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  #21  
Old October 14th, 2010, 04:58 PM
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Originally Posted by CDN90 View Post

BAHAHAHA

well played
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  #22  
Old October 14th, 2010, 09:39 PM
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Originally Posted by Ren Ching View Post
Jeff, the government changed the lending requirements at the request of the banks, not the individual homeonwers. There has been a huge shift in banking standards and practices over the last two decades that was precipitated by the desires of large commercial bank executives to be able to play the markets in addition to providing the basic services to a community as they were traditionally doing in the past. The government loosened restrictions on these practices to allow them to do business as they wanted, i.e., the things that eventually led up to the financial crisis we are in. A perfect example of allowing a free market to run without a system of checks and balances to protect the end user, i.e the taxpayers, homeowners, single parents, working stiff etc.

You state that allowing gov't to step limits our freedoms, yet you are saying that you don't want people to have the freedom to break a contract. That is a basic freedom accorded any individual, business, or corporation. There are penalties, and the bank agreed to the terms just the same as the homeowner. So, when you break the contract you suffer some penalties, and in that way you are taking personal responsibility for your choice. And then you move on.

The banks asked for the lending rules to be relaxed in order to keep up with the home prices that were being artificially inflated by mortgage brokers that were selling unstable debt that was misrepresented. The gov't did not know about the lying by the securities brokers and allowed the price inflation to continue. When the banks realized that all those bad loans were never going to come in, they declared bankruptcy. So in effect, they walked away form their own responsibility, by your model.

Now you have a homeowner who is in a home that he purchased with an understanding that prices were very high at that moment. But what he didn't know was that the prices were built on a system of lies and deceipt that went to the highest echelons of the financial world. Now, because of that deception, there is a huge economic slump that has caused the value of his home to tumble, and he may be unemployed or underemployed in a lower paying job due to no fault of his own. Or maybe just in dire economic straits due to the unfavorable terms of his adjustable loan that may have been the only option for him at the time of signing. Or maybe everything is fine and he is able to pay the current mortgage with no problem. But...and this is the catch here...the house may NEVER be worth the amount that he owes on it. If he stays in the house he may be hundreds of thousands of dollars in debt for the rest of his life. But due to some abstract concept of "home", he should somehow be prevented from exercising the basic freedom to withdraw from the contract and suffer the penalties? Just because a bunch of rich, greedy MF'ers wanted to make their fortune by lying about the product (bad loans) they were selling. Where is the indignation about the violation of the sacred "home" concept there?

The homeowner who can't afford to continue making payments because of economic conditions beyond his control isn't the same as a strategic defaulter.

However, if I understand your logic, then that point is irrelevant, correct?

Artificially high home prices were the sole result of collusion by the Bankstas at the highest levels, no?

So, extrapolating from there, does that mean you believe that greed by the consumer played no part in the run-up in RE prices and as a result, he is not in any way culpable?

Further, I'm confused about the government's involvement, and responsibility, here.

While I agree that banks have created artificial instruments to play the markets, (shitty MBS's, CDS's etc.) and that has not been a good thing, I struggle with the assertion that it was the gov't that changed actual bank lending requirements?

Now, I thought that the current administration is/was pissed that banks weren't using TARP money for small business lending, and in fact, were just padding their balance sheets with that cash, and, of course, paying out big bonuses to "rich, greedy MFer" bank execs.

How can that be? If the gov't wanted to incent a certain behavior, say small business lending, AND they created/mandated bank lending requirements, AND they held the TARP pursestrings, then what happened?

Finally, rather than being an innocent bystander that was lied to, isn't the government involved, and therefore partly culpable, for the RE debacle as well, vis-a-vis the provisions of Community Reinvestment Act ?
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  #23  
Old October 14th, 2010, 11:39 PM
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Cute Jeff. I don't agree that trying to end discrimination in lending is what has brought us to where we are. In fact I shudder at the implications of that.

Here is some more reading about the changes in banking laws that really allowed us to get where we are.

Repeal of Glass Steagall:

http://www.pbs.org/wgbh/pages/frontl...ll/demise.html

I heard a great piece on NPR last year where they just let the former CEO of one of the big banks talk. He went on and on about how the changes all precipitated. Very interesting and I think the guy has a book too. Can't find the piece now.

Anyway, not going to sit and debate this with you guys. A contract is a contract, with terms and conditions. Should your taxes go to support the decision by an individual to break their contract with a lender? Not any more or less than they should go to a business or corporate interest in the same situation.
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  #24  
Old October 15th, 2010, 11:25 AM
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Quote:
Originally Posted by JSBriggs View Post
This 17yr old article gives a glimpse at what started it all. http://www.nytimes.com/1993/12/09/bu...-by-banks.html

And a more recent one. http://www.businessweek.com/the_thre...ons_drive.html


-Jeff
Thanks, Jeff.
Am actually very familiar with this topic. Your links are spot on.
My comment about govt's responsibility was framed as a question in re: Ren's earlier post.

We should start a thread on the Fed and Helicopter Ben.
Additional quantitative easing ('stimulus') and the continued debasement of the US dollar. That's where the real action is at now...
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  #25  
Old October 18th, 2010, 08:54 PM
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I have a hypothetical question:

What would you guys do if a person had reason to believe that the landlord who owns the house he's renting is not paying the mortgage and moving into foreclosure? He's still got 7 months left in a lease and the landlord has in possession his last month rent and security deposit, no small sum of money.
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  #26  
Old October 19th, 2010, 05:03 PM
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IMHO here is what happened.

In the old days, bankers were conservative and only loaned money to people who did not need it. You had to have 20% down, stable employment etc. In fact the best banks catered to the ultra rich or people in the midwest (lower risk).

A bunch of things happened and fed off one another:
Interstate mergers of banks are permitted
.gov says everyone should own a home (poor, bad credit, minorities, urban populations etc.)
Run up in real estate values in sunny states (Fla, NV, Cali)
securitization of mortgages

Banks say, ok, I will lend to poors as I don't have to hold the paper. Dumb people take out loans they cannot afford, shit happens, market collapses.

PS and yes Ren, lending to minority groups most certainly impacted the crisis. The default rates are several times as high as for non-minority borrowers.
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  #27  
Old October 19th, 2010, 06:41 PM
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Quote:
Originally Posted by evilfij View Post
IMHO here is what happened.

In the old days, bankers were conservative and only loaned money to people who did not need it. You had to have 20% down, stable employment etc. In fact the best banks catered to the ultra rich or people in the midwest (lower risk).

A bunch of things happened and fed off one another:
Interstate mergers of banks are permitted
.gov says everyone should own a home (poor, bad credit, minorities, urban populations etc.)
Run up in real estate values in sunny states (Fla, NV, Cali)
securitization of mortgages

Banks say, ok, I will lend to poors as I don't have to hold the paper. Dumb people take out loans they cannot afford, shit happens, market collapses.

PS and yes Ren, lending to minority groups most certainly impacted the crisis. The default rates are several times as high as for non-minority borrowers.
I'm with you all the way until you lay the blame for the market collapse on mortgage defaults. The total US residential mortgage debt is about $10 trillion and historic default rates were under 2%. Even if you assume a 2% default rate with absolutely NO recovery, that's a $200 billion loss - far less than the economic impact of the market collapse, and a figure capital adequacy ratios for banks more than cover. The real culprit is the crap CDOs and CDS bets that the banks were making that amplified the defaults exponentially. People forget that when you make a binary result wager, even if the original bet is small, a side bet on the wager several times the size of the original bet can wipe you out.
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  #28  
Old October 19th, 2010, 07:01 PM
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one small point coming from an appraiser, the process of giving these loans out so easily highly inflated the value of these home. trust me this is a correction not a deflation of value. no matter what side of the fence you stand on most home owners were screwed period whether or not they chose to keep paying or defualt. they were screwed by well informed people who new this was coming and that thier company might not exist afterwards. these people were payed extreme amounts of money and had no risk invovled. would i drive my company into the ground for 10 mil in bonuses versus my regular pay, no i would not. but these ceo's didnt own these companies, so yes i say alot of them knew the risk to the companies they lead head first into an abyssof which there might not be an avenue of return. i also say they them selves had no risk at all, so they took large bonus checks, checks so large it was worth it. so if you stand high on your morals and struggle through this i applaud you, but if decide to raise your middle finger to these banks and walk away i say lets have a beer.
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  #29  
Old October 22nd, 2010, 12:07 AM
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Quote:
Originally Posted by Gore Ranger View Post
I have a hypothetical question:

What would you guys do if a person had reason to believe that the landlord who owns the house he's renting is not paying the mortgage and moving into foreclosure? He's still got 7 months left in a lease and the landlord has in possession his last month rent and security deposit, no small sum of money.
Talk to a lawyer and start digging for details on the possible foreclosure. I recall one news article where people were being thrown out of their leased homes, and given about 20 minutes to grab everything they could.
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  #30  
Old October 22nd, 2010, 11:12 AM
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I spoke with our attorney and she is confident that the process will take a VERY long time and there will be ways for us to recoup our money if there is any shadiness on the realtor's part.
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  #31  
Old October 22nd, 2010, 01:08 PM
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Originally Posted by Gore Ranger View Post
I spoke with our attorney and she is confident that the process will take a VERY long time and there will be ways for us to recoup our money if there is any shadiness on the realtor's part.
What will happen will be driven by state law. Some have laws that prevent tenant eviction until the end of the lease term. In any case you may be offered a cash for keys settlement to move out.
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