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Bush's plan for struggling homeowners

Discussion in 'Sports and News' started by Point of Order, Dec 6, 2007.

  1. Point of Order

    Point of Order Active Member

    Poin,
    Isn't it new for the bank making the loan to re-sell it as a normal course of everyday business?
     
  2. Ace

    Ace Well-Known Member

    That's OK, 'Dexter. If the argument isn't going your way, you can always refinance!
     
  3. Twoback

    Twoback Active Member

    Raise your hand if you actually thought it could be a good deal to take out an interest-only mortage with an adjustable rate.
    It was like pointing a loaded gun at your own head.
     
  4. poindexter

    poindexter Well-Known Member

    No, packaging and reselling pools of loans have been around for decades. Historically, they were known as Mortgage Backed Securities. Groups of loans packaged together, then sliced and sold in the investment world.

    Ever hear of the term "conforming loan"? They conform to a set criteria ,to be packaged and sold as Mortgaged Backed Securities. The MBS holders then knew they were investing in a security which was made up of the same type of loans. In years past, a conforming loan was the typical 30 yr, fixed income loan, under a certain dollar amount (~$350,000)

    What has changed in the past decade is that, as many posted here, something happened to lending standards. Standards went to shit.
     
  5. Pancamo

    Pancamo Active Member

    For the right people, the interest only ARM is a good product. There are many transient people who put down a decent amount of cash, live in the 5 years and move. Why would that person take out a 30 year or a 15 year mortgage?

    The sub-prime people who are getting hurt financed 100%, entered into 2/28 loans and have watched the value of the home diminsh to a point that they owe 105-110% of the value of the house.

    Adjustable rate mortgages are very good for cash-flow for people who can manage their money and those who are transient.

    To dismiss a mortgage product because a minimal amount people had issues with it is ignorant.


    POO,

    The conforming limit is now $417,000 and what you described is still in place.
     
  6. Ashy Larry

    Ashy Larry Active Member

    When went to get pre-approved for a loan 6 years ago I was amazed at the amount the bank was willing to give us, but after a few hours of going through our finances, and taking into account utlities, cable, etc. we quickly realized we'd be looking for a house about $200k less than we were approved for.

    I know a few people that bought $500k homes, got their first mortgage bill and quickly realized they were fucked.
     
  7. BTExpress

    BTExpress Well-Known Member

    And you believed that?

    And you believed that?

    And you believed that?

    Which makes them no different than car salesmen.

    But just because a car salesman tells me "You can afford this $350,000 Bentley . . . it will be a collector's item and will increase in value . . . you have NOTHING to worry about." . . . doesn't mean I am going to buy the car.

    Unless someone put a gun to someone's head and made them sign a contract . . . or changed the terms of the loan originally agreed to . . . I have trouble blaming anyone other than the person who signed the contract.
     
  8. Point of Order

    Point of Order Active Member

    'slong as it don't affect you, right BTE?
     
  9. Bob Cook

    Bob Cook Active Member

    Lending standards went to shit because just about nobody was holding onto a mortgage anymore. MBS isn't a new concept, but buying them no matter what mortgages backed them is. If you're a lender, and you know someone is dying to buy your mortgage, any mortgage, you have no incentive NOT to lend to any fool who walks in the door. Especially when housing prices are flying, no pun intended, through the roof. Everybody figured they could sell the mortgage off to the next sucker before the musical chairs game ended. Or had the odd foreclosure and made a bucket of money selling the house off.

    Actually, at this point "personal responsibilty" or "fucking lenders" doesn't enter into it. It's the old saying -- if you owe the bank $10,000, you're in trouble, but if you owe the bank $100 million, the bank's in trouble. If your home is foreclosed, you're in trouble, but if millions of home are foreclosed, the economy is in trouble.

    Blame whomever you want, but try to put your house up for sale now and see if this whole thing doesn't affect you -- the fact that your home price is falling, that buyers are nowhere to be found because THEY can't sell their houses either, or because lending standards are now so tight a buyer has to be Richie Rich to qualify, and, in some cases, that your neighborhood is deteriorating because of the now empty shells that were once homes.
     
  10. Point of Order

    Point of Order Active Member

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