Posted on 06/08/2011 7:56:45 PM PDT by Jim 726
The subprime crisis has spread well beyond the victims of those loans. The residue of the crisis spread to the economy and began to affect those who had lost their jobs, their equity and finally their homes.
All of us have been touched by friends and loved ones who had to leave their homes.
The subprime crisis was caused primarily by the crash of real estate values and not by risky loans. Since then, several variables have contributed to the rise of record foreclosures.
Loan modifications were widely marketed as easy solutions to homeowners facing payment default. As most discovered, a modification is neither easy or often granted. Unfortunately, the marketing of loan modifications attracted many homeowners who believed this was an alternate method of refinancing.
Most of these homeowners were not facing default but were only looking for a way to lower their payments.
These unfortunate home mortgage holders were coached to default on their payments to get their lenders' attention. When the modification was not approved, they could not afford to bring their payments current. Additionally, many banks filed foreclosure notices against them while their requests were being considered.
(Excerpt) Read more at theunion.com ...
What a retarded statement.
Chicken/egg. Real estate became inflated due to the crap loans.
The subprime crisis was caused by grossly inflated real estate purchased by complete idiots who didn’t have the means to pay!
Stupid is as stupid does.
People were told this was coming, the numbers were explained, and they drove over the cliff anyway.
We are nowhere near the bottom, and the housing bubble ain’t gonna unpop.
I'll second that. It's all a part of dumbing down the population.
Need more investigation and publicity on Community Reinvestment Act and banking regulations that strong-armed the banks.
Crap loans were a factor, but real estate assessment guidelines being uncoupled from indexing against the local population density, the local median income, and the total local housing supply played at least as big a part in this - and that was done under Carter. There was a time when the process made sure that a bank which was federally insured was not allowed to make loans on property greater than what the property could reasonably bring as collateral.
It is my belief that the current situation happened by design and the roots go back at least to the mid seventies and followed a step by step plan.
The drop in values would not cause a ‘crisis’ to anyone with a) Reasoble equity from a down payment or b) A continuing ability to make payments. The ‘crisis’ was brought by idiots with zero, or even less than zero equity. These alleged ‘journalists’ are interjecting a lot of ‘feeling’. These people played with fire and got burned.
Check this old article on the linkage of the subprime crisis and the invasion of millions of illegal aliens.
http://www.humanevents.com/article.php?id=33821
Actually, it was caused by politicians and their destructive regulations, programs, and agencies. The prime cause of every major economic disaster is government. You can blame the easy money of the Fed and the crooked politicians who forced banks to make loans to the unqualified.
“IMO, real estate was and is overvalued relative to the rest of the economy.”
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You are almost certainly right that it still is and it certainly has been in recent years. A few years ago some on FR were referring to spending five or six years gross income on a house as normal. It takes a lot of willful blindness to think that could be normal. I remember when the rule for most people was that a house should cost no more than two years annual income and that was based on a one income family. For a married couple to spend even two years income for both on a house is too much, to spend five years income for both is totally irresponsible, it is begging for disaster.
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