Mortgage Renegotiation

[classicman]

Originally Posted by Beestie

Gotta go with sugarpop on this one. The mortgage structures that paved the way for the mess we are in should never have been allowed to exist.

And the legislation that enabled them is at fault, no?

[Beestie]

Originally Posted by classicman

And the legislation that enabled them is at fault, no?

There was no enabling legislation - there was also no legislation prohibiting lending institutions from orginating the stuff.

There's no law against making risky loans. Nor will there be. Free market thing and all.

[classicman]

Perhaps I worded that poorly, no I know I did.

[sugarpop]

Originally Posted by Beestie

Saving it is actually the same thing as spending it. In the long-run, its better. When savings go up, the cost of credit goes down which leads to more investment which leads to... you get the pic.

And paying down debt is economically similar to saving.

And smarter.

[sugarpop]

This is the reason why I said (somewhere) that I don't think mortgages should be traded. If you have to hold on to a mortgage, then you are more likely to make good, sound loans. I never even knew mortgages WERE traded until recently. Really, who came up that genius idea? that is the STUDIEST thing I've ever heard. Well, not really, but close.

[classicman]

Yeh they just started trading them last year or so.

[Beestie]

Originally Posted by sugarpop

This is the reason why I said (somewhere) that I don't think mortgages should be traded. If you have to hold on to a mortgage, then you are more likely to make good, sound loans. I never even knew mortgages WERE traded until recently. Really, who came up that genius idea? that is the STUPIDEST thing I've ever heard. Well, not really, but close.

Mortgages aren't really traded. A small number are but the vast majority are combined with other mortgages into mortgage securities. While its tempting to blame this idea for the economic downfall, it is precisely this idea (that has been around since the 1970s) that has allowed the vast majority of Americans to obtain affordable mortgages.

Its only the recent development of the uber high-risk stuff that is to partially blame for the economy. The underlying secondary mortgage market is really a thing of beauty and remarkable efficiency.

[sugarpop]

Thanks Beestie. My understanding (and believe me, while I have very strong opinions around this issue, I don't understand most of it) is that they were bundled and sold, and that happened so many times, in some cases they don't even know who owns the mortgage.

What is the credit default swap?

[classicman]

Originally Posted by sugarpop

while I have very strong opinions around this issue, I don't understand most of it

tw will have a field day with that one. n Thats gotta be worth at least 500 words.

[Clodfobble]

It ought to be appalling to more than just tw.

[xoxoxoBruce]

My mortgage was sold to a different lender a half dozen times. But not being bundled into a package, each buyer had to look at it by itself, and judge it's merit as an investment for them. When they are bundled, the buyer is buying a surprise package.

[sugarpop]

Why? I am not supposed to have opinions about things that are happening because I don't understand some of the finance stuff? The more I learn about some of the things traders do on Wall Street, and things people do who work in related fields, the more I think we need to pass laws to stop it. I'm furious that those people get away with doing things that cause damage to society as a whole. You should be furious too. Sorry, I'm not telling you how to feel, but damn...

[Clodfobble]

Originally Posted by sugarpop

The more I learn... the more I think

And that's the way it should be. The more you fume without knowing the facts, the less seriously people are going to take you.

[Beestie]

Originally Posted by xoxoxoBruce

My mortgage was sold to a different lender a half dozen times. But not being bundled into a package, each buyer had to look at it by itself, and judge it's merit as an investment for them. When they are bundled, the buyer is buying a surprise package.

Your loan was sold once - maybe twice. What was sold over and over was the servicing rights - collecting the payments.

Unless your loan was one of the few that don't get carved up, it was put into a pool of other similar loans, and the combined payments from you and your pool-mates are split up into all sorts of interesting structures. However, as complicated as the structures are, all the payments to all the structures have to equal all the payments by all the borrowers for any given month. And that can get incredibly complicated.

[sugarpop]

Originally Posted by Clodfobble

And that's the way it should be. The more you fume without knowing the facts, the less seriously people are going to take you.

I know I am opinionated, and that may rub some people the wrong way (especially on a forum where you can't hear me/see me), but most of the things I say are based on facts that I know are facts, or things that I've read/heard from other knowledgable people. I usually do some research into things before I form an opinion. Just because I don't understand some of elements involved doesn't mean I can't understand the bigger picture. and, I know I am not always right. I am usually willing to admit when I'm wrong.

In addition, I would like to add that, just because two people have different points of view doesn't necessarily mean one is right and one is wrong. They can both be right, from their own perspective. If ten people witness an accident, there will probably be ten different versions of what happened. Are they all lying?