or 82 and due to the recession and me being very young with no credit rating established, the mortgage interest rate was at 13.5%....for my conventional mortgage!!!

OUCH!!!!

 

[dilloduck]

You know, many on this board have blamed the mortgage ignorant home buyers for this mess we are in...and some of this blame, is understandable.

They did not take the time to make themselves knowledgeable enough, on the biggest purchase of their life, before buying the home and getting the adjustable rate subprime mortgage and many on here have said this is their own damn fault!

Well, I'll be damned!

Isn't that what we are doing ourselves RIGHT NOW?

Letting our gvt talk us in to mortgaging the biggest debt in our history, with no qurstions asked by us...told by paulson that his deal to bail out the banks MUST INCLUDE NO OVERsight by any gvt position or agency, and it has to be done RIGHT THIS SECOND?

AND all of us are just repeating what we are told, THAT it MUST be done right now? when we haven't even asked WHY and how will this fix anything and how many more trillions will it cost?

WE ARE SO IGNORANT OURSELVES, don't ya think another scam is being pulled and WE are no smarter than those subprime homeowners?

Who should we blame for their ignorance ?

 

[busara]

My advice, don't wait too long. I bought my first house at 28. It was a terrifying experience (I was still in law school). It was just before the last downturn like this in the early 1990s. In the DC area, things aren't cheap, so I bought a $150,000 house for no money down and on a VA loan. (Yep, that would be subprime wouldn't it). But, we held it through all the bad times for 11 years. Neighbors all around us were sending jingle mail to the banks. At one point the houses on both sides of us and behind us were owned by the bank.

But, we were determined to keep the house at all costs. It finally paid off and we sold it for $110k more than we bought it for. When we bought the next one, we made sure we strengthened our financial position.

thanks for the advice. i believe i have a good handle on what i'm doing. saving 11% of my pay to build up an emergency fund, and putting half toward my student loans. i need to lower my min monthly payment before i can take on any loans as large as a mortgage. and the best way for me to do that is to pay off the high interest loan. im eyeing the market closely, and watching for some good multifamily homes in town. (rent to help pay the mortgage) if a good deal comes up, i might take it. but for now, im paying off the debt. its like a guaranteed 6% return!

 

[Tech_Esq]

i seriously doubtthat the underpriveledged got in to an adjustable mortgage at 5.5 %, they probably got in an adjustable at around 7% because of their lower credit ratings, then once it started to adjust up, they are more than likely paying an 11% or 12% adjustable rate, because of their higher risk...

But what the hell do i know, this was how it was just a few years ago, when we refinanced our home in to an adjustable....the rate we qualified for, the 5.12% was due to the fact that both of our credit ratings, our FICO scores were close to 800 at the time....

I seriously doubt the disadvantaged had even built up their credit rating yet, thus the much higher percentage/rates for the adjustable loans....

My first mortgage that i ever took out was in 1981 or 82 and due to the recession and me being very young with no credit rating established, the mortgage interest rate was at 13.5%....for my conventional mortgage!!!

OUCH!!!!

Damn! Care....how did you get one so low back then? I thought they were going for about 18%. You must have got it in 82 after a year of Reaganomics cuz Carteromics had the prime at what was it? 21% right?

 

[xsited1]

I vote for fiscal conservatives, but they never seem to get elected.