MSM shure jumped on subprime demanding laws and regulations be passed right now!!
And the liar loans (subprime) are not even the biggest problem.
They represent only the smaller part of americas 7.800 billion housing market.
While they often get foul the people who are actually paying them allready pay quite high rates of interest.
If loans in general get more expensive then the cheap prime loans that don't run fixed rate for the whole time will surprise their holders with brutal raises of interests. They will then not even be able to sell the house to get rid of their loan. CAn't sell, can't pay, can't refinance.
This lock ups could hit every fith loan taker.
In this lies potential for a true economic crisis.
Who's the biggest scam artist?
Uncle Sam.
Kids in college are given "financial aid" in the for of federally backed student loans - some over $20,000 per year. They are easy to get. No income required. And there are legions of undergraduates that are borrowing the max every year. It is not unusual these days to see kids graduating with a measley BA or BS and with $75-100K in debt. And, none of it can be discharged in bankruptcy. So, these kids will be paying for the rest of their lives. Victims?
"Liar loans" ("no income verification" mortgages) were originally a good idea when they were introduced by Citicorp(?) back in the late '80s. They were designed for self-employed people with good credit who had a difficult time qualifying for mortgages when underwriters had to rely on income tax returns for calculating income/debt ratios.
The more recent practice of offering "no income verification" mortgages to people with shaky credit was a disaster waiting to happen. Well, it is happening. Surprise, surprise.
Well, does character count yet, or must we wait a bit longer?
Lost another one to Di-Tech.
There is some good news - investment properties will be widely available and relatively affordable. 'Course they'll need some cosmetic fixing-up.......
Back in the day, when I ran a residential framing outfit on Cape Cod, I worked for a couple of builders who kept stacks of W2 forms handy. This was over thirty years ago and the builders, buyers and bankers were all colluding to get unqualified people into houses.
I'd say about 95% of these "unqualified" folks found a way to make their payments and have probably moved up to more substantial homes by now. Of course on the Cape today that 2 bedroom half Cape on 1/4 acre that went for $27,900 brand spanking new is "worth" over $400,000.
Subprime loan market grows despite troubles
Especially interesting the short bit about ACORN, Citigroup, and subprime loans to illegal immigrants.
on Section 8 rental assistance, who had been paying $200 a month in rent, was put into a $350,000 mortgage. Her income was listed as $72,000, when in fact she made half that,
Half that .... hmmm 36,000$$ a year and shes in section 8.
Sweet , where can I sign up? .. and can I rent from myself or do I have to go to one of their places?
And on another note , I saw a story about a poor little old lady who re-mortgaged her paid off home for 350,000 ... her income was 1000 a month ... poor girl. But my question ... what the heck did she do with the money?
Am I suppose to feel sorry for these folks?
IMHO, this sounds like collusion between developers, appraisers and and mortgage brokers...to take advantage of individuals and lenders....to the end benefit of the builder/developer. Wonder how far into it Deval is?!!
The first time my wife and I shopped for a house over 20 years ago the rule of thumb was the mortgage couldn't exceed 2 1/2 times income. This was 5 times income.
There's a sucker born every minute.
The price of laziness in school gets paid as as adult.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Pumping buyers into the market increases demand, inflating prices, and reducing demand for rentals. The clampdown will have the opposite effect.
Bad news: my rent on my $500k house may go up from the current $1,600.
Good news: Maybe I'll be able to buy it for $300k in a year or two.
One of my buddies just bought a home in January. It was on the market for $500k last year. He got it for $340k. This is in Seattle!
It's a mad, mad, mad world.
How can you carry a 350K mortgage on 72K/yr?