America's New Entitlement Generation

[Nbadan]

This article is sure to dribble your swissle.......home buyers getting buyers remorse after their sense of entitlement wears thin....

Was the Mortgage a Mistake?
They Bought the House They Wanted, and Now Everything's Changed
By Michael S. Rosenwald
Washington Post Staff Writer
Sunday, August 19, 2007; Page F01


Two years ago, my wife and I sat at a long conference table in a mortgage-title office in Bethesda. Sitting next to us: our real estate agent, who drew up our bid on a townhouse in Germantown two days after showing it to us. We didn't get an inspection, and I don't recall going back for a second look. We had to act fast or someone else would get it.

Our bid won the house -- our very own first home -- and now we had to close the deal. The owners sat across the table. They seemed more nervous than we did, perhaps fearing we would have second thoughts -- about our risky interest-only mortgage, about seeing them walk away with a $120,000 profit, about buying a house just as "bubble" was entering the regional lexicon.

And then, as the saying sort of goes, the stuff hit the fan. The sizzling home market almost immediately began to cool off, which my wife and I sort of ignored. Interest rates started to creep up, and we sort of blew that off, too. We have time. This too shall pass. No worries. Life is good! We bought a flat-panel television, took a nice vacation, bought a dog, hired him a daily dog-walker, and then we got pregnant. We have time. This too shall pass.

But now, with our baby due in six weeks, the stock market has taken a serious drive south, with the Standard & Poor's 500-stock index dropping 6.9 percent since its high on July 19 after problems emerged for subprime lenders, who gave loans to people with spotty credit at the height of the frothy housing market. The contagion from the busted subprime sector has hit credit markets hard, and now Brian Williams and Charlie Gibson and Katie Couric are talking every night on the national news about how hard it will be to get credit, perhaps leading to more problems in the housing market.

I walked in the door one night last week, and Brian Williams was talking to my wife. I heard the word "subprime" from the TV. She looked at me and said, "Should we be worried?" I said, "We have plenty of time." But the truth is, I am getting nervous. And a few days later, when I told my wife I was indeed worried and writing about it for this newspaper, she said, "You're going to give me a panic attack." She paused and then added, "Did we really mess up?"

My wife, who is a physician, asked a question that thousands of other people in the region must be asking now, too. In 2005, the year we bought our house, nearly 40 percent of the mortgages in the District were interest-only, according to LoanPerformance, well above the national average of 27 percent. Interest-only loans typically mean that buyers lock into a low interest rate -- about 5.125 in our case -- for the first three or five years, without paying principal, before the loan balloons into a 30-year, fixed-rate mortgage tied to current interest rate indexes.

Our loan is tied to the one-year London interbank offered rate, or Libor. On June 1, 2010, our interest rate will be whatever Libor is, plus 2.25 percentage points. Our total interest rate could jump as high as 10.125 percent, according to our mortgage papers, which would be rather unpleasant. If our loan ballooned now, as many others have, our interest rate would be 7.48 percent.

But that wasn't really on our minds two years ago. For us, and I suppose others who signed such deals, the lower payments afforded by an interest-only loan helped us buy a house in an expensive county -- Montgomery -- where we wanted to live and eventually send our children to school. Our payments were significantly lower than what they would have been with a 30-year fixed-rate mortgage, meaning we could buy a nicer, larger home. Also, with the real estate market then booming, we planned to sell the house within five years anyway -- for a big profit, just like the previous owners got from us -- so why pay principal on what was essentially a starter home?

Could we have lived farther from the District for less money, perhaps allowing us to get a less risky mortgage? Yes. Could we have continued to rent, waiting, perhaps, for the market to even out and our salaries to increase? Yes. But we already make nice livings. We pay taxes in the highest bracket. Our parents bought homes at our age. It may sound crass, but we deserved a nice home. We did what we had to do to get one.

Besides all that, our mortgage broker and real estate agent kept confirming what we wanted to believe: nothing to worry about.

This week, I did what I probably should have done before signing the loan. I called some financial planners. Barry Glassman at Cassaday and Co. in McLean was blunt: "In hindsight, the market went the other way. In hindsight, the numbers are going against you." If we wanted to sell our house now, we probably wouldn't make a dime. In fact, we could lose money on the deal, if you throw in all the fees and commissions. We are pretty much locked into a house that, it appears, will grow more expensive.

I asked Glassman about our options. I told him that it seemed the best one was something totally out of our control -- a recession. If the economy really tanks, it would likely cause interest rates to fall sharply, meaning that lots of people would lose their jobs, but my wife and I could refinance our house at a much lower rate. Obviously, my wife and I do not want anyone to lose a job, even if it would help us, but isn't it bizarre that one of the ways to get out of a risky loan is for other people to suffer? The world is a tricky place, and nobody teaches you this in school.

Glassman saw our options thusly: First, we need to plan for the day when our payment will go up, figuring out whether we could afford it and if not, what we can do now to start saving so we can. The second option is to refinance at some point, but when? Glassman said we have to be constantly on top of interest rates, researching them at Bankrate.com, for instance. For peace of mind, he said, it's worth considering locking into a 30-year, fixed rate now before rates go up even more. If rates then drop, we could refinance.

"You should run the numbers through a mortgage broker right now" to see what you can and can't afford, Glassman said. The advantage to calling a mortgage broker now, Glassman added, is that "most brokers have more time than mortgage applications right now."

I asked Glassman, "Did we mess up?" He pointed out that we were still paying a lower interest rate than we would have by buying now or even starting with a 30-year, fixed rate, so that was good. And the market shakeout could end in the three years before my loan balloons. "The answer is we don't really know yet," Glassman said. "Five to 10 years from now, I'll be able to give you an answer." But then he quickly added, "Were you wrong? Well, you now own a house. You have a place for your family."

True, and we're a lot luckier than many others who have already lost their homes as the mortgage turmoil has worsened.

There was a third option Glassman and I didn't talk about, but I was reminded of it after I called Adam Iobst, a Montgomery County real estate agent I interviewed for stories at the height the market. Back then, he specialized in dealing with first-time home buyers; many of his clients financed 100 percent of their purchases if they could beat the dozens of other buyers bidding for the same home.

"As you know now, things are quite different," Iobst told me. "It's a strong buyer's market now, probably the strongest buyer's market that I have ever seen." He told me about a young couple who had purchased a small condo a couple years ago in Maryland. Now they are selling it and will probably make less than $5,000 on the deal. They are moving to North Carolina, into a new, single-family home with a two-car garage for not much more than they paid for the condo. "They are just pleased and tickled," he said. "It's amazing what you can afford in other places."

washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2007/08/18/AR2007081800089.html?referrer=digg)

[lawstudent]

They gambled and lost. I don't feel sorry for them.

[L.I.T]

It's a credit nation, and credit can be a useful and necessary part of an investing portfolio when utilized correctly by trained professionals.

But, and let me say this, IF YOU CAN'T AFFORD IT, DON'T BUY IT, and, IF YOU CAN'T AFFORD THE PAYMENTS, DON'T BUY IT.

I'm getting insanely tired of this bullshit. Investors have gotten way to complacent over the last five years. Guess what, investing is risky...wait, let me repeat that, investing is risky. You run the RISK of losing when you invest. You aren't entitled to make money, you aren't entitled to always see positive returns on your portfolio, and you sure as hell aren't guaranteed there isn't going to be short term volatility.

And directly talking to the article, but if you're taking a 30 year floating rate mortgage tied to LIBOR with a premium of 2.25%...you're an idiot. Think about...why on Earth would a mortgage company offer a 30 year floating rate mortgage, if they didn't think LIBOR was going to go up? You, the investor, took a risk. You took a floating rate mortgage, deal with the consequences.

God, they are bitching about taking a risky loan...did they completely forget about the risky part?
Oh, and while I'm on this, why are you going to trust a real estate agent and a broker to give you economic forecasting advice? A real estate agent isn't trained to give you a forecast on LIBOR or a read where markets are going tomorrow, two days from now, much less two years from now, and...uh let me see, a mortgage broker is trying to get you to...well take out a mortgage.

[boutons_]

It takes 2 to tango in the shit. There seems to be lots of anecdotes that must contain some truth that lenders were predatory, lying, or both.

An amusing allegory:

August 19, 2007
Op-Ed Columnist

Easy Credit, Bubbles and Betrayals

By ROGER COHEN
International Herald Tribune

NEW YORK

Rich and poor have tended to part company over the past decade as the buoyant tide of globalization raised more yachts than boats. So here is a touching tale of how the struggling and affluent are linked, all the way across the Atlantic.

Christine Leroy, teacher, divorced mother of two, was offered a mortgage she could not believe for a cute bungalow in Sacramento, California. The deal from EHB (Ever Hopeful Bank) came with no verification of income or assets; a piggyback second loan to cover the down payment; and interest only at a teaser rate for the first two years.

"But what do I do when the rate bumps up in a couple of years?" she asked.

"Ha!" beamed Errol Sunny, the ever-smiling EHB broker specializing in 2-28 loans (2 years of bliss, 28 of purgatory). "You'll refinance. And by then you'll have a ton of home equity the way prices are skyrocketing."

Well, Leroy figured, if she ever had a problem making a payment she could always max out a credit card or get a new card from that MEC (Mind-bogglingly Easy Credit) outfit that kept pestering her with mailings.

As for Sunny, what did he care? He knew EHB could offload this sub-prime loan to some Wall Street outfit, probably BFM (Bamboozling Financial Mechanics), that would package it with some slightly less toxic loans and maybe a few good ones into an attractive mortgage security.

Sunny remembered vividly his first lesson from Dick Sharp, the veteran EHB chairman. "What do you do with plutonium?" Sharp had asked. "Dilute it a little!" The same principle applied to toxic loans: diversified, they lost some toxicity.

That is what BFM specialized in: diversification of risk, whatever risk actually meant. Risk had been re-priced on the basis that it did not exist.

Sunny, who sometimes caught himself saying "sub-crime" when he meant "sub-prime," knew an underwriter at BFM, Nick Cocktale, who specialized in assembling mortgage bonds.

Cocktale would take thousands of loans and divide them into high-, medium- and low-risk tranches. The blend was so nice, nobody ever thought about the likes of Leroy. "It's like making a good Daiquiri," Cocktale explained. "Has to be smooth."

The funny thing was Cocktale sometimes worked with the very people from ratings firms who would end up giving triple "A" grades to the securitized sub-prime loans once they had been suitably camouflaged in the mortgage bond. These firms naturally collected billions of dollars for their labors.

But what did the hedge funds or mutual funds care if the ratings on these high-yielding securities seemed a little generous? Hell, if the securities has been given a "B" rating, which is what Pakistan gets, or even a "C" like Ecuador, they might have been barred from buying the stuff and other outfits would have cashed in.

That is not the American way!

As it was, hedge funds could use high leverage - borrowing cheap to aggregate the spread between the low cost of short-term money and the high return on the mortgage securities. When a bond's return is higher than the cost of your borrowing, you're in a nice business - until, of course, things unravel.

As it would happen, one bank that ended up acquiring a mortgage bond whose collateral - yes, they called it collateral! - included Leroy's Sacramento loan was French. The bank, BPI (Banque de Promesses Infinies, or Bank of Infinite Promises), had a niche fund that favored these securities.

Its manager, Jean-Pierre Leroy (Sorbonne and Wharton), was shocked to discover in recent days that he could not put a fair value on his fund because he could not sell bonds backed by U.S. mortgages. "We 'ave to freeze the fund," he muttered before departing for a long lunch.

On his return, going through the paperwork, he was amazed by the sloppy credit standards on loans like one to a certain Leroy in California. "Maybe a long-lost relative," he mused, already thinking about the Chateau Latour he had set aside for dinner.

Christine Leroy, meanwhile, was hard pressed to afford a meal. Her equity stood at zero as house prices plunged. When she suggested refinancing, brokers laughed. Sunny was not returning her calls.

At their last meeting, Sunny, now unsmiling, had said: "In future, Christine, you must remember the distinction between liquidity and credit availability. You confused your liquid assets with the extent of your access to liabilities."

He added that after foreclosure and repossession, EHB might be prepared to rent her the bungalow on generous terms.

Email: [email protected]

http://select.nytimes.com/iht/2007/08/19/opinion/IHT-19edcohen.1.html?hp

=================

Save Subprime Borrowers, Not Bloated Bankers

By Dean Baker
t r u t h o u t | Columnist

Monday 20 August 2007

There is a simple and direct way in which the federal government can help out millions of moderate-income families struggling to keep their homes: They can simply change the rules on foreclosure to allow moderate-income homeowners the option to remain in their homes indefinitely as renters, paying the fair market rent.

This proposal would immediately give moderate-income homeowners a guarantee they would not be thrown out of the street because they cannot meet the terms of a predatory mortgage. It accomplishes this goal without requiring any elaborate new bureaucracy and without requiring a single dollar from the taxpayers. And this plan does not bail out the bankers, hedge funds, and other financial industry types who were speculating in mortgage debt.

Here's how the plan works: Currently, if a homeowner is not able to make their mortgage payments, the holder of the mortgage can go to court to place the house in foreclosure. This means, if the homeowner is not able to come up with back payments on the mortgage, or work out an acceptable arrangement with the mortgage holder, the bank or financial institution that holds the mortgage retakes ownership of the house and can have the homeowner evicted.

Under this security of housing proposal, the foreclosure process would be changed so the current homeowner would have the option to remain in their house as a renter paying the fair market rent. If a homeowner chose to go this route, the judge in the foreclosure proceeding would appoint an independent appraiser to determine the fair market rent for the house, in the same way a bank hires an appraiser to determine the value of the house before issuing a mortgage.

The former homeowner could then remain in their home as a renter for as long as they liked. The rent would be adjusted at regular intervals in step with the change of other rents in the area. There could even be an appeal process in which either party could request that the judge get a second appraisal, at the expense of the person complaining about the original appraisal. This should ensure the rent set for the house is fair. After the foreclosure, the mortgage holder would now own the house and be free to sell it to another person, but the former homeowner would still have the right to remain as a renter, regardless of who owned the house.

This program could be restricted to homes that cost less than the median house price for an area to ensure high income homeowners do not take advantage of it. The program would also only apply to people who lived in their homes, not investors. In short, it is a very simple and low-cost way to help moderate-income homebuyers. It does not give them any windfalls, but it can ensure they don't end up being thrown out on the street.

In contrast, the politicians are lining up with plans that ostensibly protect homeowners, but would most immediately benefit the mortgage holders who speculated in predatory mortgage debt. For example, one popular proposal being circulated in Congress would vastly expand the role of Fannie Mae and Freddie Mac, the government created mortgage intermediaries, in the mortgage market. This proposal would allow them to buy up hundreds of billions of dollars of subprime and other mortgages that the private sector does not want.

Of course, the private sector doesn't want these non-prime mortgages because the default rate is soaring. If Fannie Mae and Freddie Mac suddenly got in the market for this debt, those who are currently speculating in these mortgages stand to make a fortune. It's not clear the government's largess will necessarily benefit moderate-income homeowners facing foreclosure, but there is certainly a possibility some of the windfall will trickle down.

The point here is simple: We can design a mechanism that will directly benefit millions of moderate-income homeowners who are struggling to hang on to their homes; or, we can come up with schemes that will benefit the banks and hedge funds that speculated in mortgage debt. Place your bets.

http://www.truthout.org/docs_2006/printer_082007C.shtml

[boutons_]

Capital One to Shut Unit, Cut 1,900 Jobs

By MIKE BAKER
The Associated Press
Monday, August 20, 2007; 7:02 PM

-- Capital One Financial Corp. said Monday it will cut 1,900 jobs and shutter its wholesale mortgage banking business, a move that comes as lenders continue to struggle in the nation's housing and mortgage markets.

Capital One said it will shut down GreenPoint Mortgage and eliminate most of the jobs by the end of year. The McLean, Va.-based company will close 31 GreenPoint locations in 19 states and "cease residential mortgage origination" effective immediately but said it will honor commitments to customers with locked rates who have loans already in the pipeline.

"Over the past few months, we have experienced an unprecedented disruption in the secondary mortgage markets," Capital One Chairman and Chief Executive Officer Richard D. Fairbank wrote in an internal memo to employees. "I made the decision to wind down the business with a heavy heart."

GreenPoint, based in Novato, Calif., specializes in no-documentation and Alt-A mortgage loans for borrowers with slightly better credit than subprime borrowers. In his memo, Fairbank said that market has seen a "significant reduction in liquidity and continuing volatility."

The decision to close GreenPoint will hit Capital One with an $860 million charge, or $2.15 per share, the vast majority of which will come in 2007. The company lowered its 2007 earnings guidance by 14 percent to $5 per share.

Analysts polled by Thomson Financial expected earnings of $7.05 per share. Analysts estimates typically exclude one-time charges.

Capital One made the announcement after markets closed Monday. Its shares fell $2.03 to close at $66.72, then fell 15 cents in after-hours trading.

Bart Narter, a senior analyst with Celent, a Boston-based financial research and consulting firm, said GreenPoint's model of processing, packaging and selling loans to investors didn't mix well with Capital One's historical strengths.

"Capital One was smart to say, 'We shouldn't be in this business,'" Narter said. "Capital One is in the business of understanding their customers well and keeping direct relationships with their customers. So I'm not surprised by their decision."

Capital One said its other business lines remain solid and in line with expectations, adding that it will continue to sell home loans through Capital One Home Loans and its bank branches.

"Capital One's other businesses are supported by ample liquidity and funding including deep access to deposits, a 'stockpile' of subordinated credit card funding in place that allows approximately $9 billion of AAA credit card funding going forward, and a $25 billion portfolio of highly liquid securities," said Gary Perlin, the company's chief financial officer.

As the nation's housing market has cooled, the mortgage lending industry has struggled with a dramatic rise in mortgage defaults and foreclosures. Many homebuyers have been forced into default or foreclosure because they haven't been able to sell their homes or end up owing more than their home is worth.

As a result, it has become more difficult for lenders like GreenPoint to sell the mortgages they originate to investors.

"The reductions in demand and pricing in the secondary mortgage markets make it difficult to operate our wholesale mortgage banking business profitably," Perlin said.

Once a stand-alone credit card company, Capital One has moved in the past two years to acquire traditional banks as part of an effort to diversify. In acquired GreenPoint in December as a part of a $13.2 billion purchase of North Fork Bancorp, which operates banks in New York, New Jersey and Connecticut.

Fairbank told employees Monday that he had expected GreenPoint's business to continue growing.

"Unfortunately, GreenPoint has run into unforeseen challenges that are beyond its control," Fairbank said.

[L.I.T]

Ok, in the first article we had the individual buying the house actually saying, well if I have a problem, I'll just max out my credit cards. And we don't see a problem with that? But, again this attitude of risk isn't an issue anymore was fantastical and ignorant. Risk is risk, you can't diversify it out of a portfolio no matter how much you try. Hell, you know what a fully diversified portfolio will yield you? That theoretical, fully diversified, no risk portfolio? Nothing. Absolutely nothing.

Mortgage companies are by no means innocent in this, but they are the ones who are also suffering in this. Many mortgage lenders, as you pointed out in your last article, are losing money, going under, or are in the process of just shutting down. Lenders are in as much trouble as everyone else. If they go down, who then is going to finance the US's housing needs in the future?

My beef isn't with all people who borrow, but those who knowingly over-extend themselves; taking out a risky loan and relying on the faulty belief that they can just borrow more, use more credit or refinance when the payments become onerous. THAT is my problem. I want to see the numbers for the amount of these defaulters who refinanced or have a second mortgage on their home.

I'm satisfied if they devise a pricing mechanism which will give a fair market value to the existing mortgage-backed securities out there if they are transferred to Fannie Mae or Freddie Mac. The fact is, those companies do need to unload these securities. If they don't, we could be faced with a situation similar to the 1997 East Asian Crisis. Using fair market pricing maintains the open market operations, but will allow the government to absorb some of these securities. I would refer you to vehicles such as the SPV (Special Purpose Vehicle) that was used in South East Asian countries to reduce NPL and NPA ratios. The US is at the point where something like this needs to be implemented.

Don't forget what the purpose of a bank is, to maintain the flow of funds and allow people reasonable access to lending. To allow these firms to collapse under the weight of these debts would be disastrous for the US and world market in general.

[xrayzebra]

Has anyone seen any actual figures on people being foreclosed?

I don't recall reading or hearing of any figures. Also every home
I have bought I was required to have mortgage insurance if I
didn't have 20 percent down payment. Did these home loans
require that? I am asking because I am not sure. All I have
seen is crying and shouting, but no good hard numbers.

[Wild Cobra]

Has anyone seen any actual figures on people being foreclosed?

I did see something about it, but I don't remember the exact numbers. Something like 98% pay their mortgages on time, and a very small number, was it 0.8%? are in various states of the foreclosure process.

[ChumpDumper]

That was well-researched.

[Wild Cobra]

That was well-researched.
If you're responding to me, I don't think this thread merits that much research. It is such a small piece of the economy, and only idiots are affected.

Sorry, but I lack sympathy for fools.

[ChumpDumper]

Sorry, but I lack sympathy for fools.You voted for Bush right?

[L.I.T]

If you're responding to me, I don't think this thread merits that much research. It is such a small piece of the economy, and only idiots are affected.

Sorry, but I lack sympathy for fools.

Sub-prime is a relatively small portion of the market, but the ramifications of sub-prime fall-out will cause extreme short to medium term volatility which can likely cause some economies severe problems.

If mortgage companies and banks are suddenly saddled with high levels of non-performing loans the liquidity of their loan portfolio decreases; limiting their ability to lend more in the future. If investors (corporate) are turned off from investing in this basket of securities, the effects will likely be very negative on emerging markets; causing a global down-turn. What is often glossed over is one of the drivers of the global economy the last few years has been the improvement of emerging markets. If investors are scared off from "risky" asset classes those nations borrowing needs will not be met.

The media has been citing doomsday scenarios that theoretically could come to pass; which I don't think will. But to disregard a systemic issue such as this completely out of hand is fool-hardy.

[smeagol]

"Can't afford it, don't buy it".

Fucking good advice, if you ask me.

[xrayzebra]

"Can't afford it, don't buy it".

Fucking good advice, if you ask me.

I find it funny, no ho-ho funny, but peculiar that these
folks were paying rent to begin with and cant find the
money to pay a mortgage payment. Normally, it is
cheaper to buy than rent, unless you bite off more than
you can chew.

[xrayzebra]

Found this on Drudge. It is an AP article and gives a few facts.
Seems that this problem is only in a few states.


July Foreclosures Up 9 Percent From June
Tuesday August 21, 3:22 pm ET
By Alex Veiga, AP Business Writer
U.S. Home Foreclosures Jump Sharply in July, Up 9 Percent From June

LOS ANGELES (AP) -- The number of foreclosure filings reported in the U.S. last month jumped 93 percent from July of 2006 and rose 9 percent from June, the latest sign that homeowners are having trouble making payments and finding buyers during the national housing downturn.

There were 179,599 foreclosure filings reported during July, up from 92,845 during the same period a year ago, Irvine-based RealtyTrac Inc. said Tuesday. There were 164,644 foreclosure filings reported in June.

The national foreclosure rate in July was one filing for every 693 households, the company said.

"While 43 states experienced year-over-year increases in foreclosure activity, just five states -- California, Florida, Michigan, Ohio and Georgia -- accounted for more than half of the nation's total foreclosure filings," RealtyTrac Chief Executive James J. Saccacio said.

The filings include default notices, auction sale notices and bank repossessions.

Some properties included in the survey might have received more than one notice, if the owners have multiple mortgages.

The company did break out individual properties as part of its report for the first six months of this year, when a total of 573,397 properties reported some sort of foreclosure activity.

That represents a 58 percent jump from the 363,672 properties in the first six months of 2006 and a 32 percent increase from the 433,504 in the last six months of 2006, the firm said.

In the July report, Nevada, Georgia and Michigan accounted for the highest foreclosure rates nationwide.

Nevada posted the highest foreclosure rate: one filing for every 199 households, or more than three times the national average. It reported 5,116 filings during the month, an increase of 8 percent from June.

Georgia's foreclosure rate was more than twice the national average, with one filing for every 299 households. The state reported 12,602 foreclosure filings, up 75 percent from June.

Michigan reported 13,979 filings in July, a 39 percent spike from June.

California, Florida and Ohio were among the states with the highest number of foreclosure filings in July, RealtyTrac said.

California cities continued to dominate top metropolitan foreclosure rates.

The state reported 39,013 foreclosure filings last month, the most by any single state. However, the number of filings rose less than 1 percent from June.

The state's foreclosure rate was one filing for every 333 households, RealtyTrac said.

Florida's foreclosure filings dropped 9 percent between June and July to 19,179. The July figure, however, represents a 78 percent jump from the year-ago period.

In recent months, the mortgage industry has been battered by rising defaults and foreclosures, primarily driven by borrowers with subprime loans and adjustable rate mortgages.

Lagging home sales and flat or decreasing home prices have made it more difficult for homeowners who fall behind on payments to sell their homes and clear the debt, spurring the rise in foreclosure activity.

Loan types seeing higher delinquencies and defaults in general are home equity loans or second mortgages used to cover a downpayment, subprime loans to people with shaky credit histories, and Alt-A loans, which can include interest-only and adjustable rate mortgages sold with little or no documentation.

[Nbadan]

"Can't afford it, don't buy it".

Fucking good advice, if you ask me.

Yeah, much better for families to live in the streets....

:rolleyes

[medstudent]

what? just live in an apt. not everyone can afford a house. its not a right, its a privilege.

[Nbadan]

what? just live in an apt. not everyone can afford a house. its not a right, its a privilege.

So, it's a privilege to have a roof over your head? Apartments are many times just as expensive per square foot as homes....

[Jamtas#2]

So, it's a privilege to have a roof over your head? Apartments are many times just as expensive per square foot as homes....

Would you like for the government to step in and provide housing for everyone?
I really don't understand the point you are trying to make. You highlighted their reasoning:

Could we have lived farther from the District for less money, perhaps allowing us to get a less risky mortgage? Yes. Could we have continued to rent, waiting, perhaps, for the market to even out and our salaries to increase? Yes. But we already make nice livings. We pay taxes in the highest bracket. Our parents bought homes at our age. It may sound crass, but we deserved a nice home. We did what we had to do to get one.

Doesn't sound like their options were overextending themselves into a house or living on the streets.

[Wild Cobra]

So, it's a privilege to have a roof over your head? Apartments are many times just as expensive per square foot as homes....
Sure, once paid for, or close to paid for...

Where do you live that apartments are more expensive than houses to live in? For everything you get, yes. As for living space, no. At least not in my 25+ years I have been aware of such prices.

Here's the deal. New buyers, even putting up the nominal 20% down for reduced insurance rates are likely on a 30 year loan. The interest rates, even when good, make such houses cost maybe twice as much as the asking price. Houses are now running maybe $300,000 or more, at lest in my area. Over a 30 year (360 month) loan, the buyer pays about $480,000 in payments after a $60,000 down payment, or $1,334 per month. Comparable size apartments run maybe $800. You pay all the utilities for a house, and taxes. You usually have some of the utilities in a rental paid for.

A house does become cheaper with inflation. As rentals increase year to year, your mortgage payment remains the same. After maybe ten years, it could be comparable, and as you get closer to paying the mortgage off, it is cheaper than a rental. Those first several years are brutal however. Most people also make more income year to year, softening the monthly payments.

[ggoose25]

So, it's a privilege to have a roof over your head? Apartments are many times just as expensive per square foot as homes....

Umm no. They're only cheaper when you take out a subprime loan that you can't afford.

[johnsmith]

Dan will not hear of any types of arguments about any of this. The market was up and he was mad that so many people were getting into homes they couldn't afford. Then the market went down and he's mad because people are foreclosing on said homes.



He complains no matter what.........he's a liberal.

[ggoose25]

I'm a liberal, and I think he's way off on this.

[johnsmith]

I'm a liberal, and I think he's way off on this.


Good point, I was generalizing and I apologize.

Dan is in a douche bag class all his own.

[ggoose25]

I accept. :)

[Nbadan]

Doesn't sound like their options were overextending themselves into a house or living on the streets.

So the options are:

1. Pay more for a mortgage in town
2. Drive from far, far way and still get stuck paying the new Bush high-gas price tax
3. Live on the streets....

[Nbadan]

Where do you live that apartments are more expensive than houses to live in? For everything you get, yes. As for living space, no. At least not in my 25+ years I have been aware of such prices.

I didn't say 'more expensive', I said 'just as expensive'. Apartments in these parts set their rates by taking the average price per square foot in the area and multiplying it by the square ft of the apt....

[Jamtas#2]

So the options are:

1. Pay more for a mortgage in town
2. Drive from far, far way and still get stuck paying the new Bush high-gas price tax
3. Live on the streets....

You didn't answer my question of whether or not you thought that the government should provide housing or to explain where you stand. You can do that next.

To answer your question, no the options are not only:
1. Pay more for a mortgage in town
2. Drive from far, far way and still get stuck paying the new Bush high-gas price tax
3. Live on the streets....

There is also:
4. Rent until you can afford the house you want
5. Buy the house you can afford, not the one that you want

and I'm sure others as well. Tell me, are you either paying for a mortgage you can't afford or living on the streets?
When I lived in LA, I couldn't afford a house so I rented. My rent was equal to mortgages in other parts of the country, but not where I lived. I could have moved far out of town and bought a house I could afford but I made a choice to continue to rent while I lived there rather than get in over my head. Taking the interest only loan is a risk, and you can't complain if you take risks that don't work out. And it is not the fault of a company who is trying to make a profit. That's what they do. They can't all be non-profits.

[xrayzebra]

^^Or go home to Moma and Daddy and sponge off them. That's
what Dan did.

[Nbadan]

and I'm sure others as well. Tell me, are you either paying for a mortgage you can't afford or living on the streets?
When I lived in LA, I couldn't afford a house so I rented. My rent was equal to mortgages in other parts of the country, but not where I lived. I could have moved far out of town and bought a house I could afford but I made a choice to continue to rent while I lived there rather than get in over my head. Taking the interest only loan is a risk, and you can't complain if you take risks that don't work out. And it is not the fault of a company who is trying to make a profit. That's what they do. They can't all be non-profits

When you’re single you can risk to live in a shadier part of town, but with kids, on top of making daily costs double, triple, or quadruple, depending on the number of kids you have, are influenced by things like good schools and friends. So many families don't make the decision to buy into burbs' simply out of ego, but out of necessity for their kids, and if they can get into a home and pay about the same as a apt (about 1,000-1,300 here for a 3 bedroom apt) then why not? At least, that is the enticement....

[Jamtas#2]

once again, I'll ask the same question:

Do you want government to provide housing to everyone? What is your stance on this?

[Holt's Cat]

once again, I'll ask the same question:

Do you want government to provide housing to everyone? What is your stance on this?

He wants to knock the people who borrowed when they shouldn't have, yet castigate the government for allowing those individuals to make a dumb decision. All in all, a typical Nbadan thread.

[Nbadan]

once again, I'll ask the same question:

Do you want government to provide housing to everyone? What is your stance on this?

Well first of all, we have to put the brakes on the real estate speculation going on in the city before it prices families out of the city like in Austin....drive around, there are two San Antonio's....and it's only a matter of time before older neighborhoods are revitalized and the po' are no mo'....

[Holt's Cat]

Well first of all, we have to put the brakes on the real estate speculation going on in the city before it prices families out of the city like in Austin....drive around, there are two San Antonio's....and it's only a matter of time before older neighborhoods are revitalized and the po' are no mo'....

So people are entitled to live in certain neighborhoods?

[Nbadan]

He wants to knock the people who borrowed when they shouldn't have, yet castigate the government for allowing those individuals to make a dumb decision. All in all, a typical Nbadan thread.

It was the feds that dropped rates to 1% that led to overborrowing...it was the real estate realtor or agent and the broker who reassured the borrower that buying that home with a 2-5 year interest-only loan was a safe bet....there's plenty of blame to go around, but keep blaming just the buyer who got suckered..

[Nbadan]

So people are entitled to live in certain neighborhoods?

NO, I was just explaining why people fall for these sucker-loans.....

[Holt's Cat]

At the end of the day who else is to blame? Nobody makes you sign those papers. Don't buy the most expensive house you can qualify for and by all means get a fixed rate when rates are in the 5 to 7% range.

[Holt's Cat]

NO, I was just explaining why people fall for these sucker-loans.....


Right, suckers signed up.

[ggoose25]

Right, suckers signed up.

Exactly. If its too good to be true, it probably is.

[Nbadan]

Right, suckers signed up.


...and people who just wanted to do right by their kids...

[Holt's Cat]

Nobody's entitled to home ownership if they really can't afford it.

[Nbadan]

40% of our nation's kids don't even get enough to eat or live below the poverty level...it's disgraceful......if SA want's to be like Austin and other cities in other States where home speculation has priced families out of the city, we are well on our way....we need city leadership on this issue....affordable housing....affordable day-care, affordable health-care......we don't need to be throwing money at toll-roads which will be obsolete....

[Holt's Cat]

40%?

link?

[Jamtas#2]

Well first of all, we have to put the brakes on the real estate speculation going on in the city before it prices families out of the city like in Austin....drive around, there are two San Antonio's....and it's only a matter of time before older neighborhoods are revitalized and the po' are no mo'....

And how do we put a brake on speculation? By putting a limit on the price you can sell your home for? Prices get driven up because people are willing to pay more and get in bidding wars to get into certain neighborhoods. You have every right to buy a house. The kind of house you get depends upon what you can afford. You can't live beyond your means. It is healthier to shop and eat at Whole Foods, but it costs more. You can't just say Whole Foods has to lower their prices because it would benefit more people to have the ability to eat healthier. People need to understand that basic fact. Perhaps we should start teaching those kinds of subjects at the high school level so that everyone has the opportunity to learn about it. I used to manage many people who refused to live within their means. They were constantly buying on credit and spending entire paychecks on entertainment and luxury items they had no business buying when they were late with rent. We need to learn fiscal responsibility. Whatever financial arrangements you get into, you are responsible. I'm baffled that people can make such large purchases without fully understanding the costs and risks. That is just foolish in my opinion.

If you want to talk about America's entitlement generation, perhaps you should discuss those who think that someone else (the government) is responsible for everything bad that happens in their life and accept that each individual needs to think their choices through before they make them.

[johnsmith]

40% of our nation's kids don't even get enough to eat or live below the poverty level...it's disgraceful......if SA want's to be like Austin and other cities in other States where home speculation has priced families out of the city, we are well on our way....we need city leadership on this issue....affordable housing....affordable day-care, affordable health-care......we don't need to be throwing money at toll-roads which will be obsolete....


Ummmm, who's throwing money at the toll roads other then the people wanting to build them?


Dude, you are the ultimate "knee-jerk" guy.

[smeagol]

What is your solution Dan?

I bet it is socialism.

[xrayzebra]

40% of our nation's kids don't even get enough to eat or live below the poverty level...it's disgraceful......if SA want's to be like Austin and other cities in other States where home speculation has priced families out of the city, we are well on our way....we need city leadership on this issue....affordable housing....affordable day-care, affordable health-care......we don't need to be throwing money at toll-roads which will be obsolete....

Horse hockey! Throw those numbers out there and hope
they stick, right?

How many people have you even read of that has starved
to death in this country? Look at the obesity epidemic
in this country and tell me one more time who isn't getting
enough to eat. If they are it is only through neglect
of the parents.


You will learn one of these days that government doesn't
really solve any problem. In most cases they make it
more complicated and not solveable. You want someone
who pays six hundred dollars for a toilet seat looking
out for your welfare, I don't. Or spends hundreds of
thousands of dollars to ship two washers looking out
for your welfare, I don't.