MUST SEE: CNBC's Jim Kramer GOES BALLISTIC: "WE HAVE ARMAGEDDON!" (Housing Crash)

[The Cleaner]

Wow...all I can say is WOW...something happened in the markets yesterday that I still don't fully understand but it was SO BAD that Jim Kramer called it "Armageddon" and lots of people are going to lose their jobs/houses. Please post if you can fully understand it.

Go to this site and scroll down at watch the video:
http://housingpanic.blogspot.com/

SHOUTING:

"HE HAS NO IDEA HOW BAD IT IS OUT THERE. HE HAS NO IDEA. HE HAS NO IDEA. I'VE TALKED TO THE HEADS OF ALMOST EVERY SINGLE ONE OF THESE FIRMS IN THE LAST 72 HOURS AND HE HAS NO IDEA!!!"

"AND BILL POOLE HAS NO IDEA WHAT IT'S LIKE OUT THERE!!"

"THESE FIRMS ARE GOING TO GO OUT OF BUSINESS!!!!!"

"THIS IS A DIFFERENT KIND OF MARKET AND THE FED IS ASLEEP AND BILL POOLE IS A SHAME HE'S SHAMEFUL!!!!"

"WE HAVE ARMAGEDDON"

[OzarkDem]

1. Credit pool for high risk mortgages dried up

Predatory lenders are cutting back. No one wants to insure mortgages for people who don't have a reliable job or good credit history. Imagine that.

This will slow new home construction and home values will begin to fall, not much but a correction.

[tammywammy]

3. Indeed

[The Cleaner]

5. If lenders are cutting back,

how the hell is anyone going to afford a down payment on an average 400k home? Who has the $$$ to put 40K down in cash?

Sounds like home prices are set for a mass crash to me. Nobody will be able to afford the prices anymore - forclosures will increase, nobody will buy the homes, etc. Lenders will not lend easily anymore even to people with high credit ratings. A vicious circle I forsee - a final spiral downward to more reasonable prices.

Funny, nobody seems to remember the lessons learned from 1929, or 2000/2001 with the irrational exhuberance and the crazy valuations.

[Maine-ah]

35. an average 400k home?

where the heck do you live? 400k around here just about buys you a damn mansion.

[sandnsea]

37. If you don't qualify for an average $400,000 home

you're just a lousy deadbeat with bad credit who doesn't deserve anything better than a camp trailer on a $400 month lot.

That's how some of these people think.

[ChiciB1]

39. Doncha Know It!! Here In Florida It Was Gangbusters For A While And

now it's ZILCH!! My taxes went up, but I bet I couldn't sell my house for what the estimate is! We own 5-acres of land further south and those taxes sky-rocketed and won't come down either.

And try buying INSURANCE here, you'll be a basket case. My home is insured, I have flood insurance too, but the contents of my home is only 25% covered and my deductible is $3,000.00!

I think I'm beginning to feel some kind of ulcer forming in the pit of my stomach!!

[diane in sf]

77. Around here in SF you would be lucky to buy a studio apt. with $400K,

far enough out in the burbs you could get a little house.

[Zynx]

79. Does here too (WI). However, go to California or Florida and....

Yeah.

Hell, you can't afford to buy a house in Los Angeles if your family income is twice the national average.

[diddlysquat]

99. Not on the west coast.

I have a very humble little house which I bought for $78,000 over 20 yrs ago. Now it is worth $360,000 in the outskirts of Seattle. If I were in Seattle it would be worth $600,000. The Seatle market is not expected to go down either.

[NancyBreen]

115. I also live in Seattle

and bought my house in the U District 20 years ago for $90,000. It sold last year for $429,000. This was a small home built in 1929. I had to sell it because I couldn't afford the real estate taxes and I am on social security and medicare.

[hack89]

102. I live in Rhode Island

and 400K will buy you a 40 year old, 1600 sf raised ranch. IF you are looking for a 3 bed room colonial with about 2000 sf living space, you will need 500K.

[Lorien]

116. I live in an average 400k home

It's in the historic district in Orlando, FL. One story 1925 craftsman bungalow, 3/2, 1600 sq.ft, 2 car garage, needs some fixing up (new roof. kitchen, paint job, and landscaping). Last realtor estimate on it was $436,000 (I bought it for $150,000 ten years ago). A renovated bungalow across the street from me has no garage and looks to be slightly smaller, but is on the market for $534,000. Even with the crash the prices are absurd.

[OzarkDem]

38. Buy a cheaper home or rent

People are defaulting on these high risk mortgages. No need to give an alcoholic another drink.

[The Backlash Cometh]

74. Question: If new home construction slows, does that mean that the values

of existing homes rise?

[Zynx]

84. Not when there's already way too much on the market to sell. Things are really out of whack.

Construction has long lead times. Many of the homebuilders are still building despite there being no demand for what is going to be built.

[Cha]

2. I guess no one understands

it..I sure as heck don't :(

[aquart]

10. A bubble, basically fraudulent, industry has crashed?

Is that what they're saying?

Can anyone tell me if this is in any way related to the absurd number of banks on every retail block in Manhattan? Manhattan storefronts are not cheap. Regular retail businesses have gone belly up and banks come into their spaces. How can these banks be making money if retailers can't?

I know, for instance, that Washington Mutual won't hire you unless you promise to push loans on people with lousy credit. How can any business sustain itself that way? Let alone multiply like a rash? Where is the profit coming from?

[antigop]

25. aquart, I have wondered the same thing

Banks seem to be popping up everywhere.

And after a while, you see banks merge.

Is there something with the accounting that keeps this cycle going?

[aquart]

31. I don't see it as a healthy sign.

But I don't know anything about the business except what I learned as a juror. And it didn't cover this.

Logically, an area that can't sustain retailing should not be able to sustain multiple banks, either. So what don't I know?

[Subdivisions]

96. I think you may be seeing the physical manifestation of trillions

of dollars being cyphoned off of not only the middle and lower classes in the US but also right around the world.

At first there are 64 (example) banks rising from the inflow of cash from various sources (the middle class). For each bank inflow begins to flow and they begin merging and 64 banks become 32 banks, then 16 until eventually there are 4, 2 and then just one. Meanwhile, all the money is sapped from all but the most elite and their minions while we toil away serving them as corporate slaves more than willing to submit to their will just to survive.

[UpInArms]

95. it's in the packaging

of all those instruments - into what are called CDOs (commercial debt obligations) and those are bundled and sold to insurance companies, investment houses, hedge funds, etc.

It's a huge ponzi scheme where the musical chair game has 100's if not 1000's of chairs removed simultaneously.

In the 80s it was a "daisy chain" (see "Other People's Money" for details - great book by the way) and when it happened in Oklahoma City in the early 80s it was the Penn Square Bank deal - took out lots of banks (SeaFirst, one in Chicago - I can't remember its name offhand anymore) and depressed the housing there for 20 years - (see "Funny Money" - quite a great read - where the bank loaned a guy a million dollars for a 10-year-old Caddy so that he could "drill for oil") - shakesheadatthestupidityofitall

This one will be worse - Greenscum really boosted this shit in Feb '03 when he got out there and plugged those ARMs and encouraged everyone and their dog to refi their homes and pull out money and act like they were "wealthy".

Its a big shuffle - the homeowner (now foreclosed) loses, the banker loses, the realtors get it on both sides (when they sold the houses, when they sale them in foreclosure), bizness being bizness and all that - then when the taxpayer gets to bail this three trillion dollar mess out (in the 80s it was 40 billion).

:sigh:

old and tired - that's what I am

[TreasonousBastard]

4. A bunch of investment bankers and fund managers will...

lose their jobs and won't be able to take him to the best restaurants any more. Some of thopse restaurants might even close. :scared:

Other than that, a whole shitload of working people might lose thir homes in a few months, but I don't think he cares much about them.

[The Cleaner]

8. Do you or anyone else know why he was so pissed at Bear Stearns?

:shrug:

[aquart]

11. If the court case a few years ago didn't teach him not to trust Bear Stearns

Then he deserves what he gets. Those people are eager, deliberate criminals. And the wrist slap settlement did NOT teach them it wasn't worth doing.

[TreasonousBastard]

14. Not exactly, but they were behind a lot of deriviatives...

and they took a big hit a few days ago in their junk mortgage trading.

Kramer gets hysterical on a regular basis so I'd wait for a few other opinions on armageddon before taking him seriously.

Anyone want to see what a real meltdown looks like should dig into the histories of the Whitehall and Penn Central bankruptcies. We've been there before and lived, alothough the stakes are a lot higher now and and the White House is populated with the biggest asshi9les in history.

The money guys running the show have incredible survival instincts and regardless of what people around here might think, are not looking to destroy us while they climb back up the mountain.

[antigop]

26. Probably because of their two hedge funds that collapsed

http://www.theglobeandmail.com/servlet/story/LAC.20070804.RBEAR04/TPStory/Business

>>
It was last month's collapse of two hedge funds managed by Bear Stearns that shone a spotlight on the crisis that had been developing because of troubles in the U.S. subprime mortgage market.

Rising mortgage defaults were not only creating headaches for families who were losing their houses and banks that had given them mortgages; institutional investors in securities tied to the subprime market were also facing massive losses.
>>

[aquart]

33. I wouldn't let Bear Stearns manage a lunch order.

Seriously. They look at law the way Bush does.

[antigop]

34. I was just answering the Cleaner's question. n/t

[aquart]

43. I know. Just chiming in.

[Zynx]

67. The Bear Stearns CFO called this worse than LTCM, then hid on his conference call

Which is about when the stock plunged to its closing low. People did not need or want to hear that.

[AndyTiedye]

6. That's Why They Called them Balloon Mortgages

[nonconformist]

7. I don't really understand what happened either

But it seems it was bad....

[sandnsea]

9. They just whacked 1/3 of mortgages

Companies are going out of business that wrote ALL mortgages. There isn't going to be any capital, so NOBODY will be able to get a loan soon. People can rant all they want about low income people getting loans, but it's the way the loans were written that is the problem, NOT who got them. If a person is humming along making payments on their 5% interest home, then how is it their fault when the mortgage industry comes along and jacks the interest up to a point they can't make the payment anymore. It's just another example of setting people up to fail, and them blaming them for the failure when these crony capitalist fucks walk away with all the dough.

Another reason I hate people and assholes who talk a bunch of platitudes about low income people, and then turn around and laugh when the programs designed to help them end up kicking them in the ass - again.

[aquart]

12. Explain to me how they can jack up the interest?

If you sign an agreement for five percent, how is that able to change?

[tammywammy]

13. They could only do it if you signed up for an ARM

instead of a conventional loan.

[sandnsea]

24. If you love predatory lenders

Maybe you're in the wrong party.

[aquart]

30. Where on god's earth did you get that?

I signed for a student loan at 4 percent and suddenly I see it's 8 percent. I don't know how it happened so I'm asking.

[sandnsea]

32. For mortgages, there are also down payment scams

Realtors set up nonprofits to pay down payments, but what they really did was increase selling prices and have sellers commit to participate in their program, and cycled down payment money through the nonprofit. FHA thought the 3% down payment was being met, the buyers thought they were being helped through some charitable program. So how is this sort of thing the fault of "stupid buyers".

Interest in general is going up because of the monstrous debt. It's a total recipe for disaster.

And I thought you had been paying attention to the mortgage situation, I apologize if I misunderstood your interest.

I take back my apology - "push loans on people with lousy credit". Why do we always blame each other in this country instead of the lousy corporate crooks who concoct these scams.

Median and low income people have been getting home loans for decades. Ever watched It's A Wonderful Life? Yeah, that's an example of an HONEST mortgage lender.

[aquart]

36. "Stupid buyers" is NOT a quote from me.

I rent. But I have a mother and sister with mortgages and I worry about them.

"Lousy credit" is a reality. I don't apologize for that. I have it. I earned it. I don't apologize for saying that Washington Mutual insists that its employees push loans on people with that kind of credit. They do it. They are hiring people desperate for jobs and making it a condition of employment that they do this to people desperate for money. I don't know about blaming "each other" but I sure as hell blame Washington Mutual.

[sandnsea]

40. I reject that

because my son has a low income job and can't even get credit to buy a computer after putting half down. Low income people are not getting mortgages. They do not meet the income requirements in most of the country. It is median income people getting these ARM and no interest loans, because it's ALL they can get. The mortgage industry could have just as easily continued with fixed rate mortgages like they have for decades. Most of these people would have qualified. Every single time these corporate crooks cause a major economic scandal - they somehow manage to turn it around on the backs of the poor.

You have lousy credit. Can you get a mortgage???

[aquart]

50. Not trying to.

Not answering for anything but what I know. Can't speak for anything other than Washington Mutual. I'm probably not talking about low income people, either. Washington Mutual is spreading throughout Manhattan and has reached Queens, I know, in middle income areas. Bad credit is not necessarily low income, it just means didn't pay debts. Many Manhattanites are over-extended despite plush incomes. I would think they are the targets which really means we're agreeing. Median income people are being talked into loans they shouldn't take. You say they're taking them because the other ones aren't available to them and I know nothing that would contradict that. Sounds like we're on the same page. You have much more general knowledge of the situation than I do.

[sandnsea]

60. Average people, average credit

Who used to get regular mortgages. The housing market was unrealistically high and all this interest scamming did was keep it from bursting sooner. Regular working people go to buy a home, just like their parents and grandparents had. Suddenly, nothing is available to them except these interest onlies or ARM's. I've talked to lots of young working couples with perfect credit, new cars, upper 40% incomes, and that's all they could get. I honestly believe the monied interests just shift high profit vehicles every 5 years or so. Stocks to gold to real estate to interest to mergers and around and around again. And working people try to do the things they're told, and end up soaked every single time. The money goes back to the 'landed class', its rightful owner in their minds. I really think the whole thing is stacked against average people, unless they wake up and learn to play the way the wealthy do. So far, we don't.

[Zynx]

73. ARM, Alt-A, no money down, other stupid, insane mortgage agreement goes here

Lenders shouldn't give loans that people will never be able to pay, but they were.

[sandnsea]

91. Many people WERE able to pay

The terms at the outset of the mortgages. If investors would have been happy with normal profits, that's what would have happened. But that USA is loooong gone.

And please see my post below on the down payment scams. How is a home buyer supposed to know the nonprofit program is really a realtor scam?

I hate that good and honest people are being blamed for this mess. It's the crooks who intentionally concoct these schemes who are at at fault.

[sendero]

17. There is plenty of blame..

... to go around. People who bought houses they could not afford, or speculated that the price would rise fast enough to bail them out of their bad decision, get little sympathy from me.

Lenders are supposed to know better and up until the dismantling of even obvious qualifications of the borrower, did a damn fine job of loaning money to folks who could and would pay it back.

The reason this happened is the classic case of: easy credit thanks to the Fed trying to stave off a recession coupled with speculative buying.

Any time folks can gamble with other people's money, they will.

The sad part is that everyone, not just the bad actors, is going to suffer through this debacle. The only GOOD thing is that it is coming to a head before Bush gets away and manages to blame yet another disaster on someone else.

[TreasonousBastard]

20. There's plenty of capital around, just not...

for junk mortgages. Cowboy capital is disappearing once again.

I don't see that most creditworthy people won't get mortghages-- knocking them out knocks out the base of the system and everyone wants the system restored to sanity.

[sandnsea]

23. Wrong

If there are less mortgage companies, there will simply be fewer mortgages. If interest rates start to rise, then that will jack up payments on the perfect people you adore so much. When they start foreclosing, then only the cream of the crop will be able to get a mortgage. Continued separation of the classes.

Have you heard of a thing called rent? Low income people manage to pay it - month after month after month. Why shouldn't they be able to do the same damn thing with a home loan? They could if the mortgage industry hadn't decided to fuck them over with these ARM and interest only loans.

[ChiciB1]

47. So How Many Of Us Will Be Able To Donate To A Candidate???

I know I'm pretty tapped now. My house, my land and now my mother-in-law is just about to kick the bucket at 95 years old and HER place won't sell either! Her will stated that it was not to be sold until she passed! It's paid for, but insurance and taxes will still have to be paid!

I'm TOAST... we can't afford this!

[sandnsea]

76. Housing market has been pushed out of whack

The median income folks who used to be able to buy many years ago, don't make enough money to qualify for the older homes they used to buy. The land is often worth more than the house these days. That's why I don't know why everybody keeps blaming bad credit and low income. I saw people with excellent credit who just kept taking the equity out of their homes or selling and moving up up up, until we are where we are. Had nothing to do with bad credit, it had to do with greedy lenders who were willing to look the other way at the phony housing "bubble". I hate how many people are willing to just sign on to the corporate line so nobody will point the finger at the pillars of the community - the bankers, realtors, and contractors who pushed this garbage.

[ChiciB1]

86. Well, The Only GOOD Thing Happening My Way Is That My Land Is

PAID FOR! But OMG, the taxes doubled from last year! I just hope I can hang on for a couple of more years. It's been up for sale for a year now... BUT! We bought back in '89 and it was cheap then, so I'm not worried about losing my investment, that will take quite a few years, I just hope the taxes don't go up.

[OzarkDem]

42. They were writing loans for people w/ little or no documentation

of income or assets. That's crazy.

[sandnsea]

44. Yeah, the Mortgage Industry

How in the fucking hell does it become the fault of the consumer when the seller is a CROOK. I cannot figure that out. It's like blaming the storekeeper when the Mafia strongarms come around.

[Zynx]

81. It's fair to except some degree of self-honesty from a consumer.

You apply for an Alt-A mortgage and claim that your gross income is $80K a year so that you qualify to buy the house.

Lender gives you loan based on your word without asking for documents.

You know that you only make $47K a year. You still apply as if you have $80K a year in gross, even though the loan requires income of $80K/year minimum to make payments at current interest rates, let alone higher ones.

That's how Alt-A mortgages were working. Sure, the lender is being irresponsible, but so is the guy claiming he is grossing $80K a year because he knows damn well that he isn't.

[The Cleaner]

88. Yep, that's the way bubbles work -

everybody's making money, nobody wants to rock the boat. Even though everyone knows they are doing it illicitly.

However I do feel sorry for the innocent ones who didn't have much financial/real estate knowledge who got sucked in to all this. But not the ones who lied on their apps.

[sandnsea]

89. And $80,000 income is upper income

Correct? Yes, it is. Median HOUSEHOLD income is less than $50,000. Those are the people who got these loans anyway they could. Median income folks with JOBS, cannot concoct income. Some of them managed to snag a good deal here or there, but they did not cause this market or this crash.

[Rosa Luxemburg]

15. Greenspan predicted it

I think it was last year he predicted all this would happen

[sendero]

18. Greenspan.

.... is as much to blame for this happening as anyone.

[lovuian]

45. Greenspan created it giving out 4% interest

yes and even lower

that created tons of people building houses and prices going up

[Zynx]

78. Of course he did. It's his fault. Japan-style Fed Funds rate garbage.

[burythehatchet]

16. Waging an occupation while being encouraged to shop is coming

home to roost.

or

Dude, where'd my equity go?

[Nimrod2005]

19. Thsi rant he went on crashed the market yesterday!

[jobycom]

21. The little I understand...

There are too many recent flexible mortgages on homes over the last few years, and these mortgages rates, thus the monthly payments, will go up dramatically over the next couple of years, and people on fixed incomes--not just social security, but anyone not expecting a dramatic increase in salary--will begin losing their homes, and the economy will spiral. These mortgages became really popular as rates began to rise, as people began looking for lower rates. The idea of a flexible mortgage is you pay a low rate in the first few years, then it goes up dramatically. People who expect to move in a couple of years figure they'll sell before their rate jumps, or people plan to refinance for a good fixed-rate mortgage.

He was screaming at one point about there being no new mortgages, so I think he's saying that people aren't able to refinance at decent rates, so they will be stuck with these high rates, and as the economy slows, they won't be able to sell for what they owe. The reason for the shortage of new low-rate mortgages is that lenders themselves can't borrow at good rates. So he wants Bernanke to lower the prime lending rates so that lenders can offer lower rates so that people can refinance and not lose their homes (or businesses or whatever else they've mortgaged). The Great Depression started in part because people couldn't pay back loans, so banks repossessed their homes and farms and businesses to recoup their losses by reselling the properties. But the economic collapse was so extreme that banks couldn't get anything for the businesses they repoed, and the banks began failing, and even people who had saved their money in banks had lost everything. At that point, the economy is in major shambles.

At least I think that's part of what he was talking about. I don't understand the stock market. :)

[sandnsea]

27. And there you have it

And here in the west, even people with above median incomes and good credit - haven't been able to get good fixed rate mortgages. I don't think alot of upper income and boomers with tons of equity understand it. If you're still working and trying to get started, they have almost forced you into these risky mortgages. Median income people who have been getting mortgages for decades, haven't had the traditional mortgage available for a really long time.

[aquart]

41. Is this a deregulation problem?

Something that was strictly regulated now isn't? Is this the result of the legislation during Clinton's presidency that removed the restrictions on banking made as a result of the Great Depression crash of 1929?

[sandnsea]

46. It might have

I remember all of that and I remember being quite horrified when it happened. I don't know if that led to this mess or not. ARM's have been around for a while. In the 80's they were in reverse because interest was so high. You got an ARM in hopes interest would go down. I don't know how they turned that into this scam of getting people into low interest now and then jacking it up later.

[elehhhhna]

65. I have a pal who took an arm at 16% in the 80's and a few yearslater

she eneded up with a 2% rate.  ARMs are only good when rates
are high -- never low, as they have been for the last few
years.

[sandnsea]

70. I was referring to the law that allows them

that they didn't seem to be something that appeared due to Clinton's bank deregulation.

[sendero]

22. Let me attempt to explain..

... what is going on here. Anyone who feels I'm off base, please reply with corrections they will be appreciated.

First, what is happening now.

American Home Mortgage, a large and hitherto prosperous mortgage company, is effectively kaput. They will almost certain be filing bankruptcy soon, and there is little chance they will ever emerge from bankruptcy.

How did this happen? They specialized in mortgages for folks with credit 'just above' sub prime. As you know, sub prime is a fancy phrase for a credit rating that is weak to downright bad.

But even though they are theoretically operating "above" the sub prime market, their defaults have risen precipitously. This has caused the folks who have been supplying their working capital to make "margin calls", i.e. where a lender basically calls in the debt (expects full payment) because he no longer believes the borrow is credit-worthy. (I believe the AHM actually defaulted or was late on some payments owed to said lender).

When you are in the business of lending money, and the source of the money you are lending dries up, you are out of business.

Secondly, how did we get here?

Well, this could be quite a long section. The highlights include:

1) Lots of people buying houses they simply cannot afford

2) Lots of people buying houses with the expectation of continually and rapidly rising prices, an unrealistic expectation.

3) Lots of people buying houses with complex mortgages they don't understand.

4) Truly dumb people buying houses with Adjustable Rate Mortgages when fixed rates are already at historic lows.

5) A Federal Reserve desperate to flood the economy with liquidity (printed money) to stave off recession.

6) Rapacious mortgage companies staffed with folks who know damn well that the mortgage they are selling is a hugely bad deal/idea, but sell it anyway to make a buck.

7) An economy that has come under strain due to large increases in the price of oil.

8) Absurd real-estate price increases based on speculator activity.

And a host of other factors, but those are the highlights.

[nosmokes]

28. You pretty well nailed it sendero. I'd like to emphasise that the major

causes are folks buying houses they can't afford,your #1, but I think your #6, greedy mortgage companies selling ARMs and mortgages to people who aren't qualified for them and the mortgage brokers know there's adamn good chance these people are going to default on the loan but shove it on them anyhow. Buying that first piece of Realestate is a complex and complicated procedure, baffling and frightening for most folks. TO top that off you start dealing with all these people who talk a whole different language and toss around sums of thousands of dollars like it was lunch money and all the while they're talking about your life savings and the next 20 years of your life minimum.Anyone serious about buying a house should enroll in a class at their community college and learn some of the ins and outs.

[sandnsea]

29. Median income folks bought for decades

This is really just so much bullshit. This market was designed to cheat people. Entice them in, suck as much interest as they could over the short run, and then to hell with the consequences. Just like every other "bubble" in the last 20 years. No ethics. No customer loyalty. Not any sort of traditional capitalist business sense at all. It's been full on economic rape for a good 20 years.

[elehhhhna]

66. #4's a BIGGIE, too.

[sandnsea]

93. Truly dumb people

who didn't know that fixed rate mortgages weren't being offered to average median income home buyers anymore? Are those the truly dumb people you're talking about??

[elehhhhna]

127. I never said anything about "dumb people" and fixed-rate refis HAVE

been "made available"...it's just that the fancier no/lo-down & no-doc loans are scammy and were pushed hard.

[TahitiNut]

48. The 'market value' of ANYTHING is based on people willing (and able) to BUY.

Way back when ... the California (and other) housing markets were 'rising,' it was essential that a steadily increasing supply of BUYERS was available. As long as the buyers foresaw a continuation of a supply that wasn't sufficient to meet demand and were able to obtain funding, they bought. It spread.

In 1994, the bubble was 'pricked' when the tax laws were changed. Sellers in the high-cost areas no longer had to sink all of their net sales proceeds into a home in a lower cost market. Those markets - usually far outside the major urban centers - saw a collapse. Like a tree falling in a forest where nobody was around, it made little noise. But the domino chain - built by Greater Fool exploiters - began falling.

It can only get worse.

[aquart]

53. Arghhh. Need help with this:

"In 1994, the bubble was 'pricked' when the tax laws were changed. Sellers in the high-cost areas no longer had to sink all of their net sales proceeds into a home in a lower cost market."

Can you explain that to a five-year-old (meaning me, basically)?

[TahitiNut]

54. Taxation of capital gains on sale of residence was deferred ONLY if ...

... one bought a residence of equal or greater value. Then came the $250K ($500K/couple) lifetime exclusion where one could sell a home in a high-cost area like San Francisco for, say, $300K and then buy a home in a low-cost area like eastern Washington for, say, $150K and not get taxed on the $150K difference.

The pressure to defer the capital gains tax caused people to buy larger and more expensive homes - often incurring high property taxes and monthy utility bills - than they'd otherwise regard as sufficient for their needs and wants. Years and years of this created a stratified market in such low-cost areas. When the tax code was changed, anyone holding such a home found themselves unable to sell it in order to relocate (e.g. for a job) ... since the supply became far larger than the demand.

[Gregorian]

64. Nope. Close, but not true.

The new capital gains tax exemption in abbreviated form-

For a personal residence (ie. primary residence occupied 2 out of 5 years), for a single owner is exempt from $250k in capital gains. Or $500k capital gains tax exemption for married owners.


I should know. I've been doing this nearly every two years! Yee haw. Not a bad living. Even if it's not what I was trying to do. I don't give a shit about money. I just wanted beauty. But...when it all fails and one still walks away making money, it's not all bad.


I forgot the context of this discussion. But I think it had something to do with turnover?

[TahitiNut]

68. Nothing in your post contradicts what I said.

What I described was the ENACTMENT of this exclusion and its impact AT THAT TIME in various communities.

Personal EXPERIENCE.

[Gregorian]

85. It is not a one time exclusion.

It is a tax exemption that can be done every two years. That's a big difference.

[Kingshakabobo]

104. What are you saying?

The 250/500k exemption is a cumulative life time exemption. Once you use it, it's gone. This only applies to owner occupied properties held more than 2 years.

Other properties wouldn't be exempt. Consequently, they wouldn't count against our total life time exemption either.

[Gregorian]

107. Wrong.

This can be used over and over. Just not more than once in a two year period.

I've consulted accountants and even the IRS on this. And I've used it four times in the last twelve years.

Read the tax law. Sorry, I just deleted my cap gains tax exemption links. Otherwise I'd just post a link here. Google works. It's very basic. In fact so basic people miss this aspect of it.


http://www.google.com/search?hl=en&q=capital+gains+tax+exemption+every+two+years&btnG=Google+Search

[Kingshakabobo]

111. I did not know that....Thanks!

I was under the impression it was cumulative to lifetime. You learn sumptin new every day! Twice a day on DU!

[aquart]

80. Thank you!

[brentspeak]

49. Very good and useful post

Thanks for that.

[DemReadingDU]

55. other unexpected factors: job loss, illness, death

A couple have what they think are very secure jobs. Then the unexpected happens - one or both of the jobs are outsourced, and unemployment isn't enough to make payments on a huge mortgage.

Or maybe an unexpected illness/death which forces a person to not be able to work.

[sendero]

56. Yes...

... but those factors are relatively constant. Their influence on the situation we have now is minimal.

[LuckyLib]

62. Excellent list. Add to it a culture that has convinced folks that their home is their "investment."

It is your dwelling. Folks who buy way more than they can afford, expecting it to be a huge payoff because "prices are hot!" are going to be in a for a big surprise. And a curse on every realtor and mortgage broker who has raked in mega-bucks on the backs of folks who are ill-informed about finances and real estate (most Americans).

[sendero]

69. I ...

... agree totally.

[havocmom]

71. Left out the part about lots of workers' jobs being outsourced

My daughter works for a land title company, a BIG one. She has been dealing with people in India processing mortgages for people in US.

When the banking industry lets thousands of workers go then whines about foreclosures, I don't have a lot of sympathy for the guys in the board rooms. They, and the leaders in other industries brought the downfall down by reaching cuts labor costs that ended up severing arteries in the US economy.

Workers going from solid jobs to juggling low wage jobs just don't keep much $$ in circulation.

[sendero]

82. True....

... a generally deteriorating economy is certainly a factor. I personally don't think it is a BIG factor, but it is definitely making things worse.

[mountainvue]

51. As of yesterday,109

mortgage firms had imploded. Also another shockwave came when numerous lenders decided to ditch their second mortgage programs, meaning they will no longer offer them. Here is the list of lenders that imploded:
109. Winstar Mortgage
108. American Home Mortgage / American Brokers Conduit
107. Fieldstone Mortgage Company
106. Nations Home Lending
105. Wells Fargo Alternative Lending Wholesale
104. Entrust Mortgage
103. Flick Mortgage/Mortgage Simple
102. Alliance Bancorp
101. Choice Capital Funding
100. Premier Mortgage Funding
99. Stone Creek Funding
98. FlexPoint Funding (Wholesale)
97. Starpointe Mortgage
96. Unlimited Loan Resources (ULR)
95. Freestand Financial
94. Steward Financial
93. Wells Fargo (Correspondent)
92. Altivus Financial
91. ACT Mortgage
90. Alliance Mortgage Banking Corp (AMBC)
89. Concord Mortgage Wholesale
88. Heartwell Mortgage
87. Aegis Lending, Aegis Home Equity
86. Oak Street Mortgage
85. The Mortgage Warehouse
84. First Street Financial
83. Right-Away Mortgage
82. Heritage Plaza Mortgage
81. Horizon Bank Wholesale Lending Group
80. Lancaster Mortgage Bank (LMB)
79. Bryco (Wholesale)
78. No Red Tape Mortgage
77. The Lending Group (TLG)
76. Pro 30 Funding
75. NetBank Funding
74. Columbia Home Loans, LLC
73. Mortgage Tree Lending
72. Homeland Capital Group
71. Nation One Mortgage
70. Dana Capital Group
69. Millenium Funding Group
68. MILA
67. Home Equity of America
66. Opteum (Wholesale, Conduit)
65. Innovative Mortgage Capital
64. Home Capital, Inc.
63. Home 123 Mortgage
62. Homefield Financial
61. First Horizon Wholesale
60. Platinum Capital Group
59. First Source Funding Group (FSFG)
58. Alterna Mortgage
57. Solutions Funding
56. People's Mortgage
55. LowerMyPayment.com
54. Zone Funding
53. First Consolidated (Subprime Wholesale)
52. EquiFirst
51. SouthStar Funding
50. Warehouse USA
49. H&R Block Mortgage
48. Madison Equity Loans
47. HSBC Mortgage Services (correspondent div.)
46. Sunset Direct Lending
45. Kellner Mortgage Investments
44. LoanCity
43. CoreStar Financial Group
42. Ameriquest
41. Investaid Corp.
40. People's Choice Financial Corp.
39. Master Financial
38. Maribella Mortgage
37. FMF Capital LLC
36. New Century Financial Corp.
35. Wachovia Mortgage (Correspondent div.)
34. Ameritrust Mortgage Company (Subprime Wholesale)
33. Trojan Lending (Wholesale)
32. Fremont General Corporation
31. DomesticBank (Wholesale Lending Division)
30. Franklin Financial (Wholesale Operations)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ResMAE Mortgage Corporation
24. ECC Capital/Encore Credit
23. Lender's Direct Capital Corporation (wholesale division)
22. Concorde Acceptance
21. DeepGreen Financial
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial



Ailing/Watch List Lenders:

13. CIT Home Lending
12. FNBA
11. GreenPoint Mortgage
10. All Fund Mortgage
9. Quick Loan Funding
8. Option One
7. Accredited Home Lenders
6. Ocwen Loan Servicing
5. Doral Financial Corp.
4. Evergreen Investment/Carnation Bank
3. Aegis Mortgage Corporation
2. Coast Financial Holdings, Inc.
1. Residential Capital, LLC*

"Imploded" lenders: The "imploded" status is somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or a "firesale" acquisition. The Companies include all types (prime, subprime, or a mix of both; retail or wholesale; subsidiaries and entire companies). Note: Companies listed here may still be operating in some capacity; check with them before making assumptions.

Ailing lenders haven't shut down, but they're significantly scaling back or are (or recently have been) in manifest financial, legal, or operational distress. Unfortunately, most of the industry now falls under this description, so we are forced to reserve this list for the more glaring cases or those which we happen to have more specific info about.

[DemReadingDU]

57. wow, that's a lot!

do you have a link?

[mountainvue]

109. Here ya go:

http://ml-implode.com/
If you scroll about halfway down the page they are all there. Also if you click on the names it will take you to the info of what happened to the lender in question.
The implosion started in earnest back in January and has continued like a slow landslide ever since.

[annabanana]

58. The name Wells Fargo is on that 1st list twice..

once as "Alternative Lending Wholesale"
and
once as "(Correspondent)"

Why isn't Wells Fargo itself at least in the second list? (as a nervous holder of a standard 30 year fixed Wells Fargo Mortgage)

[Kingshakabobo]

105. That list is a little deceiving - perhaps intentionally by someone with ....

........a point to make.

Some of these lenders are only closing their "correspondent" divisions. Some are closing their "wholesale" or "broker" divisions.

Wells Fargo isn't going anywhere. They are doing away with a portion of their business model but they will remain a major player in retail/wholesale-broker business. Their sub-prime division left much to be desired anyway.....that wasn't their main focus. Lenders that do large a-paper business like to have a sub-prime division to pick up "fall-out" but it almost never made sense for a broker to look at THEIR programs when there were other lenders operating as specialists in that market.

Some of those lenders merely ceased doing business as "correspondent" lenders but still have a strong retail AND broker presence.

Definitions:

Retail = you can walk in to their storefront or call their 800 number to deal directly with that lender.

Broker (aka wholesale) = You go to XYZ Mortgage Broker company. XYZ collects the paperwork and forwards it to the lender for underwriting, closing and funding. The loan legally closes in the end lenders name.

Correspondent = Almost identical to the broker scenario but the mortgage company, XYZ, underwrites closes and funds the loan based on the intended end lender. I happen to like the correspondent scenario because it allows me to get best rates and terms for my client as if I were brokering the loan BUT I maintain complete control of the transaction.....I'm not relying on someone on the other side of the country to do their job correctly and get my clients loan closed.

[mountainvue]

108. You should be fine with the Wells Fargo mortgage that you

have. Kingshakabobo's post explains that their alternative lending division and correspondent division are gone and what those mean. On Wells part, those were wise moves in order to keep their shareholders and clients like yourself in a safe position. Here's a link to an article that might make you feel a bit better:
http://www.usatoday.com/money/economy/housing/2007-08-03-mortgage-lending_N.htm

NEW YORK (Reuters) — Wells Fargo (WFC), Wachovia (WB) and other lenders are limiting mortgages to some of their more creditworthy borrowers as worries about homeowner defaults widen.
Wells Fargo, the second-largest U.S. mortgage lender, said it is no longer issuing "Alt-A" home loans through brokers, while Wachovia has stopped entirely. Wachovia also said one lending unit has temporarily halted its Alt-A production.

Lenders are making fewer home loans once thought to be safe because investors now perceive those loans to be risky. The changes could worsen the U.S. housing slump by putting homeownership beyond the reach of a larger number of Americans.

(snip)

The pullback at Wells Fargo is notable because the bank has long prided itself on conservative lending standards. Wells Fargo has also been spared recent market turmoil because it didn't make many of the risky loans that had helped fuel a five-year housing boom, but are now biting lenders back.

(snip)

[annabanana]

114. Thanks mountainvue

I take no pride in pleading ignorance in these matters...

[bananas]

52. rec #5 - cnbc housing armegeddon now on the greatest page

[flyarm]

59. this same thing happened with reaganomics!! false economy!! driven by housing too high

and inflated and falsely so..so now people have paid too much..and they won't be able to sell for what they bought for..and it is the lower incomes that will be hurt most because many took out second mortgages to pay off other bills..
it is a vicious circle!!

fly

[Tierra_y_Libertad]

61. The "ripple effect" will be the Armageddon.

It isn't just the financial industry that will suffer.

Too many unsellable houses, even at lower cost, means less construction. Which means that the builders, carpenters, plumbers, electricians, landscapers, are going to looking for work. Which means that the all the folks who supply the builders, carpenters, etc, will be looking for work. Which means that all the people in the transportation which delivers the supplies to the carpenters, etc, will be looking for work. Etc, etc, etc. Which means that all those folks looking for work, taking pay cuts, scrambling to hold on to what they have, won't be buying much of anything, which means the people who make the stuff that the people, now going broke, won't be buying that stuff, which means more people out of work.

Result? The economy tanks, tax revenues fall, which means that the government will have to borrow more, which means higher interest rates, which means more indebtedness sold to the Chinese, Japanese, Indians.

All of which means that we have to pay for it all.

Which means we pay for it now, by bailing out the finance industry, or pay for it later by having to, somehow, bail out the whole economy.

Of course, we have been assured, that capitalism is the most efficient of all economic models. Aren't you relieved?

[CountAllVotes]

98. so if Bernake starts cutting rates

the illusion can continue onward or stay at least semi-stagnant perhaps? \

This is not the real answer is it Mr. Cramer?

They need to increase the rates higher so that more countries will continue to buy our bonds and thus fund our debt.

[hatrack]

118. And that'll also shovel another ton of coal into inflationary pressure

So, there's nothing the Fed really CAN do - cut rates and nobody buys our debt; raise rates and the housing spiral spins lower, faster.

Oops.

[CGowen]

63. What an actor, he knows what is going on...n/t

[ProgressiveEconomist]

92. Here's Cramer's staff summary of what he said on CNBC Friday, and my take on it

IMO, Cramer's main interest in the financial crisis on his daily cable hour is figuring out how to make money in the stock market from it. He's trying to forecast when it will become wise to buy the stocks that hold all the mispriced mortgage paper, not devise public policies to stop people from losing their homes. IMO, as long as a financial company whose stock is plummeting doesn't go bankrupt, the stock will bottom out and start rising when "repricing of risk" has run its course in the financial sector plunge.

From http://www.thestreet.com/s/cramers-mad-money-recap-mortgage-morass-index/funds/madmoneywrap/10372362.html?puc=_tsclsii

Cramer's 'Mad Money' Recap: Mortgage Morass Index; By TheStreet.com Staff 8/3/2007 7:16 PM EDT

... people can't get super-bullish until the mortgage madness has ended, Jim Cramer said on his "Mad Money" TV show Friday. To measure this and to get through these confusing times Cramer said he has come up with his own "Mad Money Index," made up of the following stocks: ...

When this Index stabilizes, and the Fed cuts rates, we'll be in the clear, Cramer said. Until then keep an eye on these stocks as a measure of the mortgage madness, which has taken over the market. "Mr. Bernanke, cut the rates now," he said, reaching out to the Federal Reserve chairman. "Many people could be about to lose their homes because you're not
listening!"

[The Cleaner]

72. "We Are Building Homes in Iraq...people are losing their homes here.."

he said this also.

[bananas]

75. Fridays stock market watch thread

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2940121&mesg_id=2940785

[bigbrother05]

83. Starting to sound like the S&L crash

All the "cook the books" techniques that Enron employed were used (pump and dump, selling back and forth to dummy companies, etc.) during the oil/commercial offices bubble that was the underlying cause of the S&L scandal. Do you think it is a coincidence that oil and real estate are the common denominators? This will be just another tweak for the BFEE on their way to global domination.

[sandnsea]

90. It is, except worse I think

I think many more companies are involved now than were with the S&L crash. It's always these crooked sonsabitches that concoct these scams, I will never understand the mentality of people who blame the crook in every situation except white collar crime.

[Blackhatjack]

87. Don't forget outsourcing of jobs, and keeping wages low contributed to this...

When you outsource jobs because it is cheaper labor for the company, you kill off consumers at home who were dutifully making payments every month.

When you keep wages low and prices begin to rise you reduce income available to pay recurring bills, it is like being on a 'fixed income.'

Add to the mix that the Banks and Mortgage Companies were turned loose to charge outrageous fees and engage in ripping off lower income people. REmember how much of their profits comes from fees? And now when they raise rates, their borrowers can't pay.

Credit card companies are raising rates across the board just at the time when mortgage payments are going up.

Just a few thoughts...

[antigop]

94. Do you all remember Long-Term Capital Management?

http://www.businessweek.com/1998/38/b3596001.htm

>>
Smart people aren't supposed to get into this kind of a mess. With two Nobel prize winners among its partners, Long-Term Capital Management L.P. was considered too clever to get caught in a market downdraft. The Greenwich (Conn.) hedge fund nearly tripled the money of its wealthy investors between its inception in March, 1994, and the end of 1997. Its sophisticated arbitrage strategy was avowedly ''market-neutral''--designed to make money whether prices were rising or falling. Indeed, until last spring its net asset value never fell more than 3% in a single month.

Then came the guns of August. Long-Term Capital's rocket science exploded on the launchpad. Its portfolio's value fell 44%, giving it a year-to-date decline of 52%. That's a loss of almost $2 billion. ''August has been very painful for all of us,'' Chief Executive John W. Meriwether, a legendary bond trader, said in a letter to investors. (Long-Term's executives declined to speak on the record.)

Long-Term Capital and its Nobel laureates in economics, Robert H. Merton and Myron S. Scholes, weren't the only ones who got creamed. Locating the losses is hard because Wall Street and the hedge-fund world don't disclose them. According to Andrew W. Lo, a finance professor at Massachusetts Institute of Technology who advises several so-called quant funds, as much as 20% of hedge funds, which control some $295 billion, are quantitatively oriented.
>>

[ProgressiveEconomist]

97. ON CSPAN2 BOOK TV NOW--A much better discussion of the mortgage crisis

by some of my favorite economists Sat 8/4/07 &pm NY time:

http://www.booktv.org/program.aspx?ProgramId=8539&SectionName=&PlayMedia=No

[distantearlywarning]

100. DU Financial Gurus, help me out here.

I am a holder of a standard 30-year fixed rate mortgage from one of the lenders in the "imploded" list above. Our household income is well above the average for our area, and we bought less house than we could afford so we have no trouble making our payments so long as both of us are employed. In fact, even if I lost my job, we could still make our payments with a few minor lifestyle changes. Further, the area we live in (Pittsburgh) has had steady but very slow housing growth since just about forever, and there was no housing bubble here. The only bad thing about our mortgage is that it's our first house, we haven't had it very long, so we have basically no equity in the house to speak of.

Should I be freaked out by this? What does this all mean for someone in my position?

Also, I don't know what people mean when they talk about median income buyers only getting weird loans? Even though we are above the median in our area, we are quite median buyers compared to those in hotter housing/job markets. Nobody tried to offer us a weird loan. We had no trouble getting a normal, 30 year fixed rate. My credit is pretty good, but my husband's credit leaves something to be desired.

[Name removed]

101. Deleted message

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[Name removed]

106. Deleted message

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[Name removed]

110. Deleted message

Message removed by moderator. Click here to review the message board rules.

[MissB]

120. I think that the person that asked the question wasn't

aware that there are all sorts of different loans out there. They have a loan through one of the companies that is now closing. All they really want to know is whether it affects their mortgage - a reasonable concern for a person relatively new to home ownership.

They're fine. They seem to have a 30 year fixed, not a variable loan.

That's all they wanted to know. They weren't being smug about it and they weren't sneering at the rest of us.

You were being a bit rude. :shrug:

[sandnsea]

121. Then SHE could have left off the snark

"Nobody tried to offer us a weird loan. We had no trouble getting a normal, 30 year fixed rate."

If it was just a reasonable concern and all.

The snark was the entire reason for the post.

[distantearlywarning]

122. This is how flamewars start.

One person interprets the actions of another in the worst possible way and accuses them of all kinds of bad moral character. I'm pretty sure you don't know anything about me - why automatically assume that I'm a terrible person who only posts things on the internet to make others feel bad about themselves?

I assure you that the "snark" was not the reason for the post. I'm sorry that it was interpreted as snobbery. I certainly do not believe in any way that borrowers are the cause of this problem, and I have little sympathy for predatory lenders. I was only questioning the statements up-thread that suggested that the average median income borrower couldn't get anything but a sub-prime loan, given that nobody tried to offer us, median income borrowers, anything but a fixed-rate. Perhaps there is a different standard in non-bubble markets vs. hot markets. All I really know about mortgages is the little research I did when we were obtaining a mortgage, which is to say not much. Certainly not enough to know whether Wells Fargo being on the list up-thread is a problem for us, and not enough to blame homeowners for having problems.

This is probably TMI, but we bought our house for only $95K. It's an incredibly low cost-of-living area, but still, I'm hardly at the top of the socio-economic heap nationwide. From your angry posts, I have this vision that you are sitting in front of your computer imagining me smoking an expensive cigar in my mansion while thinking of things to post on DU to make fun of all the little people and their failing sub-prime mortgages. Although I wouldn't turn down a mansion if someone offered it to me, that's not my lifestyle right now.

Anyway, if we want DU to be a nicer place, we could start by giving one another the benefit of the doubt and not being pissed off when we don't know the whole story. I was honestly pretty surprised to come back to find these responses tonight, and also a little hurt that someone who doesn't even know me would automatically assume that my entire intent with that post was to be a jerk.

[Name removed]

123. Deleted message

Message removed by moderator. Click here to review the message board rules.

[distantearlywarning]

124. I don't earn upwards of $80K.

We earn above average for our area, which is quite low compared to other places. In San Francisco, for instance, our combined salaries would probably buy us a closet. A closet that hadn't been remodeled since 1965. But even if I did earn $200K a year, would that automatically make me a bad person? Or a clueless one?

There was no snippiness or casting of aspersions. I realize that that was the impression you got, but it doesn't reflect intention on this end.

And I am fully aware that I live in a low cost of living area. I stated such twice. Not that I should have to justify my "street cred" or anything, but I did live for many years in an incredibly high cost of living area on a salary barely more than minimum wage. I didn't even have enough extra money every month to afford mandatory car insurance, much less a down payment on a house. All I have to do to imagine the life circumstances of a low income home buyer in San Francisco or Miami or Los Angeles is to think back about how I lived at that time, and how hard it was just to get the heat bill paid and still be able to eat.

Anyway, my point is that you're still making really negative assumptions about what I think about this issue. If you really want to know what I believe about the reasons why borrowers take sub-prime loans, or whether I believe that low-income buyers are able to buy houses outside of Pittsburgh, please do me the courtesy of asking rather than assuming. I am not your enemy, I am your fellow progressive voter. I wouldn't be here with almost 2000 posts if that weren't the case. Why not have a little faith that maybe I'm not in fact a total idiot or out to get you?

These kinds of posts are why flame wars start. If people want to know why every thread here turns into crap these days, well, this is a textbook example. I'm sorry that you are pissed off about this issue, but insulting me or anyone else won't make DU better. And if I were in fact clueless about this or any other issue you were mad about, insulting me likely wouldn't make me more able to grasp your argument or come around to your side. In fact, it would probably make me less likely to listen to what you had to say. If the goal is truly to educate others in areas in which they are ignorant, then pragmatically arguments should be framed in ways that encourage them to think rather than get angry. (Although I fully understand that sometimes it's more psychologically satisfying to try to crush another poster who you perceive as being the embodiment of every evil thing that pisses you off. If that is in fact your actual goal, well then, flame away...)

I'm trying to be nice to you and I hope it's coming across that way. I thought about defensively flaming you back, but I didn't - the last thing DU needs is one more person screaming and yelling and acting like a dickhead over absolutely nothing. I hope that you will take this and my previous post in the spirit it is intended and take what I'm saying here seriously.

And if you really want to know who I am, take a look at the sig line. That should tell you everything you need to know about me. Or ask what this clueless poster does for a living....you might find the answer very interesting...

[Name removed]

125. Deleted message

Message removed by moderator. Click here to review the message board rules.

[distantearlywarning]

126. Ok, well, what can I say to that?

Sorry we can't come to some kind of resolution. I am obviously completely anathema to you. Perhaps you should consider the ignore option.

[MissB]

133. In situations like this, it is probably best just to put the poster on ignore.

You tried your best, you really did. Other than banging your head against a brick wall, there isn't much more you can do.

If that poster responds to your olive branch with a bottle of poison, I don't see any other choice.

[TroglodyteScholar]

132. If you got the chip off your shoulder...

...maybe you could have seen it for the simple question that it was, however uninformed. That's what people do when they don't know--they ask.

[SoCalDem]

103. Nope. if you have a 30 yr fixed, and can make your payments

you are not in jeopardy. We also have a fixed rate. It's the people who bought more house than they can really afford, and who got sucked into an adjustable rate loan ..they are in deep shit, because as those loans start to escalate,they will be priced out of their house. technically, they have just been renting a place they never could have afforded.

[mountainvue]

112. My advice to you would to stay in your 30 year fixed, send

a little extra money toward your principal each month with your mortgage payment. That will help you build equity in your home faster. Since you don't live in a bubble market, I gather you didn't overpay for your home. I don't know what your plan is or how long you envisioned staying in the house but just remember if the market in your area gets bad, just ride it out and keep making your payments. Also, even though your lender is on the imploded list, you should still be okay. They will still continue to service your loan, that won't change. It seems to me that you made a solid decision and a good investment. The people that are going to have problems are those that bought in bubble markets, paid too much, did a 100% or 80/20 combo loan and their loan is set to adjust here soon. They won't have enough equity to refinance their loan into a fixed rate and many of their mortgages are tied to the six month Libor index. Theoretically, their loans could adjust every six months. There are usually caps in the loans with regard to how much the loan can adjust in the first six months and life caps as to how much the loans can adjust over the life of the loan. I have seen life caps that are in the 13-14% range. Some of the option arm products are even higher than that.

[distantearlywarning]

129. Thanks for the advice.

I also read after I posted that Wells Fargo is just having problems with the section of their company that services sub-prime loans, and that they should be basically ok (comparatively) because overall they tend to make relatively conservative loans compared to other lenders.

[MasonJar]

113. The mortgage companies duped many home buyers. Their rates

and charges were not sustainable, especially for high risk buyers. Why would you charge a really high rate to borderline buyers if you wanted them to pay back the mortgage debt; the buyers have little to lose and are being overcharged and so have little incentive to pay if their world collapses as many working Americans' worlds have. I am not a mathematician, but the bottom line is not practical and the mortgage brokers should have known it. Now the practitioners of duplicity will lose their houses too.

[ProgressiveEconomist]

131. Mortgage companies give bonuses for selling rates higher than what the buyer qualifies for.

Further, they tie such bonuses to simultaneously selling "prepayment penalties". In other words, some mortgage companies will give mortgage brokers bonuses of thousands of dollars for locking home-buyers into rates higher than they could get from honest brokers, and thus making foreclosure more likely on top of a despicable ripoff.

This was a point made by several panelists discussing Ned Gramlich's new book on Subprime Mortgages last month on CSPAN2 BookTV. See http://www.booktv.org/program.aspx?ProgramId=8539&SectionName=&PlayMedia=No for a rebroadcast schedule and web video links.

[brettdale]

117. Apprently there is another Video of Him

Blaming John Edwards for it, I guess hes trying to be the next Neil Cauvto.

[HughMoran]

119. I've already lost 10% of my net worth in the past week

I can't stand this bad news - I don't want to hear any more...

[Geek_Girl]

128. I'm very fortunate that I live in an area where housing costs are very low

I bought my 1920's 3200 sf home about 5 years ago for 140k I may be able to sell it for 180k today. My income is above the national average too. I feel pretty blessed these days.

[nolabels]

130. When the DJI goes below 10,000 call me, i will start worrying

Untill then shut the pie hole Mr.Kramer :nopity: