Posted on 01/03/2011 5:04:31 PM PST by Kaslin
'Housing Market Setback Forecast" the newspaper headline said. A recently released report on housing says that home sales are down more than 25% and the inventory of unsold homes is about 50% higher than it was the same time last year.
This is just one of innumerable stories about the woes of the housing market. We all understand about human beings having woes. But how can a housing market have either setbacks or woes?
Moreover, why should politicians be riding to the rescue of the housing market with the taxpayers' money?
We hear all sorts of sad stories about people whose homes are "underwater" or who are facing foreclosure. But why should our attention be arbitrarily focused on these particular people, rather than on the many other people who would benefit from being able to buy those same houses, if the prices came down?
The government is artificially keeping the prices up with subsidies and with pressures on lenders to accommodate the current occupants. Can we not walk and chew gum at the same time? Is our attention span so limited that we can only think about one set of people that the media and the politicians have chosen to highlight?
Do other people count for less just because the media don't put their pictures in the paper or on the TV screen? Or because politicians are ignoring them?
Rainy Day Is Here
Sometimes we are more concerned about some people because they are especially deserving. But this cannot be said about those who borrowed money to buy homes that they could not afford, or who borrowed against the equity in their homes, and now find that what they owe is more than the home is worth.
(Excerpt) Read more at investors.com ...
Ping
Or is my skin the wrong color.
Well, I can think of one reason to fuss about “underwater” homeowners, at least about the ones in non-recourse states, where handing the bank the property fulfills the terms of the mortgage. If it were just the “banksters” who’d be hurt by folks handing over “underwater” properties and walking away, it wouldn’t be any worry, but there are depositors, shareholders in banks, and us tax-payers on the hook for FDIC cover on bank deposits all of whom can be hurt by banks suddenly having devalued assets rather than an income-stream.
The situation that I knew about was that the owner paid over $200K at the time and ended up with a house worth less that $85K. The bank insisted that he make the payments, and he could not because of a divorce and a job change. Was the bank complicit in his case?
I have made the same point many many times and been shouted down.
Your investment in your home is as a domicile not a financial instrument. Whether it is worth less, more, or the same as the value of the note on it should be irrelevant, unless you are compelled to move.
You agreed to but for X and pay Y over Z months/years. The relative current value to X should not matter.
Real men adhere to their obligations and man up when it doesn’t work for them. Children whine when the cards fall badly.
I politely disagree. The terms of a contract in a mortgage are: you pay all of the payments - you then own the house, if you don’t make payments - the bank gets the house. End of story.
ahh but there is no way to prove you have ever bought anything.
The fuss is the fact there is no way this scandale corrupted lenders can EVER convey a clear title. ZIP.
What if you bought the stock under a government backed program where you put no money down and there was no recourse. If the stock goes up, you win. If it goes down the government loses.
The way out is you (the government, I mean) doesn't get in this mess in the first place.
and if there is fraud?
and to whom do you pay to get clear title?
which bank gets the home? there is no way to prove chain of custody on the promissory note.
Did he, or did he not, borrow $200,000? Whether for a mortgage, or a boat, or plane, or just to blow in Vegas, or up his nose?
He borrowed $200K, for whatever reason. Whether he borrowed it from a bank, or Big Al, he borrowed $200K. Why is a mortgage any different? Yes, the prices were absurdly driven up, just as they often are on Wall Street, or at auctions or in commodities, at times.
The answer for those is the same: Don't buy.
Was the bank complicit in his divorce and/or job change? Not having a PhD in finance or anything, I’m gonna guess no.
but he didn’t borrow 200K in return for his immortal soul. He borrowed 200K inreturn for cash, or forfeiting the deed. The bank had an appraisal done and thought it a good risk. They should hire a betterappraiser next time...
When “home flippers” were making money on a rising market, they did not share their profits with us through teh government.
Why should we now bail them out.
Investment is a gamble.
“Or is my skin the wrong color.”
I don’t think it’s the color of your skin even White people are losing their homes.
No the government shouldn’t bail you out but they shouldn’t have bailed out the banks either. The Politicians rode to the rescue of the Banks with your tax money and they picked winners and losers.
The loser’s were the smaller American Banks while obama’s backers at the global banks were saved. Those same Bankers made Millions in Bonus’s even though they were on the government dole. Our politicians created a Moral Hazard. Of course Warren thanked them for saving his Billions if that makes you feel any better.
What was/is really holding up things is the banks didn’t want to take the losses. If they weren’t allowed to price things mark to market many more of them would have been considered to be insolvent. The FDIC couldn’t handle that.
Are The Banks Insolvent? Fair Question, Given This....
http://market-ticker.org/akcs-www?post=173721
Pro Publica has been maintaining a list of bailout recipients, updating the amount lent versus what was repaid.
So far, 938 Recipients have had $607,822,512,238 dollars committed to them, with $553,918,968,267 disbursed. Of that $554b disbursed, less than half — $220,782,546,084 — has been returned.
Whenever you hear pronunciations of how much money the TARP is making, check back and look at this list. It shows the TARP is deeply underwater.
http://bailout.propublica.org/list
Buffett’s Betrayal
snippet..
“A good chunk of his fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out.”
http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/
Buffett to Uncle Sam: Thanks
http://money.cnn.com/2010/11/17/news/economy/buffett_uncle_sam/index.htm
http://www.zerohedge.com/article/no-big-banks-have-not-paid-back-government-bailouts-and-subsidies
Now that they have made lots of money from the Feds printing (”the US Government is lending money to the big banks at near-zero interest rates. And the banks are then turning around and lending that money back to the US government at 3%-4% interest rates, making 3%+ on the spread. What’s more, the banks are leveraging this trade, borrowing at least $10 for every $1 of equity capital they have, to increase the size of their bets. Which means the banks can turn relatively small amounts of equity into huge profits—by borrowing from the taxpayer and then lending back to the taxpayer.”)the books should look better.
Then of course if you read through posts on site you will find many people that don’t want the value of their homes to plummet I have read comments like that many times.
They should have let those banks fail then there would be no question about Moral Hazard.
If the banks are going to lose money, which is a risk they take, have it done in a way that disrupts society as little as possible. Amend the bankruptcy code to allow judges to bring mortgages down to market values at reasonable interest rates and force the debtor to pay what he can on the unsecured debt over the next five years. This is what the law allows a company to do in a chapter 11, why should the same relief be denied to a homeowner?
Well, you deserve it.
Your investment in your home is as a domicile not a financial instrument...Real men adhere to their obligations and man up when it doesn’t work for them. Children whine when the cards fall badly.
I'm sorry, that's just so much nonsense. You are not required to enslave yourself to your house (like a serf) to pay your mortgage. The lender, the mortgager, the derivative owners, they all took a risk, and they are not entitled to a sure thing any more than you are entitled to a free house. Asking for recourse and a having a security interest at the same time is asking for pie in the sky, and it will work out accordingly on the down side. If all these other actors made the error of pretending your ability to pay the mortgage was an externality instead of a vital interest (which they did), too f-ing bad for them when it's better for you to hand over the keys and take a walk because there's no way it's ever gonna work out. Debtor's prison and/or serfdom are not compatible with a free society.
Really, a ray of sense. thank you.
>>I’m sorry, that’s just so much nonsense. You are not required to enslave yourself to your house (like a serf) to pay your mortgage. The lender, the mortgager, the derivative owners, they all took a risk, and they are not entitled to a sure thing any more than you are entitled to a free house. Asking for recourse and a having a security interest at the same time is asking for pie in the sky, and it will work out accordingly on the down side. If all these other actors made the error of pretending your ability to pay the mortgage was an externality instead of a vital interest (which they did), too f-ing bad for them when it’s better for you to hand over the keys and take a walk because there’s no way it’s ever gonna work out. Debtor’s prison and/or serfdom are not compatible with a free society.<<
That makes no sense. You buy something, you agree to the terms, you stand by your word. Only a child whines when he/she doesn’t like the agrees-upon terms. There isn’t any complexity here: You make a deal and stand by it.
It isn’t serfdom, anymore than paying your car note makes you a slave to your car (although some do that to some degree).
It is just emotional because it is a house.
A real man honors his obligations. A child does not.
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