Posted on 10/29/2007 8:59:36 PM PDT by bruinbirdman
Hey, Angelo! The government didn't twist your arm to make questionable loans; deal with it! The folks who got snowed are the ones who may be worth helping, not slickster mortgage brokers.
Gads - I can almost smell the cologne.
Were they being negligent in their due diligence or simply winking and looking the other way? This whole problem seems to be self-induced by the lenders who are now asking for you and me to bail them out.
Economy/Credit/Housing Issues Ping List
If you want on or off this list let me know.
The only problem with that list is that overheated areas where even if prices drop 50% a good paying stable job will earn you a 20% down payment in 2 years net. If you reasonably save 20% of your after tax money, it’s 15 years in a good stable job before you can afford a 20% down payment on a house.
And anyone here would say that in 15 years the price of the home will definitely increase.
Nice broad brush there.
Your general consensus IS correct...but many subprime borrowers are fellow Freepers, brothers, cousins, and co-workers. Calling them all bums is akin to calling all conservatives “extremist religious zealots and gun nuts.”
“Angelo Mozilo, chief executive of Countrywide Financial, on Monday strongly criticised the US government’s response to the collapse of the subprime lending market, saying there had been “zero” effort to tackle the crisis. “
That idiot caused it and now wants federal, free, money to bail his ass out. Let him rot.
That only helps those who buy the houses at discounted prices.
Actually cash flows overall decrease because of the large number of people that now cannot sell their homes and make money or in fact would lose money.
Housing was, is and never will be a problem.
Sincerely
The Toddsterpatriot!
I don’t care who ya are, that’s funny right there!
Good analysis.
I am almost strictly A-paper now and never did much subprime, and what I did do was really more like subprime+ if there is such a thing...someone who was not a deadbeat but had a couple issues that kept them just under conforming. Some might call this Alt-A but it was subprime by virtue of the lenders that did the loans.
Option ARMS I have only done for those who have had success with them in the past as an investor or have well more than enough equity and residual income to be protected regardless. (we’re talking under 20% back-end DTI etc)
Anyway, I also saw what you did and realized things couldn’t last very long...the fact that over 40% of loans in California were stated income helped me realize just what a problem it was becoming - people just truly could not afford these homes.
TFB. If these dopes can’t run a clean business without riping people off, they deserve to go out of business. If we ran our computer repair business like these guys did, we’d have been run out of town on a rail many years ago.
Granted, people are stupid, but there is no way in HELL that the government should bail out these idiots. The Lenders OR the Customers.
Let the Free Market do it’s thing, and those of us with ready cash to buy a McMansion for a song can do so right now. (I have NO desire to own a home bigger than the one I have now.)
Plenty of my relatives made a killing in real estate when the market crashed in the 1930’s, and in the years to follow they rolled those homes and land purchases into bigger and better things for we future generations.
Cash is King, Baby. Always has been, always will be. :)
To be frank though...if the loans were 30 year amortized...they’d still have no equity and the reason is simple:
If you have a loan for $200,000 at 7%, 30 years, the payment is $1330.60. Of that $1330.60, $1166.67 is interest in the first month’s payment and it SLOWLY decreases after that. So your first month is only $163.93 principal. If you kept the loan 18 months before foreclosure...the balance is $196,898.14.
An interest only loan would still be at $200,000. Yeah...there’s more equity in the 30 year amortized loan...but that $3101.86 in extra equity doesn’t mean jack sh*t in the scheme of things.
IOW interest-only loans are NOT the cause of foreclosures. Negative amortization...now there’s something to discuss as is the concept of the stated income loan where income is not verified.
Actually, the government has done a few things.
FHA rules were altered...that’s the primary change.
I’m fine where I am. I saw through kalifornia 32 years ago and hitchhiked home. Milk and honey are real things in the middle America.
Some good points. That figure I mentioned that 1/3 of new loans in CA were interest-only may be misleading. Many of those home buyers could have put down a cash deposit anyway, to avoid having to pay mortgage insurance (I think that’s 20 percent). So it doesn’t necessarily mean those people are high-risk. But I think it’s an indication that there are (were) many investors that thought home prices would continue to climb, so they could make a lot of money every time they sold. In their mind there was no real need to chip away at the principal, since the rising value of their investment would eclipse whatever they could build in equity anyway.
Bush seeks to increase minority homeownership
By Thomas A. Fogarty, USA TODAY
In a bid to boost minority homeownership, President Bush will ask Congress for authority to eliminate the down-payment requirement for Federal Housing Administration loans.
In announcing the plan Monday at a home builders show in Las Vegas, Federal Housing Commissioner John Weicher called the proposal the “most significant FHA initiative in more than a decade.” It would lead to 150,000 first-time owners annually, he said.
Nothing-down options are available on the private mortgage market, but, in general, they require the borrower to have pristine credit. Bush’s proposed change would extend the nothing-down option to borrowers with blemished credit.
(snip)
exerpt:
http://www.usatoday.com/money/perfi/housing/2004-01-20-fha_x.htm#
From USATODAY 1/20/04
It was government action that made this problem a crisis. Now this guy wants them to do more.
Mozilo belongs in prison. He quietly sold 200 million of his own Countrywide stock in increments, while telling one and all how bullish he was.
No sh*t, Sherlock!
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