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

On May 15, 3:37 pm, "FrediFizzx" <fredifi...@[EMAIL PROTECTED]
> wrote:
> <milt.sh...@[EMAIL PROTECTED]
> wrote in message
>
> news:92ddb59c-bd91-4045-913b-ea501da31626@[EMAIL PROTECTED]
>
>
>
> > On May 14, 8:30 pm, "BuffettHa...@[EMAIL PROTECTED]
" <BuffettHa...@[EMAIL PROTECTED]
>
> > wrote:
> >> On May 14, 8:02 pm, "Patriot" <liber...@[EMAIL PROTECTED]
> wrote:
>
> >> > Dumb ****ing idiots shouldn't have bought a home that they couldn't
> >> > afford.
>
> >> > Now that's common sense!
>
> >> Everyone was doing it.  The credit crunch and real estate collapse
> >> still
> >> has not hit canada by any measure. . . and the big sub prime lenders
> >> here are the german and swiss banks, lol.
>
> > Over here, there was a lot of corruption. There is nothing inherently
> > wrong with subprime loans, or even interest-only loans. The problem
> > was, we allowed pretty much anyone to be a broker, and a lot of crooks
> > took applications from people, faked their qualifications to submit to
> > the bank, then, after the bank approved the underwriting of the
> > mortgage and supplied the cash, the broker sold the paper, then
> > someone else sold the paper, etc.
>
> > One of the problems lawyers are having right now is, there is a lot of
> > obvious fraud out there, but they can't find someone to sue, because
> > it's almost impossible to figure out who owns what mortgage.
>
> > This goes a lot deeper than a bunch of foreclosures. It's a criminal
> > enterprise gone wild.
>
> Nonsense.  Whilst there was some fraud involved here and there, it
> mostly was a capital market's experiment that failed.  There was a lot
> of money to be lent and not enough takers so it is just natural to
> extend credit to less credit worthy people when that happens.

Wow. You're some revisionist.

Banks didn't mind lending the money to people with less than stellar
credit. They were more than willing to take a chance on someone with a
below average credit score on a starter house. That wasn't where the
problem was. The problem was in the instances where people filled out
a mortgage application, and the broker faked the details regarding
income. There are actually cases where the brokers placed a "1" on the
application in front of the applicant's stated monthly income, to get
them approved. You see, banks don't see someone with a below average
credit score but high income as a huge risk. They do see someone with
ANY credit score, signing on to a mortgage where the eventual mortgage
payment, after the interest only period, constitutes 50% of their
income as a risk. But brokers lied to the banks. That is where that
part of the problem came from.

> When we
> look back at this 5 years from now, it won't look all that bad.  Soak it
> up and move on.  Interest rates remain relatively low for those that ARE
> credit worthy.  The financial companies were fairly stupid to package
> the debt the way they did and are paying for it now via lack of trust
> issues between them.  The experiment simply didn't work.
>
This isn't a 'soak it up and move on" kind of problem. There are still
tons of these mortgages out there, yet to be foreclosed. Since home
prices were hyperinflated, a whole bunch of people took out home
equity loans on equity that didn't actually exist. And a lot of people
with GOOD CREDIT and plenty of income (you know, GOOD risks) are
paying on $500,000 mortgages on homes that are now worth $400,000 and
still dropping. It also means banks are suddenly left carrying a lot
more unsecured debt than they're supposed to, which means money
available for credit is going to be very tight for a while, at the
same time there is a glut of homes for sale out there.

It wasn't an "experiment." It was government gleefully looking the
other way, while robber barons made the economy look good for a few
years, while actually robbing it blind. Just think; there is a huge
inventory of homes out there that were built just FOR people who are
being foreclosed on, and there is no one to fill those homes. Millions
of homes will sit empty, millions of condo buildings will become
rentals, millions of single family homes will either remain empty or
become rentals, reducing home values even further, and pretty much
everyone who purchased a home in the last 5-10 years will find himself
upside down in their mortgage, and will likely NOT see any sort of
profit from their initial investment.

I know you people WISH this wasn't so bad, but as my grandmother used
to say, you can wish in one hand and **** in the other; they're both
worth basically the same...

This is bad, will get worse, and will probably take a decade or more
to shake out.