FHA Loans and PUD Rules

[Scarlett]

It would have been nice to see more pertinent answers to the OP, not biting his head off.

I don’t think people should be bitter and overanalyze why and what is the OP buying. His family is probably young and if one of them is lawyer or doctor recently minted, they wouldn’t have had time to save money for 20% of those ridiculously inflated prices. They probably are to be commended they don’t have other debts. If he is a doctor or lawyer ( I am using these here as examples only) and his income is almost guaranteed to increase substantially in the near future, why not buy now?. I would too in his shoes. He has 20% of the 2001-2002 price, but only 10% of the 2005-current price. whose fault is the prices are overinflated? Anyhow, that’s why you pay PMI if you have less than 20% down. It’s extra insurance. If it makes sense for him regarding debt-to-income ratio and comparing with rent I say go for it.

And, no, he is not only paying the dowpayment 60K for housing, he will pay every month 3500-4000 at least in PITI unless he defaults immediately. And if his income will increase he will be able to afford it easily.

[patientrenter]

[quote=Scarlett]It would have been nice to see more pertinent answers to the OP, not biting his head off.

I don’t think people should be bitter and overanalyze why and what is the OP buying. His family is probably young and if one of them is lawyer or doctor recently minted, they wouldn’t have had time to save money for 20% of those ridiculously inflated prices. They probably are to be commended they don’t have other debts. If he is a doctor or lawyer ( I am using these here as examples only) and his income is almost guaranteed to increase substantially in the near future, why not buy now?. I would too in his shoes. He has 20% of the 2001-2002 price, but only 10% of the 2005-current price. whose fault is the prices are overinflated? Anyhow, that’s why you pay PMI if you have less than 20% down. It’s extra insurance. If it makes sense for him regarding debt-to-income ratio and comparing with rent I say go for it.

And, no, he is not only paying the dowpayment 60K for housing, he will pay every month 3500-4000 at least in PITI unless he defaults immediately. And if his income will increase he will be able to afford it easily.[/quote]

And there you can see laid out very clearly why we have arrived at the situation we are in.

Why should a nice, decent person have to wait to get something? If they say they are about to earn a lot of money, why make them wait a few years while they prove it?

It’s OK to allow low downpayments (of less than 20% or so, let’s say) because private mortgage insurers can cover the possible losses. Yes, private mortgage insurers can collect $20 billion over 10-15 years of a home price cycle, and then cover the trillion dollars of losses in the inevitable downturn. We all know that taxpayers have paid, and will be paying the difference. You just can’t insure against losses this big without insisting that the home owners come up with lots of their own money.

“Whose fault is it that prices are inflated?” A lot of people are at fault. Lenders are at fault for allowing (true buyer-funded) downpayments of less than 20%. Buyers are at fault for looking only at the home price a lender will qualify them for, and for buying with less than 20% down. Just because it’s not this prospective first-time home buyer’s fault for creating a market with inflated prices doesn’t mean that they should make all the same mistakes that created that market. Then they would share full responsibility for making home prices too high.

[patientrenter]

[quote=Scarlett]It would have been nice to see more pertinent answers to the OP, not biting his head off.

I don’t think people should be bitter and overanalyze why and what is the OP buying. His family is probably young and if one of them is lawyer or doctor recently minted, they wouldn’t have had time to save money for 20% of those ridiculously inflated prices. They probably are to be commended they don’t have other debts. If he is a doctor or lawyer ( I am using these here as examples only) and his income is almost guaranteed to increase substantially in the near future, why not buy now?. I would too in his shoes. He has 20% of the 2001-2002 price, but only 10% of the 2005-current price. whose fault is the prices are overinflated? Anyhow, that’s why you pay PMI if you have less than 20% down. It’s extra insurance. If it makes sense for him regarding debt-to-income ratio and comparing with rent I say go for it.

And, no, he is not only paying the dowpayment 60K for housing, he will pay every month 3500-4000 at least in PITI unless he defaults immediately. And if his income will increase he will be able to afford it easily.[/quote]

And there you can see laid out very clearly why we have arrived at the situation we are in.

Why should a nice, decent person have to wait to get something? If they say they are about to earn a lot of money, why make them wait a few years while they prove it?

It’s OK to allow low downpayments (of less than 20% or so, let’s say) because private mortgage insurers can cover the possible losses. Yes, private mortgage insurers can collect $20 billion over 10-15 years of a home price cycle, and then cover the trillion dollars of losses in the inevitable downturn. We all know that taxpayers have paid, and will be paying the difference. You just can’t insure against losses this big without insisting that the home owners come up with lots of their own money.

“Whose fault is it that prices are inflated?” A lot of people are at fault. Lenders are at fault for allowing (true buyer-funded) downpayments of less than 20%. Buyers are at fault for looking only at the home price a lender will qualify them for, and for buying with less than 20% down. Just because it’s not this prospective first-time home buyer’s fault for creating a market with inflated prices doesn’t mean that they should make all the same mistakes that created that market. Then they would share full responsibility for making home prices too high.

[patientrenter]

[quote=Scarlett]It would have been nice to see more pertinent answers to the OP, not biting his head off.

I don’t think people should be bitter and overanalyze why and what is the OP buying. His family is probably young and if one of them is lawyer or doctor recently minted, they wouldn’t have had time to save money for 20% of those ridiculously inflated prices. They probably are to be commended they don’t have other debts. If he is a doctor or lawyer ( I am using these here as examples only) and his income is almost guaranteed to increase substantially in the near future, why not buy now?. I would too in his shoes. He has 20% of the 2001-2002 price, but only 10% of the 2005-current price. whose fault is the prices are overinflated? Anyhow, that’s why you pay PMI if you have less than 20% down. It’s extra insurance. If it makes sense for him regarding debt-to-income ratio and comparing with rent I say go for it.

And, no, he is not only paying the dowpayment 60K for housing, he will pay every month 3500-4000 at least in PITI unless he defaults immediately. And if his income will increase he will be able to afford it easily.[/quote]

And there you can see laid out very clearly why we have arrived at the situation we are in.

Why should a nice, decent person have to wait to get something? If they say they are about to earn a lot of money, why make them wait a few years while they prove it?

It’s OK to allow low downpayments (of less than 20% or so, let’s say) because private mortgage insurers can cover the possible losses. Yes, private mortgage insurers can collect $20 billion over 10-15 years of a home price cycle, and then cover the trillion dollars of losses in the inevitable downturn. We all know that taxpayers have paid, and will be paying the difference. You just can’t insure against losses this big without insisting that the home owners come up with lots of their own money.

“Whose fault is it that prices are inflated?” A lot of people are at fault. Lenders are at fault for allowing (true buyer-funded) downpayments of less than 20%. Buyers are at fault for looking only at the home price a lender will qualify them for, and for buying with less than 20% down. Just because it’s not this prospective first-time home buyer’s fault for creating a market with inflated prices doesn’t mean that they should make all the same mistakes that created that market. Then they would share full responsibility for making home prices too high.

[patientrenter]

[quote=Scarlett]It would have been nice to see more pertinent answers to the OP, not biting his head off.

I don’t think people should be bitter and overanalyze why and what is the OP buying. His family is probably young and if one of them is lawyer or doctor recently minted, they wouldn’t have had time to save money for 20% of those ridiculously inflated prices. They probably are to be commended they don’t have other debts. If he is a doctor or lawyer ( I am using these here as examples only) and his income is almost guaranteed to increase substantially in the near future, why not buy now?. I would too in his shoes. He has 20% of the 2001-2002 price, but only 10% of the 2005-current price. whose fault is the prices are overinflated? Anyhow, that’s why you pay PMI if you have less than 20% down. It’s extra insurance. If it makes sense for him regarding debt-to-income ratio and comparing with rent I say go for it.

And, no, he is not only paying the dowpayment 60K for housing, he will pay every month 3500-4000 at least in PITI unless he defaults immediately. And if his income will increase he will be able to afford it easily.[/quote]

And there you can see laid out very clearly why we have arrived at the situation we are in.

Why should a nice, decent person have to wait to get something? If they say they are about to earn a lot of money, why make them wait a few years while they prove it?

It’s OK to allow low downpayments (of less than 20% or so, let’s say) because private mortgage insurers can cover the possible losses. Yes, private mortgage insurers can collect $20 billion over 10-15 years of a home price cycle, and then cover the trillion dollars of losses in the inevitable downturn. We all know that taxpayers have paid, and will be paying the difference. You just can’t insure against losses this big without insisting that the home owners come up with lots of their own money.

“Whose fault is it that prices are inflated?” A lot of people are at fault. Lenders are at fault for allowing (true buyer-funded) downpayments of less than 20%. Buyers are at fault for looking only at the home price a lender will qualify them for, and for buying with less than 20% down. Just because it’s not this prospective first-time home buyer’s fault for creating a market with inflated prices doesn’t mean that they should make all the same mistakes that created that market. Then they would share full responsibility for making home prices too high.

[patientrenter]

[quote=Scarlett]It would have been nice to see more pertinent answers to the OP, not biting his head off.

I don’t think people should be bitter and overanalyze why and what is the OP buying. His family is probably young and if one of them is lawyer or doctor recently minted, they wouldn’t have had time to save money for 20% of those ridiculously inflated prices. They probably are to be commended they don’t have other debts. If he is a doctor or lawyer ( I am using these here as examples only) and his income is almost guaranteed to increase substantially in the near future, why not buy now?. I would too in his shoes. He has 20% of the 2001-2002 price, but only 10% of the 2005-current price. whose fault is the prices are overinflated? Anyhow, that’s why you pay PMI if you have less than 20% down. It’s extra insurance. If it makes sense for him regarding debt-to-income ratio and comparing with rent I say go for it.

And, no, he is not only paying the dowpayment 60K for housing, he will pay every month 3500-4000 at least in PITI unless he defaults immediately. And if his income will increase he will be able to afford it easily.[/quote]

And there you can see laid out very clearly why we have arrived at the situation we are in.

Why should a nice, decent person have to wait to get something? If they say they are about to earn a lot of money, why make them wait a few years while they prove it?

It’s OK to allow low downpayments (of less than 20% or so, let’s say) because private mortgage insurers can cover the possible losses. Yes, private mortgage insurers can collect $20 billion over 10-15 years of a home price cycle, and then cover the trillion dollars of losses in the inevitable downturn. We all know that taxpayers have paid, and will be paying the difference. You just can’t insure against losses this big without insisting that the home owners come up with lots of their own money.

“Whose fault is it that prices are inflated?” A lot of people are at fault. Lenders are at fault for allowing (true buyer-funded) downpayments of less than 20%. Buyers are at fault for looking only at the home price a lender will qualify them for, and for buying with less than 20% down. Just because it’s not this prospective first-time home buyer’s fault for creating a market with inflated prices doesn’t mean that they should make all the same mistakes that created that market. Then they would share full responsibility for making home prices too high.

[chrisp]

Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?

[chrisp]

Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?

[chrisp]

Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?

[chrisp]

Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?

[chrisp]

Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?

[CA renter]

[quote=chrisp]Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?[/quote]

The TARP is just the tip of the iceberg…

“TARP does not operate in a vacuum,” Mr. Barofsky said in his prepared testimony. To properly evaluate that spending, “the context of these broader efforts” must be considered.

That $23.7 trillion figure would amount to about $77,000 for every person in the United States, and would be almost $10 trillion more than the country’s entire economic output, which is $14.1 trillion.

To reach that figure, Mr. Barofsky added up all possible Federal Reserve programs, and got a total of $6.8 trillion. He figured the TARP program could end up costing $3 trillion, including possible spending by the Federal Deposit Insurance Corporation and the Fed.

http://dealbook.blogs.nytimes.com/2009/07/21/a-big-tarp-estimate-that-isnt-worth-much/

If you read the entire article, you’ll see that this is (so far) the maximum risk, and many people believe it’s impossible to have these kinds of losses. Personally, I believe it’s always best to plan for the worst, and hope for the best. While we may not see the taxpayers bail out these entities to the tune of $23 TRILLION+, we should know what we are backing.
——————-

Yes, the housing crisis was caused by “loose lending” and by borrowers who took on too much risk.

Many people here are older, and have seen and/or studied various cycles before. We’ve seen the **permanent** damage it can cause in peoples’ lives. It’s easy to feel invincible, and that the sky is the limit, when you are young. We’re just trying to be helpful (even if that’s not what you really wanted), and show you why this decision might not be as safe as you think it is.

[CA renter]

[quote=chrisp]Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?[/quote]

The TARP is just the tip of the iceberg…

“TARP does not operate in a vacuum,” Mr. Barofsky said in his prepared testimony. To properly evaluate that spending, “the context of these broader efforts” must be considered.

That $23.7 trillion figure would amount to about $77,000 for every person in the United States, and would be almost $10 trillion more than the country’s entire economic output, which is $14.1 trillion.

To reach that figure, Mr. Barofsky added up all possible Federal Reserve programs, and got a total of $6.8 trillion. He figured the TARP program could end up costing $3 trillion, including possible spending by the Federal Deposit Insurance Corporation and the Fed.

http://dealbook.blogs.nytimes.com/2009/07/21/a-big-tarp-estimate-that-isnt-worth-much/

If you read the entire article, you’ll see that this is (so far) the maximum risk, and many people believe it’s impossible to have these kinds of losses. Personally, I believe it’s always best to plan for the worst, and hope for the best. While we may not see the taxpayers bail out these entities to the tune of $23 TRILLION+, we should know what we are backing.
——————-

Yes, the housing crisis was caused by “loose lending” and by borrowers who took on too much risk.

Many people here are older, and have seen and/or studied various cycles before. We’ve seen the **permanent** damage it can cause in peoples’ lives. It’s easy to feel invincible, and that the sky is the limit, when you are young. We’re just trying to be helpful (even if that’s not what you really wanted), and show you why this decision might not be as safe as you think it is.

[CA renter]

[quote=chrisp]Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?[/quote]

The TARP is just the tip of the iceberg…

“TARP does not operate in a vacuum,” Mr. Barofsky said in his prepared testimony. To properly evaluate that spending, “the context of these broader efforts” must be considered.

That $23.7 trillion figure would amount to about $77,000 for every person in the United States, and would be almost $10 trillion more than the country’s entire economic output, which is $14.1 trillion.

To reach that figure, Mr. Barofsky added up all possible Federal Reserve programs, and got a total of $6.8 trillion. He figured the TARP program could end up costing $3 trillion, including possible spending by the Federal Deposit Insurance Corporation and the Fed.

http://dealbook.blogs.nytimes.com/2009/07/21/a-big-tarp-estimate-that-isnt-worth-much/

If you read the entire article, you’ll see that this is (so far) the maximum risk, and many people believe it’s impossible to have these kinds of losses. Personally, I believe it’s always best to plan for the worst, and hope for the best. While we may not see the taxpayers bail out these entities to the tune of $23 TRILLION+, we should know what we are backing.
——————-

Yes, the housing crisis was caused by “loose lending” and by borrowers who took on too much risk.

Many people here are older, and have seen and/or studied various cycles before. We’ve seen the **permanent** damage it can cause in peoples’ lives. It’s easy to feel invincible, and that the sky is the limit, when you are young. We’re just trying to be helpful (even if that’s not what you really wanted), and show you why this decision might not be as safe as you think it is.

[CA renter]

[quote=chrisp]Its more responsible for me to pour $75K down the drain renting for the next few years? Your argument is that it would be for society for me to wait? But wouldn’t the economy then get worse? Is your issue irresponsibility or wanting the price to be low for yourself?

I didn’t say there would be less risk if I put 10% down. I said it doesn’t mean I wouldn’t be able to make my payments because I only have 10% down.

Yes, something terrible could happen, yes I understand the concept of an emergency fund. Yes, I plan (I understand I don’t have one now) to have one. Yes, I know plans don’t always work out.

I appreciate your argument more now. I might be able to afford the payments, but can’t sell without foreclosure if prices continue to decline AND something bad happens.

Still to make me or people like out to be awful human beings by putting all your money at risk seems a little exaggerated. I believe this discussion has educated me and made me better understand the risks. However, I believe this crisis was a result of lose lending and unregulated credit-derivatives. While prices may continue to fall and cause foreclosures in the circumstance you described, not everyone will fail. And I would guess that the magnitude of that consequence will not be as bad as the decline we are currently in.

Also, I may not know enough about TARP, but wasn’t it a 1 time (3 payment) thing? Yes, a huge multi-billion thing? But, you envision that things will only get worse and you’ll end up footing the bill? I imagine what your’re describing wouldn’t be close to the magnitude of the first credit crisis. Is it terrible to say it will be a drop in the bucket? When combined with keeping prices inflated it is? What about causing the economy to go further in the shitter and make people loose more jobs?[/quote]

The TARP is just the tip of the iceberg…

“TARP does not operate in a vacuum,” Mr. Barofsky said in his prepared testimony. To properly evaluate that spending, “the context of these broader efforts” must be considered.

That $23.7 trillion figure would amount to about $77,000 for every person in the United States, and would be almost $10 trillion more than the country’s entire economic output, which is $14.1 trillion.

To reach that figure, Mr. Barofsky added up all possible Federal Reserve programs, and got a total of $6.8 trillion. He figured the TARP program could end up costing $3 trillion, including possible spending by the Federal Deposit Insurance Corporation and the Fed.

http://dealbook.blogs.nytimes.com/2009/07/21/a-big-tarp-estimate-that-isnt-worth-much/

If you read the entire article, you’ll see that this is (so far) the maximum risk, and many people believe it’s impossible to have these kinds of losses. Personally, I believe it’s always best to plan for the worst, and hope for the best. While we may not see the taxpayers bail out these entities to the tune of $23 TRILLION+, we should know what we are backing.
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Yes, the housing crisis was caused by “loose lending” and by borrowers who took on too much risk.

Many people here are older, and have seen and/or studied various cycles before. We’ve seen the **permanent** damage it can cause in peoples’ lives. It’s easy to feel invincible, and that the sky is the limit, when you are young. We’re just trying to be helpful (even if that’s not what you really wanted), and show you why this decision might not be as safe as you think it is.

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