MadelynIris
Refugee
Anyone else scared?
anitram said:For years I watched as builders put up ridiculous McMansions, 30, 40, 50, 60 miles outside of a major city in "suburbs" and people flocking out there on a zero downpayment so they could live in a house twice the size they need and have the privilege of spending 2-3 hours a day in a car commuting. They could of course either not afford the furniture, or got into further debt to cover that. And more and more houses just popped up on the horizon with people buying up.
So it's no wonder what's happened.
AnnRKeyintheUSA said:Another way greed has backfired is all the recalls from China. All those greedy American manufacturing companies thought they could save millions by sending the work overseas where they could get off paying the workers much much less. But now they're facing huge losses in recalls and possible lawsuits due to the Chinese not being up to standard (poison pet food and toothpaste, lead painted toys, etc.) If they had their stuff made in the US under tighter regulations and paid the workers more which was the right thing to do, none of this would have happened. I hope they will all think twice about trusting China again.
ntalwar said:I don't think it's related to lower wages paid, but rather to systems and inspections not being in place to prevent these incidents.
martha said:
But many of these companies import products from China because of the low production costs, which are directly related to the low wages.
Infinitum98 said:The borrowers were also greedy because even though they knew that they wouldn't be able to pay all those monthly mortgage payments, they thought they would be able to sell their house for a higher price tag very soon anyway.
I'm glad the housing/mortgage market crashed. I've been buying some good stocks at such bargain prices.
ntalwar said:
Correct - I was saying that I don't see a strong link between low wages and inspection systems/quality control. The Chinese government needs to do more.
AnnRKeyintheUSA said:
That's not greedy, they were doing it to survive because they couldn't afford a home any other way. They didn't plan to not be able to pay the house payments, they didn't know they were going to go up the way they did. That would be very stupid, no one did that. The companies took advantage of poor people hoping for home ownership. It's terrible to not be able to afford a home and only be able to rent dives.
MadelynIris said:I'm a little worried that we're not just talking speculators, stock market investors, or crazy people buying homes they can't afford.
We're talking banks -- banks that you bank at, having people in line 40 deep trying to withdraw their money because of fears the bank is collapsing.
You scoff do you?
Even etrade had scary things happen to it 2 weeks ago concerning this. Scared me to death. First time in my life, I'm going to spread $$ around to different banks. I never thought I'd have to diversify like that... but maybe I'll get some free toasters or something.
AnnRKeyintheUSA said:
That's not greedy, they were doing it to survive because they couldn't afford a home any other way. They didn't plan to not be able to pay the house payments, they didn't know they were going to go up the way they did. That would be very stupid, no one did that. The companies took advantage of poor people hoping for home ownership. It's terrible to not be able to afford a home and only be able to rent dives.
AnnRKeyintheUSA said:
Then you're greedy, and even worse taking pleasure in the pain of others. And if you're into stocks, you are well off enough you couldn't possibly understand the desperation of the poor when they were taken advantage of with those tricky loans so don't judge them unfairly.
martha said:
Many many many of these people are people who owned a home and cashed out their equity to buy toys, hoping that the values would stay high. Some are like those you describe, but even many of them signed fraudulent papers.
Before you wring your hands till they hurt, do a little research.
AnnRKeyintheUSA said:
But they're not going to, they don't even care about their own people, so it's best not to even deal with situations like that. Bring the jobs back home and pay people a wage they can live on by US standards of living.
financeguy said:
What’s Behind the Race Gap?
By VIKAS BAJAJ and FORD FESSENDEN
New York Times, Nov. 4
High-cost subprime mortgages have often been framed as loans that catered to people with blemished credit records or little experience with debt. There has been less attention paid to the concentration of these loans in neighborhoods that are largely black, Hispanic, or both. This pattern, documented in federal loan records, holds true even when comparing white middle-income or upper-income neighborhoods with similar minority ones.
Consider two neighborhoods in the Detroit area. One, located in the working-class suburb of Plymouth, is 97% white with a median income of $51,000 in 2000. To the east, a census tract in Detroit just inside Eight Mile Road has a very similar median income, $49,000, but the population there is 97% black. Last year, about 70% of the loans made in the Detroit neighborhood carried a high interest rate--defined as 3 percentage points more than the yield on a comparable Treasury note--while in Plymouth just 17% did.
Last year, blacks were 2.3 times more likely, and Hispanics twice as likely, to get high-cost loans as whites after adjusting for loan amounts and the income of the borrowers, according to an analysis of loans reported under the federal Home Mortgage Disclosure Act. (Asians are somewhat less likely than whites to take out high-cost loans.)
Researchers and industry officials agree that there is probably no single explanation for the lending patterns, though the history of banks’ avoiding minority neighborhoods, the practice known as “redlining,” is a good place to start. (Experts have to resort to guesswork because the government does not require lenders to report information about borrowers’ credit scores, down payments and other details used in pricing loans.) Lenders say that in general higher rates are justified to account for the bigger risks posed by borrowers who have a poor record at paying bills on time and defaulting on debts. And a recent Federal Reserve study noted that neighborhoods where people tend to have lower credit scores also tend to a greater concentration of high-cost loans.
The study suggests that the concentration of high-cost loans is not caused by an area’s racial makeup, though there is a correlation, said Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association. But the Fed study also suggests that a big part of the reason may have to do with the lenders that minority borrowers do business with. The biggest home lenders in minority neighborhoods are mortgage companies that provide only subprime loans, not full-service banks that do a range of lending. It may be that these borrowers do not have access to traditional banks, because there are no branches near them. The Community Reinvestment Act, enacted 30 years ago, was intended to address redlining by forcing banks to make loans in lower-income areas. But the law’s provisions do not apply to banks in neighborhoods where they have no branches. “You could go into a middle-class area in Queens County that is white and there will be lots of banks on the shopping street,” said Alfred A. DelliBovi, president of the Federal Home Loan Bank of New York and a deputy secretary of the Department of Housing and Urban Development in the first Bush administration. “If you go to an area that is equal income and that is black, you won’t see many.”
Banks typically locate branches where they believe they will get the most deposits. A lower savings rate and a distrust of banks stemming from a legacy of redlining may help explain why there are fewer branches in minority neighborhoods, Mr. DelliBovi said. A bigger reason may be that in recent years many subprime loans were not sought out by borrowers but actively sold to them by brokers and telemarketers, said Calvin Bradford, a housing researcher and consultant. A majority of the loans were refinance transactions allowing homeowners to take cash out of their appreciating property or pay off credit card and other debt. Lenders made the risky loans, then often sold them to Wall Street investors. Many borrowers appear to have been swayed by brokers and lenders offering to look out for their best interests even when they had no obligation to do so.
“If we turn the clock back 30 years ago, we had redlining,” said Nicholas Retsinas, director of the Joint Center for Housing Studies at Harvard University. “In the last few years, we have had the opposite--an overextension of credit by lenders and an overextension by borrowers.” The country needs to find a balance, “a way to extend credit at a reasonable cost to people with impaired credit,” he said. The government, through programs like the Federal Housing Administration and the big mortgage purchasers Fannie Mae and Freddie Mac, must play a critical role, Mr. Retsinas said, adding that he worries that the efforts initiated so far are not robust enough. “There are lots of people trying to do the right thing,” he said. “But at this time I’m not very sanguine that we will deal with this in a concerted manner.”
martha said:
Many many many of these people are people who owned a home and cashed out their equity to buy toys, hoping that the values would stay high. Some are like those you describe, but even many of them signed fraudulent papers.
Before you wring your hands till they hurt, do a little research.
AnnRKeyintheUSA said:
Oh, I do know that is true too, I know some of them personally. I'm not talking about them, I knew it was only a matter of time before they lost their asses and it's even deserving in some cases. I'm talking about the first time home buyers with bad credit who were taken in by the subprime loans because it's all they could afford.
Infinitum98 said:
There is nothing wrong in buying a smaller home that costs less $. If thats not possible, there is nothing wrong in renting. These people took out Adjustable Rate Mortgages becuase they were stupid, they deserve everything they get.