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+--- Thread: Mortgages for a Brave New World (Sarcasm) (/showthread.php?tid=66666)
Re: Mortgages for a Brave New World (Sarcasm) - Spock - 11-21-2008
swampy wrote:
Let's hear it for Sarah! All her pretty clothes, cute baby! What a moron!
Fixed it for you.
Re: Mortgages for a Brave New World (Sarcasm) - mattkime - 11-21-2008
>>Fannie Mae, one of the roots of this crisis, was pressured by the Clinton (D-AK) administration
ug, this has been, hashed, hashed again, and rehashed. some conservatives like it too much to let it die.
the government's efforts to make mortgages available to a wider market segment has NOTHING to do with the current problem.
for one, if the banks believed it to be risky, they could have reduced risk in the rest of their mortgages. this obviously didn't happen.
when it comes down to it, republicans did little, if anything to stop it. i'm not saying they're worse than the dems, but this is a cross party lines dirty hands thing.
Re: Mortgages for a Brave New World (Sarcasm) - swampy - 11-21-2008
Hey, Spock.. she's a Governor. What are you?
Re: Mortgages for a Brave New World (Sarcasm) - Stizzealth - 11-21-2008
Matt:
There's no doubt about it. Both parties have the blood of the American economy on their hands. There was just so much in political contributions invested in the situation. However, I do disagree that the Clinton administration's efforts to make so-called "liar's loans" (loans that don't require income verification) didn't make any difference in the current situation.
It was, indeed, the root of the problem. When so many borrowers in the subprime (read: lots of "liar's loans") market defaulted on their mortgages, the damage could have been limited to local banks, essentially like an infected blood cell. The pressure applied to Freddie and Fannie to purchase and bundle these loans took the infection to the arteries of our credit market. Our economy depends on the free flow of lending capital to grow.
Re: Mortgages for a Brave New World (Sarcasm) - davester - 11-21-2008
I can certainly believe that our new member is a 14 year old, or someone's sockpuppet, or both.
As to the 90 day thing, following stizzealth's link gets you this:
Enact a 90-day foreclosure moratorium for homeowners who are acting in good faith: Financial institutions that participate in the financial rescue plan should be required to adhere to a homeowner's code of conduct, including a 90-day foreclosure moratorium for any homeowners living in their homes who are making good faith efforts to pay their mortgages. This will help create stability until the more far-reaching solutions are implemented and give both sides a chance to work out an agreement
This statement has little resemblance to the scenario in the original post, which is therefore what one would call a strawman. Nice try stizzealth or whoever you're posing for.
Re: Mortgages for a Brave New World (Sarcasm) - Stizzealth - 11-21-2008
Does it not? What is a "good faith effort"? I, too, can make entreaties about how hard I'm trying to pay back my mortgage/loan and not actually do it.
Re: Mortgages for a Brave New World (Sarcasm) - AlphaDog - 11-21-2008
OK, I was off having dinner, and I'm surprised that our guy with the shiny new MBA hasn't analyzed this yet! Thank you for the link to where it talks about this moratorium on Obama's site. Here is it for those who might not have read it:
"Enact a 90-day foreclosure moratorium for homeowners who are acting in good faith: Financial institutions that participate in the financial rescue plan should be required to adhere to a homeowner's code of conduct, including a 90-day foreclosure moratorium for any homeowners living in their homes who are making good faith efforts to pay their mortgages. This will help create stability until the more far-reaching solutions are implemented and give both sides a chance to work out an agreement."
As I was eating, I was thinking about the way in which this is worded. To me, the way in which this moratorium would be implemented is not particularly clear. While there are probably several variations, I thought of two, which would be at the opposite ends of the spectrum.
I can envision one scenario in which the market wouldn't necessarily be flooded with foreclosures at the end of a 90 day period. I don't happen to know offhand how long it takes to complete a foreclosure, but let's assume for the sake of this discussion that it's 60 days. So, on December 1, homeowner A is declared in default on their mortgage. Under the current system, the foreclosure proceedings begin, and their house winds up on the market on February 1 (I'm rounding for simplicity.) OK, now homeowner B is declared in default on December 5, so that house goes on the market on February 5. Homeowner C is declared in default on December 7, so their house goes on the market on February 7.
Now, let's put the 90 day moratorium in effect. Homeowner A gets an additional 90 days before the foreclosure process begins, so, assuming he can't get the issue resolved, his house doesn't go on the market until May 1. Homeowner B, thanks to the 90 day moratorium, is able to get things resolved, so his house never goes into foreclosure nor on the market. Homeowner C just can't get his act together, either, so his house gets its for sale sign on May 7.
What's the basic difference in the way this would work, besides postponing the inevitable for homeowners A and C, and giving homeowner C a chance to avoid foreclosure? If these houses are going to go on the market, the primary difference is that two will hit the market in May instead of February. There are still two, but the extra time salvaged one. What have I missed?
At the other end of the spectrum, we have one 90 day long period during which a moratorium will be in place. Under that scenario, some homeowners might get the entire 90 days while others might get only 60 days or 2 days. That could be what it means, although that certainly isn't the way it reads to me. If that is the way it would work, then, yes, the market would certainly be flooded with houses at a specific point in time.
The bottom line is that there are at least two ways in which this might be implemented. One merely shifts the point in time at which the houses go on the market, while giving an opportunity for a certain percentage of homeowners to avoid foreclosure all together. The second interpretation would dump a large number of homes on the market and create the glut described in the original post.
I think, given the lack of specific details about the plan, that it's too early to be calling doom and gloom. Is doom and gloom a possibility? Of course! But, if I can think of how this might be done without creating a glut, certainly the smart people can come up with an idea!
Re: Mortgages for a Brave New World (Sarcasm) - swampy - 11-21-2008
Smart people like Barney Frank?
Re: Mortgages for a Brave New World (Sarcasm) - Stizzealth - 11-21-2008
Neither situation is particularly desirable. Markets are inanimate, but they are driven by people, and people tend to be reasonably intelligent. You do ignore one VERY important favor, though- with either of your interpretations, it would be logical for interest to continue to accrue. This places an even further strain on the borrower, possibly effectively negating the effect of having an extra 90 days.
Plus, the banks need the money NOW. There continues to be a liquidity crisis. When there's no lending capital in our economy, the economy stagnates. If the Fed continues to print money, it drives inflation which is no good for anybody. It's much better to repurpose money that is already in the system. However, this money is locked up in houses that are worth less and less every day as the housing bubble continues to collapse.
Continuing on my point that markets are smart, I find it hard to believe that anybody on the floor of the NYSE or Nikkei or wherever, for that matter, could be fooled by a foreclosure freeze. The fact of the matter is that the majority of the houses WILL have to come on to the market in a depressed economy. There will be lots of supply but not a lot of demand as people tighten their belts heading into a recession. It is in our best interest to get the houses on the market as soon as possibly so the market can liquidate itself and restore a balanced ratio of supply to demand.
Re: Mortgages for a Brave New World (Sarcasm) - mattkime - 11-21-2008
>>I do disagree that the Clinton administration's efforts to make so-called "liar's loans" (loans that don't require income verification) didn't make any difference in the current situation.
The Clinton's did no such thing.
Sorry, you're just flat wrong.
To understand what happened and why it happened, go here - http://www.thislife.org/Radio_Episode.aspx?sched=1242