Re: Obama's Bailout is Artificially Inflating Home Values


"Welshman" <a162d@xxxxxxxxxxxxxxx> wrote in message
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On Feb 24 2009 9:56 AM, Irish Mike wrote:

"Senator Millionaire" <moone99@xxxxxxxxx> wrote in message
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I'm not a real estate professional but it seems to me that real estate
values going back 2-4 years ago were SERIOUSLY over inflated. When the
market started to go bust after the dot com debacle many investors
pulled their money out and invested in real estate - hoping to benefit
from the home appreciation values. They and others scooped up the
little down or no money down loans and were especially responsible for
the inflated prices.

The demand for homes was soaring not because people could REALLY
afford the homes but because they THOUGHT they could afford the loans.
I really don't understand what's the purpose of the government giving
homeowners bailout money when they could never afford the homes in the
first place. All of this at the taxpayers expense. What a mess!

How does this country benefit from artificially hyper inflated home
prices?

It doesn't. Home prices became artificially inflacted in large part due
to
no money down, high risk subprime home mortgages. When the housing
market
adjusted, which it always does, home prices dropped. Those people who
bought houses they couldn't afford with mortgages they were too stupid to
read defaulted on their loans. Now, normally, home prices would have
bottomed-out and then started to rise again as qualified buyers moved in
to
snap up the bargains. It's a painful process but a natural part of the
mechanics of the home market. But enter the Democrats - again. Now they
are artifically trying to prop up the market by giving more money to
reward
the people who made the bad financial decisions in the first place. Now
here's the beauty part. Studies have shown that when you give these
people
more money, they just use it to go farther in debt. Within six months
57%
of them are in arrears on their mortgages - again. The fundamental
problem
is this whole entitlement mentality. What the Democrats never realize or
admit is that most of these people are not just over their heads on their
mortgages. They are loaded down with credit card debt, no money down car
loans, etc. All Obama's pork barrel bail out bill is going to do is
delay
the inevitable natural adjustment of the real estate market.

Irish Mike

We've seen falling house prices before but the difference this time seems
to be that the banks
will not give out a mortgage no matter how much you can afford. A house
close to me is being rented for $1600 a month while similar properties in
the same area have been sitting on the market for months with a price tag
which would make the monthly mortgage payment $800 a month but nobody is
able to get a mortgage to buy them.
I just can't see where the levelling out is going to come from until the
banks start being sensible instead of going from giving everyone & anyone
a loan to giving nobody one.

The hypocrisy is that it was the Democrats with their
entitlements-to-buy-votes policies that forced the banks to start making
high risk, subprime loans in the first place. You remember the term "red
lining"? That was when banks refused to make loans to high risk borrowers
in high risk neighborhoods. It was the government that stepped in and told
the banks they had to make those loans. Then the banks got greedy and
started making all the high risk loans they could because they got the
upfront processing fees. The banks weren't worried because they thought
federal government was standing behind the loans with F-mae and F-mac. They
thought this in large part because Bill
Clinton said that F-mae and F-mac had to have up to 50% of their portfolios
in high risk subprime loans. In addition, the banks didn't even keep the
high risk loans. They just bundled them up and sold them to other banks and
investors. Bush and the Republicans saw the problem but didn't make it a
priority to stop it. They had Cox in the SEC and he just looked the other
way and let the greedy bankers do any thing they wanted. Plus you had the
Democrats controlling Congress and two incompetent buffoons, Frank and Dodd,
chairing the banking and finance committees. It was like a big ponzi scheme
and it worked until the housing market finally became so over inflated that
it just crashed. The people who took out the high risk, variable rate
subprimes mortgages for houses they couldn't afford to begin with, stopped
making threir mortgage payments. When that happened the whole thing began
to collapse under its own weight. Investor's savings got wiped out, banks
that had been in business and solvent for decades went bankrupt and the
politicians started pointing fingers at each other. Then the surviving
banks pulled in all their cash and stopped lending because many of them
didn't even know how solid their own balance sheets were, let along any one
else's. Mean while, crooks like Bernie Madoff who bilked investors out of
billions, are sitting in their Park Avenue penthouses and hiding the money
they stole. The bottom line is that banks will begin making loans again but
only to those who can truly afford them and the Democrats need to stop
telling people they are entitled to every thing they want but can't afford.
The American dream is still alive but it won't stay that way unless we stop
this entitlements-to-buy-votes bull***.

Irish Mike


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