FDIC chairman to Mortgage Co.'s-Freeze ARM's! - Page 2 - Mercedes-Benz Forum

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post #11 of 60 (permalink) Old 10-05-2007, 08:50 PM
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I think you missed my point. My point is that what you describe is just as true of someone who lost their house to flooding that didn't make the news (or the government handouts). If we're going to help people out, we should do it responsibly, and equitably, not just wherever there's a media event or political photo-op.
I understood your point completely. Regional events, like floods or hurricanes or tornadoes do deserve more attention because the impact to the entire infrastructure exacerbates any personal grief.

And having dealt with the media, exactly where has there been a flood that didn't make the news or get the Pols involved?

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post #12 of 60 (permalink) Old 10-05-2007, 08:57 PM
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I understood your point completely. Regional events, like floods or hurricanes or tornadoes do deserve more attention because the impact to the entire infrastructure exacerbates any personal grief.
Then why the detailed depiction of personal grief? Anyway, the analogy with the mortgage markets is sound. People have lost their homes to foreclosures as long as there have been mortgages. So now some of them should be rescued at taxpayer expense because investors' money is at risk?

Not everyone should own a home. Only those who can afford it. Harsh? Why isn't the same true with an S600?

I remember my real-estate agent trying to talk me into buying a larger, more expensive house than I wanted. I guess his commission would be larger too But if I had overextended myself, would you give me some of your money to help make ends meet now? Oh thanks
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post #13 of 60 (permalink) Old 10-05-2007, 09:02 PM
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The financial sector should follow the housing sector, but it's retrenchment, hardly 'total collapse'. If you look at the stats, many housing metrics have returned to their levels of the 1990s. That's hardly a total collapse.

Priming the pump, while it rewards investors, merely delays and hence intensified the eventual reckoning. Our national debt overhang, both public and private, isn't going away until and unless we tighten our belts and begin to practice fiscal discipline. Throwing more 'money' at the problem actually makes things worse in the long run. You'll notice that internationally, the dollar has become a pariah. And you probably know why I put 'money' in quotes there.

Incidentally, I do not assume that the market is 'otherwise free'; it's clearly meddled with in all sorts of ways. Further, do not assume that I am opposed to government controls just because I think this latest move is unfortunate.
I see you point on retrenchment. But the Housing market has the highest number of houses on the market in history, the largest drop in median price ever and the mortgage industry [unless otherwise instructed] is going to dump nearly the same number again onto the market in the next six months to a year with foreclosures. So that takes it from a retrenchment [not a bad thing] to a true depressed market where thousands of empty houses set for months or years.

Further exacerbating the situation is that the financial sector is being required to tighten up credit requirements for mortgages which further hinders the sell of the glut. So you end up with
  • Surplus number of houses
  • Lower median cost
  • current ownership "upside down" as value drops
  • communities tax base drops as property values drop due to glut
  • communities tax base drops as new developments stop.
  • Record number of poor credit prospective buyers
  • Tighter credit requirements
  • Lower number of qualified buyers
  • Out of work construction worker while glut of houses is sold down

McBear,
Kentucky

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Last edited by mcbear; 10-05-2007 at 09:05 PM.
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post #14 of 60 (permalink) Old 10-05-2007, 09:04 PM
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But if I had overextended myself, would you give me some of your money to help make ends meet now? Oh thanks
Hell, mcbear won't even give me a work jumpsuit with my name embroidered in gold on the breast pocket.

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post #15 of 60 (permalink) Old 10-05-2007, 09:07 PM
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Priming the pump, while it rewards investors, merely delays and hence intensified the eventual reckoning. Our national debt overhang, both public and private, isn't going away until and unless we tighten our belts and begin to practice fiscal discipline. Throwing more 'money' at the problem actually makes things worse in the long run. You'll notice that internationally, the dollar has become a pariah. And you probably know why I put 'money' in quotes there.
With this I agree 100%.

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post #16 of 60 (permalink) Old 10-05-2007, 09:21 PM
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The figures you cite with regard to numbers of unsold homes are a tad misleading, because they are absolute numbers rather than percentages. Absolute numbers may readily show records because the absolute number of homes in existence is at a record high.

Meanwhile, though, I don't deny for a minute that real hardship is in store, both for communities and for individuals. The harsh fact is that prices have to adjust. If they don't you really will see large(r) numbers of unsold houses.

The financial shenanigans of the past few years have themselves greatly distorted the market; on that we definitely agree. But further (even responsive) distortions will cause us all to pay for inflated housing values either through deflated dollars, tax dollars, or (most likely) both. And unless you're prepared to pay that way indefinitely, and increasingly, there will be a reckoning. I'm frankly worried that the degree of denial abroad in our society will result in a collapse of our financial system far beyond what you have described.

BTW, I do hope you're not trying to sell your house just now. Because if you are, I'll bow gracefully out of this particular discussion
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post #17 of 60 (permalink) Old 10-05-2007, 09:25 PM
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Then why the detailed depiction of personal grief?

Because the details of the personal grief are exacerbated by the scale of the disaster, making the personal grief worse.

Anyway, the analogy with the mortgage markets is sound. People have lost their homes to foreclosures as long as there have been mortgages. So now some of them should be rescued at taxpayer expense because investors' money is at risk?

Five years ago when the SubPrime market really got started [remember the Ditech guy] there was a big concern that many companies were selling the lowball price of the intro rate and not the fine print of the future rates. There were accusations of false advertising, failure to disclose and so on. Our DoJ, more interested in other things blew it off. A bit later, as it was realized that no credit checks were done for many the Federal Banking Commission started in on the investigation that LENDERS were making paper [loans] selling them quickly, having those sold again and again to where the lender risk was near nonexistent [it seemed at the time]. Somewhere along the line that investigation went cold. I bet we could find out how if we checked with the Federal Election Commission donor records.

So this thing was allowed to just cook along for a few years with no real checks and balances until it reached a boil last years.

Now, one group seems to think that only the stupid homeowner who didn't read the fine print should be held responsible. Others see it as in institutional failure. Still others see it as Used Car Salesman in a Bank Suit. It is really all three. But the problem is there is a problem.

Yes folks have lost homes before. That happens. But this is not the same. And the scale means that more people will lose their homes than EVER. And that will have a long term direct impact on the Nation's Economy. So, do you lock their rates, which still means they have to pay their mortgages but the system loses some of the volatility it now has OR do you make them tough it out and let the system eat the volatility and risk much greater damage?


Not everyone should own a home. Only those who can afford it. Harsh? Why isn't the same true with an S600?

I remember my real-estate agent trying to talk me into buying a larger, more expensive house than I wanted. I guess his commission would be larger too But if I had overextended myself, would you give me some of your money to help make ends meet now? Oh thanks
I did the same with my mortgage. My agent took my income and my wife's income and said we can afford XXX,XXX house. I said "figure out what it is with 1 of the 2 only. She said "you can ONLY get 44% of the original number. That was the high target. Paid it off in 5 years.

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post #18 of 60 (permalink) Old 10-05-2007, 09:31 PM
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The figures you cite with regard to numbers of unsold homes are a tad misleading, because they are absolute numbers rather than percentages. Absolute numbers may readily show records because the absolute number of homes in existence is at a record high.

Meanwhile, though, I don't deny for a minute that real hardship is in store, both for communities and for individuals. The harsh fact is that prices have to adjust. If they don't you really will see large(r) numbers of unsold houses.

The financial shenanigans of the past few years have themselves greatly distorted the market; on that we definitely agree. But further (even responsive) distortions will cause us all to pay for inflated housing values either through deflated dollars, tax dollars, or (most likely) both. And unless you're prepared to pay that way indefinitely, and increasingly, there will be a reckoning. I'm frankly worried that the degree of denial abroad in our society will result in a collapse of our financial system far beyond what you have described.

BTW, I do hope you're not trying to sell your house just now. Because if you are, I'll bow gracefully out of this particular discussion
I have lived here for 18 years, with the exception of the need for a Big Assed garage, I will most likely die here. Now I just rent a 2500sqft storage building. Oops.

I have been a worry wart on this economy for the past six years. I watched too many friends tank out on the dot.com bust by being stupid. I have also helped too many of them bail out of the "I just need..." issues of life. I am very fiscally conservative so I tend to hate government intrusion but there are times that I know that a nudge is sometimes the lesser of two evils.

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post #19 of 60 (permalink) Old 10-05-2007, 09:35 PM
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And the top-performing market-timing newsletters are all bullish just now.
What do you make of that?

MarketWatch: Best newsletters also most bullish
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post #20 of 60 (permalink) Old 10-05-2007, 09:44 PM
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And the top-performing market-timing newsletters are all bullish just now.
What do you make of that?

MarketWatch: Best newsletters also most bullish
Short term , I believe they are right.
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