<p>
Who took/made the money in the process at the first place? … like your 6 rules in another threads. Those bank CEOs, managers who made the wrong judgement/decision should get their skyrocket bonus rescinded!</p>
<p>They are just paper losses until people actually default and move out of their homes.</p>
<p>As to allocations, it certainly shouldn’t be to my mother, or to folks who are paying their mortgages, or to low-income people who would like to own a home but now won’t be able to.</p>
<p>AnotherNJmom, I would love to see that happen, but I don’t think so. </p>
<p>kbaloneyy, posted a link that presented Alan Blinder’s ideas. </p>
<p>We probably will get something like Blinder mentioned.</p>
<p>"A third reason for focusing on foreclosures is that we’ve seen this film before. During the Depression, President Franklin D. Roosevelt and Congress dealt with huge impending foreclosures by creating the Home Owners’ Loan Corporation. Now, a small but growing group of academics and public figures, including Senator Christopher J. Dodd, Democrat of Connecticut, is calling for the federal government to bring back something like the HOLC. Count me in.</p>
<p>The HOLC was established in June 1933 to help distressed families avert foreclosures by replacing mortgages that were in or near default with new ones that homeowners could afford. It did so by buying old mortgages from banks — most of which were delighted to trade them in for safe government bonds — and then issuing new loans to homeowners. The HOLC financed itself by borrowing from capital markets and the Treasury.</p>
<p>The scale of the operation was impressive. Within two years, the HOLC received about 1.9 million applications from distressed homeowners and granted just over a million new mortgages. (Adjusting only for population growth, the corresponding mortgage figure today would be almost 2.5 million.) Nearly one of every five mortgages in America became owned by the HOLC. Its total lending over its lifetime amounted to $3.5 billion — a colossal sum equal to 5 percent of a year’s gross domestic product at the time. (The corresponding figure today would be about $750 billion.) </p>
<p>As a public corporation chartered for a public purpose, the HOLC was a patient and even lenient lender. It tried to keep delinquent borrowers on track with debt counseling, budgeting help and even family meetings. But times were tough in the 1930s, and nearly 20 percent of the HOLC’s borrowers defaulted anyway. So the corporation eventually acquired ownership of about 200,000 houses, nearly all of which were sold by 1944. The HOLC closed its books in 1951, or 15 years after its last 1936 mortgage was paid off, with a small profit. It was a heavy lift, but the incredible HOLC lifted it."</p>
<p>Mini is just being mini. Ignore him, maybe he’ll find other people to annoy on another site.</p>
<p>Barrons, Mini has a point of view that’s a little different than mine. That’s ok.</p>
<p>Mini, People and companies can go broke with paper losses. That’s usually how it works.</p>
<p>Yes, but governments don’t. Isn’t that “interesting”?</p>
<p>Banks and banking are the backbone of a corporate socialist economy.</p>
<p>I saw this a few weeks ago and have been trying to get my mind around it ever since.</p>
<p>[FSO</a> Editorials: “The Greatest Bait And Switch Of All Time” by Dr. Joe Duarte 01/28/2008](<a href=“http://www.financialsense.com/editorials/duarte/2008/0128.html]FSO”>http://www.financialsense.com/editorials/duarte/2008/0128.html) </p>
<p>Here are some snippets:</p>
<p>'The fund’s name is Hayman Capital Partners, and the managing partner J. Kyle Bass sets forth an interesting story. Bass says he spoke to someone at a wedding that was being held in Rose, Spain, and here are the salient points of the story as he heard it from the well connected source: </p>
<ol>
<li><p>Big money, “U.S. insurance companies and pension funds,” stopped buying subprime paper in 2003, and were looking to unload the stuff in a profitable manner. </p></li>
<li><p>According to the note, the only pools of money around the world with enough capital to buy up the seemingly never ending supply of U.S. paper were “mainland Chinese banks, the Chinese government, Taiwanese banks, Korean banks, German banks, French banks, (and) UK banks.” ’ </p></li>
</ol>
<hr>
<p>“Through the alchemy of Mezzanine-CDOs. With the help of the ratings agencies the Mezzanine CDO managers collect a series of BBB and BBB- tranches and repackage them with a cascading cash waterfall so that the top tiers are paid out first on all the tranches thus allowing them to be rated AAA. Well, when you lever ONLY mezzanine tranches of Subprime RMBS 10-20X, POOF you magically have 80% of the structure rated AAA by the ratings agencies, despite the underlying collateral being a collection of BBB and BBB- rated assets…” </p>
<hr>
<p>If Bass’ story is true, and so far we’ve found no reason to think that it’s not, this phenomenon started in 2003, when the U.S. big money houses figured out what they had on their hands and stopped buying up the bad paper. </p>
<p>Yet, the subprime problems began to surface in 2007. That means that from 2003 to probably early 2007, the insurers and the pension funds unloaded as much paper as possible on the unwary. Yet, at the same time, Countrywide, Washington Mutual, and who knows who else, continued to write subprime loans, while Wall Street repackaged them and sold them to somebody. </p>
<hr>
<p>In other words, what we’ve seen so far might be the tip of the iceberg, since no one knows how much bad paper was peddled around the world until the bottom fell out of the market in 2007.</p>
<hr>
<p>I am at a loss for words. Should look up my copy of “The Corporation” again.</p>
<p>The pseudo-socialist playing capitalist act is just wearing thin.</p>
<p>We bought our house three years ago when we were just under 40. We sold our condo which we had had for 12 years and made a huge profit. we put down 20% on a house that we considered reasonably priced for NYC. It’s a house that we love and expect to raise our little one in for many years to come. Within a year, we had $150k in equity. Right now we have negative equity, but our mortgage is the same as it always was, an amount that we feel comfortable paying every month. We aren’t worrying about this since we bought this house because we wanted to have an actual home and not to make a profit. Things will turn around or we’ll just continue to put a little bit extra on the mortgage every month, so it’s all good. Staten Island has been hit very hard in the mortgage “crisis” and I’ve watched carefully. My personal observation is that, because it’s cheaper to buy a home here than in most places, a lot of people who aren’t qualified/prepared for home ownershp have bought a lot of houses here and there’s no good outcome possible. I actually don’t thing there should be a bailout in most cases. If there’s provable fraud, then sue, otherwise, take your lumps.</p>
<p>Mini, governments don’t usually go bankrupt. Governments choose to destroy their currency instead. </p>
<p>[Grandfather</a> Inflation Report - by MWHodges](<a href=“http://mwhodges.home.att.net/inflation.htm]Grandfather”>http://mwhodges.home.att.net/inflation.htm)</p>
<p>"INFLATION - WHO SAYS IT’S DEAD? </p>
<p>88% EROSION OF PURCHASING POWER - AND CONTINUING </p>
<ul>
<li>a dollar in 1950 will buy only 12 cents worth of goods today, 89% less than before - </li>
</ul>
<p>Inflation in my adult years increased average prices 1,000% or more -
example 1: a postage stamp in the 1950s cost 3 cents; today’s cost is 41 cents - 1,266% inflation;
example 2: a gallon of 90 Octane full-service gasoline cost 18 cents before; today it is $3.05 for self-service - 1,870 % inflation;
example 3: a house in 1959 cost $14,100; today’s median price is $213,000 - 1,400% inflation;
example 4: a dental crown used to cost $40; today it’s $1,100 - 2,750% inflation;
example 5: an ice cream cone in 1950 cost 5 cents; today its $2.50 - 4,900% inflation;
example 6: monthly government Medicare insurance premiums paid by seniors was $5.30 in 1970; its now $93.50 - 1,664% inflation; (and up 70% past 5 years)
example: several generations ago a person worked 1.4 months per year to pay for government; he now works 5 months.
And in the past, one wage-earner families lived well and built savings with minimal debt, many paying off their home and college-educating children without loans. How about today? </p>
<p>Few citizens know that a few years ago government changed how they measure and report inflation, as if that would stop it - - but families know better when they pay their bills for food, medical costs, energy, property taxes, insurance and try to buy a house.</p>
<p>Is inflation a threat to society? Consider this famous quote:
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” Lord John Maynard Keynes (1883-1946), renowned British economist."</p>
<p>Canuckguy, thanks for the link.</p>
<p>Zoosermom, I didn’t realize parts of the NYC area were soft.</p>
<p>"Zoosermom, I didn’t realize parts of the NYC area were soft. "</p>
<p>Staten Island has been decimated, but I think it’s for totally different reasons. This being the only place in NYC left with open space, too much building has gone on and builders have had to dip into the population of unqualified buyers to sell them. At the same time, the community is overcrowded and suffering the impact of poor infrastructure. I live in an established, beautiful area, so I’m convinced that with a little patience things will level out just fine. Of course I may be delusional – this wouldn’t be the first time.</p>
<p>dstark, thanks to the explaination. But I doubt the strategy worked at 30s may not work today. Today with internet high way, things are moving much fast than 70 or 80 years ago. The wall street are full of ‘quick money’ makers. who has the patiant to hold the ‘loan’ for over 15 years with small profit. And where the initial fund come from? I for one for sure don’t want any more increase at tax. </p>
<p>The ‘greedy’ of bank loan manager, free lance agents, etc. and lack of compliance law or monitoring system are all the cause of this. Still remember we got calls almost every week by those freelance mortgage agent to push the ‘no cost’ remortgage…those ‘sales’ people don’t care if you could pay or not, they get commision (if he is a freelance) or ‘merit promotion/bonus’ if a bank loan officer. … the higher up managers got promoted because your department lend out so much money. … then there are pack of wolves on wall street, create this and that so called ‘derivetive fixed income’ investment product. … the 'fool’s are the general public and foreign country investment banks or institutions came in buy those products. … on and on. … Bank should never lend the ‘no down pay’ mortgage at the first place. What happened to those ‘loan’ officer? Because this is not their own money?</p>
<p>mini, there was once an experiment called “The Soviet Union”. There was no inflation, no evil banks, there was free health care and higher education for everyone, and everyone was guaranteed a place to live. Guess what happened to that experiment? ;)</p>
<p>This may not be the popular thing to say, and I mean no offense to anyone, but I think many of these people who can’t pay their loans have only themselves to blame. The whole “predatory loans” thing makes me a little mad. Just because a company will give you a loan doesn’t mean you can afford it. I saw an article where a lady had to have her BMW M6 taken because she couldn’t pay the $1200/month loan living off her $2,300/month income :rolleyes: . That sounds more like stupidity rather than the big bad loan company</p>
<p>
Don’t forget mainland china. With socialism every one lived in ‘poor’ once. No matter how smart or hard work you are, every one got almost the same pay. So people never had the incecitive to work hare to make money for themselves. Look what happens there now? More capitalized than this capitalized country (US) in practice. People there now get ‘motivated’ to work hard and make their own money. Though the difference is since it was transfered in the mid from socialist society to capitalist like society, a lot of corruptions happens. When the privatelized the priviousely government owned companies, a lot of gov officers in positions took the first opertunity jump on the wagon. So there not every one started from the same line.</p>
<p>The socializm, communizm might be an idea society only if the society has unlimited resources available to every one. Otherwise only going to encourage the ‘laziness’. </p>
<p>LA, I agree with you people should not borrow more than they can afford. But in reality, the policy is set to encourage people spending, the over spending on credit card acount is very common. … that’s why every loan has to get approved by someone. </p>
<p>imo, in future, there should be some compliance law forbiden bank to lend the home mortgage without ‘down pay’. This way if something like this happened again, the officer approve this type of loan will take legal responsible. get punished.</p>
<p>“mini, there was once an experiment called “The Soviet Union”. There was no inflation, no evil banks, there was free health care and higher education for everyone, and everyone was guaranteed a place to live. Guess what happened to that experiment?”</p>
<p>That’s why we have to make absolutely sure the banks are protected, and bailed out as needed. As for the people who can’t pay 'em, let 'em work it off.</p>
<p>Mini, the cure for our problems are worse than the disease.</p>
<p>We have been inflating our currency for years. To deal with the stock market bubble, 9/11, the real estate bubble and the credit bubble, what do we do? We inflate.</p>
<p>Inflation can cause more problems than a few bank failures and people losing their homes. </p>
<p>Because the US currency is the world currency, inflation is spreading all over the world.</p>
<p><a href=“http://www.nytimes.com/2008/02/25/world/middleeast/25economy.html?_r=1&th&emc=th&oref=slogin[/url]”>http://www.nytimes.com/2008/02/25/world/middleeast/25economy.html?_r=1&th&emc=th&oref=slogin</a></p>
<p>Look, our owners, together with China and Saudi Arabia, end up with all the money anyway. We are just borrowing, and they don’t mind. Just give 'em what they want, and they will take care of us.</p>
<p>(You think maybe the inflation of food stuffs in Syria and Jordan might just have a little to do with General Betrayus’ ethnic cleansing policies and the two million refugees, 600,000 just between July and October?)</p>
<p>“We are just borrowing, and they don’t mind. Just give 'em what they want, and they will take care of us.”</p>
<p>:)</p>