Real Estate/Finance Trivia

[PerryChase]

According to Michael Beschloss (on Charlie Rose), Gerald Ford approved the Adjustable Rate Mortgage and the ATM machine.

The ARM allowed buyers to afford higher monthly payments, but did that result in higher RE prices thus negating the benefits to consumers and shifting the advantages to builders and lenders?

I was a child back in the 1970s but I remember my parents always paying in cash.

Did the ARM, the ATM and then the credit card contribute to a healthier economy? Or did they cause us to become debt slaves?

Does anyone else have real estate trivia to share?

http://video.google.com/videoplay?docid=-7806371962371489349&q=charlie+rose+beschloss

[Anonymous]

I don’t know about the ’70s, but having read some books on The Great Depression, buying on installment credit was an innovation in the ’20s, which many surmise contributed to the mid-late ’20s bubble and subsequent collapse.

Same story, 80 years later.

[Cow_tipping]

Definetly made us debt slaves and bubbled up the house.
Glad I dont believe in debt. Or maybe I should … I dunno … watching prices drop like a rock might make me stay the course and “We aint talking no 3% here (poison apple) or 5% there (missing rib) you hear … ” to quote one of the greatest thinkers of our generation (Slash of Guns and Roses circa 1994 when he was on some good cocaine probably).
Cool.
Cow_tipping.

[barnaby33]

Nobody made us debt slaves, we did it to ourselves. This is alot like the smoking debate. Sure its bad, but its a matter of choice. Quit blaming the person offering the loan. This has been beaten to death in the past on this board.

Josh

[Diego Mamani]

ARMs have been around for a while, and definitely predate Ford’s presidency. My parents bought their house in South America in early 1974 with a 20-yr ARM. In fact, some have recently commented (here in the USA) that people routinely use ARMs in many foreign countries, and that perhaps fixed rate mortgage homebuyers in the US overpay for the convenience of a fixed payment.

In my parents’ case, the contract stipulated all sorts of ceilings that the variable rate could not exceed in the future. We entered a high-inflation period in the late 70s and early 80s, with nominal interest rates going through the roof, but the impact on our payments was limited thanks to the rate ceilings prescribed in the contract. Thanks to inflation, my parents got a sweet deal on that house…

And 30 years later a got a similar windfall when I cashed out at the peak of the So Cal RE bubble!

[Cow_tipping]

I know, that’s why I dont smoke. I only do cocaine and up. Nobody got me hooked to that, I did it myself. I know for sure.
Cool.
Cow_tipping.

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