Monday, December 03, 2007

It makes you wonder why you even bother...

I mean, you sit down with someone, negotiate terms, sign papers, promises are made and vows exchanged, you loan them money...

...and with a wave of the wand the .gov tries to tamper with the sanctity of contract.

I am reading through the relevant section of my copy of the U.S. Owner's Manual, and I'll be damned if I can figure out where this is any of FedGov's business.

The new program is being aimed at homeowners who have steady incomes and relatively clean repayment histories who could afford the lower introductory mortgage rates but cannot afford the higher adjusted rate.
I find my heart surprisingly un-melted. Buying crap you can't afford used to draw societal disapproval, not sympathy. When did "spendthrift" become synonymous with "victim"?

Of course, there's a lot of stuff about this that I don't understand. I saw, for instance, an interview with a family afraid they weren't going to be able to keep up their house payments and talking about how they were going to need help, and my first thought was to be amazed at the background of the photo: "Ditch the two car payments and that ski boat in the driveway and there's you a few payments right there..."

27 comments:

Kevin said...

Couldn't agree more. It's a matter of priority, and I guess a lot of folks put a higher priority on toys than shelter. Fine. Just don't expect me as a taxpayer to subsidize your idiocy.

Myron said...

Oh goody. They're gonna bail me out and save my house full of expensive toys. Uh, wait a minute. I done did dat with my ownselfs money. Damn.

B&N said...

"Just don't expect me as a taxpayer to subsidize your idiocy."

Well, you're gonna, and it'll be done by lowering the value of the dollar even further, if the latest talk about interest rates is any indication of means.

Methinks it may be time to wrest the economic controls of the country from the hands of feddies. Not sure how to do that, but the thought of it is sounding better all the time.

Anonymous said...

"To my old eyes, the recent unhappiness about mortgages and Goldman’s connection with them are not examples of sterling conduct. It is bad enough to have been selling this stuff. It is far worse when the sellers were, in effect, simultaneously shorting the stuff they were selling, or making similar bets.

Doesn’t this bear some slight resemblance to Merrill selling tech stocks during the bubble while its analyst Henry Blodget was reportedly telling his friends what garbage they were? How different would it be from selling short the junky stock that your firm is underwriting? And if a top economist at Goldman Sachs was saying housing was in trouble, why did Goldman continue to underwrite junk mortgage issues into the market?

HERE is a query, as we used to say in law school: Should Henry M. Paulson Jr., who formerly ran a firm that engaged in this kind of conduct, be serving as Treasury secretary? Should there not be some inquiry into what the invisible government of Goldman (and the rest of Wall Street) did to create this disaster, which has caught up with some Wall Street firms but not the nimble Goldman?

When the Depression got under way, the government created the Temporary National Economic Committee to study just what had happened on the Street to get the tragedy going. Maybe it’s time for an investigation of just what Wall Street and Goldman did to make money as they pumped this mortgage mess into the economic system, and sometimes were seemingly on both sides of the deal"...Thanks to Ben Stein...shake your fingers at the morons that took the deal, while Golden Slacks shakes its bag of loot...don't worry...

Tam said...

Yeah, 'cause the way those bankers put the gun to those people's heads and forced them to sign was really heinous.

I've said it before and I'll say it again: It's awful hard to swindle an honest man.

Tam said...

PS: The problem's not going to be fixed by legislative bandaids.

The problem will only really be fixed when dumbass investment firms are going bankrupt while sitting on vast portfolios of worthless tract homes and millions of dumbass middle class homeowners have had to sell the plasma TV to come up with an apartment deposit after getting evicted from their foreclosed crackerbox.

Nobody learns nothing from a bailout.

Jeff said...

Tam, you're just plain mean. Those people were TRICKED into taking those loans I tell ya.

Tam said...

...and yet somehow I've never been TRICKED into buying a $100 Rolex, because I was taught that if something's too good to be true, it probably is.

If you're the assistant manager of the local Subway restaurant and your husband is a mechanic at the Ford dealership, you have no business ing the $279,000 house and you can't afford it, no matter what the real estate agent tells you.

BryanP said...

Indeed. If people would live within their means this kind of crap wouldn't happen.

My wife and I "qualified" for a helluva lot more house than we bought. We agreed that we should buy a house that would keep our finances such that if one of us were to come home and say "I'm no longer employed" it would be a case of "Well that sucks. No eating out for a while." instead of "Oh crap! How are we gonna make it through the month?!!?!"

I'm happy to say that last Friday I made the last payment on her student loans and we are now debt free except for the mortgage. Are we going to move to a bigger nicer house? Hell no. The current plans are to save up and replace the ratty carpet with wood floors and then maybe replace her car since she's currently stuck with the beater.

Sailorcurt said...

But the thing is...everyone knew that the the .gov would step in and save the world when the wheels came off.

This was being predicted months and months before the housing market took a downturn.

It isn't just that the lenders (and probably many of the lendees) just didn't think the market could tank...they fully expected the government to step in and relieve them of their burdens when it happened.

This is just par for the course.

And here's the REALLY cool part. What action do you think .gov will take AFTER having to step in and save the world? Why...try to prevent it from EVER happening again...how can they do that? Why...by taking more CONTROL of course. Legislating, regulating, enforcing.

Which will, of course, require an expansion of HUD, increased budget and manpower and more tax dollars for enforcement. Heck, they may even be able to concoct a need for a whole new government department for this: The US Department of Lending. That has a nice ring to it. Ooh, Ooh...I wonder if they'll let their "agents" carry guns???

Joseph said...

I have always tried to live beneath my means, so that I have extra money to deal with problems. I was taught by my parents that I am the responsible party!! Today, though, a lot of people are under the impression that if you do something stupid and it causes repercussions, it is somebody else's fault.

Anonymous said...

The Fed will cut and cut again, making it cheap for risk takers to play in the market. Some will argue that we need to let there be a credit-clearing deep recession. I doubt we will see that. We will do as humans have always done and do what we can to avoid immediate pain. A Muddle Through Economy will be the result that will stay with us for a long time.

red said...

It's just more of the "it's not my fault" mindset that seems to be rapidly replacing common sense.

OldTexan said...

ALL. Double, double toil and trouble; Fire burn, and caldron bubble.
2 WITCH. Fillet of a fenny snake, In the caldron boil and bake; Eye of newt, and toe of frog, Wool of bat, and tongue of dog, Adder's fork, and blind-worm's sting, Lizard's leg, and owlet's wing,—
For a charm of powerful trouble,
Like a hell-broth boil and bubble.

And there ye have it, the Feds recipe for a long and happy life. But who will pay the piper?

Having made several real dumb moves at times and eating the loss caused by selling a house below the purchase price and having made a nice profit a time or two I think we are playing with hell fire when we screw around too much with capitalism.

Folks, when you buy a house, you buy your ticket and you take a chance. I don't want some government people coming in and taking my profit when I sell my house so I see no reason for them to prop up my loss when I buy too much house with a 'no money down' good deal, which I would not do, ever, never.

What a strange odious brew we have a boiling,

ALL. Double, double toil and trouble; Fire burn, and caldron bubble.

Anonymous said...

When subprime mortgage losses surfaced in February and again over the summer, the success of structured finance in dispersing risk was more than offset by the exceedingly high degree of risk taken across the globe. Not only did direct participants like subprime mortgage originators meet their demise, but also U.S. investment banks, European insurance companies, Chinese state-owned institutions, hedge funds promising a low risk profile, and even money market mutual funds suffered write-downs on their balance sheets.....

...Unfortunately for our financial system, the magnitude of risk in corporate credit is a multiple of that in subprime mortgages... Each written CDS exchanges a risk that cannot be eradicated no matter how broadly aggregate risk is dispersed. Sinking valuations of CDOs and a commensurate leverage unwind will trigger a vicious cycle of financial losses. By implication, the problems that will ensue could make the subprime mortgage problem... look like a walk in the park...it's not a house fire...send the trucks downtown.

DirtCrashr said...

If they can create enough "victims" out of greed, personal financial irresponsibility, and plain old stupidity they've created another "progressive populist" who'll gladly vote for someone else to pony up and cover their mistakes.

Jay G said...

Two somewhat unconnected points:

First, Tam, you hit the nail on the head. I was reading a piece on this very same "problem" in Reader's Digest (Yeah, I know, what can I say).

Woman, a single mom, was grousing about her 2,700 square foot house that she didn't know how she'd make the mortgage payments on.

Now, A) I have a wife and two kids and we don't have a 2,700 square foot house; and B) The gist of the article was that she had "forgotten" to factor in property tax and homeowners insurance into the monthly payment. Uh, DUH?

Second, OldTexan NAILS it with "I don't want some government people coming in and taking my profit when I sell my house so I see no reason for them to prop up my loss when I buy too much house with a 'no money down' good deal"

That's EXACTLY what the .gov (specifically the socialists) wants - if they help you when you can't pay, you've got no business complaining when they nail you for selling at a profit...

jimbob86 said...

Years ago, I turned on my radio and this guy calling himself "The High Priest of the Painful Truth" was saying all these fools giving no money down, low interest variable rate mortgages were going to take it in the shorts, and it would be MESSY. Those "first time home owners" (that's a nice way to say po' folk) they upsold the McMansions to had NOTHING to lose if they got foreclosed on. They got a nice place to live until they got to a point they had to declare bankruptcy........ and now they are out what? They had bupkus before, and now they have ....... bupkus. And now now the .gov is going to bail the Lenders out?!?!?!

Anonymous said...

Tam, my wife and I married during the last California housing boom, and then when the market went bust we weren't ready to buy.

So, we waited. When the market started rising to staggering levels, we warned our friends and relatives not to buy. See, we'd been there before. We had a sense of history. This time, we told ourselves, we'd be ready.

The market seems on the cusp of another collapse, wherein my wife and I can buy a home for our family, and the federales come in and say they'll take care of everyone who bought more than they can afford?

Next time I'll just buy twice the house I can afford at the worst possible moment. Where's my incentive to do the right thing?

Tam said...

Prezactly.

comatus said...

jay g, you made me chuckle bitterly (Lash Out, Loud?) remembering a morning 15 years ago, when, livid at the county jacking up real estate valuations after their tax levy failed, I stormed into my office loaded for bear. Of a whole building floor of what may charitably be termed mid-level government executives, not a swingin' one knew what property tax he paid. They had to phone their mortgage holders and ask what the "escrow" was.

Bubble-riding McMansioners, one and all: only the crazy old hippie held title to anything, da fool. Deduction-juggling has made "home ownership" an empty phrase in politicians' talk-points. Delenda est. You tell 'em that.

Matt G said...

Apparently, after Raitch v. Gonzales, pretty much all commerce is "interstate commerce," and simply possessing a fungible item is "commerce."

Ptooie.

perlhaqr said...

Hell, I don't know how to feel about it.

Yes, I agree. People should have to live with the contracts they sign. On the other hand, the whole fscking situation is full of interference from the fedgov in the first place, (Or the Fed, close enough) that it's hard to say the situation occurred in a vacuum. In a perfect world, all this could happen and those who were responsible would be fine, and those who weren't would get f***ed. But as it is, in spite of the fact that I've worked to keep my finances whole, if the entire fiat economy goes to s***, I'm hosed too. So if the feds can keep the bitch afloat until I get my finances bulletproof, I say great.

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