WAIT
Oh, dem moron home buyers
How does everyone know that they are all going belly up because they can't afford the new payment structures? I know four families who bought at 3% or less in various parts of California and they knew the rates would rise. Knew. They have all kinds of plans of action including walking away unless the lender refinances. I think we are freaking out over no data. Won't be the first time those CNBC-NYT type assholes, none of whom know jack shit, tried to lead all of us over a cliff. Wait til actual numbers come in. Wait. My bet? At least half were speculating on other people's money figuring they could execute a risk free "flip" on a home and make money. Wait! Chart is at the close, Friday 8/17, and note it is still below the 200 day moving average. A BIG DEAL, don't ignore it.
3 comments:
"They have all kinds of plans of action including walking away unless the lender refinances. I think we are freaking out over no data."
Um, ok. I'm a rube. Explain how this is a good thing? Giving the keys to the bank is defaulting. That means the loan is worth *ZERO*. Am I wrong? Like I said, I'm a rube and don't know shit. Correct me. Please.
This has happened before. During the last real estate crash the lenders were amazed at the number of home owners who just defaulted. Keep in mind that RE loans are "non-recourse," which means the lender has no recourse for collection other than the home itself. It was thought all was solved by demanding 20 percent down before purchase BUT a lot of purchasers took out a second before closing and used the second to take care of the down payment. Walking away benefits the guy walking away because he avoids making payments on a $500,000 house that is now worth $300k. This can be negotiated out but many won't bother. Good for us? Well higher net worth, proof of income over a period of time, and overall credit records will mean a lot more which will reduce the number of people who can qualify for homes. But this RE binge was a bubble anyway and it has been punctured.
That's what they said after the Savings and Load Crises of the 80s. And here it is happening again. I can't help but to think that those of us that didn't get in on this will be the ones bailing it out.
I guess I should just lie, cheat, and steal. Those of us who don't get to insure those that do.
Damn!
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