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America’s housing system still has not been properly reformed

economist.com

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Re: America’s housing system still has not been properly reformed

#91

Post by eli_gottlieb »

chollida1 wrote: post #4

I'd agree that the US housing and derivatives markets are in a much better position than in 2007-2008. Atleast people who are getting mortgages now have some form of documentation, and risk manages are being asked to do their jobs. The crisis now is that, and this is just my opinion, low rates are here to stay. with the amount of money in the system, people are being priced out of homes and as time goes on the amount…

>And the most accurate part of the movie was that it showed the anguish that each of these people went through. They'd seen something no one else had, been right about it, had the event happen and even then everyone else continued to plug their ears and pretend nothing was going on while they continued to bleed money each month. It really did a good job of showing that you can be right about everything and still not make money if the rest of the market continues to act insane.

You mean: it showed the part where the assholes had grabbed control of the government and rigged the market, pointing a gun to the head of the world economy, so that their idiotic bets would pay out by force, thus penalizing everyone who had bet on the facts, right?

Re: America’s housing system still has not been properly reformed

#92

Post by eli_gottlieb »

soperj wrote: post #73
chollida1 wrote: post #69

Earlier quoted context omitted.

> Pretty much everyone is saying that interest rates are going up in the US and are going to go up soon. I wouldn't say that. According to Bloomberg's interest rate predictor the probability of a hike before the end of the year, ie the definition of soon, is less than 50%. Even if you go out to the end of 2017 you still only get to 67% probability of a fed hike. And 67% is a far cry from "pretty much everyone". And e…

Interesting, I hadn't read the outcome of Wednesday's meeting. Prior to it the local Fed Chiefs were saying that they definitely expected one to two raises this year, and maybe as early as September. All rate hikes are usually minuscule, but they add up. 2 minuscule rate hikes would double the rate right now. One reason to raise rates is that they were set as low as they were for emergency purposes. The emergency its…

We've been hearing about rate hikes Real Soon Now for more than a year now. Have they actually happened? I haven't heard of any.

Re: America’s housing system still has not been properly reformed

#93

Post by sosborn »

roywiggins wrote: post #86
mcnees287 wrote: post #18

Earlier quoted context omitted.

It's just insurance. One side pays the other side if a certain outcome occurs. In exchange for protection from the outcome, the side seeking protection pays a fee.

It's more like buying insurance on someone else's house, when you know they are a meth lab and the insurer doesn't.

In that case the insurer should do their due diligence before taking the bet.

Re: America’s housing system still has not been properly reformed

#94

Post by eli_gottlieb »

bradleyjg wrote: post #37
formula1 wrote: post #2

To sum it up, despite there being regulations on CDOs the real problem still exists. That problem is that loans are easy to get the gov stamp. Thos makes it easy for new home owners to get loans. And this makes it easy for sales people to sell the loans. Much of this opinion article is based on an other article [0] which seems less doom and gloom and more about the shift to a majority of state sponsored loans. This i…

Why does the government need to be involved in mortgage lending at all? Is there a specific market failure inherent in it people can point to that calls for government intervention to overcome (akin to the public good failure for e.g. roads)?

Homeownership was a major pillar of post-WW2 cultural stability among the middle class, so subsidizing it was considered a social good.

Re: America’s housing system still has not been properly reformed

#95

Post by __jal »

lps41 wrote: post #50
soperj wrote: post #40

Earlier quoted context omitted.

Pretty much everyone is saying that interest rates are going up in the US and are going to go up soon. Alan Greenspan just came out today saying people are going to be surprised how quickly they go up.

Why does Alan Greenspan's opinion have any weight? He is not in any kind of position to have control over rates.

He should know: he's probably the individual with the single largest share of responsibility for the housing crisis.

Not to mention responsibility for setting up with swindle that is currently used as an excuse by those who want to feed Social Security to the ibankers.

Re: America’s housing system still has not been properly reformed

#96

Post by soperj »

eli_gottlieb wrote: post #92
soperj wrote: post #73

Earlier quoted context omitted.

Interesting, I hadn't read the outcome of Wednesday's meeting. Prior to it the local Fed Chiefs were saying that they definitely expected one to two raises this year, and maybe as early as September. All rate hikes are usually minuscule, but they add up. 2 minuscule rate hikes would double the rate right now. One reason to raise rates is that they were set as low as they were for emergency purposes. The emergency its…

We've been hearing about rate hikes Real Soon Now for more than a year now. Have they actually happened? I haven't heard of any.

There was one in December. They paused because Brexit actually happened.

Re: America’s housing system still has not been properly reformed

#97

Post by sliverstorm »

talmand wrote: post #59
lmm wrote: post #36

Earlier quoted context omitted.

IIRC from reading the book a year or two ago, one of them's bosses were hounding him for the premiums he was paying on the insurance-like contracts he bought, which was something like $25m/year. When the crash happened they bought in ~$1b. Had there not been a crash he would have got nothing (the contracts would never have paid out) and that $25m/year would have been money down the drain.

Shorting is a risk. Shorting with big money is a big risk. In this case though, my impression is that certain people who actually looked at the data knew it would happen. Not like "I think it will happen", it was "it will happen sometime in this month of this year" kind of thing. Because they knew when those stupid ARMs would kick in with their adjustable rates on top of the obvious number of failed mortgages. The ri…

"take steps" kind of sugar coats it, from the film it sounds like the banks strongarmed the ratings companies to lie about the quality of the derivatives as the ARMs folded.

Re: America’s housing system still has not been properly reformed

#98

Post by fweespeech »

Domenic_S wrote: post #58
fweespeech wrote: post #53

Earlier quoted context omitted.

http://www.qualifiedhomeloans.com/campaigns/statedincomeloan... Did you really not read the first link I gave you which is a stated income loan? You are very interested in convincing me you are right when I know these no doc places exist and know people who have loans with them. I was simply correcting your belief that 660 was not "subprime".

Dude, come on. Embedded youtube video that doesn't exist anymore, 2000s-era site -- you really had to scrape the bottom of the barrel to find that page. See my sibling comment, most lenders don't consider 660 subprime.

> Dude, come on. Embedded youtube video that doesn't exist anymore, 2000s-era site -- you really had to scrape the bottom of the barrel to find that page.

It was an ad on the same google search as that first article.

Look, these products exist. You can live in denial if you'd like.

Re: America’s housing system still has not been properly reformed

#99

Post by cylinder »

mcnees287 wrote: post #26
cylinder wrote: post #16

The fact that we were not able to ban mortgage securitization after the crisis is appalling. IMO this is the root of the problems. Make banks hold their loans on their balance sheets! I also think the point about banks having capital buffers is laughable and not logical. It's like claiming we've solved chronic migraines because we have a stash of Tylenol. The cause has not been eliminated. And let's say there's a cri…

It sounds like a reasonable theory on its face. However, the outcome of this is likely that banks will stop making loans all together. If they were to offer mortgages at all, it certainly would not be a 30 year fixed rate product. It's not correct to say that banks can sell off all of their risk through securitization. They do in fact retain some of the risk. Though most has been transferred. The buffer is (in theory…

It's quite simple to get a mortgage in other countries where banks don't securitize. And if you get into trouble they will work with you rather than immediately foreclose.

Fixed rate mortgages for 30 years are a scam. How can a consumer predict interest rates over 30 years? If they go down they have to spend money on fees to refinance which benefits the Lenders. Adjustable rate mortgages are far better and allow for quick stimulation to consumers when rates are cut.

Re: America’s housing system still has not been properly reformed

#100

Post by erichocean »

soperj wrote: post #74
talmand wrote: post #61

Earlier quoted context omitted.

Insight on how to be incredibly wrong on a housing bubble?

Easy to say in retrospect. Wrong like nearly everyone else.

Or you could say, nearly everyone else was wrong as a result of him being wrong.
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