‘Zero US effort’ on housing slammed

The Financial Times ^ | 10/29/07 | Matthew Garrahan

[Doogle]

"I was irresponsible with lending practices..I practically had to stuff money in peoples pockets..I got bonuses I didn't deserved...I made a killing in the market..it was get it while the getting was good...but *sniff sniff*..I don't like the spotlight when it all falls apart....squeal,squeallllll...squealllll..ssssqueallllll"

[gitmo]

Subprime loans are usually low (or no) downpayment loans to bums. Once a loan balance exceeds the value of a home, the bum figures, "Why bother?" And then the bum waves goodbye to the house and basically says to the bank, "Enjoy your new house." Because he's a bum.

So what is the crisis?

[FunkyZero]

2 Thigs:
a) Move away from California if you can’t afford a house there. Who would want to live there anyway.
b) Stop lending money to people who can’t make the payments all while expecting a welfare bailout program to repay the unaffordable loan you gave to the borrower.

I mean, really. I want a shiny new GT40, can I just get it on an ARM loan and have uncle sam make my payments when the day comes that I can’t? No, I came to terms with the fact I can’t afford one and settled for computer wallpaper (and it breaks my heart!)
Geez

[Wally_Kalbacken]

He’s no farmer - he’s just a guy who got paid $130M last year, bitching and moaning because his gravy train dried up, and he wants taxpayers in the form of greater Fannie Mae/Freddie Mac exposure to take the risk.

The money quote has to be “First-time buyers cannot buy a home now. Only the wealthy and privileged can afford to buy homes”. The essential truth of this debacle in sub prime was the pushing beyond reason of the idea of home ownership. By moving that number up 1 or 2 percentage points we may have tripled the rate of foreclosures.

[durasell]

So what is the crisis?

---

A) The forclosed house(s) depresses the price of other houses in the area.

B)The packaged loans were sold off to hedge funds that borrowed money from banks to buy them. Basically the banks got rid of the mortgages, then the mortgages returned in the form of collateral for loans from the funds.

[gitmo]

OK, that makes sense.

But if the lender has excess inventory, would he not be forced to sell at a discounted price? And would that not make housing more affordable and cause cash flow to increase, lubricating the economy?

I admit I'm weak in economics, but I’m struggling to see a national crisis. It looks like a crisis to the lenders, but that’s a risk they took in making these loans.

[padre35]

Now THAT is funny!

“IF” this moron cut the value of his mortgages to 1/3 of their amount, and then bundled them at auction, then I could see the FedGov providing the courthouse steps to auction them off upon.

Pass out 500,000 mortgages to anyone with a pulse then whine when the loans go bad qualifies for a Financial Darwin Award.

[j. earl carter]

As long as [house] values keep falling, the subprime situation will get worse.” Would someone explain that to me? I don't get it.

I think he means to say:

So far, the feds have refused to line up more suckers to keep the Ponzi scheme going.

[durasell]

Would someone explain that to me? I don’t get it.

---

He’s holding lawmakers hostage to his crisis. Basically he’s saying, “I may have made the mess, but folks are going to blame you guys if you don’t fix it.” And he’s right.

[SteveMcKing]

"Angelo"

[Lancey Howard]

So what is the crisis?

Banks are getting stuck with lots of real estate they don't want and losing not only anticipated interest income on outstanding balances, but also seeing the collateral for those outstanding balances - - the real estate - - continue to lose value to the point where a ton of money is hanging out there uncollateralized.

In short, banks are taking a beating and if enough banks get into trouble or fail then that's bad for other financial institutions and therefore for the economy in general. I guess that's the crisis.

[aliquando]

In the words of Red Foreman “ Dumbass”!

[denydenydeny]

zero effort to tackle the crisis

Tackle, v.t. To dump enormous amounts of taxpayer dollars on while demanding no accountability from anyone; tackled, tackling
--International Leftist Dictionary, Third International Edition

[durasell]

....plus even legit people — non subprime folks — are seeing the values of their homes decline.

Not to mention the ancillary effects, such as a slow down in building, which means jobs in manufacturing and sales.

[Lancey Howard]

Hopefully, the market will get this mess straightened out soon.
And I think it will.

[upchuck]

“First-time buyers cannot buy a home now. Only the wealthy and privileged can afford to buy homes”.

Whatta buncha BS!

I suspect a "first time" home buyer will have no problem securing a mortgage is they:

• Have a stable job.
• Save until they have at least 20% of the purchase price as a down payment. Plus, if they're smart, have another 5% in reserve for moving expenses and all the stuff you need to buy after you move in.
• Live a reasonable lifestyle commiserate with their take home pay without running up a bunch of credit card debt.
• Can afford the monthly payment on a 30 year or, even better, a 15 year fixed rate loan.

This is the way it's been done by millions and millions of people and it works.

IMHO, folks today don't understand the word sacrifice.

[Porterville]

it is a shame when a few a-holes ruin a useful tool like easy low interest short-term loans....

[durasell]

It will, but there’s going to be a lot of damage. That’s a nice way of lost jobs, bankrupt companies, closed small businesses, etc.

[Lancey Howard]

Yep. It’s a shame, but what can you do?

[Mariner]

"the government is actually letting the market deal with the situation".

Well, sorta. The government is leeting the FED deal with the situation, along with the Treasury.

The "fix" is INFLATION, more cheap money and an unregulated slush fund which will be allowed to buy SIVs and CDOs...and never having to report their true value or eventual disposition.