Quote:
Originally Posted by 427 S/O
Condensed from an article by Charlie Martin.
For various reasons, the housing market stopped going up ( oil IMO). House values stopped growing and in fact started decreasing. At the same time, interest rates started to go up as the Federal Reserve Bank thought inflation was becoming a danger. So people who had bought these special subprime mortgages saw their variable interest rates go up, and with them the house payments; at the same time, their houses were worth less!.
It got to be hard to refinance them and people started losing their houses to foreclosure. The banks and the other companies that held MBSs weren’t broke but they were “house poor”: lots of assets, no cash.
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So the banks and investors got all or some of their money back, and the buyer was left to suck it up. I still believe it's best for the government to bundle and auction them off, there's a lot of money there and it won't go super cheap...imo. |
Once again, not true (first part) and foolish (second part).
Actually, I'm looking at buying a short sale house - the owner secured a second which covered most of the equity in the house - now, the value of the house is way below the appraisal when the 2nd was granted by the lending bank - therefore, the owner already has practically all equity and the bank is looking to get what it can. This scenario has happened millions of times around America in the last 5-10 years.
If you think that the government can do anything right and without losing a huge bundle, just look at the post office - now they are thinking about going to 5 days a week delivery as that entity is losing billions even with the hikes in the cost of a stamp. Volume is down - perhaps the internet has something to do with it, they cannot seem to figure it all out.