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Well, I’m screwed. I bought into the market in 2006. It was starting to head down and I got a good deal on a short sale. I figured the market would level off or go down a bit, but had NO IDEA that 7% of people failing to pay off their mortgages would bankrupt Iceland, for instance.

But in the past 8 years I’d watched my ability to buy in to the market get further and further from reality. My friends who had extra cash from relatives after graduaation and bought in are sitting high on the hog, even now. My friends like me who saved for years and years only to compete with people who were short term owners with no money down? So we figured if we didn’t buy in sometime, we’d be priced out forever. Because even after the market crash in 2001, housing prices rose like crazy. That was our model.

The fact that experts sold these risky loans as low risk securities makes my head want to pop off. The fact that I had to compete on the housing market that was so overpriced most people here in labor jobs still live with mom and dad? Similar. So I’m all about having housing that’s affordable. My place costs 5X my annual salary. My parent’s first place that was worth money was 3/4X of my dad’s income while my mom stayed home to watch us. The ratio of income to property value, I want to see that number plotted somewhere.

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I had just been noticing the other day that all the commentators on finance and real estate kept saying “It will be years until we get back to where we were”
And I thought – I don’t want to go back there. I want to go forward to a healthier, stronger, economy. For the US and globally.

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Housing prices in the bay area are insane, but then again, so is rent, and who doesn’t want a piece of the American Dream, right? Even so, when I think back to my mortgage broker telling me I could afford more house than I bought I shudder. Again.

Now, I’m in Kentucky and I have a mortgage that isn’t so much of a stretch in a house that’s about ten times nicer than the one I had in San Jose. The world works in mysterious ways, doesn’t it. Or maybe it was Daddy.

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So you’re saying that in 2 years enough people refinanced or received bad loans so that now we can achieve the rate of 9000 foreclosures a day? We didn’t have that many poor people in this country before this started.

And no, I’m not blaming all the Republicans either. But when you believe that no one needs regulation, you can’t say it’s not your fault when bad people game the system. When you cut the SEC’s enforcement arm, and the IRS’s enforcement arm, you can’t be surprised when people stop following laws.

The Washington Post did a wonderful series on AIG explaining why subprime became big business. And it wasn’t because of anything Congress did. It’s because they thought they had figured out a way to make money on those loans. And they did make money.

One of the reasons I’m hot on this topic is that one of my cousins could have been one of these foreclosures. She’s physically disabled and stubbornly independent, so neither her brother nor I found out she refinanced until the fact. Someone called her on the phone and offered to give her a mortgage on her paid for house. She had credit card bills so she thought this was a great idea.

It wasn’t until I did her taxes that I discovered it wasn’t a mortgage, it was a line of credit on her home (which doesn’t have the same protections as a mortgage) and it was an ARM. She signed what the nice lady told her to sign, what she was told was a mortgage. Yes, she should have been more careful. Yes, she should have had one of us look it over.

But given the amount she took out, the value of the property and her pension & disability insurance, there was no reason she couldn’t have gotten a regular fixed rate. Instead she had something where the interest rate changed when she was late on a credit card and the fees became outrageous. This was a very profitable refinance for someone. And this was 2003. She ended up selling the house.

I’m more of the theory we all hold some responsibility for this and we are going to have to be more careful in the future. But that’s not going to happen if we think this is all the fault of poor people.

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It was the same over here in the UK – DH and I couldn’t believe that it was being ignored, even after Northern Rock was rescued by the government.

But what an excellent analogy from Jonathan Jarvis. There is another good one circulating over here:

http://www.fapu.de/artikel-article.articleid-2464-Artikel-Vorwort-sel_lang-english.htm

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As for pork-laden, define pork. If it’s building things that put people back to work and leave the country with something to show for it, bring on the pork and pile it high. Have you read the stimulus bill? I’m so thrilled about the rapid transit map I’m already making travel plans. Extended unemployment benefits that keep people going and spending until the jobs start to come back? Nothing puts money back faster into the economy than food stamps and unemployment checks. And I don’t know about you, but I’m all for fixing the bridges in this country that keep falling down and killing people. And the power grids that are failing because they’re so old. And the dams that are way past their prime years. And . . .

This country has a major infrastructure problem. It has a major jobless problem. The present government looked at that and said, “You know, we can do something with this.” I’m all for it.

But then I’m so happy with Obama right now, I do the Snoopy Dance every time he announces something new. He saved the parks! He’s closing Gitmo! He passed a jobs bill! I’m getting SO much more exercise with this administration.

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Some people thought they’d make a killing the way housing profits were climbing but got caught in the web when the bubble burst. What goes up must come down. Business is cyclical.

Sub-prime guys got their cut of the loan, to the slime sub-prime lenders, who cares, they thought, no biggie.

That is now, why certain people actually owe more than their house is worth now. Because the lending standards were lowered so much. Giving away loans practically, no standards.

Thus the huge reaction on friday to the Guy at the Mercantile floor in Chicago who is a fed up on time mortgage payer(who was doing it the right way, now punished by having to pay his part for the liers and the innocent people(who were sold a bag of risky goods, never believe a deal is good if its sounds too good) who are caught in this mess.

So when people with law degrees mostly (2006 Congress) make decisions that should be made by people with fiance degrees and such, walaa. Credit mess.

Goverment helped make this. Now they want to fix it? Now this stimus bill that no one had a chance to read is just shooved thru? Unreally stupid.

It’s a wonder why anyone would think Government would be the solution! But now we have a porkladen bill as a result. Congress is also on the gimme express too.

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My husband has an Masters in Finance.

BTW The Bush Administration tried to block this changing of the bank loans rules by the Congress but were blocked by the Democrats. There is a huge list of Congressman who received money and it is both sides of the aisle. 7/08 Barney Frank was the one who said EVERYTHING is fine. He also lives with one of the upper level people who runs either Fannie Mae or Freddie Mac

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A few years ago my husband and I took the plunge and bought our first house. We were appalled at the amount of money we were approved for — double what we felt we could comfortably pay each month. I can see how people who are desperate for houses could be talked into getting more house than they could afford. All it would take would be an illness, injury, job loss, new baby, whatever, and they could end up defaulting. Very risky, for them and their lenders. Though now I can see why the banks were willing to take that risk. After all, the ex-homeowners may be out of a house, but that bank could just sell the house — for a profit.

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The problem is, when to listen to them and when not to.

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Looking up the house on Zillow, it’s back down to only about 15% more than they sold it for in 2004 – it had gone up to 33% over what they sold it for, a ridiculous amount of money for a small house on a small lot. But, unless the people who bought it took out a huge line of credit on it, they should still be OK.

We all have probably inflated ideas of what we should have: looking at homes from the ’50s, I can’t fit my stuff into a place that once, doubtless, raised a whole family (I’ve seen little 3 br houses that probably wouldn’t hold all my KITCHEN stuff, let alone anything else)! We expect spacious and nicely fitted homes, even if the down payment isn’t in place.

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The people I hurt for the most are those losing jobs. They did everything right and they still lose because the actions of other people have snowballed.

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I do understand the story behind the house. One of the reasons I have not even considered moving in many years. My home is part of who I am. It is part of my own personal story. My family and friends gather here on holidays or just for fun. It is my backbone. It owns my history. I know between the interest I have paid, the money I have put into taking care of my home, new carpet, other things, I have spent more than what my house is worth in today’s market. Probably more than it will ever be worth.

I know I take being sensible and looking at would happen if everything went wrong to the extreme. I’m a firm believer in the idea that my fate is in my hands. While I can’t control anything from the nose out, I can control the decisions in life I make.

That isn’t to say my heart does not go out for those who have lost their homes. It’s sad, wrong, and should not have happened. The greed that started at the top, trickled down to the homeowners who in many cases simply wanted a nice home for their families to create a history.

There are many untrustworthy professionals out there. History has shown us that. As a writer, we are always told by our fellow published authors to stay away from scams, bad agents, and publishers who are not of the big NY houses. Many authors, in their desperation to sell their story, fulfill their dreams, fall prey to these unscrupulous people and in the process they loose money, the rights to their book, their dreams.

I didn’t mean to sound as if I blamed the homeowners. I really don’t. Can’t fault anyone for wanting to take care of their families. It’s the whole process. The whole idea of buy now and pay later. Inticing people with 0% interest for the first year, or whatever. Borrow as much money as you are allowed and worry about paying it back later. I once heard someone say that they had achieved the American dream – they we in so much debt they couldn’t see climbing themselves out of it, ever.

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I think the thing most missing from the homeowner’s side of the equation is how much of buying a house is buying a story. Sometimes you look at a house and the story is right there, when you get out of the car or walk through a front door, the house folds around you and whispers the story you’re going to live if you buy it and then forget being sensible or figuring out worst case scenarios for five years. The story has you. I think I’ve lost money on every house I ever bought, but for the most part, the stories always came through.

Maybe that’s why houses are so often big motifs in my books. They’re so much a part of the heroine’s character because they whisper that story to her.

I don’t care if the speculators go down, that’s the whole point of speculating, the risk. But it breaks my heart that people are losing their stories because they trusted some mortgage broker who said, “Nah, you can afford this, go for it.”

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