[TheBreeze]

HLS,

Yes my original response was sarcastic. And you’ve laid out some decent reasons for stated income loans. However, in the grand scheme of things, stated needs to go away because it is too susceptible to fraud.

Also, I agree with you that a 30% LTV refi to a borrower with a 500 score is much less risky than any 100% LTV loan. I think the high LTV rates is what got us into this whole mess. If borrowers had to put 10% of their own money down on every mortgage, I doubt we would have seen this bubble reach the heights it did.

Unfortunately, the way the system works today (well, as of last Monday anyway), if a borrower can get a 100% LTV mortgage, there are no checks and balances to keep the “V” in “LTV” in check. Appraisers are pushed by everyone to make ridiculously high if not downright fraudulent appraisals, mortgage brokers are shooting themselves in the foot if they question the value of a home and will sometimes commit fraud on the borrower’s application just to make a sale, borrowers just want to get in the house, originators want to make as many loans as possible so that they will have more to quickly package and sell, the hedge funds buying these loans on the back end were borrowing from Citi, JP Morgan, Bear Stearns, and Goddam Sachs at 5% in order to purchase these mortgages that would supposedly yield 7% or greater.

Once the borrower was able to take his skin out of the game and get a 100%+ LTV loan, everyone else was using somebody else’s money and there was no incentive for any body to use common sense. Dang it all.

[TheBreeze]

My one reason? Well, they don’t call ’em liar loans for nothing. 😉 In any event, hopefully all of this stated income, no doc, 100% crud will go away here over the next few months and only those that can truly afford a home will be able to buy one. My guess is that the “stated” loans were used more by speculators to get into spec homes than it was by families looking to get into a home they couldn’t afford. It will be no great loss to society if these types of loans are banished forever.

[TheBreeze]

My one reason? Well, they don’t call ’em liar loans for nothing. 😉 In any event, hopefully all of this stated income, no doc, 100% crud will go away here over the next few months and only those that can truly afford a home will be able to buy one. My guess is that the “stated” loans were used more by speculators to get into spec homes than it was by families looking to get into a home they couldn’t afford. It will be no great loss to society if these types of loans are banished forever.

[TheBreeze]

HLS,

Would you put a wage earner into a stated loan? If so, why?
I can only think of one reason to do that.

[TheBreeze]

HLS,

Would you put a wage earner into a stated loan? If so, why?
I can only think of one reason to do that.

[TheBreeze]

but if the trend is towards millions of foreclosures over the next 6 months, that trend must be stopped and it must be stopped now.

Why must that trend be stopped? Do you think every American should have a house whether he can afford it or not? I say let this bubble pop and don’t try to prop it up. In my opinion, it will be much worse for the economy in the long-term if the fed tries to prop up this bubble. Let the millions of current home owners who never should have been in a home in the first place get foreclosed upon and go back to renting. That’s the way we should have been in the first place and I hope that’s where the market heads back to.

[TheBreeze]

but if the trend is towards millions of foreclosures over the next 6 months, that trend must be stopped and it must be stopped now.

Why must that trend be stopped? Do you think every American should have a house whether he can afford it or not? I say let this bubble pop and don’t try to prop it up. In my opinion, it will be much worse for the economy in the long-term if the fed tries to prop up this bubble. Let the millions of current home owners who never should have been in a home in the first place get foreclosed upon and go back to renting. That’s the way we should have been in the first place and I hope that’s where the market heads back to.

[TheBreeze]

How come he didn’t just ‘walk away’ from it? Was he personally liable on the loan?

[TheBreeze]

How come he didn’t just ‘walk away’ from it? Was he personally liable on the loan?

[TheBreeze]

To put the above comments from Cramer in perspective (which were made at 7 PM EDT today), here’s some of Cramer’s comments from 1 PM EDT today. These comments were made right before the market took a tumble:

“Tough to take us down. First, we know that the bulls go nuts in the last half hour.

…

Legg Mason (LM – commentary – Cramer’s Take – Rating) and Eastman Chemical (EMN – commentary – Cramer’s Take – Rating) rally on upgrades.

That doesn’t happen in a real bear market.

…

But forget all that. It’s the bull express that comes in at 3:30 p.m., in part because it’s so easy to transfer money from the now 4.72% 10-year — remember when it was supposed to go to 5.5%? You want to get caught up in this?

…

Oh, and don’t believe that the damaged companies don’t have ammo: Bear (BSC – commentary – Cramer’s Take – Rating) says things are great and solidly profitable and Beazer (BZH – commentary – Cramer’s Take – Rating) declares a dividend. (What a bunch of nuts — they bought back stock high and now they declare a dividend? Why not hoard it for even harder times?)

The bears never believed the last half-hour ramp on Fridays.

They still don’t.

But it happened.

By the way, people who were short in 1990 remember this exact same pattern. I used to go to Mrs. Cramer with my head in my hands, telling her how much I had lost on the short side in the last half hour of trading. Made it all back the next four days, of course — until we bottomed and it was time to go the other way.

But not before I made a huge amount of money the other four days of the week.

Takeaway: Don’t ignore the bull markets. Consider that the last half hour can easily ramp again.

Yet never take your eyes off these financials, and cover your shorts to put them out higher later on.”

So at 1:00 PM EDT we were in the midst of a roaring bull market with money being pulled out of treasuries and put in the stock market which suddenly switched at 7:00 PM EDT to a bear market in which money was flowing from everywhere into treasuries and major banks within days of failing if not rescued by the Fed.

I hope Bernanke doesn’t listen to this idiot. I will have a ton of respect for Bernanke if he just lets this whole thing play out on its own with the chips falling where they may. It’s not the Fed’s job to prop up bubble markets and they certainly shouldn’t be propping up this bubblicious housing market.

[TheBreeze]

To put the above comments from Cramer in perspective (which were made at 7 PM EDT today), here’s some of Cramer’s comments from 1 PM EDT today. These comments were made right before the market took a tumble:

“Tough to take us down. First, we know that the bulls go nuts in the last half hour.

…

Legg Mason (LM – commentary – Cramer’s Take – Rating) and Eastman Chemical (EMN – commentary – Cramer’s Take – Rating) rally on upgrades.

That doesn’t happen in a real bear market.

…

But forget all that. It’s the bull express that comes in at 3:30 p.m., in part because it’s so easy to transfer money from the now 4.72% 10-year — remember when it was supposed to go to 5.5%? You want to get caught up in this?

…

Oh, and don’t believe that the damaged companies don’t have ammo: Bear (BSC – commentary – Cramer’s Take – Rating) says things are great and solidly profitable and Beazer (BZH – commentary – Cramer’s Take – Rating) declares a dividend. (What a bunch of nuts — they bought back stock high and now they declare a dividend? Why not hoard it for even harder times?)

The bears never believed the last half-hour ramp on Fridays.

They still don’t.

But it happened.

By the way, people who were short in 1990 remember this exact same pattern. I used to go to Mrs. Cramer with my head in my hands, telling her how much I had lost on the short side in the last half hour of trading. Made it all back the next four days, of course — until we bottomed and it was time to go the other way.

But not before I made a huge amount of money the other four days of the week.

Takeaway: Don’t ignore the bull markets. Consider that the last half hour can easily ramp again.

Yet never take your eyes off these financials, and cover your shorts to put them out higher later on.”

So at 1:00 PM EDT we were in the midst of a roaring bull market with money being pulled out of treasuries and put in the stock market which suddenly switched at 7:00 PM EDT to a bear market in which money was flowing from everywhere into treasuries and major banks within days of failing if not rescued by the Fed.

I hope Bernanke doesn’t listen to this idiot. I will have a ton of respect for Bernanke if he just lets this whole thing play out on its own with the chips falling where they may. It’s not the Fed’s job to prop up bubble markets and they certainly shouldn’t be propping up this bubblicious housing market.

[TheBreeze]

Good lord. The Dow futures are down 170 points already! Anyone who is long this market is going to get destroyed tomorrow. Bring on the carnage, I say! We need to get home prices and stock prices back down to reasonable prices that make some sense.

[TheBreeze]

Good lord. The Dow futures are down 170 points already! Anyone who is long this market is going to get destroyed tomorrow. Bring on the carnage, I say! We need to get home prices and stock prices back down to reasonable prices that make some sense.

[TheBreeze]

The following quote comes from a Christian Science Monitor story:

‘To be eligible for this visa, applicants must have been “illegally present within the US before January 1, 2007.”‘

I wonder if that sub-quote is actual text from the bill. I’ve heard these Z visas discussed on TV, but it didn’t hit me how outrageous these things are until I read this actual text. So our Congresspeoples are prepared to give people permanent residency in the U.S. just because they managed to get here illegally? That is outrageous. I hope this bill meets a swift death.

[TheBreeze]

The following quote comes from a Christian Science Monitor story:

‘To be eligible for this visa, applicants must have been “illegally present within the US before January 1, 2007.”‘

I wonder if that sub-quote is actual text from the bill. I’ve heard these Z visas discussed on TV, but it didn’t hit me how outrageous these things are until I read this actual text. So our Congresspeoples are prepared to give people permanent residency in the U.S. just because they managed to get here illegally? That is outrageous. I hope this bill meets a swift death.

[Author]

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