Mortgage Housing Crisis?

[Kiwon]

Look at a map of what supposedly started the recent financial meltdown - Mortgage Housing foreclosures.

http://www.usatoday.com/money/economy/housing/2009-01-14-foreclosure-record-filings_N.htm?loc=interstitialskip

The trouble is mainly in four states - Nevada, Arizona, Florida, California.

25 states have a 2008 foreclosure rate of less than 1% and a total of 42 states at less than 2%.

In a matter of weeks, the USA deficit has ballooned to astronomical proportions through bailout after bailout and as John Boehner says, "Suddenly, every rejected Democratic pork barrel project is being funded through the TARP program."

What is really going on?

[swede]

If the Democrats wanted to make up an evil plan, this would have been a good one: engineer a fatal flaw into the mortgage markets by legislating access to mortgage money without regard for risk, then have congress come to the rescue with gazillion dollar bailouts that entrench a new level of dependence upon government, and then use pork barrel spending to grow new tendrils of malignant government corruption into the states, cities and communities of the nation.

I almost have to respect them the way one respects Lex Luthor.

[texaspackerbacker]

This is what I've been saying all along!

And the total number, no way in hell it should have been enough to corrupt those clustered mortgage securities--which were cited as the excuse for the various lending institutions failing--and sucking up all that bailout money.

[Patler]

Look at a map of what supposedly started the recent financial meltdown - Mortgage Housing foreclosures.

http://www.usatoday.com/money/economy/housing/2009-01-14-foreclosure-record-filings_N.htm?loc=interstitialskip

The trouble is mainly in four states - Nevada, Arizona, Florida, California.

25 states have a 2008 foreclosure rate of less than 1% and a total of 42 states at less than 2%.

In a matter of weeks, the USA deficit has ballooned to astronomical proportions through bailout after bailout and as John Boehner says, "Suddenly, every rejected Democratic pork barrel project is being funded through the TARP program."

What is really going on?

While I agree with a lot of what I think is behind your post, I would also suggest that in looking at the foreclosure problem you have to look past the simple rate of foreclosures. Sure many states have low percentages, under 1%, the percentage of mortgages going into foreclosure will always be low.

To understand if there is a problem, I think you have to look at the percentage change. That does signify a problem at some level. E.g. - Vermont with only 137 foreclosures has a 372% increase. Some of the states have seen the change in percentage to be much, much higher. Interestingly, some of the "problem" states you mentioned are actually experiencing a change in the rate that is less significant than some of the "non-problem" states with overall rates less that 1%. The questions that we need to ask are, what is the magnitude of the problem, have we exceeded the necessary cure for the problem, and was a cure even needed? Would it simply have righted itself?

[Kiwon]

Look at a map of what supposedly started the recent financial meltdown - Mortgage Housing foreclosures.

http://www.usatoday.com/money/economy/housing/2009-01-14-foreclosure-record-filings_N.htm?loc=interstitialskip

The trouble is mainly in four states - Nevada, Arizona, Florida, California.

25 states have a 2008 foreclosure rate of less than 1% and a total of 42 states at less than 2%.

In a matter of weeks, the USA deficit has ballooned to astronomical proportions through bailout after bailout and as John Boehner says, "Suddenly, every rejected Democratic pork barrel project is being funded through the TARP program."

What is really going on?

While I agree with a lot of what I think is behind your post, I would also suggest that in looking at the foreclosure problem you have to look past the simple rate of foreclosures. Sure many states have low percentages, under 1%, the percentage of mortgages going into foreclosure will always be low.

To understand if there is a problem, I think you have to look at the percentage change. That does signify a problem at some level. E.g. - Vermont with only 137 foreclosures has a 372% increase. Some of the states have seen the change in percentage to be much, much higher. Interestingly, some of the "problem" states you mentioned are actually experiencing a change in the rate that is less significant than some of the "non-problem" states with overall rates less that 1%. The questions that we need to ask are, what is the magnitude of the problem, have we exceeded the necessary cure for the problem, and was a cure even needed? Would it simply have righted itself?

Of course, it would have righted itself. The free market always does. It's just that the prevailing philosophy is that people who are not financially prepared to be in a home deserve to be there. It's the new "economic justice."

The cause and "cure" has been exasperated and hindered through the government's interference. The Packers can change DC when the defense fails, but the government's approach is to let Matt Millen keep tinkering until he gets it right.

Misguided government policies created the problems and yet, in bizarro world, that somehow earns the same people the right to "fix" it.

You can kill a fly with a bazooka but why would you? In a similiar vein, why should Patler be penalized via taxes because banks and home buyers in Nevada screwed up?

In Washington, what is the power brokers' real end game?

[mraynrand]

In Washington, what is the power brokers' real end game?

http://www.karmasurfer.com/Bbc1984.jpg

http://www.sofacinema.co.uk/guardian/images/products/2/20072-large.jpg

[Patler]

The questions that we need to ask are, what is the magnitude of the problem, have we exceeded the necessary cure for the problem, and was a cure even needed? Would it simply have righted itself?

Of course, it would have righted itself. The free market always does. It's just that the prevailing philosophy is that people who are not financially prepared to be in a home deserve to be there. It's the new "economic justice."

The cause and "cure" has been exasperated and hindered through the government's interference. The Packers can change DC when the defense fails, but the government's approach is to let Matt Millen keep tinkering until he gets it right.

Misguided government policies created the problems and yet, in bizarro world, that somehow earns the same people the right to "fix" it.

You can kill a fly with a bazooka but why would you? In a similiar vein, why should Patler be penalized via taxes because banks and home buyers in Nevada screwed up?

In Washington, what is the power brokers' real end game?

It is always easy to say, don't tax, don't spend. The issues that I do not even pretend to understand, let alone have the answers for, surround the question of what the long and short term effects would be on the economy as a whole to let the problems right themselves.

I think everyone admits that the problems arose because of mistakes made in the past. The question then is to "cure" or not to "cure". Sick people can recover from some things on their own, without intervention, with some current inconvenience but no long term ill effect. For other illnesses, the long term and/or short term implications of allowing them to get better on their own can be bad. From still other things, they may never recover on their own, yet the cure may be relatively simple and quick.

I do not understand the malady of the economy well enough to even guess if a cure is unnecessary, merely helpful, essential, or perhaps even harmful.

[Kiwon]

But in regard to housing, I think you can understand that people should provide a reasonable downpayment and evidence of a certain level of income before they receive a housing loan from a bank.

The TARP funds so far have not done anything to unclog the system of "toxic mortgages" (its original purpose), have in several instances been diverted to pork projects, and worst of all, have been distributed without any comprehensive accounting of where its going.

$825,000,000,000 and apparently more to come.

Remember the inflation of the mid-70's? Guess what, it's coming again.

[Patler]

But in regard to housing, I think you can understand that people should provide a reasonable downpayment and evidence of a certain level of income before they receive a housing loan from a bank.


No one, least of all me, is disputing that. That is not the problem we are dealing with now. That is what caused the current problem. We can't go back and change what already happened. I think, but I don't know for sure, that qualifying standards have changed for future mortgages.

[Patler]

The TARP funds so far have not done anything to unclog the system of "toxic mortgages" (its original purpose), have in several instances been diverted to pork projects, and worst of all, have been distributed without any comprehensive accounting of where its going.

$825,000,000,000 and apparently more to come.

Remember the inflation of the mid-70's? Guess what, it's coming again.

I don't know if the TARP funds have done anything or not, because as you correctly state there has been a woeful lack of accounting. Could be that in some instances it has gone were intended.

I sincerely doubt we will see the economy of the 1970s again. At least I sure hope not. I think there are more controls in place (and available) to prevent it. The real wild card I think is the global economy. I'm no economist, and I don't follow the economies in foreign countries other than casually, but the current situation has some peculiar aspects to it, both in the states and worldwide. There are possibilities that no one country can control its own inflation with any certainty in view of the global economic situation.

...and all because my neighbor couldn't afford his mortgage. Who would have thought...??? :wink:

[Kiwon]

...and all because my neighbor couldn't afford his mortgage. Who would have thought...??? :wink:

That's the most disconcerting of all. People did warn about the problems at Fannie and Freddie, but it was ignored (by Democrats, of course :wink: ).

And then the solution..... no one, none of these so-called "experts," knows what's going on. And then in knee-jerk fashion, the public gives a Fed chairman the power of a king just because he demands it.

I hope that you will have a talk with your neighbor and encourage him to be more responsible in the future.

[Tyrone Bigguns]

...and all because my neighbor couldn't afford his mortgage. Who would have thought...??? :wink:

That's the most disconcerting of all. People did warn about the problems at Fannie and Freddie, but it was ignored (by Democrats, of course :wink: ).

And then the solution..... no one, none of these so-called "experts," knows what's going on. And then in knee-jerk fashion, the public gives a Fed chairman the power of a king just because he demands it.

I hope that you will have a talk with your neighbor and encourage him to be more responsible in the future.

The public gave the Fed chairman the power? LOL

Way to exonerate Bush.

[Kiwon]

The public gave the Fed chairman the power? LOL

Way to exonerate Bush.

Or the banking queen Barney Frank and his boyfriend at Freddie Mac.

[Tyrone Bigguns]

The public gave the Fed chairman the power? LOL

Way to exonerate Bush.

Or the banking queen Barney Frank and his boyfriend at Freddie Mac.

Barney Frank gave the Fed the power? LOL

The mortgatge crisis wasn't caused by Freddie Mac. Sorry, but that has been debunked long ago.

Sure, it had nothing to do with lax regulations. :oops:

The major banking deregulation act of the last 20 years was Gramm-Leach-Bliley... funny that it was written by McCain's financial advisor Phil Gramm following $300 million of lobbying by the banking industry.

And, i'm sure that RR sacking Volcker had nothing to do with it. :roll:

Hmm, and I'm sure that Bush's appointment of Mr. Pitt..former counsel to the Big 4 accounting firms...to chairman of the SEC had no impact...sure, a "kinder SEC" was just what we needed.

Translation to Lawyers, accountants and CEO's...reach for that dubious tax-avoidance loophole, and the IRS will not mind. Conceal losses and exaggerate profits by various off-balance-sheet devices that violate strict accounting rules legislated in the years before Bush.

Why don't you do some research and find out what NOBEL PRIZE WINNING ECONOMIST Paul Samuelson has to say about the problems. But, i guess he knows less that Rush/Hannity and the rest of the conservative media.

And, i guess new investment strats like tranches had nothing to do with it.

And, i guess subprime loans to unqualified applicants had nothing to do with it.

I live in a blighted area..and I have more firsthand knowledge about than you can even imagine. I guess those NoDoc loans was a liberal idea. :roll:

And, i guess deceptive practices had nothing to with it.

I guess that noted liberal rag, BusinessWeek had it all wrong when they reported that Bush, etc. were warned but ignored the warnings.

http://www.businessweek.com/magazine/content/08_42/b4104036827981.htm

[mraynrand]

The major banking deregulation act of the last 20 years was Gramm-Leach-Bliley... funny that it was written by McCain's financial advisor Phil Gramm following $300 million of lobbying by the banking industry.



88 Senators voted for it; signed into law by Bill Clinton.

[mraynrand]

The mortgatge crisis wasn't caused by Freddie Mac. Sorry, but that has been debunked long ago.

And, i guess subprime loans to unqualified applicants had nothing to do with it.

I live in a blighted area.

[Tyrone Bigguns]

The major banking deregulation act of the last 20 years was Gramm-Leach-Bliley... funny that it was written by McCain's financial advisor Phil Gramm following $300 million of lobbying by the banking industry.



88 Senators voted for it; signed into law by Bill Clinton.

And, that means what? That it didn't contribute.

Signed by Clinton...why that seems terrible. Why didn't our campassionate conservatives immediately go about repealing it.

[Tyrone Bigguns]

The mortgatge crisis wasn't caused by Freddie Mac. Sorry, but that has been debunked long ago.

And, i guess subprime loans to unqualified applicants had nothing to do with it.

I live in a blighted area.

And?

[Partial]

So I was discussing with a friend about how the united states is pretty much fucked. We don't produce any goods that are used world wide and the trade deficit is awful.

The national debt will is too big to ever be paid off.

Is life about to take a major change in the US? My buddy suspects we'll see huge reductions in extra cash/spending money as goods like food, clothing, etc soar in price as the dollar becomes weaker.

[SkinBasket]

So I was discussing with a friend about how the united states is pretty much fucked. We don't produce any goods that are used world wide and the trade deficit is awful.

The national debt will is too big to ever be paid off.

Is life about to take a major change in the US? My buddy suspects we'll see huge reductions in extra cash/spending money as goods like food, clothing, etc soar in price as the dollar becomes weaker.

Is this your buddy?

http://blogs.scripps.com/abil/mayo/Mel-Gibson---Mad-Max--C10104041.jpg

[texaspackerbacker]

You don't "pay off" the national debt, you extend it and extend it ad infinitum--like corporate leverage only more so.

As for the trade deficit and a lot of production moving overseas, I used to be concerned about that, but less so now. Our GDP is increasing faster than debt; We are not experiencing significant inflation; Therefore, the situation is under control even if more money flows out of the country than in. If this situation was going to do serious harm to America, it would have happened decades ago. The fact that our money is backed by government debt instruments--effectively making the trade deficit just a matter of printing more money--insulates us against any harmful effect. As long as inflation is held in check, that will continue to be the case.

I can just hear the gears grinding when Howard, Bobblehead, aynrand, etc. read this, but I challenge you to dispute it with real facts. If you don't think things are working just fine that way, explain where you see a problem and why.

[Kiwon]

First things first, read what Tex was saying 1.5 year ago. Oh boy... :)

Second, there is no end in sight in the mortgage crisis / Fannie and Freddie mess. Responsible taxpayers are getting screwed at every turn.

The government created the problem, they created an even worse solution, and now ordinary folks are incentivized to bail on their mortgages because they know that someone else will pick up the tab.

.................................................. ...........................................

Fannie and Freddie tab is $146B and rising

CASA GRANDE, Ariz. — Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year. They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle. The mortgage finance companies, created by Congress to help Americans buy homes, have become two of the nation’s largest landlords.

Bill Bridwell, a real estate agent in the desert south of Phoenix, is among the thousands of agents hired nationwide by the companies to sell those foreclosures, recouping some of the money that borrowers failed to repay. In a good week, he sells 20 homes and Fannie sends another 20 listings his way.

“We’re all working for the government now,” said Bridwell on a recent sun-baked morning, steering a Hummer through subdivisions laid out like circuit boards on the desert floor.

For all the focus on the historic federal rescue of the banking industry, it is the government’s decision to seize Fannie Mae and Freddie Mac in September 2008 that is likely to cost taxpayers the most money. So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office has predicted that the final bill could reach $389 billion.

http://www.stltoday.com/stltoday/news/stories.nsf/nation/story/E744C01438F6DB698625774700815937?OpenDocument

[Scott Campbell]

Well, at least they mean well.