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I hope whatever reforms that are put in place are based on the actual causes of this financial collapse. Too many politicians aren't looking at the whole picture with this it seems.
That's funny. I mentioned on the Real Estate forum that buyers bid up houses for more than they were worth because of easy credit. But I was assured that I was mistaken and the houses were really worth these prices. Who to believe?
It was really a case of demand ;driven by easy credit IMO.When the goverrnment created fannie mae and mac the purpose was to give loans to borrowers that wth lower incomes. When some in the congress wanted toi audit them many that favoired those loans said no. Barney frank said if they get in trouble we can just bail them out. I don't thnik he invisioned the problem that could create.By the way it was McCain that was one that signed the alarm on this.Its also strange that they critize privatye CVEO's but they setup both so that the more laons they mnade and the better the books looked the more they made. Now rthey are look at the managers for fraud.
Well, I would think that it's our American ideal that we're better, smarter, entitled, and gosh darn it, it can't happen to us.
I deserve that 3000 sqft house for me and Toto. I deserve to put in all the upgrades; they'll appreciate, right? I work hard sitting behind my desk all day. I'm sure to be making tons more money in five years when my ARM adjusts. Lots of people get in over their heads, but their job isn't as secure as mine. But my two year old Lexus sure looks shabby in the driveway of my wonderful three story house, I should go ahead and upgrade. I deserve it, right? I work hard.
Sitting at the "bottom of the barrel", my husband and I have seen this coming for a while. The market is super-inflated, everything is bought on credit, and people are out of their minds. I blame it on individuals being stupid, feeling entitled, and relying on a bank to tell them when to stop spending. I learned to balance a checkbook in elementary school, now why can't they? Save, don't spend. Not that difficult. If we as a culture could get over our rampant materialism, I think we'd be doing much better.
I almost bought a house this year, until I realized A- we weren't going to be staying long enough to justify the expense, and B- housing prices are still dropping. The house we were going to put an offer for dropped from $107,000 to $97,000 when we were looking. I just checked on it today and it's down to $87,000. A nice house, great neighborhood, solid foundation, on a third of an acre, with only mild cosmetic repairs (wallpaper, new tiling). Its value only a few years ago was $160,000. It's an incredible steal. But I knew that it wasn't the right time, and I held back.
Now, you know the market is screwy when two college kids making just over $30,000 a year combined (albiet with great credit) can qualify for a $150,000 mortgage. I looked at the loan officer like he was nuts, and kindly asked him to reduce the amount by $50,000. And you know what? He did it! No twisting my arm, no forcing me to spend beyond my means. No one signed your death sentence..I mean mortgage...for you. It's all personal decisions, and the accountabilityb is just not there anymore.
Well, I would think that it's our American ideal that we're better, smarter, entitled, and gosh darn it, it can't happen to us.
I deserve that 3000 sqft house for me and Toto. I deserve to put in all the upgrades; they'll appreciate, right? I work hard sitting behind my desk all day. I'm sure to be making tons more money in five years when my ARM adjusts. Lots of people get in over their heads, but their job isn't as secure as mine. But my two year old Lexus sure looks shabby in the driveway of my wonderful three story house, I should go ahead and upgrade. I deserve it, right? I work hard.
Sitting at the "bottom of the barrel", my husband and I have seen this coming for a while. The market is super-inflated, everything is bought on credit, and people are out of their minds. I blame it on individuals being stupid, feeling entitled, and relying on a bank to tell them when to stop spending. I learned to balance a checkbook in elementary school, now why can't they? Save, don't spend. Not that difficult. If we as a culture could get over our rampant materialism, I think we'd be doing much better.
I almost bought a house this year, until I realized A- we weren't going to be staying long enough to justify the expense, and B- housing prices are still dropping. The house we were going to put an offer for dropped from $107,000 to $97,000 when we were looking. I just checked on it today and it's down to $87,000. A nice house, great neighborhood, solid foundation, on a third of an acre, with only mild cosmetic repairs (wallpaper, new tiling). Its value only a few years ago was $160,000. It's an incredible steal. But I knew that it wasn't the right time, and I held back.
Now, you know the market is screwy when two college kids making just over $30,000 a year combined (albiet with great credit) can qualify for a $150,000 mortgage. I looked at the loan officer like he was nuts, and kindly asked him to reduce the amount by $50,000. And you know what? He did it! No twisting my arm, no forcing me to spend beyond my means. No one signed your death sentence..I mean mortgage...for you. It's all personal decisions, and the accountabilityb is just not there anymore.
It's a good thing I'm a pessimist. I'd be thinking along these lines:
1. I have no way of knowing how much my pay will increase let alone if I'll still be working for this company in five years. No way am I getting an ARM.
2. If I get fired and, worse case scenario, can only find a job at McDonald's or some other retail outfit, I won't be able to make this monthly payment. Let me either pass on this house or come up with a bigger down payment so my McDonald's wage will cover everything comfortably.
3. I'm not upgrading anything unless not doing so presented a hazard. Any cosmetic projects would be tackled one at a time, as I had the cash to cover the cost.
4. My 10 year old car is plenty good enough. It still runs and I don't have any major issues. No way am I going to take equity out of my home or get a car loan or lease to have something shiny and new.
5. It looks like I won't have any cash left for emergencies after the down payment, closing, moving costs, and modest furnishings. I'll continue to live with roommates until I can establish a nice savings cushion.
6. I don't care if I'm later priced out of the housing market. There is no way these houses and condos are worth XXX $$$. No way am I buying into any of this. Let someone else over pay for this house/condo.
The way I see it, it was really brought upon by two main factors. The first being lenders who for whatever reason decided to give loans to more or less anyone regardless of their ability to pay it back at a later date. The second by the people taking out the loans whose combined actions managed to inflate local real estate markets to the point that false levels of appreciation began to feed upon itself.
Rising energy prices I see only as something compounding an emerging financial problem. And I blame real estate mostly due to the fact that it drives other behavior. Defaulting and walking away on loans leads to prices heading back towards their actual values, leading to people who decide to walk out on their own. The price adjustment was necessary but not without pain to anyone involved.
Edit: funny thing is, while I wrote this a commercial for a loan modification company came on
I believe the reason for the financial crisis/collapse is the games people have been playing with money. Futures, hedge funds, buying and selling non-existent and potential debt and profit...how long could this fake industry last before it fell apart? And it makes me mad, b/c these games they played in order to make money out of nothing cost the rest of us.
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