And by the way, I agree that housing is a basic need. But I disagree that owning a house is a basic need.
There’s no shame in renting, and there are a lot of unsophisticated people out there who are probably better off renting. Heck, there are a lot of sophisticated people out there who are better off renting too.
I should have bought dozens of houses-and flipped them. Then I’d be retired as a millionair-just like the Wall Street crooks! Since the taxpayers bail everybody out, who cares?
For a long time now I’ve been under the belief that there are three major groups in this whole sub-prime mess:
People who knowingly took out more than they could afford. They should feel guilty.
People who knew that their payments could, and probably would go up, but were caught off guard when they went up much higher and much quicker then they expected. Maybe they should feel a little guilt, I suppose.
People who were lied to and told that they could afford their mortgage, when the lender knew that would wouldn’t be the case. The lenders obviously should feel guilty. Most probably don’t, but they should.
I think this is part of the issue. Not only were people lying, but underwriters weren’t verifying income. I read one anecdote about a woman who worked at Wal-Mart (don’t remember what state). The broker told her to lie about her income, because the lender wasn’t checking, and he was right. She ended up with a $400K home on a $20K income and couldn’t even make the first payment.
When the boom hit everyone got greedy, from the top on down, but it’s the ones at the top who should have known better.
Well the subprime mess was helped along by the “stated income” loan. With a stated income loan, generally you have to put some money down, and they don’t check the particulars. I have seen instances where no money down loans were provided to stated income borrowers - who are the same folks losing their houses now.
nyctea that’s actually a good suggestion. What I’d really like a reporter to look at is how this has affected the immigrant population. Recently, when showing houses to a client I came across a 4 BR house with Living, Dining, Family, and game rooms, plus a detached garage. Each room of the house and the garage had a different family living there - for a total of 9 families in a single home.
While my client went around the house looking on his own I chatted up the homeowner. The “roomies” are all friends and families who have lost thier homes to foreclosure. The owner has the house on the market because the mortgage has gotten too high for her to bear, even with the other families kicking in each month.
The above isn’t rare either. I’d say that well over half the occupied houses we looked at had at least one family per bedroom, and some were as bad as the one mentioned above. It’s really sickening to see.
Like I said, I blame the Capitalist System and its Ideology as well as Corporate Fascism. I guarantee the Republicans have more fingers in the pie than the Democrats. They also bear particular responsibility through their “Rampant Capitalist and Robber Baron” Ideology and policy of the last 8 years.
I’m not going to bother asking for a cite on this. Suffice it to say I’m glad that “guarantee” is not backing up my accounts at WaMu.
If the Republicans weren’t so opposed to “putting fingers in the pie”, I might still be voting for them.
Lets say you have a 400 thou mortgage now. What do you do if your house is now worth 250. Do you just keep making huge payments on a 400 thou house that you don’t have, or do you walk. Remember of course that you will pay many times more than 400 thou before you are done. Should the bank renegotiate ,or do they just have you by the short hairs and they should ride you as long as they can?
Moving thread from IMHO to Great Debates.
Eh, land prices were so inflated that I can sort of excuse that thinking.
It always felt to good to be true, the couple thousand of government backed student loans that I squandered when I was nineteen. It felt like free money, you don’t even really have to pay it back, at least until you aren’t poor. Instincts told me there was a catch, though I never had a clue what it was.
Now I know. Yes I feel guilty.
Whats strange is duel incomes have caused a lot of foreclosures. That is part of the problem.
So you don’t think she should have known better then to buy something she clearly couldn’t afford… especially when she had to lie to get it? To me these should feel just as guilty as anyone else. Like my old Ma used to say, just because everyone is doing it, it doesn’t make it right… bridge, jump, etc.
I’m feeling a little smug because when I bought I was offered a loan at 2x what I thought I could afford and I did the responsible thing, figured out my budget and bought within my means.
It seems to me the folks that are defaulting are exactly the same ones who did creative math with their budgets, banked on their house gaining in value (which in many cases did not pan out) and cried when their plans to make it big without working for it didn’t play out the way they expected. Plenty of folks also bought at that time within their means are not contributing to the problem.
Basically, you are fucked. You sell the house for 250, and owe 150. Figure out how to deal with that, either through renegotiation with the bank or bankruptcy.
Essentially you should have considered the risk that RE prices were either not going to continue going up, or might even slide.
Easy to say now but for most of us prices have gone up their entire lives. They were assured by lenders and economic pros that they were going to make out after 4 years. You, a guy working for a living were supposed to know better? Trust no financial experts ,you are smarter. They would not have stuck their necks out if they knew the pros were looting the system from the top . They were legally able to hide the accounting fraud. They were able to do what they wanted .
The market isn’t going to stay depressed forever and real estate is supposed to be a long term investment. If you could afford your house when you bought it then you should be able to afford to hold onto it now. The day will come when the market bounces back and you won’t be so upside down on it or you may turn a profit.
If you were over your head when you bought it and you were planning on banking on it as a short term investment then you made a bad investment decision.
Please don’t take what I’m saying as a personal attack, to me this is the root of the problem, people made bad investment decisions thinking the market would continue to rise at the pace that it was rising and were not prepared when it didn’t.
Well, unless you are a teenager, I doubt that through your entire life house prices increased at the rate they did in the 90s-00s. As dreamy states, this encouraged a lot of people to see their homes as a short term income wealth-producing asset, instead of a long-term investment and a home. Others chose to leverage their homes in order to buy consumer goods and otherwise live above their means.
Just because a whole lot of people acted irresponsibly, doesn’t make it any less irresponsible.
If you were abole to make payments on your home when you thought it was worth $450K, keep making them. In another decade or so it might be worth close to that again.
Hell, how about the people who bought Lucent at $70 a share? Where is their bailout?
The poor guy lost $2.4 billion over the past year.
And we’re supposed to feel sorry about some schmuck’s $150K? :dubious: