Do you think there could be a second Great Depression?

[carebear]

I can understand that. I was just pointing out that property tax to the well informed is a real pain. I can just imagine how it would be to those who have no idea where to start. I really wouldn't consider property taxes part of the loan. Why pay interest on taxes?! :eusa_doh: Just pay the property tax on your own so you can see the local and state government do crazy things like raise the tax 15% in one year. :eusa_doh: I guess I am spoiled because property tax can only increase 2% per year here---maximum. 15% and higher yearly increases in the 1970s prompted the change here---Thank God.

Regards,

J

Oh, they have nothing to do with the loan, but they are part of the monthly/yearly cost of the property itself. For those people who want to pay their own taxes and interest it can be done. In no event are you forced to borrow your tax payment.

However, in most loans over 80% LTV the investor (Fannie/Freddie/Ginnie and most private money) require that you pay each month's portion of the yearly taxes and insurance into an escrow account, held by the loan servicer, to ensure taxes and insurance are paid. Insurance obviously so the property is covered and the loan can be repaid in case of loss. The taxes to prevent non-payment of taxes (say you forget or blow the money in Vegas) and thus a tax lein being placed on the property (which would affect the lender's ability to recoup their investment in case of foreclosure).

So, whether required by your particular loan program or not, by law when I give you a Good Faith Estimate I include the (probable) monthly taxes and the monthly cost of your homeowner's insurance so you can see what portion of your monthly income is, or should be, planned for housing expenses.

Even with higher LTV loans, if you can demonstrate financial ability and responsibility you can ususally get the required escrow waived so you can keep the money earning interest for you and just pay yearly when due. A few states are attempting to make the servicing company pay you the interest on your escrow account, so they don't get the profit from holding it for you. That opens a can of worms since the cost of mortgages currently includes that interest as part of the servicer's renumeration for managing the account. Take away the interest on the escrow funds and mortgage rates will rise to absorb that lost income so the servicers can still be paid.

The secondary market, which arose due to the Depression and to make home ownership possible for all, not just the wealthy, is an intriguing beastie.

 

[Marc Chevalier]

Yes indeed. Thank you Howard Jarvis! :eusa_clap :eusa_clap :eusa_clap

And I'd add: thank you, Howard Jarvis Taxpayers' Association, which tries to educate people about taxes and such. Advocacy groups exist for owners and for renters too. In fact, there's a group for just about every need. It's a matter of finding them, or of them finding you.

.

 

[Lincsong]

Get them to sign on the line which is dotted.

At a sales job a few years back my buddy and I put that, Tin Men, Big Kahuna and Used Cars in the "Corporate Training Library". The boss didn't notice until a client pointed it out.

That was fun. lol

Don't forget Boiler Room.lol I've got to get back to work, I'll join in tonight. Have a great afternoon all.

 

[Small Town Girl]

Wilson did betray his country but it wasn't over the Federal Reserve---it was the income tax. :eusa_doh:
American Debt ebbs and flows. It just depends on what the goal is. There will likely always be debt but we have to define what it is and what we want to get rid of. Do you want to get rid of bond indebtedness, trade deficits and/or American securities in the hands of foreign investors? I am not too worried about any of these because it is in their best interest to make sure our best interest is served as our interests become intertwined. In other words, they won't kill the goose that lays the golden egg.
I can agree with getting rid of the UN. Sell the property and pay off part of the National Debt before the politicians get their hands on it and spend it frivilously---as usual. :eusa_doh:

Regards,

J

Well,you say taxes and I say the Federal Reserve.I'm glad that we at least agree on something,though!The main point that I was originally trying make was that I think that another depression is a no brainer.I made that clear,didn't I???Then we got off into forign relations(more or less) and I got into the federal reserve and UN,whew!We have really covered allot(BTW does that have one or two l's)Personally I think that we should abollishbond indebtedness,trade deficits,etc.I rather like the idea of the Monroe Doctrine.I think that as a country we should take care of ourselves.Do you know something?We seem to have taken this to quite a depth,but I don't know that it applies to the original question as much as it should.We almost have a discussion within a discussion going on here!Well,if we know where we both stand on the matter perhaps we should throw in the towel.I thought that what you said about selling property to pay off the National debt rather funny lol
PS I like your avatar.Where did you find it?

Dixon Cannon-You are very funny and I agree with you!

 

[Lincsong]

Well Care, I'm sure glad you're one of the honest ones and work for a credit union because if you were of the these drunken, fly by night operators I really would have lost hope in society.

Fortunately for you the Anchorage market, is a lot different than the piracy that goes on in some of the insane markets like San Francisco Bay Area where over 60% of the new loans are ARMs. In Anchorage a loan for more house means a bigger house square footage wise. Here more means a higher price.

The following scenario played out too often around here;

Mary and Manuel bought their house in 1974 for $50,000, 25 years later it was paid off and the market value was $200,000. Two years later the market value was $300,000 so they decided to cash in and move to Oregon or the Sierra's. So they called up Big Al the Realtor.

Big Al told them; "oh I can get you $350,000 for the house, I know I can". So Mary and Manuel figured "go ahead" we'll list with him. So Big Al calls up Mario at Boiler Room Mortgage Company and says he got a listing for $350,000 he needs a loan product to pitch to Chip and Buffy who are working for Tech-High Co. in San Jose. Chip and Buffy have a combined income of $110,000 per year but also $50,000 in college loans. So Mario tells Big Al to send them his way and he'll put them in an ARM. Mario tells them, "look the houses in that neighborhood were $200,000 two years ago, now they're going for $350,000. With this 3 year ARM your payments are $2200 per month, which you qualify for, but under the traditional 30 year loan you're looking at $3000 per month. Don't worry, Greenspan has been lowering rates like mad, in two years you could have $150,000 in equity, sell and use that money for a down payment." Chip and Buffy have been looking to buy a house for a couple months and have watched homes increase 10-15K per month, afraid they may lose out on yet another house they sign the papers and get into the house. Now Big Al has come good on his promise to get $350,000 for the house so he goes throughout the neighborhood promising to get $375,000 for the next one. It kept playing out like that for a couple years.

In May 2005 a friend of mine's mother put her house up for sale; 1800 square foot, 3 bed 2 bath fixer up, asking $550,000. On the first day the realtor got a call from a guy who offered $545,000, then the second caller offered $555,000. On the third day a guy called and said; "the bank said I can buy a house for $590,000 can I buy that house for $590,000?" Of course she sold it to the guy for $590,000. I'm glad she made money off the deal, but with foreclosures going up and prices coming down, I don't want the taxpayers on the hook for other people's greed.

 

[carebear]

Big Al told them; "oh I can get you $350,000 for the house, I know I can". So Mary and Manuel figured "go ahead" we'll list with him. So Big Al calls up Mario at Boiler Room Mortgage Company and says he got a listing for $350,000 he needs a loan product to pitch to Chip and Buffy who are working for Tech-High Co. in San Jose. Chip and Buffy have a combined income of $110,000 per year but also $50,000 in college loans. So Mario tells Big Al to send them his way and he'll put them in an ARM. Mario tells them, "look the houses in that neighborhood were $200,000 two years ago, now they're going for $350,000. With this 3 year ARM your payments are $2200 per month, which you qualify for, but under the traditional 30 year loan you're looking at $3000 per month. Don't worry, Greenspan has been lowering rates like mad, in two years you could have $150,000 in equity, sell and use that money for a down payment." Chip and Buffy have been looking to buy a house for a couple months and have watched homes increase 10-15K per month, afraid they may lose out on yet another house they sign the papers and get into the house. Now Big Al has come good on his promise to get $350,000 for the house so he goes throughout the neighborhood promising to get $375,000 for the next one. It kept playing out like that for a couple years.

In May 2005 a friend of mine's mother put her house up for sale; 1800 square foot, 3 bed 2 bath fixer up, asking $550,000. On the first day the realtor got a call from a guy who offered $545,000, then the second caller offered $555,000. On the third day a guy called and said; "the bank said I can buy a house for $590,000 can I buy that house for $590,000?" Of course she sold it to the guy for $590,000. I'm glad she made money off the deal, but with foreclosures going up and prices coming down, I don't want the taxpayers on the hook for other people's greed.

Linc,

I'm offended, I bow in drunkenness to NO fly-by-nighter. lol

Chip and Buffy should have been spanked more as children, it might have kept them from being spanked so bad as adults.

As far as the fed.gov bailing out the math-impaired, I know you know my answer is the fed.gov has no business bailing anyone out.

And I do agree that bad people are misleading the dumb and/or greedy, but then it has always paid not to be dumb and/or greedy. To try to legislate away practical products for the smart and prepared to save the ignorant unfairly penalizes the smart.

 

[jamespowers]

Well Care, I'm sure glad you're one of the honest ones and work for a credit union because if you were of the these drunken, fly by night operators I really would have lost hope in society.

Fortunately for you the Anchorage market, is a lot different than the piracy that goes on in some of the insane markets like San Francisco Bay Area where over 60% of the new loans are ARMs. In Anchorage a loan for more house means a bigger house square footage wise. Here more means a higher price.

The following scenario played out too often around here;

Mary and Manuel bought their house in 1974 for $50,000, 25 years later it was paid off and the market value was $200,000. Two years later the market value was $300,000 so they decided to cash in and move to Oregon or the Sierra's. So they called up Big Al the Realtor.

Big Al told them; "oh I can get you $350,000 for the house, I know I can". So Mary and Manuel figured "go ahead" we'll list with him. So Big Al calls up Mario at Boiler Room Mortgage Company and says he got a listing for $350,000 he needs a loan product to pitch to Chip and Buffy who are working for Tech-High Co. in San Jose. Chip and Buffy have a combined income of $110,000 per year but also $50,000 in college loans. So Mario tells Big Al to send them his way and he'll put them in an ARM. Mario tells them, "look the houses in that neighborhood were $200,000 two years ago, now they're going for $350,000. With this 3 year ARM your payments are $2200 per month, which you qualify for, but under the traditional 30 year loan you're looking at $3000 per month. Don't worry, Greenspan has been lowering rates like mad, in two years you could have $150,000 in equity, sell and use that money for a down payment." Chip and Buffy have been looking to buy a house for a couple months and have watched homes increase 10-15K per month, afraid they may lose out on yet another house they sign the papers and get into the house. Now Big Al has come good on his promise to get $350,000 for the house so he goes throughout the neighborhood promising to get $375,000 for the next one. It kept playing out like that for a couple years.

In May 2005 a friend of mine's mother put her house up for sale; 1800 square foot, 3 bed 2 bath fixer up, asking $550,000. On the first day the realtor got a call from a guy who offered $545,000, then the second caller offered $555,000. On the third day a guy called and said; "the bank said I can buy a house for $590,000 can I buy that house for $590,000?" Of course she sold it to the guy for $590,000. I'm glad she made money off the deal, but with foreclosures going up and prices coming down, I don't want the taxpayers on the hook for other people's greed.

Hey! I know Big Al and Mario. lol lol lol Both crooks now live somewhere else. :eusa_doh:

 

[Lincsong]

Hey! I know Big Al and Mario. lol lol lol Both crooks now live somewhere else. :eusa_doh:

Well we know Little Al lives in Colorado and was helping to bankrolling a parcel tax initiative here in San Leandro last election.:rage: Seems this town is fine for him to pillage but not live.

 

[PrettySquareGal]

Article on foreclosures

http://news.yahoo.com/s/csm/20070302/ts_csm/asubprime

I know a lot of brokers & agents got into the biz during the boom. I wonder how many of them will be out of work soon? (Not directed at career folks like carebear.)

 

[carebear]

No offense taken, I'm not a realtor.

I'm a mortgage lending professional, a banker, not some plaid-jacketed property jockey.

What you say is true though, in both lending and real estate a lot of folks got in when you could qualify anyone (due to lowered qualifications and interest rates), the lenders and realtors had to hire folks quickly to cover the demand.

Those folks, who never developed marketing systems or any real knowledge of products and such are scrambling now that the easy money is gone. And in truth a lot of them were former car salesmen, simply because those guys have some understanding of sales and financing.

Although the "close the deal, any deal, right now" hit and run mindset a lot of them (not the good ones, but most of the average car hucksters) develop then contributed to this wave of poor lending and in any event is not conducive to long-term success in real estate where return business and customer referrals are your bread and butter.

 

[jamespowers]

Well we know Little Al lives in Colorado and was helping to bankrolling a parcel tax initiative here in San Leandro last election.:rage: Seems this town is fine for him to pillage but not live.

Well, types like him usually do that. Tax someone else not me.
Probably runs out on the tab as well. :rage:

 

[Mateo]

I hope it is ok that I am resurrecting this thread.

I don't think it is a question of if, but only of when.

Greenspan actually wrote a very good piece a long time ago called Gold and Economic Freedom, it is on a bunch of sites so just google it.
Quite funny considering what he later became.

Best, M.

 

[cookie]

Another Depression?

Thanks to various lunatic policies with easy available credit etc the whole US economy could be buffetted by a housing storm and it appears that it is happening already especially in the high end properties where the buyers have punted on low interest rates...not to mention poor folks trying to get into housing for the first time. The credit card debt is also a worry as is the high individual personal debt and the hedging of debts using real estate value in a house (ditto in Oz).

This is where there is the chance of repeating 1929. The only thing is that instead of letting it happen now they just create more credit to cover the losses instead of letting us line up at the soup kitchen.

Problem is...when America sneezes...we all get a cold!

 

[LizzieMaine]

Thanks to various lunatic policies with easy available credit etc the whole US economy could be buffetted by a housing storm and it appears that it is happening already especially in the high end properties where the buyers have punted on low interest rates...not to mention poor folks trying to get into housing for the first time. The credit card debt is also a worry as is the high individual personal debt and the hedging of debts using real estate value in a house (ditto in Oz).

I think one of the starkest illustrations of this can be found in the Legal Notices section of any metropolitan newspaper. In any day's issue of the Boston Globe, my own metrop sheet of choice, you'll find at least three full pages of mortgage foreclosure auction notices, and I imagine the same is true elsewhere. It's rather chilling to sit down and actually read those notices, and to realize that every single one of them represents someone's shattered dreams.

A society that lives beyond its means will eventually have no means to live by.

 

[HadleyH]

Second Great Depression

My personal opinion is no. I don't think we'll ever have a 1930s kind of economic deppression again. But what do I know? not much... [huh]

 

[warbird]

The concept that there could be another great depression is only considered plausible by those who love to write books and magazine pieces for the fun of illiciting fear or by those who have no concept in economics and lots of irrational fear often produced by above writer types.. The depression was the cross of several different roads which all happened at one moment in time. The odds of that happening again are astronomical.

Making even more difficult is the safeguards in place that were completely non-existent then. There's been enormous advancement in agricultural practices and technology, understanding of economics and money on a global scale. There has been a total sea change in archaic trade policies which not only stimulated a depression but also prolonged its effect.

Wall Street which bounced back within weeks of its collapse its far better run and far more ethically and legally run today than it was in 1929, when a few like Joe Kennedy and his ilk could orchestrate its collapse for their own gain. Afterall it was their caveman thinking that only the wealthy should be in the market, which spurned their desire to drive them out. Today that has all changed. Even labor unions invest heavily in the market

As for the housing market, it is true the requirements for loans will tighten and there are bubbles which will likely burst across the country a correction in the market, the market as a whole will stay strong. Here in this part of the country they can't build fast enough. Despite the fact they think so, DC, SF and NY do not represent the entire country or its diverse markets.

There will be more recessions, as we understand today they are a natural and unstoppable part of the economy, but there won't be more great depression because there are too many safeguards and there aren't enough chances that all the various crossroads which must intersect all at one can do so.

 

[Mr. Steve]

No

I think there is still alot of money being spent. I do believe that if you don't have it now, then it might be hard to get. Most people I know are doing better every year.

 

[PrettySquareGal]

Looks like we're headed towards a "rare global recession":

http://www.nytimes.com/2008/12/10/business/worldbusiness/10global.html?ref=worldbusiness

 

[Diamondback]

As a former econ student, I can tell you that 40% of economic problems are caused by economists. The other 60% is split just about evenly between clueless meddlers, consumers trying to live way above their means chasing that next "Oooh, Shiny Thingy! Me Want MeWant MEWANT!!!!!" and MBA-types trying to end-run around the business-cycle, or to have their cake and eat it too.

Bottom line, there's more than enough blame to go around.

----------------
Now playing: John Williams - The Battle Of Endor III
via FoxyTunes

 

[SamMarlowPI]

young men have no desire to fight for their country

wow...