Re: McCain on the economy
- From: "Alvin E. Toda" <aet@xxxxxxxx>
- Date: Thu, 27 Mar 2008 13:57:06 -1000
On Tue, 25 Mar 2008, Islander wrote:
Alvin E. Toda wrote:On Tue, 25 Mar 2008, Rita wrote:
On Tue, 25 Mar 2008 10:57:11 -0700, Islander <nospam@xxxxxxxxxxx> wrote:
I just watched McCain's speech on the economy and am amazed at the audacity of it. I'll do a complete comparison of it to the positions of Clinton and Obama, but here is one of the most blatant positions that he expressed:
He advocates increasing the down payment required for home mortgages. His argument is that foreclosures happen because the homeowner does not have enough equity in the home. This is yet another Republican attempt to blame the victim. Foreclosures happen when various variable interest mortgage schemes are coupled with increasing interest rates and a falling market. When a family can no longer afford the increasing payments they default. Increasing the down payment may make them even more desperate to avoid loss of their investment, but it is mostly motivated by the lending industry to increase what they stand to recover when the family can no longer make the payments.
Once again, McCain demonstrates that he not only does not understand the economy, but that he prostitutes for the corporations that stand to profit from his policies.
At its best this is a very simplistic analysis of the subprime fiasco and what caused it. Like it or not, for whatever reasons, the adjustable rate mortgage loan was created by the mortgage industry and these loans were aggressively marketed and sold.
He also ignores that this mortgage debt was passed off to numerous financial institutions, sliced and diced and packaged in a variety of creative new securities.
McCain was on target when he said economics was not his strong suit. Take him at his word on this if on nothing else.
There may be a point to the large down payment. I was watching a program on the real estate business in Hawaii recently-- where it is still good. In fact, luxury condos seem to sell out in less than a day. The business person-- may be an escrow company-- said that subprime has allowed a lot of people with money "off the record" to buy homes. Here many work at multiple part-time jobs to make ends meet. Some employers don't want to pay state-mandated benefits if a worker works 20 or more hours a week. It's against the law not to report income. But be that as it may, a large down payment would differentiate those who have the means-- but not on the record-- and those who do not, of buying a home.
I suspect that what you are seeing in your local market is the same thing that we are seeing here on our small island. Our realtors are reporting cash sales to people who have come into inheritances from parents or from sale of businesses. It is their intention to retire here and they are buying property before it goes even higher. Our median price home is now $694K and appears to be still climbing.
Yes, there are no foreclosures on these properties, but we are losing our working age population because they can no longer afford to live here. People who still have to work for a living are primarily disqualified for mortgages now, not because they don't have the necessary down payment, but because their income is not high enough to qualify for the mortgage.
My son in the Arlington, VA area is thinking of buying his first home since prices there have fallen so low. That is the flip side of the coin. In desireable locations prices continue to climb, but in other areas people who have a good income but no equity would like to buy now that prices have fallen. I was telling him that he might get more value by buying a forclosure, but he wants to use a real estate agent.
.
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- McCain on the economy
- From: Islander
- Re: McCain on the economy
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