Is it true that the home-mortgage flop is due to that segment of society to be precise poor and opportunistic?
Is this the profile of the person resposible for the credit crunch: A low-income person who tried to digit out a way to get a house even though he know he couldn't afford one?
Answers:
No, it's due to greed and ignorance of the leaders, and a failure of a inept system that failed to stop the damaging lend practice.
No. It is down to irresponsible lend that means that these people are told that they CAN receive excessive amounts of credit. No body "tries to numeral out a way" to get a house at all, we ALL scrimp and salvage to keep a roof over our heads. People as judgemental and credulous as you make me so frustrated!!
Not really. That would be approaching saying that the credit crunch is due to poor people figure out how to "play" the banks for money.
It is the job of the one WITH the money/asset to provide protection for that money/asset. If he hand it out willy nilly and it does not come back, too bad.
Essentially, MANY of the poor money decision made in this crisis are due to ALL of the participants believing that the open market would sustain them in ever and ever rising home prices. When the music ended and adjectives went for the available chairs, housing VALUES and market DEMAND be left standing with not a soul to bail them out. Without steadily increasing values to leverage against and the reciprocal DEMAND to lay the increased values off on, the game (financial chairs) come to a halt.
The BIG difference in this cycle though was not newly the asset being held as collateral. but inflated values were anyone SOLD to overseas investors in what is called securitized mortgages, or together packages of mortgages included in one portfolio.
So many of them go bad at once (because of the internal contractual bomb in respectively contract called "resetting of the interest rate")
All of this was NOT by luck. The Feds encouraged the repackaging of loans in demand to include MORE people in the American dream of home ownership. Unfortunately, due to CHEAP immigrant labor and the oportunistic American businessman, hulking blocks of houses were built on the cheap (no homeowner ever saw the decrease surrounded by housing labor costs, only the contractor) and were hustled stale to waiting real estate people and mortgage lenders who have NO financial interests in the money they were lend. (remember the overseas loan repackaging?)
So much fudging was going on between the contractor the real estate agent and the mortgage lender to capture the MONEY into the hands of the homeowner the all sorts of sin be perpetrated.
Were did all of this money COME from. WHY govnt borrowing logically. When George wanted money he did not have, to quarrel the war in Iraq, he merely instructed the doofuses within the congress to raise the national debt ceiling. This is usually done around midnight in the chamber so as to not let their shenanigans be see on national television.
Once the debt ceiling is raise, the FED can legally issue long term bonds to borrow the money on the enlarge market. This new influx of money into the reduction is seen as an excess (think inflation, more money chaseinig after lees goods) The housing market be an up and coming market so it got its share of the funds irregardless of the skill to pay it back.
Once fuel costs go up (excess world demand and NO investment in grease infrastructure) and interest rates went up, the teaser loan rates reset and everyone was caught surrounded by a financial squeeze. Those least able to lay rotten the poor bets caused by increased interest rates (some rates increases caused monthly rates to rise as much as 3-500 dollars) the homes started to shift into foreclosure.
The REAL culprit here is govmt overspending, increased national debt ceilings, and a frenzied rush to see who could get their money out into the bazaar the fastest, regardless of the risk.
Without anyone paying attention to the fundamentals of the business, that business went to hell contained by a handbasket.
NOW! We ALL must suffer the consequences of the error even though many of us are doing the correct thing financially. My financial footprint did not create inflation, nor the loaning of our own money BACK to us in the form of govnt debt, but I still must pay the prevailing rate at the pump and an ever increasing amount of my levy dollars goes to pay down, NOT the debt, but the SERVICE on that debt. A full 18% of respectively dollar you send to the government go to pay of the interest on the national dab, while at darkness the congress conspires to vote the ceiling higher and higher.
NAW. This current crisis not the handy work of a bunch of low classed, no count individuals who figured out how to screw the financial markets, this abomination is the work of professional greed mongers.
Countrywide and Citi Mortgage gave loans to people who could not afford them. The nation were told they qualified for these loans. These people be taken advantage of. I don't like your premise and resent your tone.
No, that is not true. It was the opportunistic mortgage and loan companies.
The companies that convinced inhabitants to take out loans based on FUTURE income.
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Answers:
No, it's due to greed and ignorance of the leaders, and a failure of a inept system that failed to stop the damaging lend practice.
No. It is down to irresponsible lend that means that these people are told that they CAN receive excessive amounts of credit. No body "tries to numeral out a way" to get a house at all, we ALL scrimp and salvage to keep a roof over our heads. People as judgemental and credulous as you make me so frustrated!!
Not really. That would be approaching saying that the credit crunch is due to poor people figure out how to "play" the banks for money.
It is the job of the one WITH the money/asset to provide protection for that money/asset. If he hand it out willy nilly and it does not come back, too bad.
Essentially, MANY of the poor money decision made in this crisis are due to ALL of the participants believing that the open market would sustain them in ever and ever rising home prices. When the music ended and adjectives went for the available chairs, housing VALUES and market DEMAND be left standing with not a soul to bail them out. Without steadily increasing values to leverage against and the reciprocal DEMAND to lay the increased values off on, the game (financial chairs) come to a halt.
The BIG difference in this cycle though was not newly the asset being held as collateral. but inflated values were anyone SOLD to overseas investors in what is called securitized mortgages, or together packages of mortgages included in one portfolio.
So many of them go bad at once (because of the internal contractual bomb in respectively contract called "resetting of the interest rate")
All of this was NOT by luck. The Feds encouraged the repackaging of loans in demand to include MORE people in the American dream of home ownership. Unfortunately, due to CHEAP immigrant labor and the oportunistic American businessman, hulking blocks of houses were built on the cheap (no homeowner ever saw the decrease surrounded by housing labor costs, only the contractor) and were hustled stale to waiting real estate people and mortgage lenders who have NO financial interests in the money they were lend. (remember the overseas loan repackaging?)
So much fudging was going on between the contractor the real estate agent and the mortgage lender to capture the MONEY into the hands of the homeowner the all sorts of sin be perpetrated.
Were did all of this money COME from. WHY govnt borrowing logically. When George wanted money he did not have, to quarrel the war in Iraq, he merely instructed the doofuses within the congress to raise the national debt ceiling. This is usually done around midnight in the chamber so as to not let their shenanigans be see on national television.
Once the debt ceiling is raise, the FED can legally issue long term bonds to borrow the money on the enlarge market. This new influx of money into the reduction is seen as an excess (think inflation, more money chaseinig after lees goods) The housing market be an up and coming market so it got its share of the funds irregardless of the skill to pay it back.
Once fuel costs go up (excess world demand and NO investment in grease infrastructure) and interest rates went up, the teaser loan rates reset and everyone was caught surrounded by a financial squeeze. Those least able to lay rotten the poor bets caused by increased interest rates (some rates increases caused monthly rates to rise as much as 3-500 dollars) the homes started to shift into foreclosure.
The REAL culprit here is govmt overspending, increased national debt ceilings, and a frenzied rush to see who could get their money out into the bazaar the fastest, regardless of the risk.
Without anyone paying attention to the fundamentals of the business, that business went to hell contained by a handbasket.
NOW! We ALL must suffer the consequences of the error even though many of us are doing the correct thing financially. My financial footprint did not create inflation, nor the loaning of our own money BACK to us in the form of govnt debt, but I still must pay the prevailing rate at the pump and an ever increasing amount of my levy dollars goes to pay down, NOT the debt, but the SERVICE on that debt. A full 18% of respectively dollar you send to the government go to pay of the interest on the national dab, while at darkness the congress conspires to vote the ceiling higher and higher.
NAW. This current crisis not the handy work of a bunch of low classed, no count individuals who figured out how to screw the financial markets, this abomination is the work of professional greed mongers.
Countrywide and Citi Mortgage gave loans to people who could not afford them. The nation were told they qualified for these loans. These people be taken advantage of. I don't like your premise and resent your tone.
No, that is not true. It was the opportunistic mortgage and loan companies.
The companies that convinced inhabitants to take out loans based on FUTURE income.
Related Questions: