We wonder if any of the political morons that are putting together this bail out plan have consulted with anyone who knows what the hell they are talking about. These morons, our elected leaders do not have the education or wisdom (in most cases) to get themselves out of debt. Many of them have gone belly up themselves and they think they are smart enough to write a plan to help out many compines to the tune of 85 billion dollars?
We say, send the CEO to jai don't let them retire millionars. If we (most of us) did this, we would go directly to jail, do not pass go, do not collect 200 million.
WHAT DO YOU THINK ???????????????l
We say, send the CEO to jai don't let them retire millionars. If we (most of us) did this, we would go directly to jail, do not pass go, do not collect 200 million.
WHAT DO YOU THINK ???????????????l
This email is from a friend of a friend. I had to post this!!! It sums it all up!
I got this in an email this morning and want to share it with all my friends.
It sounds so perfect......
I'm against the $85,000,000,000.00 bailout of AIG.
Instead, I'm in favor of giving $85,000,000,000 to America in
a "We Deserve it Dividend".
To make the math simple, let's assume there are 200,000,000
bona fide U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man, woman
and child. So 200,000,000 might be a fair stab at adults 18 and up..
So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a
We Deserve It Dividend.
Of course, it would NOT be tax free.
So let's assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife have $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads
Put away money for college - it'll be there
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs
Invest in the market - capital drives growth
Pay for your parent's medical insurance - health care improves
Enable Deadbeat Dads to come clean - or else
Remember this is for every adult U S Citizen 18+ including the folks
who lost their jobs at Lehman Brothers and every other company
that is cutting back. and of course, for those serving in our Armed Forces.
If we're going to re-distribute wealth let's really do it...instead of
trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is being
proposed by one of our candidates for President.
If we're going to do an $85 billion bailout, let's bail out every
adult U S Citizen 18+!
As for AIG.
I got this in an email this morning and want to share it with all my friends.
It sounds so perfect......
I'm against the $85,000,000,000.00 bailout of AIG.
Instead, I'm in favor of giving $85,000,000,000 to America in
a "We Deserve it Dividend".
To make the math simple, let's assume there are 200,000,000
bona fide U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man, woman
and child. So 200,000,000 might be a fair stab at adults 18 and up..
So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a
We Deserve It Dividend.
Of course, it would NOT be tax free.
So let's assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife have $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads
Put away money for college - it'll be there
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs
Invest in the market - capital drives growth
Pay for your parent's medical insurance - health care improves
Enable Deadbeat Dads to come clean - or else
Remember this is for every adult U S Citizen 18+ including the folks
who lost their jobs at Lehman Brothers and every other company
that is cutting back. and of course, for those serving in our Armed Forces.
If we're going to re-distribute wealth let's really do it...instead of
trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is being
proposed by one of our candidates for President.
If we're going to do an $85 billion bailout, let's bail out every
adult U S Citizen 18+!
As for AIG.
Lets run it by Bush while he is still in office He might bite you never know LOL He would sign it ! LOL
I sure could use that amount Not to mention the politicians would also get this amount as they are all over 18 too
LOL
there would have to be an economic pricing freeze for 30 days or you would see 200$ toasters at walmart.. ROFL..
I sure could use that amount Not to mention the politicians would also get this amount as they are all over 18 too
LOL
there would have to be an economic pricing freeze for 30 days or you would see 200$ toasters at walmart.. ROFL..
At Nite Rube:
Sounds intriguing at first. Until you compare it to other times in history when the wealth of Americans suddenly increased. Think to the Gold Rush when milk and tools were selling for 200 times their actual cost.
I do have to admit, when I first heard it I thought, wow, I could pay off the mortgage. Then I realized that gas, milk, bread, everything would cost more. Imagine paying $20 for a gallon of milk.
Mav
Sounds intriguing at first. Until you compare it to other times in history when the wealth of Americans suddenly increased. Think to the Gold Rush when milk and tools were selling for 200 times their actual cost.
I do have to admit, when I first heard it I thought, wow, I could pay off the mortgage. Then I realized that gas, milk, bread, everything would cost more. Imagine paying $20 for a gallon of milk.
Mav
I have always hated economics. It's not the math thing - had all the college-prep math classes and on into calculus in college (hated that too, but it was required for chemistry major).
Every time someone attempts to explain macroeconomics (in what they believe to be basic terms), I'm lost before they get to point #2.
I am unable to fathom how any single person in the world has a need for $250 million a year. Yet we have decided that the best athletes are worth that kind of money. What the hell does a ballplayer do with $250,000,000 - A YEAR?
The numbers have become astronomical and, to some degree, unfathonable to just about everyone. There is so much disagreement and finger pointing, I really don't believe there is anyone who truly knows what the hell is going on!
Even the recent comment about the country running on credit - what does that truly mean? My primitive mind says that means we are spending more than we will be able to deliver on. So that means what? We print more money? Oh, that's right it has to be backed by gold or something - although I've heard that is not necessarily true either? Just where does all this "new" money come from? What the fuck?
It would appear that the only financial wizards we have are the ones running off with all the money!!!
Normally when I post, I try to add something beneficial to the discussion. Not this time. Everywhere I look, all I see from my modest, middle-class vantage point is FUCKED signs
Every time someone attempts to explain macroeconomics (in what they believe to be basic terms), I'm lost before they get to point #2.
I am unable to fathom how any single person in the world has a need for $250 million a year. Yet we have decided that the best athletes are worth that kind of money. What the hell does a ballplayer do with $250,000,000 - A YEAR?
The numbers have become astronomical and, to some degree, unfathonable to just about everyone. There is so much disagreement and finger pointing, I really don't believe there is anyone who truly knows what the hell is going on!
Even the recent comment about the country running on credit - what does that truly mean? My primitive mind says that means we are spending more than we will be able to deliver on. So that means what? We print more money? Oh, that's right it has to be backed by gold or something - although I've heard that is not necessarily true either? Just where does all this "new" money come from? What the fuck?
It would appear that the only financial wizards we have are the ones running off with all the money!!!
Normally when I post, I try to add something beneficial to the discussion. Not this time. Everywhere I look, all I see from my modest, middle-class vantage point is FUCKED signs
The AIG bailout is 85,000,000,000 (85 Billion) not 85 trillion as the letter had so it actually works out to 425 dollars each for 200 million people. The total proposed bailout of 700 billion would equal 3,500 dollars each for 200 million people.
As for the greedy self centered CEOs cut their nuts off and sell them for aphrodisiacs in China. This plan punishes the CEOs and helps with the trade deficit.
My 2 cents
Bob
As for the greedy self centered CEOs cut their nuts off and sell them for aphrodisiacs in China. This plan punishes the CEOs and helps with the trade deficit.
My 2 cents
Bob
well I dont think the press has done a very good job of explaining the actual plan. As I understand it they will be buying existing notes secured by real estate. Those real estate loans are bearing interest at an average of 7% which will come back to the tax payer, short of a default.
It should also be noted that most of these troubled loans are actually victims of "marking to market" which is an accounting requirement which requires the banks to charge the loans down to the current market value (not the balance of the note). Since many of these banks had been carrying the loan packages as current assets with the intent of selling them they had to mark them down to what the secondary market was willing to pay. Since the secondary market had become spooked at the "possible" defaults within the loan portfolios they backed away from the buying of the loan pools. As such, rather than paying 110-112% of par value they were now willing to only pay (if you could find a buyer) 60-65%. That meant that the banks which were holding the loans for immediate resale had to mark them down to 60-65% of par (face value).
If that didnt put you to sleep, then note that most of the loans which are being purchased are not actually in default. The notes will contiue to pay interest and if a default occurs then the collateral can be sold. To make a long story short the tax payer isnt just handing out money they are making an investment that could loose some portion but may in fact turn a profit.
I wish that the media could get the whole story out there and stop the fear mongering.
Have a great day
It should also be noted that most of these troubled loans are actually victims of "marking to market" which is an accounting requirement which requires the banks to charge the loans down to the current market value (not the balance of the note). Since many of these banks had been carrying the loan packages as current assets with the intent of selling them they had to mark them down to what the secondary market was willing to pay. Since the secondary market had become spooked at the "possible" defaults within the loan portfolios they backed away from the buying of the loan pools. As such, rather than paying 110-112% of par value they were now willing to only pay (if you could find a buyer) 60-65%. That meant that the banks which were holding the loans for immediate resale had to mark them down to 60-65% of par (face value).
If that didnt put you to sleep, then note that most of the loans which are being purchased are not actually in default. The notes will contiue to pay interest and if a default occurs then the collateral can be sold. To make a long story short the tax payer isnt just handing out money they are making an investment that could loose some portion but may in fact turn a profit.
I wish that the media could get the whole story out there and stop the fear mongering.
Have a great day
GOOD OLE CAPITALISM AT IT'S FINEST!!! WOOHOO!!!
I'm sure glad some one did the correct math!!!!!!!!!!
Glad to see the input on this! Yes my Post is flawed and yes there are some errors, but it is the point of it all. The new Wall Street Bailout Bill is costing the taxpayers. Since this money is going to invest on Wall Street, Where the hell is MY PORTFOLIO!!!!
Well the house of reps voted it down, now watch the stock market go down
Ross Perot WARNED us about all of this back when he ran. He also warned about how NAFTA was NOT A GOOD IDEA!!! America has been sold old. When the Great American Beer, Budwieser, is now owned by a company in Belgium, something is definitely wrong with this picture.
"For a Country 5 Trillion Dollars in the hole, we should be in Utopia!" - - Ross Perot
"For a Country 5 Trillion Dollars in the hole, we should be in Utopia!" - - Ross Perot
expect more of America to be sold too. The value of the dollar is so low, its a bargin for foreigners. Next to be sold:
Lebron James and Kobe Bryant to European Basketball Teams
Lebron James and Kobe Bryant to European Basketball Teams
Any sociologists out there? When is the 'rats on a sinking ship' syndrome going to kick in?
We are glad this has brought out some good posts. Some explained very well and others just a joke. True the politicians do not lead but NOBODY from the government has asked us or offered to put this on the ballot. If it is OUR money doing this, why don't WE have a say in it. If we could dig deep enough, we would find the only reason that the government (our elected leaders) wants to fix this is because they have so much stock holding where THEY stand to loose a major portion of their wealth. Just like social security, they are not in the plan otherwise it would have been fixed a long time ago.
Yes the stock market will take a hit but it will rebound and you don't make or loose money in stocks untill you sell. These companies that are in trouble have accounting practices and auditors. Why are these problems just showing up now and have not been reported to share holders, the government and the SEC? We could go on all night long but will leave it to these comments.
Thanks
Yes the stock market will take a hit but it will rebound and you don't make or loose money in stocks untill you sell. These companies that are in trouble have accounting practices and auditors. Why are these problems just showing up now and have not been reported to share holders, the government and the SEC? We could go on all night long but will leave it to these comments.
Thanks
"These companies that are in trouble have accounting practices and auditors. Why are these problems just showing up now and have not been reported to share holders, the government and the SEC?" - MICKEYLEE
That is the best damn question I've heard in a long time! Kudos!!
Dale
That is the best damn question I've heard in a long time! Kudos!!
Dale
uuuh just thought I'd state that as long as we're NOT the ones with the MONEY and because of that, in essence; not in power, then WE'RE GOING TO PAY ONE WAY OR ANOTHER.
I hate the idea that this closely resembles socialism and I would absolutely love to see the market go and do what it needs (I really want to see if unchecked capitalism can make it). But at least the law makers of this country have a chance to put in some provisions and punishment right now so we all don't completely loose our asses.
Just to fuck with all the repubs I know that voted for bush, lately I keep asking them if they knew they we're voting for a socialist democrat each time? LOL - try it, its fun!
Both parties are doing a great job at enslaving us just like we've asked them to by not participating like we should! STOP wasting your time arguing here and get out there and do something about it!!!
I hate the idea that this closely resembles socialism and I would absolutely love to see the market go and do what it needs (I really want to see if unchecked capitalism can make it). But at least the law makers of this country have a chance to put in some provisions and punishment right now so we all don't completely loose our asses.
Just to fuck with all the repubs I know that voted for bush, lately I keep asking them if they knew they we're voting for a socialist democrat each time? LOL - try it, its fun!
Both parties are doing a great job at enslaving us just like we've asked them to by not participating like we should! STOP wasting your time arguing here and get out there and do something about it!!!
The cause of all these problems can be blamed on the SEC who overinflated values of stock. The Treasury Dept. who keeps printing money with nothing to back it and of course our Federal Govt. and politicians who are controlled by strong Lobby groups instead of the people they are suppose to represent. Reckless spending with little accountabilty. We may go through a tough time for awhile [ we have endured it before ] but we as Americans are survivors. When the citizens of this Great Country get together and realize enough is enough we will show how tough we really are. We are a Proud Country and we will survive and get stronger as we learn from our mistakes. Yes a Change is coming but it will not be from politicians but from the People.
HELPFIRE - A voice of calm and reason??? How in the hell did you get on this forum? LOL
A most welcome voice!
A most welcome voice!
Today it was NOT Democrats or Republicans who won it was the AMERICAN people! That bailout had congressional phone lines all tied up with AMERICANS calling in telling them this Bailout was a bad idea and thank GOD that it was shut down.
Let's hope the next bill they try to pass is less socialistic and geared more to the free Market. In the meantime someone needs to start proceeding to put the crooks in Jail starting with all those who drove their companies into the ground and walked away with millions!
Let's hope the next bill they try to pass is less socialistic and geared more to the free Market. In the meantime someone needs to start proceeding to put the crooks in Jail starting with all those who drove their companies into the ground and walked away with millions!
Actually each citizen over 18 would only get about 2300 dollars. Sorry. But it is a good idea.
Mickeylee said
"These companies that are in trouble have accounting practices and auditors. Why are these problems just showing up now and have not been reported to share holders, the government and the SEC?"
Anyway, Lets say lehman Bros has a mortgage loan for 200,000 that they bought from a local bank on a house that is worth 200,000. In the system the value of this is 100,000. Lets say they get paid interest only on it at 8%, so they are getting their mortgage payment. The loan says that after 2 years the rate goes to 12%. the home owner cannot pay the higher amount. In the mean time the value of homes in this area goes down 20%. The house is now worth 160,000, but it is on the books at 200,000. And the home owner is now not making the payments. and there are 1000 home owners not making payments. Now the bank does not have the cash it was expecting, and the 200,000 in asset that have on the books is now worth much less.
Do you adjust the value of the asset now or wait until the asset is sold. If they sell it now, they only get 160,000, maybe less. So the loss happens now and not in the past. Lehman bros doesnt even know it had the loss until it tries to sell the asset or the homeowner starts to default.
Think about how many more homes and mortgages are in this position. Home prices went down 12% this past month. There is more to come.
Just my thoughts.
CB
"These companies that are in trouble have accounting practices and auditors. Why are these problems just showing up now and have not been reported to share holders, the government and the SEC?"
Anyway, Lets say lehman Bros has a mortgage loan for 200,000 that they bought from a local bank on a house that is worth 200,000. In the system the value of this is 100,000. Lets say they get paid interest only on it at 8%, so they are getting their mortgage payment. The loan says that after 2 years the rate goes to 12%. the home owner cannot pay the higher amount. In the mean time the value of homes in this area goes down 20%. The house is now worth 160,000, but it is on the books at 200,000. And the home owner is now not making the payments. and there are 1000 home owners not making payments. Now the bank does not have the cash it was expecting, and the 200,000 in asset that have on the books is now worth much less.
Do you adjust the value of the asset now or wait until the asset is sold. If they sell it now, they only get 160,000, maybe less. So the loss happens now and not in the past. Lehman bros doesnt even know it had the loss until it tries to sell the asset or the homeowner starts to default.
Think about how many more homes and mortgages are in this position. Home prices went down 12% this past month. There is more to come.
Just my thoughts.
CB
This is what happens when capitalism goes unchecked. GREED pure and simple.
You are so right 4x. Too many people were living in the here and now. 0 Down and outstanding credit card debt. They think they can own this great house. Only problem is, they really dont own anything. No equity, interest only mortgates and the balloon payments in the future when the ARM (Adjustable Rate Mortgage) rate goes up.
I had an employee who I adored, who had CC debt, car payments, and decided to buy a house (in 2006)...Interest only, ARM with 2 year adjustable rate. No money in the bank.
The bank never should have given her a loan. She did not qualify and was a foreclosure waiting to happen.
Now fast forward 2 yrs. Gas prices are up, food prices are up. She is looking to sell her car, and wants to sell her house if she can before the bank gets it.
Too many people fellinto this trap and werent smart enough to see what was going to happen. The bank should get some blame too for dangling the carrot that they had no right offering.
CB
I had an employee who I adored, who had CC debt, car payments, and decided to buy a house (in 2006)...Interest only, ARM with 2 year adjustable rate. No money in the bank.
The bank never should have given her a loan. She did not qualify and was a foreclosure waiting to happen.
Now fast forward 2 yrs. Gas prices are up, food prices are up. She is looking to sell her car, and wants to sell her house if she can before the bank gets it.
Too many people fellinto this trap and werent smart enough to see what was going to happen. The bank should get some blame too for dangling the carrot that they had no right offering.
CB
This whole bailout is just a gigantic mess right now. It's unfortunate we're even having to deal with it. I think the responsibility does fall on the government because of their lack of oversight on this entire thing. It's sad to think the government saw all these things coming and next thing you know, they're just completely upside down and screwed.
One of my friends sent me a email yesterday and it was a poll to vote yes or no on the government bailout. I think we all need to voice our opinions on this. I'll put the link to that poll thing when I find it in a second.
One of my friends sent me a email yesterday and it was a poll to vote yes or no on the government bailout. I think we all need to voice our opinions on this. I'll put the link to that poll thing when I find it in a second.
Yes the Government should have regulated it but dont get the whole blame. People who got caught up in this and over extended themselves should not blame the government for their mistakes.
Now the responsible people who manage their expenses properly are paying for the mistakes of over-extended home owners, Greedy Mortgage Brokers and Banks, and the Govt.
CB
Now the responsible people who manage their expenses properly are paying for the mistakes of over-extended home owners, Greedy Mortgage Brokers and Banks, and the Govt.
CB
How about this idea. Instead of the taxpayer paying for the banking industry's mistakes why don't they be more creative with all these failed mortgages and do something amongst themselves. They may consider readjusting failed mortgages. Let's say if you have a 30 yr. mortgage they make it a 50 yr. mortgage. That way your payments would be much less and you still keep your home. We should not bail out these Fat Cats nobody is bailing out us.
Blame the big wigs K Right If we hadent taken out loans we couldnt have aforded we wouldnt has as big of a problem. So blame the People of the U.S also, for getting loans that tehy couldnt handle.
I think there are more creative ideas to solve this problem on this site than in all of congress.
I like your 50 yr mortgage idea.
lets also convert the interest only mortgages with balloon payments, to lower rate mortgages with some equity pay down and your 50 year terms.
Mortgage Value 8% 30 yrs 50 yrs
$200,000 $1,468 $1,358 $110
$250,000 $1,834 $1,698 $136
8% 6%
$200,000 $1,468 $1,053 $415
$250,000 $1,834 $1,361 $473
8% Int only
$200,000 $1,333 $1,053 $281
$250,000 $1,667 $1,361 $306
I like your 50 yr mortgage idea.
lets also convert the interest only mortgages with balloon payments, to lower rate mortgages with some equity pay down and your 50 year terms.
Mortgage Value 8% 30 yrs 50 yrs
$200,000 $1,468 $1,358 $110
$250,000 $1,834 $1,698 $136
8% 6%
$200,000 $1,468 $1,053 $415
$250,000 $1,834 $1,361 $473
8% Int only
$200,000 $1,333 $1,053 $281
$250,000 $1,667 $1,361 $306
The blaim is also to be put on,
(The home owners who took on loans they couldn
(The home owners who took on loans they couldn
Here is what the interest only 8% mortgage looks like:
Mortgage Value 8% 30 yrs 50 yrs
$200,000 $1,468 $1,358 $110
Go from 30 to 50 years save 110 per month on 200K
8% 30 yr 6% 50yr int only
$200,000 $1,468 $1,053 $415
Go from 30 yr at 8% to 50 yrs at 6% - save 415 on 200K - BUT still owe 200K after 50 yrs.
8% 30 yr 6% 50yr Interest and Principal
$200,000 $1,333 $1,053 $281
Go from 30 yr at 8% to 50 yrs at 6% with paydown - save 281 per month extra to spend (3366 per year) and you start paying down your house. You own the house outright after 50 yrs or have some equity if you sell sooner.
CB
Mortgage Value 8% 30 yrs 50 yrs
$200,000 $1,468 $1,358 $110
Go from 30 to 50 years save 110 per month on 200K
8% 30 yr 6% 50yr int only
$200,000 $1,468 $1,053 $415
Go from 30 yr at 8% to 50 yrs at 6% - save 415 on 200K - BUT still owe 200K after 50 yrs.
8% 30 yr 6% 50yr Interest and Principal
$200,000 $1,333 $1,053 $281
Go from 30 yr at 8% to 50 yrs at 6% with paydown - save 281 per month extra to spend (3366 per year) and you start paying down your house. You own the house outright after 50 yrs or have some equity if you sell sooner.
CB
I would much rather see people go into interest only 50 year loans rather then let them default on their mortgage.
I have not had time to look into it but I heard an economist talking about credit default swap saying it was most of the reason this mess exists.
I have not had time to look into it but I heard an economist talking about credit default swap saying it was most of the reason this mess exists.
why in gods name should people be allowed to pay interest only loans ? i dont have any, do you ? if you cant afford the house you dont NEED it. you may WANT it but you dont need it.
there is a ton of blame to go around. the lending institutions were making loans they knew people could not qualify for without giving them sub prime interest only loans with huge balloon payments after so many years.
and let us not forget about congress, they already had the oversight commitee, the just misunderstood what oversight ment. they thought it was not looking or acting on very real signs of trouble.
bottom line is you deserve nothing, you earn everything you get. if you cant afford it, get rid of it or loose it.
someone/some thing had to pay for the house, so why should the homeowner only have to pay interest only. the homeowner knew or should have known what kinda loan they were getting. they share in this responsibility too.
there is a ton of blame to go around. the lending institutions were making loans they knew people could not qualify for without giving them sub prime interest only loans with huge balloon payments after so many years.
and let us not forget about congress, they already had the oversight commitee, the just misunderstood what oversight ment. they thought it was not looking or acting on very real signs of trouble.
bottom line is you deserve nothing, you earn everything you get. if you cant afford it, get rid of it or loose it.
someone/some thing had to pay for the house, so why should the homeowner only have to pay interest only. the homeowner knew or should have known what kinda loan they were getting. they share in this responsibility too.
Undecided voters be sure to watch this video and you will get mad as hell at the DEMOCRATS that stopped the regulation of Fannie and Freddie Mac. Watch as the idiots in congress debate about the need to regulate to prevent what is happening to our economy now. GW is all the blame yeah right! Keep drinking that liberal kool aid or better yet watch this video and see who really is to blame even Bill Clinton says it was the democratic congress who prevented the regulation of Fannie and Freddie and what politician gained the most from the greedy CEO's ? You guessed it the same man that has a hard time paying respect to our flag Barrack HUSEIN Obama.
McCain/Palin08
McCain/Palin08
One of my friends sent me this email today for a poll for the bailout. go to www.700billionbailoutpoll.com and you can cast your vote for or against the bailout.
Here is the theory behind the interest only mortgages:
Assuming a normal mortgage payment of $1500 a month on a $200,000 house and a current average rate of return on the stock market of about 8%. A homeowner buys a house and selects an interest only repayment plan for 5 years ( the national average of homeownership has been around 5-6 years). The homeowner pays his interest payment of $750 then takes the $750 he saves in principal payments and puts that into an investment account earning at least 8% interest annually. At the end of those 5 years, even if the house did not increase in value, the homeowner should have at least $50,000 in his investment account. For most people the 50K in the investment account is more than sufficient to cover the closing costs and realtor fees associated with selling his home or to cover the fees necessary with a refinance. When you also take note that on a traditional mortgage for those same 5 years the average homeowner earns less that 10-20,000 in equity (if they are lucky to have earned even that much).
Unfortunately, the majority of people that got the interest only mortgages either chose not to or were never informed of the need to put that extra money into the investment account and so when the time ran out on the interest only portion of their loans, they did not have the investment account to pay the baloon payment and even worse the house is now worth less than their mortgage value so they can't refinance and they can't afford the increased payments.
Mortgage brokers loved to sell that type of loan since they could more easily get people qualified. Homeowners loved that loan because they only saw the lower monthly payment required. Both parties are about equally to blame, if we are going to go around assigning blame, the bottom line is that it is all about GREED. Developers and construction companies found they could make more money by building bigger houses (how many new homes are built anymore that are less than 3000 square feet?) with larger houses came higher home prices, higher home prices meant lenders had to find more creative ways to get homeowners approved for financing.
***** Please note the numbers used are for demonstration purposes only. They are used solely to demonstrate the concept and are not meant in any way to convey an actual scenario. If anyone would like to know the actual numbers and formulas please feel free to send me an email. Thanks.
Assuming a normal mortgage payment of $1500 a month on a $200,000 house and a current average rate of return on the stock market of about 8%. A homeowner buys a house and selects an interest only repayment plan for 5 years ( the national average of homeownership has been around 5-6 years). The homeowner pays his interest payment of $750 then takes the $750 he saves in principal payments and puts that into an investment account earning at least 8% interest annually. At the end of those 5 years, even if the house did not increase in value, the homeowner should have at least $50,000 in his investment account. For most people the 50K in the investment account is more than sufficient to cover the closing costs and realtor fees associated with selling his home or to cover the fees necessary with a refinance. When you also take note that on a traditional mortgage for those same 5 years the average homeowner earns less that 10-20,000 in equity (if they are lucky to have earned even that much).
Unfortunately, the majority of people that got the interest only mortgages either chose not to or were never informed of the need to put that extra money into the investment account and so when the time ran out on the interest only portion of their loans, they did not have the investment account to pay the baloon payment and even worse the house is now worth less than their mortgage value so they can't refinance and they can't afford the increased payments.
Mortgage brokers loved to sell that type of loan since they could more easily get people qualified. Homeowners loved that loan because they only saw the lower monthly payment required. Both parties are about equally to blame, if we are going to go around assigning blame, the bottom line is that it is all about GREED. Developers and construction companies found they could make more money by building bigger houses (how many new homes are built anymore that are less than 3000 square feet?) with larger houses came higher home prices, higher home prices meant lenders had to find more creative ways to get homeowners approved for financing.
***** Please note the numbers used are for demonstration purposes only. They are used solely to demonstrate the concept and are not meant in any way to convey an actual scenario. If anyone would like to know the actual numbers and formulas please feel free to send me an email. Thanks.
Even though you may dislike someone and their politics, most reasonable people would agree that no one is wrong about everything. After reading this thread, there is one common element that keeps popping up (GREED) and TR gave an excellent one sentence summary in my opinion:
"This is what happens when capitalism goes unchecked. GREED pure and simple."
Unbridled, underregulated capitalism obviously allows one of the seven deadly sins to eventually run rampant.
Payback's a bitch!
"This is what happens when capitalism goes unchecked. GREED pure and simple."
Unbridled, underregulated capitalism obviously allows one of the seven deadly sins to eventually run rampant.
Payback's a bitch!
Well everyone is talking about golden parachutes example: this morning msn story Alan Fishman Ceo of Wa-mu hired 3 wks ago and all knew that th ecompany was failing walks away with a 19 mil discharge package someone hire me for that position I can sit around for 3 wks and do nothing lol. 1 thing that I see absolutely no chatting about at this point is the oil/gas pricing <funny how a new problem makes it all change> I did some checking
oil July 2006 $78.40 barrel
gas July 2006 $2.74 gal
oil Sept 11 2008 99.21 barrel
gas sept 11 2008 $3.67 gal
pricing goes up on everything because of this and causes inflation but tnow that there is a new cause to banner against they can do what they want with oil
:s
oil July 2006 $78.40 barrel
gas July 2006 $2.74 gal
oil Sept 11 2008 99.21 barrel
gas sept 11 2008 $3.67 gal
pricing goes up on everything because of this and causes inflation but tnow that there is a new cause to banner against they can do what they want with oil
:s
Why did the media not cover this huge protest against the bail out?
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We are lovin what we are seeing here.
Why do the politicians have to add SHIT onto the bailout bill???? If there is going to be a bailout, do the bailout and fuck the rest of the bullshit.
We say, let them sink!
Loved the wants and needs comment.
We are adults and you should know what you can afford. Look at your savings account and if the balance is $100.00 then that is all you can afford.
Why do the politicians have to add SHIT onto the bailout bill???? If there is going to be a bailout, do the bailout and fuck the rest of the bullshit.
We say, let them sink!
Loved the wants and needs comment.
We are adults and you should know what you can afford. Look at your savings account and if the balance is $100.00 then that is all you can afford.