American Mortgage Meltdown ?

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Nicolas
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American Mortgage Meltdown ?

Post by Nicolas » Wed Aug 08, 2007 3:11 am

http://uk.youtube.com/watch?v=SWksEJQEYVU

Is he talking sense or has he lost the plot ?

Is this an old or New clip ?

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Post by bugman » Wed Aug 08, 2007 3:26 am

Yes it's bad
But I still think he is lost in his plot

People like him are very hard to listen to because they come off as arrogant jackasses when they try to shout down arguments

A couple of years ago lenders were refinancing at as high as 125% of the value of their homes
Ignorant or desperate people took the loans and found that they could not make the payments
Being top heavy they could not sell their homes and are getting foreclosed on
Or they bought with a teaser rate and did not refi ,now the balloon is due and they get foreclosed on

I refinanced during that time
I took a teaser and refinanced at two years as I was instructed to do by my Realtor
My loan was at 80%, that way if any happened I could sell below market if I needed to
I was still able to refinance at almost twice what I paid two years before and still have about $40,000 in equity at over a 1% lower rate

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Nicolas
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Post by Nicolas » Wed Aug 08, 2007 3:34 am

We were always given the impression that renting was more popular than buying over there is this not true ? or does it vary from State to State.

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Post by bugman » Wed Aug 08, 2007 4:18 am

Home ownership is the American dream
Typically you are not considered successful if you rent
Renting is also looked down on as paying someone else's mortgage
You also have to deal with the rent going up at least once a year

I don't know if renters are more numerous but renting is certainly not the more popular idea

Personally I was happy to be a cliffdweller, especially when I was single
But after being bullied into buying a home by my wife and mother I can certainly see the advantage
If I sold tomorrow I would net about a years pay after all the bills were paid

It has been said that owning just one rental home will double your retirement income

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Post by profshadow » Wed Aug 08, 2007 9:25 am

Geeze,

Does this guy melt down like this often? I'd say he's two steps from a heart attack!

But, my opinion, having recently refinanced and considered refinancing again, is that there are a lot of bad loans out there...loans that should never have been made, offered, or should have ever left the discussion inside the conference room at the loan factory.

A loan that defers interest and you pay more later? Loans that are 125% of the property's value? C'mon...us regular joe schmoe's have no business taking out that kind of loan.

Now, a nice cabin on several acres of land, with hunting, fishing, etc., THAT's where I'd choose.
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Post by freehunter » Wed Aug 08, 2007 5:16 pm

only four percent were not paying and ninty six percent do according to fox news.

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Nicolas
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Post by Nicolas » Thu Aug 09, 2007 2:42 am

96% may be today but when the fixed rate ends and for a month or so these folks drift onto the 'standard rate', which will be awful I should imagine, then the fun begins.

Paying off $1000, for example, may be managable but drift into $1400 plus for a couple of months and your on the slippery slope. Also set up fees could be requested again even if you find that your exsisting mortgage company are the only ones prepared to lend you the money, again!, and that can run into many hundreds of Dollars.

125% mortgage to me just sounds immoral do you folks not have a version of our OFT ... office of fair trading ?

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Post by rob_s » Thu Aug 09, 2007 4:53 am

It's called a free-market system. We do not have, and I would not want, some socialist agency butting their nose into private market affairs.

The mortgage situation is pretty bad and may get worse. If it gets bad enough, the .gov will likely jump in to figure out a way to bail out all these morons that signed up for interest-only and adjustable-rate mortgages.

It pisses me off because I've been sitting here renting for 4 years because without going with some kind of ARM I couldn't afford to buy anything worth owning. I missed my chance when I moved in here but after that the market went bananas and everything was just too expensive. If I had no morals or ethics I could have done like all these other dirtbags and bought a house on an ARM and then waited around for the .gov to bail me out when I couldn't make the payments after the adjustment.

Then you have the skyrocketing insurance and property taxes, and people are triple-f@cked.

I'd like to see a state-wide 14% sales tax, and the elimination of property taxes as a whole. And this is as a renter who doesn't even PAY property taxes.
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Post by freehunter » Thu Aug 09, 2007 5:16 am

Nobody put a gun to their head and made them take out a mortage.
Economy will balance out unless we let demos raise taxes and more social programs they the pass on to states.

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Hmmm

Post by stratman » Thu Aug 09, 2007 5:22 am

I am renting and paying a mortgage.....market too soft to sell my house, ordered to as part of my divorce. So my ex gets to live for free. This sucks. At least I got to keep GUNS !!!

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Post by Gmountain » Thu Aug 09, 2007 6:22 am

rob_s wrote:
I'd like to see a state-wide 14% sales tax, and the elimination of property taxes as a whole. And this is as a renter who doesn't even PAY property taxes.
On the other hand, I love the property tax set up in Florida. I think it should stay exactly the way it is.

Actually, it wouldn't have been such a problem if the housing market hadn't been so hyper-inflated, with people paying prices that were so far above the home's worth. High purchase prices translated to high appraisals and taxes.

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Post by Rentprop1 » Thu Aug 09, 2007 7:37 am

bugman wrote:Home ownership is the American dream
Typically you are not considered successful if you rent
Renting is also looked down on as paying someone else's mortgage
I used to be in a rental real estate business, ( hence the name rentprop #-o ) there used to be a saying that there are 2 types of renters :

people that are in transition to buy a home ( ie transfer, divorce, new family ) and people that will never be able to buy a home ( people with terrible credit, prev foreclosure, no down payment and just can afford the area )
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Post by Rentprop1 » Thu Aug 09, 2007 7:45 am

rob_s wrote: The mortgage situation is pretty bad and may get worse. If it gets bad enough, the .gov will likely jump in to figure out a way to bail out all these morons that signed up for interest-only and adjustable-rate mortgages.
I dont see the Gov jumping in any time soon, a lot of private lenders made these ARM loans not the GOV programs like fanney-mae and freddie- mac, the gov had no responsibility to those that made poor decisions with their money in the past. Plus there is no protection/recourse for all of those that have already lost their home to forclosure so far.

What I do see, and its evident that there will be a lot of properties come back on the market, and way too many poeple will want to come about thinking they are RE investors and try to pick up properties cheap and FLIP them for a profit ( too many watching all the TV shows ( flip this house and propery investors ) and too many late night RE get rich quick schemes like Carlton Sheets. Its not that easy folks and you sure can risk a lot if you get in over your head. Especially in todays market with taxes and Ins the way it is.
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Post by bugman » Thu Aug 09, 2007 8:05 am

I could have done like all these other dirtbags and bought a house on an ARM and then waited around for the .gov to bail me out
Nothing wrong with Interest only or ARMs

That is how I got my house on an 80/20 interest only ARM

The interest only worked well for me because I was a commissioned employee

ARM was appropriate because I had planned to sell after five years

When I saw things creeping up I refinanced with a traditional fixed and actually got a lower rate

But I will admit that I bought when the buying was good and refied when the refi was good and my investment has almost tripled in three years

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Post by Nicolas » Thu Aug 09, 2007 10:07 am

Quote:

It's called a free-market system. We do not have, and I would not want, some socialist agency butting their nose into private market affairs.

If you are reffering to the OFT its totally independant and only works to the advantage of the Consumer. Rarely does anything to aggresive get passed their gaze.


Free-Markets are fine if the selling is done ethically, lets face it not all of us are that clued up on all the differant types of mortgages and frankly if someone offered an ill informed person the chance to buy a house of thier dreams at a price they think they can afford frankly where is the surprise.

People every day buy cars based on the weekly fee #-o '$100 a week sure I can afford that lets get it' 25% APR plus taxes are just a side thought normally after signing on the dotted line. Many people treat Mortgages the same way.

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Post by anathema » Thu Aug 09, 2007 4:18 pm

nicolas had it right. A lot of people want to blame the home purchasers but in a lot of cases, they are new home owners who were sold on the "what can you afford per month?" pitch. In a lot of cases, it was less than their rent so signed on the dotted line and ended up with a zero down, interest only loan not knowing (or having it glazed over) that its an adjustable rate mortgage.

There is nothing wrong with interest-only (or ARM) loans EXCEPT when it is done with no money down. That leaves the new home owner with nothing. At least a zero down and fixed rate, won't hurt you down the road(as long as you never need to sell).

As well, a "bail-out" isn't going to change their situation. People make it sound like the gov't is going to come in and payoff their mortgage. If anything happens, it would be Fannie or Freddie being allowed to expand their programs and step in to guarantee a broader subset of mortgages (ie-"conforming" mortgages) to the secondary markets thereby boosting liquidity (ability to buy and sell mortgages).

The benefit (and "Bailout" aspect) to these homeowners is that with the added liquidity, they may be able to refinance the loans at more favorable rates and/or avoid pre-payment penalties. Nothing is going to change the size of their mortgage but mortgage companies don't want the loans to go bad any more than the homeowners do. They'd be lucky to get 80 cents on the dollar to pay off the mortgage loan.

Right now, perception is becoming reality as even well managed mortgage companies that only lend safe, secured Jumbo mortgages (>$417k which aren't backed by Fannie or Freddie) are getting hit because the secondary markets of mortgage investors are getting so conservative with avoiding anything not a "conforming mortgage" that these "smart, well managed" mortgage companies are getting forced by their creditors to increase cash reserves or reduce their debt load (forcing them to sell their mortgage loans at a fire sale).

Its getting pretty crazy and will get worse before it gets better . . .

As an interesting side note: the U.S. is one of the few countries than even have "Fixed" rate mortgages. Canada only has various types of ARMs.

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Post by grangalan » Thu Aug 09, 2007 9:33 pm

Makes me glad i have 5.75% fixed. Hell i never even put money down lol.
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Post by Rentprop1 » Thu Aug 09, 2007 9:35 pm

grangalan wrote:Makes me glad i have 5.75% fixed. Hell i never even put money down lol.
sure you dont have an 80/20.........didn't you just buy a few months back, not calling you out or anything, but that seems too low with out paying points at closing which would have meant ( put money down )...........
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Post by pyrguns2003 » Thu Aug 09, 2007 10:04 pm

When I bought my house 12 yrs ago (sold it 4 yrs ago),
I had a 5. something fixed for 30 interest rate, no points or etc., and only paid $385/month.


Man those were the good ole days...... .xup
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Post by bugman » Thu Aug 09, 2007 10:40 pm

sure you dont have an 80/20.........didn't you just buy a few months back, not calling you out or anything, but that seems too low with out paying points at closing which would have meant ( put money down )
My rate is 6.125 and my credit is not that good
I refied about a year ago

My 90/2- was 6.75/11.25

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