In case there is anyone who STILL doesn't get it....

[Moses]

Originally Posted by Shaun 84 Targa

OK, I give up. When you can find the law that Congress made forcing banks to make risky loans, to not check on application data and to structure them in a way that ensures default, let me know.

then we can get to how mortgage backed securities were sold.

Shaun, PLEASE read this entire article from 1999; http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&scp=1&sq=september%201999%20fannie%20mae&st=cse


Who regulates Fannie Mae? The Office of Federal Housing Enterprise Oversight (OFHEO) was established as an independent entity within the Department of Housing and Urban Development (HUD) by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992:

http://www.fanniemae.com/faq/cs_faq3.jhtml?p=FAQ

[MikeSid]

My histroical understanding of this is admittedly weak, but I think it all started with Garn-St. Germaine in the early 80s. I'm sure there were others later though and I think Garn-St. Germaine was designed to address the Savings and Loan crisis, but it has father reaching effects on mortgage lending restrictions.

[Moses]

Originally Posted by Shaun 84 Targa

OK, I give up. When you can find the law that Congress made forcing banks to make risky loans, to not check on application data and to structure them in a way that ensures default, let me know.

then we can get to how mortgage backed securities were sold.

Shaun, Fannie and Freddie borrow directly from the banks, then repackage that money to sell as mortgages.

[Zeke]

Originally Posted by Porsche-O-Phile

The lenders were just filling a need (demand) created by borrowers.

I place the culpability for this stuff about 80% on the borrowers who are/were too stupid or unrestrained to exercise fiscal restraint and about 20% on the lenders, who just chucked decades of established lending guidelines to the wind in order to profiteer short-term off the aforementioned idiots.

Repeat: "The lenders were just filling a need (demand) created by borrowers.
"

I can't disagree with your assessment of the situation, but I think your percentages are skewed.

Sure, much of the general population is uneducated on financial matters. All one has to do is visit a car dealership for couple of hours to see that. OTOH, the people making loans are anything but uneducated. They know exactly what they are doing and sell it aggressively. It's hard to avoid credit and loans. Apparently it's hard to avoid fast food, too.

[Rick Lee]

Originally Posted by milt

Sure, much of the general population is uneducated on financial matters. All one has to do is visit a car dealership for couple of hours to see that. OTOH, the people making loans are anything but uneducated. They know exactly what they are doing and sell it aggressively. It's hard to avoid credit and loans. Apparently it's hard to avoid fast food, too.

Well, life is hard on stupid people. My wife just got a Shell credit card offer where you get "free gas" for carrying a balance month to month. You know a lot of people will think that gas really is free. Hey, I'm not saying it can't be a good deal. But a lot of folks will assume it is and not do the math on how much "free gas" you get according to how much of a balance you carry and thus how much finance charge you pay for that "free gas".

[DanielDudley]

Originally Posted by sammyg2

make the low-lifes pay off their loans like they promised and none of that other stuff would ever happen.

Do you really think they can ? The true irony of the situation is of course that if we had spent the last 7 years creating a better job infrastructure, they would be able to pay offf the loans, and the houses would actually still be worth what they paid for them, the investments would be secure, and all would be well in the world. Assuming that your typical ''low life'' is actually able to figure out if he can afford an ARM would be foolish, unless of course you are making a commission based on the points attached to said loan.

Or are you suggesting that we give the bail out to homeowners, and let the money trickle up ?

Yes, you heard it here first folks. Trickle Up Economics.

[Moses]

Originally Posted by DanielDudley

Do you really think they can ? The true irony of the situation is of course that if we had spent the last 7 years creating a better job infrastructure, they would be able to pay offf the loans, and the houses would actually still be worth what they paid for them, the investments would be secure, and all would be well in the world.

When Fannie and Freddie began offering loans to people who had no business owning a house in the first place, there was an immediate surge in potential home buyers. Predictably, prices went up.

Now we are pulling a few million people back out of the housing market. Guess what? Prices are going to drop.

[Zeke]

Now we are pulling a few million people back out of the housing market. Guess what? Prices are going to drop.I think they already have dropped a lot. Any more and you can call this one a bad one. Right up there with some of the worst economic times we've ever seen in this country.

That having been said, you wouldn't believe the percentage of renters vs. home owners in Los Angeles. I don't have the statistic handy, but I remember something like 50%.

[Moses]

Originally Posted by milt

[I][B]
That having been said, you wouldn't believe the percentage of renters vs. home owners in Los Angeles. I don't have the statistic handy, but I remember something like 50%.

Not surprising. I think it might get worse. (Wayne was right!)

[sammyg2]

Originally Posted by milt

Sam, you're way to simplistic (and that's not the word I was thinking of ) in your approach to solve the world's problems. Let me make a hypothetical challenge for you to consider. Say you need to sue in small claims and you win. Now, you go to collect and there's nothing, no job, no assets to speak of. Now how are you going to
"make the low-lifes pay off" ??

When you figure this out, write your congresspersons. Send me a petition, I'll sign it.

And your compassion, while misguided adds to the problem.

Compassion creates excuses. Excuses take away personal responsibility.
Lack of personal responsibility creates a culture that says it's OK to default on a mortgage, because it's not your fault. There's no work, I didn't understand the contract, etc.
Maybe there's no work because what a person offers is not valued. Maybe there's no work because a person isn't in demand because of price, quality, whatever. Maybe there just aren't very good at what they do. Maybe they aren't willing to do something that pays better because it isn't fun. I don't want to hear the excuses. If I was behind on the payments of my loan I'd figure out a way to make those payments. I'd work 20 hours a day if that's what it took. I'd dig ditches, I'd shovel feces, I'd do whatever it took. That's called being responsible, it's part of being a man.

Maybe a person didn't understand the contract because they were too busy getting high in high school. I don't care.
If a person signs a legal, binding contract to borrow money and pay it back ,they are obligated to pay it back, even if it isn't convenient. Even if it makes times hard. Even if money is tight.
I'm tired of the whining. People are walking away from loans because it is the easy way out, and people like me are going to end up paying for them.
If we punish the dead beats it will be less attractive to walk away from a loan, It's too easy to go back on a person's word today.
using your example, a person looses in small claims court. Obviously they arel iable for something. They did wrong. they hurt someone else financially, whatever. I don't care if they don't have anything, they need to be PUNISHED! Let them know being a lowlife with nothing is not a free pass to screw others over. Let others know that if they do the same thing they will be punished too.
F- the compassion, you are doing these people more harm by coddling them than if you made them face up to their responsibilities. As long as you let people off the hook for screwing up (or even worse, bail them out) they will continue to screw up.
Then look who's stuck with the bill. The people who don't screw up. the people who pay their bills. The people who are responsible. The people who's parents actually taught them some morals.
Punish the good people, reward the low-lifes.
Guess what? pretty soon you run out of good people and everyone is a screw up. Then who's going to bail you out?

[jyl]

I believe the large majority of FNM and FRE's borrowing is via agency bonds sold to investors. Many banks buy those agency bonds, but so do many governments, central banks, pension funds, mutual funds, money market funds, corporations, etc etc.

Originally Posted by Moses

Shaun, Fannie and Freddie borrow directly from the banks, then repackage that money to sell as mortgages.

[competentone]

I'll bump this up again.

If you want to understand exactly who this "$700 billion" bailout package is going to help, take a few minutes and review the illustrated explanation about the situation.

(Warning again: Some of the language is a little rough, but is probably pretty representative of the real language used by those involved in this credit crisis.)

Can you identify the characters who will be benefiting from the bailout?

http://www.suburbanhousehunters.com/about/mortgage-crisis/

"Crap is crap." Don't believe the latest lies coming from the government (and the investment bankers pushing for the bailout) that "the government might actually make money on this deal."

If people actually saw some of the abandoned, stripped, vandalized houses behind the worst tranches of CDOs (collateralized debt obligations) they would understand that these are not "assets."

When it cost more to repair a house than the house can be sold for, or if it costs more to tear down a condemned structure than the resulting vacant lot will be worth, one does not have any "asset." Such a holding is a liability.

Some private investors might want to speculate and buy such distressed properties (for extremely low prices) and hold them with an expectation that the real estate market will eventually recover and they will make money on their purchases, but do we want the government to be speculating in real estate?

NO BAILOUT for the investment banks!

[Zeke]

Originally Posted by sammyg2

And your compassion, while misguided adds to the problem.

Compassion creates excuses. Excuses take away personal responsibility.
Lack of personal responsibility creates a culture that says it's OK to default on a mortgage, because it's not your fault. There's no work, I didn't understand the contract, etc.
Maybe there's no work because what a person offers is not valued. Maybe there's no work because a person isn't in demand because of price, quality, whatever. Maybe there just aren't very good at what they do. Maybe they aren't willing to do something that pays better because it isn't fun. I don't want to hear the excuses. If I was behind on the payments of my loan I'd figure out a way to make those payments. I'd work 20 hours a day if that's what it took. I'd dig ditches, I'd shovel feces, I'd do whatever it took. That's called being responsible, it's part of being a man.

Maybe a person didn't understand the contract because they were too busy getting high in high school. I don't care.
If a person signs a legal, binding contract to borrow money and pay it back ,they are obligated to pay it back, even if it isn't convenient. Even if it makes times hard. Even if money is tight.
I'm tired of the whining. People are walking away from loans because it is the easy way out, and people like me are going to end up paying for them.
If we punish the dead beats it will be less attractive to walk away from a loan, It's too easy to go back on a person's word today.
using your example, a person looses in small claims court. Obviously they arel iable for something. They did wrong. they hurt someone else financially, whatever. I don't care if they don't have anything, they need to be PUNISHED! Let them know being a lowlife with nothing is not a free pass to screw others over. Let others know that if they do the same thing they will be punished too.
F- the compassion, you are doing these people more harm by coddling them than if you made them face up to their responsibilities. As long as you let people off the hook for screwing up (or even worse, bail them out) they will continue to screw up.
Then look who's stuck with the bill. The people who don't screw up. the people who pay their bills. The people who are responsible. The people who's parents actually taught them some morals.
Punish the good people, reward the low-lifes.
Guess what? pretty soon you run out of good people and everyone is a screw up. Then who's going to bail you out?

I have no compassion. What's wrong with you? It's like you can't read or something.

I said there's nothing left as in "you can't squeeze blood out of a turnip."

I have a further suggestion if you can't solve the problem, only grouse, go to work for a collection agency. Bring those damn people to their knees.

[RWebb]

right.

and re "coddling them" - that iwhat unscrupulous mtg. brokers did first time around -- they have been told: no mtg for you -- here is wha you need to do to clean up your act...

btw, i heard a sig. fraction of the bad loans were for vacation & 2nd homes -- let's go after them...

[jyl]

Originally Posted by milt

I have no compassion. What's wrong with you? It's like you can't read or something.

I said there's nothing left as in "you can't squeeze blood out of a turnip."

I have a further suggestion if you can't solve the problem, only grouse, go to work for a collection agency. Bring those damn people to their knees.

To their knees, hell. What's wrong with you, Milt, gone soft or something? How about to the chain gang?

In Anyone going to jail? $700B and no legal grounds for prosecution? sammyg says that "people who reneged on binding legal contracts (mortgages) and their irresponsibility deserves punishment. Throw them in jail, they creates this mess."

You see, he's MAD! When he's mad, he's TOUGH! Tommorrow, he's going to say forget collection, forget jail, anyone foreclosed on goes straight to public execution. In the yard of their former house.

[techweenie]

Interesting to watch:

http://www.youtube.com/watch?v=lsC2k9opOP0

[BlueSkyJaunte]

Indentured servitude does wonders.

Alternatively we can expand our debtors' prison concept, which is already applied to "deadbeat dads".

[Flatbutt1]

All I know is I can afford my mortgage only as long as I keep my job. If my employer sends my job overseas will you guys bail me out? Please? Really it wouldn't be my fault... right? So I should be forgiven...right?