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213 Comments
- inactive, on 10/20/2007, -10/+56HI MY NAME IS PATTY AND I'M YOUR AGENT!
I'm going to speak really loudly and excited about whatever over-priced piece of cr@p house I try to shove down your throat! Did you notice my makeup and perfume? I put WAY too much on. It's my way of trying to cover up the 45 pounds I gained after I gave birth to my kid. My husband then lost interest in me and now has sex with Thai hookers when he goes on business trips for his WIlly Lomanesque sales trips! Can I interest you in this split-level Colonial which has gone 500% in the past six months? The markets fueled by low interest, interest only loans which will entrap you like an 18th century negro south of the Mason Dixon Line- hi, I'm Patty! - mrbubbleboy, on 10/10/2007, -1/+46The silver lining is that once this crash is over with (which is going to be while) prices should be back to a normal level where a person earning a good wage can reasonably afford a house. Right now prices just aren't affordable in many of the major metro areas.
- Y0tsuya, on 10/10/2007, -3/+31We will have successive waves of ARM resets over the next 4-5 years. Yet real-estate agents and "economists" still insist that the worst will be over in a year or so, same thing they've been repeating since 2005, only the date kept getting pushed back. And people still listen to these hacks. We have an affordability problem, not a subprime problem or interest rate problem. Yet these economists all miss the main point. Does getting a Ph.D. in economics mean you have to give up common sense?
- DCMacHead, on 10/10/2007, -1/+23That's because the "prime" borrowers weren't really prime in the first place. Two to three years ago you could fog a mirror and get a mortgage with zero income documentation--at the rate things are going, you're going to need full documentation, a notarized note from God and your left testicle pledged as collateral to get one. So, the sales were fueled by loose lending and that money is no longer there to support prices--now it's payback time for those who bit off more than they could chew.
While all this was going on, the banking regulators sat around with their thumbs up their asses doing nothing to enforce prudent lending standards. Even more ironic is that Greenspan told people ARMs were a good idea just before he commenced hiking rates 17 times.
All the market has done up to know is take the imprudent lenders down, but there are still billions of dollars' worth of mortgages left to reset. It's humerous to hear politicians say, "oh, Fannie and Freddie can buy $17 bln worth of mortgages now"--only problem is that's not even a quarter's worth of production at a top 10 mortgage lender. - SirGunslinger, on 10/10/2007, -1/+17Just like fat people need to put the fork down, broke people need to put the credit card down. Don't buy what you cannot afford.
- sarazen, on 10/10/2007, -1/+16I wish the silver lining was easier to find in this cloud. Getting great deals on foreclosed real estate just isn't very satisfying.
- krizzle, on 10/10/2007, -1/+15You haven't even experienced the fiveclosure yet.
- theworldisflat, on 10/10/2007, -1/+15Dear California,
We told you. We told you... we told you.
Thanks
Rest of the US not paying 500K for a 700sqft shack. - lucienve, on 10/10/2007, -2/+14Dugg down as inaccurate - this isn't the 'Worst in US History'. The article states that the data that they're looking at only goes back to 1953. The article actually says that it's the 'worst in _recorded_ history', and then gives the dates they have data for. The digg headline, unsurprisingly, is overly dramatic and tabloid-worthy.
- TherealObadiah, on 10/10/2007, -0/+12Well, at least I don't have to listen to those moronic ads shouting, "No Credit? Bad Credit? NO PROBLEM!
- FreakyD, on 10/10/2007, -3/+15I hope this means that the price of 24" chrome spinners are going down
- chriskzoo, on 10/10/2007, -0/+12OK, so people default on the loan and the mortgage company then has to take over the property, in a declining market. The buyer gets hurt for getting into a loan they can't afford and the mortgage company gets in trouble getting stuck with properties they can't sell and aren't drawing an income from. It's called capitalism and the the dumbest thing you can do is bail either side out. Let the chips fall where they may, the market will correct, homes will be more affordable, mortgage companies will not offer shady loans, and everyone will be better off in the long run.
- manstein01, on 10/10/2007, -1/+12Where some friend's lived their landlord sold their two - family for $300,000. When the people who bought it moved in, we wondered how the hell this family of six - only two of which worked - could afford this place. Well, two years later (my friends had long since moved out) there was a story in the local paper which used this family as an example - it turns out they made a combined income of 45 grand, and used an 80/20 to buy the house...
This crash was long overdue. Any idiot with a smidgen of common sense. could see it coming - billmccartney, on 10/10/2007, -0/+11I feel so bad for people who were living out of their means, and the idiot investment groups who made bad financial decisions on lending those people money....
Oh wait, no I don't. All of these parties are getting their just desserts. As cruel as it sounds, these people are financial idiots for not seeing this - and don't get me started on the mortgage companies... - chriskzoo, on 10/10/2007, -11/+22Right, lets blame the mortgage industry for dumb people getting into loans they couldn't afford.
- Leadhyena, on 10/10/2007, -2/+12Why is Andronicus getting digged down? The poll is misleading:
The foreclosure rate recorded in the last quarter has increased beyond the highest point seen in the history of the MBA survey, which dates back to _1953_.
The Depression wasn't even included in this study. - MrUnderbridge, on 10/10/2007, -0/+10The affordability problem is tied up with subprime more than not because it's people in those categories who are hit hardest by low housing affordability. People with marginal credit and little savings (ie, subprime) simply don't have the resources to survive the housing downturn that others might have. Not that it can't affect people with more savings and better credit - things are getting bad enough that it is.
As to the ARM resets in 4-5 years - my rough guess is that people who make it through the first reset will switch to a fixed rate mortgage before it happens again, so the effects of each successive reset *should* be less than the first. Hopefully.
I know what you mean about the 'common sense' thing. Greenspan says he couldn't see the cause and effect relationship between unsustainably low interest rates and housing speculation, ultimately leading to unaffordable housing and a housing market crash. I don't know about him, but I saw it coming and I'm not an economist. I'm simply someone who was looking for a house and seeing 20%+ year over year gains in my market. I talked to real estate agents who said 'just BUY, get what you can, you can always refinance against your equity later!' I'm sitting here thinking, what planet are these people on that they think this will last forever? In the end, I bought a house with a fixed rate mortgage. I did my own budget instead of the bank doing it for me, and got a house that was much less expensive than what I was approved for. In the end, I'm probably showing negative equity right now - but it's OK, I'm not looking to sell and I can make my mortgage payment. That makes me luckier than most. - JMMarich, on 10/10/2007, -1/+10This is a good one. Its really got me thinking.
Perfect example of America's Problem : MY SISTER:
39. Married. 3 kids. Declared bankruptcy 8+/- years ago. In the last 8 years, she and her husband have had ATLEAST 6 new cars. She lives in a 100k house.
My wife and I are 29. In the last 12 years, we have had 1 NEW car. Bought it when my 10 month old was born for the extra airbags and safety in the back.
She complains how my wife and I live in a 400k house and she has an old house in bad repair. Go figure. - JMMarich, on 10/10/2007, -0/+9I just bought my new house in a market that is actually decent, but I still made sure to get a fixed rate. Anyone who got an ARM for any other reason than "I am moving in 1 year and this is no issue" is a complete moron. Its the growing CC debt issue with another face - immediate gratification without being able to effectively pay for it.
--Josh - badrox, on 10/10/2007, -2/+11Lets face it, it sucks. But perhaps the person(s) we should blame is ourselves. Perhaps we should send the $100 to the credit card people as opposed to spending it on some crap...
- cozb, on 10/10/2007, -5/+14how old are you? It's the mortgage industry that APPROVED the people when they well know the barrower will be in trouble down the road.
- Bahimiron, on 10/10/2007, -0/+9God bless my fixed rate.
Of course despite its location, by the time this crisis is over I'm gonna lose my shirt trying to resell. It doesn't help that people are moving out of my area (Boston) at a record setting pace. - OswaldKenobi, on 10/10/2007, -2/+10The Personal Responsibility Crisis is worse than it has ever been in the United States.
- wonttellya, on 10/10/2007, -0/+7A few years ago, everybody and their grandmother is real estate investor buying no-money-down investment properties. Let's see how long these would-be real estate tycoons can hold out.
- archer75, on 10/10/2007, -1/+8I keep reading about this, but i'm just not seeing this. My wife also does mortgages too. We just aren't seeing all this doom and gloom taking place.
- Highstand, on 10/10/2007, -1/+8Any bailout is for the sole purpose of the lenders/banks. If I make bad investments I get a pat on the head and am told to do my research next time. Banks make bad investments and they whine and cry to the feds to bail them out. If they truly support a "free market" then ride the Titanic to the bottom like a man. Yes, yes I know the banks have more of impact on the economy than I do, but if you make bad loans that is YOUR fault. If you bought a house you can't afford that is YOUR fault. You cashed out all of your equity to buy a Hummer, yes again - YOUR fault. The government should step back and let the whole thing crash and sort itself out. People may have to live in Hondas and tent cities for awhile, but our economy will be better in the long run. It will get much worse. Anyone who tells you the worst is behind us is either A) a realtor, B) a real estate investor, or C) a homebuilder. On the bright side, commodity prices will crash and we will have $1 a gallon gas within the next three years.
- johnhummel, on 10/10/2007, -0/+6That was precisely why I moved out of California - $500,000 for a 2 bedroom home just wasn't going to cut it for my 5 member family.
My wife and I have it all specked out that by this time next year, we'll have $17K saved up, and we'll be able to take our pick on the market and not feel rushed to go snag a home the second it becomes available. All we have to do now is just stick to our savings plan and wait - and not get distracted by things like "Rock Band".... - inactive, on 10/10/2007, -0/+6Because they found out the Patriots are spying on them.
- pinguwin, on 10/10/2007, -3/+9So the MBA says it's the worst crisis ever. Wonder who's fault that is. I blame dumb people for this, homeowners and the MBA. Don't think it ever crossed their minds this is PR for a bailout, do you? Nah...all their lobbyists are sleeping in late until noon lately, don't yah think?
- breckinshire, on 10/10/2007, -0/+6You should buy a house in the US. With the exchange rate, your pocket change can probably afford the White House.
- stizz, on 10/10/2007, -0/+6I live in the Los Angeles area and I am sick of seeing homes that were $250k 10 years ago, now on the market for 1.2million or more. Homes do not appreciate that fast in a mere decade. Meanwhile, the median income is still barely scratching 50k a year. All these fools that either bought way more than they could afford, or bought soley with the greedy purpose of flipping the property for profit get no sympathy from me. In a few years, I'll be able to finally buy a home at a realistic price; I look forward to that. I just hope if I buy a foreclosed propery, the previous tenants don't trash the place too much before getting kicked out. Schadenfreude? Probably,..but ***** em.
- uselessexpert, on 10/10/2007, -1/+7This may sound ***** up, but I am glad this is taking place, and that a lot of people and lending institutions are falling flat on their face.
Just like the borrowers knowingly getting in above their heads to try and make a quick buck with variable rate mortgages and the lenders that administered them to the government, they are all at fault.
So, I am glad to see them getting screwed, due to their greed and their short vision, not to realize that all these craziness in real estate was eventually going to come to an abrupt end.
Anyone remember the tech bubble?... Just the same! - zengonzo, on 10/10/2007, -0/+5You're missing the resale element.
And nevermind that in a rush for the quick buck many people can make stupid decisions with longer term consequences.
Simply owning a business doesn't confer a magical ability to think clearly. That depends on the person. - inactive, on 10/10/2007, -1/+6I knew better than to play invisible money games and got a fixed-rate, in addition to moving to an area where the houses are actually worth the asking price. This "crisis" doesn't affect me, only stupid people.
- plizard, on 10/10/2007, -0/+5well idiots shouldn't get a 1mil dollar mortgage making 32k a year with a subprime ARM of 12% and rising and think they will pay it off in the 40 years they 'agreed' to. ***** idiots.
thank god for my fixed 4.99 APR - degaz, on 10/10/2007, -0/+5It's human nature for people to assume that things will always be good when times are great. You get a house at 3% for 3 years and then refinance when the time is up. The problem now, all those people who planned on refinancing can't because the banks have to tighten their lending standards since they have to retain their capital for the inevitable bank runs. The problem with that is they have no capital since they were funding all these subprime mortgages with investor funds.
This is greed at its worst. This is the ugly side of capitalism they don't teach you about in school. - Fission, on 10/10/2007, -0/+5I've been in the industry for a few years now and I now run my own office. You can't blame one or the other for what is going on because it is all situational. Take these for example:
1) Some people needed to refinance to save money and get out of trouble. The lender promises them that it will be closed before they go late and not to pay their mortgage. When they get to the closing table, the numbers changed from the nice 6% fixed they had to an 8% ARM. Now this person is in a bind because they have no money currently and need to refinance to pay their mortgage. The 8% will still save them some money, so they decide to sign the papers and bite the bullet. Bait and switch is the LENDER'S fault.
2) You buy a $400,000 house on your $40,000 a year salary because they give you that nice 1.25% stated-income option arm with a payment of $1,333 a month. Every month you defer money onto your mortgage and next thing you know, the loan recasts into a fully indexed rate at a 7.5%. Your mortgage payment is now $2800 a month and you can't afford the house you live in. Time for foreclosure! That is the BORROWER'S fault.
In the end, it's a joke how little this industry is regulated. You're dealing with people's largest financial asset and yet there is no set requirements for licenses or regulations. When a broker can send out a fake GFE with a 3.00% fixed rate and change it at the closing because it was *****, that is just messed up. They should start enforcing some rules and maybe even require people to get licensed. The problem is, it may already be too late. - manstein01, on 10/10/2007, -2/+7Completely agree. Talking to some people you would swear home ownership is some God given right.
- casemon, on 10/10/2007, -4/+9Anyone else think this was engineered? Reminds yeah of the Great Banker Land Grab... err Great Depression of the 20s... looks like it's only going to get worse (by design).
Hint, someone profits from any "depression" or "crisis". - vertinox, on 10/10/2007, -0/+5The silver lining is that people may finally wise up that ARMs screw them in the ass.
But then again... I'm not holding my breath. I don't know who told these people that ARMs are fine and dandy, but if you have a 30 year mortgage then the probability of the interest rate going up along with inflation is unavoidable. For the love of god if you can't get a fixed rate then don't buy a house. - lOvOl, on 10/10/2007, -3/+8There is nothing preventing people who lost their homes from getting another home in the future. In fact, if you are in the market for a home, you can save someone in the process of foreclosure a lot of headache if you can negotiate a short sale between them and the issuer of the loan. The seller doesn't get their credit ruined, the bank writes off the loss (which would be a lot more if they had to foreclose and sell the home themselves), and you get a nice deal on a home. Of course, I know someone who did this once but didn't to the necessary research to see if any additional liens were placed on the home they bought and in the end it turned out to be a financial nightmare, but if you do your homework you can help a lot of people who would otherwise have their credit completely ruined.
- cozb, on 10/10/2007, -8/+13 It's the mortgage industry that APPROVED the people when they well know the borrower will be in trouble down the road, so yes it's the fault of the industry and they know it.
- inactive, on 10/10/2007, -1/+6If you sign up for a bad loan it's not my fault! It's not the governments fault! It's your fault! Get some education before you sign up for any type of loan and make sure you understand the terms of your loan before you sign.
- gtluke, on 10/10/2007, -3/+7i'm pretty sure thats a given on digg.com now
- pinguwin, on 10/10/2007, -2/+6So the MBA says it's the worst crisis ever. Wonder who's fault that is. I blame dumb people for this, homeowners and the MBA. Don't think it ever crossed their minds this is PR for a bailout, do you? Nah...all their lobbyists are sleeping in late until noon lately, don't yah think?
My brother in is in the mortgage industry and laughed at how silly they were becoming. Approving pretty much anyone with a pulse. He said they knew what was going to happen but rode the gravy train, regardless of who had to pick up the pieces. - thcobbs, on 10/10/2007, -0/+4but at least you won't lose your house.
- inactive, on 10/10/2007, -0/+4Notice that nobody you know is being kicked into the streets to freeze, as most of these articles seem to imply is happening? That's because it wasn't families that were driving the Housing bubble. It was Realtors. They snatched up every house they could find, creating artificially high prices for everyoen else. So now it's not, for the most part, families that are losing their shirts- it's investment bankers. Personally, I'm glad their greed finally came back to bite them. They can rot in hell for all I care. Aside from keeping young families out of homes for the past five years, the only other thing they accomplished was to drive up everyone's property taxes.
- joe122370, on 10/10/2007, -1/+5here's an idea....buy what you can really afford and get the locked rate. Anything else is stupid and your fault, not anybody else's
- inactive, on 10/10/2007, -1/+5I can get approved to buy a $2500 vacuum cleaner too.
It would be my own damned fault if I did something that stupid. -
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