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+--- Thread: Mortgages for a Brave New World (Sarcasm) (/showthread.php?tid=66666)
Re: Mortgages for a Brave New World (Sarcasm) - Stizzealth - 11-21-2008
I respectfully disagree.
"Liar's Loans" are part of the subprime mortgage market. Bill Clinton had a fairly substantial part in pressuring Fannie Mae towards expanding their operations into the subprime mortgage market.
The Wall Street Journal had a scarily prophetic article on the subject on September 30th, 199.
Re: Mortgages for a Brave New World (Sarcasm) - swampy - 11-21-2008
Carter's CRA.. Inhanced by Clinton?
Re: Mortgages for a Brave New World (Sarcasm) - AlphaDog - 11-21-2008
Stizzealth wrote:
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.
Valid points, and I also acknowledged that my post was very simplistic and that the scenarios represented opposite ends of a spectrum. What I was trying to point out is that the statement on Obama's site is rather vague. I guess we'll just have to sit back and see what really happens. At this point, I think many ideas are either already on the table, or people are working on ideas to put on the table. While analyses are good for keeping people open minded and looking at both sides, I do hate to see people crying "fire" before there's even any smoke. People have pointed out that things that once appeared on Obama's site have been reworded or eliminated, so I'm thinking this portion of the Obama-Biden plan is not yet cast in stone.
Re: Mortgages for a Brave New World (Sarcasm) - JoeH - 11-21-2008
mattkime wrote:
>>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.
Then again if you read the article linked to from 1999, that was to just be a pilot program to see what the issues were and how to integrate the loans into the market. That was also at a time when sub-prime loans were a much smaller portion of the market. The huge expansion of the programs and the percentage of sub-prime loans happened years later under Republican control.
Re: Mortgages for a Brave New World (Sarcasm) - Stizzealth - 11-21-2008
AlphaDog:
I see what you're saying. Of course, I'd like nothing more than to see Obama succeed spectacularly. My aim in broaching this topic is to generate a public dialogue on what the President-Elect should or shouldn't do and hopefully, with the help of others who are discussing the same topic, prevent him from making a dangerous mistake.
Re: Mortgages for a Brave New World (Sarcasm) - Stizzealth - 11-21-2008
While it's true that the Republicans were not successful in properly regulating Freddie and Fannie when they were in control, the situation was certainly not helped by the group of Democrats that actively lobbied on behold of a thrift industry. It's important to note that it would have taken enormous political will to overturn Clinton's decision, considering the racial tinge to the issue. One of the problems of locking Freddie and Fannie out of the subprime market was that (in 1999) 5% of loans in the regular market were taken out by African-American residents, while 18% of loans in the subprime market were taken out by African-American voters according to that article. The racial issue was further complicated by the fact (in 1999, according to the WSJ article) that African-Americans and Hispanics tend to have a lower credit rating than other segments of the population (presumably than whites and Asian-Americans). This placed an unfortunate racial undertone on any attempts to set a certain credit score as a minimum for borrowing.
Re: Mortgages for a Brave New World (Sarcasm) - swampy - 11-21-2008
Joe... The DEMS are up to their butts in stink over sub-prime loans. Raines, Frank, Dodd who failed to listen to the warnings from the Fed way back in 2002, 2004, 2006. Pick a year.
Social engineering at it's worst. Loans for everybody. Doesn't matter if you can afford it, you too can own a home. Geeez...
Re: Mortgages for a Brave New World (Sarcasm) - Wags - 11-21-2008
Is there anyone who actually has a handle on all this? Everything seems to be a moving target. The best approach might be to get all the brightest economists together in a room and let them hammer out some sort of policy, then wait a week, see what happens and do it again. That is certainly not happening now, but seems more likely with the Obama team than our current tunnel visioned ideologues. I think the jury has to out at present on what Obama will do - campaign rhetoric is just that. Seems like a lot of Clinton retreads entering the picture presently, for what that may be worth.
Re: Mortgages for a Brave New World (Sarcasm) - DaveS - 11-21-2008
GGD wrote:
The one part of the whole subprime equation that I never really understood, is where is Joe going to live after he walks away from the underwater loan/house? Shouldn't we be seeing an upswing in the demand for rentals, and then possibly demand for those foreclosed houses by those that want to become landlords to cash in on the increasing rental market?
Or are we going to see Joe going out and buying a cheap foreclosed house (possibly the one he just lost) at the new reduced prices? This is assuming that he can somehow get a loan.
This may answer part or some of your questions.....
California median home price drops 34 percent
http://www.businessweek.com/ap/financialnews/D94J0C901.htm
...Contra Costa County saw the steepest drop in price, with the median tumbling more than 46 percent to $285,000 from a year ago. Sales in the county soared by nearly 87 percent.
Meanwhile, a six-county region of Southern California also saw a sharp jump in home sales and a decline in median price last month.
Sales in the region rose by 67 percent, while the median home price fell 33 percent to $300,000, MDA DataQuick reported Tuesday.
Foreclosure resales amounted to 51 percent of all transactions in the region.
Just make sure you read the whole article to get a fair picture.
Re: Mortgages for a Brave New World (Sarcasm) - Greg the dogsitter - 11-21-2008
Stizzealth wrote:
My aim in broaching this topic is to generate a public dialogue on what the President-Elect should or shouldn't do and hopefully, with the help of others who are discussing the same topic, prevent him from making a dangerous mistake.
I, for one, always appreciate an overture to discourse that begins thusly:
Stizzealth wrote: Our new Dear Leader has recently put his enormous cranial power to work and come up with a plan to deliver Americans who are underwater from evil and predatory lenders.