The Housing Bust: a Statistical Portrait

Housing defaults

Because some people were given mortgages, they could not afford. Then the banks sold these as AAA quality funds. The entire country has to suffer for others

greed (primarily) and stupidity. Most folks biggest asset may be their homes and

even if it is totally paid for, there selling price is down 25%. and according to some

sources next year will be worse. Sad business, cheaters seem to get away with it,

these things only get regulated after the fact.

I heard the CEO of Standard and Poors say the they needed to make some changes in classifiying mortgage bundles put up for investors - WOW REALLY???

The Housing Bust

I'm appalled at the percentage of people who have signed mortgage contracts without understanding the exact terms of that commitment, or even worse, didn't even read it. I had learned a lot about financial problems and various types of financing by the time I entered high shcool, as I grew up during the turbulent 1930's. My father advised me to never sign my name to any contract until I had read every word, and understood exactly what I was signing. A basic course in economics my first year in college reinforced my father's advice, and taught me a whole lot more. Have we failed to teach our children and grandchildren the inportance of keeping their expenditures and financial committments in balance with their income? There's no such thing as a "free lunch". Someone pays for it.

What was the government's role?

The question I have on the sub-prime issue is, "What percentage of the default mortgages is directly related to government policies requiring lending to low income borrowers?" Do any statistics exist taht breaks down the distribution of the nature of the *subprime* environment?

I think one of the inherent issues in getting people to really understhand what happened is that the jagon, while it may be clearly understood by some, is open to interpretation by many (including, I think, myself)...

Thelma wrote "I'm appalled at the percentage of people who have signed mortgage contracts without understanding the exact terms of that commitment..." I would have to agree... but wouldn't limit it to mortgage contracts. How many people *really* understand insurance contracts, most service contracts, etc., etc.

I'd content that they aren't intended t be understood... they're intended to entice. Note the advertising for so many product and services at "only $29.95 a month"... it's put in months because more people would choke if they were given a $350 a year price tag.

Is it deception? Not really... but it certainly feeds our apparent desire to delude ourselves... and it makes the difficult look possible... even if it isn't.

So... was the government complicit???

housing bust.

The housing bust, is a bottom-line equation. The government alone cannot solve the housing problem, but they can minimize losses. There are to many factors at play in this housing market. One: lenders practices and internal policies. Two: consumer knowledge and understanding of their own consumer needs, not to mention understanding of lenders practices. Three: the rise of, cost of living from food to gas prices and personal care. Four: This global economy which we are so dependent on based on all goods. Five: Wages. Today's wages do not compensate for the average cost of living and the average mortgage loan. Mortgage loan amounts went up, but wages stayed average. Cost of living went up, but wages stayed average. This is what i call the Libra effect, there must be a balance, to stay balanced. The bottom line equation is this, is it more cost effective to throw people out of their home and create an imbalance in family life and everyday life, (a mess on top of a mess) than to force the banks to re-evaluate each individual loan (re-write each loan) take a loss on the equitable value on paper, with a tax-forgiveness-credit to the consumer, re-evaluate the consumers finances and create a customize loan for the consumer based the their consumer equation OR is it more cost effective to send NOD's, Foreclose on a home, throw families out of their home and have the banks end-up with portfolio losses in the billions, if not trillions. Here is a thought, The Dayton, Ohio; housing market. There are houses being demolished by the hundreds, if not thousands. Government agencies and lenders, are both doing this. Could the government, working together with lenders create and turn this loss into something constructive, maybe a housing environment for the homeless. Where the homeless can live and maybe obtain training to become productive citizens ( isn't that what the government wants anyways, from it's citizens) and maybe if the banks and government work together, this housing mess can be fixed, and if not fixed minimized. A perfect example of bank and government not working together is this lower rate( the feds adjust, lower rates), but the banks continue to keep rates at an average of 5.5% nation wide. My questions is: Were the feds lowering rates to create a global economic mess, or to assist the average American family with their current financial and housing situation.......................................................JUST A THOUGHT.