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| 5/25 |
| 2008/2/13-18 [Finance/Banking, Reference/RealEstate] UID:49135 Activity:kinda low |
2/12 What is the profile of a person defaulting home loan? I mean,
are these type of people under-educated? Risk takers? High
school drop-outs who desperately want to own homes? And why
are they in certain areas (Inland Empire, etc)?
\_ They run the gamut. If the loan officers were all of a sudden willing to
give them a loan, even though they previously didn't qualify, and they
want a house, who are they to object. "I sign my name saying I'll pay it
back. But if they give me the money, that must mean I can pay it back.
Because otherwise the government would tell them not to give me the money."
\_ They run the gamut. If the loan officers were all of a sudden
willing to give them a loan, even though they previously didn't
qualify, and they want a house, who are they to object. "I sign my
name saying I'll pay it back. But if they give me the money, that
must mean I can pay it back. Because otherwise the government would
tell them not to give me the money."
\_ in another word people with lower than avg intelligence,
who mostly congregate in SOUTHERN CALIFORNIA like our dimwit
\_ There are fewer foreclosures in places like SF because
the market is stronger. That's all. Look at Sacramento
for NoCal "stupidity".
\_ SF markets did not go up as much as in LA, mostly because
people were not dumb enough to sign a bunch of loans they
couldn't afford, so the bubble wasn't as bad here. Only
in the NorCal burbs are people that stupid.
\_ Southern California style left wing is not
MAINSTREAM AMERICA.
\_ one oddity about california is foreclosure laws here make it hard for
the lender to persue assets beyond the property on which the loan
was taken out. This takes a most of the risk out of defaulting on
a loan for a 'underwater' property.
\_^left^right
\_ one oddity about california is foreclosure laws here make it hard
for the lender to persue assets beyond the property on which the
loan was taken out. This takes a most of the risk out of defaulting
on a loan for a 'underwater' property.
\_ unless you re-fi'd
\_ They are San Jose engineers making $100K+ with a $740K mortgage
\_ Yes, but being a state with trust deeds instead of mortgages
mitigates that somewhat, as it is much easier to foreclose
on a trust deed.
\_ They are San Jose engineers making $100K+ with a $740K mortgage now
who bought at $275K in 1995
http://www.nytimes.com/2008/02/12/business/12credit.html
\_ "... when he refinanced his home in Northern California to take
cash out to pay for his daughter's college tuition."
Yeah, blame it on the daughter. Stop playing good parent. Did
he pay $465K+ for his daughter's college tuition? There's
probably some European vacations and a BMW that he's not
mentioning.
\_ People have an amazing ability to rationalize away their
mistakes and put the blame on someone else. Too bad, they
lose a chance to learn something when they do that.
\_ I know someone who bought a house in Berkeley *knowing* she was
going to lose the house. 5 figure salary, really bad credit, not
a very convincing person. Didn't matter. They gave her a huge
loan knowing she couldn't pay it and she knew she couldn't. I just
don't understand.
\_ The market is broken because all parties involved are shielded
from the consequences of their behavior by the government.
\_ Tell that to JP Morgan and Citibank. The mortgage securitization
conduits did not look at the paper they were packaging. Greenspan
turned a blind eye, and did not enforce what little mortgage
underwriting regulation there is. Or use FedRes' considerable influence
to stop the BS.
\_ Tell that to JP Morgan and Citibank. The mortgage
securitization conduits did not look at the paper
they were packaging. Greenspan turned a blind eye,
and did not enforce what little mortgage underwriting
regulation there is. Or use FedRes' considerable
influence to stop the BS.
\_ So what are the consequences? I haven't paid much attention
honestly but I haven't heard of any high profile people
getting fired or anything.
\_ Oh Jees. Something like a dozen CEOs have lost their
jobs in the last six months. But no one in the White
House, it is a "responsibilty-free zone."
\_ you mean they they found an excuse to take their
golden parachute early. |
| 5/25 |
|
| www.nytimes.com/2008/02/12/business/12credit.html More Video As home prices fall and banks tighten lending standards, people with good, or prime, credit histories are falling behind on their payments for home loans, auto loans and credit cards at a quickening pace, according to industry data and economists. The rise in prime delinquencies, while less severe than the one in the subprime market, nonetheless poses a threat to the battered housing market and weakening economy, which some specialists say is in a recession or headed for one. Until recently, people with good credit, who tend to pay their bills on time and manage their finances well, were viewed as a bulwark against the economic strains posed by rising defaults among borrowers with blemished, or subprime, credit. Like subprime mortgages, many prime loans made in recent years allowed borrowers to pay less initially and face higher adjustable payments a few years later. As long as home prices were rising, these borrowers could refinance their loans or sell their properties to pay off their mortgages. But now, with prices falling and lenders clamping down, homeowners with solid credit are starting to come under the same financial stress as those with subprime credit. "Subprime was a symptom of the problem," said James F Keegan, a bond portfolio manager at American Century Investments, a mutual fund company. The bursting of that bubble has led to steep losses across the financial industry. American International Group said on Monday that auditors found it may have understated losses on complex financial instruments linked to mortgages and corporate loans. The running turmoil is also stirring fears that some hedge funds may run into trouble. At the end of September, nearly 4 percent of prime mortgages were past due or in foreclosure, according to the Mortgage Bankers Association. That was the highest rate since the group started tracking prime and subprime mortgages separately in 1998. The delinquency and foreclosure rate for all mortgages, 73 percent, is higher than at any time since the group started tracking that data in 1979, largely as a result of the surge in subprime lending during the last few years. An example of the spreading credit crisis is seen in Don Doyle, a computer engineer at Lockheed Martin who makes a six-figure income and had a stellar credit score in 2004, when he refinanced his home in Northern California to take cash out to pay for his daughter's college tuition. Mr Doyle, 52, is now worried that he will have to file for bankruptcy, because he cannot afford to make the higher variable payments on his mortgage, and he cannot sell his home for more than his $740,000 mortgage. "The whole plan was to get out" before his rate reset, he said. I've avoided bankruptcy for months trying to pull this out of my savings." The default rate for prime mortgages is still far lower than for subprime loans, about 24 percent of which are delinquent or in foreclosure. Some economists note that slightly more than a third of American homeowners have paid off their mortgages completely. This group is generally more affluent and contributes more to consumer spending and the economy relative to its size. Unlike subprime borrowers, who tend to have lower incomes and fewer assets, prime borrowers have greater means to restructure their debt if they lose jobs or encounter other financial challenges. The recent reductions in short term interest rates by the Federal Reserve should also help by reducing the reset rate for adjustable loans. stimulus package are unlikely to make a significant dent in the large debts weighing on many Americans, because banks have tightened lending standards and expected rebates from the government will not cover most house payments. The problems are most acute in areas that experienced a big boom in housing -- California, the Southwest, Florida and other coastal markets -- and in the Midwest, which is suffering from job losses in the manufacturing sector. And it is not just first-mortgage default rates that are rising. Tips To find reference information about the words used in this article, double-click on any word, phrase or name. A new window will open with a dictionary definition or encyclopedia entry. |