wnyc.org / 93.9fm / am 820

Comments

• [1] Josh from New Jersey September 20, 2007 - 09:01AM

  Let this play out...

  Any bailouts (from Freddie Mac to city mortgage funds) skew the market away parity for those placed to benefit from the reduction of prices, rather than the artificial propping-up of them.

  Just because a rube purchased a 300K home in 2004 for 800K doesn't mean that I should have to today!

  And so long as the government doesn't step in I may not have to.

  
  
• [2] Gary from Manhattan September 20, 2007 - 09:57AM

  The Fed can cut interest rates to zero percent, but that doesn't change the facts on the ground that people with weak cash flow (i.e., they don't make enough money) that got in over their heads still can't pay their mortgages. Thus, investors in so-called mortgage-backed "securities" won't get their money back, not matter what the interest rate is.

  (As a sidenote: The Fed really can't change interest rates in any "legal" or government mandated way as far as personal or corporate borrowers are concerned, it just jawbones banks to lower their prime lending rate. The banks could--if they wanted--ignore The Fed's lead and keep their prime lending rate exactly where they want it. Banks generally go along to get along with The Fed in the event that they get into trouble and need The Fed to bail them out.)

  
  
• [3] Trevor from LIC September 20, 2007 - 10:30AM

  Shouldn't we remember here that the Fed is actually what is referred to as a "quasi-governmental institution"?

  And Josh, they may have been "rubes", but there's also something called "predatory lending" : if "the government" HAD stepped in regulating or scrutinized the practices of these sleazy mortgage lenders* in the first place, we wouldn't be facing a possible recession/depression.

  "Stock prices have reached what looks like a permanently high plateau."

  -- Irving Fisher economist and eugenicist days before crash 1929

  Its Wall Street and its short-term greedy fat kid thinking that are the rubes.

  * Let's not forget the underwriters, the ratings firms and the securities brokers who bundled the CDOs too! Way to go, you Masters of the Universe!

  
  
• [4] Luciano Marquez from Northern New Jersey September 20, 2007 - 10:49AM

  I sit here at home listening because work has all but stopped. I am a home inspector and as the month of September started I have seen business drop almost 80%. People are just not buying or lenders have toughened up their criteria for mortgages.

  
  
• [5] Josh from NJ September 20, 2007 - 10:55AM

  Trevor -- I agree w you on the point of predatory lenders, and also that it's obvious that proactive government regulations are the answer (and needed at present) -- isn't that what regulations are for?

  But based on my own knowledge I don't know any buyers who did so by tricky lenders -- rather they were aspiring flippers or folks who bought for $400, got reassessed at $600 -- and proceeded to borrow against that $200, buying Lexus SUVs etc.

  So it's Masters of the Universe PLUS personal responsibility.

  For those risk-takers mentioned above -- why shouldn't they take the hit?

  If there were no risk, then why wouldn't everybody borrow riskily?

  
  
• [6] Stephanie from Rockland County NY September 20, 2007 - 10:56AM

  I am a HUD approved foreclosure prevention counselor and the fed rate cut is not going to help people who are in trouble now or those who are about to reset.

  People in default now are those that cannot afford their mortgage even at the teaser rate. When rates reset, the homeowners who are able to handle their mortgage now, will be unable to do so. Even if the resets are lower than expected, they will still be too high.

  FHA and SONYMA are offering refinance programs for people who have ARM mortgages but the restrictions will not help most people unless both agencies advertise the plans well. They will only help people who are not in trouble yet.

  Our question is - why isn't anyone going after the mortgage brokers who gave these terrible loans? They made huge fees and put people in loans they couldn't afford. Why must we bail out these wrongdoers?

  Also, everyone should know that HUD approved counselors are available FOR FREE. There are now many, many 'foreclosure rescue' scams out there and people need to know there is free help available. Anyone can search HUD's website and find a counselor near you.

  
  
• [7] Trevor from LIC September 20, 2007 - 10:56AM

  Blaming those who took these subprime ARM loans is the mentality of societies who shun and punish raped women: financial literacy is not taught in this country, and then we expect people to all be autodidacts and understand the smoke-and-mirrors world of real estate finance?

  There is an ideological implication in how we historically frame the mortgage crisis. Make no mistake, this is the result of free market bulls run amok under the collusion of a mercantile fascist/theocratic presidential administration and its pet banking system.

  In other news, Venezuela DROPPED the dollar Tuesday, a curiously underreported news story...

  
  
• [8] TM from Brooklyn September 20, 2007 - 10:57AM

  Brooklyn is full. No vacancy. :P

  
  
• [9] Trevor from LIC September 20, 2007 - 11:00AM

  I do agree with you Josh: I lived in Phoenix during the early years of the housing boom, and people were beyond myopic about the loans and the construction industry. It takes regulation as well as personal responsibility; a home can be an investment, but if it is just an investment that someone thinks they can flip for an easy dollar then we are seeing the results of that thinking now.

  
  
• [10] Jonathan Goldstein from http://fairlending.org September 20, 2007 - 05:19PM

  Interesting hearing what's happening on the ground in NYC. Unfortunately, it's all too familiar, paralleling what's going on in other parts of the country.

  Unfortunately people who could have qualified for prime loans were all to often steered to loans that were not suitable to them. Even when people could qualify for prime loans they were steered to subprime loans.

  Appraisers were pressured to give inflated valuations of properties so that people could take out bigger loans on their inflated equity.

  The home mortgage market has changed radically in the last 25 years, and regulation and oversight has not kept pace.

  The current mortgage tsunami is stripping equity out of neighborhoods around the country.

  We need strong regulatory oversight and new legislation to regulate the mortgage industry.