So we tax payers are going to bail out the bad loans

[OC28HEAT]

I respectfully disagree. Values are highly inflated (still). That is not healthy for anyone nor is artificially propping them up. I don't care if my home value falls as long as they all fall, which they will. It's all relative. Government having to cut back I don't see as a bad thing. They overspend every dollar they get their hands on anyway worse than any consumer with a home equity line ever could. At least consumers are limited by their home's inflated value as to what they borrow and spend. Government makes an overextended consumer look like a financial saint as they just spend into the stratosphere when their credit's exceeded (that one we do all pay for).
The only pain that will be felt is by the institutions that made stupid loans, those foolish enough to be in those industries while believing the bubble would never end and not making a plan for when that happened, those who took loans for more they could afford, and those who anchored their businesses around servicing and supporting all these artificially inflated home prices with no alternative plan to make money in the down cycle.
Let it crash. Maybe then a would be first time home buyer will actually be able to afford to buy a home. Right now they certainly cannot and never will if prices are artificially and continually propped up. Get home prices back into reality compared to average incomes at least.
It's called a correction. The bigger the inflated error, the bigger the correction. It's course should be left alone imo.
I know in my business when I make stupid decisions and don't plan for lean times, spend too much for non essentials, etc., I pay the price and suffer the consequenses, no one else. Why should this industry get special treatment and bailout? I think it's bs.
Well written,
For the most part most of the borrowers will not have a clue that this is a temporary fix and try to climb out and better themselves they will continue to spend. I have seen numerous studies that say it takes less that three weeks for someone to start spending a raise when you receive it from your employer
I see the inflated values everyday. I talk to the borrowers every day and they say that the bad lender took advantage of them when they wanted the taste of the good life.
the values need to come down and govenment needs to collect less taxes and then the govenment can spend less taxes.
Pretty simple

[OC28HEAT]

First I think its unrealistic to think it will correct to 10 years ago values.
What I am trying to get across is that if values decrease, all values decrease, and while being unable to sell at value owed would have little to do with it.
Take a 500K value home (at peak) and let's say a guy owes 450K (90%). Lets say the home plunges to 400K in value (20%). Now the guy is upside down on the loan for 50K.
So can he sell for the 450K he has a loan for? Of course not. He's 50K down.
But... if he could afford the payment before the price reduced he can still afford the payment. Assuming he wants to stay and live in the home.
If he wants to sell he certainly can. Just at 400K (realizing a 50K loss on this home).
However whatever home he buys (higher or lower value) has now also been reduced by that same 20%. So it is all relative. He buys another home, higher or lower, depending on what he can afford and realizes the gain there that he lost on the one he sold. That's the equalizer and the part that many do not see.
Now if he bought that 500K home and really was on the edge on affording the payment, that was a poor decision on his part as he will now not be able to afford to buy something else and if he can't pay the payment he'll lose the house. That is called living within your means (or not).
Now if he bought the home to inflate and flip and not live in for any length of time, he's just in deep shit and made a bad investment. In my opinion its bad policy to play your home as an investment. Do that with rental properties or other stuff besides real estate.
Several different scenarios there.
when this is all said and done most of the country will have seen a 35-40 percent correction in prices

[OC28HEAT]

It has nothing to do with the local banks. where do you think the lending companys get there money if we just let all the houses go into forclosure then the investers are going to get that much less money back. the less money they get back the less money they can invest somewhere else if at all.
if it keeps getting worse they wont want to put money out anywhere. thats how we get into recessions. The money that supports the economy doesnt come from the government or tax payers it comes from investers and people that need to invest because they have to much money and need to put it somwhere so they dont get taxed on it or even for a loss to right it off.
sorry to say but the investors are going to make money no matter what they have bets on both sides it is called hedge fund for a reason that is why the dow is still not plumeting

[Faceaz]

If it's not taxpayer money, I'm all for it. It's better then a bunch of homes in your neighborhood going into foreclosure and driving home prices down further.
It's already happening. We have our place on the market in Huntington & are thinking about pulling it & renting it out. Last year @ this time we could have gotten around 675k & we have it on the market for 639k. The problem is, in the past 2 weeks there's been 2 forclosure short sales for under 550k in our immediate area. We had a couple of offers, but only from poachers hoping that were in trouble & willing to take anything. One of the offers was over 10% less. Luckily we aren't in trouble & won't be hurt if we need to rent it.

[boatsntoys]

WE all loved the price increases that the A-hole lyeing buyers made our houses evaluate to. If it had not been for all those money grubbing banks, full of s--t ballers, manipulating loan guys, people living beyond their means, etc. etc. We never would have had the price increases we had.. We ALL loved them then. They were the reason we all made a bunch of money or equity. Now we have to give a little back.
Did anyone here turn away a buyer because you wanted to protect the real estate and banking industry and you thought that it was unwise for him to get a 100% ARM loan to buy your house for top dollar ? Or did you grab the money and run ?
I hate admit it, but we were all a part of the problem.

[Faceaz]

This is the most assinine thing I think I've read.
It's simple...the lenders are in biz to make a buck.....they have, you want....everything is explained in great detail so even a moron can understand.->the gov't forces lenders to make that perfectly clear->how many loan docs did you have to sign to buy your house? I have no sympathy for the peeps that TOOK A CHANCE as they could have waited until they were in a better financial position to buy instead of not using their heads and getting into a loan by the skin of their ass or taking a squirrelly type loan. THEY wanted so bad that they were willing to gamble..... oh well, that's life!!
If the gov't would stay out of the biz of artificially propping up the economy we'd be much better off. As it is we have been, are, and will be, living in an economy that can be manipulated by the whims of the gov't instead of a market of supply and demand. The value of whatever will find it's own level by itself.
THE PEOPLE THAT TOOK A CHANCE DO DESERVE A CHANCE TO FIGURE SOMETHING OUT IF THE GOV. CAN HOLD THINGS WHERE THEY ARE NOW FOR A LITTLE WHILE THAT MIGHT HELP.
BULLSH*T
Why do they deserve a chance any more than the rest of us???
As for the comparison to the stock market, The only difference is that people that invest in stocks usually do so with money that is above and beyond what they need to live on. If they lose they'll still have a roof over their heads. They hang for the long term and it'll come back.
I don't really understand all of the ins and outs of the stock market(never really interested me) so I stay away. I'll fool around with real estate but it's never to turn something overnight. I don't use my home as collateral and I keep twice as much as I owe in money market so I'm very liquid. I am scared of being poor. It just doesn't sound like fun and I'll be damned if I ever have to be afraid to answer the phone or the door.
So, I sold some property in Palm Springs at the top of the trend. I'm carrying some paper on the prop and have a nice little bit of pocket money coming in for a good while. If I was a nice guy, according to a few of you, I'd just roll over and take a hit for either a part of the interest or maybe I should go back and revalue the prop a lil lower. NOT!! I sold higher than what I thought it was worth (maybe they're smarter than I ) and I hit them with a substantial interest rate. They wanted, They were made aware of the consequences if they defaulted They bought and as long as they hold up their end of the bargain then I abide by mine. If they default I take it back and it's nothing personal it's just business. If they turn it (not til it's paid in full) for 5 times what they paid -great. It's called LIFE. Sometimes you get the bear and sometimes the bear gets you.
Rio
ps...Hoss...can't you sorta just leave out the race crap? It gets old after a while. JMHO
I don't like the goverment getting involved either, but think they need to. I know a couple of mortgage brokers that say there are many people in default on their loans & haven't made payments in 6 months. The lenders are afraid to forclose on the properties because it will further kill the market. If the housing market stops with brokers & lenders going out of business, it will have a serious effect on the economy. Unfortunately I think the government needs to be a bit proactive. It's help now or help later, if it gets to the point of seriously affecting the economy the gov't will need to get involved anyway.

[C-2]

Like I said – everybody hand their hands in the cookie jar.
Take the boating industry for example. Do you think they would have inflated their prices so quickly without all that equity money floating around? I doubt it.
Those 28’ deck boats that are common as Honda’s at Havasu - $175K-$200K.
Only 7-8 years ago, weren’t they in the $75-$100K range?
Yup, the money was there so they jacked the prices.
Talk about over valued. How about it Rex - you don't mince words on RE - how about on boats?

[bigq]

Folks with their own buisness, or those who live moderately working for someone else and think this is someone else's problem and it is only a home value problem need to look back at the depression and the misguided steps the government did not take to bring us out of that.....ie: which is likely to happen if monetary policy does not act accordingly now..
Spring forward to the mid 30's and the "New Deal" after the Crash, Tariff Act, and lack of Monetary control to prevent the banking collapse (more the 9000 banks collapsed in that decade alone)... From the DEAL look at back at those business tax rate increases, individual rate tax increases (79% in some cases)....it caused investment in the market to stop and go away and caused an extension of the depression into 1938...with peak unemployment peaks of 25% during the decade..that is 1 in 4 on this board...
So its gone beyond the guy getting a handout for his adjustable rate loan....this is the government trying to keep the market and banking system from significance collapse...Lack of Monetary Controls lost 1/3 of market capital between 1930 and 1931....the Crash of 29 just put us in a depression.....after that if you let the money go away and banks go under then the vicious cycle starts...
It is beyond just a mortgage problem now a problem that the Fed created ...again.

[C-2]

I hate admit it, but we were all a part of the problem.
Yes, the first step to recovery.

[boatsntoys]

We All spent the money. They got the bad credit and put into the street.
WE sold them our overvalued homes. Then after we get the cash we call them stupid A-holes for buying them.