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Thread: House flippers triggered the US housing market crash

  1. #51
    ~Standing My Ground~ Sassy's Avatar
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    Quote Originally Posted by Babba View Post
    It was NOT subprime borrowers. Blaming the poor was always stupid and tinged with racism.





    House flippers triggered the US housing market crash, not poor subprime borrowers
    Are you saying the sub-prime lenders had nothing to do with it at all?

  2. #52
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    Quote Originally Posted by pragmatic View Post
    Can we still blame it on George Bush??
    For George Bush stopping state AGs from cracking down on the problem?
    Yes, yes we can.

    For George Bush being complicit in the conservative meme blaming poor and minorities for the crisis
    and wrongly blaming the govt lending agency?
    Yes, yes we can.

  3. #53
    Victim-oppressor Pimp Davocrat's Avatar
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    Quote Originally Posted by Puzzling Evidence View Post
    Deregulation of finantual institutions was directly responsible for the houseing bubble. Bill Clinton signed it, House Republicans were the ones who were pushing for it. The banks were the ones who spent record amounts of capital in order to convince people that it was a good idea.

    In the end, banks foreclosed on properties out of pure greed and it backfired. But there was a lot of blame to go around.
    (Aw. You can never stay mad at us!)

    Valid point.

  4. #54
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    Quote Originally Posted by syrenn View Post
    in my opinion.... bottom line it is still on the borrower. Its no different then borrowing money for a car... cant make the payments and your car gets repossessed.
    I'll sell you a box-low monthly payments.

  5. #55
    Council Member Djinn's Avatar
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    Quote Originally Posted by bajisima View Post
    What worries me now that we are helping our daughter look for a home is we are seeing the same thing again. Most starter/moderate range homes have bidding wars and investors with cash end up buying them, putting a small amount of cosmetic work into them and then selling them again for a way higher price a month or two later. ...
    Curious.... The retired woman who lived across the street from me had owned her house since it was built. She recently moved to another town to spend her remaining years closer to her family. The couple that moved in have been doing non-stop work on the house for about two months. They've really not spoken with anyone on our street.

    I'd been inside the home to visit the woman before she'd moved out - and the house was in good shape. I hadn't thought about it, but I have to wonder if the guy is planning on flipping the house, as you describe.
    Thanks from bajisima

  6. #56
    Veteran Member PACE's Avatar
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    Quote Originally Posted by Babba View Post
    It was NOT subprime borrowers. Blaming the poor was always stupid and tinged with racism.





    House flippers triggered the US housing market crash, not poor subprime borrowers
    Flipping didn't cause the crash, sub primes were indeed responsible, when you have jumbos with no percentage down, and an overheated valuation of homes, even those who borrowed against equity, saw their house values diminish due to the rolling foreclosures; it's still happening, in Connecticut when GE moved out, those that followed GE put their houses on the market at crash value, which means the comp value for others changed, it was lowered. Moreover, you had robo foreclosure in Florida, which was addressed by the Obama administration, Countrywide had to re-assess every mortgage with live actuaries to determine if foreclosure was indeed necessary, what that did was prolong the foreclosure cycle.

    Now, as we all know Florida is the land of condo complexes, and here's a bit of information that many do not have, the HOA fees on those properties CAN change, in other words, if a developer has a 20 condo complex, and 10 are on foreclosure, the HOA for those 10 gets amortized into the fees for the remaining 10; so in principle your costs escalate. Not to mention during the time of ATM home ownership, the over inflated value of a home also raised property taxes for all of those, due to, you guessed it comp value.

    Sure an overheated real estate market contributed, but to claim that flipping caused it? is like pointing to the deck chair you just threw off the Titanic and claimed it caused the boat to sink.

    Regards
    Pace

  7. #57
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    Quote Originally Posted by Neomalthusian View Post
    When virtually everyone is playing the game, everyone can blame everyone else and technically be right.
    At some point, that is where regulators and sound practices are supposed to be the line that we do not cross. The banks do not have to appraise a $150,000 house for the $250,000 that is asked, but they do. If they think you can pay the mortgage, or even if they're just happy to take on the mortgage as an asset they can leverage, whether you pay or not, they'll appraise and approve and off you go. The ratings agencies that evaluate the risks of the loan are supposed to notice when a line cook at the Olive Garden has 3 homes, and his dog has a fourth, and rate the mortgage so harshly that it is useless to the banks, which discourages them from making the loans in the first place.

    The systemic flaw that drove it all was the capture of the regulators and the ratings agencies by the banks, and the lack of regulation across Wall Street. Ratings agencies rubber-stamp anything as AAA, so the banks wrap them up and sell them to consumers as AAA, and not only once, but ten, twenty, forty times, the same product, the same asset. That kind of leverage is free money and they threw it at the markets, where they profited enormously. And when the markets were collapsing, they stepped aside and let the tax payers take it on the chin, which we are still doing.

    The consumers ought to be smarter. They shouldn't take on loans they cannot afford. But some of them are pretty simple. When a banker tells you this is how the loan works, and you only have to pay $200 per month and you can afford this house, and ain't that grand, and you sign the dotted line and yes it is grand, thank you very much....and then in a few years it's $2,000 per month... Fine, people aren't smart, and they can be blamed for their stupidity. But if we just allow that kind of stupidity to run rampant through a lack of effective controls at every step, and incentivize every player to make as many bad loans as possible, the problem is....what about me? I didn't take on a mortgage I can't afford. I didn't buy 4 homes on ARMs like a dumbass. But the market blew up around me. Costs exploded around me. Corruption of the housing market and all of Wall Street and banking happened, and we ALL have to pay for it, even if we didn't have anything to do with it.

    Financially, how can I look at it any way other than, I did what I know to be honest and reasonable and proper in the market, and for my effort, I got fucked. I pay my mortgage, and my taxes pay for Goldman Sachs bonuses, and subsidize the losses that should have ruined them for taking those risks and leveraging themselves past their eyeballs, and prop up a real estate market that remains at roughly the same hyper-inflated bullshit mark it was driven to by that bubble. My tax dollars have postponed a return to an honest marketplace. And when that return does come, who is going to pay for it? Jamie Dimon?

    The answer, of course, is that I am going to pay for it, when the value of my house drops by 30% or more, and the equity I have worked to build in an utterly corrupt, dishonest, debt-based market will evaporate, my years of work and being smart and honest and doing my part to support our markets will be rewarded by...another payoff to Dimon and his ilk and a housing market that crumbles around me and wipes out my equity, takes a big bite out of my net worth, and immobilizes me utterly in the marketplace.

    You want to blame somebody, you have to blame the whole system. And specifically, the Commodity Futures Modernization Act and the other assorted flurry of deregulation that was paid for by Wall Street and sold by their shills in D.C. the same way they always are, historically. "This time it'll be different! We're so much smarter now! These old fuddy-duddies with their regulations...what is this, the 1940's? Har har! Let's move on into our brave new future! Growth and dollars for us all!!"

    If it was new it wouldn't be so sickening. But it's all happened before, plenty of times.
    Thanks from PACE, pragmatic and Panzareta

  8. #58
    Veteran Member PACE's Avatar
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    Quote Originally Posted by splansing View Post
    At some point, that is where regulators and sound practices are supposed to be the line that we do not cross. The banks do not have to appraise a $150,000 house for the $250,000 that is asked, but they do. If they think you can pay the mortgage, or even if they're just happy to take on the mortgage as an asset they can leverage, whether you pay or not, they'll appraise and approve and off you go. The ratings agencies that evaluate the risks of the loan are supposed to notice when a line cook at the Olive Garden has 3 homes, and his dog has a fourth, and rate the mortgage so harshly that it is useless to the banks, which discourages them from making the loans in the first place.

    The systemic flaw that drove it all was the capture of the regulators and the ratings agencies by the banks, and the lack of regulation across Wall Street. Ratings agencies rubber-stamp anything as AAA, so the banks wrap them up and sell them to consumers as AAA, and not only once, but ten, twenty, forty times, the same product, the same asset. That kind of leverage is free money and they threw it at the markets, where they profited enormously. And when the markets were collapsing, they stepped aside and let the tax payers take it on the chin, which we are still doing.

    The consumers ought to be smarter. They shouldn't take on loans they cannot afford. But some of them are pretty simple. When a banker tells you this is how the loan works, and you only have to pay $200 per month and you can afford this house, and ain't that grand, and you sign the dotted line and yes it is grand, thank you very much....and then in a few years it's $2,000 per month... Fine, people aren't smart, and they can be blamed for their stupidity. But if we just allow that kind of stupidity to run rampant through a lack of effective controls at every step, and incentivize every player to make as many bad loans as possible, the problem is....what about me? I didn't take on a mortgage I can't afford. I didn't buy 4 homes on ARMs like a dumbass. But the market blew up around me. Costs exploded around me. Corruption of the housing market and all of Wall Street and banking happened, and we ALL have to pay for it, even if we didn't have anything to do with it.

    Financially, how can I look at it any way other than, I did what I know to be honest and reasonable and proper in the market, and for my effort, I got fucked. I pay my mortgage, and my taxes pay for Goldman Sachs bonuses, and subsidize the losses that should have ruined them for taking those risks and leveraging themselves past their eyeballs, and prop up a real estate market that remains at roughly the same hyper-inflated bullshit mark it was driven to by that bubble. My tax dollars have postponed a return to an honest marketplace. And when that return does come, who is going to pay for it? Jamie Dimon?

    The answer, of course, is that I am going to pay for it, when the value of my house drops by 30% or more, and the equity I have worked to build in an utterly corrupt, dishonest, debt-based market will evaporate, my years of work and being smart and honest and doing my part to support our markets will be rewarded by...another payoff to Dimon and his ilk and a housing market that crumbles around me and wipes out my equity, takes a big bite out of my net worth, and immobilizes me utterly in the marketplace.

    You want to blame somebody, you have to blame the whole system. And specifically, the Commodity Futures Modernization Act and the other assorted flurry of deregulation that was paid for by Wall Street and sold by their shills in D.C. the same way they always are, historically. "This time it'll be different! We're so much smarter now! These old fuddy-duddies with their regulations...what is this, the 1940's? Har har! Let's move on into our brave new future! Growth and dollars for us all!!"

    If it was new it wouldn't be so sickening. But it's all happened before, plenty of times.
    Five star post/

  9. #59
    Veteran Member Panzareta's Avatar
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    Quote Originally Posted by labrea View Post
    On the leading edge of the crisis was the number of adjustable rate mortgages scheduled to reset at a higher interest, and the inability of borrowers to renegotiate the interest rate.
    My brothers conventional 30 year reset at a higher rate because there was this little clause that said if the appraisal value of the property decreased passed a certain point he had to make it up via higher interest rates.

    That was better than the guy down the block who was given a one time chance to pay his difference off in a lump sum before foreclosure would be initiated even though he had never missed a payment. Well he let the property go because he didn't have the 150,000 in the bank to put on his house note.

  10. #60
    Veteran Member Panzareta's Avatar
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    Quote Originally Posted by Libertine View Post
    Because I profited directly from the bubble popping.

    The best thing that could happen is that the federal government gets out of the mortgage business. Fannie and Freddie are still out there everyday buying up mortgages and turning them into derivatives.

    Fannie, Freddie, FHA, all the other government mortgage programs and the mortgage interest deduction for federal income taxes all need to go, the resulting market will be much more stable.
    Actually I did profit from the bubble popping too. That doesn't mean I liked what it did to other people's hopes and dreams.

    I was lucky though, I had a real guru for a real estate advisor who warned me ahead of time when the bubble was about to burst. I was just about to refy my house when he warned me off. If I had refied it would have been underwater from the original appraisal within months.
    Last edited by Panzareta; 13th September 2017 at 09:36 AM.

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