The Mortgage Meltdown

[Shawn-O]

http://docs.google.com/TeamPresent?docid=d...p;skipauth=true

This is by far the best explanation I've seen regarding the fix we are in. Discuss.

[andtheHomeoftheSIOUX!!]

It is alright, but it is missing the details about the government "pushing" us into this mess. I like the stick figures though!

[petey23]

It is alright, but it is missing the details about the government "pushing" us into this mess. I like the stick figures though!

You mean how a previous administration "forced" banks into accepting these loans? I think it is amazing that we are now shocked and outraged to find out that people who had a past history of not paying their bills but were given "government mandated loans" are now not able to pay their mortgages.....and on the other side, the people getting commissions approving people who normally did pay their bills for 2 and 3 times the homes that they could afford.

[BringDeanBack]

It seems that people should have to sleep in the bed that they made sometimes. Guess what? An adjustable rate mortgage is just that......adjustable. An interest only loan is just that........interest only (when do you plan on paying the principal?). Continually sucking the equity out of your home so you can keep buying new Escalades and Yukon Denali's just to keep up with the Jones'? Guess what?.....That might not be the best course of action either. Now it's time to pay the piper. As in all situations, there are some innocent people that got caught up in this, however, most of the people put themselves in the situation and SHOULD have known better.

Also, both political parties are equally to blame in my opinion. Yes everything has come crumbling down on Bush's watch, which makes him look really bad. However, the massive deregulation of the financial industry (Gramm Leach Bliley Act aka Financial Services Modernization Act) was passed in 1999 when ole Bill Clinton was in office. Yes it was republican introduced legislation, but Clinton could have vetoed it (and there were enough Dems in congress to prevent veto override if neccesary). Also, with this whole bailout mess, many from both parties supported it just in time for us to see execs from AIG collecting lavish bonuses (and trips to spas) just weeks later. I hope there comes a time when I have the opportunity to vote for someone that is truly close to the middle and used common sense to make decisions. I'm not holding my breath though.

[wsdSIOUXfalls]

So, where did this financial mess really begin? Here's a clue... From the NY Times.....9 years ago.

http://tinyurl.com/4t4czz

[Oxbow6]

It seems that people should have to sleep in the bed that they made sometimes. Guess what? An adjustable rate mortgage is just that......adjustable. An interest only loan is just that........interest only (when do you plan on paying the principal?).

There is plenty of blame to go around on this issue, but when did it become financially responsible to by a $400k home when you have a family income of less than $100K? Too many people looked at the housing market as buying futures in the stock market. Will buy more than we can afford, with little money invested, wait for the property to increase in value then we'll make money/equity. You feel bad for those who had to forclose on their homes, but common sense went by the wayside in too many situations during the housing boom/bust.

[BigGame]

There is plenty of blame to go around on this issue, but when did it become financially responsible to by a $400k home when you have a family income of less than $100K? Too many people looked at the housing market as buying futures in the stock market. Will buy more than we can afford, with little money invested, wait for the property to increase in value then we'll make money/equity. You feel bad for those who had to forclose on their homes, but common sense went by the wayside in too many situations during the housing boom/bust.

Most people in the US seem to have lost any sense of personal responsibility. When my wife and I were approved to buy our first house about 5 years ago it was well above what we could afford and we did a little research. We actually bought a house about half the value we were approved for because we didn't just jump in blindly. People shouldn't have been approved for the loans they got but just because you can do something doesn't mean you should. It's frustrating for me because once again the government looks to bail out the idiots, while responsible people suffer.

[Oxbow6]

Most people in the US seem to have lost any sense of personal responsibility. When my wife and I were approved to buy our first house about 5 years ago it was well above what we could afford and we did a little research. We actually bought a house about half the value we were approved for because we didn't just jump in blindly. People shouldn't have been approved for the loans they got but just because you can do something doesn't mean you should. It's frustrating for me because once again the government looks to bail out the idiots, while responsible people suffer.

"That's a good bingo! Please claim your prize at the consession counter."

[moser53]

Most people in the US seem to have lost any sense of personal responsibility. When my wife and I were approved to buy our first house about 5 years ago it was well above what we could afford and we did a little research. We actually bought a house about half the value we were approved for because we didn't just jump in blindly. People shouldn't have been approved for the loans they got but just because you can do something doesn't mean you should. It's frustrating for me because once again the government looks to bail out the idiots, while responsible people suffer.

I heard on the radio that 90% of Americans make there mortgage payments on time. I cannot back up that number but I would like to know what that percentage is. Republican talking points is that Clinton forced companies to give loans to people not qualified for them. How much of that contributed to the problem. I would like to know. Democrates say lack of oversite and regulations was the problem. When the taxpayers have to pony up this kind of money for a bail out like this we taxpayers should demand an investigation and let the chips fall as they may. But politicians only like investigations when they can stick it to the other party. Dems control congress let's see what they do. And I disagree with your statement that most Americans have lost any sense of responsibility. Most Americans get up every day go to work and pay there bills.

[Oxbow6]

I heard on the radio that 90% of Americans make there mortgage payments on time. I cannot back up that number but I would like to know what that percentage is. Republican talking points is that Clinton forced companies to give loans to people not qualified for them. How much of that contributed to the problem. I would like to know. Democrates say lack of oversite and regulations was the problem. When the taxpayers have to pony up this kind of money for a bail out like this we taxpayers should demand an investigation and let the chips fall as they may. But politicians only like investigations when they can stick it to the other party. Dems control congress let's see what they do. And I disagree with your statement that most Americans have lost any sense of responsibility. Most Americans get up every day go to work and pay there bills.

You are probably right that "most" is a stretch. But that number of irresponsible people is growing at a rapid rate in this country as is evidence by the 700 billion dollars it is going to take to help clean up this mess!

[moser53]

You are probably right that "most" is a stretch. But that number of irresponsible people is growing at a rapid rate in this country as is evidence by the 700 billion dollars it is going to take to help clean up this mess!

Look at this country and tell me who we have as role models. The people we should have as role models like politicians, CEOS, actors, the clergy every day fill the newscasts with bad behavior. This is what our youth see.

[Stromer]

Look at this country and tell me who we have as role models. The people we should have as role models like politicians, CEOS, actors, the clergy every day fill the newscasts with bad behavior. This is what our youth see.

I think it goes back a little farther. Somewhere along the line, a small number of parents started slacking at their job of teaching their kids responsibility. Those kids then grew up and are now grown adults having their own kids. Those parents are now the ones shunning their responsibility to their kids(today's youth). This includes letting their kids be influenced so heavily by those very things you mentioned. I hate to think where we are headed as a nation, no matter what party is in control. Just my opinion.

[lawkota]

Most people are financially responsible. But even a small percentage can create a financial meltdown.

A bank may have 5-6% in capital, perhaps lower. For a $1 billion bank, that is $50-60 million in capital. Let's say half that bank's assets are in consumer loans and home mortgages, and that default rates are 20%. That means $100 million of the bank's loans are in default. If the underlying collateral is less than half of the loan amount (which in today's market is reasonable to assume), then the bank may be insolvent even though 80% of their customers are making their loan payments.

If the bank has all its assets out in consumer loans, as many do, then a 10% default rate can ruin it.

I think total mortgage debt in this country is around $10 trillion, but I don't have a source for that number and it may include all mortgages, not just single family homes.

[The Sicatoka]

You mean how a previous administration "forced" banks into accepting these loans? I think it is amazing that we are now shocked and outraged to find out that people who had a past history of not paying their bills but were given "government mandated loans" are now not able to pay their mortgages.....and on the other side, the people getting commissions approving people who normally did pay their bills for 2 and 3 times the homes that they could afford.

That's part of the picture.

The other part is that Congress, or the subcommittee overseeing Fannie Mae at least, was led by Barney Frank who had an, ahem, unique relationship with the Fannie Mae management during that same period of time.

The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his

[petey23]

I heard on the radio that 90% of Americans make there mortgage payments on time. I cannot back up that number but I would like to know what that percentage is. Republican talking points is that Clinton forced companies to give loans to people not qualified for them. How much of that contributed to the problem. I would like to know. Democrates say lack of oversite and regulations was the problem. When the taxpayers have to pony up this kind of money for a bail out like this we taxpayers should demand an investigation and let the chips fall as they may. But politicians only like investigations when they can stick it to the other party. Dems control congress let's see what they do. And I disagree with your statement that most Americans have lost any sense of responsibility. Most Americans get up every day go to work and pay there bills.

But politicians only like investigations when they can stick it to the other party. Dems control congress let's see what they do.

Key part of your statement right here! If the Dems had someone they could pin this on, they would already be having hearings...since they don't they just let the communication arm of the DNC(i.e, CNN, NBC, MSNBC, ABC, and CBS) vaguely apply the blame. They are not going to subpeona Barney Frank, Chris Dodd, Harry Reid, and Nancy Pelosi anytime soon.

[moser53]

But politicians only like investigations when they can stick it to the other party. Dems control congress let's see what they do.

Key part of your statement right here! If the Dems had someone they could pin this on, they would already be having hearings...since they don't they just let the communication arm of the DNC(i.e, CNN, NBC, MSNBC, ABC, and CBS) vaguely apply the blame. They are not going to subpeona Barney Frank, Chris Dodd, Harry Reid, and Nancy Pelosi anytime soon.

No the key part of my statement is that this should be investigated.

Wouldn't you love to see these Dems under oath.

I think you don't want this investigated for fear where this may go.

Some reports have this bailout into the Trillions.

They appointed a Special Prosecutor Ken Starr for a 300,000 alleged illegal

loan to Susan McDougal in Whitewater and you don't think this should be

investigated. Tell me I'm wrong.

[administrator]

Please don't make this a Republicans vs. Democrats issue. This is yet another economic topic that can be discussed without partisanship, but until we decide to change the rule barring politics, I'll continue to enforce it.

Thanks for your help.

[BigGame]

I think it goes back a little farther. Somewhere along the line, a small number of parents started slacking at their job of teaching their kids responsibility. Those kids then grew up and are now grown adults having their own kids. Those parents are now the ones shunning their responsibility to their kids(today's youth). This includes letting their kids be influenced so heavily by those very things you mentioned. I hate to think where we are headed as a nation, no matter what party is in control. Just my opinion.

I work with parents and kids every day and this seems to be the case. Every year I notice less actual parenting with the average kid and more blame being placed on schools, government, and society by these dead beat parents. Why is it that every Mormon student I have is highly responsible and has a strong work ethic? It's not a religion thing; it's a family values thing that happens to be part of the Mormon faith. This isn't intended to drag religion into the conversation, just make a point about it's relation to parenting, values, and eventual success of the kids.

[petey23]

No the key part of my statement is that this should be investigated.

Wouldn't you love to see these Dems under oath.

I think you don't want this investigated for fear where this may go.

Some reports have this bailout into the Trillions.

They appointed a Special Prosecutor Ken Starr for a 300,000 alleged illegal

loan to Susan McDougal in Whitewater and you don't think this should be

investigated. Tell me I'm wrong.

For the record, I would love to see this investigated and congressmen and congresswomen and senators and wall street execs under oath! Without getting political, I wish it could take place before November 4.

[Nodaker]

Please don't make this a Republicans vs. Democrats issue. This is yet another economic topic that can be discussed without partisanship, but until we decide to change the rule barring politics, I'll continue to enforce it.

Thanks for your help.

The largest economic meltdown in most of our lives, bottom falling out of our 401k accounts, layoff starting in force (including my company) across the nation and when we discuss this topic and its causes we are suppose to leave politics out of it.

Good luck with that.

[andtheHomeoftheSIOUX!!]

The largest economic meltdown in most of our lives, bottom falling out of our 401k accounts, layoff starting in force (including my company) across the nation and when we discuss this topic and its causes we are suppose to leave politics out of it.

Good luck with that.

Leave the politics out of it. We can talk economics with out politics.

[dead_rabbit]

Leave the politics out of it. We can talk economics with out politics.

You forgot to insert the winking smiley face at the end of your sentence. Maybe your sarcasm was implied?

Politicians, greedy people on Wall St, greedy people on Main St., and people who were "tricked " into taking out mortgages that they could never afford is what got us into this crisis. If you can't bring politics into this conversation, why even talk about it?

[dead_rabbit]

So, where did this financial mess really begin? Here's a clue... From the NY Times.....9 years ago.

http://tinyurl.com/4t4czz

The Time's article mentions the Clinton administration pressuring Fannie Mae to encourage all of these sub prime loans, but it was Carter's administration that originally encouraged home ownership for EVERYONE, especially if you were a sub prime borrower.

[SoonersNSioux]

"and people who were "tricked "

I'm really split on this. I've concluded to myself the blame can pretty much be passed to everyone involved. We too bought our first home a few years ago in Grand Forks. I was shocked at how they could approve us for a $250k home. Thankfully, we had some common sense and actually went with something WE could afford. While we practiced fiscal responsibility and I'm peeved at how we have to bailout other individuals, I can also see their POV.

Back a few more years, we were going to buy a home in a mass-produced neighborhood in OK. In this sort of situation, you don't own the home till it is finished, however, you put down earnest money to hold your spot. During this time, my wife saw her income at her work get slashed in half. The problem was the home company/lender still thought we could afford the home! It took nearly a month to to get it across to them that we didn't want any crazy mortgage package they were trying to offer to get us to stay in the deal. Thankfully, I was also able to get our earnest money back, but I could easily see how less educated individuals could get suckered into homes they can't afford. They (the lenders) operated like used car salesmen and tried to bog you down in bazillions of numbers till they show you the magic low monthly rate.

[farce poobah]

"and people who were "tricked "

I'm really split on this. I've concluded to myself the blame can pretty much be passed to everyone involved.

Excellent summary of the issue..