The Mortgage Mess

[StinkerBell]

I have such mixed feelings about the Mortgage mess. Was it a good idea for the Gov. to step in?

Here or some of my ideas. Not firm yet, but things being tossed around in my mind.

1. The Gov. stepping in and placing a band aid on a issue that is hemorrhaging. Much like in my mind the immigration issue. Not really fixing the problem.

2. I also think that people should own a home. I truly believe that with home ownership comes pride within oneself. Pride in Country and Pride in community.

I do believe when a person owns their home they are more vested in their community.



Uggh. I just not sure what to think about this.

[ScottA]

Mortgage mess is nothing more than S&L #2. It was planned and executed by the Fed so bankers could rob us again nothing more. The government should not spend one cent bailing out anyone related to this farce. If people bought too much home then let the banks refinance them or forclose. How the hell does anyone justify spending MY money to pay for someone elses house? Especially when most of these homes are McMansions. I agree that people should own their homes but we need a system that allows people to buy homes they can afford not forced to buy the overpriced, oversized crap the banks and builders are pushing on Americans. Just try to buy an affordable home in any major market. Forget it there aren't any.

[Robert_Flowers]

StinkerBell

Was it a good idea for the Gov. to step in?

No anytime the Gov.comes to help look out rember Katrina.

People need to take responsibility for there actions.

Alot of people have said they did not know the interest would go up,they did not understand the contract and now they are crying for help when they should have asked for help before they signed a contract they did not understand.

I don't mean to sound uncaring but my folks lost our home when i was little they had 6 months left and they refinanced the house to pay off debt but the payment was double and they still tried to live above they means and lost the house.

People should own a home but The American Dream has turned in a nightmare, bigger is not better just look at this forum how member who built there own are in trouble?

After i reread this i do sound ticked off you know i am i have had enough with this ITS NOT MY FAULT generation they need to grow up and learn everything does not come gift wrapped and on a silver platter you work for what to have you do not ask for handout if you can't afford it you do without!

robert

[MaineRhino]

What a mess we are in!   Our brilliant minds in Augusta here in Maine thought it would be a good idea to make investments tied to the sub-prime mortgage industry.  Now they tell us they (we) lost 20 million in that deal!     

If someone can't afford to pay the extra due to an increase in interest rates, then they could not afford it to begin with.
And I agree with StinkerBell, this is just a band-aid fix.

Our goverment and so called leaders remind me alot of Sgt. Schultz in Hogan's Heroes when he says "I see nothing, Nothing!!!!" 

 

[glenn kangiser]

Just a rerun of previous Bush and Clinton admin ripoffs.

[Homegrown Tomatoes]

My husband was talking with the lady from the bank who handles the finances for their company here a while back, and she told him that 41% of the new homes sold in our area end up in foreclosure.  That's so ridiculous!!!  When we moved here, his boss introduced us to a realtor to help us find a home.  Talking to her on the phone from home (then OK) she asked me what price range we were looking in.  I told her I wasn't familiar with the market here, but that we hoped to move into something that would be priced in the $60-70K range in our current location, with a little land attached.  She snickered and then asked what we'd paid for our current home and the details about it.  I told her we'd paid $24K, and got ripped off at that because of the extent of some of the repairs that needed to be made... and it was a 3 bedroom, one bath on three and a half lots with a single car detached garage and mature fruit and nut trees.  Well, she sent me a bunch of listings with the cheapest one starting at a quarter of a million dollars.  When I arrived here to look at homes, and she pulled up in her "image" car and I told her, "Look, I don't know what he told you my husband does for a living, but he doesn't OWN the company... I don't want to look at anything that costs a quarter of a million dollars."  She and the lender were both going on about how they could see to it that we got approved for a loan on something that big, and I just finally lost it and said, "Even if you COULD, what makes you think I WANT to be in that kind of debt??"  They both were shocked...  And I could go on about how ridiculously expensive houses are in this area and the stinking communist-land-ownership-property-taxes, but y'all all know about that already, I'm sure. 

I think people have just lost their minds... I see stuff that people do to their kids by plugging them in all day rather than booting their butts outside, and how folks just seem to think that they have to have whatever they want, and they "needed" it yesterday... the whole world  has gone mad.  They've made the government god, and sit around waiting for it to give them their handouts and tell them what they need and what they need to do.  Thinking about it depresses me.

[Redoverfarm]

Well I don't know where to start. First off I still owe money on my house. For a few more years anyway. But I went ahead and rolled my loan into a fixed rate for a fixed # of years.  Yes the interest was a little higher but I didn't want it to escalate with a ballon in 1-2-3 years down the road.  And I figured what I could pay and still eat.  Yes at times when unexpected things happens it gets tight but the first bill paid at each month is the house and then the next most important and so on and so on.

It is no wonder that there is a problem when you can go anywhere and get a loan for anything without any credit history check or anything.  The ads say Bad Credit no problem.

I think it all boils down to one thing whether it is housing, vehicles or any purchase and that is " Live within your means" and the h*** with what the Jones are doing. Nothing meant in case there is anyone on the board or guest by the name of "Jones".

[StinkerBell]

Here is my next question for you guys. Is this a tax payer bail out? Cause it would seem that the financial institutions are the ones that will not earn any additional money on this with the higher rates of interest. Granted I do not like the idea of the government stepping in and not finding fault that the lender was doing something illegal and changing the terms of a binding contract.

[ScottA]

Is this a tax payer bail out?

Rest assured that if the government is involved it will cost tax dollars. I read that the government will back some of the refinanced loans so yes tax money is involved. My guess is the goverment will start buying the bad loans from the banks but they won't advertise it. Tricky part to understand in all this that we are already paying for it with higher prices and inflation that was created by the housing bubble in the first place. The housing bubble was created by the fed loaning money with very easy terms and almost no regulations. Few know that when a bank makes a home loan they often get the money from the fed. They borrow the money at say 5% then loan it to you for say 8%. The bank makes 3% on money it borrowed in effect from the taxpayers. But better than that the banks have been bundling these loans into securities and selling them for cash so they don't even need to service the loans. It's almost like free money and your government made it possible by printing the money they loaned to the banks out of thin air.

[Sassy]

There's a nice flow chart & explanation for what is really happening with the "mortgage mess"

http://www.augustreview.com/news_commentary/global_banking/global_bankers_seek_to_raid_taxpayers_over_subprime_fiasco_2007113081/

[StinkerBell]

I wonder if there is a way to file bankruptcy against the government. Seeing I can not afford them.

[Sassy]

The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

by Greg Palast

Global Research, March 14, 2008
GregPalast.com

While New York Governor Eliot Spitzer was paying an "escort" $4,300 in a hotel room in Washington, just down the road, George Bush's new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there's a BIG difference. The Governor was using his own checkbook. Bush's man Bernanke was using ours.

This week, Bernanke's Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks' mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers' bordello: Eliot Spitzer.

Who are they kidding? Spitzer's lynching and the bankers' enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Street's line that millions of US families are about to lose their homes because they bought homes they couldn't afford or took loans too big for their wallets. Ba-LON-ey. That's blaming the victim.

Here's what happened. Since the Bush regime came to power, a new species of loan became the norm, the "sub-prime" mortgage and it's variants including loans with teeny "introductory" interest rates. From out of nowhere, a company called "Countrywide" became America's top mortgage lender, accounting for one in five home loans, a large chuck of these "sub-prime."

Here's how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 a month payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain't worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the "discount" they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. Grinnings move into their Toyota.

con't @ http://www.globalresearch.ca/index.php?context=va&aid=8336

[desdawg]

People are like sheep. Whatever the flock is doing must be the right thing. I make mistakes but I didn't make that one. I think it's time to get the flock out of here. There are many "investors" around these parts who paid the inflated prices for land but had seller carryback terms when they bought. Many are just walking away as they are in it for twice the current value. It's ugly at all levels.
Many of these "investors" were pulling out of the dot.com bubble bursting and thought real estate was the next great thing. They had no knowedge or experience but they had equity they could pull out of their personal residence using a HELOC or doing a refi. Now they are really in a problem. I know guy's that were building houses and their cash flow came from the next round of borrowed money. 
Should we be bailing these people out? Nope. But on the other hand we are all paying for this day to day with our cost of living being jacked all around. Then there are the oil companies.........I better not go there. 

[muldoon]

The problem is not with people owning houses it is with the financial institutions way of handling the funds.  By leveraging and using margin on top of the structured credit they created a house of cards.  Take a look at this cartoon, where it says Joe think of every Hedge Fund, credit union, bank, & money market out there.  Where it says Bob, think of every large bank, Investment bank and the like.  This went on for years, now it's unwinding. 

http://media3.washingtonpost.com/wp-dyn/content/graphic/2008/03/14/GR2008031401451.gif

So from above,
They had a total asset of $100, and were exposed to $3100.  This is 31 : 1 leverage.  Now go look at a real one from the front lines:

http://bp2.blogger.com/_H2DePAZe2gA/R9sT8yG-HKI/AAAAAAAAA7k/A-SlM2Kotng/s1600/OCCpg1.png



edit - posted pix here as it was blocked a few times when I tried to look at it.  GK

Alot of money has been lost, alot more is coming. 

[ScottA]

100% correct. If they go broke it's their own problem of their own making. The government has no business bailing them out. What happened to all the profits these people made in the past years? Did they not keep any reserves for hard times? We no longer have a free market. We have a controled market as long as the fed keeps tampering with it. This is hardly a fair playing field for the average investor. Welfare for the rich.

[Sassy]

Muldoon, that cartoon says it all!  That's what brought down Enron in the early 90's & several other large corporations... creative financing - cooking the books, whatever you want to call it - the Federal Reserve is just a sham but it & a few other banks like Chase, JP Morgan & BofA are making a killing - consolidation on wealth to a few while breaking the backs of the masses...   

[John Raabe]

Here is Muldoon's cartoon - worth the read.



Leverage is the killer here... that and lack of thoughtful oversight. These expansive and highly leveraged new financial "instruments" of the last decade or so are only now being tested in a strong economic downdraft... oops, me bad! 

Guess who gets the final bill? 

And, more and more, it looks like the final bill will be paid with newly manufactured dollars - dollars that will be worth considerably less:
• At home (lowering the standard of living for all Americans, especially those with savings).
• Abroad where the dollar (in the good old days) was the "exchange currency" giving the U.S. a profound advantage since all our trading partners (Asia, the OPEC countries) have had to hold dollars to settle their accounts.
• When these countries unwind their dollar holdings and go to Euros or a basket of currencies, the American standard of living (felt as inflation) will be forced downward again.

It will be an interesting adjustment as we become the low cost producer of food and manufactured goods hiring our kids to do the low wage factory work that we were able to farm out to the Chinese and Indians.

[sparks]

Isn't this leverage and derivitive stuff the same as 'margin' in 1929? My parents knew how that turned out!

[peternap]

Isn't this leverage and derivitive stuff the same as 'margin' in 1929? My parents knew how that turned out!

I'm impressed. A lot of people don't know that margin was the killer in  big crash.

Still is if your not careful. I took a small profit the other day because I had a ton of short term stock on margin and was certain I was going to get dumped on. If I'd have toughed it out, the maintance call would have hurt.

[sparks]

Many years ago, I read a book: "The Day the Bubble Burst". Had many interesting characters in it.....J.P.Morgan....Joe Kennedy....GM.....Bank of America...et al. History seems to be repeating itself. I believe the authors were Max Morgan-Witts and Gordon Thomas.

[StinkerBell]

 The Day The Bubbbbble Burst, bye bye Miss American Pie, drove my Chevy the the levy but the levy was dry.....Good old boys drinking whiskey and rye...


prophetical......

[Sassy]

Here's some good info from Downsize.org  http://www.downsizedc.org/blog/ 

[John Raabe]

As you say Sassy, Good Info.

Thanks, interesting read.

[sparks]

Great stuff Sassy... Passing it along....