Oh BOY!!

[capeman]

If that is correct then mass adoption of the 50 year could raise the overall price of housing by 13% at current interest rates and become scalable to increased/decreased rates. That is the kind of thing I fear and that is what can make housing prices stay fundamentally higher than what people should believe they are worth. If you think back to the 50’s when car loans were pretty scarce the price of a car was really low compared to todays standards. Now that most everyone finances purchases and interest rates are low it allows manufacturers to charge more for cars and keep sales up. Nice cars (SUVs now) are a sign of status and the industry has been milking that to no end. Housing has been the same and if the 50 becomes a preferred product based on better affordability then that will absorb some of the declines we expect to see in the near term. I don’t want a 50 and I don’t want my kids to be paying off my house when I’m dead. That kind of sucks.

Thoughts?

cheers,

chris

[PerryChase]

drunkle, milk the ones who can pay and are least likely to resist. Why not? That’s just business as usual.

———-

patient, if we’re talking about lenders providing relief to the borrowers in trouble, then those with 30 years fully amortized loans, can be refied with interest-only or Option ARMs. They could go with 10-year interest-only with 20 years fully amortized. That will give them a 10 year reprieve to get their finances in order. They can also refinance again in 10 years.

Those with exotics are up the creek, I’m afraid. Banks might allow those borrowers to skip a couple of payments and have them added to the principal. But if a borrower can’t afford the exotic payments today, will they be able to afford them a couple months from now? The lenders will just kick the can further down the road, which they might well do in order to keep-up the paper profits so execs can collect bonuses; and to try to avoid paying the hedge funds on bad loans for now.

———–

Good point capeman. It’s possible that a 50 years mortgage could stretch things a little more.

But I think that the housing gamblers already went with Option ARMs in order to leverage to the max.

[PerryChase]

drunkle, milk the ones who can pay and are least likely to resist. Why not? That’s just business as usual.

———-

patient, if we’re talking about lenders providing relief to the borrowers in trouble, then those with 30 years fully amortized loans, can be refied with interest-only or Option ARMs. They could go with 10-year interest-only with 20 years fully amortized. That will give them a 10 year reprieve to get their finances in order. They can also refinance again in 10 years.

Those with exotics are up the creek, I’m afraid. Banks might allow those borrowers to skip a couple of payments and have them added to the principal. But if a borrower can’t afford the exotic payments today, will they be able to afford them a couple months from now? The lenders will just kick the can further down the road, which they might well do in order to keep-up the paper profits so execs can collect bonuses; and to try to avoid paying the hedge funds on bad loans for now.

———–

Good point capeman. It’s possible that a 50 years mortgage could stretch things a little more.

But I think that the housing gamblers already went with Option ARMs in order to leverage to the max.

[Anonymous]

I predict the banks will push for legislation for quick paycheck garnishment—unless the people work in a cash only business, they’ll be paying off the loan anyway without owning the house.

Is there a guaranteed ‘seniority of debts’ w.r.t. people as there are in corporations?

I.e. generally corporations are required to pay off banks and senior bondholders before junior bondholders, convertible and preferred shares, and last, common stockholders.

Could a mortgage deficiency be considered “senior” to e.g. credit card debt?

Coudl one bank who has a mortgage deficiency against the FB force the bank of the FB’s credit card to turn over all payments made to the credit card until the mortgage debt is extinguished?

What about car loans?

Going after utility payments might be going to far…but could they go after rental payments if they’re deemed “too luxurious”?

[Anonymous]

I predict the banks will push for legislation for quick paycheck garnishment—unless the people work in a cash only business, they’ll be paying off the loan anyway without owning the house.

Is there a guaranteed ‘seniority of debts’ w.r.t. people as there are in corporations?

I.e. generally corporations are required to pay off banks and senior bondholders before junior bondholders, convertible and preferred shares, and last, common stockholders.

Could a mortgage deficiency be considered “senior” to e.g. credit card debt?

Coudl one bank who has a mortgage deficiency against the FB force the bank of the FB’s credit card to turn over all payments made to the credit card until the mortgage debt is extinguished?

What about car loans?

Going after utility payments might be going to far…but could they go after rental payments if they’re deemed “too luxurious”?

[Anonymous]

The lenders will just kick the can further down the road, which they might well do in order to keep-up the paper profits so execs can collect bonuses; and to try to avoid paying the hedge funds on bad loans for now.

I think the goal is to turn an individual company crisis into a systemic crisis, i.e. to fail at the same time as everybody else.

The first banks to fail get screwed. If they’re all failing, they get helicopter drops from the Fed. It’s Caseylogic.

[Anonymous]

The lenders will just kick the can further down the road, which they might well do in order to keep-up the paper profits so execs can collect bonuses; and to try to avoid paying the hedge funds on bad loans for now.

I think the goal is to turn an individual company crisis into a systemic crisis, i.e. to fail at the same time as everybody else.

The first banks to fail get screwed. If they’re all failing, they get helicopter drops from the Fed. It’s Caseylogic.

[patientrenter]

Very perceptive, Dr Chaos. Restructure your own loans until the other guy can’t.

Patient renter in OC

[patientrenter]

Very perceptive, Dr Chaos. Restructure your own loans until the other guy can’t.

Patient renter in OC

[cyphire]

I agree Chris.

I don’t want a large number of people to be hurt – but if they start playing games with the market economics, then someone will get hurt. Prices need to come down. Anything that changes this will provide some relief for some, but will hurt the vast majority who can’t buy homes.

Lets face it. There is no significant reason for the price run up, no one but hard core Realtors with only greed on their side can make a point for this. What goes up must come down to a fundamental point. We have been living on credit in this society for too long, there has to be a correction. Even if it isn’t a massive correction, with interest rates where they are now most people can’t buy. That isn’t right. Also – what about all the baby boomers. They need to sell. With prices this high there has to be downward pressure. With downward pressure will increase the buyers.

Just my opinion – remember – we are just after the largest price increase on record. Prices were still flat or higher a year ago. This roller coaster is just heading down and it will gather speed.

[cyphire]

I agree Chris.

I don’t want a large number of people to be hurt – but if they start playing games with the market economics, then someone will get hurt. Prices need to come down. Anything that changes this will provide some relief for some, but will hurt the vast majority who can’t buy homes.

Lets face it. There is no significant reason for the price run up, no one but hard core Realtors with only greed on their side can make a point for this. What goes up must come down to a fundamental point. We have been living on credit in this society for too long, there has to be a correction. Even if it isn’t a massive correction, with interest rates where they are now most people can’t buy. That isn’t right. Also – what about all the baby boomers. They need to sell. With prices this high there has to be downward pressure. With downward pressure will increase the buyers.

Just my opinion – remember – we are just after the largest price increase on record. Prices were still flat or higher a year ago. This roller coaster is just heading down and it will gather speed.

[Author]

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