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Anatomy of a Train Wreck
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<blockquote data-quote="The Other Side" data-source="post: 410349" data-attributes="member: 17969"><p><span style="color: #0000ff">"Did you not understand the issue when you posted it? Why would you post something as if it were fact if you're not prepared to stand behind it? Zero down payments does not put anyone behind any eight ball if they can afford to make the monthly morgage payment. Did you not understand this simple point when you posted it as gospel?"</span></p><p> </p><p><span style="color: #ff0000">"After the government succeeded in weakening</span></p><p><span style="color: #ff0000"><span style="font-size: 12px"><span style="font-family: 'AGaramond-Regular'">underwriting standards, mortgages seemed to require</span></span></span></p><p><span style="font-size: 12px"><span style="font-family: 'AGaramond-Regular'"><span style="color: red">virtually no down payment, which is the main</span></span></span></p><p><span style="font-size: 12px"><span style="font-family: 'AGaramond-Regular'"><span style="color: red">key to the problem"</span></span></span></p><p> </p><p><span style="font-size: 12px"><span style="color: black">This is the exact quote from the author of this report cited by WKMAC.</span></span></p><p> </p><p>He is speaking directly about the current mortgage crisis.</p><p> </p><p>I understand all too well. The majority of FAILED loans are zero downpayment and variable rate loans to low to moderately low income buyers.</p><p> </p><p>The author cites this fact as well as the goverment currently. </p><p> </p><p>It is a fact that a person who can afford a mortgage payment with zero down is the right candidate for this type of loan, however, this is not the majority.</p><p> </p><p>The Bush administration pushed hard to get minority low income buyers into the market with zero downpayment loans.</p><p> </p><p>FACT: President Bush mandated HUD to push zero downpayment loans with variable rates to minorities.</p><p> </p><p>These are the very highest percentage of failed loans. The author cites the "easing" of standards to achieve the cited goals of Pres Bush (5.5 million homes by 2010) as the point where this crisis began.</p><p> </p><p>It went all wrong when all guidelines went into deregulation.</p><p> </p><p>Let me make myself clear on this issue, there are responsible parties all the way from Wall Street to main street. Both Democrats and Republicans alike.</p><p> </p><p>Money corrupts, and as long as people were making money during the boom, everyone was looking the other way.</p><p> </p><p>This is what happens with corruption and greed.</p><p> </p><p>What happens next is whats important here, what direction does the Goverment and Wall Street take to stabilize the country, many jobs are at risk right now.</p><p> </p><p>How many people do we all know who will be unemployed next year at this time???</p><p> </p><p>The Bush "Home Ownership Society" was a noble idea and this I agree with the author, it was the lack of safeguards that caused this crisis to grow to a disaster.</p><p> </p><p>In the begining, the home ownership society was to build single family homes around the country in the 100K to 200K price range, and Bush ordered Fannie mae to set aside 400 billion dollars to back these loans.</p><p> </p><p>The problem started when the builders began to make homes larger than what was suggested by the Bush Administration.</p><p> </p><p>Both Fannie Mae and Freddie Mac were not designed to cover loans greater than 200K and they ended up backing loans as much as 800K with zero down and variable interest rates.</p><p> </p><p>People who bought in these circumstances have walked away from homes when the rate changes to prime plus 2 percent or (ex: 6.75% prime 2006 plus 2% = 8.75%) on a first mortgage! The difference on the first would jump to a level that people just couldnt afford.</p><p> </p><p>The second made it worse. The second is always 1.5% higher to begin with, so a second at 7.85% would be 9.85%!</p><p> </p><p>A 100 percent loan is structured at 80/20 </p><p> </p><p>Folks who bought a 800K home at 80/20 with an adjustment in 3 or 5 years were destroyed when they could'nt re-fi or sell the home. </p><p> </p><p>Fannie and Freddie were not designed to cover this.</p><p> </p><p>This is the point I am making. The banks were selling these junk loans to foreign banks just to get them off the books. </p><p> </p><p>At the end of the day, is this all GW Bush's fault? <strong><em>NO.</em></strong></p><p> </p><p>He merely planted the seeds for failure, the system just exploited the idea.</p><p> </p><p> </p><p> </p><p> </p><p> </p></blockquote><p></p>
[QUOTE="The Other Side, post: 410349, member: 17969"] [COLOR=#0000ff]"Did you not understand the issue when you posted it? Why would you post something as if it were fact if you're not prepared to stand behind it? Zero down payments does not put anyone behind any eight ball if they can afford to make the monthly morgage payment. Did you not understand this simple point when you posted it as gospel?"[/COLOR] [COLOR=#ff0000][/COLOR] [COLOR=#ff0000]"After the government succeeded in weakening [SIZE=3][FONT=AGaramond-Regular]underwriting standards, mortgages seemed to require[/FONT][/SIZE][/COLOR] [SIZE=3][FONT=AGaramond-Regular][COLOR=red]virtually no down payment, which is the main[/COLOR][/FONT][/SIZE] [SIZE=3][FONT=AGaramond-Regular][COLOR=red]key to the problem"[/COLOR][/FONT][/SIZE] [SIZE=3][COLOR=#ff0000][/COLOR][/SIZE] [SIZE=3][COLOR=black]This is the exact quote from the author of this report cited by WKMAC.[/COLOR][/SIZE] [SIZE=3][/SIZE] He is speaking directly about the current mortgage crisis. I understand all too well. The majority of FAILED loans are zero downpayment and variable rate loans to low to moderately low income buyers. The author cites this fact as well as the goverment currently. It is a fact that a person who can afford a mortgage payment with zero down is the right candidate for this type of loan, however, this is not the majority. The Bush administration pushed hard to get minority low income buyers into the market with zero downpayment loans. FACT: President Bush mandated HUD to push zero downpayment loans with variable rates to minorities. These are the very highest percentage of failed loans. The author cites the "easing" of standards to achieve the cited goals of Pres Bush (5.5 million homes by 2010) as the point where this crisis began. It went all wrong when all guidelines went into deregulation. Let me make myself clear on this issue, there are responsible parties all the way from Wall Street to main street. Both Democrats and Republicans alike. Money corrupts, and as long as people were making money during the boom, everyone was looking the other way. This is what happens with corruption and greed. What happens next is whats important here, what direction does the Goverment and Wall Street take to stabilize the country, many jobs are at risk right now. How many people do we all know who will be unemployed next year at this time??? The Bush "Home Ownership Society" was a noble idea and this I agree with the author, it was the lack of safeguards that caused this crisis to grow to a disaster. In the begining, the home ownership society was to build single family homes around the country in the 100K to 200K price range, and Bush ordered Fannie mae to set aside 400 billion dollars to back these loans. The problem started when the builders began to make homes larger than what was suggested by the Bush Administration. Both Fannie Mae and Freddie Mac were not designed to cover loans greater than 200K and they ended up backing loans as much as 800K with zero down and variable interest rates. People who bought in these circumstances have walked away from homes when the rate changes to prime plus 2 percent or (ex: 6.75% prime 2006 plus 2% = 8.75%) on a first mortgage! The difference on the first would jump to a level that people just couldnt afford. The second made it worse. The second is always 1.5% higher to begin with, so a second at 7.85% would be 9.85%! A 100 percent loan is structured at 80/20 Folks who bought a 800K home at 80/20 with an adjustment in 3 or 5 years were destroyed when they could'nt re-fi or sell the home. Fannie and Freddie were not designed to cover this. This is the point I am making. The banks were selling these junk loans to foreign banks just to get them off the books. At the end of the day, is this all GW Bush's fault? [B][I]NO.[/I][/B] He merely planted the seeds for failure, the system just exploited the idea. [SIZE=3][/SIZE] [SIZE=3][/SIZE] [SIZE=3][/SIZE] [SIZE=3][/SIZE] [SIZE=3][/SIZE] [SIZE=3][/SIZE] [/QUOTE]
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