Posted on 11/30/2007 1:38:02 AM PST by HAL9000
You seem to be blaming the borrowers who took these loans in good faith. Most haven't missed payments. The lenders appear to have gotten crazy with some of the products they've offered and that's causing a major problem.
If these rates go up and millions of homeowners can't keep pace, the lenders will take a huge bath and may even go under. That will seriously harm the economy and move us into a significant recession as investment capital gets scarce and businesses lay off workers.
The lenders, and you, do not benefit if they're foreclosing on homes that have devalued. They will have lost money. The buyers will have negative equity and many may be forced into bankruptcy. On a small scale that's always going to happen but we're looking at millions of incidents in a short time. A shock to the system.
It's inevitable that some people will lose their homes but if a small action can avoid a serious economic downturn, it's in the best interest of the the lenders, the borrowers and the nation generally to take such measures.
Personally, I'm concerned about the falling dollar. It has some benefits such as making US exports more attractive in open foreign markets and to foreign investment (a two-edged sword) but it does nothing for the American worker or businessman's buying power at a time when costs of goods and services are climbing.
Not an economist by training, I just don't like the idea of a capital crunch and a low dollar for keeping a roaring economy.
That doesn't (yet) appear to be what's happening here.
If the government is working a deal to prevent interest rates from setting to market conditions, what do you think is happening?
Japan suffers the same problem after having outsourced much of their low level production to Thailand etc. they need a lower yen to balance the books.
After having doen the same thing to our low level mfg, I don't see how we can avoid following Japan down the same path of asset deflation.
The problem is that commodities like oil and food are inflating while assets are deflating. That will squeeze American retail spending (the traditional engine of our growth) unless exports can pick up the slack as you suggest.
Are even the teaser rates a loss? I doubt it. What were the intro rates?
I have a 220v circuit for an electric stove. That circuit is idle, because I have -- and strongly prefer -- a gas stove. My plan is for the stove circuit to be re-routed to the HVAC. A interim measure. I'm gonna have to re-wire the whole house eventually, but I'd rather do it later than sooner.
We have left it original except we did upgrade the power. None of the outlets were grounded.
Built in kitchen cabinets that one would have to bulldoze out. There are several others in the area i am keeping my eye on and my wallet at the ready. What goes around comes around.
In the long run it may be the best way to go. In this instance I think, even now the sub prime fiasco is over blown as far as the ACTUAL consequences for a large number of people.
Hard to place any responsibility to any number of us who would be considered prime borrowers. Even there probably 90% haven’t a clue of even how the economy functions much less if lending practices are going to be a problem at some future date.
I don’t know.
But even a mild loss is better than a big loss.
You represent a perspective that is lost on too many people today. My house is of a later vintage, built in 1987, bought by us in 1988 from original owner, for $116K (Piedmont, NC). It had 2200 square feet of heated space (now, with half of basement finished, a little over 2500 squre feet). We took out a 15 year fixed rate loan, refinanced once with another 15 year loan and paid it off early, a few years ago.
We have resisted the urge (not really THAT much of an urge) to “upgrade” to a more expensive home, and we don’t regret it at all. Our income has grown pretty well over the years, but we are just putting money away, and raising boy/girl twins, now almost 16 years old, waiting for college expenses to hit. We will weather that storm and then perhaps slow down a bit. I am 50, wife is 46. We don’t have expensive tastes. We save for things we want rather than buy on credit. We usually buy one step below “cutting edge” technology on things, saving good money there (and “cutting edge” is often not cutting edge any more by the time you get the item home).
I fear for our kids, who I hope have been watching how we live and will emulate it. They are savers, not spenders, and that makes us proud.
I admire your spirit and your perspective. I wish more would see its wisdom. Some may, soon, by choice or otherwise.
Even though I have personally benefited (at least on paper) from the most recent ‘boom’ I generally agree with you. I think it would be interesting, however, to see a breakdown of the cost of housing per square ft. over the same historical period. It seems to me, admittedly without any data to back it up, that a lot of people ‘moved up’ in the size of their homes over the past 10-15 years and that this has fueled some of the debt crisis.
“What a croc, those people should be put out on the street.”
What a coincidence. To find that there is someone else out there that has never miscalculated or done something foolish.
You and I have never done anything foolish. You and I have never miscalculated. You and I can just watch people be homeless without a single care in the world . . . We have so much in common . . . .
Look, I live over in Europe. Why don’t you just walk on over (the Atlantic) and come visit. Then we can talk about how we’ve never been in the need for some help in times of trouble.
Only if it doesn't take one penny of tax dollars and/or tax credits.
It takes awhile for this stuff to ripple through the economy. People will read a headline and not feel as if anything’s changed. A year later, they’re feeling the impact.
It’s all over the wire services. Here’s one story:
NEW YORK (Reuters) - The Bush Administration is close to agreeing on a pact with major financial institutions that would temporarily freeze interest rates on certain subprime loans, the Wall Street Journal reported Friday, citing sources familiar with the negotiations.
snip
According to the Journal, the accord is being negotiated between regulators including the U.S. Treasury Department and a group of mortgage-related firms, including Citigroup Inc (C.N: Quote, Profile, Research), Wells Fargo & Co (WFC.N: Quote, Profile, Research), Washington Mutual Inc (WM.N: Quote, Profile, Research) and Countrywide Financial Corp (CFC.N: Quote, Profile, Research).
Sources with knowledge of the negotiations told the Journal that individual members have agreed to abide by any agreement reached by the coalition, which is called the Hope Now Alliance.
The newspaper said the coalition and the government have largely agreed to extend the lower introductory rate on mortgages for certain borrowers who will have trouble making payments when their mortgages increase.
To be determined, however, are exactly which borrowers would qualify for the freeze and for how long it would last, the Journal said, adding one scenario envisions a freeze lasting as long as seven years.
In California, four top mortgage lenders have agreed to a deal brokered by Gov. Arnold Schwarzenegger to allow borrowers facing unaffordable resets to keep their lower initial rates five more years if they live in their homes and continue to make payments on time.
About $890 billion of subprime U.S. mortgages will have their rates reset next year, peaking in March, according to a report by the Organization for Economic Co-operation and Development.
snip
I have the feeling we are about to get a bail out called something else, sort of like it's not amnesty if you don't call it amnesty. Let the banks eat their loans.
The average foreclosure costs $50-60k. It is often cheaper for a bank to allow the delinquent payer to pay the teaser rates - and lose some of the interest - than it would be for the bank to foreclose and try to re-sell the property
.....The permit fees were over $40,000.......
You should move. You have a government of thieves and scalawags.
Damn...
60 Amp service...
Yikes!
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