Irvine Housing Blog

Oh, I got hit on stocks too. I listened to what I thought was good advice and have been putting money in the market since 1991.

While I haven’t read Fannie’s and Freddie’s charters, I’ll assume they say somewhere that the God that creates them can take them over, unlike a real “private” company. I think a better question is where in the Constitution does it authorize GSE’s in the first place? We’re an awful long way from McCulloch v. Maryland.

We’re agreed on the bailouts. Hopefully SCOTUS will start reigning in federal government power grabs with Obamacare’s mandates, before it’s too late.

119 banks failed so far this year.
140 last year.

284 total since 2008.

Only 27 failed from 2000 to 2007.

I wonder if they’ll accelerate the process next year.

Wow, dumb post of the century award.

Low interest rates by the Fed providing cheap (and dangerous, when ARMs reset) money, government-created monstrosities like Fannie and Freddie dumping endless credit in the so-called “market,” and the FHA lowering standards and down payment requirements, and an official government *policy* of leaning on banks to make loans to people who ordinarily would be laughed out of a bank from 1776-1990.

Yep, no government tinkering here.

Wow, what a great list.

Too bad the cause of the bubble is just the lowered standards due to the private market funding the loans. It’s no different than the .com bubble.

Try quality rather than quantity next time.

No, you already get credit for your idiotic comments up thread.  “Chavezism”!?!?!  Good grief.

What is it about the righties and their lists of buzzwords?

I guess when you have no idea of how things work, you just kinda throw out words and hope you look smart.

What’s a “buzzword?” Something libs don’t understand?

Funny, I guess it’s just a coincidence that the housing market worked fine until the 1990’s when the government started tinkering. The Mother of all Coincidences, actually.

How can liberals consistently ignore reality?

All that cheap credit from the Fed and Fan and Fred was irrelevant. So freaking dumb.

You don’t understand what I mean? Or are you just a reflexive lefty who defends Chavez and communism at all costs? Either way, dumb.

I can see the appeal of right wing thinking. You don’t need personal responsibility when you can just blame everything on the government.

Mommy, the Federal Reserve just lowered the federal funds rate and I can get a mortgage for 6.5%. Why are they forcing me to borrow a million dollars that I’ll never be able to pay back?

Daddy, Fannie Mae and Freddie Mac… exist? Why are they forcing my bank to issue non-conforming negative amortization stated income loans?

Grammy, why’d the government make you into a communist by forcing you to take Social Security?

Nice try Kirk, but it’s the libs who want bailouts. I want everyone who bought off more than they could chew, especially HELOC abusers, to be foreclosed on (and yeah, banks dumb enough to make bad loans should fail too). How more clear can I be? I want the damn government out of the damn RE “market”, let the banks foreclose, and prices will correct, and those of us who didn’t play greedy, zero-down ARM flipper games will come in and say, “thanks for the granite counter tops.” And I’ll be paying cash, thanks.

And yeah, SSI is a Ponzi scheme that will bankrupt the US, along with Medicare. Fortunately my granny invested well and doesn’t have to rely on it. Anyone who does is an idiot that will be eating cat food in their 80’s.

You’re right. It’s because of ultra liberals like George W. Bush and Henry Paulson, who forced things like the Troubled Asset Relief Program, that we’re in this mess we’re in.

And Social Security is a huge Ponzi scheme that’s been running since 1935. It’s all part of Hugo Chavez’s plot to take over America. Have you seen FDR’s birth certificate? His REAL birth certificate? He was born in Venezuela!

Typical liberal argument, “Bush did it.” Yeah, and you all hated Bush, so how is that a defense? If anything, Bush doing something should be a liberal argument *against* a proposition. It’s unbelievable how libs do that, “But but Bush!” Ridiculous. I’m not Bush nor his PR guy, so make an argument, OK? And since when was Bush ever a real conservative?

Of course, all the banks knew Fannie and Freddie were implicitly backed by the gov, and the unholy relationship between the gov and the banks in mortgage policy got us all in so deep, it pretty much made it mandatory that we did TARP. The point is, had gov just stayed the hell out of things, TARP would never have been necessary.

And yeah, SSI, in 1935 the life expectancy was 63 and you couldn’t collect until 65, 47 payers for every payee. Now a very grayed American demographic has a near 80 life expectancy, 20% youth unemployment, and 3-1 payee ratio, soon to be 2-1. If that isn’t a doomed Ponzi scheme, I don’t know what is.

Oh… my… God… you actually think President Bush was a liberal. That pretty much says it all doesn’t it?

You’ve made no argument whatsoever regarding the government’s role in creating the bubble. You just keep listing government and government sponsored organizations. But, you never say how they actually inflated the bubble. Saying Fannie Mae or its apparently cool nickname “Fan” doesn’t prove anything.

Let’s try it… Duke.

There, I’ve proved that Duke is responsible for the housing bubble.

So, I say that Duke and the private sector that issued stated income, no money down loans that didn’t even meet Fannie Mae or Freddie Mac’s standards caused this bubble. After all, when you can just make up how much money you earn and get as big of a loan as you want, you can really start buying up houses.

Do you not believe that stated income, no money down loans existed? Do you not believe these loans were shoved into Collateralized Debt Obligations to make them appear safe to feckless investors?

If you don’t believe these existed then that explains a lot. If you do believe they existed… who made these products?

That whole life expectancy tripe regarding Social Security, or its awesome acronym SSI, it just that. Tripe. Social Security, if left untouched, will pay out 100% of its benefits until 2041. After that, it can still pay out 75% of its benefits. If we get rid of the cap on the wages subject to the Social Security tax ($106,800 this year), then it’s fairly likely that Social Security pays out 100% indefinitely given the progressive nature of the benefit schedule. Anyway, the point is there’s not a problem here that can’t be fixed rather easily. It’s hardly a Ponzi scheme. But, the real deal is that people like you just hate Social Security because you think it’s a communist plot as you’ve demonstrated quite clearly in your comments.

And another win for Kirk. Booyah!

Win? What did you win? You obviously aren’t interested in good faith debate. You just want to see how many keystrokes you can get the conservative to waste.

You obviously know exactly what I am referring to when I mention Fannie and Freddie, their buying mortgages that banks would have never made otherwise, that I never even remotely called Bush a liberal, and that the “Social Security Trust Fund” is a bigger fable than Gulliver’s Travels.

Bantering with bad faith liberals (excuse the redundancy) is a waste of keystrokes. Night.

Let’s see, I said that the loans that caused the bubble didn’t meet Fannie Mae’s and Freddie Mac’s standards. That means that Fannie Mae and Freddie Mac wouldn’t have purchased the loans. Yet, you still keep mentioning Fannie Mae and Freddie Mac.
Let’s see here… can I find a loan like this…

Oh wait. The very top post today.

* The property was purchased on 12/5/2001 for $475,500. The owner used a $468,750 first mortgage and a $6,750 down payment.

What was the conforming limit in 2001? Don’t know? $275,000.

Do you understand the significance of a non-conforming loan? No? It means that neither Fannie Mae nor Freddie Mac would buy it.

* On 4/16/2003 she refinanced with a $450,000 first mortgage.

Know the conforming limit in 2003? No? $322,700.

So, did Fannie Mae or Freddie Mac have anything to do with these loans? Don’t know? Let me answer. No.

Now, Fannie Mae and Freddie Mac are a whole different story after the bubble burst. They were forced to take on loans they wouldn’t normally touch. They were simply another bailout vehicle (a sacrificial lamb) AFTER the bubble was inflated. They had very little to do with inflating the bubble. That’s not to say they wouldn’t have had problems anyway. Everyone that did loans would have problems since the private sector inflated a huge bubble. Even if a loan provider required 20% down, that 20% and the principal paid would already be gone on loans made from 2004-2008 and that is when loans become at risk.

Your “free market” took everyone down. Good job.

Just as you are clueless on the cause of the bubble, you are clueless on Social Security and all the other rightie talking points you got echoing in your brain.

Booyah! Another win for people with a clue.

This was the most entertaining thread I’ve read in a long time. I was just enjoying the pure animosity of two people exchanging barbs, but I have to give props to Kirk for such a step by step take down on that last comment.

This blog has documented loan after loan like Kirk mentions, but it’s not just the loan amount that matters. The loans have to be structured a certain way. I don’t think any of the interest only or stated income loans are considered conforming loans. I could be wrong, but I think I remember reading about that a long time ago. I wonder about HELOCs.

If good faith debate means a bunch of dry comments, then I think I’d rather see more bad faith comments.

Absolute nonsense. No particular “type” of loan caused the bubble (Besides, I never said anything about Fan’s and Fred’s standards. I said the loans wouldn’t be made because private banks don’t have infinite capital, see below). Bad loans helped cause defaults in subprime, at first, but this disaster was well beyond subprime. Anyone with a “clue” would know this meltdown was way, way beyond just subprime. And by the way, FHA loans were in the mid to high *500’s* for crissakes. 500’s!

The bubble was caused by the flood of cheap, essentially “artificial” credit that wouldn’t be there in a free market, primarily ridiculously low Fed rates - for every point the Fed drops rates, millions of people suddenly “qualify” for loans - and magical “extra” credit that wouldn’t be there without Fannie and Freddie buying up loans. For every loan Fannie and Freddie buy, that’s one more a bank can make (they can only leverage so much based on capital on hand, under federal law). So if you took away the Fed’s intervention, and let rates float according to some market, and removes Fannie and Freddie pouring credit that otherwise wouldn’t be there, FHA’s ridiculous standards, and this thing never gets anywhere near this big.

But this is all moot, since you actually believe there was a free market in real estate.

Even worse, your insane belief in the actual existence of a Social Security Trust Fund - it’s a file cabinet full of IOU’s, ya tard! - A religious belief that the right hand of government promising to pay the left hand of government (SSI) tens of trillions plus interest - ha! - when it can’t even pay its current obligations without running a $1.5T deficit, is utterly preposterous. Plus, it will be supposedly paying itself with debased currency, since printing is the only way to keep the entitlement Ponzi schemes going (so seniors on SSI will need even more COLA’s, so those numbers are going to be even worse. We’ll all be doomed from the inflation, not just the seniors.)

SSI trust fund = government promising to pay itself back, plus interest, with debased currency, by running the printing presses. Good luck with that.

Look at all the nonsense in that one. In JD’s fantasy world every loan has the same risks and all credit comes from Fannie Mae and Freddie Mac.

The credit for the loans that caused this mess came from the private sector. Plain and simple. Banks packaged up the loans into Collateralized Debt Obligations and investors bought them.  The Collateralized Debt Obligations took the loans off the banks’ balance sheets so they could make more loans to package into more Collateralized Debt Obligations and so on and so forth. Unfortunately for the banks, the securities from the Collateralized Debt Obligations matured earlier than the loans they held and investors stopped buying the securities when the bubble burst. That meant the loans went back on the banks’ balance sheets. Oops.

But, that’s okay right? Cause I’m sure the bank “insured” those loans with Credit Default Swaps.  Too bad they were worthless because they were traded without a clearinghouse and were often chained dozen of entities deep with offsetting positions. Any entity that failed to fulfill its contract in a chain could bring down the whole chain. That’s why AIG was bailed out. To keep from setting off a massive chain reaction of failed Credit Default Swaps that would mean that banks would need to bring more bad loans on their balance sheets.

What a joke the right wing is. No matter how obvious the facts, they’ll stick to their beliefs like a religion. That’s all you guys have. Your beliefs. You’re just not good at anything else.

LOL! Loving it!

This time I give props to JDSoCal.

Sorry Kirk, but you just don’t seem to understand the mortgage industry at all. Let me explain what JDSoCal is saying using a car analogy so that you can understand.

1) Customer A buys a car that runs fine from JDSoCal Motors.
2) JDSoCal Motors uses the money from that sale to build a lemon.
3) Customer B buys the lemon from JDSoCal Motors.

It is Customer A’s fault that Customer B got stuck with a lemon.

I hope this clears things up.

Beautiful analogy!

Booyah! Three wins in a roll!