UN to open 'probe' on US housing crisis

[SteamWake]

Not sure how or why but...

http://www.youtube.com/watch?v=Fjl0TtvYz3k&feature=player_embedded

[Dowly]

Why not? It's not like this is something new. Didnt UN investigate housing crisis in US after hurricane Katrina? Maybe they'll want to come back and see how it's going? Or something, I dont know, dont understand what's so special about this. :hmmm:

[August]

Why not? It's not like this is something new. Didnt UN investigate housing crisis in US after hurricane Katrina? Maybe they'll want to come back and see how it's going? Or something, I dont know, dont understand what's so special about this. :hmmm:

I wonder how much money it will cost to conduct this probe of the obvious?

[SteamWake]

I will save them alot of time and money.

The current housing crisis was caused by banks whom were 'forced' to give home loans to people whom could not pay them back.

The origin of this debacle can be traced all the way back to Roosevelt but Jimmy Carter and Bill clinton put the program on steroids.

The Bush adminstrations exacerbated the issue.

Now the Obama adminstration keeps digging and the hole doesent get any shallower.

[OneToughHerring]

I will save them alot of time and money.

The current housing crisis was caused by banks whom were 'forced' to give home loans to people whom could not pay them back.

The origin of this debacle can be traced all the way back to Roosevelt but Jimmy Carter and Bill clinton put the program on steroids.

The Bush adminstrations exacerbated the issue.

Now the Obama adminstration keeps digging and the hole doesent get any shallower.

The whole global recession originated from the US housing market. I'd say that's reason enough to take a look at the thing and the system around it.

[AVGWarhawk]

Run Barney run....

[mookiemookie]

I will save them alot of time and money.

The current housing crisis was caused by banks whom were 'forced' to give home loans to people whom could not pay them back.

The origin of this debacle can be traced all the way back to Roosevelt but Jimmy Carter and Bill clinton put the program on steroids.


Bull. The loan to securitize model is what pumped the system full of bad loans. Don't even bring up the long-debunked "CRA caused the crisis!" red herring. Banks weren't forced by the big bad government to make loans. And the ones they DID make under CRA were such a tiny percentage of the whole, not to mention less likely to default. No, the profit margin of making loans and turning around and selling them to Wall Street before they ever had to worry about the loan defaulting is what "forced" them to make the loans.

Besides, if it was truly a problem of just bad loans, we could have bought out every subprime loan in existence with the billions upon billions that have been thrown at the problem. But we're still feeling the after-effects despite that money going to Wall Street. That fact alone should tell you its something else.

If you want someone to blame, blame Greenspan's Fed for keeping rates too low for too long. Blame Phil Gramm for exempting derivatives from the Commodities Futures Modernization Act. Blame the overleveraging of firms like AIG, Lehman and Bear Stearns. But save me the CRA garbage.

[Platapus]

Bull. The loan to securitize model is what pumped the system full of bad loans. Don't even bring up the long-debunked "CRA caused the crisis!" red herring. Banks weren't forced by the big bad government to make loans. And the ones they DID make under CRA were such a tiny percentage of the whole, not to mention less likely to default. No, the profit margin of making loans and turning around and selling them to Wall Street before they ever had to worry about the loan defaulting is what "forced" them to make the loans.

Besides, if it was truly a problem of just bad loans, we could have bought out every subprime loan in existence with the billions upon billions that have been thrown at the problem. But we're still feeling the after-effects despite that money going to Wall Street. That fact alone should tell you its something else.

If you want someone to blame, blame Greenspan's Fed for keeping rates too low for too long. Blame Phil Gramm for exempting derivatives from the Commodities Futures Modernization Act. Blame the overleveraging of firms like AIG, Lehman and Bear Stearns. But save me the CRA garbage.

Didn't you get the memo? Everything is supposed to be blamed on the Democrats? :har:

But thanks for that post. I also snicker at the thought of the government forcing banks to make loans. I have read the CRA and have not found anything in the wording that "forces" banks to make loans.

There is much to criticize about the CRA, but causing the economic problems we have is not one of them. The CRA may have made it easier for the banks to choose to use poor business practices, but it did not mandate any. :nope:

The question would be how many of these "bad" loans were made by institutions not regulated by CRA?

[mookiemookie]

The question would be how many of these "bad" loans were made by institutions not regulated by CRA?

75%. Many of these loans were made by mortgage brokers not covered by the CRA:

http://www.ritholtz.com/blog/wp-content/uploads/2009/06/cra-chartg1109.gif

Furthermore, if CRA was to blame, you would have expected to see the largest housing bubbles in big time CRA areas like Harlem, the south side of Chicago, Washington DC. This was not the case. Tony areas like Miami, Phoenix and Southern CA are where real estate skyrocketed and foreclosures have hit hardest.

And what you say is true: read the CRA law and you'll see its not about forcing banks to make loans they otherwise wouldn't - just the opposite: it's about forcing banks not to reject loans they otherwise would make. This is what I do for a living and I've given presentations to professional societies and seminars on this. I like to take the printout of the CRA law (its only 7 pages) and offer someone $20 if they can point out anywhere in it that there are quotas or hard numbers in it. So far no one has gotten my $20.

[AVGWarhawk]

I think the reality of keeping up with the Jones was the cause. I always wonder how the Jone's got their money in the first place :hmmm:

http://misc.mortgagebrokers.ie/images/blogimages/debt_free.jpg

[mookiemookie]

I think the reality of keeping up with the Jones was the cause. I always wonder how the Jone's got their money in the first place :hmmm:


That's true, there was definitely a lot of that. Shows like "Flip This House" and that garbage only fed the fire. There was a ton of demand, and banks were all too willing to feed it and give money to people who had no business getting a loan. And why shouldn't they? If they knew they could make a loan on Monday and sell it to Wall Street by Friday, what the heck did they care if the borrower was going to repay it 30 years down the line?

[Platapus]

Guilty as charged.

When The Frau and I were first looking for a house to buy, we wanted to find something in the 300-350K range but could not find anything to our liking.

Then we stumbled upon a builder and started considering a new construction for 450K. If I was smart, I should have stopped there and started looking for existing houses in the 400K range. But we got caught up in the excitement of a "new" house.

Of course the initial cost of 450K is a fantasy. about 500K later we had our new house.... too big... too expensive for what we needed (or even wanted).

Fortunately we were smart enough not to take out a loan we could not afford, but still we allowed ourselves (no one to blame but ourselves) to get suckered in to buying too much for too much.

[AVGWarhawk]

That's true, there was definitely a lot of that. Shows like "Flip This House" and that garbage only fed the fire. There was a ton of demand, and banks were all too willing to feed it and give money to people who had no business getting a loan. And why shouldn't they? If they knew they could make a loan on Monday and sell it to Wall Street by Friday, what the heck did they care if the borrower was going to repay it 30 years down the line?

Well sure Mookie, it was a soup pot full of things that contributed. I believe most can be attributed to living way beyond their means. Some lived off their homes with refinancing to the hilt. These individuals paid the credit cards after the refinance but ran the cards up again. Sooner or later you can not refinance your home. Just not smart living off your home like that. So, the next thing you know your mortgage is twice what it was before the refinance, you credit cards are up to the limit again because you needed that John Deere tractor and the Craftsman at a 1/3 of the price would just not do in your neighborhood. So, who gets the shaft first with no payments? The credit card folks. That only last so long before the long arm of the lawyer is sending court order for payment. Now that the law is after you for the credit cards what suffers next? The house payment. You basically got three months to figure it out before that long arm is putting your goods out on the street. The house sold at a short sale. I can only point one finger here....the consumer. The one who signed the dotted line without reading. The one who needs a trip to Disney every six months. The one that need the Hummer. Time for a lot of folks to take the responsibility of the failure of their finances.

[Tribesman]

Rubbish

[mookiemookie]

While what you say is true, the consumer isn't in charge of the loan approval process. They can want want want, but at the end of the day the ones holding the purse strings are the banks who extended these ridiculous amounts of credit and loans to people without regard to traditional lending standards.

[CaptainHaplo]

Mookie - yes, banks own some level of responsibility.

But - no one held a gun to the head of the person digging themselves deeper and deeper in debt.

Ultimately, the decision rested with that person, they made the wrong decisions. Others - banks - may have made such decisions possible, but no one but the individual is responsible.

Its like saying a gun maker is responsible for someone getting a gun and then going to rob a liquer store. The person committing ther crime, or in the case of housing and overall debt - the person living beyond their means, has to take the final responsibilty.

[August]

- the person living beyond their means, has to take the final responsibilty.

At least until they declare bankruptcy and start the process over again.

[Tribesman]

but no one but the individual is responsible.

Errrrrrr....no
It really is a simple sum, think about it.

[CaptainHaplo]

Well, bankruptcy has its own price, thankfully. The strengthening of the personal bankruptcy rules was something long overdue.

The issue in the OP remains - the UN has no legal authority to probe an internal US matter. Its nothing more than a political, bash America witchhunt.

[mookiemookie]

Mookie - yes, banks own some level of responsibility.

But - no one held a gun to the head of the person digging themselves deeper and deeper in debt.

Ultimately, the decision rested with that person, they made the wrong decisions. Others - banks - may have made such decisions possible, but no one but the individual is responsible.

Its like saying a gun maker is responsible for someone getting a gun and then going to rob a liquer store. The person committing ther crime, or in the case of housing and overall debt - the person living beyond their means, has to take the final responsibilty.

I don't disagree with you on some level, but this still isn't the root and end cause of the problems. Things were as bad as they were due to massive overleveraging on the part of the large investment banks (just to illustrate: Bear Stearns was at a 35 to 1 leverage ratio when it collapsed, meaning that a 2.85% drop in the value of your assets would wipe out all of your available capital) as well as the unchecked growth of derivative products like credit default swaps. The loan defaults were the catalyst, and if they had been taken on their own, the system would have been able to absorb it. But what brought down the house of cards was the greed and poor business practices of the banks.

[nikimcbee]

Run Barney run....

:har:

[AVGWarhawk]

Errrrrrr....no
It really is a simple sum, think about it.

Sure the individual is responsible. Welcome to the "Take Responsibiliy For Your Actions or Inactions Club." If it is not the individuals irresponsible actions then whos? Will anyone take any responsibility for anything anymore?

[CaptainHaplo]

Mookie - I think we agree that the financial institutions dug their own holes as well. Yes, they are responsible for that.

However, had the PEOPLE been living within their means, the housing market wouldn't have crashed, because the homeowners would have been able to make their payments.

The financial industry would have still crumbled, but I think that there would have been much more significant resistance to bailing out banks if there had not been the issue of the housing market. After all, we had to bail out the banks to fix the housing market supposedly. And the supposedly came from Bush, not Obama.

[AVGWarhawk]

Mookie - I think we agree that the financial institutions dug their own holes as well. Yes, they are responsible for that.

However, had the PEOPLE been living within their means, the housing market wouldn't have crashed, because the homeowners would have been able to make their payments.

The financial industry would have still crumbled, but I think that there would have been much more significant resistance to bailing out banks if there had not been the issue of the housing market. After all, we had to bail out the banks to fix the housing market supposedly. And the supposedly came from Bush, not Obama.

Yes, the first check was cut by Bush.

[Schroeder]

However, had the PEOPLE been living within their means, the housing market wouldn't have crashed, because the homeowners would have been able to make their payments.

[sarcasm on]
Hmm, I'm just wondering what would happen if a country lived beyond it's means..... That would cause a crash in the end that would let this crisis look like child's play.
[sarcasm off]
BTW this is neither directed at CH nor at America alone. I think the entire western world is guilty of that. :-?

[mookiemookie]

However, had the PEOPLE been living within their means, the housing market wouldn't have crashed, because the homeowners would have been able to make their payments.
If the banks and mortgage brokers had been doing their job in loan underwriting, people would never have been approved for loans they could not pay back.

[Platapus]

Quote:
Originally Posted by CaptainHaplo http://www.subsim.com/radioroom/smartdark/viewpost.gif (http://www.subsim.com/radioroom/showthread.php?p=1194894#post1194894)
However, had the PEOPLE been living within their means, the housing market wouldn't have crashed, because the homeowners would have been able to make their payments.

If the banks and mortgage brokers had been doing their job in loan underwriting, people would never have been approved for loans they could not pay back.

The two do not have to be exclusive of each other. There is plenty of blame to go around. :yep:

[CaptainHaplo]

Your right Platypus - they are not mutually exclusive.

However, while it may be unethical to exploit the "I want it right now" greed of people, which is what financial institutions did by making high risk loans, there was nothing illegal about it. It was however, a financial risk which fell through. This is why I don't think they should have been bailed out.

Just as that policy cost the banks (or at least should have) - the policy is costing those who lived beyond their means.

What really bugs me is that the "bailouts" could have been done with a lot more wisdom and effect.

Lets look at JUST the Bush $700 Billion Dollar Bailout signed October 3, 2008. At the time it was signed - there was an estimated 740,000 foreclosure filings for the 2nd calendar quarter. If you extrapolate that out to cover the entire 2008-2010 period it would equal roughly 5,920,000 foreclosures that will have occured between January 2008 and January 2010. The future date is important to consider. Bear with me.
With those numbers, every home that would have been in foreclosure during that entire time - including now and into the next two months - could have gotten a bit over $118,000.00 credit to their mortgage. I can't think of all but the most heinous of irresponsible financial behavior in which that amount would not keep a family in their home. At the least, that amount should have pretty much stopped ALL foreclosures for 2 years.

(Sources: http://www.wsws.org/articles/2008/jul2008/fore-j26.shtml (http://www.wsws.org/articles/2008/jul2008/fore-j26.shtml) and http://www.npr.org/templates/story/story.php?storyId=95336601 (http://www.npr.org/templates/story/story.php?storyId=95336601) )

Now - I am NOT advocating that should have occured - because it would have encouraged more people to just "not make the payments". So what would have been a smarter answer?

While I disagreed with the bailout altogether - if your going to spend taxpayer money, use it wisely.

Set it up so that if your making under 6 figures and your in trouble, the government would allow you to apply to have help with your mortgage. Yes, there could be a tiered system - if you have a 500k house, and you make 99k a year with no kids - then you probably need a smaller place... If your making 45k a year, have a 200k home, and three kids, your gonna get some help.

Here is how the help would occur though. You apply, and if you meet the guidelines, then you pay the PRINCIPLE of the loan, the government pays the interest, but the rate is capped. The fund would also be able to - via guidelines, "catch you up" with a maximum of 3 full payments if your that far behind. The program would have a finite timeframe, say a manditory review every 6 months. It would also mandate a 1 year time frame in which the lender and homeowner needed to modify the existing loan to a fixed rate.

(ARM loan terms have been the real culprit)

The beauty of this is simple. The banks would be forced with a hard choice. Foreclose, they lose out on the payments, meaning they face having to liquidate, which hurts their bottom line. Sure, if they accept they lose some of the interest profit, but that loss is alot less than the expense of a foreclosure (~$50,000.00 to forclose and remarket) and subsequent short sale. Besides - they deserve to take the loss when they were using predatory lending practices.

The time and fixed rate gives the homeowner the opportunity to find a way to carry forward, making changes in their personal financial policies. Yes, some people would not change, and be right back in the hole - but this would be a one shot deal. You don't make your own changes, sorry for you. This puts a level of responsibility back on the homeowner as well.

Now it would have had its drawbacks, one being the obvious problem of using MY taxes to bail out other people. The other is it could be argued that it merely postponed the inevitable. However, doing this would remove the "housing foreclosure" issue entirely - and as a country, we would have something to show for the 700 Billion from Bush and the 275 Billion from Obama.

Again, I disagree with bailouts period, but if there is a movement to use taxes to help the people - lets help the people, instead of "rescue" investors who need their PROFITS rescued - not the original investments.

I don't have a problem laying part of the blame with those greedy investors, or the banks who yanked up the ARM rates as high and as quick as they could. But the majority has to lie with the person who signed on the bottom line. Want to fix the problems - then address the root cause, help people have some breathing room so they can learn to correct their mistakes. When that breathing room is done, they sink or swim on their own.

Its about time people started taking responsibility for their actions, while at least using the money for something that will actually HELP.That way, your and my tax money isn't needed for any more "bailouts".

Just out of curiosity - does anyone know of any REAL, TANGIBLE results from any of that nearly $1 Trillion dollars? I haven't seen any.....

[Tribesman]

Sure the individual is responsible. Welcome to the "Take Responsibiliy For Your Actions or Inactions Club."
Warhawk .
Look at what was written and what that was a response to.
You are creating a strawman.
If it is not the individuals irresponsible actions then whos?
There are more players than just an individual in the equation.

Haplo , a tangible result of that money was to slow the rate of forclosures.
Forclosures on that scale would have crated a downward spiral that fed itself. The result would have been that even the most prudent mortage holder would have ended up with a debt on a worthless asset.