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Post by anklemonitor on Oct 3, 2007 16:53:40 GMT -4
That is just so way wrong to bail out people that bit off more than they could chew and got themselves into debt. I feel it is personal responsibility to not go into debt trying to pay your mortgage, not the duty of the mortgage brokers trying to make a deal. What about the people that paid their bills and didn't live beyond their means and didn't go in debt, what are they going to get, higher taxes to pay for the bailout?
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Post by About Time on Oct 3, 2007 20:54:32 GMT -4
Careful! You're pissing off your neighbors judging by the number of homes for sale on the island! LOL!
OK, what about the mortgage companies and lenders that used deceptive practices, and it's been shown that MANY of them did so. Home buyers, especially first time buyers are vulnerable. They don't understand (who does?) the intricacies of buying a home. They're excited, scared, and vulnerable.
The President's plan to deal with the mortgage practice is to, in a nutshell, lay the loss at the feet of banks and mortgage companies by forcing them to drop the interest rates that they sold the loans at (to my understanding and I certainly don't claim to be an expert).
The plan has been hailed as being one that could actually work! The philosophy behind it is that the banks still make money (as they should) but at lower rates than the attempt at rape and pillage that they hoped to make.
That being said, I understand your opposition to the plan. One should not enter into debt that they can not afford. Counter that that one should not enter into debt that can be effectively predicted to be unaffordable when given good information. The lenders knew that the housing boom would not last indefinitely and preyed upon many of those who were easily and many times, not so easily convinced to buy when they shouldn't do so.
** IF ** the trend of foreclosures continue, the repercussions will affect the house values of everyone who continues to churn out the monthly mortgage check.
I think that the bottom line is that there is some balance, and while it might "feel good" momentarily to allow those who have gotten in over their neck to go under, to allow it to happen is going to affect us in much lower home values for those that remain.
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Post by anklemonitor on Oct 3, 2007 21:00:19 GMT -4
But isn't that why they get in trouble in the first place, they were trying to make money by buying and selling and the market didn't go the way they wanted? So many people buy and sell and buy and sell and yea that is great when the market is a sellers market but now that it turns to a buyers market the others are boo hooing about it.
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Post by About Time on Oct 3, 2007 21:13:32 GMT -4
"They" who is "they"? The buyer or the lender?
To some extent, sure. Both. However, if the lenders were more selective in who could afford what, not qualifying someone for a mega-loan when they could afford a playhouse, the problem wouldn't exist.
There is responsibility that needs to be assessed against the buyer. Certainly, but there's more that goes into it than that, and along with it, the fact that the it's a done deal. Now it's the time to, if possible, make adjustments to protect the investments that the rest of us have in our homes.
Personally, I've seen it. We moved here in 2002. Ex decided she wanted to hang with a married guy and took off. Left me with our two kids and a foster kid. We/I had/have an adjustable rate loan and it's gone up significantly over the years. Since she's been and continues to be WAY behind in child support payments, (I have custody) it's been REAL tight on many occasions. Happily, I've been able to hang in there keeping my kids grounded in a good situation.
I've been lucky. Good job, decent raises, so have been able to make it. I can surely understand how really ugly it COULD have been.
I like to try to look at both sides of an issue and think about all sides of the issue.
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Post by anklemonitor on Oct 3, 2007 21:24:43 GMT -4
I can see where you are coming from and can accept that I just don't think it is right and goes along with how irresponsible people are in general in this day and age. I do not understand why anyone would get an adjustable rate on a mortgage. That is like insanity to me. Granted I am not a rocket scientist and do not know as much about these things as you do but I surely would never ever agree to an adjustable rate. I do remember telling the mortgage company to get their house off my property when they tried to refuse me a 15 yr mortgage over a 30. The difference in payment was only about $100 but the total payout was almost $100,000 more. Yes the good old days when a house in Harbor View or Cloverfields went for $40,000 and Bay City $50,000 NEW! Sorry to hear about your wife and family problems. More power to you on keeping it together and taking care of the kids, I have tremendous respect for you for that. You are not alone, sadly there is a rather large fraternity of fathers with sole custody and a momma that ran off. Go Dads Go!
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Post by About Time on Oct 3, 2007 21:29:58 GMT -4
There's a time and place for adjustable rate mortgages as there are for other "creative" mortgages. One just needs to be cognizant of when one should enter into one. :-)
The problems emerge when the best laid plans of......
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Post by qtboyforlife on Oct 4, 2007 8:09:17 GMT -4
The mortgage mess is a combination of four major players.
1) Lenders- They took lending pratices that had been in the past used to assist business owners (one's without steady paychecks) to buy a house..ie. Intrest only, arms (for realestate investors/ Flippers), no-doc loans..
2) Buyers- for not following common knowledge (2x's a years gross income should be the cost of your house), not reading the fine print, and spending more than they could afford. The majority of the 50% increase of housing costs was the result of bidding wars and disregaurd for dollar value (a house unless its a custom home should not cost more than $75 a square foot, land should be in the $20-150 sq foot range depending if it's waterfront, flood zone.
3) Realestate agents- For allowing their buyers to participate in bidding wars for homes that were obviously overpriced, and looking at their commision check instead of the havoc they were creating. FYI commisions at the beginning of the housing boom was in the 5-8% range.
4) Sellers- for not seeing the fact they will not get that $300k they are asking anymore, accept the fact homes are not in demand and let it go. Holding on to it untill you can't afford it anymore will destroy your neighbors home value.....REO's on the Island are selling for $150-200K, around 168 homes have entered forclosure process since July 2007, and those are going to be the new comps for apraisels......
PS: It's not the governments place to fix a free market gone bad, that will only worsen things 10-15 years from now. Let the market fix it self, yeah some people will get slammed pretty hard BUT it wont happen again.....I would agree regulating lender pratices in the future, but let this one play out.
Fact: To bring home prices within historical levels (3% rise in value, 3% inflation) the National Median home price (as of August 2007) would have to drop 20%.......
The fix, do the same thing that was done after the 70's housing mess, raise intrest rates into the double digit's (10-11%). People will sell and move into more reasonable priced homes, and builders will stop with the $600k mini-mansion and build smaller more family oriented homes.
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Post by anklemonitor on Oct 4, 2007 8:14:40 GMT -4
Thanks for the info, enlightening. I do not feel sorry for "flippers" or people that wanted to make a buck so bad they decided to take a big chance and they lost. Hopefully it will be a reality check and they will not do it again.
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Post by anklemonitor on Oct 4, 2007 8:16:29 GMT -4
I think the trend for smaller homes has really increased with the high increases in utilities.
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Post by qtboyforlife on Oct 4, 2007 8:41:21 GMT -4
I think the trend for smaller homes has really increased with the high increases in utilities. I don't think many are going to have a choice, the smaller homes are the only thing selling. To get an investor interested in a developement the "Builder" needs to show a quick turn around on cash beating wall street averages (to give you an Idea, 10-12% a year on wall street is average) to entice them to pull money out of a hedge fund and finance a project. I wouldn't be suprised to see new floor plans for paper projects that haven't broken ground yet. In Baltimore county there is a development with 25 homes listed for $750k, only one has sold and the rest have been sitting empty for the last 8 months........current offer is builder pays all closing costs or you get to go shopping for a car (similar to whats going on in Florida). That keeps the sale value up so it doesn't effect comps in the area, and basicly gives the buyer a cheaper price.
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Post by anklemonitor on Oct 4, 2007 8:48:56 GMT -4
If they sell, I read that as 2 dozen more people are possibly getting in over their heads. I didn't take a poll but just an observation it looks like lots people don't stay in one place longer than about 3-5 yrs.
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Post by Kryo on Oct 4, 2007 11:45:16 GMT -4
For the past 5 years or so, people who want to own a home have been almost forced to get into a situation where they have to get into "creative financing". If you have wanted to own anywhere between, say, Allegany County and Talbot County in Maryland, then your probably SOL if you're an average wage earner.
I'm currently trying to sell my home. Not because I have to, but because I want to. And while it pretty much sucks to have your perceived equity knocked down a few notches, we are certainly due for a correction.
The thing that really annoys me right now is, that all the media are reporting this huge glut in inventory. We've been looking for a new home for 6 months and only see the same old stuff still sitting on the market. Glut? What glut!! They have everyone scared into laying low until things improve.
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Post by qtboyforlife on Oct 5, 2007 10:21:21 GMT -4
They have everyone scared into laying low until things improve. I believe a lot of people who want to sell or are thinking of selling have held off, hoping that the market will improve soon (doubtful) and not listing their home. I think there are a lot of people that have only bought and sold in a boom market and don't really know how to handle a bust market. They will learn soon, gonna have to if they want out in the next 18-24 months. One of two things will happen, 1) the median price drops 20% next month, or 2) prices decline 1-2% a quarter until the historic appreciation and inflation intersect with the median cost. I'm thinking #2 is the only one that will happen and current trends take it into 4th quater 2008 to 1st quarter 2009....but that's just my opinion.... Remember for the last 50 years it has been tracked, everyone had "REAL ESTATE IS A SURE 0% RISK INVESTMENT" drilled into their heads. It's the first time prices have fallen like they have and the whole deal is treding on new ground, for everyone.
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Post by midwesterner on Oct 6, 2007 17:36:12 GMT -4
I am sure I'll get flamed for saying this from the folks that got ARM's and are suffering now, but, lets face it, if you cant afford the 30yr fixed rate, you cant afford the house. A lot of folks took the real estate gamble and got some of these crazy loans, 40, 50yr deals, 6 month intertest only libor's, etc. They sure were not complaining when their payments were low, now a lot took the gamble and lost and its the taxpayer's problem?
Maybe we should just have a zero risk society, no matter what dumb things you do, someone else will pay for it. That would make everything more fun, go to Atlantic City and loose, get your money back. Buy a lottery ticket and loose, get your dollar back. Invest it companies like Enron, get your money back if the stock fails.
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ankle monitor Off 102 Days
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Post by ankle monitor Off 102 Days on Oct 6, 2007 17:43:17 GMT -4
No Flames Here! too many people watching those home fixup shows and stuff, trying to make a killing on a risky investment. I have no sympathy for those people. Do you have any idea how many kids are enrolling in college for interior design because they watch those stupid shows. They are in for a big surprise.
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Post by dej on Oct 7, 2007 5:32:35 GMT -4
I don't know that prices will actually decline that much, but I think they will stay flat for a year or two. Even though there are a lot more homes listed this year, and they are taking a lot longer to sell, prices are still about 3% above last year in Queen Annes County. Tightening the credit standards back up will go a long way to settling the market, much better than raising interest rates like they did in the late 70's. Those increases were actually to slow down inflation, of which the housing boom was only a part. (Remember the gas lines?). Unfortunately the interest rates back then got as out of control as the inflation had been, leading to 16.5% mortgages, high unemployment & recession. Even though I kept my job, I couldn't buy a house until the rates got back down to 13.75%, because even with mortgage rates almost hitting 17%, home prices still didn't drop significantly.
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Post by bchevy on Oct 9, 2007 19:17:43 GMT -4
If people are in over their heads, and it's shown to be a lenders' fault the lender should pay up and make it right, NOT the government, in ANY way.
If they are in over their head due to their own fault, shame on them, It's not the gov't job to bail out loans.
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Post by qtboyforlife on Oct 11, 2007 9:01:57 GMT -4
I don't know that prices will actually decline that much, but I think they will stay flat for a year or two. Even though there are a lot more homes listed this year, and they are taking a lot longer to sell, prices are still about 3% above last year in Queen Annes County. Tightening the credit standards back up will go a long way to settling the market, much better than raising interest rates like they did in the late 70's. Those increases were actually to slow down inflation, of which the housing boom was only a part. (Remember the gas lines?). Unfortunately the interest rates back then got as out of control as the inflation had been, leading to 16.5% mortgages, high unemployment & recession. Even though I kept my job, I couldn't buy a house until the rates got back down to 13.75%, because even with mortgage rates almost hitting 17%, home prices still didn't drop significantly. True prices are staying flat or actually up a little, but we don't know the details of the sale. How many sellers are paying closing costs? Could effect the true cost of the house upwards $10-20k, I would pay listing price now if the seller agreed to 100% closing costs but nothing less. I agree, if lenders went (they are on their way) back to Min. 10% down + Closing Costs it would go a long way to correctiong the market. If people can't afford the house their in, sell it and downsize. Government has no business bailing anyone out, you shoot yourself in the foot that's your problem. My guess is Intrest rate will hit 8% within 2 years home sales will go flat by 2nd Q 2008 and will stay flat till 1st Q 2009. Sales will pick-up but prices stay in the 1-3% increase for 3-4yrs, sometimes dipping. Incentives will increase for buyers as REO lists increase and the 25% down for Forclosures will go down to 10-15% and some Government Programs will add REO to their lists of approved homes to buy.
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Ankle Monitor Off 97 Days
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Post by Ankle Monitor Off 97 Days on Oct 11, 2007 9:14:25 GMT -4
I remember paying 12% and feeling lucky about it compared to what others were paying.
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Post by Frank on Oct 11, 2007 15:20:26 GMT -4
I paid 15 3/4% on my first home and was lucky. Interest rates went to 18% after I settled. My dad thought I was nuts, 22 yrs old and a $500 mortgage! How times have changed.
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Post by alanr on Oct 11, 2007 15:57:05 GMT -4
Oh the early 80's- 18% interest. Now if I could only remember! The 70's
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Post by outlaw on Oct 11, 2007 17:04:58 GMT -4
It's more than just mortgages that people can't pay. We've been in our house for 14 years and are feeling the squeeze. Our electric bill has tripled and homeowner's insurance has doubled. My parents, who are on a fixed income, have had their electric and water/sewer bills triple. Of course gas keeps going up, and groceries have gone up, especially dairy. The increase in health insurance costs for us has negated any wage increases we have received for years. It adds up to a few hundred dollars a month which means a lot less extra money to fool around with. But we are the lucky ones; some people bought houses they could barely afford and can't cut it at all now with everything else going up. Seems like all we do is scramble to make ends meet.
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Post by bchevy on Oct 11, 2007 17:15:04 GMT -4
'tis time to leave Md.
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Post by outlaw on Oct 11, 2007 17:19:56 GMT -4
I think you're right, bchevy. I think I may have to wait until my kiddies are grown though. I hated being uprooted as a kid.
We haven't appealed our taxes because they seem to be on par with or a little lower than other similar homes. With my luck, if I appeal it they will probably raise them even more.
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Post by bchevy on Oct 11, 2007 17:36:32 GMT -4
We've talked about it for a few years now, yep- after the kids are grown, 1 is in college now, 1 in 10th grade. I've got relatives in some CHEAP States if I can get the Mrs. to go along!
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