Here comes the Alt-A crisis (income tax, investment, second mortgage, fees)

[goodbyehollywood]

Originally Posted by Humboldt1

How much further will the upcoming Alt-A crisis force home prices down?

I expect it will be much more severe in areas like California and Florida.

I am not sure how much of an impact it will have here in Chicago, though I am sure it will have a negative impact on prices here.

Yes, CA has millions of Alt-A loans, and a lot of these people really stretched into homes they couldn't afford. CA is a very expensive state and people are living beyond their means just to stay there. Higher gas and food costs are going to bring the issue to a head sooner rather than later, because even high income earners are on a shoestring budget. I'm looking to buy back into SoCal in a couple of years, if the market realigns with a more traditional ratio. Right now, that's not happening near the coast. Prices are holding. Inland and out in the desert, they can have it.

[walidm]

Originally Posted by wanttomoveeast

walidm: Maybe I'm slow tonight but I have no idea what you are asking/referring to re: doctors' diagnosis. I don't see the comparison. I do blame the consumer. I blame the person who doesn't bother to do their own research and watch out for themselves, this includes myself. Just because you are ignorant or decide to not bother doing the work and trusting a stranger doesn't mean you shouldn't take responsibility for your actions. Back to the big home loans people shouldn't have, I'd think that this is an obvious answer. Buying a large home you can't afford, or any size home for that matter that you can't afford, is just, well, wrong.

So in typing this out, are you saying that the consumers did not challenge the mortgage brokers' analysis and information they provided? If so, I have definitely challenged a doctor's diagnosis, as the research is there, all you have to do is read it for yourself and make yourself understand the mortgage loan business to make a better decision. Or, you can just be lazy and pretend that the broker is out for your well being and make a totally uninformed decision. I'm no expert on home loans, and before I bought my first home I was clueless. But I made myself understand, one way or another, before making a huge life decision. I listened to the broker, then read the facts, then made a choice.

Maybe I'm off base. Like I said, I wasn't completely sure of your question.

While I congratulate you on being the exception, please realize you are not the norm. Consumers are typically not as educated as they believe. Real Estate agents, mortgage professionals, and banks practice on a daily basis - what the average consumer jumps into every 5-7 years. The consumer simply does not have the time or experience to come close to par.

Case in point - you listened to the broker. Many folks blame the buyers, don't want a bailout, blame the banks, want the mortgage brokers all fired, want their home values to remain inflated, and don't see any of this as fair. Well, what's fair? There will be a compromise. Participation will be required, blame will be counterproductive and we better get started soon or your taxes will be the next thing driving you out of your home as the city falls apart around you. Those folks who don't deserve a bailout - were paying property taxes that pay for the city, and if they're not paying who will? (I haven't seen the Govt. lower property taxes yet, so someones gotta take up the slack) With 3.5 million homes ready to reset, small business is probably next on the hook. Do we really want to sit around and watch the dominoes?

[ViewFromThePeak]

Originally Posted by walidm

Do we really want to sit around and watch the dominoes?

There are plenty of countries with command and control economies available to folks like yourself. I suggest you contact immigration and see if you can make it out there. They're probably wonderful places to live in.

As for me, I actually enjoy capitalism for its benefits and downfalls thank you very much. The full business cycle will occur with or without the government's intervention and will result in the same net effect. The choice of get it over quickly or feel a greater net pain over time is up to us.

[DenverLawGal]

I know I'm not the norm. That's my ***** with others. It didn't take any genius level intelligence to learn, I just did. It also didn't take much time. Lunch hours and what not, scouring the web. So even though it'll be another few years before I sell, I'll research again! My ***** with others is that they didn't bother understanding what's going on or thinking of their future and that of their kids, and now here we are.

Originally Posted by walidm

While I congratulate you on being the exception, please realize you are not the norm. Consumers are typically not as educated as they believe.

Participation? On behalf of who? How am I supposed to get started? I'm thinking of more hunkering down in my home and waiting out the crash. Maybe I'm naive.

Originally Posted by walidm

Participation will be required, blame will be counterproductive and we better get started soon...

[goodbyehollywood]

Here's the kicker-- we're going to spend billions trying to fix this mess and the dominos are going to topple anyway. Taxes will go up, property values will go down, the feds will be meddling in everything, everybody will find it more difficult to obtain credit and cities will go bankrupt-- all while unemployment and inflation are rising.

The finger pointing is just in the first inning. Those who didn't take bonehead loans blame those who did-- and those who made them available without qualification-- because their mistakes will be socialized at great cost to all.

[k374]

another interesting clip:


YouTube - Foreclosures to Rise As 'Liar Loans' Sour

[70Ford]

Originally Posted by ViewFromThePeak

Anyone who thinks defaulting on a mortgage is "immoral" is simply someone posing as a libertarian, IMHO. More likely a right wing neo-bolshevist.



It's not being paid by myself other than through real wage declines. I hold zero US dollars.



Laughable. Hank Paulson's "bazookanomics" will destroy the dollar.

Fannie/Freddie will not get bailed out despite the talk to the contrary. They'll get the ball rolling then as the currency hyperinflates, they'll stop dead in their tracks. Gold confiscation won't work as the mellow yellow is way to easy to hide and operate within a black market.

Fannie/Freddie are simply too big to bail out. On a positive note, we'll all know our lender personally once again .

Predictions.....are fun. And sometimes funny, too!

[SKB]

Originally Posted by 70Ford

Predictions.....are fun. And sometimes funny, too!

Agreed,
I wish I could bump up all of the housing prediction threads, those have really juicy stuff to bad they are all closed.

[ViewFromThePeak]

Originally Posted by 70Ford

Predictions.....are fun. And sometimes funny, too!

Nothing's changed. It's stil too big to bail out. Takes time for that to be realized. The gubmint barely moved in and hasn't realized that Fannie/Freddie are the drunk loser alcoholic roomies no one wants. Once the trillions of dollars washes back ashore and gets monetized, bump this up once again. Notice that even though 10yr T-bills are 3.77%, that mortgage rates (30yr conforming) are 6.31% on average? The spread is widening even with the nationlization of these worthless companies.

Oh yeah, did you see the February message of me predicting the Fannie/Freddie failure and everyone laughed? Not laughing so much anymore I take it

[Daddys///M3]

Originally Posted by ViewFromThePeak

Notice that even though 10yr T-bills are 3.77%, that mortgage rates (30yr conforming) are 6.31% on average?

One has nothing to do with the other.