[her2001]

Originally Posted by crystalblue

that would prevent many non-homeowners from ever buying a place in many of Americas larger cities.

in Cali, 20% of 600k is 120k, just for a downpayment

and if the avg family in Cali is making 100k a yr (to be very generous), then they could only afford a home for 300k tops.

not many of those left.

If they making 100K they can't afford a $600K home regardless of downpayment.

I have no problem with requiring 10-20% down.

I think some areas of Florida will start turning inventory in the next year or two. Not for a profit but we should see sales and maybe small growth.,

Other High Spec areas with huge inventories are gonna be in trouble for some time.

[mhoward48]

Originally Posted by Wild Style

^^

Well, it could always happen again IF the govt. does not prevent banks from offering exotic loans of any type to the public sector. It should be federal law that only 30 yr fixed loans are available. It should become law that at least 20% down is needed and the person(s) applying for the loan can not buy a house that is more than 2.5 to 3 times their annual income. That would stop this from ever happening again. I am sure there are SOME cases where it could be more beneficial to take out a exotic type loan. But the it isn't worth it considering what could happen again.

I agree with you. When we first bought our first home, we followed those exact same principles, you mentioned. We also followed it for every home we bought after that.

I do not know if it was a law or not, but it was suggested by the realtors, and mortgage lenders. We bought our first home in the 70's, and have used the same principle, for the next 4-5 homes we bought.

We have always used the 30 year fixed. That will help as far as getting an affordable loan for a home.

Yet, how they will lower the insurance and taxes is up to the government, and I sure hope they do something about that!

Best of luck all

[hiknapster]

Originally Posted by sunrico90

Will the current situation evolve in a way that might prevent the same cycle from taken place?

Do we need greater GOV involvement? Big brother looking out for our best interesr...http://bestsmileys.com/eyes/1.gif (broken link)

Excellent question.

The debate is raging on helping the folks that got in over their head and now are upside-down on their mortgages.

Should we assist these people?

And is it fair to the folks that didn't fall for the subprime loans? That didn't buy the theory that housing prices would just keep going up, up, up? That quietly sat by and saved their money?

[Mike1306]

News Flash!

Not every loan that is in trouble is a sub prime. Some people with fixed rate loans are being foreclosed.
Some people with ARM's are doing fine with them.

The problem was with the lenders not checking out the borrower better.

There have been 97% and 100% loans around for years. Just like anything else that becomes popular it got abused.

[hiknapster]

Originally Posted by Mike Peterson

News Flash!

Not every loan that is in trouble is a sub prime. Some people with fixed rate loans are being foreclosed.
Some people with ARM's are doing fine with them.

The problem was with the lenders not checking out the borrower better.

There have been 97% and 100% loans around for years. Just like anything else that becomes popular it got abused.

Right. Not a news flash. My first post in this thread touches on the fact that there are all sorts of people in trouble for all kinds of reasons.

I just don't think we should bail them out, and I'm not saying that you think that, too.

[Mike1306]

Originally Posted by hiknapster

Right. Not a news flash. My first post in this thread touches on the fact that there are all sorts of people in trouble for all kinds of reasons.

I just don't think we should bail them out, and I'm not saying that you think that, too.

There are some here that place all the blame on subprime loans and think they should be outlawed.

That is what I was replying to.

[SANDYHAIR]

There enough blame to go around . Lenders, Realtors and the Borrowers. But as far as helping them out I don't feel it's right .imho YOU SIGNED THE LOAN IF YOU DIDN'T UNDERSTAND YOUR LOAN YOU SHOULD NOT HAVE SIGNED . It's just not fair to the people who did the right thing. imho.

[Wild Style]

Originally Posted by Mike Peterson

There are some here that place all the blame on subprime loans and think they should be outlawed.

That is what I was replying to.

Actually sub prime is a small portion. The problem is not subprime, as has been stated millions of times before it is EXOTIC loans that are the problem. Anyone who does proper research will realize this. This same exact thing happened in the 90s with these funny loans, and it has happened again. Common sense says exotic loans are not the way to go. If you don't have the money to follow traditional 30 yr fixed then guess what? You don't need a home. There is no law of the universe that says everyone must own. Sure everyone would want a Ferrari or Benz if they could afford one but they can't, so guess what? They forgo it.

Here is a good article

link

We would not be where we are right now had it not been for exotic loans and thats a fact. Many economist predicted this was going to happened back in 2003. They all said these exotic loans were a bad idea. But thanks to Greenspan, banks and people with little understanding of economics/finance we are here now.

If I can find this article that interviewed the inventor of these exotic loans I will post it. Its a real eye opener.

[Mike1306]

Originally Posted by Wild Style

Actually sub prime is a small portion. The problem is not subprime, as has been stated millions of times before it is EXOTIC loans that are the problem. Anyone who does proper research will realize this. This same exact thing happened in the 90s with these funny loans, and it has happened again. Common sense says exotic loans are not the way to go. If you don't have the money to follow traditional 30 yr fixed then guess what? You don't need a home. There is no law of the universe that says everyone must own. Sure everyone would want a Ferrari or Benz if they could afford one but they can't, so guess what? They forgo it.

Here is a good article

link

We would not be where we are right now had it not been for exotic loans and thats a fact. Many economist predicted this was going to happened back in 2003. They all said these exotic loans were a bad idea. But thanks to Greenspan, banks and people with little understanding of economics/finance we are here now.

If I can find this article that interviewed the inventor of these exotic loans I will post it. Its a real eye opener.

I have an adjustable rate loan where I can choose to pay a minimum payment which is less than the interest, interest only, 30 yr amort. or 15 year amort.

Does this mean I could not afford the home? Absolutely not but my business does not provide a regular paycheck and the ability to pay a different amount each month is useful for me.

We are not talking about luxury items here so the Ferrari example just doesn't play. But if we take your thoughts out a little further, why not tell people that can not pay cash for their car that they need to walk or take the bus.

[hiknapster]

Originally Posted by Wild Style

If I can find this article that interviewed the inventor of these exotic loans I will post it. Its a real eye opener.

I would love to read that article. Thanks, Wild Style.