Got an idea for this economic crisis

[Kr0nus]

Ok, so I just realized something today. This whole problem is because of mortgage companies giving mortgages to people that can't afford them and because houses have been loosing value. So, why are we bailing out these companies and not the Home Owners? Stay with me here. What if the government could somehow force these financial institutions to re-fi all of there current high risk sub-prime loans to the current market value? Like in my case I bought my house for $515,000, but the current market value is between $380-425k. I have suffered a huge loss and a lot of people are in the same situation that I am. For me it's (sort of) ok because I am in Iraq, but other people are getting screwed because they need to refinance but can't. There rates have adjusted to ridiculous rates and eventually they will no longer be able to make payments and they will have to foreclose. The lenders loose out on the property and have to mark it as a loss.

 

If we could reset the high risk home loans (pretty much all sub-prime) back to the market value people would be able to afford their homes again. The lenders wouldn't be taking as big of a loss and would learn a lesson. Home values would go back up at a normal rate. And, the government wouldn't have to spend $700 billion bailing out all of these companies. I fully realize that some companies are at the point of no return, but with this plan we wouldn't have to spend anywhere near $700 billion and it is a real solution for the people and not corporate America. Also there would be far less foreclosures which no one seems to be addressing.

 

Does this make sense to anyone?

[Mech]

You should call g-dub up and tell him about your idea, he might consider it.

 

http://www.dvorak.org/blog/wp-content/uploads/2007/03/bush_phone.jpg

[88TSI_Rob]

Here's the problem. There are a couple million people that are suffering from this housing crisis out of 300 million Americans. If the banks fail because of these mortgages (compounded with a slowing economy, higher commodity prices, etc. etc.) every single one of us in America will suffer and not only that the global economy will suffer. Without these banks there would be no one to lend credit. Almost every business in the US works on credit. Many businesses use revolving credit to pay day-to-day bills and payroll. Without business credit many of us would start seeing our pay checks bounce. People wouldn't be able to use credit cards, take out car loans, or apply for mortgages. Everything would come to a grinding halt.

 

If the US comes to an grinding halt, every country in the world that does business with the US will be effected.

 

The analogy a lot of people are using is a house of cards. These banks are at the bottom, if they fall the whole system fails.

 

 

There are programs in place to help the people that are facing foreclosure. If those programs don't help then they signed a mortgage contract that was way, way over their head. If they were too stupid to understand the ramifications of what they were doing, I don't feel sorry for them.

[Komeuppance]

Shut down the Federal Reserve and stop allowing a private corporation to print money.

 

-Robert

[Shelby]

this bailout is just like the $300-$600 rebate ck,, did it help you in any way ,, hell no all it did was put more of your money into their pockets ,,it did nothing about the real problem the run away cost of every thing from gas to a loaf of bread , it help'd you in no real way , more like throwing a crumb to a starveing dog ,,shuts him up for a few min but he's still hungry just can't bark with a mouth full

 

why would people go out and pay 100% or even 200% of what a house is realy worth

, i mean lets face facts a $200k home is just that no out landish price artificualy set will magicly make it worth $500k over nite , greed is the problem but the greedy ones will not be hurt they got their money and have learn'd nothing this bailout will only cause them to think ,hey the goverment will save our rear if we get into trouble they can't aford to let us screw up the economey,,

 

 

we're back to that 5% controling things for the rest of the 95% of the population

or the gov doing for the 5% and forgeting about the 95% thats more like it realy is

[lmwii]

part of the problem with making the banks write off all those losses is the fact that the loans have been securitized - turned into investments and sold like a bond or a stock. if they all crash, then the thousands of retirement accounts and the like that have bought these securitized loans will fail too.

 

the subprime mess is due to both poor lending practices, and the securitization of those loans. if the loans were just bad loans, it would be a much simpler problem.

[lmwii]

the cartoon in this thread is dead on:

http://www.starquestclub.com/forum/index.php?showtopic=80853

[Shelby]

every one needs to understand the people that oreginaly make these loans GOT their moneys , they are the ones that start'd the whole mess but they don't loose

[lmwii]

if you can't afford the payments, don't take out the loan. i have no - zero- nada - zilch - null sympathy for someone who took out an adjustable rate loan that they couldn't pay once the rate changed. if they were too stupid to know better, then too bad. if they were betting on the house gaining value and seilling it to make a profit, too bad.

 

if i offer to lend you money, you don't have to take it. the idiots who loaned them the money are no more at fault than the idiots who took out the loans.

[Shelby]

i'l have to agree completely with that,, 21 yrs ago i had to make a decision about buying a home,, i'd just had a heart attack so i was certain of one thing i could not take out a loan that my wife could not afford to pay after i was gone that set limits that i wasn't happy with but had no choice but to follow,, now this wasn't because i couldn't get a morgage but why take out a $200 k morgage i knew i'd have to loose if something happen'd to me so i was stuck with buying a double wide , yep automaticly went to being a 3'd rate cictizen over nite would i had i known that hell no but no one tells you this up front ,, no one tells you that it has no loan value at all no colateral build up , had i it to do over i'd have bought what ever i could have aford'd and it would have been a true home so the wife would at least have some thing of value later on , today it and property is paid off, and the property alone can provide her with income for the later part of her life after i'm gone

[Mech]

if you can't afford the payments, don't take out the loan. i have no - zero- nada - zilch - null sympathy for someone who took out an adjustable rate loan that they couldn't pay once the rate changed. if they were too stupid to know better, then too bad. if they were betting on the house gaining value and seilling it to make a profit, too bad.

 

if i offer to lend you money, you don't have to take it. the idiots who loaned them the money are no more at fault than the idiots who took out the loans.

 

So lets say i take my car to a mechanic and i know ZERO about repairing cars. The car was making a noise, and lets say it was a simple repair. The mechanic tells me i need to spend 2 grand to fix the problem. So i spend it. The mechanic cheated me. I put TRUST in the mechanic, and he exploited my ignorance about auto repair.

 

Whats the difference when it comes to getting a home loan from a lender?

 

Now, if someone goes from renting to owning a million dollar house, thats just plain stupid. But most people werent.

 

The banks exploited the american dream, to own your home.

 

How many people were told that the payment would increase in xxx amount of time? Do you think people would have singed on the dotted line if they knew that in xxx amount of time their payment would double and they would not be able to afford it?

 

Dont ask Dont tell, right?!

 

As long as the chrome is shiny and the windows are clean, people will buy the car right? And the fact that the car burns 2 quarts of oil every 500 miles, well, the salesman will just keep that to himself.

[lmwii]

there's no need to make an analogy...it's dead simple. people went to borrow money. they borrowed more than they could afford. somehow, this is the evil banks' fault?

[lmwii]

also, as a borrower, it's your job to know what you can and can't afford. the broker's job is to sell you a loan.

[Mech]

Hey Imwii,

 

If you have ever boughten a car that a had problem, that you didnt find out till later, thats makes you an idiot then.

 

I'm getting real sick of these Jerks saying hard working american people that only want a better life for themselves and their families are idiots.

 

The banks knew damn well what they were doing, and that people would take the loans. The lenders are nothing but a bunch of damn crooks.

 

When the economy tanks, and you cant afford your house payment, or to buy food, lets see what you have to say then.

[lmwii]

you insist on using analogies, so here you go:

 

you buy a car that has every possible issue listed in black and white on a contract. even problems that WILL come up in the future. you buy the car, then cry because what YOU AGREED TO IN WRITING comes to pass.

 

that's what this is like.

 

or:

 

you buy a car hoping that it will become worth more than you paid for it so you can sell it at a profit before the payments kill you. the car doesn't rise in value, and you are stuck.

 

that's what the other part of the housing crisis is like.

 

these borrowers signed documents laying out the terms of the loans. there was nothing hidden, not like a car that might break down or not. the loans spell out the terms explicitly.

 

so you are left with people too dumb to read what they are agreeing to, or gamblers that lost. boo-freaking-hoo. thanks for effing up the economy dumba**es.

Edited September 21, 2008 by lmwii

[Lusion972]

First off, the sub prime loans offered to people with less then perfect credit is much like the stock sold from the .net companies of the late 90's. What started off as great quickly blew up in everyones faces but just to show you how messed up the market is. My neighborhood right now is still being built, houses are being bought while 1/4 of the neighborhood is for sale. My neighbor next door literaly packed his families crap yesterday and just left. He gave me his new address(rental home) and said he was leaving. No for sale sign or nothing, he said they tried to hold out as long as possible but when his mortgage ballooned from 8-900 a month to 12-1400 there was nothing he could do. He is disabled and his wife is the only one that works. Banks would rather lose money on these houses instead of just refinancing them to a lower interest mortgage. Why? Why not just offer these people the 8-900 a month payments and keep receiving money. I blame the lenders/banks and brokers more then anyone else.

 

Now there are alot of idiots in this world that knew they were way over their heads. My co-worker, she is a clerical and makes a ton less then me went out with her husband(still dont know what legal job he has) and bought a 350k house in the middle of the ghetto. LOL, so they went from paying 1500 to like 2200 a month...next thing you know her truck got repo'd, she is trying to get the house refinanced but it isn't worth jack especially since its in the hood. Why? Why do people that know they dont make enough money to afford a home of that magnitude even try? I have a modest home, 3 bedrooms, 2 car garage and a small front and back yard. My mortgage is small but I have HOA fees and insurance tacked on to it as well. I didn't put much down on the house because I had a broker I trusted and my mother taught me about real estate. People should do their homework before buying a house, understand what a loan is all about and how they work.

 

If all else fails I would rather rent my house and go rent an apartment before I let it get taken away and go bad on my credit.

[Kr0nus]

you insist on using analogies, so here you go:

 

you buy a car that has every possible issue listed in black and white on a contract. even problems that WILL come up in the future. you buy the car, then cry because what YOU AGREED TO IN WRITING comes to pass.

 

that's what this is like.

 

or:

 

you buy a car hoping that it will become worth more than you paid for it so you can sell it at a profit before the payments kill you. the car doesn't rise in value, and you are stuck.

 

that's what the other part of the housing crisis is like.

 

these borrowers signed documents laying out the terms of the loans. there was nothing hidden, not like a car that might break down or not. the loans spell out the terms explicitly.

 

so you are left with people too dumb to read what they are agreeing to, or gamblers that lost. boo-freaking-hoo. thanks for effing up the economy dumba**es.

 

Have you ever read the Home Loan paperwork before? It's like reading Chinese (Assuming you are not Chinese). You need someone to interpret it for you. Now these educated people that interpret it for you leave some stuff out, sometime really important stuff. Like in my case I thought that my property taxes would be far less than they are. When I made my first payment it was only for $2k, I thought that was what I had to pay for the year. It turns out that I have to pay way more than that and the only reason why it was 2k is because of when I bought my house. I was only paying for property taxes for 3 months basically. I didn't know that you have to make them every 6 months. My lender did not mention this. How would I know this? I know you are probably going to say through research, but how far can you take that? I'm not a home lending agent. Some people were not even told that their mortgage would adjust after 2 years. Thats just messed up.

 

Now I know that a lot of these people got loans that they clearly could not afford. But there are a lot of people that really are victims of the home loan industry. Now people that cannot afford their home for whatever reason are trying to shortsell their home for a loss. You have to get your lenders ok to do this. Now lenders are denying people this and what are they supposed to do? The lender could have gotten some of their money back, but instead they force the home owner into a foreclosure. How is that right? It's hard to get out of a situation like that. I mean how long does someone have to keep paying for their mistakes?

 

This is why I would like to see the government help out the people instead of the companies. Give these people a chance to keep their homes. What do you think is going to happen when they release the $700 worth of funds? I can't see it helping the current home owners. They are still going to have homes that they cannot afford. Isn't this the whole problem?

[lmwii]

when someone signs their name to a contract for hundreds of thousands of dollars, they should understand it. end of story for me. if you lack the basic financial acumen to realize that the monthly payments on a 250k 20 year mortgage should be more than $1000 a month, then you aren't competent to own a home. i'm not talking about little details here. i'm talking about a simple mortgage calculator that anyone can find on the internet. people are dumb, and all of the taxpayers are going to pay the price for their stupidity.

[Kr0nus]

when someone signs their name to a contract for hundreds of thousands of dollars, they should understand it. end of story for me. if you lack the basic financial acumen to realize that the monthly payments on a 250k 20 year mortgage should be more than $1000 a month, then you aren't competent to own a home. i'm not talking about little details here. i'm talking about a simple mortgage calculator that anyone can find on the internet. people are dumb, and all of the taxpayers are going to pay the price for their stupidity.

 

 

I have to know, are you a home owner?

 

The "little details" is what screwed a lot of people. They would have a decent APR for 2 years and then after that it would go to something insane. Or ridiculous fee's would kick in after the first year. It's the "little details" that were camouflaged in legal jargon.

 

I am agreeing with you that a lot of people did buy homes that they could not afford. But, it was not everyone. Also, a lot of people research was the loan officer. They didn't use a library or the internet because they had a "expert" right there that they thought was on their side. Obviously this wasn't true.

[Lusion972]

Kronus, if you dont understand what an arm is then you shouldn't have gotten it. Fixed rate is exactly what it means...a fixed rate that will never budge. When I bought my first place it was a condo that was forclosed and I didn't wanna take the chance of being screwed in any way so I had an attorney read over the loan agreement. Some people need to invest in pre-paid legal...it really helps, I have it and continue to use their service.

[Star_V8_Quest]

First off, the sub prime loans offered to people with less then perfect credit is much like the stock sold from the .net companies of the late 90's. What started off as great quickly blew up in everyones faces but just to show you how messed up the market is. My neighborhood right now is still being built, houses are being bought while 1/4 of the neighborhood is for sale. My neighbor next door literaly packed his families crap yesterday and just left. He gave me his new address(rental home) and said he was leaving. No for sale sign or nothing, he said they tried to hold out as long as possible but when his mortgage ballooned from 8-900 a month to 12-1400 there was nothing he could do. He is disabled and his wife is the only one that works. Banks would rather lose money on these houses instead of just refinancing them to a lower interest mortgage. Why? Why not just offer these people the 8-900 a month payments and keep receiving money. I blame the lenders/banks and brokers more then anyone else.

 

Now there are alot of idiots in this world that knew they were way over their heads. My co-worker, she is a clerical and makes a ton less then me went out with her husband(still dont know what legal job he has) and bought a 350k house in the middle of the ghetto. LOL, so they went from paying 1500 to like 2200 a month...next thing you know her truck got repo'd, she is trying to get the house refinanced but it isn't worth jack especially since its in the hood. Why? Why do people that know they dont make enough money to afford a home of that magnitude even try? I have a modest home, 3 bedrooms, 2 car garage and a small front and back yard. My mortgage is small but I have HOA fees and insurance tacked on to it as well. I didn't put much down on the house because I had a broker I trusted and my mother taught me about real estate. People should do their homework before buying a house, understand what a loan is all about and how they work.

 

If all else fails I would rather rent my house and go rent an apartment before I let it get taken away and go bad on my credit.

i agree and if the fed wouldnt have bailed them out,i think with enought provoking they could have worked out something to keep the payments at a certain price for the time being.

one of the head guys of these comanies that were baile dout made 34 million last year.

how the hell can anyone make 34 million and the business is tanking?

i want to know because as small business owner,i want to know how to make alot of money incase my busniess starts a downhill plunge.

[Lusion972]

Just do like exxon does...say there is a shortage and still make 62 billion in profit

[Kr0nus]

Just do like exxon does...say there is a shortage and still make 62 billion in profit

 

 

Well if there is a shortage than they can up their prices. Supply and demand. If the supply is short and the demand is still there than they will raise the prices.

[lmwii]

kr0nus, as lusion just alluded to, an ARM vs a fixed rate is not a little detail.

 

i am not a homeowner. i have read through and researched mortgages however, which apparently is too much effort for some folks who actually are borrowers. for the price of a few $20 books and/or a few weekends on the internet, these borrowers could have known what they needed to know to avoid getting into trouble. if your source of trustworthy, unbiased, on-your-side advice is the broker, then i must say again, you are too dumb to deserve sympathy.

Edited September 21, 2008 by lmwii

[vbrad511]

I've got to chime in even though I don't own a home. IMHO it's a matter of predatory lenders. They knew going in that they'd screw a lot of people. They knew all they had to do was tell people they could take their dream home to the next level and even though it'd come back to bite them unknowingly later, they'd do it. Let's face it, America has gotten used to taking the easy way out of everything. So these folks who may or may not have known the conventional methods for buying a house, and were hesitant because of the details, or what they could afford at the time, now saw the shiney deal the lenders were holding in front of them and jumped. It was impulsive on the buyer's part. Badly impulsive, but hey, everybody wants a little more. Knowing the nature of folks wanting a nicer house and a better life, these lenders knowingly baited millions of people who they knew (or strongly suspected) would fail. My mom lost her nice house a few years back. She was facing certain forclosure and (OMG) having to stay with me. She got lucky enough to sell, with less than a month to go before the bank stepped in, and walked away with basically nothing. She's 70, and had to come out of retirement so she can afford her efficiency apartment now. Kinda sucks after working 35+ years already. Enough pity-party. The folks that took out the impossible loans sholdn't get a free pass./ They should have some sort of consequences for not following through, but the predatory lenders need to be held accountable too.

 

Actually, why are there laws restricting sales of guns? Are people not responsible enough to handle them without government mandating rules? If we took the rules away, then gun related crime jumped, would it be dismissed as people shouldn't have bought the guns in the first place, but then not change anything? No. There are known dangers, so rules are put in place. You break those rules, there's a price to pay. Same should be set on home loans.