Do you have adblock enabled?
 
If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(LA Times)   "The mortgage foreclosure crisis is starting to abate." "What about all these home equity loans due to reset?" "Oh, crap"   (latimes.com ) divider line
    More: Scary, foreclosures, second mortgages, mortgages, financial regulators, home equity, Equifax, line of credits, Matt Cutts  
•       •       •

3033 clicks; posted to Business » on 10 Nov 2013 at 12:11 PM (3 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



52 Comments     (+0 »)
 
View Voting Results: Smartest and Funniest


Oldest | « | 1 | 2 | » | Newest | Show all

 
2013-11-10 11:00:47 AM  
The Dude abides.

Crisis abate.
 
2013-11-10 11:03:08 AM  
Prescient headline.
 
2013-11-10 11:07:02 AM  
Oh, FFS
 
2013-11-10 11:17:50 AM  
you mean you can't use your home on a checkbook forever?
 
2013-11-10 11:18:31 AM  
Over in 1.
 
2013-11-10 11:28:45 AM  
The US mortgage outstanding debt is around $13 Trillion . I think the economy can handle a $30 billion hiccup.
 
2013-11-10 11:56:05 AM  

doyner: Prescient headline.


NICE.
 
2013-11-10 12:06:50 PM  

Wanebo: The Dude abides.

Crisis abate.


I think they were going for "subsides".
 
2013-11-10 12:19:48 PM  
Make the entire country non-recourse for mortgage and auto loans. That stops a LOT of this floating crap and the increase in interest rates pushes the super-subprime buyers out of the market and forces the lenders to be much more diligent in who they approve.

A house is a place to live and build long term equity (with an eventual goal of reduced costs of occupation). It is not a checkbook.
 
2013-11-10 12:34:55 PM  
That's just, like, your opinion, man.
 
2013-11-10 12:41:45 PM  
"Avoision."  It's a perfectly cromulent word.
 
2013-11-10 12:45:09 PM  
Shut the f**k up, Donny Subby.
 
2013-11-10 12:52:52 PM  
FTFA:  If borrowers cannot afford or choose not to make the fully amortizing payments that reduce the principal debt, the bank that owns the note can demand full payment and foreclose on the house if there is sufficient equity.

There's your problem in California. I know people who haven't paid a HELOC in 3+ years. What's the 2nd mortgage lender gonna do? Nothing, that's what.

Snarcoleptic_Hoosier: Make the entire country non-recourse for mortgage and auto loans. That stops a LOT of this floating crap and the increase in interest rates pushes the super-subprime buyers out of the market and forces the lenders to be much more diligent in who they approve.


THIS. If you titans of industry believe in capitalism so much, stop rigging the game.
 
2013-11-10 12:53:23 PM  
That's pretty awesome.
 
2013-11-10 01:11:19 PM  
Your house is not an ATM.
 
2013-11-10 01:14:34 PM  
History's so much more fun when it's relived the second time.

/Say what you will about the tenets of mortgage resets, but at least it's an ethos.
 
2013-11-10 01:22:52 PM  

Wanebo: The Dude abides.

Crisis abate.


Crisis abates.

Crises abate.
 
2013-11-10 01:26:33 PM  
Go away, abatin'.
 
2013-11-10 01:43:01 PM  
What are people thinking when they take an "interest only" loan?

"Well, we can't pay for it right now, but I'm sure we will win the lottery in the next few years".

I know most banks are evil and all, but why would you loan to anyone if they don't have some logical payback plan?


/and no, die before I have to pay it back isn't a logical payback plan
//nor is "hope for foreign invasion"
 
2013-11-10 01:51:39 PM  

Nightenstaff: What are people thinking when they take an "interest only" loan?

"Well, we can't pay for it right now, but I'm sure we will win the lottery in the next few years".

I know most banks are evil and all, but why would you loan to anyone if they don't have some logical payback plan?


/and no, die before I have to pay it back isn't a logical payback plan
//nor is "hope for foreign invasion"


They're thinking, "I have all kinds of other debt that I can use that money to pay off while I pay interest only on the house.  Also, I'm going to be promoted at work before that comes due, so I'll be able to make it up later."  At least the smarter ones are (smart being a relative term).  The dumb ones are thinking, "Cool!  I can afford that!" without thinking of the future.
 
2013-11-10 02:36:36 PM  

Benevolent Misanthrope: Nightenstaff: What are people thinking when they take an "interest only" loan?

"Well, we can't pay for it right now, but I'm sure we will win the lottery in the next few years".

I know most banks are evil and all, but why would you loan to anyone if they don't have some logical payback plan?


/and no, die before I have to pay it back isn't a logical payback plan
//nor is "hope for foreign invasion"

They're thinking, "I have all kinds of other debt that I can use that money to pay off while I pay interest only on the house.  Also, I'm going to be promoted at work before that comes due, so I'll be able to make it up later."  At least the smarter ones are (smart being a relative term).  The dumb ones are thinking, "Cool!  I can afford that!" without thinking of the future.


I have an interest only mortgage.  I initially paid cash for my house. When rates got low enough I took out a 10/1 interest only mortgage and placed the money with my financial advisor.  I think of it as a fixed rate margin loan with a 10 year bullet.  So far my guy is generating a good positive carry.  I agree, however, that taking out an interest only loan as acquisition financing if you don't have substantial other assets is a poor idea.
 
2013-11-10 03:17:53 PM  
mandatory "resets" requiring borrowers to begin paying both principal and interest on their balances after 10 years.

Guh? Isn't that how every loan is supposed to work?

/I know, I know.
//One traditional mortgage, no HELOC.
 
2013-11-10 03:21:04 PM  
Amy Crews Cutts, chief economist for

nelsonhaha.jpg
 
2013-11-10 03:41:49 PM  
The night of wild partying is great until the bill comes the next morning.

And, you might be going away for a while. That goat had some powerful friends.
 
2013-11-10 04:07:42 PM  

Fuggin Bizzy: Guh? Isn't that how every loan is supposed to work?


The industry had those stupid 'interest only' loans for those who were absolutely certain there would always be a buyer to flip that house to at a profit.
 
2013-11-10 04:33:56 PM  
The problem is that housing is overpriced.  The banks perpetuated this by creating new and interesting ways that people could think they could afford to purchase a home.  It's all black magic and smoke and mirrors.  Eventually it all comes due and crashing down to where a person working an average job can buy an average house for 2.5* their annual income.  This means in areas where Family Dollar and Walmart are the average employers, average houses will be in the $40k range, not the $150k range.
 
2013-11-10 04:38:40 PM  
1. Buy a house you can afford.
2. Pay it off within ten years.  (If you can't, then you can't afford that house.)
3. Profit, since you don't have to pay for housing every month anymore.
4. (Optional)  Repeat steps one through three while letting someone else rent the house you already own.


Easy.  A mortgage on a small house isn't much more expensive each month than a two-bedroom apartment.
 
2013-11-10 04:48:58 PM  

NetOwl: 1. Buy a house you can afford.
2. Pay it off within ten years.  (If you can't, then you can't afford that house.)
3. Profit, since you don't have to pay for housing every month anymore.
4. (Optional)  Repeat steps one through three while letting someone else rent the house you already own.


Easy.  A mortgage on a small house isn't much more expensive each month than a two-bedroom apartment.


This.  I bought a single wide trailer on 4 acres, several years ago.  Paid it off in about 7 years.  Easy living ever since.  Wife and I even raised (still raising) 3 kids in the trailer.  I have a friend that bought a $400K McMansion on an acre......now he's upside down and scared to death.
 
2013-11-10 04:56:07 PM  

NetOwl: 1. Buy a house you can afford.
2. Pay it off within ten years.  (If you can't, then you can't afford that house.)
3. Profit, since you don't have to pay for housing every month anymore.
4. (Optional)  Repeat steps one through three while letting someone else rent the house you already own.


Easy.  A mortgage on a small house isn't much more expensive each month than a two-bedroom apartment.


The problem with this is when you live somewhere "desirable" like say the Bay Area. Then the workers in the local community are competing with Chinese all-cash buyers and other forms of (usually foreign) money launderers looking to park their money in American real estate, with no intention to occupy.

They should do like other countries and only allow citizens to own property. Foreigners can lease.
 
2013-11-10 05:24:16 PM  
The real news here is that apparently people still have earthlink email addresses.
 
2013-11-10 05:35:21 PM  

Propain_az: NetOwl: 1. Buy a house you can afford.
2. Pay it off within ten years.  (If you can't, then you can't afford that house.)
3. Profit, since you don't have to pay for housing every month anymore.
4. (Optional)  Repeat steps one through three while letting someone else rent the house you already own.


Easy.  A mortgage on a small house isn't much more expensive each month than a two-bedroom apartment.

This.  I bought a single wide trailer on 4 acres, several years ago.  Paid it off in about 7 years.  Easy living ever since.  Wife and I even raised (still raising) 3 kids in the trailer.  I have a friend that bought a $400K McMansion on an acre......now he's upside down and scared to death.


Yes, but you bought a trailer, which is guaranteed to decline in value. At least you have the acreage.
 
2013-11-10 05:57:53 PM  
The HELOC overhang is why we had to pretend that the 1st trusts we're A-OK and did not put any bankers in jail. As soon as you zero out the 1st mortgages and admit that they were frauds, the HELOCs go pop too. Even if the banks holding those were more or less above board.

Basically we've enabled one big rolling 3 card monte game since mid-2006, when everyone knew Countrywide was cooked.
 
2013-11-10 06:41:59 PM  

the_freelance: The HELOC overhang is why we had to pretend that the 1st trusts we're A-OK and did not put any bankers in jail. As soon as you zero out the 1st mortgages and admit that they were frauds, the HELOCs go pop too. Even if the banks holding those were more or less above board.

Basically we've enabled one big rolling 3 card monte game since mid-2006, when everyone knew Countrywide was cooked.


I'd say it's more along the lines of Calvinball.
 
2013-11-10 06:42:05 PM  
Nah, abide is right
 
2013-11-10 06:53:07 PM  

Snarcoleptic_Hoosier: Make the entire country non-recourse for mortgage and auto loans. That stops a LOT of this floating crap and the increase in interest rates pushes the super-subprime buyers out of the market and forces the lenders to be much more diligent in who they approve.

A house is a place to live and build long term equity (with an eventual goal of reduced costs of occupation). It is not a checkbook.



I don't think you know what recourse means.
 
2013-11-10 08:17:30 PM  
That's because these credit lines, which are second mortgages with floating rates and flexible withdrawal terms, carry mandatory "resets" requiring borrowers to begin paying both principal and interest on their balances after 10 years. During the initial 10-year draw period, only interest payments are required.

Well, that shouldn't be a big problem. Only complete idiots would take out a decade long interest only loan on their house.
 
2013-11-10 08:19:44 PM  
first person to scheme their way out of this is a billionaire

....aaaaaaaand go
 
2013-11-10 08:45:08 PM  
Doing this was a thing? The banks let people do this? And nobody thought that this wouldn't go bad?
 
2013-11-10 08:46:32 PM  
Interest only loans?  That was amateur stuff.  The real pros got into the negative amortization loans.  The ones where you didn't even cover the interest and your loan balance keeps going up each and every month.  They are like totally awesome and you can't go wrong.
 
2013-11-10 08:57:14 PM  

jmr61: Snarcoleptic_Hoosier: Make the entire country non-recourse for mortgage and auto loans. That stops a LOT of this floating crap and the increase in interest rates pushes the super-subprime buyers out of the market and forces the lenders to be much more diligent in who they approve.

A house is a place to live and build long term equity (with an eventual goal of reduced costs of occupation). It is not a checkbook.


I don't think you know what recourse means.


To be able to reclaim losses up to the value of the contract rather than the market value of an asset. A recourse state allows the lender to seek the difference between the appraised value and the actual value in the case of default or asset forfeiture (Loan for $1000 to buy item. After 1 year, item only worth $500 and borrower stops paying loan. Lender seizes asset, sells it, and proceeds to seek damages for remaining value against defaulted borrower.) In a non recourse situation, the lender must accept that the potential for a write-off of bad debt for the difference in value must exist and be factored into the cost for borrowing (higher interest rates and secured deposits).

But you're right, I don't know. I'm only an accountant.
 
2013-11-10 09:49:34 PM  

Opiate of the Lasses: FTFA:  If borrowers cannot afford or choose not to make the fully amortizing payments that reduce the principal debt, the bank that owns the note can demand full payment and foreclose on the house if there is sufficient equity.

There's your problem in California. I know people who haven't paid a HELOC in 3+ years. What's the 2nd mortgage lender gonna do? Nothing, that's what.

Snarcoleptic_Hoosier: Make the entire country non-recourse for mortgage and auto loans. That stops a LOT of this floating crap and the increase in interest rates pushes the super-subprime buyers out of the market and forces the lenders to be much more diligent in who they approve.

THIS. If you titans of industry believe in capitalism so much, stop rigging the game.


Why is it "rigging the game"? Many mortgages in the US already ARE non-recourse.

Forcing all new loans to be non-recourse will make lenders more diligent. However don't complain then when rates go up and it's harder to get a loan.
 
2013-11-10 10:45:52 PM  
Debeo Summa Credo:
Why is it "rigging the game"? Many mortgages in the US already ARE non-recourse.

Forcing all new loans to be non-recourse will make lenders more diligent. However don't complain then when rates go up and it's harder to get a loan.


I would consider that as an acceptable trade off to reducing the social engineering bubble. Yes, ideally, everyone should be able to afford a home (as in the literal building), but that requires an informed populace willing to put off present benefits for future ones and be able to determine their own risk tolerances. I'm not optimistic enough to believe that is ever a realistic scenario, so the cost should reflect the risk. House financing becomes a low profit margin situation since buyers who do qualify are capable of switching lenders and the market stabilizes into what it was BEFORE the concept of "investment home".

That being said, I support an expanded social program to provide assistance with housing (living in a fixed residence) for those unable to qualify.

I know you're a bit more on the conservative side than I am, but I don't believe you to be an idiot. Any critiques or criticisms are welcome.
 
2013-11-10 11:15:59 PM  

pounddawg: Your house is not an ATM.


But it *is*. The entire systems is setup so that you are supposed to use your house as an ATM. And anything else you can use.

The sad fact is our economy is built on credit. If people really started saving money, the economy would crash like you wouldn't believe.
 
2013-11-11 01:06:26 AM  

Opiate of the Lasses: They should do like other countries and only allow citizens to own property. Foreigners can lease.


This I'd love to see.
 
das
2013-11-11 04:37:30 AM  
Dumb people get screwed over.
Read a history book.
 
2013-11-11 06:03:17 AM  

Opiate of the Lasses: NetOwl: 1. Buy a house you can afford.
2. Pay it off within ten years.  (If you can't, then you can't afford that house.)
3. Profit, since you don't have to pay for housing every month anymore.
4. (Optional)  Repeat steps one through three while letting someone else rent the house you already own.


Easy.  A mortgage on a small house isn't much more expensive each month than a two-bedroom apartment.

The problem with this is when you live somewhere "desirable" like say the Bay Area.


If you can't afford to live there, it's not desirable for you.

Then the workers in the local community are competing with Chinese all-cash buyers and other forms of (usually foreign) money launderers looking to park their money in American real estate, with no intention to occupy.

They should do like other countries and only allow citizens to own property. Foreigners can lease.


That is a horrible idea.
 
2013-11-11 07:24:43 AM  

Snarcoleptic_Hoosier: Debeo Summa Credo:
Why is it "rigging the game"? Many mortgages in the US already ARE non-recourse.

Forcing all new loans to be non-recourse will make lenders more diligent. However don't complain then when rates go up and it's harder to get a loan.

I would consider that as an acceptable trade off to reducing the social engineering bubble. Yes, ideally, everyone should be able to afford a home (as in the literal building), but that requires an informed populace willing to put off present benefits for future ones and be able to determine their own risk tolerances. I'm not optimistic enough to believe that is ever a realistic scenario, so the cost should reflect the risk. House financing becomes a low profit margin situation since buyers who do qualify are capable of switching lenders and the market stabilizes into what it was BEFORE the concept of "investment home".

That being said, I support an expanded social program to provide assistance with housing (living in a fixed residence) for those unable to qualify.

I know you're a bit more on the conservative side than I am, but I don't believe you to be an idiot. Any critiques or criticisms are welcome.


Yeah, I agree that it's a reasonable trade-off for making new loans non recourse prospectively. I was taking issue with the other guy's comment that recourse loans are "rigging the game".

One critique would be that making auto loans non-recourse would be tougher, as its a depreciating asset used for collateral. I believe most car loans are recourse now.
 
2013-11-11 08:34:48 AM  

realmolo: pounddawg: Your house is not an ATM.

But it *is*. The entire systems is setup so that you are supposed to use your house as an ATM. And anything else you can use.

The sad fact is our economy is built on credit. If people really started saving money, the economy would crash like you wouldn't believe.



Yes, because it's not like savings fuel investment or anything like that.  Money stuffed in the mattress is dead money.  Money put towards stocks/bonds etc. is being pumped right back into the economy.
 
2013-11-11 11:38:20 AM  
2006. Home prices are going up and will always go up.

2013. Home prices are going down and will always go down.

uit.guggenheiminvestments.com

3.bp.blogspot.com

//Yesterday I received the first HELOC offer in a decade. It was weird. I had to check to see if I fell into some wormhole into 2006 or something
 
2013-11-11 11:45:20 AM  

Snarcoleptic_Hoosier: Make the entire country non-recourse for mortgage and auto loans. That stops a LOT of this floating crap and the increase in interest rates pushes the super-subprime buyers out of the market and forces the lenders to be much more diligent in who they approve.

A house is a place to live and build long term equity (with an eventual goal of reduced costs of occupation). It is not a checkbook.


I assume if they did that the mortgage insurance borrowers with less than a 20% downpayment currently pay to protect the bank against default would go to a policy that protects the homeowner against their house going underwater, and not much would change.
 
Displayed 50 of 52 comments


Oldest | « | 1 | 2 | » | Newest | Show all


View Voting Results: Smartest and Funniest

This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »
On Twitter








In Other Media
  1. Links are submitted by members of the Fark community.

  2. When community members submit a link, they also write a custom headline for the story.

  3. Other Farkers comment on the links. This is the number of comments. Click here to read them.

  4. Click here to submit a link.

Report