Posts Tagged foreclosure

Main ingredients for a housing crisis and foreclosure – The desperation, deception and greed

Jan 23

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The year is 2008, another presidential election until (I suppose), the economy (recession or worse), and the housing market is in a recession) (or worse. How could this happen? Only a year ago, in 2007, the housing market seems to be, and after too many so-called "experts" was ready to expand.

But then the bottom fell out of the market, as investors realized that people are not able to afford their homes, and property values began to falldramatically in some areas. hedge funds at Bear Stearns were rescued safely by printing Federal Reserve, investors from Abu Dhabi, Citigroup, for billions of dollars, Bank of America stepped up the process of saving Countrywide Financial Corp. after the portfolio was high risk in mixing. Who is responsible for this mess?

To get an idea of why so many Americans are facing foreclosure to get one, you mustOnly turning the next shopping center in the neighborhood. Check out all the useless crap, expensive, people continue to buy, because only beat the payment of a credit card and never really think of your items. And they have reason to consider the purchase, as always, are adopting a new credit card is as easy as ordering from McDonald's.

And if interest rates have fallen close to 0% for the burst of the bubble in 2000 and 2001 to fightBanks began to give mortgages, such as credit cards. Homeowners, formed by birth, to be greedy impulse buyers began to buy homes and refinance their homes as ATMs. Banks take a family for a maximum amount of the loan, experts and give the house that is worth increasing the amount of rates and fees for guides brokers and agents. The day was full of greed and everyone had a seat at the table.

Homeowners into get as much money as possible, lied on their loan applications, the overstatement of income by 50% or more. After all, decades of public schools encouraged fraud, and now does not even try to describe the teachers lender table. The banks, eager to provide money for loans without a doubt.

Could not afford it, it did not take long for the first time homeowners, their homes, he begins to discover that they could not afford their homes. This has littlean increase in interest rates, such as individuals who not only $ 2000 per month and $ 1,000 a month in credit card bills, can afford to pay U.S. capital of $ 3,000, regardless of the amount of interest paid each month. However, most runs in a start drawing values at home. And sell homeowners with good credit, which can be financed at 110% of the purchase price is not as fast when they come to job loss or health problem. The consequences of the greed of high-risk buyers and lendersshould be started to penetrate the rest of the market, which would be entirely predictable, the number of bad loans were made by banks securitized and sold to investors in hedge funds.

Property values dropped, making it difficult to avoid for the owners not to sell to a foreclosure. And the executions could no longer be avoided, so the property values further. A drop in the market was panic, despite the efforts of the Federal Republic of inflationReserve, was a period of recession, despite the manipulations of better rates from the Federal Reserve was already depressed by the owners, but just seen trapped in their homes with loans is much higher than the present value of the property. For years, for their greed in recent years to pay, instead of building equity in their homes.

Thus, the real estate market has undergone a number of large banks to distribute the money, and homeownerswas to obtain money. The imbalance has paved the way for the housing market into a depression at the first sign of default and lower property values. The problem is basically created the inflation and interest rate manipulation by the Federal Reserve, a misguided attempt to fight a bull. Bolle handled, but will not be treated effectively with the issue of transfer from one segment to another. And in the transfer of a huge bubbleOwners and consumers, the way of economic crisis, moreover, that are victims of exclusion walk has now been opened by the Federal Reserve.

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Fed $ 200 billion bailout of the mortgage, $ 0 for homeowners in foreclosure

Nov 27

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Offered by saving $ 200 billion by banks this week is that more clear from the day on which banks are insolvent. The Fed makes a futile attempt to prevent the further collapse of the theft of public funds due to inflation and trade in new funds for subprime loans. The more support the system can be maintained only worsen the inevitable collapse.

The rescue plan, like others before, is an attempt to eliminate the Fedenough toxic mortgage debt bank balance sheets to keep the system more financially sound, although weak at the moment. Total collapse of major banks in the country that must be done properly to bring other banks. When people recognize that they are not alone in facing financial ruin and foreclosure and their money from banks, the largest financial institutions could not survive without large ransom.

TheseBanks have already burned most of their reserves to cover losses stemming from exposure to the mortgage crisis and took as much as possible from each other and foreign investors. The fire sale of U.S. companies to foreigners is just the beginning, but do not buy when our institutions are on the verge of bankruptcy. While other banks, credit has dried up, the Fed as a dump of last resort for banks and their residues, veryinflated mortgages.

Currently, the debt still preserved some semblance of legitimacy has been approved by the bond rating agencies, so the Fed is more than willing to maintain the farce of Treasury trading for them. A little 'more money (dollars, euros, Swiss francs and other currencies) is used to collect the money after a very bad track at the expense of those with the best price.

Therefore, banks will be able to move with a value of 200 billion dollars of bad loans from itsShares in exchange for new loans from the Fed in the form of bonds to strengthen its reserves and reduced to appear solvent. But it is very doubtful that these lives actually fool someone who owns a house in a neighborhood, or investment banks, hedge funds and other institutions that are exposed to the mortgage crisis.

The mortgage crisis is much more than a few regional markets and infects the proliferationmore than 200 markets around the country. Florida and California have at least 33 hours each in soft markets, counties and cities and the values in some areas rose faster and higher than in other communities. These are the markets where it will be much of a bad debt to be traded on the Federal Reserve. (Otherwise, if the banks had generally good debt would be a plan to save the U.S. Federal Reserve in the first place, then, the debt must come from this sad and difficult problemsMarkets).

The Fed, however, is from bank loans, despite their previous loans spectacular failure. Inflation will continue to increase the cost of consumer goods, including food, energy, and what (all the dissipation of energy to the economy, in particular). But at least the owners their mortgage payments or problems to keep warm, or feeding their families can rest assured that your bank does not feel any pain financialdrive from their homes.

And because the inflated values of these properties continues to drop and more homes on the market empty for a long time, bankruptcy restrictions can only push more homeowners abandon their homes more and more value. This is the legal and financial framework of the banks themselves have created. And what will the new design, the public will lose their homes and the cost of saving outBanks.

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