We didn't learn a thing from the housing bubble

[flacaltenn]

We've been getting a lot of refi offers lately. A lot of ARM's, they always emphasize in bold letters we'll be able to skip up to two payments, and they always encourage us to consume the difference on our note rather than save it.

I ask of the loan industry and government - did we not learn anything from the housing bubble? Its like it never happened! These guys are ready to do it all over again.

You are correct. Jack-crap has not changed. But you're wrong about the culprit. The "loan industry" STOPPED writing crap loans and that freeze endangered the economic indicators. So HARP and other Federal programs were commissioned to make it easier to write CRAP loans again.. Because Fannie and Freddy are still making tainted sausage out of what the banks are ALLOWED to issue as "documentated" loans..

It's ALWAYS been Federal policy polluting the loan market. Nothing HAS changed..

Matter of Fact --- look for the systemic meltdown of the new Federally defined "student loan program" coming to a theatre near you...

You're full of shit. The big investment banks like Lehman and Goldman were not regulated by the CRA and free to buy or not buy whatever loans they wanted. Why is it you sheeple righties can't get this through your thick skulls?

Because it's wrong?? Fannie had a back room boiler called the "RISK TRANSFORMATION FACILITY" (look it up). Made to package and consume and DISGUISE all the bad loans that could be written.. As long as Fannie was buying and PROMOTING and establishing QUOTAS on questionable loans, this volume was indistinguable to investors from other loan bundlers. The Fannie standards come down -- everyone rushes to comply.. See my other recent post re: who is STILL lowering standards today.. Even after the banks STOPPED writing questionable loans..

Simple pardner --- you're deluded and probably having hallucinations due to your unwillingness to recognize the leader in the rush to the bottom of loan underwriting even today..

 

[flacaltenn]

< 10% should not even be allowed. Freaking stock traders have to maintain a 10% margin - the cutoff for homeowners certainly shouldn't be lower.

So why does the Federal HARP program IGNORE this and BLESS the banks to write mortgages for homes up to nearly 200% of appraised value?? Fannie will just eat them up.

These are refinances. If you are already 200% LTV then getting a refi that is 200% LTV doesn't put you anymore underwater. Do I need to explain how keeping the same LTV but lowering your interest rate makes it easier to pay down the mortgage?

LMFAO --- Do I have to explain to you the utter lack of WISDOM in continuing to WRITE MORTGAGES with 200% LTV??????? All blessed by the Feds and co-owners of the ONLY bundler allowed to HANDLE these HARP LOANS???

 

[OohPooPahDoo]

Because that's a risk you take. If it really worries you you could always sell it and move into the cardboard box you're headed for anyway. I hear those don't depreciate much.

So because I have made an investment that involves risk, I should not consider the potential loss to be of any consequence?

That makes absolutely no sense! You right wing nutters will go through amazing twists of logic to justify the crap you're fed.

Hey, you're the one panicking about idiot neighbors taking out bad loans and ruining the value of your home, not me.

"Panicking" ?

You righties set really low bars for emotion.


Your opinion appears to be that because a home investment is a risk - the financial result of that risk is of no concern. That's fucking retarded.

Your solution pretty much guarantees that is exactly what will happen.

How?

Mine pretty much guarantees the opposite.

It "guarantees" it? LOL! You've got a way to "guarantee" a housing bubble will never happen again? My fuck you surely do think an awful lot of yourself for being such a obvious moron.

Your lack of understanding of markets is just amazing.

A guy who thinks he can "pretty much guarantee" a housing bubble will never happen again if we just follow his policies is telling someone else they don't understand markets?

That would be like someone who thinks he can travel through time telling a physicist he doesn't understand relativity.

 

[OohPooPahDoo]

You're full of shit. The big investment banks like Lehman and Goldman were not regulated by the CRA and free to buy or not buy whatever loans they wanted. Why is it you sheeple righties can't get this through your thick skulls?

Because it's wrong??

CRA regulates DEPOSITORY BANKS not INVESTMENT BANKS.

 

[OohPooPahDoo]

So why does the Federal HARP program IGNORE this and BLESS the banks to write mortgages for homes up to nearly 200% of appraised value?? Fannie will just eat them up.

These are refinances. If you are already 200% LTV then getting a refi that is 200% LTV doesn't put you anymore underwater. Do I need to explain how keeping the same LTV but lowering your interest rate makes it easier to pay down the mortgage?

LMFAO --- Do I have to explain to you the utter lack of WISDOM in continuing to WRITE MORTGAGES with 200% LTV??????? All blessed by the Feds and co-owners of the ONLY bundler allowed to HANDLE these HARP LOANS???

Nope. All you need to explain to me is how replacing a 200% LTV mortgage with another 200% LTV mortgage with a lower interest rate places someone in a worse position to pay down their mortgage. That's it.

 

[eflatminor]

I ask of the loan industry and government - did we not learn anything from the housing bubble? Its like it never happened! These guys are ready to do it all over again.

Nope, apparently not.

So, will you vote for the very same politicians that seek to manipulate tax laws and commit to more bailouts, all in the name of 'the dream of home ownership'? Or will you take a different approach and vote for the limited government guy that stands against cronyism?

It's easy to denigrate companies in the loan industry that benefit from the loopholes and taxpayer backing, but that wouldn't be possible without meddling nanny state do gooders, would it?

I'm not really sure how limiting government is going to prevent privately owned and operated "to big to fail" investment banks from buying junk mortgage investments from loan sharks whose only purpose is to make the loans, pocket the fees, and then unload them as soon as possible.

Easy. A government that operates within the confines of the Constitution cannot declare any organization 'too big to fail'. More importantly, the only way a company can get that big is through cronyism, which limited government advocates will not engage in. So, if your bank makes the bad decisions you outlined, they will simply lose market share to banks making better decisions. It works.

My guess is you can't actually think at all and instead just know to reflexively spout "limited government" as the answer to every question asked of you.

Well, insulting those you invited to discuss this topic is quite the strategy. Good luck with that.

In any case, I have thought about economic bubbles extensively, both in my study of economics and having grown up in a household where the family business was real estate.

Lastly, "limited government" is NOT the answer to every question asked, but it is to this one. Sorry if that doesn't fit your agenda, but I was under the impression you wished to discuss the topic. Perhaps not.

 

[Toro]

I ask of the loan industry and government - did we not learn anything from the housing bubble? Its like it never happened! These guys are ready to do it all over again.

Nope, apparently not.

So, will you vote for the very same politicians that seek to manipulate tax laws and commit to more bailouts, all in the name of 'the dream of home ownership'? Or will you take a different approach and vote for the limited government guy that stands against cronyism?

It's easy to denigrate companies in the loan industry that benefit from the loopholes and taxpayer backing, but that wouldn't be possible without meddling nanny state do gooders, would it?

I'm not really sure how limiting government is going to prevent privately owned and operated "to big to fail" investment banks from buying junk mortgage investments from loan sharks whose only purpose is to make the loans, pocket the fees, and then unload them as soon as possible. My guess is you can't actually think at all and instead just know to reflexively spout "limited government" as the answer to every question asked of you.

Dodd-Frank makes it much less likely that investment banks will be buying that stuff.

Instead, hedge funds are issuing CDOs. But the issuance is a trickle compared to before the financial crisis.

 

[flacaltenn]

These are refinances. If you are already 200% LTV then getting a refi that is 200% LTV doesn't put you anymore underwater. Do I need to explain how keeping the same LTV but lowering your interest rate makes it easier to pay down the mortgage?

LMFAO --- Do I have to explain to you the utter lack of WISDOM in continuing to WRITE MORTGAGES with 200% LTV??????? All blessed by the Feds and co-owners of the ONLY bundler allowed to HANDLE these HARP LOANS???

Nope. All you need to explain to me is how replacing a 200% LTV mortgage with another 200% LTV mortgage with a lower interest rate places someone in a worse position to pay down their mortgage. That's it.

Your a hopeless, thoughtless lib fer sure. You are perpetuating the RISK (now again to taxpayers) that CAUSED the flood of toxic mortgages onto the market. And if you think a point or point+little is gonna fix owing the bank TWICE what your house is REALLY worth -- you're a dumb lib as well.. That person is NOT less likely to walk or leave the taxpayers holding the bag because Fannie got them a point on the refinance when their looking at TWICE that amount in principal arrears to the bank.

At the same time --- you're entertaining me by creating a thread whining about how we've not learned a thing from the former crisis -- and simultaneously denying that the currently the Feds are the ones perpetuating the risk to society. If you weren't so entertaining -- you'd be useless..

 

[flacaltenn]

You're full of shit. The big investment banks like Lehman and Goldman were not regulated by the CRA and free to buy or not buy whatever loans they wanted. Why is it you sheeple righties can't get this through your thick skulls?

Because it's wrong??

CRA regulates DEPOSITORY BANKS not INVESTMENT BANKS.

Don't care WHO CRA regulates.. It's not relevent. What is and WAS relevent is the political pressure on Fannie and Freddy to write a larger fraction of their loans in risky underwriting. AND to then CONSUME this crap and repackage it for sale.. Under orders from politicos to increase their holdings of sub-primes and create the underwriting rules to meet quotas. THEY ARE DOING IT AGAIN --- and they never quit.. Not a message to the banks to "cool it". In fact -- HARP was developed to ENCOURAGE MORE of it....

 

[S.J.]

Oopa doop is on a rampage, huh? Pretty common among low intelligence primates.

 

[Toro]

Because it's wrong??

CRA regulates DEPOSITORY BANKS not INVESTMENT BANKS.

Don't care WHO CRA regulates.. It's not relevent. What is and WAS relevent is the political pressure on Fannie and Freddy to write a larger fraction of their loans in risky underwriting. AND to then CONSUME this crap and repackage it for sale.. Under orders from politicos to increase their holdings of sub-primes and create the underwriting rules to meet quotas. THEY ARE DOING IT AGAIN --- and they never quit.. Not a message to the banks to "cool it". In fact -- HARP was developed to ENCOURAGE MORE of it....

This may be true, but up until 2006, the GSEs were losing market share in subprime, and had been for years. Only in 2006, at the very end of the bubble, did the GSEs regain a fraction of the market share they lost. Most of the impetus for writing the garbage came from lenders without CRA mandates, primarily lending to middle and upper middle class households, not to poor people. I can't remember the exact amount, but a huge number - something like 30% to 40%, though maybe I'm off - of all mortgages in the country were subprime in 2006. Nearly 90% in San Diego county were subprime. This lending had nothing to do with the CRA.

 

[flacaltenn]

CRA regulates DEPOSITORY BANKS not INVESTMENT BANKS.

Don't care WHO CRA regulates.. It's not relevent. What is and WAS relevent is the political pressure on Fannie and Freddy to write a larger fraction of their loans in risky underwriting. AND to then CONSUME this crap and repackage it for sale.. Under orders from politicos to increase their holdings of sub-primes and create the underwriting rules to meet quotas. THEY ARE DOING IT AGAIN --- and they never quit.. Not a message to the banks to "cool it". In fact -- HARP was developed to ENCOURAGE MORE of it....

This may be true, but up until 2006, the GSEs were losing market share in subprime, and had been for years. Only in 2006, at the very end of the bubble, did the GSEs regain a fraction of the market share they lost. Most of the impetus for writing the garbage came from lenders without CRA mandates, primarily lending to middle and upper middle class households, not to poor people. I can't remember the exact amount, but a huge number - something like 30% to 40%, though maybe I'm off - of all mortgages in the country were subprime in 2006. Nearly 90% in San Diego county were subprime. This lending had nothing to do with the CRA.

These markets outside of "conforming" loans never would have thrived if Fannie and Freddie weren't buying and authorizing similiar crappy underwriting. Investors went into the market for the MBS believing that subprime was backed by the explicit support of Fannie and Freddie and that there was no in fact no gigantic difference in the sloppy underwriting. Where they differed was in the predatory nature of the deal to the consumer, but the universe of consumers QUALIFYING for these deals was essentially the same.

If we're talking about predatory practices -- I agree with you --- there WAS a diff. But when it came to the systemic RISK to the market that subprime represented -- the FEDS were all for it and TO THIS DAY --- are still willing to pump the market risk out of the range of sanity...

 

[Toro]

Don't care WHO CRA regulates.. It's not relevent. What is and WAS relevent is the political pressure on Fannie and Freddy to write a larger fraction of their loans in risky underwriting. AND to then CONSUME this crap and repackage it for sale.. Under orders from politicos to increase their holdings of sub-primes and create the underwriting rules to meet quotas. THEY ARE DOING IT AGAIN --- and they never quit.. Not a message to the banks to "cool it". In fact -- HARP was developed to ENCOURAGE MORE of it....

This may be true, but up until 2006, the GSEs were losing market share in subprime, and had been for years. Only in 2006, at the very end of the bubble, did the GSEs regain a fraction of the market share they lost. Most of the impetus for writing the garbage came from lenders without CRA mandates, primarily lending to middle and upper middle class households, not to poor people. I can't remember the exact amount, but a huge number - something like 30% to 40%, though maybe I'm off - of all mortgages in the country were subprime in 2006. Nearly 90% in San Diego county were subprime. This lending had nothing to do with the CRA.

These markets outside of "conforming" loans never would have thrived if Fannie and Freddie weren't buying and authorizing similiar crappy underwriting. Investors went into the market for the MBS believing that subprime was backed by the explicit support of Fannie and Freddie and that there was no in fact no gigantic difference in the sloppy underwriting. Where they differed was in the predatory nature of the deal to the consumer, but the universe of consumers QUALIFYING for these deals was essentially the same.

If we're talking about predatory practices -- I agree with you --- there WAS a diff. But when it came to the systemic RISK to the market that subprime represented -- the FEDS were all for it and TO THIS DAY --- are still willing to pump the market risk out of the range of sanity...

The subprime CDOs and structured products came across our desks. Most weren't stamped by the GSEs. At the height of the bubble, only a quarter of all subprime loans were guaranteed by Freddie and Fannie, down from over half the decade prior. Most were bundled and sold to investors like us because you could pick up an extra 30-40 bps on AAA CDOs. This was the private market going nuts. Investors knew they weren't agency-guaranteed.

 

[flacaltenn]

This may be true, but up until 2006, the GSEs were losing market share in subprime, and had been for years. Only in 2006, at the very end of the bubble, did the GSEs regain a fraction of the market share they lost. Most of the impetus for writing the garbage came from lenders without CRA mandates, primarily lending to middle and upper middle class households, not to poor people. I can't remember the exact amount, but a huge number - something like 30% to 40%, though maybe I'm off - of all mortgages in the country were subprime in 2006. Nearly 90% in San Diego county were subprime. This lending had nothing to do with the CRA.

These markets outside of "conforming" loans never would have thrived if Fannie and Freddie weren't buying and authorizing similiar crappy underwriting. Investors went into the market for the MBS believing that subprime was backed by the explicit support of Fannie and Freddie and that there was no in fact no gigantic difference in the sloppy underwriting. Where they differed was in the predatory nature of the deal to the consumer, but the universe of consumers QUALIFYING for these deals was essentially the same.

If we're talking about predatory practices -- I agree with you --- there WAS a diff. But when it came to the systemic RISK to the market that subprime represented -- the FEDS were all for it and TO THIS DAY --- are still willing to pump the market risk out of the range of sanity...

The subprime CDOs and structured products came across our desks. Most weren't stamped by the GSEs. At the height of the bubble, only a quarter of all subprime loans were guaranteed by Freddie and Fannie, down from over half the decade prior. Most were bundled and sold to investors like us because you could pick up an extra 30-40 bps on AAA CDOs. This was the private market going nuts. Investors knew they weren't agency-guaranteed.

Well there were predatory practices on the consumer due to the TERMS of the loans AND there were predatory practices on the investors due to the disclosures of the composition of the bad sausage.

You would have had to look at the underwriting practices for each of those bundles and their parts to find out if they differed substantially from the lax underwriting rules that Fannie and Freddie and the Congress were pushing. Nobody really did that. But my guess is that if you HAD sampled the actual RISK in those non-GSE loans -- there would be no substantial increase over the ones that the GSE were bundling..

Look up "Risk Transformation Engine" and see how much effort Fannie put into HIDING those risks...

 

[Toro]

These markets outside of "conforming" loans never would have thrived if Fannie and Freddie weren't buying and authorizing similiar crappy underwriting. Investors went into the market for the MBS believing that subprime was backed by the explicit support of Fannie and Freddie and that there was no in fact no gigantic difference in the sloppy underwriting. Where they differed was in the predatory nature of the deal to the consumer, but the universe of consumers QUALIFYING for these deals was essentially the same.

If we're talking about predatory practices -- I agree with you --- there WAS a diff. But when it came to the systemic RISK to the market that subprime represented -- the FEDS were all for it and TO THIS DAY --- are still willing to pump the market risk out of the range of sanity...

The subprime CDOs and structured products came across our desks. Most weren't stamped by the GSEs. At the height of the bubble, only a quarter of all subprime loans were guaranteed by Freddie and Fannie, down from over half the decade prior. Most were bundled and sold to investors like us because you could pick up an extra 30-40 bps on AAA CDOs. This was the private market going nuts. Investors knew they weren't agency-guaranteed.

Well there were predatory practices on the consumer due to the TERMS of the loans AND there were predatory practices on the investors due to the disclosures of the composition of the bad sausage.

You would have had to look at the underwriting practices for each of those bundles and their parts to find out if they differed substantially from the lax underwriting rules that Fannie and Freddie and the Congress were pushing. Nobody really did that. But my guess is that if you HAD sampled the actual RISK in those non-GSE loans -- there would be no substantial increase over the ones that the GSE were bundling..

Look up "Risk Transformation Engine" and see how much effort Fannie put into HIDING those risks...

Default rates were lower for agency subprime mortgages than for non-agency subprime mortgages.

 

[Two Thumbs]

We've been getting a lot of refi offers lately. A lot of ARM's, they always emphasize in bold letters we'll be able to skip up to two payments, and they always encourage us to consume the difference on our note rather than save it.

I ask of the loan industry and government - did we not learn anything from the housing bubble? Its like it never happened! These guys are ready to do it all over again.

Have you learned yet that the housing bubble was Carters idea that Clinton ran with?

And that since it worked so well for clinton, obama is going to do it again?

You, to get the same results.

Still glad you blindly supported obama?

well, are you?

Are you seriously this big of an idiot?

So the fact that dems kicked this off with clinton, and are doing it again under obama, actually is over your head.

you're pathetic.

This was your chance to learn that the party you blindly follow doesn't give a damn about you, but instead you went; lalalalalalalaBushesfaultlallalalalalala

 

[kwc57]

Would all the liberals who want to blame the conservatives for the previous housing disaster please mark this day on their calendar.

You're a moron.

You're an ignorant assmunch. Truth hurts doesn't it?

Let me tell you something as someone who has worked in banking for 34 years. Asking banks to lower thier lending standards and give loans to people who are high risk borrowers who can't afford to pay them and promising banks that the loans will be guaranteed by the government has been tried before and failed. History my assmunching friend, history. You and Obama need to quit pushing diversity training in schools and study history so you won't repeat it.

 

[OohPooPahDoo]

Nope, apparently not.

So, will you vote for the very same politicians that seek to manipulate tax laws and commit to more bailouts, all in the name of 'the dream of home ownership'? Or will you take a different approach and vote for the limited government guy that stands against cronyism?

It's easy to denigrate companies in the loan industry that benefit from the loopholes and taxpayer backing, but that wouldn't be possible without meddling nanny state do gooders, would it?

I'm not really sure how limiting government is going to prevent privately owned and operated "to big to fail" investment banks from buying junk mortgage investments from loan sharks whose only purpose is to make the loans, pocket the fees, and then unload them as soon as possible.

Easy. A government that operates within the confines of the Constitution cannot declare any organization 'too big to fail'. More importantly, the only way a company can get that big is through cronyism, which limited government advocates will not engage in. So, if your bank makes the bad decisions you outlined, they will simply lose market share to banks making better decisions. It works.

You're a complete idiot.

 

[OohPooPahDoo]

Nope, apparently not.

So, will you vote for the very same politicians that seek to manipulate tax laws and commit to more bailouts, all in the name of 'the dream of home ownership'? Or will you take a different approach and vote for the limited government guy that stands against cronyism?

It's easy to denigrate companies in the loan industry that benefit from the loopholes and taxpayer backing, but that wouldn't be possible without meddling nanny state do gooders, would it?

I'm not really sure how limiting government is going to prevent privately owned and operated "to big to fail" investment banks from buying junk mortgage investments from loan sharks whose only purpose is to make the loans, pocket the fees, and then unload them as soon as possible. My guess is you can't actually think at all and instead just know to reflexively spout "limited government" as the answer to every question asked of you.

Dodd-Frank makes it much less likely that investment banks will be buying that stuff.

How?

 

[OohPooPahDoo]

LMFAO --- Do I have to explain to you the utter lack of WISDOM in continuing to WRITE MORTGAGES with 200% LTV??????? All blessed by the Feds and co-owners of the ONLY bundler allowed to HANDLE these HARP LOANS???

Nope. All you need to explain to me is how replacing a 200% LTV mortgage with another 200% LTV mortgage with a lower interest rate places someone in a worse position to pay down their mortgage. That's it.

Your a hopeless, thoughtless lib fer sure. You are perpetuating the RISK (now again to taxpayers) that CAUSED the flood of toxic mortgages onto the market. And if you think a point or point+little is gonna fix owing the bank TWICE what your house is REALLY worth -- you're a dumb lib as well.. That person is NOT less likely to walk or leave the taxpayers holding the bag because Fannie got them a point on the refinance when their looking at TWICE that amount in principal arrears to the bank.

So ability to repay a loan doesn't have anything to do with the amount of the payments, but only depends on LTV? That's an interesting idea.

At the same time --- you're entertaining me by creating a thread whining about how we've not learned a thing from the former crisis -- and simultaneously denying that the currently the Feds are the ones perpetuating the risk to society. If you weren't so entertaining -- you'd be useless..

How are they perpetuating the risk?!? The underwater mortgages are already there you idiot! Refinancing them doesn't make them any more underwater!