General thoughts on the state of the union...

Discussion in 'The Lounge' started by Dave I., Sep 25, 2008.

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  1. Dave I.

    Dave I. Well-Known Member

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    The mortgage companies who thought up this whole sub-prime scheme should be drawn and quartered, the people who thought they could cover a interest hike of 12 to 20% when they could barely cover the initial 3 to 5 years of monthly payments, should be put into manual labor jobs (similar to the post great depression) to keep their houses. Screw them all!

    And now we the tax payers are going to give up $700 Billion to fix an issue the big companies and the buyers caused themselves. And to top it all off the government is now going to have direct control off those properties. In short, socialist real estate.

    We need to get a president who can read the Declaration on Independence and the Constitution of the United States, and UNDERSTAND WHAT THIS NATION WAS FOUNDED ON. I can guarantee that GREED, was not one of the reasons.

    I am really starting to wonder if we need that many people in Washington making decisions since they obviously don't have a clue what is right for this nation, only their, and others like them, pocket books.

    Quote from a friend of mine," about the Patriot Act, i'd rather be blown up by terrorist, than give up my privacy and my rights"

    This is the first BIG test as a NATION since WWII, and how we handle this will decide the fate our children and grand children and so on. Will we be Americans and do what is right, or will we continue to vote our rights away.


    Rant over, these are opinions, my opinions, and you don't like them, thats your choice and i respect that so respect mine.




    Dave I.
     
  2. Roy Justice

    Roy Justice Original Member
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    put the blame where it belongs

    The first person to blame is President Clinton for signing the law into effect stating banks MUST loan to less than qualified individuals who live in poor neighborhoods to over come the banks practice of Redlining , a well intentioned idea gone wrong. Janet Reno declares "any bank failing to abide by the new law will be severely prosecuted" forcing banks into sub prime lending and creating zero down loan programs, the chairmen of Fannie Mae and Freddie Mac who caved in and agreed to back these loans further encourgaing the mortgage industry to make loans to people who otherwise would not qualify. All of this is part of the Community development programs (Obama was a Community Developer)meant to help poor people get a piece of the American dream Home Ownership! Sounds good but was fiscally irresponsible.
    To make matters worse the authors of this mess are now Obamas leading finacial advisors. McCain is not clean either he wants to appoint one of the leading players to the Treasury if elected.
    All of this was done without oversight (The Dems vehemently opposed Govt oversight over this) however now they want it so they can be the ones to save us from their mess.
     
  3. Marc

    Marc Well-Known Member

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  4. Roy Justice

    Roy Justice Original Member
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    Nobody is innocent in this mess.
     
  5. lurk 1

    lurk 1 New Member

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    come on, put the blame where it belongs, on every single person who speculated on real estate and lost. they played. let em pay. i'm still renting at thirty three years old cause i knew better. now i'm gonna pay for these houses whether i bought one or not?

    i don't know one person who has made real money since clinton got out of office unless they were in real estate. now i gotta buy their house for them cause they spent like that money was gonna be there forever. short sighted people need to see why some people try to think long term. propping up markets like this is exactly that, short sighted.

    "we could be headed for a recession if we don't pass this bill." b.s. we've been in a recession for at least three years now but we're finally confronting the fact that this horse we've been riding(real estate) can't run forever. why did these giant financial institutions not hedge their bets? didn't most of these guys go to Harvard? hang em. their mistake. all of a sudden its "my economy" now? its no more mine now than it was when it looked like i could never afford a house.
     
  6. Roy Justice

    Roy Justice Original Member
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    wow, what a bitter way to look at things, you can't afford to buy a house so everyone who bought one is a schmuck and now you have to pay. Good grief.
     
  7. Dave I.

    Dave I. Well-Known Member

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    I didn't read it that way Roy.

    The only schmucks are the ones who bought a house they couldn't afford or sold a house to a buyer that had no way of affording it. I agree they brought this on themselves, and we, those who couldn't buy and those who actually had the means to afford the house they got are going to be the ones who have to fix it.

    I really hope this bill dies real soon.


    Dave
     
  8. lurk 1

    lurk 1 New Member

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    i'll own up to being bitter. i hope my industry is deemed worthy of a bailout if myself and my brethren so horribly mismanage things as the principals at each level of the current mortgage mishap have. that's from borrowers right on through to the underwriters. oh, never mind, i guess i'm the underwriter. i'd rather buy swampland than a stake in any of these companies.
     
  9. Roy Justice

    Roy Justice Original Member
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    let me clear something up, I am dead set agaisnt a bail out.
    I think we are just postponing the inevitable or maybe even making things worse. I don't like the fact the govt is buying the non performing loans only eaving the company in tact, and the CEOs still at work.
    Prior to 1934 there was no FHA, no Fannie Mae, but then buyers needed at least 50% to get a bank loan. In order to get the people into homes and stimulate the economy these institutions were created and it worked. Today it has grown into a bloated, out of control agency who seems more interested in the profits.
    People need a place to live, when rents are a high as mortgage payments, it only makes sense to buy.
    Remember these non performing mortgages only make up about 8% of all home loans, the majority of us are responsible so don't burn down our house to get rid of a few rats.
    Most of us see our homes as our future security, our hedge against inflation and a place where our landlords can't evict us control us or raise our rents.

    The lenders were pressured to make loans to those with less than perfect credit, and for many of my clients it was a big step for their future.

    Many of them though wanted what they couldn't afford, instead of an affordable two bedroom condo, they had to have a house, instead of living in National city they had to live in Poway. Lenders were offering creative ways to make that happen and it backfired.
     
  10. Robk

    Robk Well-Known Member

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    No administration has anything to do with loan guidlines. You guys are killing me. Sure the rise up of subprime was the mid 90's under Clinton, it expanded under GW. But neither, regardless of what you show me had anything to do with it.

    It has to do with the secondary market. Companies were willing to buy the paper so companies were willing to originate those loans.

    I don't want to get on my high horse here but do any of you have contacts in the banking industry at the highest level? I'm talking about men and women that are/were litteraly packaging up these bulk sales of loan paper and walking them down Wall Street for purchase. The word is "securitization."

    Most of you are just reading what some journalist found out from someone he knows who knew somebody.

    As we speak Wachovia is working on a massive securitization deal to bring back lending. I'm already getting emails from insiders about massive capital infusion for loan securitization.

    C'mon, look into the history of the S&L's guys. Not much difference, just bigger dollars...it's always bigger dollars the next time around.

    In case none of you noticed Wamu is bust. 10x the $$$ as IndyMac. This was old news in May but for some reason MSN and all these other websites are just telling us about it. Like I said. The media is really far behind this.
     
  11. Roy Justice

    Roy Justice Original Member
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    Really????????

    The CRA was passed into law by the 95th United States Congress in 1977 as a result of national grassroots pressure for affordable housing, and despite considerable opposition from the mainstream banking community.[1] Only one banker, Ron Grzywinski from ShoreBank in Chicago, testified in favor of the act.[2] The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions. The CRA is enforced by the financial regulators (FDIC, OCC, OTS, and FRB).

    The bill encouraged the Federal National Mortgage Association, commonly known as Fannie Mae, to enable mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies to lend to home buyers. It also encouraged the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, to buy mortgages on the secondary market and sell them as mortgage-backed securities on the open market.[3] Due to massive financial losses, on September 7, 2008 the Federal Housing Finance Agency (FHFA) put Fannie Mae and Freddie Mac under the conservatorship of the FHFA.[4]


    [edit] Clinton Administration Changes of 1995
    In 1995, as a result of interest from President Bill Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.

    These revisions[5] with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for seven years. Thus in 2002, the regulators opened up the regulation for review and potential revision.[citation needed]

    Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like Countrywide, that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997 by Bear Stearns. [6] The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent. [7] [8]

    Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market. [9]

    "No administration has anything to do with loan guidelines"...?

    seems to me the banks either complied or faced the wrath of the Federal Govt.
     
  12. Marc

    Marc Well-Known Member

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    Thanks for enlightening us. Why haven't your contacts "at the highest levels of the banking industry" done something before now?
     
  13. Robk

    Robk Well-Known Member

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    This is going to be just like the religion debate. We can all find something to support each persons opinion.

    The fact remains that if no one is willing to buy the paper no one is willing to fund them. Right now these rules you show are in place right? Or atleast they were for the last 18mo. We all know none of these tougher deals got done like they did in 2006 and earlier. So the fact that legistlation was heavy handed doesn't matter.

    No buyers no sellers.

    By the way there is just a "S" load of construction (office/multifamily) loans coming around the hopper too.

    Roy, I appreciate your hard work in finding that information to post. But it's not reality. If Wall St. buys it someone is selling it. If Wall St. isn't buying no one is selling it. That's where resi lending has been at for a year or two now with or without those rule.

    I'm not a huge fan of the bailout but the government is looking at this from a cash flow perspective. There is litterally no business going on right now. The cost of revenue in one year without a bail out appears to far exceed 700b. So leveraging a one time 700b appears to make sense if it can net a gain of 700b in just one or two years from this move.

    Capital has to get freed up some how.

    Traditional banking is coming back. Evertime I talk with a big dog they say the same thing. They all are back to retail banking and relationship lending. If you want to borrow money for that apartment building you better be ready to deposit money with that bank. Over the last few years this has been the trend.

    Old school is back.
     
  14. otay michael

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  15. Roy Justice

    Roy Justice Original Member
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    robK what I don't like is that the Govt will buy the non performing loans, essentially cutting the deadwood from Fannie Mae, which makes investiong in the remaining mortgage backed securities less risky. The Govt then makes it possible to allow the mortgagees to remain in their homes, and someday down the line those non perfoming loans begin to perform again making it possible to sell them off and recoup some profits, while we the tax payers get none of the benefits of this plan
    remember I am not a loan broker but have worked alongside lenders in the residential market for years and have more than a passing interest in the way things work in the secondary market.
    I do uinderstand how the pools of loans are sold into the secondary market, allowing lenders to continue making loans. When the mortgage backed securities become too big a risk, investors stop buying them. The bail out may make sense in getting investors back in the securities market
     
  16. djlipripper

    djlipripper Well-Known Member

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    I do like reading this to a point. I was a wholesale mortgage rep for three years and it was amazing to see what people were sending in to get approved. THis has been coming fore the last 2-3 years, it didn't just fal out of the sky. It was tough doing business selling traditional product when you could get the same rate from a subprime lender with less requirements.

    I do admit that I do not like the bailout at all, why not do what Rick Roberts says and give that 700B to the taxpayers and stimulate the economy that way, it would break down to about 297K per taxpayer AFTER paying 30% taxes, which would give the GOVT 25B+ to pay down some debt, the problem with not helping the major players is that ALL of the foreign investors will take there money somewhere else, like CHina who owns 48% of our holdings....We are definately at a critical mass point in our history. Time to let freedom ring and everyone needs to grab ahold of their American pride, stop fighting amongst the parties and get back to the basics of our country, the Constitution!

    GOD BLESS AMERICA!
     
  17. lurk 1

    lurk 1 New Member

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    297k for each and every taxpayer? sounds to me like i bought a house whether i bought a house or not. how bout the banks that invested billions in overvalued real estate take the hit? are you telling me they are the only institutions that lend money? i need to prop up these banks so they can start lending money again and we can fuel the stagnant economy? how, by lending money to failing businesses ("main street" they're calling it on the Hill) rather than having them lend to fund purchases of overpriced real estate? i don't trust these guys as far as i could throw them to make good decisions about balancing risk. these are the ABCs of economics that these monkeys have been ignoring for a good five years now. is anyone really surprised. i just wish i had the cash to short all these banks as the inevitable finally came down. coulda made a killing.
     
  18. djlipripper

    djlipripper Well-Known Member

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    THat was supposed to come across as tounge in cheek!!
     
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