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Author Topic: Housing predicted to drop for 2 more years :(
R1 Man
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http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=200 80719&id=8913768

LONDON (Reuters) - Citigroup chairman Win Bischoff has warned that house prices in Britain and the United States are likely to keep falling for another two years.

The chairman of one of the world's most powerful banks told the BBC in an interview that he expects it will take two years for the markets to stabilize.

He also said he expected the credit crunch could continue through until 2009.

Bischoff told the BBC that there would be redundancies at the bank, which employs 12,000 people in Britain, and warned that some of them would be compulsory.

No further details were released of the interview which is due to be broadcast later on Saturday on the BBC News Channel (Reporting by Paul Majendie, Editing by Jon Boyle)

Copyright 2008 Reuters


I live in Detroit area. MOTOR CITY CAPITAL. Well in my neighborhood 5 years ago, housing sold for $155,000 average. Beginning of the year housing was selling for $87,000. Tuesday they sold a house for $35,000 CASH. Where the heck is housing going???? Foreclosures are on the rise. I had 6 houses on my street alone. 1 sold for $55,000. 1 for $35,000. 2 at $87,000 and the other just sold...not sure yet. But we are getting hit hard. Where is our city assessors....hmmmm.....they tax us at values that are FAR above curent selling value. When are they going to cut our rates???? What would happen if CITIES cut taxes based on market values. Would they go into huge defficiets???? I had one guy buy a house for $87,000 and he refinanced it for $145,000 and took the money and fled back to RUSSIA. Now that house is in foreclosure again. Whats next?

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Peaser
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It'll probably drop for another year or so, then remain stagnant for another 5 - 10 years before beginning to recover IMO.

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glassman
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i just found an antebellum B&B 4500 sq ft fully furnished for only 172K$ on one acre with hiway frontage.

white antebellum style columns and designated historic....

it would be perfect except it's a couple miles outside my gas mileage limit tho [Frown]

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Propertymanager
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I'll be VERY surprised if housing values only drop for two more years. This country is on the verge of a major collapse. The game is over and we lost - it's as simple as that. Runaway spending. Promising everything to everyone. Entitlements for every lazy deadbeat. I seriously doubt that housing prices will increase during a collapse.
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The Bigfoot
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Does anybody else get the feeling that Paulson and the boys know something about Fanny and Freddy that they aren't telling?

I REALLY don't like the Bush admin plan in regards to "rescuing" the MAC's...

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glassman
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until this deal? Wachovia was known as a very conservative bank.

July 22, 2008, 9:54 am
Wachovia-Golden West: Another Deal From Hell?
Posted by Heidi N. Moore

While Goldman Sachs Group banker Ken Wilson–call him “Kenny” only if you are President George W. Bush–takes up his new job as an adviser to Hank Paulson, former Paulson adviser and fellow Goldman alum Robert Steel has his hands full at Wachovia.

The North Carolina bank today posted a net loss of $8.66 billion–compared with net income of $2.34 billion last year–and took $6.1 billion of write-downs. It also slashed its dividend to just five cents a share from 37 cents.

A lot of this pain can be traced back to Wachovia’s errant 2006 acquisition of mortgage lender Golden West Financial. The entire market value of Golden West–which Wachovia bought for $25.5 billion–has nearly disappeared. Even on the day the deal was announced in May 2006, investors hated it so much that they slammed $1 billion out of Wachovia’s market value. At the time, Wachovia had a market cap of $90.2 billion and predicted that with Golden West its combined market cap would be $117 billion; today Wachovia’s market cap is hovering around $25.87 billion, or just a little more than Wachovia paid to acquire Golden West. Wachovia this year procured a capital infusion of $7 billion because of that pain. Wachovia’s net slid last year to $6.3 billion from $7.7 billion in 2006, mainly because of bad loans made by Golden West. Former Wachovia CEO G. Kennedy Thompson lost his job last month in large part because of the fallout. And Wachovia’s stock price today–cover your eyes–was a piddling $12.24 at the open, or just about a quarter of the 52-week high of $53.10 in September.

Considering all these signs, it may be time to enshrine Wachovia’s acquisition of Golden West Financial as a Deal From Hell.


http://****s.wsj.com/deals/2008/07/22/wachovia-golden-west-another-deal-from-hel l/?mod=googlenews_wsj

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IWISHIHAD
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Business Briefing LA Times
July 22, 2008


HOUSING
Loans would aid buyers of foreclosures

As many as 1,000 California families could qualify for low-interest loans to purchase foreclosed homes, Gov. Arnold Schwarzenegger has announced.

The state-backed Community Stabilization Home Loan Program will make $200 million from bond sales available to first-time buyers in ZIP Codes with large numbers of foreclosures.

The program will "help stabilize neighborhoods that have homes sitting empty," the governor said at a ceremony in Stockton. The city is one of the nation's worst hit from the collapse of the subprime mortgage market.

_________________________________________________


How about they make these loans available to the home owners before foreclosure then there would be a lot less foreclosures.

Sure seems like they got this thing backwards.

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a surfer
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One of my wifes friends went delinquent 12 months ago on her house. The bank has yet to foreclose.

There are so many delingquent loans out there that have yet to hit the books.

SCARY...

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bond006
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Roubini: More Than $1 Trillion Needed to Solve Housing Crisis
Posted Jul 22, 2008 05:42pm EDT by Aaron Task in Newsmakers, Recession, Banking
Related: FNM, FRE, XLF, WM, WB, WFC, BAC
Treasury Secretary Hank Paulson has been putting on a full-court press in the last 24 hours, making the case for his plan to shore-up Fannie Mae and Freddie Mac.

"I would rather not be in the position of asking for extraordinary authorities to support the GSEs," Paulson said in a speech Tuesday in NYC. "But I am playing the hand that I have been dealt. There is a need to support efforts that strengthen Fannie and Freddie's ability to continue to play their important role in financing mortgages and in our capital markets more broadly."

The timing of Paulson's speech -- and various and sundry media appearances -- is not coincidental. This week, Congress is expected to vote on housing legislation that includes Paulson's plan, which a GAO report said is likely to cost the government $25 billion.

But $25 billion -- or even the GAO's worst-case $100 billion estimate -- pales in comparison to the cost of doing nothing, says Nouriel Roubini, NYU professor and chairman of RGE Monitor.

"We have to find a solution where government intervention prevents a disorderly outcome" in the housing market that leads to a "systemic banking crisis," Roubini says.

The housing bill, which earmarks $300 billion to backstop mortgages after lenders agree to lower mortgage payments, is "a step in the right direction" but "doesn't do enough," he says, predicting the government will ultimately need to spend more than $1 trillion.

Roubini's main concern stems from a view that the "housing recession is not bottoming by any standards," in contrast to hopeful comments from Paulson on Fox News and Barron's last weekend.

The economist believes U.S. home prices will ultimately fall 30% from their peak -- vs. 18% to date according to the S&P Case-Shiller Index -- "before bottoming out some point in 2010."

In the interim, the negative wealth effect of declining home values and increase in "underwater" mortgages will lead to more Americans walking away from their homes. Such "jingle mail" threatens to ultimately cost $1 trillion in credit losses, wiping out 75% of the capital of U.S. financial institutions, Roubini warns.

It is that "disorderly" outcome Roubini says the government cannot afford to let happen. With "the charade" that Fannie and Freddie weren't already government agencies over, he believes a nationalization of the 50% of mortgages not owned or guaranteed by Fannie and Freddie will be necessary, and the Frank-Dodd Bill is a small step down that road.

From Roubini's view, nationalizing housing avoids the government having to nationalization the entire banking system, making it the lesser of two evils.
70 votes|Recommend this

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bond006
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'They're All Toast': Roubini Says Brokers, Even Goldman, Can't Stay Independent
Posted Jul 22, 2008 05:09pm EDT by Aaron Task in Investing, Newsmakers, Recession, Banking
Related: GS, LEH, MS, MER, JPM, BAC, C
The broker/dealer business model is "inherently unstable" and the four remaining major firms will not be independent in a few years, says Nouriel Roubini, economics professor at NYU's Stern School and chairman of RGE Monitor.

Embattled Lehman Brothers is likely to seek a buyer "within months," Roubini says. Lehman Brothers ceasing to be independent is not such a shocking outcome, but Roubini ultimately sees a similar outcome for Goldman, Merrill Lynch, and Morgan Stanley.

The problem, he says, is that broker/dealers use the same model as banks -- borrow short and lend long -- only they borrow on even shorter timeframes, use more leverage, and don't have the kind of government backstop banks enjoy.

In the wake of Bear Stearns' demise, which showed how brokers are vulnerable to a "run on the bank" if they can't get overnight funding, the Fed temporarily opened its discount window to brokerage firms. But making that option permanent means submitting to the same kind of regulation and capital requirements as banks; that, in turn, means a very different business model -- and much lower profitability -- for Wall Street firms, whose current business model is "not viable," he says.

With U.S. financial giants like JPMorgan, Citigroup, and Bank of America dealing with internal issues, the most likely buyers are international financial firms or sovereign wealth funds, Roubini says. But unlike in 2007, foreigners are not going to settle for preferred shares, and non-voting rights next time around.

That raises the questions: Is America ready for (true) foreign ownership of major financial institutions? And do we have a choice?
85 votes|Recommend this

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bond006
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The Rise of the Mortgage 'Walkers'
By NICOLE GELINAS
February 8, 2008

Fitch Ratings, while telling investors last Friday to expect additional "widespread and significant downgrades" on $139 billion worth of subprime loans, has cited a new factor in their "worsening performance."

"The apparent willingness of borrowers to 'walk away' from mortgage debt," the analysts noted, "has contributed to extraordinary high levels of early default" on loans issued during the 18 months before the mortgage bubble burst. It expects losses to reach 21% of initial loan balances for subprime mortgages issued in 2006 and 26% for those issued in early 2007.

Such behavior, where not precipitated by willful fraud, shows that American homebuyers supposedly duped by their lenders aren't so dumb. They're perfectly capable of acting rationally without political interference.


While mortgage fraud has abounded in recent years, voluntary foreclosures are not by themselves evidence of a newfound irresponsibility on Americans' part. To be sure, until recently, mass-scale voluntary foreclosures were unthinkable. But markets have changed, and people are changing their behavior in response.

A decade ago, most people started off with enough equity in their homes to make foreclosure irrational from a financial standpoint. Consider: If you made a 20% down payment on a house, prices would have to fall by 20%, almost immediately, before you lost all your money and had much incentive to walk away. This scenario was unlikely, particularly since an independent appraiser had assigned a clear value to the home. Foreclosure was remote, absent a personal financial crisis, for another reason: Every month your mortgage payment would reduce your debt and increase your equity, giving you more room for prices to fall.

But over the past few years -- until last spring -- banks and the mortgage-backed securities investors who bought the loans the banks packaged weren't demanding substantial down payments; they were happy with 5% or even nothing down. They also didn't worry about whether or not borrowers were building up equity. "Interest-only" loans, quick mortgage refinancings to cash out any equity, and other inventions often led to just the opposite.

Now the bloom is off the residential mortgage-backed securities (RMBS) rose. And some borrowers, even those who can theoretically afford to keep their homes, realize they owe much more than what comparable houses in the neighborhood are selling for -- and think that prices won't rebound anytime soon. So they're walking away, according to anecdotal reports as well as recent statements by top executives of both Wachovia and Bank of America.

In most cases, once a homebuyer splits, the mortgage-securities investors are stuck with the loss. In some states, including California and Arizona, this provision is the letter of the law. In others, the bank forgives the balance of the loan -- a common practice that's unlikely to change now, given the criminal and civil investigations banks are already sweating through.

Essentially, mortgage-bond investors, seemingly unwittingly, sold homebuyers a put option, without properly pricing it, and now homeowners are exercising that option. Moreover, prime borrowers in many markets face the same incentives.

Yes, this behavior is new -- but only when it comes to houses. Americans have long been able to cut their losses from bad investments and start over. It stands to reason that when the market made houses into yet another speculative investment, Americans would do the same.

Borrowers acted rationally in response to market forces and incentives during the bubble: Buy a house because prices always go up; you can't lose. Many are acting rationally now: Mail the keys back and un-borrow the money, because prices are sinking fast while the debt isn't. When the house was purchased not as a first home but as a rental investment, the decision is even easier.

Imagine: Politicians keep saying that Americans need protection from their big, bad lenders -- but that protection is already there.

Of course, there's a price. Mortgage "walkers" will take a hit to their personal credit rating. Yet this once-forbidding punishment may be discounted. That's because, just as when markets change their behavior, people change, when people change their behavior, markets change also.

If hundreds of thousands of people with decent work histories are going to have less-than-stellar credit because of foreclosures this year and next, they won't suffer so much as in the past. Many walkers are going to want to buy houses again some day; and when they do, lenders are going to want to make money lending them money to do so (hopefully requiring a good down payment). Investors searching for yield likely won't bypass what could be a large pool of borrowers.

This rapid transformation shows that the continuing political hand-wringing over what to do about failed mortgages isn't needed. It's beginning to dawn on lenders and their agents -- who assumed that borrowers who could afford to do so would make payments no matter what -- that they could be stuck owning hundreds of thousands of houses at a minimum. This realization will pressure the companies administering those mortgage loans to renegotiate more quickly with borrowers in cutting loan balances. Thus, some version of the "Paulson plan" would have happened without Treasury Secretary Henry Paulson's pressure on the capital markets in December.

Nobody is going to debtors' prison. Nobody is going to have to toil for 30 years and sacrifice their kids' future to pay off burdensome loans that they're stuck with forever because they overreached. (Even if banks and mortgage administrators pursue judgments for post-foreclosure loan balances, there's always bankruptcy as a last resort.)

As for Sen. Hillary Clinton and her proposed "moratorium on foreclosures": She may soon find that borrowers, not just lenders, are screaming to let them act within their contractual rights.

Ms. Gelinas is a chartered financial analyst and a contributing editor to City Journal.

See all of today's editorials and op-eds, plus video commentary, on The Editorial Page.

And add your comments to the opinionjournal.com forum.

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glassman
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Foreclosures jump 57 percent in last 12 months By Lynn Adler
Tue Apr 15 '08

Home foreclosure filings surged 57 percent in the 12 month-period
ended in March and bank repossessions soared 129 percent from a year
ago, as homeowners struggled to make mortgage payments, real estate
data firm RealtyTrac said on Tuesday.
For the month of March, foreclosure filings, default notices, auction
sale notices and bank repossessions rose 5 percent, led by Nevada,
California and Florida, RealtyTrac said.

The rise in March to filings on a total of 234,685 properties followed
a 4 percent decline in February, RealtyTrac reported.

"We're going to see quite possibly a record amount of foreclosure
activity in the third or fourth quarter," reflecting sharp payment
increases on adjustable-rate subprime mortgages in May and June,
Sharga said.

One in every 538 U.S. households living in single-family dwellings
received a foreclosure filing in March. The single-family dwellings
can include condominiums.

http://newsgroups.derkeiler.com/Archive/Misc/misc.survivalism/2008-04/msg01472.h tml

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SeekingFreedom
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Ok, when this is the opinion that is taken hold, this is a scary day...

Imagine: Politicians keep saying that Americans need protection from their big, bad lenders -- but that protection is already there.

Of course, there's a price. Mortgage "walkers" will take a hit to their personal credit rating. Yet this once-forbidding punishment may be discounted. That's because, just as when markets change their behavior, people change, when people change their behavior, markets change also.


Read that and tell me she just said that low credit scores aren't going to be able to screen who is trustworthy with large debts? Did I read it right?

If hundreds of thousands of people with decent work histories are going to have less-than-stellar credit because of foreclosures this year and next, they won't suffer so much as in the past. Many walkers are going to want to buy houses again some day; and when they do, lenders are going to want to make money lending them money to do so (hopefully requiring a good down payment). Investors searching for yield likely won't bypass what could be a large pool of borrowers.


Large field of borrowers? Uh, did you forget that that large pool has already 'walked' on those large debts in the past? That was the purpose of credit scores...to help lenders screen who was a 'good' risk.


This rapid transformation shows that the continuing political hand-wringing over what to do about failed mortgages isn't needed. It's beginning to dawn on lenders and their agents -- who assumed that borrowers who could afford to do so would make payments no matter what -- that they could be stuck owning hundreds of thousands of houses at a minimum. This realization will pressure the companies administering those mortgage loans to renegotiate more quickly with borrowers in cutting loan balances. Thus, some version of the "Paulson plan" would have happened without Treasury Secretary Henry Paulson's pressure on the capital markets in December.


So, they expect lenders to forgive debt because someone bit off more than they could chew. I see this as a good 'last resort' but it shouldn't become policy.



Nobody is going to debtors' prison. Nobody is going to have to toil for 30 years and sacrifice their kids' future to pay off burdensome loans that they're stuck with forever because they overreached. (Even if banks and mortgage administrators pursue judgments for post-foreclosure loan balances, there's always bankruptcy as a last resort.)


Wow! And this is why bankruptcy got some legislative attention a couple of years ago as well. We need to stop taking away the consequences of bad choices and let some actions hurt. That's the only way people learn.

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glassman
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but SF, President Bush told them to do it. He said they had to go spend every penny they could borrow to prove how patriotic they are... [Big Grin]

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bond006
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not so sf the lenders knew the loans were bad loans to make in the beginning thats why they bundled them quick and dumped them on other lending and investment companies. Not to mention state city and county pension funds and fannie mae,freddie mac.

All of this done by ratting fraud and slipping a bad mortage in with an A rated one.

How do you think freddie and fannie got in trouble these people are not stupid they were lied to as of the quality of the mortage contract.

I say prison to the bunch now.

And nationalize the entire banking system by force if necessary.

They are using tax payer money to bail the out why not have the government just buy the whole damn system and have done with it

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SeekingFreedom
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LOL, Glass...I guess we see how 'patriotic' this country has become. [Razz]

Bond,

As I've said on our previous thread on this topic, I'm not saying that the lenders are in right here, but neither are the borrowers. There are only 3 main things that anyone should be able to find in their loan docs that should have told them they couldn't afford the houses they were 'buying'.

1) Rate: Type and percentage
2) Monthly Payments
3) Any balloon payments

That's it. Just looking at those three things would have told anyone whether they realistically could make good on the loan. And all of these 'poor, helpless people that got ripped off by these terrible lenders' should have looked at those things. In fact, it's required by law that the lender disclose them specifically during signing.

As for why we shouldn't nationalize the banking system; do you really want the government in control of ALL of you money? They can't even manage the tax money they take.

You want to see 'loans' made against your money like they do with Social Security? I sure don't.

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glassman
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As for why we shouldn't nationalize the banking system; do you really want the government in control of ALL of you money? They can't even manage the tax money they take.

the "flip side" to that is that the Founders specifically charged the Congress with that responsibility, and they GAVE it away by founding the Fed Res.

in '03? the several states were almost all in deep financial trouble. the best way to fix that was to to stimulate real estate. why? because the states collect (most?)tax revenues based on sales and real estate.

the States were in so much trouble that i once ('03) drove from Omaha to Wash DC without seeing any cops on the roads... state jobs were being cut everywhere... the real estate boom in '04-07 fixed that cash problem and created another one...
this is always the case. we go from one frying pan into another. meanhwile there's always a little less bacon left in the pan....

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The Bigfoot
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I don't want the government as it stands now in charge of all my money.

But I gotta wonder how the debates in congress would change if they did have that responsibility. And how our oversight of our elected leaders would change as well?


As to the problem of folks walking away from their mortgages?

Systems only work when people buy into the system. When a system requires a burden that adds stresses beyond what an average man would consider reasonable, people no longer believe in the system and that system breaks down.

That is what is happening in the mortgage world. It has always been burdensome in the amount of paperwork and fees required to buy or (especially) to sell a home. When you add an interest rate hike that goes well above going rate/ the total destruction of any perceived equity due to depressed prices/ the inability to gain a new or better loan because of tighter lending requirements and the evaporation of equity/ and a general lack of demand for anything on the market...the burden is too much. Therefore the system breaks down and people walk away.

It's not about irresponsibility (though in some cases that definitely exists) as it is about folks realizing there is no light at the end of the tunnel.

Would you accept paying 9% on a $200,000 loan when the home is now rated as being worth $150,000 and the going rate for new mortgages is 6.5%? You would have to pay over-inflated costs for a least 10 years before you got back to where you were before the bubble burst.

Watch the MBS bond market this winter. I'd be willing to bet good money that we see record lows on 30 yr mortgages. If the lending industry gets smart they will bite the bullet and readjust the loan of anyone with verifiable income who comes to them asking for a change in terms without fees.

At this point preventing any foreclosures they can will do more to stabilize their industry than anything else. Foreclosing on a home is an expensive deal and in this climate there is no way they could ever get a return on their money. Better rework the loan and get a monthly cash flow than to pay for foreclosure, sell the home for 2/3rds it's value or worse, and end up with the same cashflow they would have had if they had reworked the loan.

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bond006
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I hear you about the government and I also see what the private sector has done with our money and if it was not for the government and our tax money they would have gone down hard by now and our money would have went with them.

As it sits now would you put your money in a bank that uncle sam was not insuring? lol

The Government does not do a bad job with our money only part of the government does they are called republicans don't forget this bunch put us in the sac for 9 trillion and called all the stupid programs freedom this and freedom that.

so far our government has always came through for us

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Propertymanager
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quote:
I hear you about the government and I also see what the private sector has done with our money and if it was not for the government and our tax money they would have gone down hard by now and our money would have went with them.
The free market is not at fault here, the government is completely responsible for the real estate fiasco. The government (and yes, President Bush) pushed "homeownership" and the government lowered interest rates to stimulate the real estate boom. The government even allowed loans to be made to people who they knew were lying about their income (liar loans, i.e. no doc loans).

Even after all that, things would still work out right if the government would GET THE HECK OUT OF THE WAY! Business that made these ridiculous loans should be allowed to fail - regardless of their size. Individuals who took out loans they couldn't afford should be allowed to fail.

If these businesses/people were allowed to fail, the banking industry and individual borrowers would learn their lesson. Banks would no longer make stupid loans, at least without factoring in the real chance of failure.

As we stand now, the lesson learned is that you should make VERY risky investments because the government is there to bail you out.

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SeekingFreedom
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As to the problem of folks walking away from their mortgages?

Systems only work when people buy into the system. When a system requires a burden that adds stresses beyond what an average man would consider reasonable, people no longer believe in the system and that system breaks down.

That is what is happening in the mortgage world. It has always been burdensome in the amount of paperwork and fees required to buy or (especially) to sell a home. When you add an interest rate hike that goes well above going rate/ the total destruction of any perceived equity due to depressed prices/ the inability to gain a new or better loan because of tighter lending requirements and the evaporation of equity/ and a general lack of demand for anything on the market...the burden is too much. Therefore the system breaks down and people walk away.


What would you consider a 'resonable' burden for home ownership, Big? As I've mentioned above and in the past, noone is holding a gun to anyone's head and forcing them to buy a home. It doesn't matter what the current market is, when they signed their agreement with the lender they accepted the terms 'as is' not 'as it might someday be.' If the market gets worse (in terms of interest rates, etc) noone goes clamoring for a new loan with the current rates, do they? So why should they get them changed (for free) when the rates get better?

It all boils down to people not living up to their obligations that were legally entered into in order to get a home. And these bailouts and forclosure aid only strengthens the idea that one doesn't have to own up to one's promises to repay.

Would you accept paying 9% on a $200,000 loan when the home is now rated as being worth $150,000 and the going rate for new mortgages is 6.5%? You would have to pay over-inflated costs for a least 10 years before you got back to where you were before the bubble burst

No, I would refinance my $200,000 to a 6.5% and keep making payments as I said I would. Real estate, like most investments, are cyclical. While there is definately some depreciation at times, it usually bounces back. Historically, real estate (in general as there are always exceptions) doubles in value every 10 years or so. It is a solid investment usually. But as with all investmetns, there is risk. And if you can't handle the risk, don't invest.

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SeekingFreedom
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The Government does not do a bad job with our money only part of the government does they are called republicans don't forget this bunch put us in the sac for 9 trillion and called all the stupid programs freedom this and freedom that.

Bond, I don't know how to put this to you...but, uh, the republicans aren't the only ones that waste money. Earmarks and pork spending are truly bipartisan. [Smile]

so far our government has always came through for us

In what ways? Let's just use the current example about these bailouts. The part about this forclosure 'emergency' that normally doesn't get mentioned is that it affects less than 3% of the total housing market. In dollars that's a big number, as a part of the entire market it's not. Now, lets take that dollar amount and find out who we're going to get it from to 'rescue' these individuals.

Let's see, if they can't make their payments, we can't take it from them. Ok, so we'll take it from the people who are too poor to even try to own a home, right? Wait, once again, no money to take. Well, I guess that leaves us with the ole' standby...take it from the responsible folks already making their payments and paying their taxes.

That's right. You and I are going to end up footing the bill for these few (remember, less than 3%) that over reached their income. Our tax money is going to pay for their mistakes. Not natural disasters, not unforseeable events; bad choices.

Yes, our government is coming through all right...it's just who is being covered and who is footing the bill that is in question.

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The Bigfoot
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quote:
Originally posted by SeekingFreedom:


No, I would refinance my $200,000 to a 6.5% and keep making payments as I said I would. Real estate, like most investments, are cyclical. While there is definately some depreciation at times, it usually bounces back. Historically, real estate (in general as there are always exceptions) doubles in value every 10 years or so. It is a solid investment usually. But as with all investmetns, there is risk. And if you can't handle the risk, don't invest.

Ah my friend.... You are a cash strapped young man in 2003 with a good job who bought in to President Bush's dream for everyone to own a home. Your parents and friends who know about investments told you that a home is the best investment you can make after a good IRA. You are a little short but your friend suggests you buy a home on a 5 yr arm and then use the equity you built up and the appreciation of your homes value to refinance into a fixed rate. So you heed this advice that your lender agreed with and put your entire savings (about $7,000) along with a gift from your parents of $3,000 into buying your $200,000 home.

You go in to your lender in 2008 and say you are near your adjustment date and want to refinance into a fixed rate loan. Your lender says that lending rules have tightened and they say you need at least 7% down.

You tell them...ok, well, I put 10 grand down and have built up about 7 grand in equity over the past 5 years so even if home prices haven't appreciated that shouldn't be a problem.

Your lender looks at you and says...um, if you want to use the equity in your home you will need to pay 500 dollars for an appraisal of your homes worth. But I gotta tell you...home prices have declined around 15% in this area. I'd just guess that your home is worth around $170,000. You still owe $183,000 on your mortgage so I don't think you will have any equity to put against the new loan. If you want to refinance your mortgage you are going to need about $15,000 to cover your 7% downpayment and closing costs.

So sorry SF...no refinance for you my friend.

Now...
quote:
Would you accept paying 9% on a $200,000 loan when the home is now rated as being worth $150,000 and the going rate for new mortgages is 6.5%? You would have to pay over-inflated costs for a least 10 years before you got back to where you were before the bubble burst.


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bond006
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Deregulation in the capitalist word does not work for long.

The crooks in the banking world take over this was started by greed and profit motive to a criminal level run wild.

SF and PM the last republican to balance our budget was Richard Nixon.

Every other Republican term has resulted in expansion of government and debt from Ronnie boy on.

There excuse in the Dems controled congress .

They had it all this time for six years and our economy and debt is the worst ever. And very little hope of recovery this time

When I say that I refer that we now don't have the capacity to pull oursevles out without direct Government involvement.

And no this economic mess was not caused by the Government. It was caused by Banking fraud. Do you really think people in the lending business did not know they were making loans that would fail. Of course they did. You would have to be a greenie virgin to swallow the line of government sounds to me like a right wing think tank spewing mouth rot.


Go back to Limbaugh and Savage

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Foreclosure filings up 120%
220,000 homes were lost to bank repossessions in the second quarter, and the annual forecast for 2008 will have to be revised upward.

By Les Christie, CNNMoney.com staff writer
Last Updated: July 25, 2008: 8:02 AM EDT
NEW YORK (CNNMoney.com) -- As foreclosures continue to soar, 220,000 homes were lost to bank repossessions in the second quarter, according to a housing market report Friday issued by RealtyTrac.

That's nearly triple the number from the same period in 2007.

A total of 739,714 foreclosure filings were recorded during that three-month period, up 14% from the first quarter, and 121% from the same period in 2007. That means that one of every 171 U.S. households received a filing, which include notices of default, auction sale notices and bank repossessions.

"Most areas of the country are seeing at least some increase in foreclosure activity," said James Saccadic, CEO of RealtyTrac, an online marketer of foreclosed homes. "Forty-eight of 50 states and 95 out of the nation's 100 largest metro areas experienced year-over-year increases in foreclosure activity."

Because foreclosure filings are growing so quickly, RealtyTrac will have to reevaluate its foreclosure forecast for the year, according to spokesman Rick Sharga.

"We've been saying foreclosures will total 1.9 million to 2 million this year," he said. "But midway through the year, we're already at 1.4 million so we're going to be raising our projections."

And there is more bad news: Bank repossessions are up as a proportion of total filings, representing 30% of the notices issued during the quarter, up from 24% a year ago.

"I don't think that's a surprise if you look at the general conditions out there," said Brian Bethune, chief financial economist for Global Insight. "There have been six straight moves of weaker employment this year. The ongoing problems in the housing market are compounded by a generally weaker economy. Foreclosures won't go down until we start to see employment move up again."

Sun Belt front and center
California's Central Valley remains ground zero for foreclosure filings. Stockton, which is just east of San Francisco, had the highest rate of foreclosure filings of any metro area, one for every 25 homes. That's seven times the national average.

Riverside/San Bernardino, which is east of Los Angeles, had the second highest rate in the nation with one filing for every 32 households. Las Vegas, Bakersfield and Sacramento rounded out the top five.

Detroit continued to suffer more than any other non-Sun Belt area, with one filing for every 66 households. And several Ohio cities were also hard hit, led by Toledo (one in 92 households), Akron (one in 93) and Cleveland (one in 108).

On the other hand, there were a handful of metro areas that remained relatively unscathed. Honolulu, at one filing for every 1,331 households had the lowest rate of all, followed by Allentown, Pa. (one for every 972) and Syracuse, N.Y. (one for every 880).

At the state level, Nevada had the highest rate with one filing for every 43 households, while California had the highest total number of filings - 202,599.

The report came as more negative news for the housing market this week. On Thursday, a report form the National Association of Realtors revealed that existing home sales had declined again as the number of homes for sale continued to rise. On Tuesday, a government agency reported home prices registered another drop in May.

All this is happening as Congress struggles to pass a housing rescue bill that will make FHA-insured loans available to many at-risk borrowers. The measure, which is expected to be enacted, would take effect until Oct. 1.

One of the sponsors of the bill, Rep. Barney Frank, D-Mass., said in a statement Thursday that he encourages lenders and mortgage servicers to delay taking action against delinquent borrowers before the new law takes effect.

"I am urging the mortgage servicers to hold off on foreclosures in applicable cases," he said, "so borrowers can take advantage of the program."

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It is impossible to make anything foolproof because fools are so ingenious.

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SeekingFreedom
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Ah, my friend, Big...apparently I was dumb. [Smile]

Seriously though, let's look at the situation. Even if I can't refinance yet, not all is lost. If my original rate was 9% and the average is now 6.5%, even with an adjustable I'm not likely to get anything higher than my current 9%. That means that I should be able to continue making payments as I have been assuming that nothing else has changed financially. Next question, how long do I have till my next rate adjustment?

So, now that I have a heads up as to my actual situation, I have a few options.

First, is there anyway to add value to the home through sweat equity? If so, I may be able to counter the general depreciation of my area.

Second, I get a part time job or work some overtime for the next little while to save up the needed money to refinance for a fixed rate.

Third, if feasable, take in a friend\roomie to help offset the increased rate till I can refinance to a better rate.

Fourth, sit around and whine that I got screwed and hope Uncle Sam soars in to the rescue.

Guess which one I don't think I should take. [Razz]

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SeekingFreedom
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Bond, I just don't understand your position.

You tell me that the government is the ones that got us here (either through action or inaction) and in the same breath tell me that you think they are the ones to get us out.

By making that statement you are giving control of your life to people who quite frankly couldn't give a damn less about you as long as you continue to vote for them. Do you really consider yourself that impotent to affect the course of your life?

That is the emasculation of the american people that I feel so strongly needs to be countered. People have the ability to overcome if they are given half a chance. Our Founding Fathers stood up to one of the super powers of their day to wrest this land from tyrany. People today just need to believe that the prize is worth the cost.


Go back to Limbaugh and Savage

While I do that, go back to youtube and watch Obama reruns. [Razz]

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The Bigfoot
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quote:
Originally posted by SeekingFreedom:
Ah, my friend, Big...apparently I was dumb. [Smile]
Seriously though, let's look at the situation. Even if I can't refinance yet, not all is lost. If my original rate was 9% and the average is now 6.5%, even with an adjustable I'm not likely to get anything higher than my current 9%. That means that I should be able to continue making payments as I have been assuming that nothing else has changed financially. Next question, how long do I have till my next rate adjustment?
So, now that I have a heads up as to my actual situation, I have a few options.
First, is there anyway to add value to the home through sweat equity? If so, I may be able to counter the general depreciation of my area.
Second, I get a part time job or work some overtime for the next little while to save up the needed money to refinance for a fixed rate.
Third, if feasable, take in a friend\roomie to help offset the increased rate till I can refinance to a better rate.
Fourth, sit around and whine that I got screwed and hope Uncle Sam soars in to the rescue.
Guess which one I don't think I should take. [Razz]

Ah...I was not clear.

Your introductory rate given '03 stats would have been around 5%. I was saying you were looking at a reset of 9%. Though in investigating sub-primes I have found the reset (unless it was a balloon) has a 50% chance or better of being the LIBOR plus 5% margin. Therefore 9% is a little inflated. It would be 7.25%-7.75% depending on which LIBOR average you use.
On a $183,000 loan with 25 years left to maturity you are looking at a Principle/Interest jump from $1070 per month to around $1350 per month. As you do not own 20% of your home you will also need to continue paying $100 a month to Primary Mortgage Insurance.
(Before you can get rid of the PMI you will need to spend $500 and have your house appraised which means you will not be able to get rid of the insurance until you can prove you own 20% equity in the home's value rather than 20% of the loan's value. You just got stuck with PMI for another 10 years.)

Please remember that these stats are based on a normal sub-prime loan. There are no balloon payments or interest-only gimmicks. This is what a well qualified sub primer (credit score below 660, two or more 30 day late payments in the past 12, one 60 day late payment in the past 24, foreclosure or charge off in the past 24, bankruptcy in the past 60, debt to income ratio of 50% or higher, or limited qualifying income) with 5% down would have received.

Sweat Equity/Overtime/and boarding others are all good options. Especially for non-married folks.

But it doesn't change the $10,000 investment you made turning into a huge liability. If you sell now you lose everything you put into the home plus an extra $13,000 from depreciation plus another $5,000 to $15,000 in costs associated to selling the home.

If you don't sell you have to squeeze an extra $280 a month out of the budget. And don't forget that is just for this year. If the Fed does start raising rates to combat inflation your mortgage payments will reset to a higher level next year too.

If you send back the keys to the lender? You are still out the $17,000 you put into the home but you won't have to swallow the $20-30k selling costs (which, quite frankly would ruin the average young to mid-aged American) or deal with a budget breaking increase in monthly payments.

So who is responsible for this mess? Is it the purchaser who (knowingly or not) bite off more than they could chew?

Is it the lender who should have put the kibosh on the deal despite pressure to get sub-primes into the market despite the risk?

Is it the market regulators who graded the debt higher than it should have been graded?

Or perhaps the bond purchasers who were lured with better than average return rates?

I say all and none of the above. We in America excel at creating systems so multi layered that the end product has no recognizable features of the starting elements. The system is what failed and everybody associated with the system (which is everyone) will end up losing because of it.

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glassman
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i just saw an article on NBC news where they showed a couple at a "financing fair" in MD that were "hoping" to get their 7% ARM re-fied to 3% fixed...

if anybody is able to do this please let me know how you did it... cuz i want some 3% money too...

if subprime people start getting this deal? everybody should be able too

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The Bigfoot
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ooo...3% fixed? I'd jump on that too.

That seems excessive but I would want to look at the program behind it to see what the terms are.

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glassman
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i think the people they were interviewing probably couldn't afford anything more... but that just tells me they can't afford their house...

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Propertymanager
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quote:
if subprime people start getting this deal? everybody should be able too
Sorry Glass - these programs are only for deadbeats! Honest people that pay their bills need not apply!!!
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glassman
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yeah, i'm beginning to read the new bill Bush says he's going to sign...

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Upside
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Personally? I want this crash to continue. I've seen homes right here in our little 'burb sell for ridiculously low prices. Our neighbors across the street put their home up for sale yesterday. They tried to sell it about 2 years ago for 280,000 but couldn't move it. Now? They're asking 220 for it and will probably let it go for 190 if anyone offers it. Won't be too much longer before I become a buyer and holder of some of these homes, just gotta try to time the bottom.
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Glad you said it first, I was afraid to jinx it.
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