Economic Stimulus?

[wanna be drummer]

Yes, and I asked you how they did and you never gave an answer.

I haven't been visiting this forum a whole lot and I forgot about this convo until today. My apologies.

you made a point without valid information or any information at all which made you look like a blowhard.

Valid information? I jsut gave you my opinion, I wasn't going into detail about it.

But again, how did the government screw over the banks?

Did you not read my post? Forced sub-prime lending

They tried to save the banks by giving them money. They didn't screw them over.

They tried to save them at the last second after it was too late. In the end, governmental interference was the cause of the banking failure.

You clearly do not know what you are talking about. Now are you going to give me a valid answer on why you think the government screwed over the banks or no?

I did. Twice now. Reread my last post

[zepyep]

Hi all,

Did you not read my post? Forced sub-prime lending

Forced?Like a gun to the head.Buy this house and mortgage you can't afford?

[They tried to save them at the last second after it was too late. In the end, governmental interference was the cause of the banking failure.

Your joking?Not the loans people could never pay back.Not the 50Mil bonuses to the CEO's,etc., who's company just lost 60 million.The Banks get billions they can do what that want with,did they reinvested in the company?

KB

[wanna be drummer]

Hi all,

Forced?Like a gun to the head.Buy this house and mortgage you can't afford?

Um...no not at all. I'm saying the government forced the banks to allow subprime loans and people accepted that.

So no, you are incorrect, that is not what I believe

Your joking?Not the loans people could never pay back.Not the 50Mil bonuses to the CEO's,etc., who's company just lost 60 million.The Banks get billions they can do what that want with,did they reinvested in the company?

KB

The banks don't get shit if their customers don't pay back their loans...

They got screwed by the government because they were forced to give out loans to people who couldn't afford to pay them back and now we're all paying for it, no?

[zepyep]

Hi all,

Um...no not at all. I'm saying the government forced the banks to allow subprime loans and people accepted that.

So when do two wrongs make a right?

People,adults I might add accepted, loans they know up front they could never pay?And who forced them?

The banks don't get shit if their customers don't pay back their loans...

Not anymore,...

They got screwed by the government because they were forced to give out loans to people who couldn't afford to pay them back and now we're all paying for it, no?

No personal responsibility?They were forced to sign?If any was forced to sign,then a few people should be going to jail,no?

KB

[Dzldoc]

On top of all that, many of the homes that were foreclosed on were striped bare of fixtures, wiring, plumbing everything including the kitchen sink by the exiting owners

[manderlyh]

^that definitely happens, doesn't it?

I'm sure that there are other areas that are much worse off than Boise, Idaho, but here, it's almost impossible to sell a house. We have a few houses in our neighborhood that are basic, homes--nothing out of the ordinary or super-special, that are priced decently, and they're just sitting. I'm talking about a 3 bedroom, 2 bathroom 1600 sq foot home that they're asking like $160K; and a 2200 sq foot house that's valued at around $220K with an asking price for $185 that have just been sitting. These are stellar prices--my 2000 square foot house is valued at $200K, but I don't think we'd ever be able to get that if we sold it.

In my area, there are many repos around. Many people fell victim to the subprime mortgage scandals---others to the 20/80 ARM mortgages. It does seem that banks are desperately trying to keep their assets and are trying to keep homeowners in their homes--even ones who have defaulted on their loans, but there is a point where these people who can't afford to make their payments will be booted if they are continually falling behind.

Though I'm stressed out about being underemployed and not having any money of my own, I'm thankful every day that when my boyfriend and I bought our home, we only bought what we could afford to pay for on ONE income--otherwise, we'd be in a bad situation. We haven't' been in danger of missing the house payments, thank God, but things have been a LOT more tight than ever before these last few months.

[wanna be drummer]

Hi all,

So when do two wrongs make a right?

People,adults I might add accepted, loans they know up front they could never pay?And who forced them?

No, Kevin you're not listening. I'm not saying the customer was forced to take the loan, I'm saying that the government forced banks to give out sub-prime loans. Banks will not give out high-risk, low-reward lending as they have been doing, unless the government told them they do...which it did under Clinton

Not anymore,...

They never do.

No personal responsibility?They were forced to sign?If any was forced to sign,then a few people should be going to jail,no?

KB

...

Fail

Once again, the banks were forced to give out sub-prime loans. That's the problem I have. I'm not talking about the customers, I'm talking about the BANKS

[manderlyh]

Banks weren't forced to give out subprime loans.

Nor were the subprime loans under Clinton. Clinton left office in 2001--before the major housing/real estate boom's peak. He may have started part of the subprime lending, but the banks DID NOT HAVE TO LOAN MONEY TO PEOPLE WHO DIDN'T HAVE THE CREDIT AND INCOME TO BACK IT UP. The first mortgage company we went to wanted to give us MUCH more money than we could afford, but we chose to go to someone who stick to the "house payment should be 1/3 or less than your total take-home pay each month" rule. Housing payments--rent or mortgages should NEVER be more than 33% of your income each month.

The biggest issue with this whole mortgage mess is that mortgage lenders were approving people for more than they were really able to afford. Many people were approved for 100% financing when it used to be the norm that you had to have 10-20% down to buy anything--only people with really bad credit were expected to have that much down during this skyrocketing housing economy.

We were approved for a $450K mortgage--on about a $65-70K a year income combined. $450K for a house in my area is MUCH MORE house than ANYONE needs for a first house in Boise, Idaho. $450K in Boise will buy you a 6,000 square foot home with average--or just a really posh, posh home, (I just checked real estate listings to give a decent example)--go outside Boise, and you can pretty much buy a ranch if you look in the right places. It's not like you can't find a home under that price for a family of four or five.

If we had bought the most expensive house we were approved for, we'd be totally screwed in today's economy. Our 4 bedroom, 2 bathroom 2000 square foot home had a selling price of $175K--though it was a great deal, it's still more house than two people really need for a first home--it's bigger than the house I grew up in; it's bigger than my mom's current house.

I have many friends who are about the same age as me, and make about the same amount of money who DID take on the large mortgages--and though I haven't asked them--I often wonder how they're doing with their mortgages. I actually wondered at the time and still kind of wonder if they fell for some of the gimmick loans like the "interest only loans" that end up being slightly different than renting, (which was one that the first mortgage broker suggested, but we were smarter than to take that offer).

Many of these people who were buying these HUGE houses at 24, 25, 26 years old who were employed by places that have taken a huge hit from our economy's situation--jobs like stocks and investment firms and real estate jobs. Though I was totally jealous of their homes at the time, I am quite happy that we were smart about what we bought.

To make a short point long--I'm trying to say that mortgage lenders were offering unconventional loans to people that IMO were kind of unethical. We had a housing boom that was making housing values inflate beyond belief--and with our subprime loans and unconventional "deals" that were out there, everyone seemed to be able to buy--no matter what your financial situation truly was. Mortgage lenders were lending people money for HOMES who had neither the credit for a decent credit card, nor did many of these people qualify for new or used car loans. What does that say?

The housing market was hugely inflated--my mom bought a (smaller) new house at the end of 2003 for $99K. She put down $12K or something, so right off the bat, she had some equity. Today, her home is appraised for $170K. So in just over FIVE YEARS, her home has appreciated $70K--and she really hasn't done much work to it because it's a 7-year old home.

On the other hand, our home was sold at $175 when we bought itin Feb. 2006. We paid less than appraisal value. This year, our home's value is about $25K above the price we paid. In less than three years--the only thing we did to our house is buy new kitchen appliances and re-do some of the landscaping--nothing that would make the value change much.

Granted, I don't think that our homes would sell at this price in this economy, but realistically, this is how much the homes are worth--and though they would sit for a while, I think that these assessments are close to market value.

Edited to add: many of these people who have been trapped into these mortgage situations that aren't good were people who were really excited to have the opportunity to buy homes--any homes. These people may have been ones who didn't think they'd be approved for a home loan based on their credit, their incomes, etc. Many of the people I see with TOO MUCH HOUSE for their income are simply ones who didn't educate themselves in real estate before they jumped into the home ownership game. These people didn't know much about real estate prior to the huge housing/real estate craze. These rules were really redefined and defied the norms of mortgage lending that were previously strictly adhered to.

I had the great fortune to work in a real estate broker's office when I was 18. I was lucky to have learned the housing game long before I even set out looking for an apartment of my own. This was a great advantage that I had when it was time to start looking to buy--and without it, I could have easily fallen prey these "different" lending practices that hit the US.

[wanna be drummer]

Banks weren't forced to give out subprime loans.

The governmental regulations on banks disagree

Nor were the subprime loans under Clinton. Clinton left office in 2001--before the major housing/real estate boom's peak. He may have started part of the subprime lending, but the banks DID NOT HAVE TO LOAN MONEY TO PEOPLE WHO DIDN'T HAVE THE CREDIT AND INCOME TO BACK IT UP. The first mortgage company we went to wanted to give us MUCH more money than we could afford, but we chose to go to someone who stick to the "house payment should be 1/3 or less than your total take-home pay each month" rule. Housing payments--rent or mortgages should NEVER be more than 33% of your income each month.

Subprime lending can refer to more than just credit and income...

And Clinton did push for subprime lending...I'm not blaming him because he wasn't the only one who told the banks to do so, but he was definitely a part of it

The biggest issue with this whole mortgage mess is that mortgage lenders were approving people for more than they were really able to afford. Many people were approved for 100% financing when it used to be the norm that you had to have 10-20% down to buy anything--only people with really bad credit were expected to have that much down during this skyrocketing housing economy.

We were approved for a $450K mortgage--on about a $65-70K a year income combined. $450K for a house in my area is MUCH MORE house than ANYONE needs for a first house in Boise, Idaho. $450K in Boise will buy you a 6,000 square foot home with average--or just a really posh, posh home, (I just checked real estate listings to give a decent example)--go outside Boise, and you can pretty much buy a ranch if you look in the right places. It's not like you can't find a home under that price for a family of four or five.

If we had bought the most expensive house we were approved for, we'd be totally screwed in today's economy. Our 4 bedroom, 2 bathroom 2000 square foot home had a selling price of $175K--though it was a great deal, it's still more house than two people really need for a first home--it's bigger than the house I grew up in; it's bigger than my mom's current house.

I have many friends who are about the same age as me, and make about the same amount of money who DID take on the large mortgages--and though I haven't asked them--I often wonder how they're doing with their mortgages. I actually wondered at the time and still kind of wonder if they fell for some of the gimmick loans like the "interest only loans" that end up being slightly different than renting, (which was one that the first mortgage broker suggested, but we were smarter than to take that offer).

Many of these people who were buying these HUGE houses at 24, 25, 26 years old who were employed by places that have taken a huge hit from our economy's situation--jobs like stocks and investment firms and real estate jobs. Though I was totally jealous of their homes at the time, I am quite happy that we were smart about what we bought.

To make a short point long--I'm trying to say that mortgage lenders were offering unconventional loans to people that IMO were kind of unethical. We had a housing boom that was making housing values inflate beyond belief--and with our subprime loans and unconventional "deals" that were out there, everyone seemed to be able to buy--no matter what your financial situation truly was. Mortgage lenders were lending people money for HOMES who had neither the credit for a decent credit card, nor did many of these people qualify for new or used car loans. What does that say?

Well that sort of went on a little further than it should have Mandy

And banks didnt not necessarily want to do that in many situation

The housing market was hugely inflated--my mom bought a (smaller) new house at the end of 2003 for $99K. She put down $12K or something, so right off the bat, she had some equity. Today, her home is appraised for $170K. So in just over FIVE YEARS, her home has appreciated $70K--and she really hasn't done much work to it because it's a 7-year old home.

On the other hand, our home was sold at $175 when we bought itin Feb. 2006. We paid less than appraisal value. This year, our home's value is about $25K above the price we paid. In less than three years--the only thing we did to our house is buy new kitchen appliances and re-do some of the landscaping--nothing that would make the value change much.

Granted, I don't think that our homes would sell at this price in this economy, but realistically, this is how much the homes are worth--and though they would sit for a while, I think that these assessments are close to market value.

Um. ok? Relevance?

[manderlyh]

The relevance of that comment is that many people got caught in a trap:

1. The values of houses went up in price rapidly--too rapidly to really keep track within a 6 month time period. People were putting in offers on homes at full-price, only to have another person snatch it up from under them because the other person offered more than the home was worth in order to guarantee their spot as top bidder. (We did a full-price offer in our home--and we had to pay closing costs...and we were the first of five people to put in an offer in one day.)

2. Now that these values are rapidly dropping in many areas, people who have owned their homes for more than a year or two are rapidly losing equity--especially if they've refinanced for bill consolidations, etc. So in order to sell these houses that these people really can't afford, they have no choice but to do a short sell--which is almost as bad as a repossession. Even people who have the money to buy these houses aren't paying what they were worth last year, or even six months ago.

3. Homes don't normally appreciate this quickly. Usually, they would appreciate this much over a 10 year period or so, but not in 3-5 years.

_____

Oh yeah, and I forgot to say that to my knowledge, much of the subprime lending practices that came into effect during this time were NOT put into effect by Clinton. He may have started the ball rolling, but Clinton was not the one lowering Federal interest rates, etc. He wasn't in office.

[wanna be drummer]

The relevance of that comment is that many people got caught in a trap:

1. The values of houses went up in price rapidly--too rapidly to really keep track within a 6 month time period. People were putting in offers on homes at full-price, only to have another person snatch it up from under them because the other person offered more than the home was worth in order to guarantee their spot as top bidder. (We did a full-price offer in our home--and we had to pay closing costs...and we were the first of five people to put in an offer in one day.)

2. Now that these values are rapidly dropping in many areas, people who have owned their homes for more than a year or two are rapidly losing equity--especially if they've refinanced for bill consolidations, etc. So in order to sell these houses that these people really can't afford, they have no choice but to do a short sell--which is almost as bad as a repossession. Even people who have the money to buy these houses aren't paying what they were worth last year, or even six months ago.

3. Homes don't normally appreciate this quickly. Usually, they would appreciate this much over a 10 year period or so, but not in 3-5 years.

ok, but I'm saying that gopvernment authored-subprime lending in one of the biggest reasons we're in this housing crisis. You said they don't force subprime lending. I disagree, the legislation in place makes it hard for banks to turn someone away based on plain risk.

[manderlyh]

They weren't forced to lend with these shifty practices.

I have friends who were offered all kinds of mortgages that were almost unheard of before:

interest only loans

20/80 splits

ARMS

The mortgage lenders were all about selling as many loans as they could--and it got out of hand. NO ONE was twisting their arms to offer these high-risk mortgage loans.

It was the NORM to be financed with these loans that were usually extremely rare prior to this huge housing/real estate craze. When we bought our home, which was within our finance range, which also translates to not as nice as those of my friends, we were one of the ONLY people who had bought a house within a two years that we knew who had a FIXED MORTGAGE RATE.

My boyfriend actually had co-workers who were trying to talk him into buying a bigger and more expensive house by financing through an interest-only mortgage. (I told him if he did that, I'd have killed him.)

What's wrong with that picture?

Like I said, the first lender we went to offered us some of these loans. Because I had a background in real estate, I was a bit shrewd when I was looking at these offers. We decided that we really weren't comfortable with these loan offers. With this particular lender, we even had an ARM for the house we bought, though the credit scores were fine and so was our income.

We went to a second mortgage lender--one a family friend in the real estate business recommended--and we had NO "shifty" loan offers. Granted, it took a few more days to get them preapproved, etc., but we were offered a FIXED RATE mortgage that we were comfortable with--unlike the other lender's offers.

Many lenders offered these mortgages because they were the easiest to guarantee--the least amount of work for them--with the maximum profit. Like I said, the credit scores were fine, we were within a reasonable monthly payment/purchase price for our income, etc.

Many lenders offered people ARMS that started out at a GREAT interest rate, then one or two years down the road, the interest rates got so high that the homeowners were forced to refinance to keep their mortgage payments within manageable limits--all because their credit wasn't good enough to get a decent fixed rate at the original time of purchase. I know several people who have had to refinance their homes after a year or two because the ARM started going up to the point where they couldn't pay their mortgages otherwise. I also know a few people who haven't been able to refinance because their credit scores didn't improve, so they have been in danger of missing house payments because said payments have increased 20-30% of their original payment amount.

These ARMS were loans that were meant to get people who wouldn't normally qualify for the houses they have bought into the home they want--while it sounds great at the beginning, it just isn't worth it in the long run. One of my friends had like $10K in equity when she refinanced her house due to an ARM, and it ended up costing her about $8K to do it--so much for buying a house for an investment...

This is just one of the issues the US housing market is facing today--many areas are suffering great amounts of depreciation--many people are upside down on their homes because values have gone down; but that's not what I'm addressing. I'm addressing the not-so-great lending practices that occurred in the US during this time.

edited for clarity

[wanna be drummer]

Not the most awesome of sources, but I'm tired and going to bed so it'll do.

This article pretty much sums up much of what I had to say on the topic. I started typing then I got bored and tired so I think I'll hit it and leave that article as reading material.

[manderlyh]

I will read it--

[TypeO]

Barney Frank, Sept. 10, 2003: "The more people in my judgment exaggerate the threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the treasury, which i do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. Even if there were a problem, the federal government does not bail them out. But the more pressure there is, the less we see in terms of affordable housing."

As Bill O'Reilly revealed, as late as July 08 Barney Frank was still covering up what, by that time, had to be undeniable evidence of an imminent collapse.

If you can manage to look beyond any personal distaste for O'Reilly/Fox news you may have, the facts are pretty plain.

I'm personally glad O'Reilly blasted his sorry ass, he's one of the real reasons for the mess we have now, because he was overseeing the mess and denied/covered it up and then tried to blame others (read: Bush).

[euro]

They weren't forced to lend with these shifty practices.

I heard of the concept of "best practices" but in America i guess they call it shity practices?

[manderlyh]

^heh.

I said SHIFTY practices--though shitty also fits the bill.

[euro]

^heh.

I said SHIFTY practices--though shitty also fits the bill.

I really need to get glasses

[cryingbluerain]

This stimulus plan is going to take lots of time to implement and more time before we see any actual results. Instead of going through all this rigamoro, if we want an immediate jolt to the economy why don't we just slash everyone's payroll taxes by 50%?

Wait, we are talking about politicians here. Why do the most expedient, practical thing when we can set up a wasteful gov't bureaucracy to do it instead?

[Bong-Man]

I've been reading the foreclosure notices in the local paper. A little background here....I have an adjustable rate mortgage at this time....and I've had it for 10 years ! My rate is currently 4 7/8%. I have dropped 4 points in 10 years, and I'll soon drop to 2 7/8 %. My rate is determined by the 1 year T-arm index.

I only offer that personal info to demonstrate that just because someone has an ARM loan.....that's not necessarily evil.

Back to foreclosures.....I've seen notices where folks are foreclosing with 10 7/8% interest rates.

I don't care how ignorant somebody was for signing the mortgage....Somebody needs to go to jail for selling people that crap !

[wanna be drummer]

I've been reading the foreclosure notices in the local paper. A little background here....I have an adjustable rate mortgage at this time....and I've had it for 10 years ! My rate is currently 4 7/8%. I have dropped 4 points in 10 years, and I'll soon drop to 2 7/8 %. My rate is determined by the 1 year T-arm index.

I only offer that personal info to demonstrate that just because someone has an ARM loan.....that's not necessarily evil.

Back to foreclosures.....I've seen notices where folks are foreclosing with 10 7/8% interest rates.

I don't care how ignorant somebody was for signing the mortgage....Somebody needs to go to jail for selling people that crap !

You really believe that? So because the deal may have been awful, the fact that someone's own stupidity caused them to sign a mortgage doesn't matter at all? I strongly disagree.

[Bong-Man]

You really believe that? So because the deal may have been awful, the fact that someone's own stupidity caused them to sign a mortgage doesn't matter at all? I strongly disagree.

I don't know how you could disagree. It doesn't matter because those practicing the stupidity don't own the home anymore. The people who originally sold the mortgage aren't holding that either. Unfortunately, one could make a good argument that you and I are now holding and paying for both.

[wanna be drummer]

But why would someone need to go to jail for selling a bad mortgage? No one has to sign the dotted line...

[The Rover]

6 Minute Video where Congreeman explains what they were told on Sep. 15th that caused them to think the end of the uS and World Financial Sysytem was near, due to an "electonic" "bank" run on the Financial System. . . . .

http://www.youtube.com/watch?v=_NMu1mFao3w

Maybe our Financial System should have ended as we know it.....

It was based on corrupt greed anyway.... Why not try something new ? ? ?

But they want to save the status quo corruption.... for now....

[Bong-Man]

But why would someone need to go to jail for selling a bad mortgage? No one has to sign the dotted line...

Because many of the companies selling the mortgages (refinancing also) were lying about the qualifications of the buyer. Property price, income, and debt were all fudged to get the loan thru. Since the mortgage was going to be sold anyway, those companies didn't care as long as they got their cut. They were nothing more than carpetbaggers that were allowed to flourish because of limited oversight of the mortgage industry.