In quoting my post, you affirm and agree that you have not been goaded, provoked, emotionally manipulated or otherwise coerced into responding.
"The difference between what we do and what we are capable of doing would suffice to solve most of the world’s problems.”
Mahatma Gandhi
The crisis still came down to 3 things.
1) Bad loans - forced by the US government and the Community Reinvestment Act.
2) People that took the loans with no idea of how to pay them.
3) The odd legal situation that allows people to throw the keys in a house and walk away without further actions. Any other debt results in the lenders going after your other assets.
Cotton1 (03-29-2021),MisterVeritis (03-28-2021)
The financial crisis that ensued happened because the most aggressive lenders knew that the mortgages were likely to end up in default and decided to package them and sell them to the unsuspecting public around the world, so that they wouldn't be left holding the bag alone. It would otherwise have been a disastrous banking and real estate crisis that was confined to the lenders rather than a global financial crisis. The banks' own poor lending practices were responsible and they were not forced to issue subprime loans, they chose to.
In quoting my post, you affirm and agree that you have not been goaded, provoked, emotionally manipulated or otherwise coerced into responding.
"The difference between what we do and what we are capable of doing would suffice to solve most of the world’s problems.”
Mahatma Gandhi
That is just the left wing talking point because the left wing Democrats forced the bad loans aka aggressive.
If the banks did not and the community complained then they would use regulations against them to prevent expansion, mergers and purchases.
Of course government had to blame someone else for what they did. Of course banks had to package them and unload them AFTER being stuck with them.
Cotton1 (03-29-2021)
The banks started packaging and unloading when the housing bubble began to burst and the cause of the housing bubble was the Taxpayer Relief Act of 1997 (a Republican initiative) which permanently exempted from taxation the capital gains on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. This spawned significant real estate speculation. House flipping became an industry and house prices began to rise artificially. It encouraged people to to buy expensive, fully mortgaged homes, as well as invest in second homes and investment properties because they could escape significant capital gains tax when they sold.
There is plenty of blame to spread around, however it was certain major banking entities that lobbied to have Glass-Steagall repealed. So the lenders are not innocent parties in all of this.
In quoting my post, you affirm and agree that you have not been goaded, provoked, emotionally manipulated or otherwise coerced into responding.
"The difference between what we do and what we are capable of doing would suffice to solve most of the world’s problems.”
Mahatma Gandhi
don't agree.
First , nobody was forced at gunpoint to sign a loan
Second. If a person does not read the contract of what is likely the biggest purchase they ever make . That's on them .
If a person does not understand signing an ARM on a 300k homethat when the rate rises just 1% it's 250 a month more
#3. It's clearly stated the ARM rate is intially an introductory rate. Actually if rates drop 1% the buyer saves $250
But low rates create more demand
More demand creates higher price.
People were drooling over homes they could only afford on a perfect world scenario.
As far as ethics? It's not against the law to loan someone money that lacks the sense to know a starting rate is just that.
Please read your contract .
#4. " Predatory"? Only if stupidity is illegal or having a third party look at and translate the contract .
It's your home and it's your biggest purchase. You don't have to be brilliant to do that
#5. Greed from the buyers wanting more and more and more hurt them and the lender knew it would. But it's expressed that up down etc can occur. Therefore ' variable '
#6. If the buyer went all in and qualified at initial rate or whatever and used it to buy above their means instead of buying beneath them it's a good shot the loan may default . May not.
The subprime market had underwriters as in say a subprime loan market.
Someone has to supply the capital.
Many mention Goldman betting against their own clients as unethical .
It's not unethical to understand that a house of cards will fail in a big way eventually " subprime" means what it says.
It's not unethical to short a mortgage derivative. Not unethical to buy one
It's also not illegal for an underwriter such as Morgan or Goldman that has furnished the capital for the subprimes to protect their investment.
A "market maker" such as Goldman or Morgan is legally allowed to take an opposite position if they are the market maker . It's actually a good idea at times
I'm yo.
This my brother yo
We yo yo
carolina73 (03-29-2021),Collateral Damage (03-29-2021)
Greed kills
Be it a lender.
A borrower or whatever
Two emotions control anything spec , invested wisely etc
#1 Greed
#2. Fear
Too much Greed can take you out of the game
Too much fear can save you money but cost u opportunties
There has to be a healthy amount of both to size up any financial decision
I've been guilty of both
It taught me things I should have known at birth lol.
Last edited by Cotton1; 03-29-2021 at 04:10 AM.
I'm yo.
This my brother yo
We yo yo
carolina73 (03-29-2021),Dr. Who (03-29-2021)
carolina73 (03-29-2021),Collateral Damage (03-29-2021),Peter1469 (03-29-2021)
If banks didn't write these loans to people with no means to pay them off, many who were minorities, they were not allowed to expand and punished in other ways by local and state governments.
The Community Reinvestment Act did much more to cause the 2008 Housing Market Crash than the tax reforms in the early 1990s. Allowing people to keep more of their money is always a good thing.
ΜOΛΩΝ ΛΑΒΕ
carolina73 (03-29-2021),Collateral Damage (03-29-2021),DGUtley (03-29-2021)
I agree. I tend to believe 110% that I am a better or at least the rightful custodian of my own money as opposed the govt being such. We have seen how the govt does
I've seen the blame place on glass-stiegal to the lenders and everyone in between but the borrowers are also a big part
Drooling over a home you cannot afford under the established historical norms doesn't make it a good idea when a deviation occurs such as ' subprime "
Last edited by Cotton1; 03-29-2021 at 06:54 AM.
I'm yo.
This my brother yo
We yo yo
carolina73 (03-29-2021),Peter1469 (03-29-2021)