Re: Blindly Into the Bubble


"Islander" <nospam@xxxxxxxxxxx> wrote in message news:2qWdnUmdze2lc-ranZ2dnUVZ_viunZ2d@xxxxxxxxxxxxxxxxx
Jerry Okamura wrote:

"mg" <mgkelson@xxxxxxxxx> wrote in message news:99957bde-71aa-4880-a8df-3f844db513ab@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Dec 29, 8:58 am, "Jerry Okamura" <okamuraj...@xxxxxxxxxxxxx> wrote:
The solution to all problems. "The mortgage" problem is not he result of
people making the wrong choices, but of the "system" for allowing the people
to make the wrong choices....

Did they "allow" them to make wrong choices? Or did they persuade them
to make wrong choices because there was a bigger profit in it?
According to one expert on The NewsHour with Jim Lehrer, a couple of
weeks ago, the latter is the case.

Yes, they "allowed" them to make the wrong choices, because you "should" have enough money to be able to make the payments that are required when you borrow so much money. As for "bigger profits", it is hard to believe that there are bigger profits when they have to foreclose on a home.....

Jerry, you are seeing only the two extremes. When a loan is made, the HUD guideline of 30% of gross income for principal, interest and taxes is typically used as a definition of "affordable." What happens subsequent to that is well know by the financial community. Either the property appreciates and everyone benefits or the homeowner is forced to increase the size of his payments in order to avoid losing the home.

Unless is it a vairable interest loan, how can the monthly payments increase? The only way I know that can happen is "if" as part of the loan agreement, part of the payment you make is toward either insurance or taxes. Your insurance rate probably will not increase, but your property tax payment probably will increase. Bsdies, as I understand the issue, the problem loans are not HUD loans are they?

It
is not unusual for homeowners to sacrifice in order to pay 50% to 60% of gross income in a desperate attempt to avoid financial ruin. While the foreclosures get the headlines, there are vastly more homeowners who will make almost any sacrifice to keep their home. The banks don't want foreclosure as you point out. Rather, they want homeowners to become virtual slaves to them at interest rates that used to be called usury.

"Usery" is whatever rate the "government" decides is high enough to qualify for the use of the term. Since, I am not aware of home mortgage interest rates being classified as "usery", your statement is misleading to say the least.

The same game is played with credit cards. There is little profit in forcing a person into bankruptcy. Rather, it pays very well to increase the interest rates on accounts that appear to be in trouble because most people actually work very hard to pay their bills.

Which is basically the same problem. People borrowing money that they sooner or later may find that they cannot possibly keep up with the growing interest rates. Of course there is a basic difference between home mortgages and credit card debt. Your home morgage is tied to the value of your home, credit card chages are tied to nothing of value. Of course having said all of that, our Federal Government does not seem to have any problems borrowing money, because unlike Joe Sixpack, they can always get the money from we the taxpayer..... Joe Sixpack does not have that option.

.

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