Subprime Bailout
 

Who's going to help pay for all those homeowners who didn't read the fine print? Take a guess.

But there's good news!

...and bad news.

Hey, someone has to help all those people that make less than $20k/year and financed for $720,000!

It makes no sense to "restructure" these people so that they can continue to spend every last dime on their mortgage. If it is too much house for them, they should simply move out and rent. (A whole bunch of articles are saying how good it is to rent in a bad housing market.)

In my state there is already a system of loan restructure and re-education camp, that your lender must officially tell you about before they foreclose. As long as we're talking about those dumb people who get a big ARM they can't afford:

http://cellar.org/2007/foreclose.jpg

Now I must tell you I am in no danger, I have already rearranged my financial situation and paid these folks. I'm sure that they count me in that 1.1 million, although my story isn't told in CNN/Money, because I am a professional and am qualified for all kinds of stuff, and will make money soon and have sort of anticipated the financial situation. I am happy that they decided to give me the stupid loan. Because they did, I could continue to live in this fabulous place and soon Jacquelita will move in with me. And that's... the rest... of the story.

I read about this one guy who was in his seventies and suffering with the early onset of dementia who'd been conned into signing up for a second mortage under these terms. His daughter found out about it months later when she examined his finances and found that the mortgage payments now exceeded his pension. Not all of them are dumb. Some of them are vulnerable.

One homeowner was going to lose his house - as most of his neighbors because of his sub-prime loan. Then the report provided the numbers. His mortgage increased from $800 per month to just over $900 monthly. For $100 per month more, he would suffer foreclosure?

What is worse are the same fools who have car loan payments. Take out another loan for a depreciating commodity? No wonder we so desperately need illegal immigrants to raise the intelligence level in America.

There are cases in which people with excellent credit got conned into making subprime loans when they should have had fixed loans.

how do yuo feel about 0.00% apr loans on cars, mr smarty pants?

This whole mess was created by a deliberate chain of events. First, the Feds take away tax credit for consumer loans, leaving only mortgage interest as deductible. The lending market, knowing a good thing when they see, begins offering equity loans in order to put people's home equity into the pockets of others.

The value of the average house subsequently appreciates way out of proportion in order that people have more equity to borrow (gotta keep feeding the credit machines). Housing prices escalate beyond all reason, so in order to continue to feed the credit monster, subprime loans are created and doled out liberally to people who can't afford them. The balloons hit, and at the same time, the resale/newhousing markets go tits up, and voila! Crisis.

I believe that part of the problem was that people were using subprime loans, i.e. no down or higher than the normally accepted income multiplier, as a way to invest in homes. I've read some stories of people buying many homes at once, but as the down turn happened and investors got stuck with houses because the builder would be able undercut the flipper's price to get a home sold.

The previous post sums it up pretty good. Right now in the previously hot markets people have to get exotic loans to afford homes, but now since credit is starting to be tightened buyers can't qualify for a loan to buy a house at the currently inflated pricing. Another way the the housing market could be saved would be to have increased wages, which hasn't happened. For some borrowers, a bailout would just prolong an eventual foreclosure because there is no way a person could ever afford the mortgage mention in the first post, i.e. $720,000 mortgage while making $20,000 a year.

As a personal note, I was looking to buy in my area, but have been priced out of the current market. I would rather rent than get myself into a risky loan that I wouldn't be able to afford.

Others factors besides a market gone mad with easy money, rabid investors, and shady lenders have a perfect storm beginning to spin in Florida. Hurricanes caused insurers to either raise prices or flee the state entirely, leaving homeowners to suddenly find themselves paying more than four times what they once were for insurance and now stuck with state coverage that has been bankrupt for years. Mix that with reassessed property taxes on those high home values everyone was cheering as the great windfall of the new century and suddenly mortgages, new and old, are out of reach.

The proposed solution? Eliminate homeowner property taxes. What a disaster.

You think?

I'm a fan.

Though I'm not sure I'm making more interest on the money I'm keeping than I spend on postage stamps for the payments.

you could set up direct pay and have them take the money out electronically?

Not with Nissan! They get an extra $5/month for that service!

THOSE COCKSUCKERS!

they have a new website for finance.....nissanfinance dot com. check that out, UT

0% interest his how money games claim profits on cars that are so bad as to otherwise not be saleable or profitable. Company plays money games. Mortgages its future profits to realize that same money as a profit today. It's a 'hope and a prayer' that the company can build something profitable next decade.

Why 0% car loans? Because the vehicle that sells at almost no profit is both grossly overpriced and technologically obsolete. 0% is a gimmick to dump bad products on the public.

Same gimmick in the 1990s was to claim profits while shorting pension funds. Pension funds are $7 billion short, the company's products are still crap, and a new "money game" is needed to keep the products moving. Mortgage the finance unit to make the auto assembly unit look profitable. Mortgage X and make Y look profitable. If done overtly, it would be called criminal. 0% interest is simply a money game so that a pathetic product can continue selling for another 10 years.

Meanwhile the intelligent consumer never borrows money for a disposable item. If one cannot pay for disposable item, then one does not need that disposable item. Borrowing money for a car (or any other non-capital item) is just another form of addiction.

Even at 0% interest, if the consumer needs a car loan, then the consumer never needed that disposable item. Loans are for capital items whose value is expected in increase with age such as a home, an education, or to build a business. Car loans are simply another example of consumer addiction - so that a debtor will never become a creditor.