Some Editorial Cartoons Are Tooooooo Accurate!

[tt11758]

Yep.....you get what you pay for.....

Sadly, WE get what they pay for, too.

[PegLeg45]

Sadly, WE get what they pay for, too.

Yep.   

[billt]

The idea behind government low income home loans (which were not the driving force behind the crash, though they didn't help), was to remove urban blight, and improve income levels and cut government dependence. The idea is this. By helping turn a neighborhood of renters into one made up in large part of homeowners, you give people an investment and sense of ownerhip of the place.

FQ13

They were the exact cause of the "crash". They didn't "own" a damn thing because they had no money. The problem with that type of thinking is it parallels the nonsense Bill Clinton spewed with his, "Everyone has a RIGHT to own a home!", nonsense. That is total B.S. You have a "right" to only what you can afford. What happened with the housing market is you took a bunch of basically broke people with low to middle income paying jobs and not much else, and shoved them into a home they in fact overpaid for, because enough of them were doing it to artificially inflate the market. These same people in fact owned nothing. They came into this "investment" with zero down, and as a result had no financial stake in this "investment" what so ever. They knew they would not be able to afford the payments in 5 years. They didn't care because each and every single one of them were stupid enough to think the housing market would never have a downside. And if it did, so what? They couldn't get hurt because they didn't have a single dime of their own money "invested".

This entire debacle was based on the bigger idiot theory. In a normal real estate market you will always have a certain percentage of the people in it who will try to over borrow. Normally they are held in check by the banks and lending institutions who will refuse them the loan simply because they don't have enough income or down payment to support it, should the market take a turn for the worse. In this case the banks and lending institutions became the "bigger idiot's" by lending these nit wits the money because they themselves were sucked into this belief the market was never going to subside. What did these morons think, the price of an average home would be $1,200,000.00 in ten years?

Financial analysts are predicting there will be at least another 1.5 to over 3 MILLION foreclosures in the upcoming year, (2011). This is based on these same idiot's who bought right at the top, 5 years ago. Most all of their mortgages are set to "adjust" next year. This means that 1.) They can stay in the home and make the extremely high "adjusted" payment, (which they cannot afford), or 2.) Sell, (Which they cannot do because they won't be able to pay off half of the note.), or 3.) Which is to refinance, (Which they cannot do because no one is going to write a note for over twice what their house is worth.) Their last option which is no option at all is to walk away, which is exactly what they will all do. This is going to cause at least another 15% deflation in the residential real estate market nationwide. Some predict this could go another 20+% in the tank.

All of this was caused by idiot's who were allowed to borrow too much money which in turn allowed them to be a part of a market they had absolutely zero business being involved with in the first place. This is the same thing which contributed to the Stock Market's demise in 1929. You had another bunch of idiot's in that market who were wildly speculating on stocks with only 5% of the money they were trading with. After the market dropped just 5%, they were wiped out, and had no money left to make their margin calls. The result was total collapse, just the same as you're now seeing with real estate. This is always the result when people make purchases with more paper than they can afford. The end result is cheap real estate with very few buyers with enough money to purchase it. Those who have the money and time will become wealthy. When that happens the idiot's, (read Democrats) will bitch and moan how "unfair the system is". You cannot create wealth with a printing press. This simple concept has yet to be grasped by the democratic party in this country, let alone our communist President. They are simply too stupid to understand simple Capitalism, or else refuse to understand it because they don't like it.  Bill T.

[MikeBjerum]

billt is exactly correct!

It was the low income loans and the idea that "everyone should own their own home" that put homes in the hands of people that could not afford to buy them, did not have the knowledge or skills to maintain them, and knew nothing more than $X per month for housing and no other expenses.  This camel was so overloaded that it could have broken its back on a good day.

The next thing that happened was that these people with minimal income and skills became "experts in high finance," and they were suckers for the home equity market.  Right after jumping into a home that it is questionable if they should have owned in the first place, they were making financial deals that were based on paper gains - gains that disappeared as quickly as they appeared.

[PegLeg45]

Bill, that's about as spot-on as I've heard it put.

[Sponsor]

[Solus]

There were a lot of speculators involved in the crash also.

You didn't  have to be "poor" to take advantage of the loan "bargains".   

Folks with some cash would purchase 3 or 4 or 5 homes on speculation, thinking they could maintain the payments and sell the houses for the increased equity if the rates got to high. 

This cause an "apparent"  demand for housing which caused increased prices and over building by contractors.

When it came time to sell, there were no buyers, especially at the inflated prices.  Builders who responded to that demand were stuck with houses also. 

With a glut of houses for sale, prices plummeted while  outstanding loan balance did not.   

With raising interest, everyone was holding houses that they could not afford and with very few buyers, and those buyers unable to get loans even at the drastically reduced prices due to the cash crisis of the lenders.

[billt]

Just to give you an example of how stupidly these lending institutions were operating during that period. The girl who cuts my hair is in her early 30's, a single mom, and owns the salon she operates out of. She has a lot on the ball, works long hours, saves her money, and is doing alright financially. She already owned a home, and had a fair amount of equity in it.

She, like many during that time, thought she would, "look around at what's out there". The first place she walked into "Pre Approved" her for a $375,000.00 loan! She told me they didn't want to see her books, bank accounts, tax returns, a pay stub, NOTHING. She promptly told them there was no way she could possibly afford a payment on a loan that size. They replied she had nothing to worry about. They told her she "couldn't get hurt" because even with zero down the payment would be "very affordable" the first 5 years, and after that she could simply cash out the equity through sale, or "simply refinance".

She told them her intention was not to put zero down, but rather sell her current home, (the market was so hot at the time houses were selling within hours after being placed on the market), and use that equity toward the new place. The lender advised her against it saying, "Why would you want to tie up your money instead of ours?!" Needless to say she wisely stayed put. This is the degree of financial insanity that these fools were operating on. These are the same idiot's that Barney Frank said were, "doing a fine job" running Freddie and Fannie who insure these type of loans just before the bottom fell out.

We haven't even scratched the surface as to the amount of damage that has been done as a result of all of this moronic financial behaviour. With yet another 3 MILLION mortgages set to tank in the upcoming year, it will be the final Coup De Gras on an economy that is actually far worse than the Great Depression, simply because most of it is still being masked by loans to people without the means to pay it back as the economy worsens, jobs disappear, and it all compounds. All of this is having a ripple effect throughout the bowels of our economy. Most of it will take decades to repair, if in fact it even can be. One thing is for certain. Every day Hussein and the democrats remain in power, is a day wasted as far as any "recovery" is concerned. This President in charge of our economy is worse than an alcoholic in charge of a liquor distributorship.  Bill T.  

[jaybet]

Another factor that contributed VERY heavily to the problem is that in many, many cases the lenders held absolutely NO responsibility for the loans they made. They would make a loan like you guys describe, then two months later Countrywide or GMAC owns it, then someone else owned it, then it went off into some pool of loan excrement they created. No accountability for that bad loan.
Mortgage companies should maintain at least partial responsibility for every loan they write. Things would change.

[billt]

It was not at all uncommon 20 years ago for a bank or loan company to insist on at least a 20% down payment before they would even talk to you about any type of home mortgage. And you better have that 20% without the liability of a ton of other debt like car payments and credit cards. Then the subject of income along with length of time at your job would come up. Then the amount of children you had, and were financially responsible for was discussed. If at any time you stepped over the financial boundaries of what that company set forth, no loan, period.

All of this was circumvented in this entire housing fiasco. This whole mess became so politically correct in trying to place these worthless minorities into homes they had no business in, these questions were not even asked. Many loan companies were under direct government pressure to make loans to financially unstable minorities in accordance with the, "Everyone has a right to own a home as part of the American dream", bantering. They should have kept dreaming instead of lending to these deadbeats. Hussein will no doubt choose to do what he has in the past. Inflate the currency to pay off these toxic debts to try and make all of this go away as quietly as possible, so as to not make the liberal democrats look any more stupid then they are for pushing such a suicidal financial position. With an economy stretched to the limit with worthless wars that are costing us billions of dollars every month we waste on Middle East soil, and a $13+ Trillion dollar debt. The straw that breaks the Camels back just became a 10 ton boulder.   Bill T.

[JC5123]

Help me if I am wrong here, but I heard a bit on the news the other day about a memo being leaked. If I understand this right Obama wants to forgive the loans for people who are underwater. Meaning if you owe more than your house is worth, you just get let off the hook. (some fees and conditions may apply) So, again we are rewarding stupidity, and reckless behavior.

Would this be considered a form of class warfare? I mean, if you were stupid, and bought a house that was more than you could afford, and no it's underwater, you get forgiven. Basically a clean slate. Of course if you did it right, and put money down, and have paid on your loan, now paying a mortgage on a house that is still (barely) worth what you paid, you're S.O.L.

I know I would be looking at a few of my neighbors and wondering..... Not to mention fuming.