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Old 06-26-2013, 02:14 PM
 
127 posts, read 219,461 times
Reputation: 138

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deja vu? greed they say causes amnesia and history repeats itself

Rising Mortgage Rates Cause 'Rush to ARMs'

These ARMs, many requiring interest payments only, were popular during the latest housing boom but quickly fell out of favor when safer, fixed-rate loan rates fell to record lows.


And ridiculously stupid naive people believe the "buy now or be forever priced out" tripe:

"I'm afraid we're going to miss the boat," said Alicia Diederichs. "I feel like we might get priced out of the market in a few months, and just depending on the mortgage payment whether we could afford it if the interest rates go up more."

"Ideally we would do a 30-year fixed, but it's all going to be dependent on the end mortgage payment, what we can afford, so we would have to look at an ARM potentially if rates continue to rise," she said.

There should be a limit to stupidity, I mean...how incredibly stupid are these people? If interest rates are rising long term then an ARM is the LAST thing you should buy. Let me guess...they think home prices are going to rise to oblivion so they can refinance when their ARM resets? Oh yes, didn't we just test that philosophy en masse and endure a huge crash as a result of that kind of thinking?
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Old 06-27-2013, 12:36 PM
 
48,508 posts, read 88,644,248 times
Reputation: 18188
These types have always been available its just that not many had use for it and thus rejected. Variable rate loans are the norm in many European countries and fix rate like our 30 year are not available at all. The reality is that government guaranteed loans are now being considered for elimination. Another proposal is tightening under writing with a 10% equity or higher in down payment. What is aimed at is having the borrower have more equity and take larger loss if they walkout and not having government or taxpayer suffer losses like they have with Fannie and Freddie. It wasn't just ARM loans that caused the housing crash problems. Housing has got to be like banks. Not too big to fail that means taxpyers take over the loss and that includes all loan that are government backed.
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Old 06-29-2013, 09:15 PM
 
4,797 posts, read 11,221,266 times
Reputation: 8360
Quote:
Originally Posted by johnmanners View Post
deja vu? greed they say causes amnesia and history repeats itself

Rising Mortgage Rates Cause 'Rush to ARMs'

These ARMs, many requiring interest payments only, were popular during the latest housing boom but quickly fell out of favor when safer, fixed-rate loan rates fell to record lows.


And ridiculously stupid naive people believe the "buy now or be forever priced out" tripe:

"I'm afraid we're going to miss the boat," said Alicia Diederichs. "I feel like we might get priced out of the market in a few months, and just depending on the mortgage payment whether we could afford it if the interest rates go up more."

"Ideally we would do a 30-year fixed, but it's all going to be dependent on the end mortgage payment, what we can afford, so we would have to look at an ARM potentially if rates continue to rise," she said.

There should be a limit to stupidity, I mean...how incredibly stupid are these people? If interest rates are rising long term then an ARM is the LAST thing you should buy. Let me guess...they think home prices are going to rise to oblivion so they can refinance when their ARM resets? Oh yes, didn't we just test that philosophy en masse and endure a huge crash as a result of that kind of thinking?
Not to worry, Ben Bernacke says there is no housing bubble.

Bernanke: There's No Housing Bubble to Go Bust

Oh wait, that was 2005.

Well, surely it couldn't happen again. Our government leaders are too bright for that.
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Old 06-30-2013, 02:27 AM
 
4,570 posts, read 3,227,864 times
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Back in 1992 when I bought a new home at 8%, I remember thinking how stupid my neighbor was for taking out an ARM around 6%. His rate went nowhere but down. Meanwhile I paid to refi twice.

Still, now would seem the wrong time to take out an ARM. Unless you plan on moving before the rate resets.
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Old 06-30-2013, 08:20 AM
 
1,924 posts, read 2,113,519 times
Reputation: 1252
Quote:
Originally Posted by kanhawk View Post
Not to worry, Ben Bernacke says there is no housing bubble.
He's right. And he was right in 2005. It's a shame that so many know so little about such recent history. How are you going to keep from repeating it if you don't actually know what happened?
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Old 06-30-2013, 08:48 AM
Status: "Enjoying the winter" (set 29 days ago)
 
Location: East of Seattle since 1992, originally from SF Bay Area
34,109 posts, read 62,032,232 times
Reputation: 38035
When used properly, these loans have their purpose, but they depend on continued property value increases. With the home prices going up 22% over the last year (here) there's a good chance of building great equity in 5-7 years. Most people move withing that time, so would never have to face that huge increase in payment amount. History does repeat if the current trend doesn't last that long and prices start to fall again, so their payments go up on a home not worth what they owe. It's a gamble for sure, but many people think "let's get the house now and worry about that when the time comes." I think the next repeat of the home loan crisis will be more limited geographically, with some areas suffering but others unaffected.

The other difference is that people getting these ARMs are now having to really qualify for them, while before, mortage brokers pushed them through with questionable or even fake documentation.
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Old 06-30-2013, 10:19 AM
 
1,924 posts, read 2,113,519 times
Reputation: 1252
It would be nice if this crackdown were focused on the abusive products and outlandish lending and securitization practices that led to the original credit crisis. But they are instead applied across the board. This is helpful in some ways, but not such a good thing overall.
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Old 07-01-2013, 10:35 AM
 
7,281 posts, read 9,635,461 times
Reputation: 11460
So what is the big deal? If you are buying or considering buying and have enough downpayment, get the best deals you can on interest, fee and price.

Let the idiots that buy with low qualifications figure out their own lives.

If you buy with a good downpayment and a secure income source with a plan for bad times, what is the problem? House prices go up, they go down. Wait enough time and what went up will go down and vice versa.
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Old 07-01-2013, 05:00 PM
 
Location: 3rd Rock fts
749 posts, read 1,006,145 times
Reputation: 304
Default TAG: subliminal colluding

Quote:
Originally Posted by oaktonite
It would be nice if this crackdown were focused on the abusive products and outlandish lending and securitization practices that led to the original credit crisis. But they are instead applied across the board. This is helpful in some ways, but not such a good thing overall.
It's hypocrisy if the lying homeowner/borrower--whom signed on the dotted line--doesn't suffer a similar faith as the lenders.
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Old 07-01-2013, 07:52 PM
 
1,924 posts, read 2,113,519 times
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Quote:
Originally Posted by DSOs View Post
It's hypocrisy if the lying homeowner/borrower--whom signed on the dotted line--doesn't suffer a similar faith as the lenders.
Read some history. First figure out what portion of the market was actually refi's and equity lines. That's homeowners selling all or part of their homes to themselves, typically because of the significant gains in cashflow that could be realized by doing so. How much lying do you figure that group was doing? Then learn how the loans that actually failed were typically written into subprime and nearby markets between 2002 and 2006 (especially 2005-06) by unscrupulous high-pressure private brokers who packed them with high-cost, high-profit terms but with ever worse and eventually all but nonexistent underwriting for immediate sale and securitization into secondary markets though the newly expanded, no-standards chop-shops that Wall Street had built out specifically for the purpose of slicing and dicing all that stuff off to institutional investors starved for yield. It wasn't lying homeowners, but rampant credit-market abuse and unchecked cowboy capitalism that caused the roof to cave in.
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