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Thread: Freddie Mac. Betting against home owners.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by Dittohead not! View Post
    Banks don't build houses.

    If it cost the builder 80K to build the house, and the builder sold it for 200K, who gets the additional $120? Is that all profit to he bank? Of course not.

    First, there's the cost of the property, then there are the various and sundry fees and taxes on builders. After that, the builder, not the bank, keeps a profit, if all goes well. The bank loans out the entire $200K less whatever down payment the buyer has. During the housing bubble, that down payment wasn't much.

    So, if the house is now in default and is worth $100K, the bank has lost the other $100K.
    Not to mention that they 120k that the builder factored into his margin pays for the salaries of his team, equipment rental and maintenance. A years worth of property taxes. Taxes on his business. Not sure if you know this, but the town is going to want their cut from permitting fees. I know 120k sounds nice, but that is not a great margin when you look at all the contractors real expenses.
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by apdst View Post
    Because no one has the 20% down payment that has been made legally mandatory by the Frank-Dodd bill.

    The government is, "helping", us again.
    There is no such requirement. There was talk about lowering the reserves the banks must keep on loans that had at least a 20% down payment but I'm not sure that it ever went anywhere.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by KevinKohler View Post
    The issue with those empty houses is greed, though. They WOULD sell...if the banks would move on them. Have you tried to BUY a short sale? Banks drag their feet, because they are making less profit on them. Essentially, they make the buying process as hard and tricky...and expensive...as possible, in order to try to NOT sell them...to hang onto them till the market starts making a comeback. Of course, they are legally REQUIRED to have them available for sale...but there are no rules on just how miserable they can make the entire process.
    It's more than that. BTW, yes I attempted a short sale. Right after the crash I was watching the market for vacation rentals. The market for these fell like a rock in some places. I put an offer in on one in Florida. After 3-4 delays, I quit. A guy I work with was doing the same on one in Myrtle Beach. (we figured we could swap a week with each other). Basically they were vacation rentals. He gave up also.

    Let's look at some FACTS. No one is buying these houses at their CURRENT price, which is STILL bloated from the housing bubble. A house in a normal neighborhood, and 1/8th of an acre, that cost less than 1K to build back in 1953...should NOT be priced at over 200K today. That's a bubble price...and yet, that's what banks are asking for some of these houses, and MORE. So, they are not selling them. Which suits them just fine. A bank is losing nothing on the house by not selling, aside from some property taxes. Compound that issue with the fact that the banks are ALSO the ones that issue the loans, and have made that process damn near impossible for anyone making LESS than 80K a year (you need a WHOPPING 20% of the sale price of the house up front, and an average credit score of over 750)...and then mix in the fact that MOST of these houses are "middle class" houses....which, in CT, means anywhere from 150K to 350K, and you know what you get? The people that can afford to buy houses are also wealthy enough to buy the houses that AREN'T sitting in foreclosure...and the people that WOULD buy the houses that ARE sitting in foreclosures and short sales, can't qualify for the loans...what do you get?

    Now, in NORMAL economics, when you have a product that is priced too high, and then fails to sell...you REDUCE the price, or go belly up. But not so with housing, because who owns them? Banks. And banks don't have to worry about going belly up, do they?
    Right, banks don't want to expose that their claimed $750 million in assets are actually only worth $300 million and they are actually in very poor financial shape.

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    Re: Freddie Mac. Betting against home owners.

    Heh...Conservatives should be cheering. Government is acting like the Private Sector!
    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by iliveonramen View Post
    Heh...Conservatives should be cheering. Government is acting like the Private Sector!
    Not that we are going to make any difference here, stuff like this never helps.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by 1Perry View Post
    Not that we are going to make any difference here, stuff like this never helps.
    It was a joke! I'm as outraged as the next guy. I'm sure it's going to be handled because they are already receiving letters from Congress on the subject. I'm sure the Prez or Congress will swoop in and kick some ass.
    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by MaggieD View Post
    If a bank loans $300,000 to buy a house and has to liquidate it at $200,000 plus expenses, the bank that made the loan loses $100,000 plus expenses. What the house cost to build in the 1950's is immaterial. Your completely wrong here.
    The bank is issuing a loan to buy a house that the bank OWNS.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by Dittohead not! View Post
    Banks don't build houses.

    If it cost the builder 80K to build the house, and the builder sold it for 200K, who gets the additional $120? Is that all profit to he bank? Of course not.

    First, there's the cost of the property, then there are the various and sundry fees and taxes on builders. After that, the builder, not the bank, keeps a profit, if all goes well. The bank loans out the entire $200K less whatever down payment the buyer has. During the housing bubble, that down payment wasn't much.

    So, if the house is now in default and is worth $100K, the bank has lost the other $100K.
    Builders don't own the house...they are simply hired to build it. That's why they are called contractors. Now, yes, there is a company that owns the house...in the US, there are about 5 major ones...but for the purposes of this debate, we can forget about those...there are 800,000 foreclosed homes in the US...bank owned. Of those, some 240K are owned by Freddie, aka, John Q tax payer. The other 560K or so are by "private" banks...of all of these, nearly 3/4 of them are NOT new homes. Meaning, they are homes that have had at least 2 owners in their history. Another 3/5s of those were houses previously sold in short sales, or foreclosures. Not sure the numbers exactly, but my realator was talking to me about it the other day, at LENGTH. Most of all of these homes were purchased with FHA loans...and most of THOSE were bank owned when purchased. See what I mean? The bank already owned them...
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by Blue_State View Post
    In developed areas of New England, that formula does not represent reality. We are experiencing real losses here.
    Most of the houses for sale in CT are from the 50s and 60s. The banks have LOOOOOONG since recouped any loses possible on these homes, by selling them, selling them again, and then selling them again.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by KevinKohler View Post
    The bank is issuing a loan to buy a house that the bank OWNS.
    Well, I'll try one more time...then just agree to disagree.

    The Smith family buys a house for $320,000. They put $20,000 down. The bank loans them the $300,000 and that money gets paid to the Jones family (the sellers). The bank is now out $300,000 and has a lien on the house. The Smith family lets the house go into foreclosure after two months because the bottom fell out of the real estate market (just as an easy example). The bank is still out $300,000. Yes, they own the home. But the home is only worth $200,000 now. The bank is out $100,000 right out of the box.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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