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Thread: Looks like housing market is about to get big help from the government

  1. #46

    Default Re: Looks like housing market is about to get big help from the government

    "Loans are poperty, just like anything else."

    Yes, but maybe they shouldn't be considered property.


    If they aren't property, then what are they? Everything is property of someone or something.

    "They can be bought and sold"

    And I have a problem with this. If you have ever seen Rounders, one of the plot lines has the bumbling psuedo-buddy of Matt Damon, having his "markers" (scattered throughout town) bought up by one individual (grandma). I could certainly see a company interested in eventually owning a bunch of property scarfing up sub-primes.


    If they want to buy things, so what?? The free market is based on letting people make their own decisions. Do we really want our governmetns to get in the business of determining who is allowed to own what property? That is a slippery slope.

    "We if a company goes out of business, they are still owed the money"

    Sure. But if they are out of business, who do you pay?


    When a company is going out of business, you pay the owners, either before or after the company has gone out of business. It's not like everyone who owned it dies immediately after it goes under. But, this is irrelevant, because that's not how loans are handled anyhow.

    "Finally, foreign institutions are allowed to purchase loans and service them"

    See above. We are specifically talking home loans now. When I say foreign, I'm also thinking of a company in California as well as Germany. A company that has no real interest in the community. Why would they? How could they?


    Again, this country does not discriminate. Why does it matter where a buyer is from? You mention having a real interest in the community, so do you want to make that a requirement to buy property? What if the local companies have less interest in the community than foreign companies, or what if the local have fewer resources and can't afford the property? To answer your question, foreign companies coudl have an interest in the community because they want to make money from their investment. You don't usually get a good return from a dump. Regardless, you're plant still creates conditions to property ownership. Would you prevent a white family or a black family in Cleveland from buying property because they may not have an interest in your definition of community?

    "Why should we deny a company the opportunity to enter a market simply because it has different skin color than us or speaks a different language?"

    If they wish to enter the Cleveland area housing market, open a local office and deal directly with the principles, which would be buyer and real estate agent. Nothing stands in the way of doing that does it?


    If you require those companies to do so, you will have fewer lenders with fewer resources in the area, thus fewer people will have the financing to buy homes. What is the need for this anyhow? How often do you find the need to personally deal with your mortgage lender? Not often, I assume. If you start mandating things that make business more expensive (like mandating that a local office be opened), the mortgage process will become much more difficult and prohibitively expensive. Is that what you're looking for?

    That is the way it used to be. Loans came from local banks.

    When loans only came from local banks, all you had to choose from was local banks. Now, you can choose from a multitude of lenders, with LOTS of different options. You are free to find better deals, or terms that best suit you. Many of those who took the sub-prime loans would not have been able to buy a home otherwise. If only they could keep up with the payment,s no one would think that sub-primes were a problem.

    By demanding a local isolationism, you would be severely restricting the availability of loans and the loan products. Fewer people could buy homes and you may have fewer people living in your city.

  2. #47

    Default Re: Looks like housing market is about to get big help from the government

    Skipster,
    Non-local ownership is simply not responsive enough. Or responsible enough. Hell, arrest warrants have been issued for executives, but as you can imagine they are difficult (putting it mildly) to execute. So what does it mean to you that code violations are not being corrected? I take it not much.

    You can harp about free markets all you want, but the relationship that now exists between home buying and who eventually holds the notes IS NOT WORKING, at our local level, to the advantage of the communities.


    From this perspective it is easy to see that local lenders must be more responsive. They can be forced to be, while those far, far away cannot be as readily.

    Housing Court Judge Pianka is trying. He just held a trial in absentia where a company called Destiny Ventures out of Tulsa Oklahoma decided it wasn't important to send a rep to the local trial for housing code violations. Pianka judged them guilty and levied a fine of $40,000. In this case he has some leverage as this Destiny Ventures now owns about 100 inner city properties in Cleveland and East Cleveland. They will not be permitted to sell any of those homes until their financial obligation for fines is satisfied. That got their attention. Now, I hope, the result will be that they will have to hire some local talent and fix up the homes that they thought they could turn around and dump at firesale prices. But not all absentee owners can be held as easily accountable (not that the process above was easy).

    A quote from Cleveland Law Director Bob Triozzi: "the cases are tricky because it is hard to tell who should be charged. Paperwork delays and shifts in ownership are common during foreclosure and obscure the trail."*

    This is where the foreclosure courts can play a part. By insisting, as they are now doing, that nothing be obscure about the projected ownership of foreclosed properties. Then one can hope that once they have title they will be immediately be informed that their newly aquired property must be inspected before they can sell it. This would required a new law, but I think such a law would be perfectly reasonable.


    In summary, these major note holders are in constant violation of local law, and nobody on a national level, including investors, the Fed, and the huge financial groups give a damn about that.

    *Published in the Cleveland Plain Dealer. The cases refered to in Triozzi's quote are for housing code violations.

  3. #48

    Default Re: Looks like housing market is about to get big help from the government

    "If they aren't property, then what are they? Everything is property of someone or something"

    It's actually a philisophical question. I disagree that loans have to be considered property. Or with your notion that eveything is property. I could classify a loan as a promise regarding future behavior.

    I also disagree with the notion that corporations should be considered, legally, individuals. But that's another subject.

  4. #49

    Default Re: Looks like housing market is about to get big help from the government

    "Many of those who took the sub-prime loans would not have been able to buy a home otherwise. If only they could keep up with the payment,s no one would think that sub-primes were a problem."

    What? Many who took subprime loans had no business getting those loans.

    Then you say "If only they could keep up....????" You got to be kidding me.

    It was a CF waiting to happen and now it has.

  5. #50

    Default Re: Looks like housing market is about to get big help from the government

    Quote Originally Posted by LkwdSteve View Post
    "Many of those who took the sub-prime loans would not have been able to buy a home otherwise. If only they could keep up with the payment,s no one would think that sub-primes were a problem."

    What? Many who took subprime loans had no business getting those loans.

    Then you say "If only they could keep up....????" You got to be kidding me.

    It was a CF waiting to happen and now it has.

    Be careful with that language, or matclone will consider you heartless and cruel.

    I agree that many of these loan should not have been made, but the fact is that they have been made. Now, the consequences set in. When those loans are foreclosed, the lender loses money AND the homeowner loses money. That is the incentive for bank not to make risky loans and for the consumer not to take on debt he can't repay.

    If we have a bailout, this same cycle will repeat. The lenders will learn that the government will pay the lendees, who will pay the lenders, and they will make more bad loans. The same cycle perpetuates.

    If we let those involved bear the brunt of their mistakes, they won't repeat them in the future. If we bail them out, this all will happen again.

  6. #51
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    Default Re: Looks like housing market is about to get big help from the government

    http://biz.yahoo.com/rb/071205/subprime_cuomo.html?.v=1

    NEW YORK (Reuters) - New York state prosecutors have sent subpoenas to Wall Street firms seeking information related to the packaging and selling of debt tied to high-risk mortgages, a person familiar with the matter said.
    ...

    The investigation is examining how adequately investment banks reviewed the quality of mortgages before packaging them into products that were then sold to investors, the sources told the Journal. The subpoenas also requested information about how the debt was pooled into securities, including the banks' relationship with credit-rating firms, they said.

    The probe appears to be examining the relationships between mortgage companies, third-party due-diligence firms, securities firms, and credit-rating firms as they relate to the role securities firms played in the subprime mortgage crisis, the Journal said.

  7. #52
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    Default Re: Looks like housing market is about to get big help from the government

    http://news.yahoo.com/s/ap/20071205/...ortgage_crisis

    WASHINGTON - The Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures, congressional aides said Wednesday.
    ...

    Mark Zandi, chief economist for Moody's Economy.com, said while the administration plan is a good first step, eventually the government will have to go further because of the size of the problem and the threat to the economy.

    "This is the most serious housing downturn we have seen in the post World War II period," he said. "It is a threat to the broader economy. The risks of a recession are very high."


    sarcastic comment: gotta look out for those investors!

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