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Author: [Politics] Topic: Dreary Economic News
djbrow
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djbrow
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#26
Posted: 3/1/2012 2:10:51 PM
QUOTE

Originally Posted by Nut_Flopper:

While the "loan officers, loan rating agents, sub prime lenders, sub prime buyers, banks, insurance corporations" were part of the problem they did not create it. They were enabled by the governments idea to allow people who couldn't afford a home obtain one.

Why does everybody have to own a home particularly if you can't afford it?

I have worked directly in the REO (Foreclosure) industry for 16 years and continue to do so. I am the guy who cleaned up the mess after the fact, I didn't have anything to do with loan generation or the foreclosure process. The files came to me once the foreclosure was completed to liquidate the assets. I have heard thousands of stories over the years.

The majority of the responsibility indeed lies with the government. The mortgage industry and the borrowers are second and equally to blame in my opinion, greed corrupted both sides. The mortgage industry was peddling crack (Free money) and the consumers sucked it up. But like I said the government is ultimately to blame for allowing it to happen.

They enabled the lenders to loan 125% LTV.

They allowed lenders to give consumers an 80% or 90% first mortgage and  a 10-20% second for their down payment for 100% financing, buyers had no monetary risk in the game.

They allowed stated income, I heard stories of Walmart clerks "stating" on loan apps that they made $7500 per month and it was acceptable.

They allowed people to refi their credit card debt over and over while the market skyrocketed. People bought new cars, big screens whatever and rolled it all back into their mortgage again and again and again...

People were signing loan docs not reading a damn thing about what they were getting themselves into other than I am buying a house and not contributing a dollar out of my pocket. It's the biggest purchase of your life you may want to know what you are getting yourself into.

Also let me just say that the government is even more involved now and continuing to darn up the mortgage and real estate industry. They are hurting way more than they are helping.

Lenders are afraid to lend.

REO inventory is just sitting rotting allowing the borrowers to in essence squat in the homes

Lenders are donating foreclosures to different non profits which again some are set up as scams to exploit.

The idea of potentially renting out foreclosed inventory is a terrible idea. The banks and/or the government would not be able to manage this effectively and too much liability would result in a ton of litigation for them.


Actually, a really good post. And for the most part, spot on.

Couple of comments, though. Foreclosures are one of the worst artificial manipulators of the housing market. I fully support any measure that can reduce this number, while not allowing a mortgagee to stop paying a mortgage. If the percentage rate of mortgages can be reduced so as to prevent a foreclosure but still require a normal payment, there is no reason this should not happen, considering the bailout the banks received.

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Nut_Flopper
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#27
Posted: 3/1/2012 3:03:35 PM
QUOTE Originally Posted by djbrow:

Actually, a really good post. And for the most part, spot on.

Couple of comments, though. Foreclosures are one of the worst artificial manipulators of the housing market. I fully support any measure that can reduce this number, while not allowing a mortgagee to stop paying a mortgage. If the percentage rate of mortgages can be reduced so as to prevent a foreclosure but still require a normal payment, there is no reason this should not happen, considering the bailout the banks received.



I am agreeable to this if it is done responsibly. The current loan mod process is one big clusterfuck though.

I was vehemently against any bailouts. No lesson was learned, our current scenario could happen again and most likely will in time.

They could allow a 1 time offer for borrowers to in essence refinance or reset their mortgage to current interest rates, but not reducing their principals which they are doing right now. If you can keep up great if not cut the losses and move on. Everything is being drug out in a very non productive way, the whole industry is a mess right now. There is still a HUGE back log of inventory being held back. If it was done properly the worst would have been over by now. Our government is just prolonging the pain from my perspective.

Also pro tip: I know Chase is currently doing this and I am sure a few other lenders are as well. If anybody has their mortgage with Chase and you complete a successful loan mod or short sale as a borrower you can get a 15-25k bonus.

What the darn is that about, they are rewarding bad behavior just like the bank, auto and insurance bail outs.

We have completely lost our sense of personal responsibility as a nation and it is killing us.
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Stiln
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#28
Posted: 3/1/2012 4:39:05 PM
nutflopper,

You're wrong though, that's thing they were not solely enabled by the government. Everyone was looking out for themselves during that time period so they are all separate entities.

The majority of the problem does not necessarily rely solely on the gov't at all.

In fact I could make an argument that the sub prime buyers were the ones at fault and pathetically stupid in buying these homes without realizing that they could afford it. The advice that these people who bought homes during the crisis should have known better. Explain to me how that is the fault of the government at al? Any smart rational minded person would know if they could afford a 500,000 dollar house making 40,000 a year.

I don't believe at all that the governemnt is the first entity to blame. That's what I think a lot of people who don't understand this crisis claim. Ohh it's the gov't fault ultimately.

No it wasn't. Loan officers, sub prime lenders, sub prime buyers lending rating agencies, the govt, banks, etc.. etc.. are all separate entities that were watching their own back. So to say that govt is ultimately the number one cause can certainly be argued. Are they one of the primary factors, sure!

However alan greenspan who's far smarter than you and I and the rest of the people in this thread was quoted saying that he couldn't even place the blame on to one entity or agency. So how do you figure and others in thread that you guys seem to know the answers to one of most "grey area" crisis's in the past several decades this nation has faced.

The banks allowed sub prime buyers to take this money out which was then rated highly by the loan rating agencies. If anything the government should have stepped in to do a lot more however they didn't so this crisis worsened.

And I'm not saying the gov'ts role in this crisis is minor because it's not but they are not the ultimate and single most important reason this crisis occurred.

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#29
Posted: 3/1/2012 5:34:25 PM
Nut Flopper is entirely correct.

More on Fannie & Freddie:

Scott Simon was one of those buyers. He works in the mortgage department at Pimco, the world's largest bond manager, and one of the biggest buyers of Fannie and Freddie securities:

"Fannie and Freddie in meetings with investors, whether it was us or anybody else, essentially just would sort of laugh and say, 'Well, you know the government will stand behind us,'" Simon says.

Truer words were never secretly spoken. But when the bailout finally did happen, it happened in a way almost no one would have foreseen.

=============

I'm truly at a loss to understand what you're missing Stilin.

It went like this:

Government ---> We want to encourage "affordable housing" and we will encourage F&F to buy the riskiest loans in your portfolio.

Activists (including Obama) -----> Make risky loans or we will sue under the CRA.

Lenders -----> Um, ok.


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#30
Posted: 3/1/2012 5:43:19 PM
Not all problems require a government solution:

Start Now" began "in the heart of the financial crisis in early 2009," he said. Meek got representatives of six banks — three national and three regional — to agree to appear at a location in Stamford to meet face to face with homeowners having mortgage problems. The idea was to allow people to work out solutions in person, avoiding the frustrations of dealing with banks' national call centers.

About 60 homeowners attended the event, and more than half of them got help.

"That day 36 people walked out with their houses saved from foreclosure," Meek said. "And it wasn't because they received federal money, just from sitting down and being able to talk face to face with a loan officer.

"What had happened, every time you called the bank, you ended up with a call center and someone would tell you to fax in documents and then they would go into the black hole of a fax machine," he said.

The Stamford Advocate covered the event, and soon the reporter was calling him asking when the next event would be. One article had prompted 150 telephone calls to the paper.

Since then Meek has put together Start Now events in Hartford, Bridgeport, Danbury — 11 of them so far.

"It was supposed to be a one-time event," he said.

More events are planned in the next few months in Stamford and Bridgeport.


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