My favorite Obama ad. I especially like where McCain talks about supporting Bush more than many other GOP senators.
Of course, that was a figure of speech not meant to be taken literally. Go here... lots of Trailblazers, Durangos, and Xterras under $20k, but you can't get a Prius for under $27k. http://www.hertzmedford.com/ (Plus no sales tax if you buy in OR)
You're wrong again. The reason why ARMS existed and other similar mortgage instruments is the belief that skyrocketing home values would persist indefinitely. Got a big balloon payment coming up? Then simply sell your house which has tripled in value in two years or refinance your mortgage. It's the only situation in which they would ever make any economic sense - and the reason why they exist. Your inital statement "The housing crisis had NOTHING to do with housing prices" is laughably dumb. Unless you meant "EVERYTHING" by NOTHING.
People don't like to pay notes on houses that that are valued a lot less than their mortgage. There is a tendency to walk away from their houses. Also people may need to sell their houses because they need to move because of their job or changed circumstances and they can't sell due to they owe more than the house is worth. They have to walk away.
You might think that, and it would tend to make sense. This, of course, ignores the fact that people just want to keep their home. Out of the Chapter 13 cases to stop a foreclosure, the overwhelming majority (of the ones I have seen) are underwater. Are you for real? Sure, the belief that home prices would increase, or at the worst remain constant made the noteholder more willing to enter into the deal, the ARMs were devised for one reason...to write more notes. To create more business. To develop a larger loan portfolio for the purposes of selling them off. People buying these homes, to the extent that they were informed of the note terms, were hedging their bets that interest rates would decrease or remain constant. They lost...big. What a lot of people did not take into account is that the first rate adjustment would be at least 1% even if rates went down an entire point (most of these are based on 3 or 6 month LIBOR). You think the analysis is laughable? Fine. Don't listen at all to the guy who has spent the last 6 years representing debtors and mortgage servicers. I guess experience just doesn't hold a candle to the guy who sits there attempting to become an oil trading mogul and insult people under a thinly veiled guise of waxing prophetic on the internet.
I will not listen to you. I've listened to a lot more knowledgeable people on this. From the macro level to the micro level - pretty much everybody agrees that the rise and fall of housing prices is the root cause of the current conundrum (..conversely once the housing market recovers, the current downturn will begin to end). I don't need to be a mogul to know that a statement that "the housing crisis has nothing to do with falling home prices" when every single knowledgeable person on earth knows otherwise is just plain ridiculous. It's like saying that "Falling Tulip prices have NOTHING to do with the Dutch Tulip Bubble!" - in other words it's wrong.
That's funny. No really, that is actually funny. The beginning of the problem, and what caused home prices to decline, was a higher default rate which led to more foreclosures. Once the increased foreclosures started to hit hard, home prices began to fall. Servicers started realizing far less at sale. Losses deepened. People stopped being able to sell their home at anything other than a short sale. Foreclosures climbed again. Home prices continued to fall. The fall in home prices was a reaction to the increased foreclosure rate caused by the inability of homeowners to pay increased principal and interest payments at the time of adjustment. You are suggesting that the default rate had nothing to do with causing the crisis. That is funny beyond belief. You further suggest that once prices rebound that the crisis will end. That is hilarious. That will not cause people to have an increased capacity to pay higher adjusted payments. It will not create more performing mortgages. Until fewer mortgages end in foreclosure, this problem will be there. You seem to (without outright saying it) ignore the fact that regardless of the existence of equity, people want to keep their home and will pay the mortgage if able to do so. To suggest that this crisis would have happened without the spike in mortgage defaults by homeowners is absurdly funny.
but if the home prices increase foreclosures will not make banks assets worthless like they are doing now.
It's not nearly this simple. Here's a study on the issue: http://money.howstuffworks.com/personal-finance/real-estate/number-one-reason-for-foreclosure1.htm Foreclosure Factors: Subprime Mortgages or Home Values? Some snippets: Yet a 2007 study released by the Federal Reserve Bank of Boston indicates that home values might be a bigger factor than how the home was purchased. For one, the study noted that many people who defaulted on a subprime mortgage initially financed their mortgage with a prime mortgage. The study then turned to home values, finding that homeowners who suffered a loss in home value of 20 percent or greater were about 14 times more likely to go into foreclosure than those who had a 20 percent increase in the value of their home. The Boston Reserve, then, attributed the dramatic rise in Massachusetts foreclosures in 2006 and 2007 to a decline in home prices that began in 2005 [source: Gerardi, Shapiro, Willen]. The study suggests that while subprime lending played a role in foreclosure, the driving factor was not an outrageous reset payment. It was losing equity in the home, so that the value of the home was less than the amount owed on it. ... Midwestern states such as Ohio and Michigan, hard hit by the foreclosure crisis, don't have a relatively high number of subprime mortgages. What they do have is a large number of lost jobs. More than 340,000 jobs in Michigan and 200,000 jobs in Ohio have been cut since 2001 [source: Associated Press]. So economic performance of an area ranks as one of the driving forces of foreclosure, alongside declining home values and subprime mortgages. Countrywide Financial, the largest mortgage company in the country, also cites economic performance as a cause of foreclosures. In 2007, Countrywide released its findings on the main reasons for foreclosure, which was reported in about 80 percent of the cases. Countrywide attributed "curtailment of income" as the primary factor 58 percent of the time. This far exceeds some of the other reasons: * Illness or medical reasons made up 13 percent of foreclosures. * Divorce came in at 8 percent. * An inability to sell the house clocked in at 6 percent. Surprisingly, payment adjustment on a mortgage was given as a reason only 1.4 percent of the time [source: Countrywide Financial]. We might expect this rate to be higher if subprime mortgages with adjustable rates were the number one reason for foreclosure. ... As you can see, there's unfortunately no magic bullet that can predict foreclosure; these reasons are intertwined in complicated ways. Before you know it, you might be grappling with more than one factor. For example, being stuck with both a subprime mortgage and hefty medical bills may lead you with nowhere to turn, especially as the value in your home continues to drop.
Foreclosure almost always results in a loss to the lienholder. This is more true since the advent of the 80/20 loan as a way to get around the need for PMI. The fact that foreclosures occur at auction make it so that a property that has no equity at inception results in a loss at sale unless the loan had been performing for a length of time sufficient to generate a significant reduction in the principal balance. Keep in mind also that once the sale is complete, any outstanding property taxes (with penalties, if any) must be paid prior to the first lienholder to apply any money to the balance of the loan. If you are a junior lienholder, you are screwed, plain and simple.
This is very interesting to me, especially because most of the loans I have seen (both representing debtors and creditors) have had varying amounts of negative equity. Most of them are underwater.
Yes I do. "Andy Warhol said we all get our 15 minutes of fame," says Barack Obama. "I've already had an hour and a half. I mean, I'm so overexposed, I'm making Paris Hilton look like a recluse."
No...I'm not suggesting that at all. If I were the type like say....you.....who would make a blanket declaration that a collapse in home prices has "NOTHING" to do with the current housing crisis....I'd come out and suggest that, or just say it. But I didn't, did I? Really? Because pretty much every credible economic forecast that I have seen indicates that a bottoming out of the real estate market and eventual rebound is going to be necessary for any sort of recovery. Every single one. PLease show me an alternative one that you are using which indicates that home prices can stagnate and the economy will rebound in spite of such. No I'm not saying any of the kind. I'm just laughing at your statement that housing prices have nothing to do with the housing crisis. LIke I said earlier - if by nothing, you mean everything, then you're right. I didn't suggest that, Chief Jay Strongnuts. But hey if that's what you want to believe in order to salvage some e-pride, then by all means....be my guest.
