<i>"But, listen guys, they are not after the truly stretched....they are after the guy who just didn't WANT to pay because the value went below the loan balance.....not the guys who CAN'T pay..."</i> By far the vast majority of walk-away people in this country are those who cannot pay. That's the real crux here. People who walk away from spec houses are an entirely different thing... but that's a minority of the overall housing debacle. Where do we think all of this consumer liquidity that supported the economy = boosted stock market has come from? Savings? Increased earnings? Nope... refi's possible only thru artificial value inflation of their homes. The bear market = bull market phase that recently ended was not fueled by trickle down economics, which is a failed concept in itself. Job creation trickled out of the country to third-world locations, and corporate earnings trickled into white collar bank accounts like it always does. Meanwhile, Joe Average was still being downsized, automated and squeezed from inflation on all ends. Where to turn, where to turn. Ah yes... the home. It's value had increased by xx%. Need money to make ends meet, got vacation and then Christmas shopping ahead. Did we ever see any ads on how easy = cheap it was to refinance homes and unlock equity there? Those ads ran around the clock for years because it paid very well to do so. Net result is a disproportionate number of actual homeowners buried to the gills in multiple payments with no equity or worse, upside down. What will they do with no remaining source of ready cash to keep the consumer spending wheels turning? For those who tout how stupid such people are, save your breath. It was upon the collective backs of their credit cards and equity loan checks that your most recent bull market rode to record heights. Indexes hit all-time highs, bull-party etc solely due to U.S. consumer spending and nothing else. Sure as hell wasn't an influx of job creation in the U.S. for call center services. * Today there is no remaining source of easy money. Equity lines don't exist. Savings haven't existed for years. Government graft checks hitting mailboxes soon will mostly pay existing debt instead of forward purchases. Where will liquidity come from to boost the housing market? What will happen to retail sales year-end this time around? We'll see. As for banks filing suits for fraudulent statements of buyers, it'll never happen. The banks were in almot every case compliant if not encouraging for that fraud. They are the ones who failed to prove stats and data on the applications. The buck pauses there first before falling on home buyers. I worked with two different associates who were mtg brokers that turned to the trading world next. Both of them from different parts of the country told me same exact thing back in 2006: when the notes come due for what was written out there, it will far exceed anyone's estimate of magnitude. Said another way, most of that paper written by everyone was pure crap. Now it's starting, just starting to come due. When homeowners have nowhere else to turn for extra money as living costs mount, they are faced with impossible choices that must be made. Walking away from a home and living wherever shelter can be found is one of those.
Hey Steve, What is the time period banks have to come back and check to see if you lied on your application about how much you made, debts you have etc....... I beleive they only have six months legally to check it out. I maybe wrong but that is what I heard from a mort broker/accountant.
I'll guarantee you it isn't 6 months. In fact, if it's fraud, I don't know if there is a statute of limitations. OldTrader
Here's a rather unsettling fact - don't recall where I saw these numbers though: In the last few years 70% of GDP has been from Consumption 40% of that consumption was based on equity extraction. I think it's safe to say that 50% of that equity extraction is history - and that has got to be a conservative estimate. Where does that lead us? I think Main Street is toast. Can someone please find fault with this logic? I hope it's not true.
Totally agree. Where is the growth in the economy going to come from? It isn't going to be consumption. We need a major tech break through such as a green energy revolution, or nano tech on a major scale. That would do it. Otherwise I see flat growth for a looong time.
*******MUST WATCH Video by the BBC******** ***Super Rich: The Greed Game --On Google Video*** http://video.google.com/videoplay?docid=-4001834874264918973&hl=en Most of it is likely a review for ET'ers but pass it on to your sheeple friends and associates!!!!
First: The Fed/Gov has what is called "soverign immunity"...can't be sued....can't happen....don't waste your time trying to argue any different.... Second: If a borrower does not tell the truth on a loan application where the Fed gov is involved that is Bank Fraud....no statue of limitations on fraud...... New flash: The Feds are going to prosecute some people for fraud...send a message just like the IRS is doing with Wesley Snipes... Real estate problems are starting to sort out around the country....flashy speculative places: LasVegas, Phx, So Fla, SanDiego etc etc....some people owned 8-10-12 new homes with hopes of flipping for a quick $50,000?? profit...when they applied for the loan they told lender it was going to be my home....no doc...stated inflated income....maybe all different lenders... Other areas are more job related and economical in nature.... But, the smart people saw a chance with low rates to have a opportunity to finally own a home....take responsibilty for their own future..... Every one over 30, which is me and about 6 other guys on ET, knows that a home is not meant to be a cash cow.....it is shelter, a lifestyle choice... When I first heard of the ATM concept on your home equity I simply did not understand what it meant....a buddy and I were trying to decipher what these people were doing to get some cash out of their home equity....it was, and still it, such a foreign concept to us.... PS: Both of us have been in commercial real estate for 35 years... SteveD
Keep digging that hole even deeper guys!! Who cares about the consequences it's all about your bonuses!!! WaMu bets on blemished borrowers with credit cards http://seattlepi.nwsource.com/business/368297_wamucards25.html