1. Free rent ---
Many stupid or irresponsible or naive and ignorant people bought houses more than what they could afford. I was astonished to find how many homes were bought with less than 5% down payment, even 0%, while they don't have savings set aside in case of job loss. Now that their 'imaginary/inflated' equity diminished, they went default. They could stay at the house, rent free, for like 2 years, thanks for US government's interference to dissuade banks to foreclose it immediately. I, as tax payer, am paying for their free rent! Why should I ? Angry...
2. Greedy banks ---
They are the ones invented all kinds of fancy, exotic loan products, which disillusioned buyers into thinking they could afford a home with no or little money down. Don't have enough income? No problem, you pay interest only with great short term rate! (Yes, buyers are responsible too.)
Government bailed out greedy banks so that banks can have more buffer holding off already foreclosed properties. They control the number of homes going to the market in order to control home prices. They know if they list all foreclosed homes at once, too many inventories would drive price down. Again, tax payers are paying for the bail out money! Angry...
3. Strategic default ---
It has become more and more popular for people to do this. Basically this is done by buying a second home at low price, then walk away from their first home. Why? Their first home they bought it too high, they had little equity, they owed way more than their mortgage, so they might as well just give it up. They knew their credit will be ruined after foreclosure, which would disqualify them to buy next home, so they buy it first, then foreclose the previous home. Smart huh? Ironically it is legal right now. Immoral. Again, tax payers end up paying for them. Angry...
4. FHA loan ---
Government is trying to help with overflowing house inventory. They changed the criteria to enable borrowers put down as little as 3% to buy a home again, and you don't need to be a teacher or veteran. OMG, isn't that what put us into this mess to begin with? What they are doing is only to help with 'near future', a faked housing market improvement, but statistics already showed a high percentage of default rate on this group of loans! Why should we even let them? The worst case when too many defaults happen to this FHA loans, our great government probably would have to bail them out too. With whose money? You bet it's from tax payers...
5. Unemployment insurance ---
Obama's economic rescue is tinted with socialism without strict criteria. Working people are paying for non-working class, regardless if they are already well off. The unemployment insurance should have an asset criteria. Why should we, tax payer, people who still work hard, pay for those who already has good asset, but simply do not work? Ridiculous.
Can't you see why I am angry? The middle working class, responsible ones end up paying for those otherwise! I should have put down 0% for my first house and simply walked away too! I would not have lost any money, and paid no commission to greedy agents. Oh, talk about commission, angry about real estate agents trying to make $$$ on sellers who are already losing. Tricky ones also play games with buyers, telling them they've got multiple competitive offers on the same property, trying to hike up the sell price.
Ok, I will stop here. When it involves group of people, it becomes politics. No wonder politics is always a sensitive and heated topic.
Saturday, October 3, 2009
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4 comments:
I agree with you even though I got an FHA loan to buy my house with only 3.5% down. However, my house is only 3x my income so perhaps I'm less of a risk.
I will mention that they have tightened loan standards to overcompensate for the laxity of the past few years.
1/3 of income is what bank is trying to gauge these days, they actually use debt-to-income ratio, so it depends on your overall liability as well.
However, if you do not have enough savings set aside, you are betting on you always have a job, or you have fancy parents, relatives or friends.
The bottom line is how responsible borrowers are and how likely they stay put even if their home values tank and they owe more than what the house is worth of. It's tough.
Both banks and government (of course certain consumers) are responsible for this housing bust. During the 2000 recession, the government deliberately pumped money into the housing market so that the economy wouldn't look that bad. Now we see what is the end result...
At this moment, there is so much excess money out there and they said that the inflation risk is low because of high unemployment rate. Are we sure? People can pick back up their spending habit very quickly and the US dollar is losing its value. We have been enjoying low inflation rate in the U.S. for so long that we forget that it could go up too.
Honestly, I'm not an economist to make a right prediction. But, are they?
It is really weird out there, people are concerned about both inflation and deflation, like cross roads. As long as unemployment rate is still low, I tend to feel 'recovery' is superficial that can not be sustained.
China's keep going up is helping the world's economy and there are high hopes relying on that. But it was already warned China may face asset bubble if they don't adjust their monetary policy very soon. Easy money causes bubbles, just like what happened to US. :(
With that concern raised, I seriously doubt how optimistic we could be for the near future outlook in US...
And you are right, I am not economist either, and few of them could really predict correctly enough either.
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