Re: Home Foreclosures: Crisis Is Only Getting Deeper, conservatives

On May 15, 1:18 pm, The Trucker <mik...@[EMAIL PROTECTED]
> wrote:
> On Wed, 14 May 2008 20:52:42 -0700, Video61 wrote:
> > On May 14, 9:21 pm, James Dale Guckert <RichGan...@[EMAIL PROTECTED]
> wrote:
> >> In article <03LWj.5665$hv2.4...@[EMAIL PROTECTED]
>,
>
> >>  "Patriot" <liber...@[EMAIL PROTECTED]
> wrote:
> >> > Dumb ****ing idiots shouldn't have bought a home that they couldn't
afford.
>
> >> > Now that's common sense!
>
> >> "Common sense" at the time undermined your premise, "Patriot." 
Common
> >> sense also said quite loudly at the time that if you take a
low-interest
> >> (at the time) loan on a house that EVERYONE is telling you is only
going
> >> to become worth more than your purchase price (income!)--and quickly
at
> >> that... and EVERYONE is telling you that you can refinance the loan
> >> (reduced liability!) before the reset kicks in so you can continue to
> >> repay the mortgage... and EVERYONE felt safe assuming that the equity
in
> >> the home would always exceed the loan itself... then there was not
much
> >> reason to believe that you cannot afford a home with a tiny down
> >> payment, no do***entation of income, and an adjustable rate. 
Meanwhile
> >> there was no reason not to take out a low-interest (at the time)
HELOC
> >> and use that money to buy BSC shares on margin (more income!).
> >> Meanwhile the lenders KNEW they could then break up the loan into
neat
> >> little packages and sell them to other financial institutions who
didn't
> >> care about the fundamentals because the financial market was just
peachy.
>
> >> Cluster****: The American Way!
> >> --
> >> James Guckert / Rich Gannon / Whore for Bush
>
> >  nice overview, and quite correct. the blame the little guy crowd is
> > either ignorant, or stupid. probably both. the applicants were
> > encouraged to do what they did, by the mortgage brokers and banks. the
> > little guys only wanted to own a home. speculators smelled easy money.
>
> That analysis is simply wrong.  If you didn't buy a house you were going
> to be financial road kill.  That explains why a lot of people who really
> did not want to own a house bought them.  The brokers would have created
> these mortgages using blow up dolls if they could have gotten away with
> it.  The people who really could not really afford to do these deals
> but who did want to own a home were just pawns in the greed game.

That's exactly it. You have bad credit, you own nothing of value, and
you're $20,000 in debt. Someone tells you you can buy a house with no
money down, for a payment that is roughly half your rent payment...
you see yourself owning something of value, you (mistakenly, it turns
out) believe that you can sell the house after you've paid the
interest only for 5-6 years, and with houses going up in value so
fast, perhaps you can turn a profit and get yourself out of debt. At
the very least, for five years, you have extra money to spend, because
the monthly cost of living in the house is less than rent. What's the
downside, if you already have bad credit and you're in debt?
>
> But ask yourself if those that could not afford it were actually harmed.
> They had no money to invest in a down payment and they are not at risk
of
> losing such.  If the bankruptcy laws were as they were before the
> Republicans took over the government, and if the IRS could not tax the
> imputed income from just walking away from the mortgage then the
shysters
> would have to EAT the loses and the price of housing would fall to where
> working Americans that actually WANT to own a home might well be able to
> afford it.   I see no upside to "keeping" people in homes that are
priced
> too high.  The bankruptcy laws must be changed.
>

One of the solutions to me is to let these people continue making the
"interest only" payment as a sort of "rent-to-own" contract, and then,
when housing values settle, offer them a real mortgage at the current
price and a low interest rate. The banks are going to have to eat the
lost money, anyway, if they foreclose.

Another option would be to offer the houses to speculators and
investors at discount prices, who would then would have to allow the
current residents to stay there at a competitive rent for a period of
time...

The problem is the glut of unsold homes after all of these
foreclosures.