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| Foreclosures at record as household wealth falls (Page 2/19) |
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OKflyboy
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MAR 06, 11:03 PM
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| quote | Originally posted by maryjane:
Does that mean banks gave loans to 'at risk' borrowers (and/or) borrowers bought mortgages they couldn't afford long term?
(Bear with me folks---I've been in an information vacum for 18 months--very little TV-no iternet-a one horse town with a once/week newspaper that is more about local events than news) |
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That's exactly what it means.
Many bought homes with "5 years interest only" loans when they could barely afford the "interest only" payment, now, 5 years later, they have to start making payments that include both interest AND principle and suddenly they're rethinking their purchases.
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maryjane
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MAR 06, 11:06 PM
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That IS disturbing.
I guess the next question is how many lending institutions may fail because of it? That loaned money came from somewhere...........
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sostock
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MAR 06, 11:09 PM
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A subprime rate is like a teaser to get a person in a house that really can't afford it. There's a whole slew of these loans out there. ARM's, balloon payments, my favorite is the interst only loan. All you do is pay the interest but never any money towards the house. Kind of like leasing a car, you get to drive it but never own it.
I think the practice is questionable but really its the buyer who is reponsible. It doesn't take a genius to figure out that if you make $10 per hour that you can't afford a $300K house. That's the problem with a lot of people right now. They want it all, the big house, the nice cars, the flat screen tv, etc. Problem is if you make 30k a year you can't afford all that crap. Its pretty simple, you either make more money or get by with less. I saw this mess coming 10 years ago. Its not that people can't afford to won their own home, they just all can't have that nice house on the hill.
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DtheC
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MAR 06, 11:10 PM
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| quote | Originally posted by maryjane:
Does that mean banks gave loans to 'at risk' borrowers (and/or) borrowers bought mortgages they couldn't afford long term?
(Bear with me folks---I've been in an information vacum for 18 months--very little TV-no iternet-a one horse town with a once/week newspaper that is more about local events than news) |
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The adjustable rate is the key, the mortgage rate is not fixed at (or around) the prime intrest rate. Some are financing with 0% down, and a low rate to begin with. Basicaly just covering intrest. 5 years down the line the intrest rate goes up as does the payment. Guess what the borrower has no equity, he's only been paying intrest for 5 years.
All of a sudden his payment goes from something they could barley afford, to almost double what they can afford.------------------
Ol' Paint, 88 Base coupe auto.
Turning white on top, like owner.
Leaks a little, like owner.
Doesn't smoke....... OK, we're trying to quit.
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Formula88
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MAR 06, 11:10 PM
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| quote | Originally posted by maryjane:
That IS disturbing.
I guess the next question is how many lending institutions may fail because of it? That loaned money came from somewhere........... |
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Potentially, quite a few. Countrywide Mortgage, the nation's largest lender, has already lost so much money that they effectively went bankrupt, until Bank of America bought them.
The FDIC identified 76 banks at risk in the fourth quarter, 2007. Remember, FDIC is who insures your deposits. They're even increasing their staff to handle the potential swell of bank failures:
http://www.consumeraffairs....8/02/fdic_banks.html
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loafer87gt
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MAR 06, 11:20 PM
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The worldbank is now recommending lenders forgive a good percentage of these home loans. For example, Greenspan says that if a person has a 400,000 mortage, the bank could reduce his principal owing to 200,000 and cut his payments in half. He says if they don't consider bailing out these individuals, the country risks going even further into a recession. Over on the housingpanic blogs there are a number of people of there who say they made a good chunk of change flipping houses, and have since been sitting on their earnings from selling these properties. Now they are withholding payments on their own mortgages, saying they are hopeful the government will pay off their expensive house so they don't have to use their own money to do so. It's sickening. All these assholes who borrowed more than they can afford should reap what they so. It's not going to be pretty, but it will be the only way to bring some sanity back to the housing market prices.
http://housingpanic.blogspot.com/[This message has been edited by loafer87gt (edited 03-06-2008).]
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maryjane
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MAR 06, 11:24 PM
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| quote | Originally posted by Formula88:
Potentially, quite a few. Countrywide Mortgage, the nation's largest lender, has already lost so much money that they effectively went bankrupt, until Bank of America bought them.
The FDIC identified 76 banks at risk in the fourth quarter, 2007. Remember, FDIC is who insures your deposits. They're even increasing their staff to handle the potential swell of bank failures:
http://www.consumeraffairs....8/02/fdic_banks.html |
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For some reason, the page wouldn't load properly for me. What were the top 10 "at risk" banks?
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maryjane
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MAR 06, 11:30 PM
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| quote | Originally posted by loafer87gt:
The worldbank is now recommending lenders forgive a good percentage of these home loans. For example, Greenspan says that if a person has a 400,000 mortage, the bank could reduce his principal owing to 200,000 and cut his payments in half. |
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That is insane--but at least the bank will get a portion of their depositers' money back. There are no winners in mass foreclosures---who is going to buy these thousands & thousands of homes? You can't even insure a
vacant home, and being vacnt, the value will drop like a rock in a matter of months.What a mess.
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sostock
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MAR 06, 11:40 PM
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| quote | Originally posted by maryjane:
That is insane--but at least the bank will get a portion of their depositers' money back. There are no winners in mass foreclosures---who is going to buy these thousands & thousands of homes? You can't even insure a
vacant home, and being vacnt, the value will drop like a rock in a matter of months.What a mess.
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True, but if you are sitting on a pile of money and looking to invest this could be a good thing. The stock market is in bad shape right now. If you find a nice home in a good neighborhood you could purchase it, rent it out to the people who just defaulted on their loan, and sell the house for a profit when the market picks back up.
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maryjane
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MAR 06, 11:48 PM
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| quote | Originally posted by sostock:
you could purchase it, rent it out to the people who just defaulted on their loan, and sell the house for a profit when the market picks back up. |
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Not even I am that cold.
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