Replies

Well, if one wants to be charitable, they can say it was loose lending policies that led up to this.

The lending that happened amounted to a kind of bidding war between the institutions. A house worth 100K in a certain market suddenly zoomed to 200K in short order. And there was nothing to justify the increase save what the institutions were willing to lend on it.

So now because of these policies, literally millions of people face foreclosure and possible bankruptcy. Years of destroyed credit.

And the lenders sit back, after having the sheriff toss the schmucks stuff on the sidewalk, and say "Don't blame us!" "They knew all about it!" "It's not our fault!!"

And you know what? Some of the lenders might take serious financial hits because of it. And before you can say "cheese", the gummint will be in there filling up there back pockets like the S&L debacle.

Meanwhile, the schmuck is sitting in a Barcalounger on the sidewalk, with basically a negative credit rating now, without a pot to whiz in.

And the bankers and Wall Streeters will still be eating lobster and flying first class.

"Well, if one wants to be charitable, they can say it was loose lending policies that led up to this. "

I'd say it was financially uneducated consumers who were impatient to have it all now that caused this. One thing that our school systems lack is financial education. Kids should be taught about the magic that is interest. The power of financial discipline. As a parent, I've tried to give that to my kids.
ARMs are evil for your primary dwelling. Less than 10% down is asking for a financial bloody nose. Paying over 40% of your income for your mortgage is just plan stupid. But people are doing all of that and more. I don't blame the lenders on this one. It's the uneducated consumers. If you don't understand what you're signing up for, you probably shouldn't sign up.

These are sub prime notes. Most of the people should not have been homeowners in the 1st place. I have a sister with a financially retarded husband that has one of these. I have been sick with worry for her for 18 months knowing that she will probably loose her house. They have no worries. By the way they went to Europe for a couple weeks for the holidays. Go figure.

"And the bankers and Wall Streeters will still be eating lobster and flying first class."

That seems to be the end of all the stories lately.

Carolyn

Prices here in Oklahoma never rose to the astronomical heights seen in other parts of the country...this time, perhaps because we well remember the lessons of the oil bust in the early 80's and the Penn Square Bank failure, which kicked off bank and S&L failures all across the country. I well remember the S&L, who held mortgages on homes whose value fell with the failures of the oil business wailing about how they were losing money when they had to repossess homes. They actually said "we have always made money on repos in the past". I was astounded when I read it, but on reflection it made sense since in the past values had risen and the property they took back was worth more than what they had loaned. In the oil boom they loaned 2 and 3 times the actual value of homes and in the oil bust they cried until the Feds came to their rescue with your money and mine.