Sub Prime Mortgage tanking

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Has anybody been watching the congressional hearing on the tanking of the sub prime mortgage market on c-span?

I saw this coming and got out of the housing and mortgage business 3 years ago because I knew it was going to be bad. But after watching the hearings in congress it appears it's going to be much worse than I thought.

C-span has set several panels of experts and all agree we were headed into a recession anyway. Coupled with the fact the housing market is about to correct and people will not be able to give away homes in some part of the country for the money they have in them. The recent law changes to avert personal bankruptcies, and the lack of manufacturing rebounds . The experts came to a general agreement that we are looking at a serious recession , not a short term blip like we all had hoped.

They are agreeing that a 3% negative GDP growth forecasted over the next five years is to be expected and it could get much worse than that.

I think it will be much worse than that.

What are your thoughts and what in the economy has you the most worried.

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@wvpeach,

IANAreal estate guy, but I don't see why some investors wouldn't be in the market to buy some of these homes at deep discounts so that they can turn them at a later date for a profit to buyers that really have money or good credit.
The losers are the people who bit on the sub-prime deals in the first place, and the real estate sellers that pushed such lending. Many have learned the hard way that you don't get something for nothing. We don't need a surge in building, we need buyers for existing homes as they come on the depressed market at attractive prices, usually to the dismay of those who bought over their heads.

At the risk of offending some buyers, I think they deserve the hole they dug for themselves. I certainly don't agree with those who think the government should bail them out! Why should my taxes go to fools who wouldn't stop digging once they were in a hole too deep?

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@Curmudgeon,

I agree and I sold my business's and am holding cash as I plan to take advantage of this situation .

But the c-span hearings brought up deeper repercussions for the economy than I had ever thought about.

Curmudgeon I built homes for 15 years. I watched housing and materials prices rise 44% over seven years . It was a bubble and beware the bubble will never be that big again. So knowing banks they will hang on to many of these over priced homes for far too long, till the value is where it should be and let us hope the economy is such when they finally let them go at reasonable accurate pricing that it will pay to flip these homes or buy for rentals.

I am still holding on , as I'd like to see the bottom before I buy.

Curmudgeon;38259 wrote:

IANAreal estate guy, but I don't see why some investors wouldn't be in the market to buy some of these homes at deep discounts so that they can turn them at a later date for a profit to buyers that really have money or good credit.
The losers are the people who bit on the sub-prime deals in the first place, and the real estate sellers that pushed such lending. Many have learned the hard way that you don't get something for nothing. We don't need a surge in building, we need buyers for existing homes as they come on the depressed market at attractive prices, usually to the dismay of those who bought over their heads.

At the risk of offending some buyers, I think they deserve the hole they dug for themselves. I certainly don't agree with those who think the government should bail them out! Why should my taxes go to fools who wouldn't stop digging once they were in a hole too deep?

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@wvpeach,

Straight up, if you got affected by this, you're an idiot and deserve it.

going into any loan that you KNOW you won't be able to afford later - REGARDLESS of intentions (flip, sell, rent, etc) is just an outright stupid idea.

you bought it, you're stuck with it. not my fault you can't sell it for more or break even, and now your mortgage is blowing up.

REFINANCE. it's not that f'in hard.

ugh.

/rant

and yes i know what i'm talking about... i just moved into my new house thiis past weekend.

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@wvpeach,

as terrible as this sounds I can't wait

I want to buy a home, the housing market tanks and prices go down. Higher Interest rates don't matter because I have a VA loan in my back pocket

come to poppa new house :-D

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@briansol,

The repercussions to the economy seem to be going a little deeper than what you are talking about Brian.

But I am headed white water rafting this weekend and do not have time to go into what was said by multiple economists on c-span this week.

But perhaps somebody else will jump in and roll with the ball and I can join in after I get back and just think.

They will have saved me all that typing!:headbang:

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@wvpeach,

(joke)Should you be thinking of white water with so many people without healthcare, LOL.

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@Drnaline,

This is why credit should be discouraged. "Credit" is a fun word for "debt", and most Americans are loaded with it. I can't wait for these houses to go under, give me a few more years, and I'll have enough cash on hand to buy, it'll be sweet.

I feel zero sympathy for idiots who borrow money so that they can buy things they don't need.

1 Reply

@Freeman15,

Freeman15;38341 wrote:

This is why credit should be discouraged. "Credit" is a fun word for "debt", and most Americans are loaded with it. I can't wait for these houses to go under, give me a few more years, and I'll have enough cash on hand to buy, it'll be sweet.

I feel zero sympathy for idiots who borrow money so that they can buy things they don't need.

?!?

This is possibly one of the most ingnorant thoughts ever posted

nobody has 200K cash to buy a house, everybody uses credit, this isn't a new concept.

Where we are in troubls is Americans have purchased homes they couldn't actually afford. Poor Fiscal responsibility is a very commong trait among Gen Xers

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@Silverchild79,

Hey they brought out Greenspan the other day and that says it all. I f you missed it. Then Silverchild75 has it right. I might just get a piece of land cheaper if I wait a bit longer.
And my house in Indiana is near closing. So for once I might make out alright.

Thanks wvpeach nice post.

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@Silverchild79,

Silverchild79;38343 wrote:

?!?

This is possibly one of the most ingnorant thoughts ever posted

nobody has 200K cash to buy a house, everybody uses credit, this isn't a new concept.

Where we are in troubls is Americans have purchased homes they couldn't actually afford. Poor Fiscal responsibility is a very commong trait among Gen Xers

I don't have a credit score, and my checking account is always pretty healthy. At my current rate of saving, I should have enough for a modest house by the time I'm 28-29. You don't need a credit score, you don't need debt, and frankly, you don't need a house.

Credit should be avoided at all costs, especially car and credit card payments. Whereas a house appreciates, a car is the only item on which you pay interest that depreciates as soon as you buy it.

Please listen to an episode of the Dave Ramsey Show.

1 Reply

@Freeman15,

Freeman15;38408 wrote:

I don't have a credit score, and my checking account is always pretty healthy. At my current rate of saving, I should have enough for a modest house by the time I'm 28-29. You don't need a credit score, you don't need debt, and frankly, you don't need a house.

Credit should be avoided at all costs, especially car and credit card payments. Whereas a house appreciates, a car is the only item on which you pay interest that depreciates as soon as you buy it.

Please listen to an episode of the Dave Ramsey Show.

you got a credit score. believe me you do.

1 Reply

@Drnaline,

LOL I have insurance , should I break a bone or drown hopefully they will pay the bill. Never know they could say I was doing something dangerous and and not covered!:dunno:

Drnaline;38330 wrote:

(joke)Should you be thinking of white water with so many people without healthcare, LOL.

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@mlurp,

mlurp;38447 wrote:

you got a credit score. believe me you do.

I have never in my life used a credit card or taken out a loan. Credit bureaus have nothing on me, so if I do have a credit score, it's hovering around 300.

Further, in buying a house, you don't need a credit history to secure a mortgage. If you really want to tie the anchor of debt around your ass, you can simply put down 25-30% of the total price and demonstrate secure employment to get the same rate as somebody with a 700+ credit score.

1 Reply

@Freeman15,

Freeman15;38481 wrote:

Further, in buying a house, you don't need a credit history to secure a mortgage.

bahahaha

you're in for a rude awakening.

I have a 760 fico, and I had a hard time getting a decent rate with all this subprime **** falling out.

Quote:

If you really want to tie the anchor of debt around your ass, you can simply put down 25-30% of the total price and demonstrate secure employment to get the same rate as somebody with a 700+ credit score.

what you put down doesn't really effect what they lend you. if you get 20% down, you don't have to pay PMI, and that's about it.

2 Replies

@briansol,

briansol;38511 wrote:

bahahaha

you're in for a rude awakening.

I have a 760 fico, and I had a hard time getting a decent rate with all this subprime **** falling out.

what you put down doesn't really effect what they lend you. if you get 20% down, you don't have to pay PMI, and that's about it.

One of my neighbors from when I was a kid just moved to Tyler, TX and bought his house cash. His son (aged 25 or 26, can't remember) put down 30% on a $140k house and his rate is somewhere just over six percent on a 20yr fixed rate mortgage. He has one credit card, never had a car payment, and this is his first house. Yes, you can get close to the same rate as somebody with excellent credit.

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@wvpeach,

What a bunch of elitists you all are, you disgust me. Capitalizing on others misfortune.... wait you are NOT capatalizing on their misfortune, you are cazpitalizing on their IGNORANCE (as i spell that wrong). Sub prime mortgages were sold convincing the 12 dollar an hour worker, in 3-5 years you will be makeing 20 dollars an hour and you can afford the baloon payment or the variable interst rate. and if not, refinance and we will get you another 3-5 years to get your 20 dollars an hour.

None of you will be rich over night, none of you will hit the lottery, none of you will be rock stars or movie stars, Most of you will always live month to month, and most of you will always fight bills. That is NOT a bad way a life, it is just THE way of life.

Word of advice I have been spouting for years, If you do not make enough moeny to SAVE in the BANK a DOWN PAYMENT on a house, then you cannot afford a NOTE on a house.

1 Reply

@Silverchild79,

I have to disagree silverchild.

With a little work and sacrifice it is very possible to come up with more than 200K in a few short years. And some thoughtful planning.

I applaud Freemans initiative

But he is a youngster and not very realistic about the number of people with that kind of discipline. And besides which if everybody did as freeman suggests the economy and capitalism would come crashing down fast.

Silverchild79;38343 wrote:

?!?

This is possibly one of the most ingnorant thoughts ever posted

nobody has 200K cash to buy a house, everybody uses credit, this isn't a new concept.

Where we are in troubls is Americans have purchased homes they couldn't actually afford. Poor Fiscal responsibility is a very commong trait among Gen Xers

1 Reply

@wvpeach,

Credit will be tight and even excellent credit will be under scrutiny till this thing washes out.

Hopefully by next spring. By then banks and the surviving mortgage companies will be begging for business

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@wvpeach,

Gotta jump in here.

Opinion... When we were younger and wanted a home we knew we had to save for many, many years to come up with our down payment (generally 20 to 30%) and then could get a loan to buy our "dream home." We raised the kids in the old farm house and knew that in our "golden years" we would finally get the house of our dreams. This pretty well typified everyone in our community. We scraped, planned, and saved and then when we got the house we made darn sure we could afford it and then we took care of it! Maintenance inside and out was of utmost importance. We had to treasure our investment.

Now, the kids get married and can jump into a house for nothing down and payments not much bigger than renting. They go head first into debt, get the house, don't really treasure it, let it go to pot, and then when times get hard let it be repossessed. Easy come, easy go! That's what the sub-prime culture has done to our society.

We purchased a new home in February but found that living in town is not for us so we are in the process of building a new home on a small acreage. It will cost three times more than what we got for our farm! With good credit and money down we are getting a heck of an interest rate.

I don't think anyone is hovering around like vultures trying to make bank of other misfortunes. But, I see too many people that think money grows on trees and they are "entitled" to pick it! It's time they sacrifice for the things they want just like we did in the "olden days!"

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Sub Prime Mortgage tanking

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