Comments on: Sad News on the Wicked Local Blog, and San Diego Plays Hardball With Irresponsible Lenders

By: mike.martin

mike.martin — Fri, 01 Aug 2008 20:19:49 +0000

I can appreciate your position, I really can — but saying “you deserve to burn” isn’t going to help the market right itself. And…well…there’s nothing so sweet as exactly what you want to hear, right? Especially when it comes to buying your home. What drives me crazy are people who are walking away from mortgages but still driving expensive SUVs. A repo isn’t nearly as bad as a foreclosure, folks. Get rid of the schlock and keep the house if you can!

By: Payurbills

Payurbills — Fri, 01 Aug 2008 15:01:25 +0000

I agree with certain aspects of your story. The taxpayers should not bailout the corporate leeches that made plenty of money the past 10 years. However, all of these tax payers crying should just give it a rest. If these people didn’t know what they were doing then I would like to sell them some swamp land. What did they think was going to happen? I am sure they own a credit card and know how interest rates work. Let me see if I understand this correctly- I buy my house at the peak of the market and because I didn’t get a 5yr ARM then people have no sympathy for the 30 yr fixed homeowners. These people were irresponsible and now they are paying the price. Why should I have sympathy for either- the corporations and dumb homeowners both appear to be the same greedy deadbeats? Plenty of people have lost millions over the years in the different bubbles popping in our economy. Our society needs to be smarter and not so quick to be sympathetic for irresponsible people. Pay your bills…

By: mike.martin

mike.martin — Thu, 31 Jul 2008 04:09:13 +0000

Cool — thanks.

By: tom.newhampster

tom.newhampster — Thu, 31 Jul 2008 02:37:32 +0000

LTI of 28%: Ratio of monthly mortgage debt cost to income should not exceed 25% of Gross Income. I remember when is was a a lot tighter than that.

Monthly mortgage payments (1st, 2nd, etc all added together) of principal and interest plus real estate taxes and insurance (including MGIC, mortgage guarantee insurance if you didn’t have 20% down or your house lost value…) of TWENTY FIVE percent. Twas the standard for years, at least in the 1970s.

By: mike.martin

mike.martin — Tue, 29 Jul 2008 20:51:11 +0000

Thanks for your 2 cents — I’m not real happy about it either, though a lot depends upon propping up those two institutions. You should go down to the dentist’s office and swipe a back issue of The Economist — his article is really in-depth and interesting.

By: anon

anon — Tue, 29 Jul 2008 18:48:52 +0000

I’m part of the “less-government crowd” not because it’s necessarily the best way to get the best outcome for the economy, but because regulation tends to have the nasty side effect of limiting freedom. You’re right – less government will not clean up this mess in the way that you imply it needs to happen. However, the point is that freedom is not freedom if you aren’t allowed to fail. The banks need to crash and burn because it is the right thing to do. It might actually be a better way to solve the problem in the long term too if it forces everybody to start pricing risk appropriately, especially if the workouts you are proposing merely drag the pain out over a longer period of time. However, that is beside the point; they need to fail because they took the risks and reaped the profits which resulted in this mess of their own doing. This bailout disgusts me. Our representative Barney Frank disgusts me.

By: mike.martin

mike.martin — Tue, 29 Jul 2008 18:18:25 +0000

Too true — it isn’t only FSBO sellers who are a little unrealistic, and the sooner we get some fresh blood into their first houses, the sooner it all gets moving. A lot of houses sit because sellers want to travel back in time a couple of years.

Want to explain LTIs for us?

Thanks, Max!

Mike

By: max

max — Tue, 29 Jul 2008 18:06:12 +0000

What this market needs most is reasonable prices, and reasonable lending. And by “reasonable” I mean LTIs of 28%, which is historically proven to be sustainable. The sooner we get there, the better.