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Thread: Freddie Mac. Betting against home owners.

  1. #61
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by Blue_State View Post
    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.
    In CT, you're average house, materials and labor, costs 50-70K to build, excluding such ritzy areas as Greenwhich, etc. Add another 10-20K for the property, which was likely sold to them by a BANK, and you're in for 100K. Property taxes, depending on area, would be about 6-8 grand per year, depending on how idiotic the inspector is. Again, we're talking about the typical home, here, not some McMansion. Business taxes are just an expense of being IN business...houses being built or no. And besides, they only get paid when the business gets paid. Permits are a bitch, I'll grant you that. You have to have a permit for anything, in CT. All said, though, still not as grim as some folks make it out to be.

    What is HURTING the folks that build houses is the fact that we don't NEED any more houses built.
    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 MaggieD View Post
    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.
    Right. I agree with this scenario. But this is not the scenario we are facing today. Not a lot of houses being sold like this. What we have are a lot of houses that were sold by individuals, to companies, who then sold back to other individuals. Oft times, a seller doesn't wish to wait that long before they can "get on with their life"...so they sell their house to a company. Voila. Now they have the money they need for a down payment on another house, can move, etc. And don't have to worry about taxes or anything else hanging over their head, from the old home. These realestate companies then turn around and "flip" that house, for a profit. Oh, and by and by, some of the realestate companies provided their own financing (now illegal), or had contracts with other mortgage companies (still legal). In other words, they flipped the house, which means the recouped the potential loss of buying it from, say, the Jones family...and since they are the lender, or are in business with the one that is lending, they stand to lose little if the new family forecloses...because they get the house back, plus they get to keep whatever was already paid down on the loan, plus the loan payments that were made. No net loss, only a loss in POTENTIAL profit.
    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.

    That's how it was explained to me, anyway.


    Then, to add insult to injury, these mortgage companies, who already sold and repossessed the house once, sat on them for the past couple years, and then "donated" them to the state, at least in CT...so they could get a nice, 200K tax cut for the year. And of course, CT bulldozed the houses...
    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
    99% of the time, I am inclined to agree with this, but you can't just sit back and say that we aren't in slightly extraordinary times, no? Most folks having trouble now bought within their means...but unbeknownst to them, there was a crash looming that would result in them being unemployed, and in their home value going below the purchase value by over 150%.
    We weren’t in extraordinary times when these people bought these homes. Look, I do feel bad for a lot of peeps who bought houses who were caught up in the fury, and bought houses because they thought they could make a killing on them in the market. That being said, people with bad credit were being foolish and signing contracts for really insane financing terms, against their better judgement. This was a great failure of government and financial institutions, but people who have bad credit need to take a look at what they are signing up for. They were suckered into a disaster of their own making.

    I did not favor the bailouts of the banking industry and the auto makers AT ALL. I opposed vehemently letting bad businesses succeed. I would rather have bailed out homeowners than businesses by a long shot. That being said, our government needs big businesses much more than it needs homeowners. We have already taken on much more federal debt than we can afford.

    Quote Originally Posted by KevinKohler View Post
    .

    I'm not saying this to say, hey, look at me, I'm awesome...I'm saying this to say that it's not simple apathy, lazyness, or lack of marketable skill sets that are keeping people unemployed in todays current economic climate. So, how did I end up unemployed? The business I worked for went out of business. You ask that question enough, and I'll promise you THAT is the answer you're gonna GET, in many cases. That, or the business shrunk, downsized, etc. Yes, SOME people bought too much house. SOME people took loans they really shouldn't have. But I think you'll find that the majority are people who took a loan within their means, and then lost their jobs. Through NO fault of their own. Those jobs were lost as a direct result of the housing market crisis, and the resulting recession. Should these people be the ones that have to pay for the mistakes of an administration YOU and everyone else helped into power? Should THEY be the ones that have to pay for the dishonest, scandalous, greedy business practices that caused this mess?
    Don’t point your finger at me and the rest of us who did not support anything that was happening in DC when all the **** hit the fan. We could see it coming for several years leading up to it. Point your finger at lawmakers who thought social engineering was an appropriate business model for success, lawmakers who implicitly supported all the bull**** that happened by holding financing institutions hostage with FDIC status.

    No sane business would ever have given credit to the non-credit-worthy without an implied guarantee by our government that it would be taken care of.
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by MaggieD View Post
    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.
    Indeed. It would have been far wiser to work with the homeowner and keep him in the house.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by MaggieD View Post
    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.
    They don't care Maggie....they feel like they lose the battle but win the war in that scenario. The feel that going through and changing the terms of mortgages would cause a moral hazard (*cough* *cough* bailouts to banks that would fail without tax payers) and create a precendent or idea that if the housing market collapses the banks should take the loss. They want the remorgating or foreclosure to be as painful as possible as a deterrent. They also aren't worried about short term losses because they virtually have unlimited capital access possible to them.

    It will take the government to force this to happen. Banks will drag their feet on this if given the choice.
    “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 Dittohead not! View Post
    The Frank-Dodd bill mandates a 20% down?
    That's right. Ya'll wanted more regulation. Well, you got it.

    But the local builder is advertising 0% on houses they seem to be having trouble selling for some reason. How can they do that?
    The interest rate and the down payment are two different animals. I bet he want get off the couch without a check for 20%.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by KevinKohler View Post
    But they DIDN'T lose that money. Your typical, single family, middle classer type house costs between 50-70K to build, depending on state. That's total, materials, labor, etc. Add another...what, 10-20K for property, TOPS, and you got a house that costs the bank UNDER 100K. And they went and SOLD it for 250-300K. ...
    It isn't the banks who are selling the houses. It's banks who lend the money for people to buy houses from other people. The banks make the interest paid, and they own the house if you default.
    "God is the name by which I designate all things which cross my path violently and recklessly, all things which alter my plans and intentions, and change the course of my life, for better or for worse."
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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by lizzie View Post
    It isn't the banks who are selling the houses. It's banks who lend the money for people to buy houses from other people. The banks make the interest paid, and they own the house if you default.
    Not just the interest. If a house that sold for $200,000 and is now worth only $70,000, and the bank has it, there's more than interest there.

    AUSTAN GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.

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    Re: Freddie Mac. Betting against home owners.

    Quote Originally Posted by MaggieD View Post
    That's not right. Please show a link on that. 20% down payments are mandatory. It's being discussed as a rule change, along with other draconian rule changes...most likely won't happen.
    That's right. It's being discussed. No one is going to issue a loan, that may be in violation of the law later down the line.

    Something that is in the bill and isn't being discussed, is the ban on high risk loans. By now, alot of people have crappy credit scores, especially if they're fixing to get foreclosed on.

    Will Mandate for 20% Down Hurt Homebuyers? - TheStreet
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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