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depends on who you ask :p
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Indeed. K Street and Wall Street really love the idea. |
I'm trying to figure out how the cost is only $1.7B. We're talking about billions in lost home values and that's the supposed cost of a "bailout". That sounds like a tax writeoff for a couple of companies that isn't even that much money. What's the deal behind the deal here?
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The $1.7 billion number is the projected cost of defaults on the new, government-backed mortgages. So if a homeowner with a current "bad" mortgage (i.e. an ARM that's now too high to pay) gets a new, lower-cost, government-backed mortgage and then defaults on it, the government, not the original bank, has the bad debt on its books. So the taxpayers pay for that. The number doesn't address the lost home value, as that's already passed by the time this transaction takes place. It also doesn't address money lost in when the mortgage-backed securities lost their value, as much of that has already been written off (though, again, most of that was also subsumed by the government when the Fed agreed to do it earlier this year). This is S&L all over again. Financial institutions make a bunch or horrifically bad mistakes that even a 5-year-old could see weren't a good idea, and then go crying to the government to help them out. |
There is no shortage of people who come out of the woodwork when individuals want to get bailed out from their mistakes, but they get harder to find when business comes around looking for handouts. I'd rather just have the economy collapse than continue living with these double standards.
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I don't think I believe you. |
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You could say the same about about lendees crying to the government. I'm against either getting these kind of benefits. The people and businesses it penalizes are those with good judgment, which is a quality we should reward. A dumb-ass lender or company shouldn't be put in close the same position as someone that acted responsibility. That's what this country, should be about, IMO. An opportunity - if you work hard, do your homework, don't do anything stupid, you should come out ahead. If you don't, you shouldn't be subsidized by those that do. |
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Sadly, I do. He's the classic example of a guy who wishes for bad things so his political views can be promoted. |
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Probably right to doubt it, but I am really tired of everybody trying to hold individuals to a different standard than business enterprises. If anything, business should be held to a higher standard than some regular Joe. If getting bailed out is bad for the average person, it is just as wrong for any business entity as well. |
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That is the way I feel about it. Unfortunately, according to the FED, these banks have intertwined their financial deals to the point that it is feared that the collapse of one would create a domino effect leading to the complete collapse of the economy. I'm sure this point was not lost on the managers who created this mess. |
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What political view is that? The elimination of double standards? |
"The greatest good for the greatest number."
I feel like that is the criteria that should be used to judge this, not who comes out ahead. |
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A business should be allowed to fail, just like an individual can. That's how capitalism works. When times are good, these same financial institutions would be whining about how they want an open and free market without government intervention or regulation. |
People talk about banks like they're goblins or trolls, but how many people work for banks or have stock in banks? And pretty much everybody keeps their money in banks, and uses banks for lines of credit.
Banks are people - not literally, but when a bank fails, there are people who lose. |
Corporations are treated as people under the law. That's how they get to have Constitutional rights to free speech, get to hold copyrights, patents, etc.
Sure, there are people who lose. That's why FDIC exists. They are there to mitigate some of the risk to those who have deposited money with banks that later fail. If the plan is to never have a bank fail in this nation, why does FDIC even exist? "People" lose every time that a business fails, but that is what happens in capitalism. It sucks, but it is hardly a good reason to allow some businesses to fail and not others. |
they let Drexel fail. It's a broader view they are trying to take.
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Well, I think its an excellent reason. Note that I have no opinion on this particular problem - I don't understand the details nearly well enough. But I think the function of government in a crisis like this is to mitigate the damage to the economy as much as is reasonable, and it seems to me plausible that helping the banks makes sense. |
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You may be right. You only hear the mantras of "capitalism" and "free market" when it is favorable to business to promote those concepts. When they are retreating, you don't hear them talking about it at all. I'd like to see those "brave" and "smart" people who ride the wave of deregulation and capitalism during good times actually stick by their guns when times get tough. They want government out of their way when it might prevent them from making an extra dollar, but they cannot wait to have government come back in when it might save them a dollar. I don't see the integrity in that. |
from my parents foreclosure thread, one problem IMO, IMO is that the banks dont seem to be able to help themselves. There are people, like my parents, who dont want to get foreclosed on (they havnt yet) and want to rework something out with their lender but cant get them to respond to their cries. Instead the banks seem paralyzed and continue to accept foreclosure after foreclosure instead of being able to stave off the event and mitigate their own loss. BTW this is factual and a quick search will show you that the banks have been able to reach less than 5% of those that they think need help.
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Wait, that's exactly what I said. Do you mean "lendee"? Quote:
Yes and no. I would prefer to see free enterprise succeed and fail largely on its own merits. I would prefer to see regulation employed almost always only when individuals or corporations in the system act illegally or in such a way that's obviously detrimental to the entire system as a whole. But.... In such cases as the subprime mess, if nothing was/is done to manage some of the losses, you're looking at a potential serious impact on the economy. Even worse than what we've seen already. Although maybe we're going to get there regardless of what the government does (or tries to do). However, instead of the government just blanket bailing out individuals and/or corporations (and we've seen much more of the latter than the former, sadly), I'd prefer an approach as I've described earlier in this thread, which is equal stick and carrot, and to let these individuals and corporations shoulder their share of the pain. It's a balancing act, but that's part of the job. |
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Here's an idea: treat these corporations like individuals. If they've so fucked up the entire system because of their stupidity, then bail them all out, but... garnish their corporate earnings to help pay for the bailout. :D Quote:
This is just semantics, though. People aren't really criticizing the banks as entities made up of thousands of regular people who service millions of regular people. They're critizing the managers and leaders of these institutions who either got in over their head or just plain acted illegally. For the sake of brevity, however, it's just easier to say "banks". And that's not even to mention that some of these institutions are hedge funds or high-end investment firms who aren't exactly made up of the "little guys". |
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I did. Every loan agreement is different. Some are accurate on their face, and one side just makes a bad deal because they didn't do their homework, they were reckless, or they took a calculated risk that didn't pan out. Sometimes there's fraud and illegality. In the latter case, it's not a valid contract, I have sympathy for the victim, and full restitution should be paid by the wrongdoer (not the taxpayer). A company acting illegally is a HUGE drain on the system and I'm all for aggressive criminal prosecution, restitution, etc, etc. I do understand that there's a negative impact on the economy as a whole, but I don't think that's necessarily a bad thing long term. We're so afraid of the lows but they're often necessary to create the highs. Lower home values create opportunities. Tougher credit means less foreclosures. The system being down doesn't mean the system isn't working. |
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There are banks that have already failed, and there are many more banks that will fail regardless of any "bailout" (see the FDIC's attempt to bring people out of retirement to deal with the upcoming work). These banks are not being bailed out because, generally speaking, the only ones who will lose, outside of a small group of shareholders, are those who are inconvenienced enough to have to get their money back through the FDIC. Flere is right...its the interconnectedness of these larger banks, and our general reliance on these banks for a huge part of our nation's economic activity, that's the problem. It's not as simple as "they made the mess, they should deal with it." We all will deal with it in a way that no one wants to see and that's why they need to survive. |
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Which leaves a blueprint behind to others as a way to keep their bank afloat. I already stated earlier in the thread that these banks are being saved because they made sure that they were too important to fail. I would expect banks that are too important to fail to make sure they weren't on the verge of failure, but these banks apparently thought it meant they had a free pass to engage in high risk activity because they wouldn't be ALLOWED to fail. They didn't see their position as a reason to be more responsible, but rather as a safety net for their irresponsible behavior. |
Also just want to add that this is most likely a blip on the radar compared to what's coming when commercial real estate officially goes bust.
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It doesn't matter how they got there; all that matters is the end result. Hell, take the CEOs and VPs and the rest of senior management (we all knew they were aware of the shit they were peddling, take a look at the results of the SEC's investigation into the credit rating agency's corruption for more proof) and throw them in jail, banish them to burn for eternity, whatever you want. But it doesn't change the fact that we are where we are right now, and simply teaching these banks a lesson so that 50 years from now, another bank doesn't make the same mistake...that's not feasible. |
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They won't learn the right lesson regardless. Lots of banks collapsed back around the Great Depression. It did not stop people like Phil Gramm (and others) from trying to unwind financial regulation so these banks can run unbridled into disaster all over again. It will happen again and again until people start accepting responsibility for their actions. These people did these things out of nothing other than greed, whereas an over-extended person who was just trying to get a home for their family could not be characterized the same way. |
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I completely disagree with your last sentence, but that's besides the point. What is the "responsibility" you want these people to learn? Is it worth it to have a further national disaster, economically-speaking, just so these guys can really understand what they did? Do you really think that because a lot of JPM/Chase/Lehman/Bear execs ruined the economy and paid the price for it, that's going to stop the future financial kingpins from becoming greedy? They're suddenly going to toe the line and only book conservative, fixed-rate loans while investing in treasury securties? |
I read in the local paper this morning that the Federal government here in Canada is putting in new rules for insured mortgages in hopes to avoid ever ending up in a similar housing meltdown. Apparently 40 year terms will be out (new max will be 35) and minimum 5% down payment will be in effect. I like the changes.
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How far off from that are we? I know that as part of cost cutting measures, the company I work for (a big one)- closed a lot of offices around the country. I'm sure this is happening with other companies, too. SI |
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Probably still a bit off. While it's being felt in many places, a big issue is developments that are still in the process of being built or have only recently been completed. All of these banks have been funding the construction, and they're considered "current" (i.e. nowhere near default because the scheduled interest payments have been made) but in fact these payments are being drawn from interest reserves that are structured into the loan. So in essence, the bank's are recording interest payments by just shifting the balance of the loan from the borrower's cash position onto the balance sheet. Fast forward to when the interest reserve is tapped...now you realize that the construction delays, budget overruns, etc have caused the project not to be completed on time, which obviously delays the project from receiving cash flows from prospective tenants. Therein lies the problem. So a huge, huge amount of "current" loans are going to shift into write-down mode once the banks realize that there is no way they will receive the cash flow that can pay the loans once they're off an interest reserve and amortizing normally. |
Good lord, Fannie and Freddie got crushed pre-market.
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I was shocked at how much commercial real estate was empty in the St. Augustine Beach area compared to last year.
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Simply put I think they're hoping to get more selling them to the goverment than they would get on the free market. |
I'm not sure how the sale to the government would work, but at least for nationally-chartered banks, if a house is foreclosed on and auctioned off, the bank only receives the amount that was still owed on the loan. There's no profit for them.
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What happen exactly? |
A lot of FUD started spreading about Fannie Mae and Freddie Mac being insolvent, about to be bailed out, etc, overnight... At least that is the impression I got. When I saw competing headlines early this morning of it being insolvent, not being insolvent, needing an immediate bailout, and not needing an immediate bailout, I knew something was up.
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Worst part about the market being dragged down by this, is that there will probably be another run made on oil as these fund managers/speculators dump other stocks and buy more oil futures.
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I heard on NPR earlier this week that there is 300 million square feet of commercial real estate currently vacant. That's not good. Quote:
Bear in mind that the foreclosure price isn't likely to equal the amount still owed on the loan, so the bank loses money. If the bank sells the loan to the government, they at least get present value on the loan. That is the attraction to the banks. |
the ethics side of the argument just simply got thrown in the trash today.
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http://biz.yahoo.com/ap/080713/fed_mortgage_crisis.html
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I dont understand. It's not the lenders fault. It's the stupid homeowners. Why would they need to curb something? /sarcasm |
A few days ago I caught the tail end of some radio discussion about how odd it is that the government is now pushing restrictions to make lenders be more careful with risky loans when it was the government pushing lenders to make it easier for low income folks to get housing loans previously.
I don't recall lenders being pressured to relax their restrictions before all this trouble. Can anybody speak to this? |
Yes, you're 100% right.
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I am curious about this. Can anyone point me to when the government asked banks to not seek verification of income before offering someone any mortgage that represented 80% or more of the value of the house? Can anyone also point me to when the government asked banks to implement penalties for early payment of principle? I'm even more interested in the statements related to encouraging banks to not push escrow for tax and insurance payments, especially for any mortgages that represent 90% (or more) of the value of the home/property. I am not personally aware of that, but I allow for the possibility that it happened and definitely want to read about it.
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The poorly regulated market and greed TOLD them to do it and push people into these loans because they made more on them (when they were resold in bundles). The best part is that many people who wouldve qualified for Alt-A or conventional loans were sold on loans in the subprime market so that the originator made more. In some cases (see Beazer & KB) the originator actually forged documents and applications to fill in those blanks you mention.
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FDIC's Bair has put a halt to Indymac's homes in Foreclosure, 'We believe that a loan that is modified to a good faith Owner-operated household would always be worth more than a foreclosure.' Exactly what has been said in multiple threads but for whatever reason the banks just either cant or won't reach those that need the modifications. Maybe the Indymac failure will give the other banks some fair warning that they need to get their bearings when it comes to handling the loans on their books.
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Email received this morning, for some reason two days after it says it was sent in the body of the email, haha...........
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They didn't quite do that, but they did require Freddie Mac and Fannie Mae to purchase more "affordable" loans. Then they looked the other way as they bought subprime loans left and right. Quote:
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And this was happening under the watch of George W. Bush, supposedly a conservative?
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It's a big myth that this is a low-income, subprime crisis. This is a general mortgage problem that only partially has to with low-income buyers. |
Does anyone know where we could find facts on the income ranges of those being foreclosed on?
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very true, generally everyone was encouraged to stretch beyond their means. the insidious part is even some who didnt need subprime or Alt-A Mortgages were talked into them because they were "flexible" and the lender made more money on them.
From the other thread regarding my parents and the idea of voluntary foreclosure, they are now staring INvoluntary foreclosure in the face. Good times for my family this year and next I suppose. |
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Is this different than any other sales situation? Like going into jiffy lube and ending up with $150 of services you don't need? Or being talked into buying way more car than one needs or can afford. Obviously the stakes here are higher, but you're still just buying a service. Why would the seller do anything other than try to talk you into the the best "sale" for them? How is that insidious? (I'm not talking about the forging of documents or anything like that). Why would anyone go into a situation with a lender and think they're acting in your best interest? In this some brand new concept from the last 5 years where lenders have just now started to try to make money? Were they just in it for the love of the business before that? I think its a culture thing more than anything else. The culture of debt. People don't think anything of it to sign away their financial futures. Our parents and grandparents didn't even take out car loans - they bought used or saved up. This culture is what was bound to blow up eventually. |
I guess this is as good a place as any to ask.
We are in the process of buying a house and have been pre approved for an amount higher then the purchase price. My wife is worried becaue we borrowed some money from her 401K ( about 17.5K ) for closing costs, down payment, etc... The thing she is worried about is that we won't get approved because it is $300 extra a month out of her check and we were pre approved prior to doing that. Now she makes more then enough that $300 isn't a significant amount ( over 100K) she is just a worrier, so I guess my question is should we worry? We are currently at an extended stay suite and it is getting old. |
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Since you are already preapproved, you shouldn't have anything to worry about unless you are suddenly unemployed. With that being said, does your extended stay suite have a jacuzzi? Because if it does, I would not be in such a hurry to buy a home :lol:. |
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You're technically really not supposed to significantly change your financial status after being approved but before closing. Honestly - I'd give your lender a call and ask. If you can still qualify fine, then have them re-draw up the papers. You don't want to be hit with this at the closing. |
What Wade said.
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thats what we are doing today. But isn't a pre approval different from an approval? It is my understanding that just because you are pre approved that doesn't really mean much |
dola- would $300 a month be considered significant based on 100K + a year?
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Actually, pre-approval really does not mean that much. Lenders will run your credit and check your finances at least once more prior to actually closing on the home and giving you the keys. But like I said earlier, if you are preapproved and your financial situation is generally the same throughout the process, you should have nothing to worry about. Just don't quit your jobs, file bankruptcy, etc. |
http://news.yahoo.com/s/ap/20080716/..._investigation
Well that ought to put it to bed that only the fringe mortgage brokers we're running roughshod and putting people into loans they shouldnt have from all means necessary including those that we're illegal. |
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It all depends on how much you're trying to borrow, your credit, etc, etc. In getting a mortgage the lender generally assumes that any loan you're paying off whatever that monthly payment is is money you can't pay towards your mortgage. So if you were borrowing right up to what they said you could pay a month, you should worry. If you were well below, it's not an issue. How much you make means nothing by itself. |
She isn't making $300 less. She's diverting $300 of pre-tax income to a long term savings account that would be factored in as an asset in a credit evaluation by any lender worth his or her salt.
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Is that still the case if the money is being used to pay off a debt? It isn't an extra $300 going into a 401k, it is an extra $300 paying off a loan against a 401k. |
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It may be counted as additional debt while you repay it, but it is not less income. |
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I think I misunderstand how a 401k withdrawal/loan works. If this just gets repaid back into the 401k then yeah - I retract what I said and digamma is right. |
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I mean it is and it isn't. It's not a loan that you are going to default on that gets reported to the credit agency, but someone may look at it as debt when reviewing your assets and liabilities. However, ex-ante, you would definitely consider the 401k an asset. |
thanks for the words guys. It is an exciting time.
Our agent talked to some mortage people he knows and basicly told us if there is something that will hinder us getting aproved the company will let us know it needs to be fixed before moving on with the process. |
Well this makes it tough to state that these sorts of things dont need regulation or enforced regulation:
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Also makes it tough to assume that the broker will live up to their fiduciary responsibilities. |
So why does this mean we need more regulations when they aren't following the ones that exist?
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you mean theyre not enforcing them. Im fine with the stuff on the books now (much like the EPA regulations) if theyll simply enforce them. If they wont than that should be fixed and that may include new or improved rules. On another note it certainly backs up the case that many people were hoodwinked into loans they couldnt afford or were misrepresented to them as. |
I'm saying how do we know the regulations don't work? I can get behind enforcement of them but creating new regulations to fix problems that regulations exist for already makes no snese to me.
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how do we know they dont work?
The fact that we are in a foreclosure crisis. The article above where people shirked their fiduciary responsibilities. The fact that mortgages were securitized and bundled as worth more than they were. The fact that underwriting standards were ignored. The fact that appraisers were pressure to lie or outright lied about homes worth. etc. etc. etc. etc. It is plainly obvious that the regulations within the mortgage industry either were lacking or unenforced. Wouldnt be the first time but I'd bet those who aren't for regulations are consistent in that regard and dont feel regulations are needed in most places or industries. What Ive found is that where there is a lot of money to be made those in power either choose to not enforce the regulations or tell others to not enforce them. Bush to the EPA, the Immigration Czar on borders, Comptrollers on insurance applications, mortgage oversight during a "boom", etc. |
I'm not saying there shouldn't be regulations.
I'm saying that i don't like knee-jerk reactions that we "need more regulations" when things went wrong and we found out the existing regulations weren't being enforced. Perhaps we should spend time/money enforcing the existing regs and seeing how they work rather than creating new ones to not follow. |
This is one beautiful graph. American's save $392 a year....
American Savings: Americans Save an Average of $392 Per Year. Total Consumer Debt is over $2.5 Trillion. The Dark Knight of Debt. » Dr. Housing Bubble Blog |
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Are 401Ks considered 'savings'? |
Dola, I blow that 'avg american mortgage balance' clear out of the water.
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So I have to assume that those against helping out the individual in this thread are also against any sort of punitive action against UBS and the other banks that marketed Auction Rate Securities as anything but what they were. They marketed them to individuals as cash equivalents when they were not and the practice continued after the senior executives knew that they were practicing fraud (nothing has been proven yet but the case seems pretty thick). I mean I assume that everyone remains firmly entrenched in their stances and are consistent in the sense that some believe that executives and big business need to be regulated because they do not, have not, and never intend to regulate themselves (especially when they know they'll be bailed out) and the other side will think that individuals should never trust anyone, including those that are deemed as experts, for advice and direction.
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Are we not allowed to think that individuals shouldn't be protected from their own stupidity but they should be protected against fraud? I'd like to think that this whole crisis was made up of many different people and many different problems rather that just all stupid people or all fraudulent lenders.
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Well on the spectrum, and Im deeply involved in it, I can tell you fraud in cities that had big bubbles in them was far more rampant than those on the other side of the aisle want to admit or fail to recognize. Unfortunately, in this arena, I feel I have more intimate knowledge than they, so it gets me riled up when they camp in a space surrounded by, what I deem to be in some cases, incomplete or inaccurate information.
BTW, I must say that unfortunately due to my licensure, during those times, I was required by law to sell to someone if they could provide financing. I had no choice and could not give my opinion. Just wanted to put that out there. |
Flasch - since it now appears that Florida, specifically, had some very egregious problems with mortgage fraud, I think you need to recognize that it may not have been the same in all other parts of the country.
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It's certainly regional BUT I would bet $ that the areas with the most severe upswing in valuations also had the most severe run up in fraud cases and the most severe decrease in underwriting procedures and break down of the system(s). Therefore where we're feeling the most problems that some say is the cornerstone of the greater economic issues we're seeing we're built upon a house of cards of fraud, greed, etc. etc. To say it didnt exist or it was the individuals stupidity/ignorance is a sliver of what is going on in the whole pie.
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I've tried to make that distinction but people would rather lump it all together. The stuff DanGarion posted about debt in America is amazing. It's aboslutely ridiculous what kind of mortgage/student loan/credit card debts people are taking on. Even if there were a minimal amount of fraud out there - the whole thing would have come crashing down eventually. Even we regulate the shit out of everything and agressively enforce the regulations, people will manage to live beyond their means. Maybe we don't let them borrow as much for a house - they'll spend it on a car or boat instead. You can't protect people from themselves. |
back to Brian D, it was neither or all of the above and in some cases none of the above. Youre leaving out the bad/fraudulent appraisers, the fraudulent Down Payment assistance programs, etc.
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And guess who gets to pay for it, when they want Uncle Sam to give them help? Look, all parties are guilty in this mess. |
question for those in the know...
My sister called me yesterday and said she got a notice saying they were forclosing on her house if she doesn't pay what she owes by 8./21. apparently she hasn't paid her morgage in about 3 months ( or all of it at least) and owes roughly 5K This came as a huge surprise to me and I wish I knew sooner, I really don't want me or my parents to have to give her 5K but whats done is done. I told her that the first step should be to call the bank and see if something can be worked out. She has about 3K she can give them in the middle of august, unfortunantly that includes her august payment which is about 1900 and will have to be late on her september payment. So I guess my question is will the bank be willing to work with her or should me or my parents prepare the check right now? FWIW she is a widowed mother of 3 kids under 9, so this has been emotionaly taxing to say the least. |
um....
She should call the bank immediately and try to work something out to stay in the home letting them know that she wants to pay up. hopefully they'll work something out. Generally when they say they are foreclosing on them it doesnt happen overnight and will be a process. It is expensive for the bank so they will hopefully want to keep her in the home but if youve read the last 6 pages of this thread you'll see that the banks have truly fallen on the sword when it comes to contacting those in need of help. If they would be more diligent they could help themselves out too however I had a banker friend of mine tell me that the government and people are asking the lenders to do more in the way of work while all the while the banks are slashing their payrolls and doubling, tripling, and quadrupling employees workload so it's not that easy. This is besides the point at hand. You and whomever wants to help should be prepared to help by paying money but the bank may be able to work some sort of bi-weekly payment thing to get her caught up. Or pay a lump sum now of 1/2 and we'll work a payment schedule out for the rest etc. That being said, if she truly cant afford to pay even once she's caught up then perhaps letting go of the home (like my parents) is the best option for her wherein she can go rent something that she could. Unless someone in the family wants to subsidize which more and more american's are doing for their family members. Y'know I sell to foreigners all the time and they have no qualms about having many extended family members in the same, generally, big home where they all share and split the bills and I think that this may be a trend we see more and more with Americans over the next 5-10 years. However all of the above should not be taken in lieu of getting advice from a paid professional who specializes in these sorts of matters. Do your own due diligence. |
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I am somewhere in the middle ground on all this, but jut to point out a basic historical fact: where there is money to be made, to there the crooks go. I would guess fraud was no higher than usual in markets that began to boom early on, but certainly as it continued and became more apparent, criminals showed up in droves to take advantage (or previously good people fell into crime). Just saying if there is a cause and effect with respect to higher fraud rates and boom areas, it isn't necessarily all in the fraud--->boom direction. |
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It was in the middle of his paragraph, so I wanted to pull this out for flasch to highlight it for Lathum. It really is critical your sister do an honest evaluation of her finances and ability to pay and to pay going forward. If your family helps her and she ends up just delaying a foreclosure down the road, you're just throwing money away (and so is she). The bank should work with her, because there aren't so many eligible buyers out there for foreclosed properties at the moment, and banks aren't in the business of owning property. Not only is the foreclosure process expensive, but if there are no takers and all the bank does is take on title until it can pass that property on, it is a money sink for them, requiring maintenance and upkeep, and forcing them to pay taxes on it, pretty much none of which they will ever get back even when they do find an owner. So the bank is looking at a pretty big cost to them to actually foreclose. Plus, I think the government is asking banks to work with mortgagors/trustors more, although I have no idea if they are taking that to heart. So the bank should be willing to work with your sister (and especially if she doesn't have a history of going into foreclosure--she doesn't, right?). |
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You are fine. I did the same thing when I bought my house. |
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Have her contact the bank ASAP, be prepared to pay what she can, and work on a schedule to get caught up. If she can't afford the home, 9 times out of 10 she's better off selling the house herself than letting it foreclose. If they have gone to foreclosure, more than likely the she's avoiding talking to them, and that's the worst thing you can do when you owe a bank money. The banks I work with are 100 times more likely to work with someone who comes to them up front and says they are in trouble and need help, as opposed to someone who ignores the problem. The housing bill could have possibilities to help her refinance to a lower payment. But even if not unless she's completely upside down in the house valuewise, she's so much better off getting caught up with the bank and selling the house to get into something cheaper. |
I basicly told her to call the bank, and she is at my parents today working with them since I live 3,000 miles from them all.
As for if she can afford it or not I'm really not looking for common sense advice, basicly she had to pay for summer camp and fell behind, things snowballed, etc... thanks to all those who replied, it pretty much confirms what I already told her. |
Having just finished a book about the collapse of Enron, I see a lot of simularities in the way mortgage derivatives were moved around lately and the way Enron destroyed themselves with their assortment of derivatives. When people found out why Enron went down, some prominent people came out in favor of regulations that would prevent companies from spreading these derivatives around without proper collaterialization. Of course, the Bush administration and big business fought hard against this and they won...which played a big part in the meltdown that happened later.
Go read one of the handful of good books about what happened at Enron and you will see how the biggest problems didn't get fixed by stuff like Sarbanes-Oxley, due to lobbyists/political influence keeping the trading of derivatives from being regulated. Who started the ball rolling on this unregulated derivative business? None other than Wendy Lee Gramm, the wife of Phil Gramm, who was the head of the Commodity Futures Trading Commission at the time. She later joined Enron's board, oddly enough. Go figure. |
Which enron book? I picked up 24 days a few years ago but never finished.
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I just finished _Pipe Dreams: Greed, Ego, and the Death of Enron_ by Robert Bryce.
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Just another sign that the shit involved with the CDO, securitized debt dealing, mortgage garbage went to the heart of the fact that these companies do not and will never self regulate and the capital structure must be balanced with a regulatory force that can insure and protect the public:
Quote:
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caveat emptor...
In all things. |
NPR's Marketplace had a guy from the WSJ (not exactly a bastion of left-wing economic thinking) on last week who said we should expect more regulation of the financial sector in the coming years given that Wall Street has shown itself utterly incapable of self-regulation, and that this would be a good thing.
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They must be catching on that investors are losing faith and see regulation as a way to keep the investment coming in.
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Whew, we got word everything was aproved and we are good to go!
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