Your skepticism is appropriate, but please consider that 40 years might not be a long enough time frame.
I have to agree, with the premise, but not the way it (those statements) are politically sold to justify more and more abuse of the system (working people, and their prediliction towards greed, debt, over spending and over living their means)... these recognized trends have been with every economy, and when they are unleashed, and spurned with advertising and greed and such, people go wild and into a buying frenzy.... so, yeah, it is amazing how often its said.....
Your right and no I am not suprised. I have been hearing lots of these stories about "how bad it really is". Heck just go back to that Cramer interview with Trump. The don himself said "it's a depression in the real estate market". Your friends should have plenty of work for years to come. What's ironic is that these law firms will make a killing off of the financial industry considering that the homes are worth less than 0 after factoring in the banks legal and administrative costs. Would have cost the banks less if they let crack heads live in these homes and pay a dollar a month mortgage. Yet these clown thought they were so smart selling so many mortgages at rates that people wouldn't be able to repay while giving themselves performance bonuses like it was candy. Got rope?
Banks' Subprime Losses Exceed $500 Billion as Writedowns Spread By Yalman Onaran Aug. 12 (Bloomberg) -- Banks' losses from the U.S. subprime crisis and the ensuing credit crunch crossed the $500 billion mark as writedowns spread to more asset types. The writedowns and credit losses at more than 100 of the world's biggest banks and securities firms exceeded $501 billion after UBS AG reported second-quarter earnings today, which included $6 billion of marks on subprime-related assets. The International Monetary Fund in an April report estimated banks' losses at $510 billion, about half the total for all companies. Predictions have crept up since then, with New York University economist Nouriel Roubini forecasting losses to reach $2 trillion. ``It just keeps spreading from one asset to another, so it's hard to know when these writedowns will stop,'' said Makeem Asif, an analyst at KBC Financial Products in London. ``The U.S. economy needs to stabilize first. But even then, Europe could lag and recover later. There's still a lot more downside.'' Auction-rate securities have begun adding to the losses as regulators and prosecutors force banks to buy back bonds they'd sold to clients as safe investments. UBS set aside $900 million to cover potential losses from repurchasing the securities, while Citigroup Inc. and Wachovia Corp. estimated losses from the buybacks at $500 million each. The collapse of the U.S. subprime mortgage market has saddled banks worldwide with losses from declining values of securities tied to all types of home loans and commercial mortgages as well as leveraged-loan commitments. Banks and brokers have raised $353 billion of capital to cope with the writedowns, according to data compiled by Bloomberg. The gap between the losses and capital infusions, which stands at $148 billion, has regularly narrowed to about $80 billion as capital raising follows writedown announcements. To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net. Last Updated: August 12, 2008 15:06 EDT http://www.bloomberg.com/apps/news?pid=20601087&sid=aSKLfqh2qd9o&refer=worldwide
It's not going to stop any time soon. The UK is heading down and the Alt A stuff hasn't hit the books of the banks yet. Fortunately, we have the American taxpayer to bail out all the banks that will fail. (** Yes, that was sarcasm. **) Btw, it's ironic that the source is from the UK: the UK is having its own housing problems: http://www.guardian.co.uk/money/2008/aug/12/houseprices.mortgages?gusrc=rss&feed=networkfront Sales of homes by Britain's estate agents are down 40% on a year ago as the strict lending conditions imposed by the credit crunch prevent first-time buyers securing a mortgage, the Royal Institution of Chartered Surveyors says today... Quentin Jackson-Stops, of Jackson Stops and Staff in Northampton, said: "Conditions are more difficult even than the 1990s because of a lack of first-time buyers entering the market due to a lack of available mortgage funding." Another surveyor, Malcolm Parker, of Joplings in North Yorkshire, said: "The only properties attracting any interest are those offered at greatly discounted prices (ie repossessions, new builds on large developments) and the older rural properties. The first-time buyer is on the list of endangered species."
It's in Oz too - bunch of posts here - http://www.whocrashedtheeconomy.com/?cat=3 I found this (or did I get it here?) forum for the whole world: http://forum.globalhousepricecrash.com/index.php did I get these links here?
Kind of makes sense. A lot of the foreign real estate mutual funds/ETF's invest heavily in the UK and Australia. I'm sure that didn't help the run up...
'Liar loans' threaten to prolong mortgage crisis Monday August 18, 2:27 pm ET By Alan Zibel, AP Business Writer 'Liar loans' threaten to prolong mortgage crisis for 2 more years in some parts of US In the mortgage industry, they are called "liar loans" -- mortgages approved without requiring proof of the borrower's income or assets. The worst of them earn the nickname "ninja loans," short for "no income, no job, and (no) assets." The nation's struggling housing market, already awash in subprime foreclosures, is now getting hit with a second wave of losses as homeowners with liar loans default in record numbers. In some parts of the country, the loans are threatening to drag out the mortgage crisis for another two years. "Those loans are going to perform very badly," said Thomas Lawler, a Virginia housing economist. "They're heavily concentrated in states where home prices are plummeting" such as California, Florida, Nevada and Arizona. Many homeowners with liar loans are stuck. They can't refinance because housing prices in those markets have nose-dived, and lenders are now demanding full documentation of income and assets. Losses on liar loans could total $100 billion, according to Moody's Economy.com. That's on top of the $400 billion in expected losses from subprime loans. Fannie Mae and Freddie Mac, the nation's largest buyers and backers of mortgages, lost a combined $3.1 billion between April and June. Half of their credit losses came from sour liar loans, which are officially called Alternative-A loans (Alt-A for short) because they are seen as a step below A-credit, or prime, borrowers. Many of the lenders that specialized in such loans are now defunct -- banks such as American Home Mortgage, Bear Stearns and IndyMac Bank. More lenders may follow. The mortgage bankers and brokers who survived were more cautious, but acknowledge they too were swept up in the housing hysteria to some extent. "Everybody drank the Kool-Aid" said David Zugheri, co-founder of Texas-based lender First Houston Mortgage. They knew if they didn't give the borrower the loan they wanted, the borrower "could go down the street and get that loan somewhere else." The loans were also immensely profitable for the mortgage industry because they carried higher fees and higher interest rates. A broker who signed up a borrower for a liar loan could reap as much as $15,000 in fees for a $300,000 loan. Traditional lending is far less lucrative, netting brokers around $2,000 to $4,000 in fees for a fixed-rate loan. During the housing boom, liar loans were especially popular among investors seeking to flip properties quickly. They were also commonly paired with "interest only" features that allowed borrowers to pay just the interest on the debt and none of the principal for the first several years. Even riskier were "pick-a-payment" or option ARM loans -- adjustable-rate mortgages that gave borrowers the choice to defer some of their interest payments and add them to the principal. While some borrowers were aware of their risky features and used them to gamble on their home's value or pull out money for vacations, others like Salvatore Fucile insist they were victims of predatory lending. Fucile, who is 82, and his wife, Clara, wound up in an option ARM from IndyMac after consolidating two mortgages on their suburban Philadelphia home. Fucile was attracted by the low monthly payments, but says the mortgage broker who signed him up for the loan didn't tell him the principal balance could increase. It has risen about $24,000 to $276,000. "He put me in a bad position," said Fucile, who fears he will be forced into foreclosure. "He misled me." IndyMac was taken over by the Federal Deposit Insurance Corp. last month. FDIC spokesman David Barr declined to discuss the Fuciles' case, but said the agency has temporarily frozen all IndyMac foreclosures and is working on a broad plan to modify mortgages held by the Pasadena, Calif-based bank. The low monthly payments of liar loans helped many home buyers afford to purchase in areas of the country where prices were skyrocketing. But they also helped drive up prices by allowing people to buy more than they could truly afford. Case in point: about 40 percent of loans made in California and Nevada in 2005 and 2006 were either interest-only or option ARMs, according to First American CoreLogic. "It was pretty evident that the only thing that was supporting these loans was higher home prices" said Tom LaMalfa, managing director at Wholesale Access, a Columbia, Md.-based mortgage research firm. Now that prices have fallen, almost 13 percent of borrowers with liar loans were at least two months behind on their payments in May, nearly four times higher than a year earlier, according to First American CoreLogic. Countrywide Financial Corp., now part of Bank of America Corp., was one of the top providers of liar loans. The company is now is paying the price. More than 12 percent of Countrywide's $25.4 billion in pick-a-payment loans are in default, and 83 percent had little or no documentation, according to a Securities and Exchange Commission filing last week. Critics say Fannie Mae and Freddie Mac, which bought or guaranteed liar loans from lenders including Countrywide and IndyMac, should have stuck with traditional 30-year, fixed-rate mortgages. "I personally think that they ventured beyond their mission," said Richard Smith, a mortgage broker in Chattanooga, Tenn. Because of their decision to back shakier loans, he said, "the home-buying public is going to have to pay." Fannie and Freddie entered the market for risky loans just as they emerged from accounting scandals. At the time, Wall Street giants such as Bear Stearns and Lehman Brothers Holdings Inc. were backing a growing share of ever-riskier loans, and both government-sponsored companies felt pressure to compete. Freddie Mac wanted "to stay competitive in the market and take steps to preserve market share," spokesman Michael Cosgrove said. Fannie Mae increased its purchases of liar mortgages "at the requests of many of our customers," according to spokesman Brian Faith. Both companies also were able to use subprime and liar-loan investments to meet government-set affordable housing goals. Now Fannie, Freddie and other mortgage investors are reviewing defaulted loans to see if lenders committed fraud. If they find enough evidence, they could force lenders to assume responsibility for losses. But it's unclear how much money they might recover, especially from lenders that have gone under or been seized by the government. http://biz.yahoo.com/ap/080818/liar_loans.html?.v=3