Where is the US economy headed?

I can't begin to tell you how much I just wish the bank said "I'm sorry maporsche, without more of a down payment, we cannot give you a mortgage."

I wish I were 24 again.

2 Replies

@maporsche,

maporsche wrote:

I can't begin to tell you how much I just wish the bank said "I'm sorry maporsche, without more of a down payment, we cannot give you a mortgage."

I wish I were 24 again.

Our kids took advantage of the easy mortgage money and easy credit at the height of the housing bubble too, and are below water now on the value of their house which means they are pretty well stuck until things settle out and they pull even. If he was transferred, they would take an enormous hit, and that's not a comfortable situation to be in.

Back when we were much younger and less savvy about this stuff, we bought VA repos for $100 down or some such and were able to live in a nice house pretty cheap. When we got ready to move, nobody else had any money either, so we just had somebody else take up the payments and forfeited what little equity we might have accrued. We were living paycheck to paycheck, though, and had there been a serious economic downturn that put us under water, we could have been saddled with a debt we could not have paid.

The rule that you have to pay at least 10% down on a mortgage, preferably 20% or more to get the best rate, is one of the most humane rules there is, and even then financial security requires an economy that is stable and growing.

But hang in there Maporsche. We weathered our 'younger years' dubious decisions and so will you. You got smart a lot quicker than we did. Smile

1 Reply

@Foxfyre,

Foxfyre wrote:

Our kids took advantage of the easy mortgage money and easy credit at the height of the housing bubble too, and are below water now on the value of their house which means they are pretty well stuck until things settle out and they pull even. If he was transferred, they would take an enormous hit, and that's not a comfortable situation to be in.

Yep, not too comfortable at all. I wish the fact that millions of people are in the same boat was any sort of consolation, but it's not. I estimate that at my home's current value and reviewing the forecasts for housing over the next 5-15 years, that it will take me 13 years before my house value in my current home is equal to my loan amount. That fact, coupled with my growing hatred of Illinois, leaves a nasty lump in my throat.

Quote:

But hang in there Maporsche. We weathered our 'younger years' dubious decisions and so will you. You got smart a lot quicker than we did.

Yes, it could be much worse. My fiance and I are very healthy, love each other very much, and are trying to enjoy our life, despite our financial difficulties right now. I've been doing a lot of meditation, which seems to set me at peace.

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@maporsche,

maporsche wrote:

I can't begin to tell you how much I just wish the bank said "I'm sorry maporsche, without more of a down payment, we cannot give you a mortgage."

I wish I were 24 again.

My dad used to tell how the bank refused him a loan for something to do with farming, but it probably saved him from alot of trouble later. It was a community bank, an old banker, that knew the business, and made his bank run on sound practices. In the housing business, it was the federal government that began to mandate loans not based upon sound business practices, and incredibly people like Barney Frank still want to continue that policy, after this whole debacle. What is incredible is that people like Frank and Dodd are still in office, sitting there chastising other people, and continuing their shananigans, without anyone calling them on the carpet. They are still acting like the experts. It is disgraceful.

1 Reply

@okie,

okie, Wrong again; the government did not force banks to make those stupid loans to unqualified people. Show me the law legislated through congress and signed by the president that forced banks to make those sub-prime loans?

1 Reply

@cicerone imposter,

cicerone imposter wrote:

okie, Wrong again; the government did not force banks to make those stupid loans to unqualified people. Show me the law legislated through congress and signed by the president that forced banks to make those sub-prime loans?

I think CRA did cause stupid loans, maybe you don't. Just the other day, I heard a banker, whose family had been in the banking business for decades, and who has been running a bank for a long time, say that it did. I choose to believe him over you, ci. Alot of things are not about force, its about policy that arm twists or intrudes upon natural free market forces that bring about unintended consequences. Bureaucrats are never going to admit their work may actually be counter-productive, never.

1 Reply

@okie,

okie wrote:

cicerone imposter wrote:

okie, Wrong again; the government did not force banks to make those stupid loans to unqualified people. Show me the law legislated through congress and signed by the president that forced banks to make those sub-prime loans?

I think CRA did cause stupid loans, maybe you don't. Just the other day, I heard a banker, whose family had been in the banking business for decades, and who has been running a bank for a long time, say that it did. I choose to believe him over you, ci. Alot of things are not about force, its about policy that arm twists or intrudes upon natural free market forces that bring about unintended consequences. Bureaucrats are never going to admit their work may actually be counter-productive, never.

I don't think it was the CRA itself that was the problem. We got through the Carter and Reagan administrations with it without it causing any serious problems. The problem started with the Clinton admnistration and was continued in the Bush administration when the CRA was used as an excuse to order Fanny Mae and Freddie Mac to accept more risky loans and that's what built the housing bubble that was initially too lucrative for other lenders to resist. Then when those risky loans started defaulting, the whole house of cards collapsed and nobody was big enough to withstand it.

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@Foxfyre,

Your anecdotal evidence is laughable at best; a banker said? What respectable business banker would make loans to unqualified people? Which government agency forced banks to make those loans? Where are all the evidence that the government forced the banks to make loans to unqualified borrowers?

Your conclusions and evidence are as always without any grounds. Show us the evidence?

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@Foxfyre,

Quote:

Bush administration when the CRA was used as an excuse to order Fanny Mae and Freddie Mac to accept more risky loans and that's what built the housing bubble that was initially too lucrative for other lenders to resist. Then when those risky loans started defaulting, the whole house of cards collapsed and nobody was big enough to withstand it

the market shapes the product. When no verification mortgages became a guaranteed sale to Freddie and fanny then it was a given that bogus paperwork was going to be submitted. When the originating for profit company no longer had any financial or legal incentive to police the paperwork then it was a given that they were going to become paperwork pushers only. The sweet deal was that mortgage writers not only had Freddy and Fanny ready and eager to buy what ever they wrote, but also traditional bond buyers who wanted the bundled and sliced batches of mortgages. They also did not care about the individual loan performance, because they were deluded into believing that with masses of loans (1000 per bundle I think) there was no way that enough would go bad to matter (because with ever rising housing values you simply foreclosed, sold the property for a slight loss, and moved on, even a bad loan had little downside risk).

so here you are, looking at a guy who should not get the mortgage that he wants, but you know that if you write in the right numbers he will get his loan. You also know that if he does you will collect $3-4k for a few hours of work, and that if you refuse he will go down the street and find someone else who will do it, will take the payday. You also know that you will be in the legal clear, and their is no way to take a loss on the deal. Do you write in the correct numbers? Your federal government has set up this system, they say in 100 different ways that they want everyone to be part of the "ownership society", that not letting people own is depriving them of their American Birthright......do you put in the correct numbers now???

1 Reply

@hawkeye10,

hawkeye, and Foxfyre, as I told ci, perhaps it was not about forcing bad loans, it was about creating an atmosphere that encouraged bad loans, as you explained, hawkeye. It was a Fannie and Freddie ready and eager to buy the loans. So we created an atmosphere where bad loans were doled out so that they could be bundled and sold to make a ton of money. Why not, after all, the housing prices were on the increase, and as long as that continued, who cares, right? But when prices hit the skids, everybody began to wake up to the fact that the loans were based upon bad lending practices, that would never have been as widespread if the banks themselves had made the loans based upon them being ultimately responsible for the loans.

Why we are not grilling the government officials and politicians right now over all of this is a mystery to me. Actually not a mystery, the mainstream press has given government a pass, and the crooks with Fannie and Freddie have skated, along with their buddies in Congress. And the Democrats in power have no interest in ethics when it involves their own, none whatsoever, and that is why the crooks in their own party skate.

1 Reply

@okie,

okie wrote:

hawkeye, and Foxfyre, as I told ci, perhaps it was not about forcing bad loans, it was about creating an atmosphere that encouraged bad loans, as you explained, hawkeye. It was a Fannie and Freddie ready and eager to buy the loans. So we created an atmosphere where bad loans were doled out so that they could be bundled and sold to make a ton of money. Why not, after all, the housing prices were on the increase, and as long as that continued, who cares, right? But when prices hit the skids, everybody began to wake up to the fact that the loans were based upon bad lending practices, that would never have been as widespread if the banks themselves had made the loans based upon them being ultimately responsible for the loans.

Why we are not grilling the government officials and politicians right now over all of this is a mystery to me. Actually not a mystery, the mainstream press has given government a pass, and the crooks with Fannie and Freddie have skated, along with their buddies in Congress. And the Democrats in power have no interest in ethics when it involves their own, none whatsoever, and that is why the crooks in their own party skate.

All you say is accurate, but I think it WAS ALSO about forcing bad loans. The kids at ISUB have done quite a bit of research on that as posted HERE: http://iusbvision.wordpress.com/2008/09/30/obama-sued-citibank-under-cra-to-force-it-to-make-bad-loans/

This was just the first site I came to. I can probably find other stuff if necessary, but this provides direction to some good sources whether or not you agree with the students' evaluation.

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@Foxfyre,

Foxie, That's not proof; Obama was not in any position to force such stupidy. Show us the legislation. Did he use a gun, and put it to their heads at citi bank?

1 Reply

@cicerone imposter,

cicerone imposter wrote:

Foxie, That's not proof; Obama was not in any position to force such stupidy. Show us the legislation. Did he use a gun, and put it to their heads at citi bank?

Lawyers and politicians use briefcases, not guns, to enact force, ci. You should have learned that decades ago.

1 Reply

@okie,

A briefcase? Where did you go to school?

1 Reply

@cicerone imposter,

cicerone imposter wrote:

A briefcase? Where did you go to school?

Yes, a briefcase. It looks like a small suitcase, usually black or brown, with pockets in it for papers. If you have not seen one, ask a friend or a relative to show you one, or go into an office supply store, like Staples or Office Depot, and they will show you one.

I went to school in Oklahoma. Any other questions?

1 Reply

@okie,

Here is a picture for you, ci. You could also find more on the internet to help you visualize different types of briefcases.

http://images.netshops.com/mgen/master:GOOD051.jpg?is=140,140,0xffffff

I found a bigger picture of a brown briefcase.

http://images.netshops.com/mgen/master:TPR016.jpg?is=355,355,0xffffff

2 Replies

@okie,

Its the papers in those briefcases owned by politicians that are dangerous, ci. More dangerous than a gun, thats for sure. Or at least they can do more damage in a very short time. Example, papers in the briefcases of Fannie and Freddie employees and their friends in Congress!!!!!!!

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@okie,

You wrote:

Quote:

Lawyers and politicians use briefcases, not guns, to enact force, ci.

How does lawyers and politicians use briefcases to enact force?

I'm still not clear how lawyers and politicians use briefcases to enact force, because I always had the misconception, according to you, that they had to go through some procedures to have laws enacted before they could force them onto the general public. Besides, not all lawyers or politicians use "briefcases." Can they still enforce the laws, or do some other legal enforcement entity handle enforcement? I don't think I've ever seen any police officer carry a briefcase. My brother used to be a state legislator, and I'm not sure how he enforced anything by his briefcase.

I'm at a total loss - according to you!

1 Reply

@cicerone imposter,

cicerone imposter wrote:

I'm at a total loss - according to you!

According to more than me, ci.

1 Reply

@okie,

Oh! Please show me evidence of this. You are free to copy and paste it right onto this thread.

1 Reply

Where is the US economy headed?

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