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HLS
ParticipantHere’s a true story to add….
http://money.aol.com/news/articles/_a/life-changes-with-a-latte-to-go/20070914115609990001
ParticipantSeattle….It has to be put into perspective for people. My analogy is that they simply gambled and lost. Accept it and walk away. They may even have tax consequences from their loss.
If you owe $600K on a house that is worth $500K today, you really aren’t losing anything anyway, except pride, ego, etc. There are always the drama queens/kings.
People will not be homeless. They will be able to rent.
There are millions of landlords and employers who view a person’s past differently, so it’s impossible to say that they won’t be able to find a rental or get a job. Most employers don’t look at credit reports.A clean credit report with everything else current except the mortgage should be looked upon differently.
After a foreclosure, you just need to use credit responsibly and pay minimum payments on time to rebuild.
America needs to get past the “shame” of being a tenant.
The fact is that in So Cal, in many areas you can rent for about 50% of what is costs to own.
It’s not an entitlement to OWN a house, any more than it is to own a Rolls Royce.
Europe has had tenants for centuries.The fact is, most landlords are getting a terrible return on the value of their asset today. (It may be a great return based on their investment, but that’s a diff story)
Tenants should be thankful for this house of cards.As far as buying in the future, they need to only buy what and when they can afford it. There may be programs that will overlook the foreclosure. Worst case scenario is, it’s on a credit report for 7 years.
It’s not the end of the world, it’s not a terminal disease.
It was irresponsible of many people to buy a home. THEY NEED TO FACE THAT. A govt bailout will be a disgrace and slap in the face to the resonsible people who didn’t buy because they knew they couldn’t afford it.
It will also contribute to an inevitable larger bust from the facade and the related propaganda.People need to feel some pain and learn from the experience.
ParticipantCMB,
As I advise my closest friends, at this time, I tell them to get cash in the bank that is FDIC insured to weather whatever storm might be brewing. As much as possible. When you have liquid cash available you can withstand financial curveballs that get thrown at you.I know people with 2 years (or more) of liquid living expenses in cash, and they still have income streams today.
They have a ton of equity and dont care if home prices go up or down, they aren’t moving away (yet)I think that people who cannot get into a similar situation are just living beyond their means, and will be “a slave to the man” most of their lives. Living paycheck to paycheck and planning for “retirement” doesn’t work for me. It never did.
Most people never know the joy of financial freedom, some learn it too late in life. If the storm doesn’t come, you still have YOUR money in the bank, plus some interest.
Better to be prepared than be caught off guard.
Having toys, possessions, stocks, cars, equity etc. won’t pay the bills, allow you to buy food, travel, or enjoy life until it’s turned in to CASH.
Do you know what I think the governments biggest fear is ?
I’d say it’s that people stop spending money. Lowering interest rates sole purpose is to get people to spend money TO STIMULATE THE ECONOMY… Does it really “keep people in jobs” ??If the govt REALLY wanted to be helpful,
They would let the housing market collapse without intervention. we need an economic cleansing and entire generation or two to understand pain & reality. Reward the people who didn’t buy because they knew they couldn’t afford to.
They would encourage saving by raising interest rates so there was an incentive to save, not spend.
Let people save most of their income and tax them when they spend money on CRAP.
They would rewire the social INsecurity system that is broke like many pensions funds.Approximately 4% of San Diego homes are on the market today and are virtually unsalable at what people “think” their homes are worth. The other 96% are fooled about their “equity”. Imagine if 10% of homeowners want to cash out at the same time, it impossible as there are nowhere near enough buyers UNLESS the prices are in line with affordability and/or it is attractive to an EDUCATED investor so that they get a return commensurate with their risk.
So as long as there are people afraid of missing out and willing to pay more than someone else, there is a market.
At an auction an unlimited number of people can watch while 2 (two) bidders push a price to the moon.
Does it REALLY eastablish a value that the rest of the world has to agree with ?The stock market is a legalized pyramid scheme. On a micro scale, you would be thrown in jail for “trading stocks”.
On a macro scale, “everyone’s doing it”The stock market defies logic. Bad news can make stocks rise, good news can make them fall. It’s all about “Wall Street expectations” Can they beat the street.
That being said, people can definitely make money from the market, EXACTLY like in houses, but not everybody can make money all the time.
No tree grows to the sky. There is a forest fire once in awhile and ALL trees burn down.
It’s a game. Not everybody wins. People end up broke for one reason or another, or in a state of health that money cannot fix.
Play the game if you wish, but if you don’t define your own rules, you are just in with the sheep, following the herd, soaking in the propaganda.AS A DISCLAIMER, If you got this far, I’m not sure that I believe all of the above, but I enjoyed writing it.
Just think about what COULD happen, and be prepared.
I welcome any rebuttals 😉ParticipantMost people in the lending industry who made $10k-$15k a month did it by screwing people and taking advantage of the borrower’s ignorance.
They didn’t make that money because they deserved it or even knew what they were doing. The more you screw the borrower in rate and fee, the more the company makes, the more you get on your paycheck. Simple,
Just like a boiler room operation.Very few were able to truly explain the nuances of ARMS or advise the borrower about what was really best for their sitaution. Negative Amortization loans paid the highest commissions in the industry, which is the ONLY reason many people are in them, and owe more today than their loan started with. Worst loans EVER invented for the borrower, Best EVER for the lender.
There was no need for so many people in the industry, especially the theives, of which there were plenty, and still are. They weren’t missionaries from church sent to help people.
What is amazing is that these people thought that sort of income would last forever and spent money like water.
Just like those that thought houses would go up forever, including the ignorant real estate agents whose income depended on perpetuating the myth.I have no sympathy for anyone who made $10K a month and is out of work now.
There are people today that are losing their houses because of unethical advice that they heard from loan folks or real estate agents.
It was a sales job based on commissions. In ANY industry, commissions breed fraud.
Some people come out of college with 4 or 6 years (or more) invested and cannot make $40K with an education and someone goes from
waitress to a gravy train of $120K a year and then broke ?
Give me a break!And another thing, regarding “equity lines of credit, refinance loans for which she receives just $400 per loan instead of her usual $600 fee”
Most people are getting doubly screwed by getting a HELOC through a broker, a processing fee of $400 for that is a ripoff.
It’s not like we’ve had a brain drain of highly educated, ethical, honest people who had integrity.
Kinda like having a house with no equity, if you walk away, what have you really lost ?IT WAS A SALES JOB, there’s plenty others out there, go find your next victim.
There’s a sucker born every minute……Other than the above, my opinions on the matter are limited.
September 19, 2007 at 2:07 PM in reply to: House Approves Plan to Help Struggling Homeowners Avoid Foreclosure #85212ParticipantEX-SD, I know what you are thinking! I’d love to have you as a neighbor when you load up the wagon train and venture back west.
I’d love to be a fly on the wall when these big boys are together.
I firmly believe that what they say in public and and what they really think is 180 degrees difference.I still remember when Greenspan uttered “irrational exuberance” why he didn’t say… You folks are insane idiots for paying the prices for these worthless stocks.
Ya gotta know that’s what he was thinking, and wanted to say.SO… Just suppose, Bernanke calls Greenspan before his first speech and says, “UM,, Al,, How ya doin,, It’s Ben.
Ummm,, Do I tell those whackjobs in CA that they are being stupid paying that kind of money for stucco boxes ?”AL says, “Ben, are you kidding me? I shouldn’t be telling you this, but my blind trust is long all the home builders, it’s not too late to get in on the action” So Ben says,. “OH OH,, OK,, AL. thanks, got it. UMM can I utter ‘irrational exuberance’ ?”
Al says ” Ben, you’re a big boy, just keep talking and tell them that you will be monitoring the situation and will watch it closely,, and ALWAYS add ‘We are doing EVERYTHING that we can’ It’s a great line to use, people think that ya mean it. The longer you talk, the fewer people listen, and even less understand. Kudlow and Cramer will argue over each word later, DON’T WORRY”
Ben says “OK OK,, Thanks AL..”
Al says “Ben,, two more things, get in on those homebuilder stocks, I’m telling you, It’s not too late”
Ben “OK AL. what’s the 2nd thing”Al says “Oh ya..if that Maria from CNBC asks for an interview, do it Ben, she’s a cutie”
ParticipantCMB,
This is all in fun. It’s a BEARISH site!Let’s get past that and admit that anyone with an understanding of market forces and the emotions of fear and greed absolutely KNEW that this local property market was going to crash. The older you are, the easier it is to understand my statement.
We’re here sharing opinions and ideas about the way we think. If someone wants to post relevant FACTS and figures that support bullishness, they are welcome to.
The problem is, their AREN’T any bullish signs.
It’s not a matter of doomsday, it’s a matter of being realistic and understanding what is going on and how to be positioned defensively to the best of your ability to survive hard times.Saying that they aren’t making any more land AND everybody wants to live here is poppycock.
It’s not all doom and gloom. I can tell you with absolute certainty the following things:
a)This country is going to have a major depression that will make 1930’s look like it was booming.
b) The stock market will crash and millions of people will be devastated psychologically and financially.
c)Terrorism will continue and a huge attack on US soil will occur.
d) A major earthquake is going to happen in CA
e) A high ranking politician will be caught in a major lie
f) A CEO will go to jail for corporate fraud
g) Interest rates will change
h) The cost to mail a letter will go up
i) The Rolling Stones will stop touringI just cannot tell you WHEN any of the above things will happen………..
I am pretty sure of the following also:
1) Paris Hilton isn’t going to graduate college with an MBA
2) Oprah is not going to be on welfare
3) McDonalds isn’t going out of buisness
4) Shania Twain isn’t going to move in with me
5) The internet isn’t going away
6) People aren’t going to stop dying
7) The weather is San Diego is good year round
(That’s why EVERYBODY wants to live here)
8) Disneyland isn’t closing down
9) There won’t be peace in the middle eastAs far as you wanting “short plays” do you want exact addresses or will neighborhoods and zip codes do ?
OR
Are you trying to turn this into a stock market site so that you can tell us how well your returns have been and you are bullish cuz you have made a few bucks on paper in a few years ?? (That are still subject to losses)I’m guessing that your are under 40, and possibly under 30 and think that you know it all about long term investing and trends and economics.
I already know that there are others that post on this site that could chew you up in minutes. They have forgotten things that you will never know or understand.
Feel free to correct anything that I an incorrect about, I will humbly correct my post, gladly.
When I was younger, I was also brash and thought I knew it all.
When I was 20 my mother told me that I had all the answers, but she also said that I wouldn’t know the questions until I was at least 30. She was right.September 19, 2007 at 12:57 PM in reply to: House Approves Plan to Help Struggling Homeowners Avoid Foreclosure #85206ParticipantEx-SD…
You wouldn’t be saying this JUST so YOU can buy back in at 50% of what you sold at would you 😉“You are 100% correct that the housing market simply needs to correct itself”
Take 100 upside homeowners at random and ask them:
A) How about we foreclose on your house, drop your credit score a bit, let you walk away with no 1099 debt relief consequence, you go rent for a few years while the PIGG’s folks straighten this mess out FOR YOU, You save up a few bucks, and you can buy a similar house back and owe half as much money as you do today, after saving a whole bunch by renting….Then you will owe $300K instead of $600K
OR
B) How about we figure out a way that you can continue to pay interest on a $600K house that’s really worth about $300K,
that you don’t have any equity in today anyway, and we don’t really know what the heck we are talking about, (cuz if we did you wouldn’t be in this mess) but hopefully in a few years this mess will sort itself out. C'[mon, it’s an election year and WE WANT TO HELP. You will continue to be strapped, and will still owe about $600K in a few years, but the good part is, YA don’t have to move. Your credit score is probably crappy right about now anyway. So we are going to help you, just like we are helping those poor folks in New Orleans who live in a punchbowl……Ummmmm, which one is REALLY better for the homeowner…
A or B ??? ???September 19, 2007 at 10:41 AM in reply to: House Approves Plan to Help Struggling Homeowners Avoid Foreclosure #85193ParticipantI dunno lookout….
There is a HUGE attempt to confuse the general population about what is happening, on the pretext of saving the little guy. If they do raise limits, it’s a #@(&^$! BAILOUT that will be at taxpayer’s expense….Haven’t heard it called “amnesty” but in many cases the foreclosure decision was helped by the fact that the borrower owes more on the house than it is worth, can’t sell it for what they owe, better to walk away anyway.
What is the lender going to do with it ?, other than sell it for a loss and spend a pile of money in the process.
Real etstate agents get commissions for selling foreclosures too.The govt AND lender would rather keep people buried in an overpriced home on the guise of “we want to help you” so keep paying your lender… (If the home was worth more, they wouldn’t be so willing to help) Call it amnesty, whatever, it sounds better than BAILOUT.
SO, raise the limits so they can keep a Californian buried and saddled with $600K worth of debt and interest payments, in a house with no equity. What exactly are you saving if you have Zero or negative equity ??
THE ANSWER is to allow foreclosures as necessary. We need a free market without intervention. Let the people who bought and couldn’t afford it know that it WASN’T an OK thing to do, and you aren’t going to get bailed out.
Let the prices fall until supply and demand kicks in, so those that KNEW they couldn’t afford to buy in the past and waited are rewarded with lower prices.
And if they REALLY wanted to help the buried homeowners , they would let the foreclosures happen, and the guy that owes $600K today can go rent for a few years, save up some money, and buy a house in the same neighborhood he has today (that he cannot afford today) for $300K and owe less at that time and still own a house. (probably wont save any money, that was humor)
Please tell me which is better for the govt protecting the system from collapsing… and which scenario is REALLY better for the borrower ?
The govt is (or should be) embarrassed, ashamed and scared, among other things.
The time for them to intervene isn’t in 2007, it was in 2002 when the 100% financing started.
THAT was the time for them to butt in and require a down payment.Even with cheap interest rates, I can assure you that market would have never exploded like it did.
There would be happy homeowners today and there would be lots of tenants for landlords just like it supposed to be.
ParticipantThanks temec,, I got your back too !~
I’m not sure that others disagree, some (still) just don’t understand.
When you have an ARM that is going to move 300 to 500 bps on the first adjustment, your rate is so obscene anyway.It’s usually not explained properly, but an ARM shouldn’t be intended as a long term loan. An adjustment during your fixed period isn’t going to happen, and most people should get out of them (if they can) at reset if they are keeping the property.
The indexes are sometimes AVERAGES or lagging so the 50 bps cut isn’t reflected in an index immediately.
The 10YR is UP 8 bps at the moment today.
30 YR fixed conforming loans are 5.875% at PAR today.There is historical and statiscal data from Federal Reserve
at this site http://www.federalreserve.gov/releases/h15/Current/Find an index that you like!! Daily updates are available.
If one reads their loan docs, a scary event is when the index that you are tied to no longer exists, and a replacement is used. (FNMA LIBOR no longer exists)
Looks like BBA LIBOR dropped 25 bps today.
ParticipantWhat do you think I’ve said earlier today!!
Many caps are at 2%, but 5% is possible.As far as ELOAN goes, do they charge extra for Title-Escrow etc ??
Any idea what it takes to qualify ??Most people haven’t got a clue what it takes, but always want to assume that they can get the best rate, only some qualify for the best rate and very few people have an 800 score.
At today’s rates, a Full Doc 30 YR Fixed loan up to $417K, with a credit score of 680+, and LTV of 80% or less for a purchase or no cash out refi (70% LTV for cash out) I can do at ZERO points at 6.25% IF THEY QUALIFY.
Title-Escrow & Lender Underwriting is about $2,000 more, so .50% would take care of it on a $400k loan.
The par rate today is 5.875%.Your 5YR ARM is way off though. PAR rate today is 5.75%, so a monthly interest only payment on $300k would be $1437
It hardly pays to get a 5 YR ARM today.Getting loans funded is all about knowing what you actually qualify for, not just looking for the lowest rate.
ParticipantUsing a debit card does absolutely nothing for your credit score, it doesn’t even show up on a credit report.
Can’t understand why anybody uses them.Using a credit card (getting rewards) and paying the bill in full each month costs you exactly the same as your debit card purchase, maybe even less if you pay debit transaction fees, AND will raise your credit score when used responsibly.
If you time it right, you can earn interest on the float for up to about 6 weeks too.The credit cards that I like are Southwest Airlines card for free airline trips, and a Norwegian Cruise Lines FREE card that gets you a $500 credit towards a cruise after spending around $17K.
In Temecula, Hwy 79 south exit, (Pechanga casino exit) right on the west side of Hwy 15, there is a SHELL gas station across from an ARCO.
SHELL is usually the same price or a penny less than ARCO, and accepts all credit cards. It’s the consistently the cheapest station that I know of.I never see many cars at the ARCO station.
ParticipantWhat many people do not know about an ARM is that the larger your margin is, the more your “loan salesperson” earned in commission. Margin is never zero at PAR, but there can be a wide spread.
The NEG AM loans are the worst piece of crap loan ever invented for the borrower. (Best EVER for the lender)
A 5% MARGIN is possible. They pay the highest commissions in the industry, which is the ONLY reason that many people have them and owe more on their loan today than they started with.
They were lied to about that low,low payment.Simply put, the lender rewards the “loan salesperson” for screwing the borrower. The worse the screw job, the higher commission gets paid. People have no idea.
I’ve seen many crazy loans that people are in because they went to a friend, neighbor, relative, etc. for a “free” loan.
I always tell people my fee, and give them an option of how it gets paid. I’m not looking to pocket a penny that they aren’t told about.
I’ve seen FREE cost people thousands of dollars. With friends like that, who need enemies ???
ParticipantCOOP,
Did you see my reply about this on page 2 of the 50pt Cut thread ??ParticipantWill someone who has an ARM PLEASE get out your loan docs and post what your index and margin are.
Then post what your current rate is and what your next reset cap is.I’d like to find someone who is going to actually benefit the way some of you think.
We will see what the 1 year LIBOR does in the next few days.
Some people have margins that are 3-6% OVER the index.
Their reset rate is STILL BELOW THIS.I think another thing that you might not realize is that some indexes are lagging averages, and slow moving indexes, and are not going to change 50 bps anytime soon.
There are some assumptions being made about ARMS that just aren’t true.
ANYBODY ??
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