Danger: The risk lurking in the US mortgage market

[Ghostpanther]

There are several indicators and several analysts who have said this - Mauldin, Friedman, Khan. Others.

I have read this before. Not saying they are wrong or right. Time for anything, proves if something is correct when predictions are made. Interest rates will increase as the economy begins to flourish. A recession however, does not need to be a result if the economy remains strong. The important thing will be the balances involved.

[Macaquerie]

I feel like it's hard to pin all the blame for this on lenders, when at the end of the day they're just filling a need. People have this irrational obsession with home ownership and are easily roped in by whatever financial wizardry promises to score them that dream home, but honestly even if you have the money real estate is just about the worst investment you could possibly make. Owning a home is a lot more work than you think and you are hardly free to do whatever you want with it, and as an asset they are barely worth holding because home values are so volatile, always going through these cycles of bubbles and crashes instead of offering steady long term growth.

[Louisa Bannon]

Everything the government does regarding Title 12 of the Federal Codes (banking, financing, investing, etc...) is done for the benefit of the 1% and against you quite literally.

Of what was called the Savings & Loan Crisis, they did almost nothing. But at least back then they were neither too big to fail, nor too big to jail - someone had to take a fall in a very public way. I've met Michael Milken, entitled douche if there ever was one. They sent this guy to prison, this guy that had bankrupted millions and damaged the portfolios of many more (I know people in this latter group). So let's be clear, people got fucked with no grease up and no compensation. Today, Milken still has millions and is a celebrated philanthropist. Sounds harsh, but minimum security prison for a few years and then you are out again and still worth millions despite the shit you pulled and what you did to people - I think many would do that on purpose. Ask Martin Shkreli, sounds like he's going to be just fine and that's of the money we know about.

Fifteen years later rather than tightening things up with legislation, they loosened their grip. I mean, Alan Greenspan said it was good so away we go. Americans claim to worship Jesus but his real name is God-Money, that Jesus guy is a front for fools.

Then the Financial Crisis of 2007/2008 hit. Some one lowly fucker that couldn't disavow what he had done went to jail for a short while. Institutions considered too big to fail were saved on the back of the taxpayers. Nobody in a meaningful decision making position of power went to jail for what is literally the largest fraud case in the history of the nation. End result: now they knew they were too big to fail and too big to jail, and believe me that will not be the last time you hear that, the clock is ticking. No significant legislation altered in any significant way the practices of these institutions.

What has happened is that many more began to invest in weird scam shit like personal loans, for profit universities, pornography, phone sex, etc. I mean, they've intelligently diversified.

And I think I can explain what happened to the rental market. Warren Buffet is famous for the "blood in the street" thing, and he's not even the first guy to say it. There are Real Estate conglomerates that waited for the market to bottom out and then went in with fucktons of money and bought shit up. Because even people that are recently bankrupted will be back needing a place to live, and it's nice to be able to rent them back again the homes that were fucked away of them.

I get the whole caveat emptor thing. Certainly it is a guiding a principle and I think even a sound one. But we all know that there are many, many people that are almost too stupid too walk and chew gum at the same time, so better safeguards need to be in place to protect them. That's just how it is.

But they are not protected. You are not protected. Another crisis will occur. They will then trot out that "too big to fail, too big to jail" shit. And so it will go...

[Rasulis]

It is really hard to justify paying cash for a house in the last few years (2010 - 2017). We sold our old house in 2012, and bought 2 town houses and built our current house. We had enough from the sale’s proceed to pay cash, but at 2.7% fixed interest rate (at that time) it just does not make sense to pay cash. If you qualify, obviously.

[Moshots]

Requiring zero debt is the stupidest crap I have seen posted in awhile. Get back with us when you understand how financing works.

Other than student loan debt and a car payment if you can't even pay off your credit cards your probably not ready to pay 800-2000 dollars a month on a home mortgage....

especially given the fact that you should have atleast 15-20% down to get lower rates/fee's.... if you had that money sitting around why did not just pay off credit card debt first..

[wheresmywoft]

Other than student loan debt and a car payment if you can't even pay off your credit cards your probably not ready to pay 800-2000 dollars a month on a home mortgage....

especially given the fact that you should have atleast 15-20% down to get lower rates/fee's.... if you had that money sitting around why did not just pay off credit card debt first..

The OP didn't limit it do credit card debt.... They had it at any debt.

[morbidari]

In his system, if your current debts are so small, you would just pay them before applying to a mortgage. He did ask for a 30~45% starting fee, so if you could pay that, another small direct expense or two wouldn't hold you back. If his idea is to significantly reduce loans, it would surely work. Now, if reducing loans is a good idea, that's another story.

Keep in mind I am making no argument with you, simply pointing out how silly the OP’s idea is.

So under OP’s system, I could make 5k a month, but if I had a car loan for 20k to be paid over 4 years, I can’t buy a house. So say, under their highly flawed system, I bought a house. I can no longer get a new car on loan, so what do I drive? Public transportation is a good argument, but what if the bus didn’t run around when I need to be at work? What if id didn’t exsist where I live? So I have to go without a car because I have a mortgage?

This is why anyone with even a 5 second education is basic finances knows why OP’s plan is fundamentally flawed. Here’s another fact: most companies take out loans to operate and expand. So most companies shouldn’t be allowed to take out loan if they owe anything? Keep in mind that a conpany is vastly more volatile than a person, and far more likely to go under and be unable to pay than most people.

OP: go learn about finances. It will help you out big time. I didn’t know until I fell into a lot of debt and couldn’t get out. I went bankrupt after my apartment building burnt down, and was legally forced to learn how it all worked. I wish I had known sooner, but it makes no difference now, because knowing how it works has helped me fix every wrong I made before. The loans you are complaining about are a symptom of a vastly bigger problem: poverty and a huge housing market. They need to sell houses, or the US faces a brutal financial crisis. Selling those houses has caused some huge problems, however not selling them would cause massive problems that could even cause the government into such financial hardship, that they go belly up. That’s how important the housing market is in the US.

[breadisfunny]

I can't believe whats happened before may happen again.

i can believe it.

[Gorgodeus]

Other than student loan debt and a car payment if you can't even pay off your credit cards your probably not ready to pay 800-2000 dollars a month on a home mortgage....

especially given the fact that you should have atleast 15-20% down to get lower rates/fee's.... if you had that money sitting around why did not just pay off credit card debt first..

It does not matter what type or how much debt someone has. As long as the mortgage payment does not exceed too high a percentage of income, it is affordable.

[Deleted]

Goes to show how stupid the majority of people are. Same here in holland. Government puts a cap on mortgage (rather than loaning 150% house worth you can now only lend 105%) but now the trend is to overbid asking prices. Everyone with a mortgage debt deserves what's coming to them.

[Low Hanging Fruit]

Google "histrionics". Then maybe "irony".

You were wrong and got called out. Get over it.

It does drip down your cheek all the time. Its cute. But I am not the topic here.

[Draco-Onis]

I have read this before. Not saying they are wrong or right. Time for anything, proves if something is correct when predictions are made. Interest rates will increase as the economy begins to flourish. A recession however, does not need to be a result if the economy remains strong. The important thing will be the balances involved.

All economies slow down and stagnate which can lead to recessions if the right policies are not in place, it is folly to think that the economy will remain strong forever. As of right now we are actually in a very bad situation since central banks have been using all their tools for too long so we do not have any levers to pull in case of emergencies.

[Laerrus]

http://money.cnn.com/2018/03/08/news...ngs/index.html

!
This NEEDS to be addressed!

We must make simple, but followable rules:
"If you want a mortgage: have ZERO debts and start with 30-45%." (to be adjusted)

Ah yeah... No. Without being able to play the debt/credit game, I would not have been able to build my FICO score up to a 793. I have done this while making payments on loans totaling $25,000, making my bills on time and paying my credit cards down to under 30% by the end of the billing cycle (I usually aim for the 8% to 10% sweet spot.)

Without a good credit rating, forget making any big purchases unless you want to pay an absolutely horrible interest rate.

TREMENDOUSLY

You Trump supporters have completely killed this word for me.

[Vash The Stampede]

I can't believe whats happened before may happen again.

How does anyone not see this coming? We have recessions over and over again, plus nothing was done about the banks. BTW, the price of homes are going up fast again, plus the amount of foreclosers are skyrocketing. At least in my area, cause when I look at Zillow.com, the amount of homes in my area that are foreclosed is insanely high. I think right now NJ has the highest forecloser rates and the most zombie homes.

When Bernie said to break up the banks, we should broken them up. Now we're going to have another recession cause of them again. Don't bail out the fuckers, let them go out of business. Might be a great way for some people to keep their homes.

[Low Hanging Fruit]

Hey cutie. I'll help you out.

This is called a post:



See that part circled in red? That's the part that you ignored. A post is intended to convey ideas.

So when you say something as fucking stupid as:



How am I supposed to respond? Do I actually need to take pictures of the conversation and make a play-by-play for your fucking incompetence? You want me to spend more than the 3 seconds it takes me to type "go fuck yourself" that you've somehow diagnosed as an obsession over you?

YOU elected to join a public discourse on the subject matter. YOU elected to allow your ideas conveyed in your posts to be publicly scrutinized. You have only YOURSELF to blame for not only prevailing it upon yourself to enter this discussion, but to also be incapable of maintaining it.

By the way, your analogy about "not making a bed for 20 years" not only added zero value to your argument, as that analogy makes zero sense related to banking defaults, it didn't even net you any internet points, because it was a lame as fuck joke.

Good luck with your life.

Man you are really upset. I am just trying to stay on topic here. Please stop making this about me.

- - - Updated - - -

How does anyone not see this coming? We have recessions over and over again, plus nothing was done about the banks. BTW, the price of homes are going up fast again, plus the amount of foreclosers are skyrocketing. At least in my area, cause when I look at Zillow.com, the amount of homes in my area that are foreclosed is insanely high. I think right now NJ has the highest forecloser rates and the most zombie homes.

When Bernie said to break up the banks, we should broken them up. Now we're going to have another recession cause of them again. Don't bail out the fuckers, let them go out of business. Might be a great way for some people to keep their homes.

I agree. They do it over and over because they are rewarded for it.

[AlphaOut]

How does anyone not see this coming? We have recessions over and over again, plus nothing was done about the banks. BTW, the price of homes are going up fast again, plus the amount of foreclosers are skyrocketing. At least in my area, cause when I look at Zillow.com, the amount of homes in my area that are foreclosed is insanely high. I think right now NJ has the highest forecloser rates and the most zombie homes.

When Bernie said to break up the banks, we should broken them up. Now we're going to have another recession cause of them again. Don't bail out the fuckers, let them go out of business. Might be a great way for some people to keep their homes.

How exactly is it the banks fault? Should they give you a loan if you can't afford it? Probably not. But what if you can afford it on paper but you're irresponsible in other areas of your budget; like constantly splurging on dumb shit. Banks cant really see that; and if you give them your last 3 bank statements all people generally do is "behave" on their budget until they get the loan. I blame the people, not the banks on this one. I "believe" there was something to help prevent what happened after last recession. People were attracted to ARM loans; but the ARM cap was too high after the initial fixed time was over. I think the caps are lower now. It brought way too much hardship to the borrower. Then again, its the borrowers fault for not calculating their mortgage at max cap in the first place.

[Moshots]

It does not matter what type or how much debt someone has. As long as the mortgage payment does not exceed too high a percentage of income, it is affordable.

True but if your paying 15-20% interest on credit card debt with enough money in the bank to do a down payment Unless that money is making 15% interest somehow your an idiot who can't manage your money.. and i'm sure a mortgage company would look at that badly as someone who could eventually default more than a smart person.

[Logwyn]

We should confiscate all property for the common good! Then redistribute it equally among the workers...errr population! /sarcasm

Pfft 45% down?!?! No debt?!? What is this the sims??

[Gorgodeus]

True but if your paying 15-20% interest on credit card debt with enough money in the bank to do a down payment Unless that money is making 15% interest somehow your an idiot who can't manage your money.. and i'm sure a mortgage company would look at that badly as someone who could eventually default more than a smart person.

Or you know they were saving up for a down payment, while also paying their other payments. Mortgage companies do not care what type of debt you have. Only the total amount, and your payment history.

[Spiffums]

Requiring zero debt is the stupidest crap I have seen posted in awhile. Get back with us when you understand how financing works.

He sounds like he has rental properties and wants to keep people on the "rent plantation".