Sarah Palin, Republican Vice Presidential Candidate

[kuronosan]

Cry me a river. Poor poor homeowner who wants a home so badly. Putting zero down on something that they know are only paying interest at the moment. Poor poor homeowner.

Somehow I think your logic would be much different if it were you that was being thrown out on the streets with ruined credit.

Considering, however, you're using the internet and clearly have a roof over your head, I can see how you can sit on such a high horse.

[Dantrag]

There are alot of people to "Blame" and "Punish", but that won't help with fixing the problem with the Stock Market.

They did it to themselves. Again there was a graph for the totals throughout the day and they were fairly steady until they found out there was going to be now bailout. Then that's when they let things go down because they were "omgno700bforus".

[Saphirea]

Well, rent doesn't have interest. Rent doesn't have an ARM with it. What's easier to understand a 5 page lease or 100 page document and an 80/15/5 with a 10 year ARM.
I'm not on any kind of high horse at all. I worked and saved to afford a down payment what is so damn hard with the concept of working for you want instead of expecting a handout?

[eunhye]

Somehow I think your logic would be much different if it were you that was being thrown out on the streets with ruined credit.

Considering, however, you're using the internet and clearly have a roof over your head, I can see how you can sit on such a high horse.

If say tomorrow I get into a car accident and become paralyzed, and can't work for the rest of my life. I'll tell you right there and then you can just finish me off. I'm no good for my family or society. I didn't choose to have the accident come to me. It just happens. Do people just choose to buy a home they willingly know that they can't afford or it just happens?

Well, rent doesn't have interest. Rent doesn't have an ARM with it. What's easier to understand a 5 page lease or 100 page document and an 80/15/5 with a 10 year ARM.
I'm not on any kind of high horse at all. I worked and saved to afford a down payment what is so damn hard with the concept of working for you want instead of expecting a handout?

I also see other people who are jealous of their friends who can have a big house and a big car and all that jazz. So they want to do the same too. You don't ever notice this, but people want what they can't have and they'll do whatever it takes to get it. Even if it means living beyond their means.

[Dantrag]

Eun, some people did purchase what was within their means. The thing is that the interest rate increase can double your payment. Without someone saying "this can happen" but actually saying "oh you'll save money for the first 2-3 years then your payment will slowly increase, by then you should have a higher paying job right? Oh then you'll be fine there's nothing to worry about!" Everyone in the world isn't always the most savvy when it comes to this kind of thing. That's why some lenders had a tendency not to fully explain things because they knew that they'd get more money.

[Dimmauk]

If say tomorrow I get into a car accident and become paralyzed, and can't work for the rest of my life. I'll tell you right there and then you can just finish me off. I'm no good for my family or society. I didn't choose to have the accident come to me. It just happens. Do people just choose to buy a home they willingly know that they can't afford or it just happens?



I also see other people who are jealous of their friends who can have a big house and a big car and all that jazz. So they want to do the same too. You don't ever notice this, but people want what they can't have and they'll do whatever it takes to get it. Even if it means living beyond their means.

I blame Rap Music for that mentality.

It took me a year to sell my house this April. And I only made 2k from it. But I also did not put any money dont when I bought my house in 2003. My payment was about 1k a Month too LOL!

Bottom line, banks got greedy, people wanted the bling, and now we are gunna have to pay for it.

[eunhye]

I blame Rap Music for that mentality.

It took me a year to sell my house this April. And I only made 2k from it. But I also did not put any money dont when I bought my house in 2003. My payment was about 1k a Month too LOL!

Bottom line, banks got greedy, people wanted the bling, and now we are gunna have to pay for it.

You are part of the problem. And $2,000 what about closing costs? How much did you pay for all of the other non-discrete fees? Hate to say it to you, but you lost money.

[Beckwin]

ugh goddam, the bad mortgages aren't "handouts" jesus christ.

The 1977 CRA from the Carter years worked just fine for over 20 years. The intent of that bill was to get banks to invest in the urban areas they operated in- to doubly help urban renewal and provide incentive to get more minorities into homeownership. The history of these CRA loans was very strong, having no major defaulting problems despite the loans tending to be inherently riskier. In the 90s, the Clinton administration gave the effort second wind, and it pretty much continued doing it's job.

Around the turn of the century, the housing market was ridiculously strong. The lending world started getting a little cocky, figuring that on a whole the housing/mortgage market was extremely strong and safe. Along with that attitude, the Gramm-Leach-Bliley Bill (same one that opened the infamous "Enron loophole") also contained provisions for securities swapping... I can't quite explain all the details, but from what I read this allowed the secondary market (see: companies like Fannie/Freddie who for the most part just buy mortgages) much more free reign in their trading... so you have this huge industry with a ton of capital and very little regulation buying up and trading ("gambling on" is a phrase I've seen to describe the secondary market) loans from cocky lenders handing out ARMs and no-check mortgages.

Then the housing market burst, and the economy on a whole was on a slump, seeing real wages for the middle class decline a la the Reagan years, meaning that families got squeezed when it came time to pay the adjusted rate. The "logic" behind ARM is that your career advances/wages rise after a few years and you can still keep up with payments... yeah wasn't happening like the lenders thought. The bubble burst also has killed off refinancing (I have family members who have lost a ton of equity on their homes) which was a common way to deal with a personal financial crunch, enter into a better mortgage (like say, when Bernanke let the interest rate go down to 2% or w/e), start a business/go to college/etc.

The fact is that CRA loans are not the majority of the defaults we've seen, especially for Fannie/Freddie.

But now we're in a situation where major financial institutions who do a lot of investment/lending have nothing to back up their assets and can't really give out loans or invest... Aurik has talked at length about this, but there's a lack of liquidity right now which is harming one area of business and it's very possible that will start effecting other areas of our economy. Banks are already closing down/getting bought up; Wachovia just went under and was bought by Citi? I think.

So as ugly as the idea is, the bailout is pretty much necessary unless you want some dystopian libertarian/austrian fantasy. Note that the gov't won't be giving anyone money; they are buying assets/giving loans which are later sold/paid back. I can only hope that congress will pass more regulation legislation, but you have to accept that will only happen in the next administration (Bush wants to wash his hands of this, and the next session of congress won't be till january- yes, a full session will be needed to get enough good legislation through to actually hammer out the details beyond a bailout).

[Elvis]

mo money mo problems

[eunhye]

Eun, some people did purchase what was within their means. The thing is that the interest rate increase can double your payment. Without someone saying "this can happen" but actually saying "oh you'll save money for the first 2-3 years then your payment will slowly increase, by then you should have a higher paying job right? Oh then you'll be fine there's nothing to worry about!" Everyone in the world isn't always the most savvy when it comes to this kind of thing. That's why some lenders had a tendency not to fully explain things because they knew that they'd get more money.

It looks too good to be true. This should be a light bulb to some people. There is no get rich quick. That was another reason people wanted to buy these homes. They thought they could have a turnover if they bought it for $300, it would be $400 in 5 years.

Unless you are Paris Hilton, you can't afford to shop till you drop. It's just people want to be like Paris Hilton. I just think you cannot say that most people are not savvy. Just most people see green more through their own eyes than they see how much their pockets truly have, which is lint.

[Dimmauk]

You are part of the problem. And $2,000 what about closing costs? How much did you pay for all of the other non-discrete fees? Hate to say it to you, but you lost money.

The price of my house went down, so I had to sell at a lower price. All of the houses around mine were on sale as well. Plus, I was moving to a new town already. I made 2k after all costs were paid. I got lucky in my opinion.

[Beckwin]

eun you're mischaracterizing the borrowers... it's not like they were offered 500k for no money down no credit check. here's a quote from someone who works as a lender, from another forum I frequent:

I speak to people everyday who are upside down in their mortgages - and these are not irresponsible morons or unscrupulous sheisters, but real working people who even while acknowledging the unprecedented appreciations of the housing bubble could have never forseen their property values plummeting 15-25% over the course of 6 to 12 months...
I represent them to the banks for modifications, I broker short sales ...

cut the conservatroll bullshit.

[SwampdonkeyPLD]

What do you think of this strategy aurik? http://www.americanthinker.com/2008/...estion_ar.html

[eunhye]

eun you're mischaracterizing the borrowers... it's not like they were offered 500k for no money down no credit check.

There were a majority of people who actually had great credit. And they speculated that the real estate bubble would continue to boom. What happened when a lot of people defaulted on their loans? Their speculation busted. All of a sudden, their property values go down. Greed on people who want a home even though they willingly know they couldn't afford one, and greed on other people who want to flip-flop a house. This show http://www.aetv.com/flipthishouse/, I am sure made people even more greedier.

That couple who were doing nice and whom I assume had bought a home they could afford, surely didn't see this happening. They were just being good, hard working, paying their taxes folks.

[Bingbong]

(see: companies like Fannie/Freddie who for the most part just buy mortgages) much more free reign in their trading... so you have this huge industry with a ton of capital and very little regulation buying up and trading ("gambling on" is a phrase I've seen to describe the secondary market)

A> They did not have the "capital" in place. The leverage merely was moved... some loaners were on a 30-1 ratio of on hands funds to loaned money. For example, you go into a casino, most states have regulations that say you have to have a dollar on hand for every $2 or $4 dollars in chips on the floor. The government allowed these big industries to spend money they didn't have on the assumption the bubble would continue to grow.

Couple that with shit loans given to people that couldn't pay them, and BOOM, you lose.

B> Investment banking/loans/securities are one of the MOST regulated industries there are, comparable to pharmaceuticals and other health-care related industries.

This bailout plan sucks. It hasn't been related to the common American how this will effect them. For most, nothing has changed, we're still writing out checks for the mortgage, the car, the cable bill etc.

A smart man would come along with a plan that would help out the companies that need it, throw out the jerks that were in charge when it happened, and tell the common American that in a finite period of time 3, 4, 6 etc years that they are going to save on property tax, or interest rates will drop, or their 401K's will double.

People need to hear that whatever plan is brought forth, it's going to help out Joe Schmoe. Otherwise, it just looks like $700 Billion dollars going to big corporations that will just fuck it up down the road again anyway, and leave us with the bill.

[Alleya]

Couple that with shit loans given to people that couldn't pay them, and BOOM, you lose.

Just one small point. It's not just that bad loans were given to people who couldn't pay, it was that loans designed to fail were given to people who the firms knew would not be able to pay, but they did it anyway for the profit.

[Bingbong]

Just one small point. It's not just that bad loans were given to people who couldn't pay, it was that loans designed to fail were given to people who the firms knew would not be able to pay, but they did it anyway for the profit.

Seems like semantics there.
If you make-up a type of loan that you know will not be paid back, it's not only bad, but almost criminal.

It's these sort of companies that should be out of business, and those sort of folks that should be renters.

little anecdote: When my wife and I purchased our home, we were first time home buyers, no capital, great credit, and making decent wages. We were approved for 100% financing buy a mortgage broker of up to $350,000 on a 30 year fixed loan. Without a down payment though, IPM was going to kill us. So they said ok, you can split it... so we did an 80/20 FIXED 30 year rate to avoid PMI. HOWEVER, we purchased a house at 295,000. Why not 350,000? Because we knew we couldn't pay that! We wrote a check for the closing costs, and away we went.

So yes, I am a walking case of the government's plan to help people buy homes. But by using some brain power, my wife and I did it in a way that meant we were going to be able to afford that roof over our head. 3 years in and we're still sailing along.

I guess that's why I personally hold not only the banks, but the defaulting homeowners responsible for this. A purchase a big as a home, and people didn't take into consideration what might happen to that 5/1 ARM when the rate changed? Seems stupid to me.

[Dantrag]

Beckwin, so the banks should be able to do whatever they think is best towards getting as much profit as possible no matter the risk and then just have the government bail them out? It's not the first time it's happened and we sure as hell know it won't be the last. If we're to stop this, and I'll agree with you, there needs to be more regulations put into place. If we're going to give them any money, then we need rules and regulations into place to not allow this to happen again. There is no way in hell that the 700B plan that got shot down had everything necessary in place to protect our future interest, hell I doubt it had many if any things in place. We can't keep having institutions think they can do whatever and then have the US bail them out every time they go under or start to go down.

This is what I was speaking of earlier:

http://usnews.rankingsandreviews.com...rom-Uncle-Sam/

The "Big 3" did it to them selves with shitty cars from the late 80's all the way up to the late 90's. They didn't have an improving business model and just kept making crap cars and let Honda/Nissan/Toyota just demolish them in every aspect. And inside the bill they want the car makers to have a MPG of 35 miles to a gallon by 2020, which is also another joke. But anyways, sorry off topic and such... oh and the only reason they asked for it is because they didn't want to reach into their cash, not because they actually needed it.

[Beckwin]

There were a majority of people who actually had great credit. And they speculated that the real estate bubble would continue to boom. What happened when a lot of people defaulted on their loans? Their speculation busted. All of a sudden, their property values go down. Greed on people who want a home even though they willingly know they couldn't afford one, and greed on other people who want to flip-flop a house. This show http://www.aetv.com/flipthishouse/, I am sure made people even more greedier.

That couple who were doing nice and whom I assume had bought a home they could afford, surely didn't see this happening. They were just being good, hard working, paying their taxes folks.

umm, "willingly know they couldn't afford one" sounds like yet another mischaracterization. Do you realize how widespread foreclosures have become for things to get this bad? And do you really think the majority of them were homeowners with 19 year mindsets of "fuck it, it's on credit/loan so I doesn't matter how much it costs?"

You, and bingbong, seem to forget that the average, decent working person puts a certain level of trust in professionals they deal with, especially professionals from reputable, successful companies. If a lender says "yes, you can do this, no problem. let's sign the papers and get you into that house", decent people will be willing to put trust in that. It's great that you and bingbong have made smart investments that you haven't been burned on- I have family members who have done the same- but that's no reason to be resentful towards those who got burned by the market or put a little too much trust in their lenders.

[Bingbong]

Beckwin, I'm telling you right there that it's idiotic to think that just because a "professional" tells you, it's absolutely right.

Anyone with a brain in their head HAS GOT TO have questions. Not asking them is ridiculous. When you say "Ok" to a mortgage for instance, there's a least a month between actually saying yes, and signing on the 40 dotted lines. At any point, a person could stop that from happening. Also, when you are at that lawyer's office signing all the damn paperwork, you have several experts there to ask anything.

Sometimes people just throw caution to the wind, or just don't give a shit. Honestly, no documentation home loans, interest only home loans? How can anyone hear that and think that it's a good idea? People got greedy, on the bank side for the cash and commissions that come with signed documents, and the home buyers for getting into contracts for houses they couldn't afford. The fact that these big banks kept throwing money at these sort of programs (in the form of "securities") added to that, and it's amazing it took this long for the shit to hit the fan.