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CLE: US Subprime Crisis Is "Financial Apartheid"  
User currently offlineFlighty From United States of America, joined Apr 2007, 8573 posts, RR: 2
Posted (6 years 8 months 1 week 2 days 13 hours ago) and read 2636 times:

http://www.breitbart.com/article.php...0127181914.e1z8r2hd&show_article=1

"They had small means and big hopes of owning a house. But African-Americans snared in the US mortgage crisis have seen the American dream turn into a nightmare many call "financial apartheid."

The storm triggered by risky "subprime" loans has left many in ruins, forced out of their modest homes and furious at falling victim to financial dealings that have taken a particular toll on minority families.

"People of color are more than three times more likely to have subprime loans," concluded the organization United for a Fair Economy in a recent report which estimated that minorities have seen between 163 billion and 278 billion dollars of their equity go up in smoke since 2000. "


This is complete hogwash IMO. Banks are the ones negatively affected by this crisis. If you can't pay your mortgage, don't buy a house. Go rent an apartment.

People want it both ways. They want super-low payments of exotic ARM mortgages, but they don't want to actually pay the mortgage adjustment. Any way you slice it, these people ("apartheid" shouters) are asking for homes without paying for them.

I feel sorry for the bankers who have lost tens of billions (approaching $100B) on this. Home prices got bid up to prices people cannot afford. In effect these ARM products raised home prices, even in poor neighborhoods. Bankers did NOT know this would blow up in their own faces, costing billions. Why blame them for putting people in houses?

Simultaneously, people are starting to whine that it is "too difficult" for poor people to win approval for home mortgages. Well gee, suddenly it's a human rights issue. Jesus H Christ. You want a cheap house, you want a mortgage, but you blame the BANK for selling you a house you could not afford. I just can't fathom it.

Banks should air some commercials on TV. "You may be mad about losing your home... well... SHUT THE HELL UP. We lost $18 billion dollars because of your sorry asses. You think we're happy? We're Citi Group (TM)."

104 replies: All unread, showing first 25:
 
User currently offlineYOWza From Canada, joined Jul 2005, 4897 posts, RR: 15
Reply 1, posted (6 years 8 months 1 week 2 days 12 hours ago) and read 2622 times:



Quoting Flighty (Thread starter):

This is complete hogwash IMO

I'm assuming you don't have a finance background. This issue is far more complex than your post suggests. It's an all round bad situation, both those of modest income and the lending institutions are suffering. So... where do you think this problem was born?

YOWza



12A whenever possible.
User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 2, posted (6 years 8 months 1 week 2 days 12 hours ago) and read 2619 times:



Quoting Flighty (Thread starter):
I feel sorry for the bankers who have lost tens of billions (approaching $100B) on this.

Boohoo. 18bn is a drop in the bucket for banks, they probably took a while to even notice. Look at Societe Generale and their 4.9bn euro fraud - they just went out and raised 5bn in capital from other banks to cover it. Never ever feel sorry for a bank. Bankers never go hungry.

Quoting Flighty (Thread starter):
We lost $18 billion dollars because of your sorry asses

Again, I don't think any bankers actually lost their homes because of this loss. The ones who suffer are the ones sold these dodgy loans. Yes it takes two to make a bad or stupid loan, the lender and the borrower - the blame here does not lie solely with the homeowners.


User currently offlineFlighty From United States of America, joined Apr 2007, 8573 posts, RR: 2
Reply 3, posted (6 years 8 months 1 week 2 days 11 hours ago) and read 2602 times:



Quoting JGPH1A (Reply 2):
Again, I don't think any bankers actually lost their homes because of this loss.

Not one person lost "their" home over this. That would be robbery.

Instead, banks have bought many homes and been burned in the process. People lived in the bank's homes without paying for them.

The bankers essentially tricked each other. Some got away clean. Others got royally screwed (i.e., the shareholders of banks such as myself). I got screwed.

Do I feel sorry for people who got crap loans? Yes, sometimes. But if you are a fool, you will eventually spend your money foolishly. It is impossible to become financially secure if you are a complete fool. That is the problem for them. Preying on grandmothers is an age-old activity. There is absolutely nothing new about ARMs. They have always been a bad idea, but now we have the data to prove it.

Banks won't make the same mistake again.

And indeed, banks really did screw up. The over-valued these mortgages to the extent that it was too enticing to loan to the wrong people. That was wrong. Instead, those loan applicants should have been rejected. And in turn, prices in bad neighborhoods would have fallen. Then people would have been approved at cheaper prices, and this "crisis" would have been avoided. But banks got greedy, and screwed each other.

I am not sure any regulation of the "sub-prime" market is necessary. There is no motive to "trick" people into mortgages they cannot afford because banks pay dearly for it. Banks hate to foreclose. It is truly the last resort. Banks get virtually nothing for these bad-neighborhood houses. They go on the auction block and banks cut loose for far under fair value.

One innovation we may potentially see is banks actually writing off part of the debt of the borrower in lieu of actual foreclosure. Although it sets a horrible precedent for further abuse / lawsuits against banks, such negotiations would keep people in "their" homes since, although they can't pay the original loan, they are still better than the (catastrophic) losses associated with foreclosure. Those are essentially a 100% writeoff. Most of these people live in houses worth next to nothing. Bank labor / paperwork costs can equal the value of these homes, at $30k in some cases. So banks may prefer to avoid the hassle and cut the mortgage by 1/2. Very sticky situation however.

Lastly, for every "poor soul" who gets kicked out of "their" house, another "lucky person" will move in. Generally. The real estate market will clear up. It always does. And all those houses will be lived in once again. There is nothing wrong with evicting a squatter. You get a lot of notice before the bank forecloses. And another, more deserving person will take your place.

So what is the solution... naturally, banks will place lower value (and higher expected default risk) on these ARM assets going forward. So, they will be disinclined to make these loans ever again. So, the problem is already solved. Lesson learned. We could outlaw ARM mortgages outright, that is another possibility. But it will hardly be necessary now.


User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 4, posted (6 years 8 months 1 week 2 days 11 hours ago) and read 2597 times:



Quoting Flighty (Reply 3):
the shareholders of banks such as myself). I got screwed.

Yes, you did. That is the other half of this whole mess. It's not just the homeowners, the shareholders take it in the shorts too - but no doubt the CEO of Citi Group will be taking his multi-squillion dollar performance bonus this year same as usual. It's not HIS money, after all - it's yours. That's capitalism, baby. Those in charge seldom suffer if they screw up.


User currently offlineFalcon84 From , joined Dec 1969, posts, RR:
Reply 5, posted (6 years 8 months 1 week 2 days 11 hours ago) and read 2594 times:



Quoting Flighty (Thread starter):
Banks are the ones negatively affected by this crisis.

Banks aren't losing in the long run, Flighty. People are losing. Banks will simply get more money from the government, and they'll write off all this subprime bullshit they've been feeding us. PEOPLE will get hurt the most. People who trusted banks and lending institutions that they would not deliberately put them in a bad situation.

You want ME to cry for the banks, who made billions on that bullshit banking bill that passed a few years back, that gave them windaflls? Sorry, pal, you're barking up the wrong tree.

You got screwed, because you're a shareholder, but you don't obviously give a shit about the thousands upon thousands who lost more than you EVER could in this banking crisis.


User currently offlineRJdxer From , joined Dec 1969, posts, RR:
Reply 6, posted (6 years 8 months 1 week 2 days 11 hours ago) and read 2590 times:



Quoting JGPH1A (Reply 2):
Bankers never go hungry.

http://www.charliekeating.com/enquirer0206.pdf


User currently offlineFlighty From United States of America, joined Apr 2007, 8573 posts, RR: 2
Reply 7, posted (6 years 8 months 1 week 2 days 11 hours ago) and read 2590 times:



Quoting YOWza (Reply 1):
'm assuming you don't have a finance background. This issue is far more complex than your post suggests. It's an all round bad situation, both those of modest income and the lending institutions are suffering. So... where do you think this problem was born?

My background has its strengths and weaknesses. As I understand it, small banks discovered a thriving market for poor quality mortgage assets. They proceeded to link many of our country's poorer people into these high-risk-for-banks loans. It was also "high risk" for customers in the same way drinking and driving is high risk. That's why normal people try not to do that.

Americans are well known for taking on as much debt as possible. This is risky and carries consequences. Now we are hearing complaints about those consequences, whereas the customers are actually not bearing the capital loss. They are running away, while the banks ought to throw them in debtor's prison. It is impossible for banks to pursue damages against these scofflaw people. Instead, banks must divest of these houses at a loss. That's no good for banks.

People who re-financed their homes to get $50k to spend on trinkets and vacations are also getting burned. As they should. They bet their homestead on a very iffy proposition.

Local bankers didn't care about the long term risk because they knew they could flip these loans to Citi or Deutche Bank. So that was the disconnect. If the big holding banks really knew how crappy these assets were (which they ought to have known), then this viscious circle wouldn't have happened.

Ultimately I do blame those large banks for not doing proper simulations of the effects of interest rates on the ARM population. They were trusting that uneducated people were somehow wise enough to make sure their loans were sensible in the face of future risks. Meanwhile, the borrowers (generally also inept) trusted that the bank was being street smart. Ultimately, nobody was street smart. The banks made a mistake in not digging into their derivatives.

Greenspan gave a famous speech in 1999 about the dangers of opaque derivatives that were not properly understood. It seems he was right. Banks have always known the risk profile of ARMs. You can't let people stretch their way into an ARM because they will default when rates rise. But by consolidating these puppies, I guess banks tricked each other. Deutche Bank assumed banks in Cleveland had done their due diligence. But nobody had. So Cleveland got away clean, while banks in NYC and worldwide paid the price.

CLE borrowed a lot of money that they don't intend to pay back. Instead, people like me, Germans, Japanese will pay the price. It was our money and our houses. Regards.


User currently offlineRJdxer From , joined Dec 1969, posts, RR:
Reply 8, posted (6 years 8 months 1 week 2 days 10 hours ago) and read 2584 times:



Quoting Falcon84 (Reply 5):
People who trusted banks and lending institutions that they would not deliberately put them in a bad situation.

Do you step off the curb without looking trusting that the bus driver won't run you down? Do you change lanes while driving trusting that the person in the other lane will let you in? Where does personal responsibility fall in the making of a home loan? When is it the buyers responsibility to say, I don't understand this and it's a lot of money, maybe I'd better ask for some advice?


User currently offlineHalls120 From , joined Dec 1969, posts, RR:
Reply 9, posted (6 years 8 months 1 week 2 days 10 hours ago) and read 2583 times:



Quoting YOWza (Reply 1):
This issue is far more complex than your post suggests. It's an all round bad situation, both those of modest income and the lending institutions are suffering. So... where do you think this problem was born?

In the greed of buyers, sellers, mortgage brokers and appraisers. They are all guilty.


User currently offlineFlighty From United States of America, joined Apr 2007, 8573 posts, RR: 2
Reply 10, posted (6 years 8 months 1 week 2 days 10 hours ago) and read 2582 times:



Quoting Falcon84 (Reply 5):
Banks will simply get more money from the government,

Yes and that's an absolute crime. I agree that banks should pay a heavy price for their stupidity. The Feds should not bail out these banks. Let them drown. The US banking sector is very strong and this is not 1929. A few of the dumbest banks should be allowed to quit.

By the same token, people should not be given a free house. Maybe a one-time amnesty on these ARMs, getting poeple into a more sensible type of loan. But don't go overboard. I do not want someone else getting a sweet deal just because they signed an insane ARM, can't afford to refinance, lost their job etc. Yes, they are people. People exist all over.

I am a person too and nobody is giving me a free house. And furthermore I don't call lendingtree.com or whatever. Enticing TV ads for refinances proved to be very unhealthy. People just don't have any idea. They are shocked that when you borrow a bunch of money, spend it on BS, and default youend up with nothing. Duh. Your assets are gone because you spent them. In retrospect banks were capitalizing on the most "senseless" people with those TV ads. And then selling those loans to Deutche Bank. Who got burned, basically just Deutche Bank in the end.

So Greenspan was right... haha


User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 11, posted (6 years 8 months 1 week 2 days 10 hours ago) and read 2576 times:



Quoting RJdxer (Reply 6):
http://www.charliekeating.com/enquirer0206.pdf

Exactly. Even in prison they get fed.


User currently offlinePPVRA From Brazil, joined Nov 2004, 8964 posts, RR: 39
Reply 12, posted (6 years 8 months 1 week 2 days 10 hours ago) and read 2569 times:

Quoting Flighty (Thread starter):

Banks get billion-dollars bail-outs from the Federal Reserve and other central banks when they should be going bankrupt for poor decisions. People don't get them. [edit: just read your last post and I see you agree with this]

Quoting JGPH1A (Reply 4):
That's capitalism, baby. Those in charge seldom suffer if they screw up.

They would, by going bankrupt. And since they aren't and they know they will get bail-outs I think Flighty is wrong in saying the following:

Quoting Flighty (Reply 3):
Banks won't make the same mistake again.

You get rid of market accountability and you screw up how the capitalist system is supposed to work. Big banks know they operate with a safety-net and thus are willing to take bigger risks than they probably should.

[Edited 2008-01-27 15:06:10]


"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineFalcon84 From , joined Dec 1969, posts, RR:
Reply 13, posted (6 years 8 months 1 week 2 days 9 hours ago) and read 2550 times:



Quoting RJdxer (Reply 8):
Do you step off the curb without looking trusting that the bus driver won't run you down?

That means nothing. That's just rhetoric. You can read all the fine print in the world, but there's a certain level of trust that people have to put into bankers, into airline pilots, into anyone who is allegedly an expert in a given field. You're trying to absolve the banks of wrongdoing, and putting it all on the little guy. Sorry, but the little guy isn't the bank expert. The bank expert is the one who knows the true risk of what is going, and, in my view, the deliberately misled the public over sub prime, simply to make extra bucks. Now, you can sit there and suck on the collective coin rolls of the banks, but they're the ones who offered the product, and they're the ones who should be held accountable for this mess, not the average Joe.


User currently offlineFalcon84 From , joined Dec 1969, posts, RR:
Reply 14, posted (6 years 8 months 1 week 2 days 9 hours ago) and read 2546 times:



Quoting Flighty (Reply 10):
By the same token, people should not be given a free house.

They weren't. They paid mortgages on it. It's not their fault the banks deliberately put out a product they knew would be risky, and could bring the whole market down.

Which is why when I hear Rudy Giuliani and Ron Paul speak of less regulation on industries like banks, I have to laugh my head off. They nead MORE, not less. They obviously cannot be trusted with the public trust, as they're too fucking greedy to do so. Less regulation? After this fiasco?

Quoting Flighty (Reply 10):
And furthermore I don't call lendingtree.com or whatever.

Too bad. I do. I've done it before-I just did it today, in fact. What the hell is wrong with calling them anyway?

Quoting Flighty (Reply 10):
People just don't have any idea.

That's right-they don't! And that's why, in the end, they have to put their trust in a professional who supposedly won't steer them wrong, and won't deliberately put them out on a limb over a cliff, like these banks did to these people.


User currently offlineRJdxer From , joined Dec 1969, posts, RR:
Reply 15, posted (6 years 8 months 1 week 2 days 8 hours ago) and read 2525 times:



Quoting Falcon84 (Reply 13):
That means nothing.

It means everything. When does personal responsibility begin?

Quoting Falcon84 (Reply 13):
You can read all the fine print in the world, but there's a certain level of trust that people have to put into bankers, into airline pilots, into anyone who is allegedly an expert in a given field.

That's why you get the opinion of a third party, like a lawyer. If you can't afford the lawyer, you probably can't afford the house. An airline pilot is different. That takes physical skill as well as the understanding of a complicated machine. Totally different.

Quoting Falcon84 (Reply 13):
Sorry, but the little guy isn't the bank expert.

Nor should he or she be expected to be. That is why you get a lawyer.

Quoting Falcon84 (Reply 13):
Now, you can sit there and suck on the collective coin rolls of the banks, but they're the ones who offered the product, and they're the ones who should be held accountable for this mess, not the average Joe.

So the average Joe has no personal responsibility to make sure they can afford the loan at the beginning, as well as at ARM adjustment time? There should be no consequence for them taking out a loan without understanding exactly what the terms were? So no accountability for the average Joe, that makes sense.


User currently offlinePPVRA From Brazil, joined Nov 2004, 8964 posts, RR: 39
Reply 16, posted (6 years 8 months 1 week 2 days 8 hours ago) and read 2515 times:

Quoting Falcon84 (Reply 13):

That means nothing. That's just rhetoric. You can read all the fine print in the world, but there's a certain level of trust that people have to put into bankers, into airline pilots, into anyone who is allegedly an expert in a given field. You're trying to absolve the banks of wrongdoing, and putting it all on the little guy. Sorry, but the little guy isn't the bank expert. The bank expert is the one who knows the true risk of what is going, and, in my view, the deliberately misled the public over sub prime, simply to make extra bucks. Now, you can sit there and suck on the collective coin rolls of the banks, but they're the ones who offered the product, and they're the ones who should be held accountable for this mess, not the average Joe.

You know I agree with this. But you need to understand what led banks to this, because it is the FED who put banks in this position with artificially low interest rates. Regulation will only tinker with symptoms not fix the disease, and won't apply to other possible scenarios, possibly even hurt. What is needed is the other 'R'--reform.

[Edited 2008-01-27 17:51:34]


"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineEvilForce From , joined Dec 1969, posts, RR:
Reply 17, posted (6 years 8 months 1 week 2 days 8 hours ago) and read 2514 times:



Quoting Flighty (Thread starter):
"They had small means and big hopes of owning a house. But African-Americans snared in the US mortgage crisis have seen the American dream turn into a nightmare many call "financial apartheid."

The storm triggered by risky "subprime" loans has left many in ruins, forced out of their modest homes and furious at falling victim to financial dealings that have taken a particular toll on minority families.

 laughing   laughing  Somebody call the hyperbole police to ship this reporter off to Exageration-traz.

I love how these morons don't report on the 95% of sub-prime borrowers that haven't defaulted on their mortgage. Also, they act as if the homeowner was blameless in this entire dealio. These deadbeats quit paying their mortgages, thereby lost the rights to the house. Had they kept paying the mortgage, they'd still be able to live there. Give me a break.


User currently offlinePyrex From Portugal, joined Aug 2005, 4024 posts, RR: 28
Reply 18, posted (6 years 8 months 1 week 2 days 7 hours ago) and read 2501 times:

If they don't give out loans to people who are doubtful creditors they are being racist, an obstacle to their empowerment, yada yada, if they do give out these loans and they end up defaulting it's the bank's faults for creating an apartheid? Damn, they just don't seem to get a break.

Quoting Halls120 (Reply 9):
In the greed of buyers, sellers, mortgage brokers and appraisers. They are all guilty.

 checkmark 

Speakinf of greed, a few weeks ago, while we are knee-deep in this mess, TLC or one of those reality TV channels was airing a program called "Flip It" or something like that about people who buy a run-down house (on borrowed money, of course), renovate it and sell it for a small fortune a few months later, glorifying this behavior. Unqualified "investors" spending tons of money on very expensive, very illiquid assets is what caused this trouble.

Quoting PPVRA (Reply 12):
Banks get billion-dollars bail-outs from the Federal Reserve and other central banks

Hasn't happened yet - yes the FDIC is there as a last resort but when they do intervene generally they seize up the bank, the shareholders get nothing.



Read this very carefully, I shall write this only once!
User currently offlineCwapilot From United States of America, joined May 2000, 1166 posts, RR: 17
Reply 19, posted (6 years 8 months 1 week 2 days 7 hours ago) and read 2496 times:

The sections of a mortgage document explaining the costs, the payments that will be due and the payments that will be due after it adjusts (including the maximum the adjusted payments could be) are NOT in small print at all. In looking at ours, it is in very HUGE letters and set off in a box. It is in 3 different places and we had to initial in each of those places, in addition to the bottoms of the pages that had to have signatures. THAT is where personal responsibility should begin. Gee, if your payment is going to FREAKIN DOUBLE in 3 or 5 years, are you going to be able to afford it? If all your payments are going towards INTEREST in those first 3 to 5 years, is that really a deal you should take?

And do not forget, before you lay this all at the feet of George Bush (hell, if some of you trip over your own shoe lace, you blame him for not regulating the length of shoe laces, so why not?) that the incentives in place to offer these risky loans have their roots in a feel-good liberal social program of the Clinton administration which was claiming to "spread the stability of home ownership" to everybody. Incentives for institutions, and several enabling regulations for those who shouldn't get loans, like allowing them to use an "alternate credit history" to qualify for a loan. (i.e. submitting pay stubs and phone and utility bills instead of a credit report among other things, and not having to have any cash on hand) It sounded great at the time, didn't it...the nasty Republicans wanted to keep poor people from owning houses and St. William of Little Rock wanted to get everyone a house (...and a car, and a computer...). Well, it created a lot of "stability" didn't it? Banks previously had little or no incentive to grant these loans, and that was labeled as discrimination. It's kind of a slap in the face to those who were actually REALLY discrimintated against when red lines on maps were part of lending practice to call not being able to afford something discrimination.

Finally, where did these loans originate? Certainly not in the front offices of the most reputable banks. They were either in other companies specializing in this sort of loan, or offshoots or departments of the "reputable" banks. It takes a certain amount of sleaze to push people who wouldn't qualify for a loan to begin with, into loans that they obviously wouldn't be anywhere near able to pay after the various adjustments. What is also being missed are the people who qualify under normal conditions, but who have second and third mortgages because they can't stop using their credit cards...living beyond their means, and these same institutions providing them with and encouraging them to accept the means to do so.

So, as I see it, there are a lot of dirty hands in this: politicians, banks and irresponsible people. Yeah, the banks engaged in sleaze, but it was encouraged by the government, and I am sorry, but I am tired of people being able to blame others, especially the easy targets like the evil bankers, and claim that they didn't understand. If you can't understand, you have no business completing such a complex transaction in the first place. I could be sitting in a house that cost twice the one I settled on...I qualified based on alternate loan programs and tax abatements for an amount much higher than what I would qualify under normal conditions, and the payments would have been the same...until 5 years was up and the ARM adjusted and tax abatements ran out at the same time. It was right there, in black and white, what my payment would be...noting a lawyer would need to decipher. I got the "your income will be greater by then, you could refinance, etc, etc" speech, but I had the sense to say NO. So, I get to continue paying my mortgage while the people without the intelligence and self control to buy what they can afford, get to keep their giant homes they can't afford (or small homes they can't afford in any case) compliments of my taxes, and my (an every other responsible person's) banking costs going up in the long run...not to mention 401ks and IRAs losing value because of what these people have done to the market and property values plunging in areas where there are many foreclosures.

And, of course, where does everyone look for the solution? Back to the beginning: the government! Instead of letting the market correct itself, and because it's an election year, we have to prop up the collapsing house and enable peope to keep on living beyond their means. What happens 5 years from now when these same groups of people are in another hole? The government solution should be to close the floodgates...there should be no such thing as C rated loans in the housing markets. I have a hard time feeling sorry for anyone in this mess. I am pissed off at the banks for mismanaging our money and allowing this to happen.



Southside Irish...our two teams are the White Sox and whoever plays the Cubs!
User currently offlineFalcon84 From , joined Dec 1969, posts, RR:
Reply 20, posted (6 years 8 months 1 week 2 days 6 hours ago) and read 2457 times:



Quoting RJdxer (Reply 15):
It means everything. When does personal responsibility begin?

Where does the responsiblity of the LENDERS begin, RJ? They're putting out this crap that they KNOW is risky, but could make them tons of money up front. You seem to want to exonerate them completely.

Quoting RJdxer (Reply 15):
Nor should he or she be expected to be. That is why you get a lawyer.

Bullshit. We shouldn't HAVE to have lawyers for everything. And you tell me how many Average Joe's can even afford a lawyer to look over everything? Give me a break.

You a right, they should not be expected to. Maybe then, just maybe, the lending institutions should take THEIR responsibility a little more seriously in not misrepresenting?


User currently offlineLTBEWR From United States of America, joined Jan 2004, 13120 posts, RR: 12
Reply 21, posted (6 years 8 months 1 week 2 days 6 hours ago) and read 2455 times:

In particular to Black and Hispanics being dispropotionaly hurt by the sub-prime mortgage crises, there are several key issues.
Many banks and other mortgage lenders were under pressure to make sure they didn't discriminate as to non-white mortgage applicants so may have been less strict on qualifications and ended up with a larger number of higher risk borrowers.
Many non-white and borderline qualifed borrowers might tend to purchase older homes in less desirable urban areas or older suburbs (higher proportion of lower income residents, higher crime, poorer quality schools, higher property taxes) that would be more quickly affected by downturn of market prices.
Many high risk borrowers may have had uninsured medical costs, jobs that are less stable as to income, are subject to drops in income or have benefits cost more out of pocket, or of higher risk of being shipped off to China or lower cost areas of the USA.

As to all high risk borrowers there were acts of deliberate fraud by applicants, mortgage brokers, and some banks just to make the quick buck on the fees, some didn't do their homework, got inflated valuations/apprasials/comparables.

What to do with the current crises? I do believe that for true mortgaged home residents some deals ought to be made to either transfer them to lower interest rates or allow them to rent the house at a reduced rate but still some mininum and a regular income status until the market improves in 1-2 years, and reapply for a mortgage then. That means more stability for the neighborhoods, property taxes will get paid, people have a place to live and the mortgage company will save money vs. forcloure. The Federal bankruptcy laws as to individuals should be returned to in part the previous laws so more can file for it.
Speculators and 'flippers' - screw them, they were highly responsible for the run up in home prices that is a part of this crises.


User currently offlineHalls120 From , joined Dec 1969, posts, RR:
Reply 22, posted (6 years 8 months 1 week 2 days 6 hours ago) and read 2454 times:



Quoting Falcon84 (Reply 20):
Quoting RJdxer (Reply 15):
Nor should he or she be expected to be. That is why you get a lawyer.

Bullshit. We shouldn't HAVE to have lawyers for everything. And you tell me how many Average Joe's can even afford a lawyer to look over everything? Give me a break.

Well, when you are talking about spending six figures in the purchase of a home, spending a few hundred dollars for the services of a lawyer ought to be a no-brainer.


User currently offlineFalcon84 From , joined Dec 1969, posts, RR:
Reply 23, posted (6 years 8 months 1 week 2 days 6 hours ago) and read 2453 times:



Quoting Halls120 (Reply 22):
Well, when you are talking about spending six figures in the purchase of a home, spending a few hundred dollars for the services of a lawyer ought to be a no-brainer.

Disagree. It shouldn't even be necessary.

Again, where is the responsibility for the lenders? Many of you, mostly the conservatives, put almost ALL the blame on those who simply want a decent life, and who were taken advantage of by these lenders with a product that wasn't what it seemed. They offered the product, the buck stops with them, I believe.


User currently offlineEvilForce From , joined Dec 1969, posts, RR:
Reply 24, posted (6 years 8 months 1 week 2 days 5 hours ago) and read 2441 times:



Quoting Falcon84 (Reply 20):
We shouldn't HAVE to have lawyers for everything. And you tell me how many Average Joe's can even afford a lawyer to look over everything? Give me a break.

We shouldn't need lawyers for anything. But we do. Plain and simple. Don't be a fool. If you can afford $ 250,000 for a house you can afford $ 300 or $ 400 for a lawyer. Those fees can be rolled into the closing costs / loan. Too stupid, too lazy, too cheap to get a lawyer? Tough shyte.


25 Halls120 : Well, that's your choice. Not a wise one, IMHO. I don't put ALL the blame on the buyer. I think everyone bears a share of the blame for the current e
26 Flighty : That is correct. Calling something "racist" in America is strong language. Here, it is not really backed up by the facts. Blaming a bank for not lend
27 Post contains links PPVRA : The ECB opened a $500 bi line of credit. It's a form of bail out. The Fed also did back in august. http://money.cnn.com/2007/08/10/markets/rate_futur
28 Falcon84 : If the 'other party", i.e. the banks, can't do the right thing, they should be out of business. That's part of their job.
29 Pyrex : Well, I wouldn't consider it a bail-out since in practice it is just injecting liquidity into a market (the money market) which had basically dried o
30 RJdxer : They were offering a completely legal and legitimate loan. If you can show where anything they were doing was illegal, please do. Risk has nothing to
31 Jetjack74 : It's buyer beware. Yes there does need to be some oversight, but you are the responsibility for what you sign. Many of those who're of disadvantaged
32 Post contains links EvilForce : Oh, you mean like this: http://www.cbsnews.com/stories/2007/12/05/business/main3579673.shtml Nice attempt to push your agenda with no basis in fact.
33 Jetjack74 : I never said Bush was right. I reject the idea that this will do ANYTHING for the economy. A "bipartisan" stimulus package is nothing more than a han
34 EvilForce : No, my point was to call you on your b.s. about trashing "the left" and pandering when the right wing has been every bit as populist regarding this.
35 Checkraiser : The Truth In Lending Act requires full disclosure of all fees, worst case scenarios, etc... When I bought my place 20 months ago I remember the fees b
36 Jetjack74 : And i'm calling Falcon and his band useless disciples on his unoriginal blather by casually blaming everyone except those who signed their names on t
37 Post contains links AndesSMF : For those who don' t know, there is a website that has been covering this debacle for years: http://thehousingbubbleblog.com/index.html I have been a
38 N1120A : I wouldn't exactly call Countrywide small. "Normal" people? Are you insinuating that those with smaller incomes are not normal? The main problem here
39 Miamiair : This type of apathy and lack of ethics in corporate America is a sign of the times. People are greedy, they just want the $$$. I caught the tail end
40 RJdxer : I don't see either of those as a "problem". If the prices were rising tha fast, then the person taking out this type of loan should have had pause at
41 Baroque : So how are the robbery charging matching those for arson? How long do you get for burning a bank? Hopelessly idealistic Falcon84, wanting a world in
42 N1120A : Most had no other choice if they wanted to buy a house, which most people generally think is a good thing. I don't think it is so much about assuming
43 Halls120 : No, it isn't. Banks are a business, not a public service. If the buyer can't take the time to read all the documentation that goes along with a home
44 767Lover : If that is the case, then they sure as hell aren't aware that their property taxes will likely increase on them in the future, in many cases by a lar
45 Post contains links 767Lover : Countrywide's CEO is forfeiting $37.5 million of his package. Interesting how the concept of "personal responsibility" changes depending who you're r
46 Miamiair : Yes it is. Thanks for pointing that out.
47 Pope : I agree wholeheartedly. I disagree. Don't feel sorry for the bankers. They took a business risk and lost. That's the great thing about capitalism. Wi
48 Pope : Saving for retirement is also "a good thing". But since when does the end (a good thing) justify an abrogation of personal responsibility? Under your
49 Flighty : You are right. I take it back. I don't feel sorry for the bankers. This thread has convinced me their incompetence basically caused this problem. But
50 Pyrex : Actually, I was talking about what caused the mess, not the ones most harmed by it. And the winners, at this point, are actually the ones currently b
51 Baroque : How long should I cry over his fate? He still seems to be exiting with ?$36 mill and a 400,000 a year pension - then again, there are some other numb
52 767Lover : You misread. The article says he did forfeit the $36M and the $400K consulting deal, and other perks. In addition to $36.4 million cash severance pay
53 RJdxer : I think owning a Ferrari would be a good thing, but I have a choice and decide not to since I know that I really can't afford it. Different situation
54 Pope : Banks are suffering dearly for mistakes. That's capitalism. You screw up you lose money. Note that you can be a bank and not part of the FDIC. Howeve
55 MaverickM11 : Amen. This whole crisis was about stupidity and irresponsibility by all players. Banks lent irresponsibly, borrowers borrowed irresponsibly, investor
56 Baroque : Sorry "away" was what I missed. However, "Now, he'll leave with a pension plan and supplemental executive retirement plan that totaled $23.8 million
57 AndesSMF : I call BS on that. 100% loans made it really easy for people to invest w/o any skin in the game. How easy could it get? Purchase a home, get cashback
58 N1120A : Owning a home has been seen for years as the epitome of personal responsibility. Given that many, if not most of these people were first time home bu
59 Flighty : Wanting is not needing. My daddy taught me it's good to want things. I desire real estate too. Just because the bank approves you (for a credit card)
60 AndesSMF : One reason why local governments had no incentive to pop this bubble, as their tax revenues kept increasing. Of course, that additional revenue will
61 Pope : But if you owe more than the house is worth, you don't really "own a house" now do you?
62 N1120A : Wilson ignored some really pressing needs the state had in the name of his imagined fiscal conservatism. Those needs have really come to bear now.
63 AndesSMF : To the amount of 2X more than what he wanted? Doubtful. What I do know is that pay/benefits for government workers has gone way up, to the point that
64 MaverickM11 : I was using "investor" as an all encompassing term whether it was long term investors, short term investors/speculators, hedge fund managers, SIVs, C
65 Pope : Can anyone think of a single thing N1120A has ever said was the result of a person's individual's responsibility? It seems to me that he, along with s
66 Post contains links AndesSMF : I found a good example of the craziness of this bubble. The following property, in a crappy neighborhood, sold for $310K in 2005. http://www.zillow.co
67 Post contains images Prebennorholm : That US subprime misery has hit the press over here as well. There is one thing which I don't understand, and which I would like to understand. We are
68 N1120A : The issue here is that traditional ARM's really did fluctuate with the market, and were essentially the bank betting on a higher interest rate later
69 AndesSMF : The interest rate was based on some other measure besides the Feds rate. You have to understand that there were several types of ARMS. The key word t
70 EvilForce : There are dozens of ARMs and how they work. Some have a one time adjustment at 5 years and then become fixed for the balance of the term. Some have a
71 Halls120 : One of the best posts I've read in a long, long time. What's that saying, those that ignore history are doomed to repeat it? A question for you - sho
72 Post contains links 767Lover : In the third quarter of 2007, foreclosure actions were started on 384,000 loans in the U.S. Out of those, 63 percent were cases where either the borro
73 MaverickM11 : And that 95% still represents a significant uptick in wealth and housing including among minorities
74 Post contains images Halls120 : Sure there is, if you are a liberal apologist. Just blame the evil bankers!
75 Post contains links N1120A : Buying something that is generally known to have significant inherent risk is incomparable to something that is supposed to be the safest investment
76 Prebennorholm : I'm not sure I understand yet. Dear N1120A, do you suggest that pure greed made lenders produce unreadable small print in the contracts which opened
77 Post contains images Pyrex : Very appropriatelly, I just came back from an extremely interesting lecture given by an MIT economist about the housing market, entitled "Can Housing
78 N1120A : There is a reason they call it predatory lending. I actually think Citibank is getting a really bad rap in this area. In fact, I think all the big ba
79 Post contains links AndesSMF : BS, plain an unadulterated BS. I had conversations with local utilities prior to the crisis, and they made me aware of the problem to come. Gray Davi
80 Pope : But housing isn't supposed to be an investment. It's supposed to be where you rest your head. All of a sudden people have bought into the "housing as
81 Prebennorholm : Thanks AndesSMF for reply #69. Now it all becomes more clear for me. Those principles of loans talk to the worst instincts in homo sapiens. They shoul
82 AndesSMF : Funny you mention that, but in our curiosity we have seen at least two examples of a track home in two different places. You're welcome! Neither do I
83 Prebennorholm : Thanks Pyrex for the info. But since my junk bonds slashed in value since Christmas, then I could easily imagine that a substantial part of those low
84 767Lover : I have an ARM (I got 3 years ago because my rate will remain fixed until 2011 and I will be moving out of this house before 2011. I know, it was a dum
85 Post contains images Pyrex : Mine haven't - just as long as I actively refuse to look at my bank statements the losses aren't real, are they? Not necessarily - the credit crunch
86 RJdxer : No, because if taken care of, both will appreciate in value. While you want to forgive the person who, while not under any coercion, with every oppor
87 Redngold : If it hasn't been said already: there are definite parallels here between the subprime crisis and the illegal practice of redlining. See Charter One B
88 Post contains links and images Halls120 :    Now you qualify your earlier response, because you can't wiggle out of it. Inherent risk has NOTHING to do with the issue we are discussing. The
89 AndesSMF : I recall Davis' money quote: 'The State does NOT have a spending problem, we have a revenue problem' I still find the chance to use the quote anytime
90 EvilForce : Frankly, claiming any governor of California was better / worse fiscally is intellectually dishonest. Much of California's spending is predefined by
91 Post contains images Halls120 :    Under that line of reasoning, I expect you are giving Bush a pass for his management of the federal budget, right? Anyway, back to CA. Frankly,
92 Falcon84 : Maybe all Americans should have taken the cue from California, and done the same with George W. Bush for his record deficit spending in the White Hou
93 N1120A : What are you talking about? It has historically been the safest thing to do with ones money. Well, your conversations don't change the truth. Wilson
94 Post contains images Halls120 : The difference between states and the federal government is that the feds can legally engage in deficit spending, while most states cannot. According
95 N1120A : Davis had to deal with the energy crisis that was Wilson was a major cause of. That alone would have shifted Davis into the black. Further, Wilson fo
96 Halls120 : The bottom line remains that Davis was so poor a manager that he was run out of town on a rail. His own party didn't support him at the end. Of cours
97 AndesSMF : Dude, what the hell is this about IGNORING my very specific reference. I am not even talking about a conversation, but ASSEMBLY BILLS that specifical
98 Pope : I think you need a lesson in economics and finance. The capital preservation is not investing. Your house should be where you rest your head. It is n
99 Mandala499 : I agree... The stability of a home ownership... LOL... Take a mortgage, your house is your asset... LOL... Housing is called an investment by the foo
100 767Lover : See, this is really the heart of what you are getting at, isn't it? That people generally are too dumb to look after themselves. I hear so many liber
101 Halls120 : Wrong. Why do you keep repeating this lie?
102 N1120A : It isn't a lie and I take offense that you would insinuate such. Wilson pushed for and signed the energy deregulation bill The bill you cite was APPR
103 AndesSMF : You missed the point. The timeline is the issue. The legislature and the governor KNEW that there were problems, as clearly stated in the bill. They
104 Halls120 : Take all the offense you want, but your continued insistence that Wilson created the deregulation problem is simply wrong. I sent you clear evidence
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