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SD Realtor.
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December 2, 2007 at 5:10 PM #107682December 2, 2007 at 5:25 PM #107532
SD Realtor
Participantucodegen fair argument. Here is what I take issue with….
“We got into this problem with the banks/loan originators feeling that the increasing property value would cover any loss even with the fact that the loans were non-recourse. The property would give them back their money on foreclosure. The lenders made the bad assumption that the current rate of property appreciation would continue unabated.”
No I have an issue with this statement 100%. To speculate that lenders made an assumption such that property appreciation would continue unabated is not accurate at all. In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.
Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.
“For responsible lending to exist, the lenders have to realize that they can loose their skin in the game, not just the borrower.”
Now I do agree with this of course. However you are talking a massive reform. No more GSE backing… Basically any lender has to either be direct or every lender has to insure every mortgage or something drastic like that. I would buy into that.
The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin? Why the difference? If you classify them as assets, if you let a guy walk from his loan simply because of a market adjustment, (which as you can see I disagree with) then why the difference.
uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then? If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? Yes I know I am taking the argument to a ridiculous extreme but I do think you can see my point.
SD Realtor
December 2, 2007 at 5:25 PM #107627Participantucodegen fair argument. Here is what I take issue with….
“We got into this problem with the banks/loan originators feeling that the increasing property value would cover any loss even with the fact that the loans were non-recourse. The property would give them back their money on foreclosure. The lenders made the bad assumption that the current rate of property appreciation would continue unabated.”
No I have an issue with this statement 100%. To speculate that lenders made an assumption such that property appreciation would continue unabated is not accurate at all. In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.
Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.
“For responsible lending to exist, the lenders have to realize that they can loose their skin in the game, not just the borrower.”
Now I do agree with this of course. However you are talking a massive reform. No more GSE backing… Basically any lender has to either be direct or every lender has to insure every mortgage or something drastic like that. I would buy into that.
The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin? Why the difference? If you classify them as assets, if you let a guy walk from his loan simply because of a market adjustment, (which as you can see I disagree with) then why the difference.
uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then? If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? Yes I know I am taking the argument to a ridiculous extreme but I do think you can see my point.
SD Realtor
December 2, 2007 at 5:25 PM #107663Participantucodegen fair argument. Here is what I take issue with….
“We got into this problem with the banks/loan originators feeling that the increasing property value would cover any loss even with the fact that the loans were non-recourse. The property would give them back their money on foreclosure. The lenders made the bad assumption that the current rate of property appreciation would continue unabated.”
No I have an issue with this statement 100%. To speculate that lenders made an assumption such that property appreciation would continue unabated is not accurate at all. In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.
Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.
“For responsible lending to exist, the lenders have to realize that they can loose their skin in the game, not just the borrower.”
Now I do agree with this of course. However you are talking a massive reform. No more GSE backing… Basically any lender has to either be direct or every lender has to insure every mortgage or something drastic like that. I would buy into that.
The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin? Why the difference? If you classify them as assets, if you let a guy walk from his loan simply because of a market adjustment, (which as you can see I disagree with) then why the difference.
uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then? If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? Yes I know I am taking the argument to a ridiculous extreme but I do think you can see my point.
SD Realtor
December 2, 2007 at 5:25 PM #107674Participantucodegen fair argument. Here is what I take issue with….
“We got into this problem with the banks/loan originators feeling that the increasing property value would cover any loss even with the fact that the loans were non-recourse. The property would give them back their money on foreclosure. The lenders made the bad assumption that the current rate of property appreciation would continue unabated.”
No I have an issue with this statement 100%. To speculate that lenders made an assumption such that property appreciation would continue unabated is not accurate at all. In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.
Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.
“For responsible lending to exist, the lenders have to realize that they can loose their skin in the game, not just the borrower.”
Now I do agree with this of course. However you are talking a massive reform. No more GSE backing… Basically any lender has to either be direct or every lender has to insure every mortgage or something drastic like that. I would buy into that.
The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin? Why the difference? If you classify them as assets, if you let a guy walk from his loan simply because of a market adjustment, (which as you can see I disagree with) then why the difference.
uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then? If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? Yes I know I am taking the argument to a ridiculous extreme but I do think you can see my point.
SD Realtor
December 2, 2007 at 5:25 PM #107687Participantucodegen fair argument. Here is what I take issue with….
“We got into this problem with the banks/loan originators feeling that the increasing property value would cover any loss even with the fact that the loans were non-recourse. The property would give them back their money on foreclosure. The lenders made the bad assumption that the current rate of property appreciation would continue unabated.”
No I have an issue with this statement 100%. To speculate that lenders made an assumption such that property appreciation would continue unabated is not accurate at all. In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.
Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.
“For responsible lending to exist, the lenders have to realize that they can loose their skin in the game, not just the borrower.”
Now I do agree with this of course. However you are talking a massive reform. No more GSE backing… Basically any lender has to either be direct or every lender has to insure every mortgage or something drastic like that. I would buy into that.
The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin? Why the difference? If you classify them as assets, if you let a guy walk from his loan simply because of a market adjustment, (which as you can see I disagree with) then why the difference.
uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then? If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? Yes I know I am taking the argument to a ridiculous extreme but I do think you can see my point.
SD Realtor
December 2, 2007 at 9:11 PM #107630patientrenter
Participant“If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? ”
SD R, I wouldn’t call this a ridiculous extreme at all, except that one should only do this in a rapidly rising market. I don’t approve of it morally, and have never done it, but it’s the most rational selfish homebuyer strategy in a system that gives big incentives to maximize borrowings.
Patient renter in OC
December 2, 2007 at 9:11 PM #107727Participant“If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? ”
SD R, I wouldn’t call this a ridiculous extreme at all, except that one should only do this in a rapidly rising market. I don’t approve of it morally, and have never done it, but it’s the most rational selfish homebuyer strategy in a system that gives big incentives to maximize borrowings.
Patient renter in OC
December 2, 2007 at 9:11 PM #107762Participant“If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? ”
SD R, I wouldn’t call this a ridiculous extreme at all, except that one should only do this in a rapidly rising market. I don’t approve of it morally, and have never done it, but it’s the most rational selfish homebuyer strategy in a system that gives big incentives to maximize borrowings.
Patient renter in OC
December 2, 2007 at 9:11 PM #107774Participant“If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? ”
SD R, I wouldn’t call this a ridiculous extreme at all, except that one should only do this in a rapidly rising market. I don’t approve of it morally, and have never done it, but it’s the most rational selfish homebuyer strategy in a system that gives big incentives to maximize borrowings.
Patient renter in OC
December 2, 2007 at 9:11 PM #107784Participant“If there is no issue at all with walking out on a loan (besides a hit on credit), then theoretically why not purchase a home at 100% financing anytime in the cycle, walk away when you cannot afford it and save enough cash to buy a home for cash in the future? ”
SD R, I wouldn’t call this a ridiculous extreme at all, except that one should only do this in a rapidly rising market. I don’t approve of it morally, and have never done it, but it’s the most rational selfish homebuyer strategy in a system that gives big incentives to maximize borrowings.
Patient renter in OC
December 2, 2007 at 9:13 PM #107635bubba99
ParticipantJust wanted to be clear that the “government” is not bailing out anyone. The poor savers here and abroad, who have been funding this at 2%-5% annual interest rates have been funding the bubble, and will fund the bail out.
The loss of 5% or 6% because of inflation vs. the FED’s artifically low interest rate has paved the way for the bubble, and looks to be the FED’s solution to the problem.
IF the yield curve gets inverted again, and mortgage rates go to 2 or 3%, problem solved – and paid for by the “moral” savers who fund the mess with negative real rates of inflation.
It must be hubris that allows someone to speak of a borrower being immoral while walking away from a bank that has been robbing its depositors for years.
December 2, 2007 at 9:13 PM #107733ParticipantJust wanted to be clear that the “government” is not bailing out anyone. The poor savers here and abroad, who have been funding this at 2%-5% annual interest rates have been funding the bubble, and will fund the bail out.
The loss of 5% or 6% because of inflation vs. the FED’s artifically low interest rate has paved the way for the bubble, and looks to be the FED’s solution to the problem.
IF the yield curve gets inverted again, and mortgage rates go to 2 or 3%, problem solved – and paid for by the “moral” savers who fund the mess with negative real rates of inflation.
It must be hubris that allows someone to speak of a borrower being immoral while walking away from a bank that has been robbing its depositors for years.
December 2, 2007 at 9:13 PM #107767ParticipantJust wanted to be clear that the “government” is not bailing out anyone. The poor savers here and abroad, who have been funding this at 2%-5% annual interest rates have been funding the bubble, and will fund the bail out.
The loss of 5% or 6% because of inflation vs. the FED’s artifically low interest rate has paved the way for the bubble, and looks to be the FED’s solution to the problem.
IF the yield curve gets inverted again, and mortgage rates go to 2 or 3%, problem solved – and paid for by the “moral” savers who fund the mess with negative real rates of inflation.
It must be hubris that allows someone to speak of a borrower being immoral while walking away from a bank that has been robbing its depositors for years.
December 2, 2007 at 9:13 PM #107778ParticipantJust wanted to be clear that the “government” is not bailing out anyone. The poor savers here and abroad, who have been funding this at 2%-5% annual interest rates have been funding the bubble, and will fund the bail out.
The loss of 5% or 6% because of inflation vs. the FED’s artifically low interest rate has paved the way for the bubble, and looks to be the FED’s solution to the problem.
IF the yield curve gets inverted again, and mortgage rates go to 2 or 3%, problem solved – and paid for by the “moral” savers who fund the mess with negative real rates of inflation.
It must be hubris that allows someone to speak of a borrower being immoral while walking away from a bank that has been robbing its depositors for years.
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