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Posted by: Klarissa 9 months, 2 weeks ago
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Klarissa9 months, 2 weeks ago
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A frightening quote from the article:
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"Could we have had this housing disaster without Fannie Mae and its brother Freddie Mac? Certainly not.
Why would a mortgage originator sell a mortgage that couldn’t get paid back? Only if it could be re-sold to taxpayer backed Fannie or Freddie.
Both went belly up last year and put under explicit government control. Their five trillion dollars in debt went right onto us taxpayers, doubling the outstanding debt of the US government.
Now President Obama is “solving” our mortgage crisis by adding another $200 billion of taxpayer guarantees behind these two entities and, for the first time, allowing them to guarantee mortgage refinancing for more than 80 percent of the home value.
And those who can’t make their mortgage payments will be subsidized by taxpayers to the tune of $75 billion so they can.
A failure of capitalism? This could never happen in a country where private property was respected and people were not subsidized by government to buy what they can’t afford.
Rather than saving the American dream, the Obama team could be bringing it to an end. "
Perhaps Obama really meant it when he said he was a blank slate. He is giving everyone else (the Senate Democrats) the power of the presidency.-
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wtagg9 months, 2 weeks ago
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An incredible over-simplification.
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If the loans were bad to begin with, why did the mortgage writer write the loan to begin with? Because they could without any real regard for the actual likelihood of the loan fulfilling payback. Yes, there is culpability with the FM's, but there is plenty of culpability for the financial sector. They were playing a shell game.
The mortgage bailout has two sides. It rewards failure and that is bad. Both the homeowner and the lender are culpable. It would help protect some of the home values in the area of potential mortgage failures. There are plenty of homes in the $250,000 plus category that are in trouble or have failed. Couple of those in your neighborhood can send home values down considerably. Those mortgage paying homeowners lose equity through association. That alone could put them in mortgage trouble.
You own a home originally appraised at $500,000 and had $100,000 equity and carried a $400,000 mortgage, which you did not have trouble meeting payments. Suddenly 3 homes in your neighborhood experience mortgage failure and are sold at bank foreclosure for $300,000. Your mortgage company suddenly becomes worried about your home. Why? Because they believe that if you fail, they will not cover the loan. They reappraise your home for $325,000 and want you at a 80% level again against appraisal. That means the bank wants the loan at $260,000. You need to find $140,000.
Will this happen in every neighborhood? No. Can it happen? Certainly. When banks reassess because of a market drop like we've experienced, this scenario is very possible.
I won't even get into the whole balloon loan thing that were the favorites of all the flippers.
I laugh at the horror espoused by so many about socialism. Much of our current market is either based upon socialistic models, like the banking industry, or is an almost perfect socialistic model, like the insurance industry.
If you own any insurance at all, you are part of a socialistic organization and market. Can anyone say they do not? Ironically, probably only the very poor.-
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nostalgia9 months, 2 weeks ago
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Am I understanding you correctly??
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"They reappraise your home for $325,000 and want you at a 80% level again against appraisal. That means the bank wants the loan at $260,000. You need to find $140,000"
What type of mortgage allows the lender to demand you come up with $140000 to lower the principle you owe to be lowered to $260000?-
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DoseASpinoza9 months, 2 weeks ago
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The same kind that let borrowers refinance and take equity out of the house that in reality, wasn't worth any more than the price paid. It's the same thing in reverse. All real estate is based on comps.
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Most of those inch-thick lending documents contain draconian provisions to let the banks protect themselves. -
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Wolfie20079 months, 2 weeks ago
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Wtagg
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"I laugh at the horror espoused by so many about socialism. Much of our current market is either based upon socialistic models, like the banking industry, or is an almost perfect socialistic model, like the insurance industry."
Those are exactly the things that need to be ended. Anyone who isn't horrified by socialism is a fool or they plan to be part of the ruling class. Did you note Red's comment at the top of the thread? When the government takes charge of private property then we are not longer free people. What is it about government stealing our private property and, therefore, liberty that you don't understand?
Btw, please explain and expand your insurance socialism and bank theory. I'd like to see just how you think that works, of course, the insurance industry is not the government and neither those companies nor banks are unable to take our private property like the government can and does on a whim. Try again. -
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willottica9 months, 2 weeks ago
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So far as I know, any mortgage with a term shorter than its amortization. They can't demand more on the existing mortgage... but the existing mortgage expires on X date, and they won't refinance unless the principal is reduced to Y.
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wtagg9 months, 2 weeks ago
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Would you lend someone 130% of the value of a home? If the home (or collateral) devalues to the place it is well below the loan amount, the loan becomes high risk. The loan provider cannot have the expectation of the full loan amount being recovered upon sale if the need for foreclosure arises. It does not reflect upon whether or not the home owner can continue to pay or not. The loan is at risk because the value of the collateral is well below the value of the loan.
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You hold a loan at the pleasure of the loan provider. If the value of your collateral (home) depreciates below the loan amount, the loan provider can call the loan. This usually does not come into play unless the housing market falls.
Like now.
I did not say it absolutely will happen. I said it can happen. A financial institution should look at its holdings in such a market to determine its current risk. Risk is a fluid thing. My point is that loans that were not considered risky 8 months ago, could be risky currently due to changes in the market itself, even though the home owner is continuing to meet payments.
Judging a loan based purely on whether a home owner can meet a payment at the closure of the loan is simplistic and naive, not to mention, incredibly for bad business. Conditions change over the life of the loan.
What about all the interest only loans that were popular, especially with house flippers, a few years back? The assumption was that equity would be provided by the market, not the home owner. In the current market, those homes would almost certainly fail an appraisal vs. loan amount test.
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DoseASpinoza9 months, 2 weeks ago
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How is it then that the banks have taken so much of our money and property, and gotten billions in government bailout money? How is it that they have been allowed to privatize profits and socialize losses?
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You may believe that socialism didn't exist here until last year, but since then it is unquestionable. The only thing worse than the government taking huge stakes in banks and insurers (AIG) and taking over running them, is giving them the money and NOT taking over running them.
I don't think government does a great job of many kinds of business. But I don't think this government can do any worse than the bankers we have allowed to own and run everything in the past.-
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Wolfie20079 months, 2 weeks ago
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Dose
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Did I say anything about socialism not existing in the US until last year? Read it again, I said it need to be ended. Also, I said that I wanted Wtagg to outline his theory regarding banks and insurance companies being socialist enterprises. If you notice I didn't defend this quagmire that exists today. Why don't you read and comprehend before you start ranting?
Since the government has done such a great job of running things so far, yeah right, we should continue to let them take and steal our property at will? How totally inanely stupid.-
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wtagg9 months, 2 weeks ago
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Again, I find the irony in comments like
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"the government has done such a great job of running things so far"
"Did I say anything about socialism not existing in the US until last year? Read it again, I said it need to be ended."
very interesting. You vigorously supported the government a very short time ago. Why has it suddenly become so horrible? You apparently vigorously supported a government that was pursuing this. Is it that you only want your party's brand of socialism?
Could you point out where the government is stealing our property at will and how that has suddenly changed from a few months ago?
Again, I think you need to refrain from using your ending comments. They don't help your argument and they imply a personal attack, which ironically, you seem to use as an argument in many instances.
Pot, meet kettle. -
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wtagg9 months, 2 weeks ago
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Wow. You cannot see how you are either paying for others or others are paying for you?
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Why do you have insurance policies?
Why do you borrow money? Where does that money come from?
I'm stunned. Maybe you need to look up the definition of socialism to start with. Having a idea of what the word means, without all the fear-mongering rhetoric, would be a good place to start.
Am I championing socialism? No. By action, I have always posted here against such principles. My point is toward all of those that say they'll have no part of such principles while they are part of their every day lives. You carry insurance because you are betting that you will need others to help pay for your health care, car repairs, home repairs, benefits to your survivors, etc..., all the while others are betting that you will help pay for their benefits.
Adding a *try again*, when you don't really understand what you are talking about, doesn't help your argument and makes you look foolish. I suggest leaving it off your comments unless you are actually trying to provide exactly that impression. It makes you attempt to appear elitist and above everyone else, which really isn't working for you. -
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Endoscopy9 months, 2 weeks ago
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wtagg
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"If the loans were bad to begin with, why did the mortgage writer write the loan to begin with?"
You ignore that the CRA and other banking laws FORCED banks to give out bad loans as a cost of doing business. Talk to a bank loan officer sometime and get ready for an angry rant. To expand or merge a bank has to have a good CRA rating. At present HUD demands that banks have 31% of their loans under that CRA law. They are still forcing banks to give out bad loans. Rules that were changed in 1992 to take effect in 1995 were allowing Faniie and Freddy to accept 0% down loans and banks to give low starting ARMs with no principal for a few years. There was no checking allowed of the poor to pay the loans. Is this something a bank would normally do? Never unless forced to. They are still forcing these loans on banks.
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not2needy9 months, 2 weeks ago
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Yeah, it's time to get scared Klarissa! A Libbie just might save the country from the disaster that the cons created, but you and RRJ will curse them all the way.
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You all act like you're in the top one percent of the nations wealtiest people, and in reality you're either house wives, retired teachers, living in your parents basements or barely making it by the skin of your teeth. I know tooooooo many cons who are on the verge of being homeless or already homeless and living with family, but defend Bush and his right to make them homeless. Talk about scary and pathetic! When you people defend a man who made off with billions, robbed the citizens through war profittering, denied vets decent benefits and spent us into the toilet, while he, Cheney and Rove thumbed their noses at us, how can we take you all seriously.
You all act like you're mentally ill... Is being a republican a form of mental illness? Seems so! -
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vor9 months, 2 weeks ago
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Klarissa, despite your complete lack of credibility you plug on. Your numbers are non-sensical. Obama has doubled the national debt? That is completely insane. In one blank thoughtless statement you ignore the entire responsibility of the the money grubbers who truly created the problem.
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The American Dream wasn't to live mired in debt. Yet that that is not the message many Americans grew up hearing. Debt and deficit were no longer dirty words.
The Reagan years especially reinforced this belief. It was now time to trust the robber barons who were going to make us all rich. Unfortunately that was not the reality of what happened. Once these concepts were re-implemented under Bush it quickly became clear once again there was no trickle down. Real income did not increase against inflation. Yet they still told the public they deserved a new SUV and a 3,000 sq. foot house. That they could afford these luxuries. They would finance that dream. We were all going to get wealthy together. Greed WAS good.
You are blaming the people for buying into this myth. And you act as if it only low income buyers who are failing. To be correct it was not just a myth sold by Republicans. To even suggest it was a purely political problem is laughable. There was no loan many of these lenders wouldn't write. Because there was no amount of compensation that was enough anymore. Yet it was all a mirage. The free market destroying itself. Capitalism failing miserably. Now you blame Obama?
Red blooded Americans killed the American Dream, not Barak Obama. Time to slither back into your hole. Like all of your neocon chums your difficulty accepting responsibility for anything is absolutely repulsive.
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