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RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 9:20:50 AM   
cyberdude611


Posts: 2596
Joined: 5/7/2006
Status: offline 		The problem is pretty simple...
Years ago people bought the biggest home they could with adjustable rate mortgages. 5 years later, the rate jumps unless you refinance to a fixed rate. The problem is these people either do not qualify for the fixed or the payment ends up being too high.

High property taxes in some areas and high homeowners insurance is also partially to blame. Now if we had good leaders who were on top of the nation's big problems, they would have seen this problem coming. They would have either clamped down harder on the insurance companies and/or lower the property taxes. Some states like Florida is now considering eliminating property taxes altogether. It will drop some housing payments down a few hundred dollars a month. And also force the insurance companies to drop their rates. This will end up giving relief to many people. The state would then make up the difference by raising the sales tax. Florida can do this because of the money that comes in with tourism. Many states probably cannot do it. But it shows that relief is possible if politicians do the jobs they are elected to do.

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RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 9:26:01 AM   
SusanofO


Posts: 5672
Joined: 12/19/2005
Status: offline 		I'd never have an adjustable rate mortgage - who needs those kind of "surprises"?

- Susan 

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RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 9:44:59 AM   
popeye1250


Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline 		Susan, yeah, those adjustable rate mortgages are legal theivery but I guess that's the only way some people could afford to get into a house.
I have 30 year "fixed" rate mortgages on both condos here of 7% and 7.25% for the rental condo so there won't be any "surprises."
And 10 years down the road as inflation goes up as well as my COLA raises the payments on these places that are already very low compared to up North will be chump change!
I wouldn't reccomend "adjustables" to anyone if you can avoid them at all.

(in reply to SusanofO)
Profile   Post #: 23
RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 4:30:34 PM   
petdave


Posts: 2479
Status: offline
quote:

ORIGINAL: LadyEllen
Not sure about the causes of the US situation,

(snip)

We are told that the economy is buoyant in the UK. But, how much of this buoyancy is the result of credit lending one wonders? Almost all of it, is the answer; whether its mortgages, loans or credit cards, the economy is now reliant on lending and the meeting of payments by borrowers. Given this, the level of borrowing is now causing the Bank of England to raise interest rates, which had during the happy times of a few years back, dropped to a record low. As the rates rise, more and more people will find they are unable to meet their payments, their homes will be repossessed and house prices will fall through the floor - leaving ongoing mortgagees not only in negative equity with regard to their home but also more interestingly, with not enough assets to cover their other borrowing either.


Yeah, that pretty much covers it here as well.

However, from what i've seen of the actual numbers, the scary thing is that the default rates on ARMs are only running 10-25% higher than the defaults on fixed rate mortgages... The headlines are pointing out the interest rate increase, which is true, but ignoring the fact that it's been accompanied by jumps in the cost of living (especially energy and INSURANCE costs), inflation, a downward pressure on wages, and a loss of middle-class jobs. While everybody likes to talk about homeowners using equity in their homes to fuel the economy, there was also a lot of benefit from the jobs created by new home construction and everything that entails- the realtors, attorneys, the people who build and sell the fixtures, appliances, and so forth. No portion of a national economy exists in a vacuum (which is something that we're going to get a very, very harsh lesson in if we allow our domestic automobile industry to collapse)

Another interesting thing that doesn't get much press. i, and at least a few other people i've conversed with, have gotten financing on a home that involves escrow- taxes and insurance on a home are paid out of a fund that the homeowner contributes to with monthly payments. All of a sudden, at renewal time (often after the loan had been sold to a new lender), it's mysteriously discovered that the funds in the escrow account weren't sufficient for the annual costs, and there's now a deficit to make up, in addition to a substantial increase. i had my net mortgage payment go up by 10%; one person i know was hit with an almost 25% increase on a fixed rate note! Part of this is due to the insurance industry *spit*, some the fault of ever-rising property taxes as homes are "reassessed" in the bubble market, but i suspect that part of it may also be the fault of the mortgage companies involved.

...dave

(in reply to LadyEllen)
Profile   Post #: 24
RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 4:49:00 PM   
LadyEllen


Posts: 10931
Joined: 6/30/2006
From: Stourport-England
Status: offline 		Petdave - sounds a lot like what happened here in the last decade; lots of mortgages were to repay interest only, and had an endowment policy tacked on which was meant, over the time of the mortgage to build into a sum sufficient to cover the initial capital. The overall cost was about the same as a straight mortgage, but was somehow easier to obtain (figure) and had the possibility, or more like certainty as it was sold, of the endowment side making far in excess of the required capital.

Trouble was, the stock market crashed and thousands suddenly found their endowment didnt cover the capital, or were advised even 20 years ahead, that it wouldnt, and they ought to make new arrangements. There was an almighty rumpus and on investigation it was shown that the sellers of these policies had seriously oversold them and were ordered to pay compensation to those to whom they had been missold.

Same thing happened with pensions. The result of all these shenanigans has been a total loss of confidence in the UK working population in any form of financial instrument, especially pensions. Meanwhile, those who ordered the misselling and mishandled the whole thing badly, still got their commissions of course, and still have a new Mercedes every year.

E

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RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 4:57:21 PM   
petdave


Posts: 2479
Status: offline
quote:

ORIGINAL: LadyEllen

Petdave - sounds a lot like what happened here in the last decade; lots of mortgages were to repay interest only, and had an endowment policy tacked on which was meant, over the time of the mortgage to build into a sum sufficient to cover the initial capital. The overall cost was about the same as a straight mortgage, but was somehow easier to obtain (figure) and had the possibility, or more like certainty as it was sold, of the endowment side making far in excess of the required capital.


Now that's a clever sell job... i'm surprised the lobbyists didn't manage to get those legalized here... we do love our Dow Jones.

...dave

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RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 5:19:20 PM   
popeye1250


Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline 		I'm not too concerned about taxes here. My yearly taxes are $467.

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RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 6:04:33 PM   
Sinergy


Posts: 9383
Joined: 4/26/2004
Status: offline
quote:

ORIGINAL: KatyLied

I should read before I ask, but is this mainly from adjustable rate mortgages?  I know people who have had significant (hundreds of dollars) increases in their adjustable rate mortgages.


That is part of it, KatyLied.

Part of it are all the people who refinanced at low interest "interest only" loans assuming the economy would improve since they elected Monkeyboy.  5 years later, their jobs have been long ago offshored to India and their bank says pay the balance, refinance (which they cannot do) or be foreclosed on.

Part of it are intelligent people who got fixed rate mortgages locked in, who then lost their jobs for the aforementioned reasons, and their mortgage insurance ran out before they could find a job to pay the mortgage.

Then you have the people you mentioned.

What is hilarious are the realtors here in California that insist it is a flattening of a brisk housing market.

Nobody is lowering their prices.  On the other hand, nobody is selling their houses.

Sinergy

_____________________________

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RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 6:20:32 PM   
popeye1250


Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline 		Oh prices will come down.
In New England in the late 1980's prices started comming down and they kept going down until 1995.
About 7 years of falling prices.
But, like today, the prices just went too far too fast.
That always seems to happen in the same three different areas of the country, the North East, Florida, and California.

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Profile   Post #: 29
RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 6:22:13 PM   
Sinergy


Posts: 9383
Joined: 4/26/2004
Status: offline
quote:

ORIGINAL: popeye1250

Oh prices will come down.
In New England in the late 1980's prices started comming down and they kept going down until 1995.
About 7 years of falling prices.
But, like today, the prices just went too far too fast.
That always seems to happen in the same three different areas of the country, the North East, Florida, and California.


I keep getting frantic calls from a couple of realtor friends telling me to look at this great steal house.

Im not in a hurry.  They have difficulty comprehending my lack of being in a hurry.

Sinergy

_____________________________

"There is a fine line between clever and stupid"
David St. Hubbins "This Is Spinal Tap"

"Every so often you let a word or phrase out and you want to catch it and bring it back. You cant do that, it is gone, gone forever." J. Danforth Quayle


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Profile   Post #: 30
RE: "Mortgage crisis overwhelming credit counselor... - 3/23/2007 9:30:41 PM   
popeye1250


Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline
quote:

ORIGINAL: Sinergy

quote:

ORIGINAL: popeye1250

Oh prices will come down.
In New England in the late 1980's prices started comming down and they kept going down until 1995.
About 7 years of falling prices.
But, like today, the prices just went too far too fast.
That always seems to happen in the same three different areas of the country, the North East, Florida, and California.


I keep getting frantic calls from a couple of realtor friends telling me to look at this great steal house.

Im not in a hurry.  They have difficulty comprehending my lack of being in a hurry.

Sinergy


Sinergy, and did you ever notice that they always say, "This is the best time to buy?"

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RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 6:59:02 AM   
Termyn8or


Posts: 18681
Joined: 11/12/2005
Status: offline 		This is going to sound like a hijack, but it isn't.

Let's take the case of the medical industry. Part of my point is that people do not see the big picture. Most people have never seen even $10,000 in cash. Fewer still have seen a million. That is 10,000 $100 bills. So if you can't concieve 10,000 how can you concieve a million ?

You go to the hospital for a broken bone. let's say medical insurance doesn't exist. You know they are going to want an Xray and one place advertises Xrays for $40 and another charges $100. If you had insurance you wouldn't care, but if you think about it, let's say both Xray machines are identical, they use the same amount of power and the operators make the same wage. Where does that other $60 go ?

Real supply and demand economics means that people buy within their means. Just like we made doctors rich through medical insurance, we have creazted a housing price boom with predatory, or at least high-risk lending.

If they didn't do this, the price of a house would fall until it is within someone's means to buy it, who wants to buy it that is. New cars wouldn't be $30,000 if people can't afford them. The market would change.

And by the way, if you knew what that $30,000 new car actually cost to make you would do like me, never buy new. I also do not want a new house, they are junk.And people just do not realize how cheap electronics is. That $2,000 TV probably cost about $300 to build.

This is how the rich get richer, all of it. Build crap overseas, or as quickly and cheaply as possible and then charge a premium price for it. Well banks actually facilitate this by lending. If you didn't have credit, how likely are you to plunk down $2,000 for a stupid TV set ?

Big business acts as a team, of that there is no question. They operate in their own best interest. I don't blame them, but the greed has gotten out of hand.

And the sheeple go along. New car, no interest or payments for a year, just what do they think happens at the end of that year ? A $150,000 mortgage for $450 per month. Anybody got amortization tables to see how long it takes to pay it off ?

Wait until it gets bad, think of the children ! Well, you can have the new game for your PS2 or Xbox, but you either don't eat supper for a week or forego the annual tennis shoes, take your pick.

I know someone makes $25,000 a year just bought a new car, a small economy car. When people return to sanity, those making four times that much will be buying the same car.

Personally I don't have that problem, I have a 20 year old car, a 20 year old TV and the crappiest PC that will do what I want it to. I have no desire to "go shopping". I don't need the latest and greatest. I fix things for a living and I can tellya, latest and greatest = breaks down sooner and costs more to repair. I want no part of it, and if I were a millionaire I would probably live exactly how I do now. I might get a nicer car, but it'll likely be old. Actually it would be 1970 Olds Toronado, and I might get a 10 year old TV just for the hell of it. I still wouldn't get cable or a cellphone.

I fully agree that people buy irresponsibly, and many foreclosures are the fault of the buyer. Plain and simple, but there is something more to it, people have become so stupid that they do not understand the terms of what they're signing into.

Of course some are intelligent, but they just gotta have it, but there are more and more stupid people who just don't realize that $450 a month will about never pay off $150,000. Especially in the US, where there are graduates who cannot even balance their checkbook.

In short, I stand behind my earlier assertion that banks WANT to foreclose, and that is because property is a much better asset than cash.

If I were greedy I would loan someone $300,000 who is on welfare. Months later when my temporary tenant is out on the street, he has paid X amount, decreasing my costs, and maybe fixed the place up. All to the good for me. Just remember that I would not loan the money unless the property is worth more than the loan amount. That means my temporary tenant was also forced to be a shrewd buying agant for me. Things couldn't get much better.

I say, let the bubble burst. It is high time.

T

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RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 7:27:17 AM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		i can think of several ppl that had to take a pay cut.

many of these homes ppl bought to flip.

as w the stock market- the big fish make cash off teh small fish

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Profile   Post #: 33
RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 7:31:05 AM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline
quote:

ORIGINAL: popeye1250

I'm not too concerned about taxes here. My yearly taxes are $467.


holy cow!  i like that price. in my current pricey zip code- taxes have been creeping up.  @ 1500.00.

i was going to dispute my new taxes- $913.00. but the things i intend to do- best not to flag their attn.

my siblings pay 4-5-6k in chicagoland.  well you can KEEP that price tag!!!!

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RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 7:47:06 AM   
KatyLied


Posts: 13029
Joined: 2/24/2005
From: Pennsylvania
Status: offline 		We have what I consider high real estate taxes, but it's for school funding, sort of hard to argue with that, especially if you have um's who went through the school system.

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RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 11:24:28 AM   
popeye1250


Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline 		Katy, that's the biggest problem with r.e. taxes, sooo much of them go to schools.
"It's for the CHILDREN!"
In the small (P. 16,000)  seaside town that I lived in in New Hampshire they built a $23 m addition to the local high school two years after I left.
Taxes went way up!
I just don't think one thing like schools should devour 70% of a city or town's budget! And for what? They go onto college to be educated for jobs that will be "outsourced" to India or China anyway?
They don't spend a lot of money in this state on schools. Even the school busses are bought used from other states.
And, I think we rank 47th on education in the country!
But that's ok, do you know what we do with our dumb people?

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RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 2:38:19 PM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		i dont see how a new building has anything to do with learning....

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Profile   Post #: 37
RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 2:57:31 PM   
Termyn8or


Posts: 18681
Joined: 11/12/2005
Status: offline 		"dont see how a new building has anything to do with learning.... "

Hunky, don't be so dense. It's for the children doesn't mean it'll actually help the children.

It's so they can say "look what we did for you !". And actually it is for the children, their children. Yes, the politicians' and contractors' children benefit greatly. The son's new BMW so the frat boys don't laugh at him, Chrissake it was almost two years old !, and the daughter's drug rehab every other month.

Yes, it is for the children. Just not ours.

T

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Profile   Post #: 38
RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 3:05:12 PM   
TNstepsout


Posts: 1558
Joined: 8/3/2005
Status: offline
quote:

ORIGINAL: Termyn8or
I say, let the bubble burst. It is high time.


I think you just about said it all in your post T. The problem is that people want what they want, when they want it and now there are people out there saying "guess what? You CAN have what you want, when you want it". What they dont' tell them is the catch, and most people don't want to know. Knowing would mean they might have to walk away from their dream home and they don't want to do that. So they sign on the dotted line and then blame every one else when it goes bad.

Then again, that is part of our modern culture. Everything is someone elses fault. In this case it's shady lenders, greedy builders, lazy legislatures etc... Anywhere but where the blame needs to be, on irresponsible buyers. Well the bottom line is, there is always a bottom line. Every business is out to make money. If you wonder how a lender can possibly make money on a $450 mortgage for a $150,000 home, then you probably shouldn't take the plunge until you figure it out.

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RE: "Mortgage crisis overwhelming credit counselor... - 3/24/2007 3:06:55 PM   
Griswold


Posts: 2739
Joined: 2/12/2007
Status: offline
quote:

ORIGINAL: KatyLied

I should read before I ask, but is this mainly from adjustable rate mortgages?  I know people who have had significant (hundreds of dollars) increases in their adjustable rate mortgages.


It's from folks who shouldn't have purchased, with mortgages and mortgage docs they should have read, for homes they should have had more down payments for and income to support.

It's math.

(This of course, does not take into account, those folks who have had unexpected calamities befall them...which happen to those who did read the docs, did purchase with enough down...and shit just happens).

< Message edited by Griswold -- 3/24/2007 3:42:56 PM >

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