$700 B Bailout

[firstdown]

Originally Posted by FRPLG

Honestly there are a lot of smart people who can't figure this out. I think if it was easy to figure out it wouldn't have happened.

Right now, in whatever form, the bailout has like a 50-50 shot at righting this stuff at best anways.

That is why it is taking so long. Neither side wants to ram a proposal down not because they want to be seen as working together but more importantly they want to CYA. They both want to be able to say the other side voted for this thing too if it doesn't work.

It not at hard to figure out. Too many people had loans which they should not have ever had and they could not afford them. When the housing market was doing so great people with mortgage issues or payments too high could just sell their home at a profit and walk away. Now when the sh&* hits the fan they cannot sell their home in a soft market and the trouble begins. Back before the mid 90's about the only way people lost their homes was do to a loss of a job. Now days people are just loosing their homes and still have the same income as they did when they purchased them. Now its going to get much tougher to buy a home and hopefully we do not repeat this again.

[mheisig]

Originally Posted by firstdown

It not at hard to figure out. Too many people had loans which they should not have ever had and they could not afford them. When the housing market was doing so great people with mortgage issues or payments too high could just sell their home at a profit and walk away. Now when the sh&* hits the fan they cannot sell their home in a soft market and the trouble begins. Back before the mid 90's about the only way people lost their homes was do to a loss of a job. Now days people are just loosing their homes and still have the same income as they did when they purchased them. Now its going to get much tougher to buy a home and hopefully we do not repeat this again.

Exactly.

The pattern for decades has been you may a substantial down payment on a house (20% at least). Generations before us you waited to buy a house and you put a big chunk down. All of a sudden people get greedy, want more house than they can afford, and we end up with shit like 5/1 ARMs and interest-only mortgages. People somehow feel entitled to the house of their dreams at the age of 25 and figure, "Screw down payments, screw paying the principle and all that, this is the NEW generation! We're living the American dream!"

If people weren't so damned greedy and impatient (the lenders and the borrowers) we wouldn't be in this mess.

1) Don't buy more house than you can afford.
2) That means that you can afford the house now AND 5 years from now.

[FRPLG]

I meant how to fic it and prevent it recently. The underlying causation for this goes back to the late 70's. Right now cause doesn't mean much though.

[SmootSmack]

It's hard for people not to get upset when they read something like this

FOXNews.com - WaMu Gives New CEO Mega Payout as Bank Fails - Local News | News Articles | National News | US News

[Sheriff Gonna Getcha]

Originally Posted by SmootSmack

It's hard for people not to get upset when they read something like this

FOXNews.com - WaMu Gives New CEO Mega Payout as Bank Fails - Local News | News Articles | National News | US News

It is certainly understandable why people would get upset with that story. It's really tragic that some are making millions while others are losing their jobs, watching the value of their pensions plummet, and losing their homes.

But, keep in mind that WaMu's new CEO had nothing to do with the bank's failure. Moreover, "golden parachutes" aren't as crazy as they sound. Suppose CEO X has a proven track record of turning around struggling businesses, makes $5,000,000 per year at his current job, and has great job security. He's probably a very hot commodity and will not leave his job unless he's paid handsomely and is given some job security (i.e., guaranteed money). That guaranteed money is typically payable if his employment is terminated for no fault of his own and is forfeited for certain bad conduct (e.g., fraud). It's a form of job security and isn't much different from an NFL signing bonus, except it's paid at the end of the employment instead of at the beginning.

Basically, it does suck, but it makes sense.

[SmootSmack]

Originally Posted by Sheriff Gonna Getcha

It is certainly understandable why people would get upset with that story. It's really tragic that some are making millions while others are losing their jobs, watching the value of their pensions plummet, and losing their homes.

But, keep in mind that WaMu's new CEO had nothing to do with the bank's failure. Moreover, "golden parachutes" aren't as crazy as they sound. Suppose CEO X has a proven track record of turning around struggling businesses, makes $5,000,000 per year at his current job, and has great job security. He's probably a very hot commodity and will not leave his job unless he's paid handsomely and is given some job security (i.e., guaranteed money). That guaranteed money is typically payable if his employment is terminated for no fault of his own and is forfeited for certain bad conduct (e.g., fraud). It's a form of job security and isn't much different from an NFL signing bonus, except it's paid at the end of the employment instead of at the beginning.

Basically, it does suck, but it makes sense.

I understand. I was just saying that if someone were to just pick up the paper (or I guess log onto the Internet) today and see this-and only this-it would enrage them.

[djnemo65]

Originally Posted by firstdown

It not at hard to figure out. Too many people had loans which they should not have ever had and they could not afford them. When the housing market was doing so great people with mortgage issues or payments too high could just sell their home at a profit and walk away. Now when the sh&* hits the fan they cannot sell their home in a soft market and the trouble begins. Back before the mid 90's about the only way people lost their homes was do to a loss of a job. Now days people are just loosing their homes and still have the same income as they did when they purchased them. Now its going to get much tougher to buy a home and hopefully we do not repeat this again.

Sorry First, you are behind on this. What you are describing is the collapse of the US housing market, which is only the first part of the story. The bailout does not purport to address this, which is a major reason why the public is not supporting it. How we went from a correction in an overvalued US housing market to the potential collapse of the global economy is a bit more complicated than you are allowing.

[firstdown]

Originally Posted by djnemo65

Sorry First, you are behind on this. What you are describing is the collapse of the US housing market, which is only the first part of the story. The bailout does not purport to address this, which is a major reason why the public is not supporting it. How we went from a correction in an overvalued US housing market to the potential collapse of the global economy is a bit more complicated than you are allowing.

I was not talking about the bail out. Someone asked how the whole mess got started and that how it got started. Yes there is more to the whole story but thats how it started.

[redsk1]

Originally Posted by mheisig

Exactly.

The pattern for decades has been you may a substantial down payment on a house (20% at least). Generations before us you waited to buy a house and you put a big chunk down. All of a sudden people get greedy, want more house than they can afford, and we end up with shit like 5/1 ARMs and interest-only mortgages. People somehow feel entitled to the house of their dreams at the age of 25 and figure, "Screw down payments, screw paying the principle and all that, this is the NEW generation! We're living the American dream!"

If people weren't so damned greedy and impatient (the lenders and the borrowers) we wouldn't be in this mess.

1) Don't buy more house than you can afford.
2) That means that you can afford the house now AND 5 years from now.

I understand what you're saying but what's wrong w/ a 5/1 Arm?

I think what you mean is Option Interest Only ARMs. Big difference.

[redsk1]

Pelosi should be ashamed at throwing POLITICS into whether this bill should be passed or not. She was quoted in her speech. Not the right time or place. Regardless, if you think it should or shouldn't be passed let's talk about why and why not rather than who's fault it is.

REP. NANCY PELOSI, (D-CA), HOUSE SPEAKER: For too long this government, for eight years has followed a right wing ideology of anything goes, no supervision, no discipline, no regulation.

[Sheriff Gonna Getcha]

Originally Posted by redsk1

Pelosi should be ashamed at throwing POLITICS into whether this bill should be passed or not. She was quoted in her speech. Not the right time or place. Regardless, if you think it should or shouldn't be passed let's talk about why and why not rather than who's fault it is.

REP. NANCY PELOSI, (D-CA), HOUSE SPEAKER: For too long this government, for eight years has followed a right wing ideology of anything goes, no supervision, no discipline, no regulation.

I agree that Pelosi's comments were ill-timed. However, the Republicans who supposedly switched their votes should be even more ashamed. Essentially, they concluded the package was in the best interests of the economy and our country, but they decided to say "f' the best interests of our country," I want to get back at Pelosi.

[hesscl34]

Originally Posted by mheisig

Exactly.

The pattern for decades has been you may a substantial down payment on a house (20% at least). Generations before us you waited to buy a house and you put a big chunk down. All of a sudden people get greedy, want more house than they can afford, and we end up with shit like 5/1 ARMs and interest-only mortgages. People somehow feel entitled to the house of their dreams at the age of 25 and figure, "Screw down payments, screw paying the principle and all that, this is the NEW generation! We're living the American dream!"

If people weren't so damned greedy and impatient (the lenders and the borrowers) we wouldn't be in this mess.

1) Don't buy more house than you can afford.
2) That means that you can afford the house now AND 5 years from now.

Sorry, it's not the "people" that created these loans and sold them to the buyers telling them "I'll get you into a house no matter what". You want to blame someone?.. then you blame the banks and loan processors. They should go to jail for giving people those options and letting them believe they could afford it. Most home buyers are clueless when it comes to the loan process. They depend solely on their real-estate agent and loan processor for advice. They took the "good faith" out of the estimate and just made it bullshit.

[SmootSmack]

People who bit off more than they can chew essentially shouldn't simply completely be absolved of blame here.

[saden1]

Assuming you own your own home I am curious as to how many people in here actually read their loan documents in their entirety before they signed them?

[Slingin Sammy 33]

Originally Posted by saden1

Assuming you own your own home I am curious as to how many people in here actually read their loan documents in their entirety before they signed them?

I didn't read every last document to the letter, but I reviewed the settlement documents and loan repayment schedule and fees in detail on every home transaction I've done. I've never gone for an ARM, only 30 year fixed rate mortgages.

If you're making a six figure financial decision it's definitely your responsibility to understand what's going on or get an independent attorney to review and explain the documents to you.

This financial crisis is about much, much more than the 5% or so of mortgages that are defaulting. There is plenty of blame to go around on both sides of the aisle and from Wall Street to Main St. We all share in some of the blame here. It's just an egregious shame that Congress can't get a package together to stem the crisis.