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| Facts leading up to the housing bubble that broke our economy; "Just the facts ma'am just the facts" | |
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| Tweet Topic Started: Dec 21 2013, 04:04 AM (1,981 Views) | |
| Neutral | Dec 22 2013, 12:35 AM Post #51 |
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Fire & Ice Senior Diplomat
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Stay low info, who cares. |
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| Mountainrivers | Dec 22 2013, 01:33 AM Post #52 |
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Fire & Ice Senior Diplomat
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You should be able to prove your position easily enough, if you're right. So, show us that anything you've said is based in fact. |
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| Sea Dog | Dec 22 2013, 01:39 AM Post #53 |
Fire & Ice Senior Diplomat
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I assume that would be borrowers approached the bank, or did the banks send out gangs to retrieve them off the streets? If I borrow more than I can repay, I believe it is my fault, not that of any lending institution. |
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| Mountainrivers | Dec 22 2013, 01:48 AM Post #54 |
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Fire & Ice Senior Diplomat
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You still don't get it do you? Despite all the evidence that's been presented. You sound like Berton and Neut. |
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| Neutral | Dec 22 2013, 02:50 AM Post #55 |
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Fire & Ice Senior Diplomat
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The borrowers were too blame but they knew they could qualify, if they had been intelligent they would not have been in that position to start with in most cases. |
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| Sea Dog | Dec 22 2013, 04:06 AM Post #56 |
Fire & Ice Senior Diplomat
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Being able to qualify, and able to repay, are two entirely different things. Most people should know the difference! |
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| Mountainrivers | Dec 22 2013, 04:36 AM Post #57 |
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Fire & Ice Senior Diplomat
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I'll try one more time to explain this to you and if you still don't get it, then you'll just have to believe whatever you choose to believe. Here's the way it worked: You hear that housing prices are going up rapidly and you would like to own your home. You call a realtor, who comes to your home and tells you that you can qualify for a loan of X dollars based on your income and expenses. The realtor takes you to look at houses, you find one you like and make an offer. The seller accepts your offer and the contract is signed. You are now out of the loop until closing most likely. The realtor orders an appraisal, the appraiser says the house is worth what you offered, whether it is or not. The realtor then takes the contract to a loan originator who offers it to a bank.. The banker says okay, offers you a very low introductory rate, with an escalation clause after a certain period of time and your house will appreciate at a 10% rate each year, so if something happens and you can't make the payments, you can refi at a lower rate and payment. The bank doesn't require a down payment or verification of your income. Why? Because the bank is going to sell your mortgage to someone else and become un -responsible for it. How does the bank do that? They package your loan with a bunch of others called a CDO or collateralized debt obligation, goes to AIG and applies for insurance in case you default. AIG, is an insurance company, but it is regulated which requires that it keep reserves sufficient to cover potential losses, so it can't issue an insurance policy, so it issues something called a credit default swap, which doesn't require reserves for losses and isn‘t regulated. The bank then takes this package of loans and sells it to a hedge fund or other large investor, which thinks it is insured, and even if it isn't, the bank is too big to fail, so it will be bailed out by the government. When the bubble burst, the investors made claims against AIG, which, because it didn't have reserves, couldn't pay up. This put both AIG and the banks in financial peril. The government concluded that failure of those institutions would be catastrophic for the economy and bailed them out. So, you see everyone in that chain was responsible for the debacle, from the buyer to the "insurers". Most people couldn't have dreamed up a scheme like that, so putting the blame only on the buyer is false. |
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| Sea Dog | Dec 22 2013, 04:41 AM Post #58 |
Fire & Ice Senior Diplomat
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I was a licensed real estate salesman during the early seventies. Appraisals were done by an agent of the lending institution. At that time, thirteen percent was the going mortgage rate. I never sold a house that was lost to foreclosure. Of course, I also never tried to sell someone a house that they could not possibly afford! |
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| Mountainrivers | Dec 22 2013, 04:50 AM Post #59 |
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Fire & Ice Senior Diplomat
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"I never sold a house that was lost to foreclosure." Now how could you possibly know that unless you only sold to your immediate family and friends? " I also never tried to sell someone a house that they could not possibly afford! " That was not the case here. Realtors would sell to anybody the bank would approve and still will. The banks wanted to make those loans because they could make a quick buck and be relieved of any responsibility so the appraiser would appraise the house for whatever the sales price was. The banks also didn't require employment, income verification or credit worthiness. It was a scheme, plain and simple and the taxpayers lost. |
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| Sea Dog | Dec 22 2013, 04:59 AM Post #60 |
Fire & Ice Senior Diplomat
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"Now how could you possibly know that unless you only sold to your immediate family and friends?' Foreclosures on homes is very rare here. Also, many of the buyers that I sold to, still live in the home. |
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