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these people that you are describing are not smart, rather they are unethical. shame on all the people who tell others to ignore the law for their own benefit. we are headed to a societal breakdown and people are urging others on! just because one group engages in bad behavior, that does not mean that everyone should engage in bad behavior. the idea rather should be to PUNISH bad behavior. instead we have, "let the illegals in, let people not pay, let the government keep bailing out the irresponsible and the predatory", etc. it means nothing to have money in the bank if the money has become worthless. if we don't start acting responsibly as a society, our money will be worthless and that is about the only thing you can bank on.
now our government needs a bailout and is going to ask healthy banks to give them money. when does this stop?
fiat currency is 100% based on trust! this will not end well!
Strategically not paying a mortgage is unethical. Selling loans under the barrier of a large corporation that are clearly not going to be repaid and giving money to people that can't pay it back is pretty unethical too, especially if they contain confusing terms that aren't clearly understood by the consumer. Refusing to kick people out of their houses because banks don't want to eat the write downs (and purposely inflate their company's valuation/stock price) is pretty unethical too.
Ethics is a two way street. It's not exactly reasonable to expect consumers to follow ethical standards when the companies lending the money aren't following ethical standards. People aren't taking responsibility for their actions by not paying their mortgage. On the other hand, banks aren't taking responsibility for their actions by letting people live in houses because they don't want to eat costly write downs and deflate their stock price.
Strategically not paying a mortgage is unethical. Selling loans under the barrier of a large corporation that are clearly not going to be repaid and giving money to people that can't pay it back is pretty unethical too, especially if they contain confusing terms that aren't clearly understood by the consumer. Refusing to kick people out of their houses because banks don't want to eat the write downs (and purposely inflate their company's valuation/stock price) is pretty unethical too.
Ethics is a two way street. It's not exactly reasonable to expect consumers to follow ethical standards when the companies lending the money aren't following ethical standards. People aren't taking responsibility for their actions by not paying their mortgage. On the other hand, banks aren't taking responsibility for their actions by letting people live in houses because they don't want to eat costly write downs and deflate their stock price.
Its largely driven by practicality over ethics. The loans that shouldn't have been were just pure greed. But if your the guy at the bank who has to make the decisions on who to forclose on, if you know someone is living there and its not degrading, why rock the boat? Its greed on greed. The guy is essencially an unpaid caretaker. If the banks had to take all the houses they forclosed on and had to maintain them as a few cities have legally began to insist they'd be ready to sell at bargain basements.
Everyone is taking advantage of how things are. The bank knows the resident is keeping the house with a value, the resident who is living there sans payment knows the bank isn't in any hurry. Since there will be more homes in default before there are fewer that year is very possible.
I read about a new quick and dirty way of getting income property. Find out what houses sold at auction have people living there and maintaining them. Buy cheap, and go to the door, offer instead of making them move a very liveable rent and instant income property and tenant who wants to stay with nothing spend but a cheap sale price.
Strategically not paying a mortgage is unethical. Selling loans under the barrier of a large corporation that are clearly not going to be repaid and giving money to people that can't pay it back is pretty unethical too, especially if they contain confusing terms that aren't clearly understood by the consumer. Refusing to kick people out of their houses because banks don't want to eat the write downs (and purposely inflate their company's valuation/stock price) is pretty unethical too.
Ethics is a two way street. It's not exactly reasonable to expect consumers to follow ethical standards when the companies lending the money aren't following ethical standards. People aren't taking responsibility for their actions by not paying their mortgage. On the other hand, banks aren't taking responsibility for their actions by letting people live in houses because they don't want to eat costly write downs and deflate their stock price.
let's analyze this!
the government bailed out the companies that sold the unethically repackaged loans, so do we not follow any government laws because the government behaved irresponsibly? maybe we should all not pay taxes because the government behaved badly? at what point do we address the issue of personal responsibility?
besides, the homeowner issue has actually morphed from people who were (in their own minds) "swindled" by the bankers to the fact that delinquencies are rising due to general economic conditions, i.e., loss of jobs / loss of hours. are those people going to be able to say, "i lost my job because my unscrupulous employer laid me off so therefore i will not pay"? the newer delinquences are related to loss of employment. besides, the already modified loans are still defaulting! do you see how bad behavior ALWAYS has unintended consequences! the government bailing out the bad bankers / wall streeters amplified this ugly snowball which is not going to end anytime soon. people have to start behaving in an ethical way if they don't want to see a whole system meltdown.
the root of all of this trouble is the federal reserve and that is why they need to be audited and the fraud needs to be exposed!
Last edited by floridasandy; 09-23-2009 at 05:42 AM..
i found an excellent post today from denninger on bernanke and the federal reserve which is, in part:
Now Bernanke is waving his arms around screaming "look over there!" in a desperate attempt to avoid admission of the facts:
THE PAST
He said that "house price appreciation reflects strong economic fundamentals", when that was a lie. House price appreciation was a speculative asset bubble that he and Greenspan intentionally created.
He said that "subprime was contained" even though it was blatantly obvious that literally millions of fraudulent mortgages had been handed out- fraudulent lending that The Fed was responsible for intentionally refusing to regulate.
He said "there will be no recession" even though the ultimate collapse of the subprime and ALT-A housing bubble was mathematically assured at the time he made the statement.
Now he claims that "the banking system has been stabilized" when in fact all that has happened is that the banks have continued to lie. What, for example, is Wells Fargo's exposure to CDS that Wachovia wrote ON THEIR OWN CREDIT RISK IN PICK-A-PAY OPTION MORTGAGES, a blatantly outrageous "self-insurance" deal that is currently being carried OFF BALANCE SHEET TO HIDE THE LIABILITY?
The Fed is allegedly the regulator charged with preventing predation by lenders and financial institutions toward citizens yet they allowed and still allow the banking industry to re-order transactions and not call overdraft coverage "a loan" in order to avoid state usury laws as well as truth-in-lending disclosures that would show the actual effective interest rate on such "loans" was in excess of 1,000%!
Despite all these pronouncements and claims that "they've saved the world" the facts are exactly the opposite:
THE PRESENT
The bad debt remains in the system and there is effectively no forward credit demand. All sectors of credit demand are either flat or shrinking except federal government issuance (which Bernanke is monetizing in a desperate attempt to prevent market prices from coming to the forefront.) The credit intermediation system remains hopelessly clogged - there is essentially no securitization issuance going on in other than government-backed sectors, as the duped simply refuse to buy (and get screwed) a second time.
The entire rally off the March lows has been driven by blatant monetization of government and GSE debt. You can even find exact "pumps" in the stock market that are correlated nearly to the minute with the release of the Fed "POMO" monetization activities.
The banks have not been forced to disclose their actual marks against these "assets" nor their valuation methodologies. We know for a fact they are playing games because in places like California as much as 90% of the foreclosure "auction" properties are pulled by the banks within a day or so of the purported auction - yet they remain in inventory, and when banks blow up there are "magic" 30, 40, 50 or even 60% losses in asset classes they hold that suddenly appear on their balance sheets that were not there just a day before. Colonial is a prime (but hardly the only) example, where a blended 37% loss "suddenly" appeared out of nowhere - for a bank that was at its last quarterly report considered "well-capitalized."
Sales tax receipts continue to crater, freight volumes are in the toilet, international container shipping prices are for all intents and purposes flat on their back, car sales following CFC's expiration have collapsed (now indicated at under 9m units/year) and despite a claim that we lost only 200,000ish jobs last month the Household Survey showed nearly a million more people in total out of work last month - when one counts those who gave up! NONE of these "high frequency" indicators have turned around in the economy - all indicate further economic deterioration, NOT RESUMPTION OF GROWTH.
I wonder if Congress will (if they haven't already - I don't think they have) pass legislation that would prevent unethical behavior among real estate professionals, much like they have with accountants and auditors. It appears like people in real estate sales and lending are still doing everything they can to bend the ethics and rules in order to make a MASSIVE profit. I know that salespeople need to sell in order to make a living, but this is getting out of control. My idea: eliminate all commissions from banking and real estate sales and replace it with a reasonable salary, implement legislation similar to Sarbanes-Oxley for real estate professionals, and ban all variable-rate mortgages. Will it fix all our ills? No, but it's a start.
people have to start behaving in an ethical way if they don't want to see a whole system meltdown.
Terrific post! This particular line^^ is what I'm worried about to be honest. I'm worried our country could end up going through some REALLY tough times.
Consider that we have a government itself that is irresponsible and unethical. FHA that is trying to reflate a housing bubble by cheap lending practices that got us into the problem in the first place, by printing money and STEALING value from those who have responsibly and through sacrifice saved for a rainy day. If the government is exhibiting this behavior what can we expect of the general populace?
this bank bailout / hiding of toxic assets did nothing to actually solve the housing problem, and just embedded it further into the system, leaving the government open to insolvency instead of some banks.
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Homeowners in financial trouble often redefault
