BS: Fed Rate Cut

Subject: BS: Fed Rate Cut
From: Riginslinger
Date: 17 Aug 07 - 09:31 PM

It looks like the Fed has moved to save the Bush Administration. If they had done that in 1980 for Jimmy Carter, we wouldn't be dependent on foreign oil today.

Subject: RE: BS: Fed Rate Cut
From: Alice
Date: 17 Aug 07 - 11:04 PM

I'm in the middle of a mortgage refinance. It will help me a bit.

Subject: RE: BS: Fed Rate Cut
From: dick greenhaus
Date: 18 Aug 07 - 09:58 PM

I'm glad to see that the fear of a Welfare State doesn't extend to government support of poorly-run lending establishments.

Subject: RE: BS: Fed Rate Cut
From: GUEST,.gargoyle
Date: 18 Aug 07 - 10:25 PM

The Brits led off first ... four weeks ago with rate cuts ...

Don't tell me...we are not on the eve of.......

Subject: RE: BS: Fed Rate Cut
From: gnu
Date: 18 Aug 07 - 10:35 PM

DO NOT SAY IT!

Subject: RE: BS: Fed Rate Cut
From: TRUBRIT
Date: 18 Aug 07 - 11:39 PM

try being a realtor in the midst of this mess......

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 20 Aug 07 - 08:17 AM

That's the really strange part of it, nobody can sell anything, and their solution to all of that is to tighten up the requirements making it harder for people to qualify.

Subject: RE: BS: Fed Rate Cut
From: TRUBRIT
Date: 20 Aug 07 - 02:33 PM

I know -- not hugely helpful. Of course it would have helped if all lending standards know to man had not been thrown out the window over the last couple of years......

Subject: RE: BS: Fed Rate Cut
From: SINSULL
Date: 20 Aug 07 - 03:04 PM

The tightening stems from abusive lenders who encouraged buyers to overextend themselves with adjustable rate mortgages. They knew that these buyers were poor risks long term but greedily lent the money anyway. Now we all pay.

I have little sympathy for people who borrowed more than they could afford expecting that rates would never climb. I watched in horror when a co-worker bought a house at 100% financing with an adjustable rate. He can afford the payments today. He has no *NO* savings to fall back on if the roof leaks, the basement floods or rates go up. It is a recipe for disaster. But instead of buying the house he can afford he is buying the one he wants.

I pity his neighbors who will have an eyesore next door when he defaults and the property falls into disrepair. Some towns are actually passing laws making it mandatory for the lenders to keep a house up to basic standards set by the town when a loan defaults. For example - the lawn must be maintained; mail and newspapers must be collected daily; exterior repairs must be done as needed - no broken windows or doors off hinges.

Lenders in one town demanded specific guidelines and were told: "Pretend you are living next door. Now keep it in shape."

Every day I receive junk mail and emails offering me ridiculous amounts of money to refinance my mortgage or take out a second mortgage. "No proof of income necessary." In other words, borrow until you can't pay it back any more. Great!

Subject: RE: BS: Fed Rate Cut
From: Rapparee
Date: 20 Aug 07 - 03:20 PM

I agree with SRS. The concept of a "starter home" has gone out the window: we first lived in a 3 (small) bedroom, 1.5 bath ranch. We could afford it (just) and we actually made enough money when we sold it that we could make the downpayment on another house in Indiana, the profits from which we put into our current house.

But we made sure that we ALWAYS had a fixed-rate mortgage so we could plan our expenditures -- no surprises of the sort that can come with some of the new types of mortgages.

I dunno what's going to happen. Something like 48% of the new houses in the Boise area are owned by out-of-state "investors" (mostly from California), and the housing market there is flatter'n central Illinois. Fortunately, it hasn't hit here...yet.

Story:

There's a former shopping mall here. Fred Meyer and Albertson's used to be there, but Fred built their own plaza across the street and Albertson's closed the market there when the rents went through the roof (as did the other stores). Now it's just a bunch of deteriorating buildings with a square block or more of parking lot.

Costco wanted to buy it and the owners, a group in Chicago, asked for $18 million US. Costco replied, "We don't pay THAT much for land in Las Vegas!" and continued looking.

Now, the property is carried on the county tax rolls for about $7 million. And it's slowly falling into ruin. So the group asked the county to reassess it.

The county did. Knowing of the selling offer to Costco, the county re-evaluated the property at $12 million, based upon the group's own estimate....

Sometimes you're better off just keeping your mouth shut....

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 20 Aug 07 - 10:49 PM

It seems to me that this whole thing was engineered through the tax codes. The only thing you can deduct anymore is interest on a dwelling, so people were refinancing their homes to buy new cars, boats, motorcycles... You name it.

             I sold a house a few years back, and not knowing where I was going to be working for the next several months, I rented a house. My taxes at the end of that year were astounding. I had to buy another house to take advantage of the interest credit scam.

             I think folks who criticize the home buyers in this environment have failed to realize what a huge tax burden a renter is really saddled with.

Subject: RE: BS: Fed Rate Cut
From: TRUBRIT
Date: 20 Aug 07 - 11:46 PM

all of the above is absolutely on point. I have clients that lenders have told could borrow money that would take 53% (yes, that is 53% ) of their monthly income to repay,   I represented buyers a couple or three years ago when they bought a modestly priced starter home for around $139K. Three years later they asked me to do an analysis which I did -- I thought the house was worth around $169K -- I thought that was pretty good - pay broker fees and walk away with around $18K = can't be bad. She then told me the owed more than $169K on it -- they had refi'd with an online lender who had given them a drive by value on the home of............$229K and had lent them $179K and told them they had equity in the home......adjustable rate mortgage -- of course > It is immoral, should be illegal and has to be fattening.

Subject: RE: BS: Fed Rate Cut
From: TRUBRIT
Date: 21 Aug 07 - 12:25 AM

Well - tru-ish -- but it is quite a complex area and I honestly don't believe that the average person has a clue what they are signing up for with lenders........

There are oodles of totally honest lenders and real estate brokers out there but sadly there is the contingent that is not honest and combining those with the public who WANTS to be told you can have your cake and eat it results in huge problems....

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 21 Aug 07 - 08:29 AM

Yes, well, we used to have truth in lending laws and usery laws too, but that all went away with Ronald Reagan.

                   And one used to be able to deduct "interest expense" on his/her taxes, regardless of what it was for. And they used to let one income/average, so if you were in a seasonal business and had a bad year--or a windfall seaon--you could average the tax burden over a number of years.

                   All of those things are gone now, and what it does to a person with lower than average income is to make him/her pick up an unfair share of the tax burden--unless, of course, he buys a house. It's almost as though Congress has legislated this "housing bubble" into existance, and encouraged it to blow up and pop.

Subject: RE: BS: Fed Rate Cut
From: The Fooles Troupe
Date: 21 Aug 07 - 08:50 AM

You can't deduct your housing loan interest off your income in Australia... Little Fascist Johnny is looking for more pork-barrelling for this election and he has about AUD$5 billion spare... hey, how come his failed ex-US political advisors haven't woken him up to that one? It would most benefit the rich, his mates, anyway...

We do have 'rent assistance' which the unemployed and pensioners can get, but you can't get any assistance if you are paying off your OWN home...

Subject: RE: BS: Fed Rate Cut
From: Rapparee
Date: 21 Aug 07 - 09:21 AM

I read the legal notices in the paper every morning, and every morning there are two or three "Trustees Sale" notices. Someone else couldn't make the payments, and foreclosure has happened.

My neighbor has two kids and a house he bought in 2000. He also has a ski boat, two dirt bikes, two all-terrain vehicles, two BIG pickups, a car, two mountain bikes, a golf cart and two sets of clubs, and a BIG honkin' fifth wheel trailer. There are two of things so he can go out with his teenaged son; his wife cuts the grass and takes care of the house and I rarely see his daughter. I can only wonder what his credit payments are like, as the trailer must have cost about USD 100,000.00.

The guy across the street has a Class-A (bus-sized) motor home that cost more than his house. He uses it about two weeks per year.

Well, it's their problems. I can stay in some really fine hotels for what they've paid for "camping" equipage.

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 21 Aug 07 - 06:54 PM

Rap - That's never made any sense to me either. Especially the motor homes. But what a lot of people have been doing is getting second and third mortgages, so they can deduct the interest they are paying on their motorcycles, camp trailers, and etc.
Now, if the value of their house goes down, they would be instantly insolvent.

Subject: RE: BS: Fed Rate Cut
From: Rapparee
Date: 21 Aug 07 - 09:54 PM

That's fine, IF you have the savings to pay off the loans completely if you had to do so. Heck, I might even do it myself -- make some money off the interest of the covering money and deduct the interest I pay.

I personally think that ol' Ronnie Reagan didn't do the Middle Class or the poor any favors, and the folks since then have done even fewer. But then again, I think that if there aren't some changes and hope continues to erode there will be blood in the streets.

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 21 Aug 07 - 10:30 PM

Rap - I don't think I made myself clear. I don't think most people have that kind of money, and that's the problem.

          And I agree there very well might be blood in the streets. But I would trace most of that back to whoever was running Ronald Reagan. When they introduced "supply side" economics, they doomed the working poor to perpetual servitude.

Subject: RE: BS: Fed Rate Cut
From: Rapparee
Date: 21 Aug 07 - 10:49 PM

I have, very fortunately and by dint of VERY hard work, enough money set aside to pay off the mortgage completely. Because of the interest deductions I'm not going to do so, but I could.

In and of itself "supply side economics" isn't necessarily bad. But like so many, many other things it was wrongly understood (I'm being charitable here) and wrongly applied. As a result, Reagan's "Social Safety Net" is, at best, in tatters and more and more people are viewing life with hopelessness. And people without hope are people who have nothing at all to lose.

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 22 Aug 07 - 10:20 AM

Yeah, I think you're right about the "supply side" thing. There was a guy on "Book TV" a while back who'd written about it and insists that Frederick Heyek intended for things to be, at least, loosely regulated. Of course the Reagan bunch didn't want any regulation at all, and I think that's how we find ourselves where we are today.

Subject: RE: BS: Fed Rate Cut
From: Rapparee
Date: 22 Aug 07 - 01:34 PM

Hey, that Book TV bus is gonna be HERE on August 30! Watch for us on TV!

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 22 Aug 07 - 05:56 PM

Okay, I'll do that. Where are you? Do you know who or what they will be interviewing, or who will be speaking?

Subject: RE: BS: Fed Rate Cut
From: GUEST,UP
Date: 23 Aug 07 - 12:42 PM

The mention of corporate welfare for the predatory lenders instead of say "A Fed adjustment" was an ultimate insult for Wall Street types whose full time job is to protect the money of the absurdly wealthy.

For them "corporate welfare" is a four letter word...
that earns them billions in tax breaks and bail outs.

Subject: RE: BS: Fed Rate Cut
From: Bobert
Date: 23 Aug 07 - 12:53 PM

Good news/bad news...

The good news is that we are cutting interest rates...

The bad news is that you no longer qualify to get a loan???

Hmmmmmmmmm????

Something happening here
What it is ain't exactly clear...

I wish I could say that I was all that confident but seein' as I am just finishing up a spec house that I've been building for the last year that would have sold quickly a year ago, I'll admit to being a tad nervous...

Bobert

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 23 Aug 07 - 11:44 PM

Bobert - That's the funny thing about it. While they say they are trying to keep mortgage rates down, at the same time they are raising the bar as to who qualifies for a mortgage. And while all of this is going on, people with adjustable rate mortgages are paying through the nose. Couple all of that with home values dropping, many of the adjustable folks will just walk away.

             Frankly, I think somebody saw this coming when they made it impossible to file bankruptcy.

Subject: RE: BS: Fed Rate Cut
From: The Fooles Troupe
Date: 20 Sep 07 - 07:35 AM

Ha! A Loan Shark Spam! Finally attracted to the scent of blood!

Subject: RE: BS: Fed Rate Cut
From: Donuel
Date: 20 Sep 07 - 08:40 AM

Instead of being accurate and precise...let me just say what the Fed cut WILL DO




This FED cut is projected to bail stock prices
and also help nearly 70,000 people who would otherwise lose their homes due to sky rocketing ARMs leading to foreclosure.

It will not help the other 1.2 MIllion people who face foreclosure this coming year.


The LAST Time the Bush's were in charge they robbed ALL the Savings and LOan Banks.

The Bush family is a front for a pack of thieves who rob banks because

thats where the mney is.

Subject: RE: BS: Fed Rate Cut
From: Donuel
Date: 20 Sep 07 - 08:58 AM

When people started putting their money into homes that they thought would continue to rise in the (manufactured) bubble, the banks KNEW they were going to become Lucy and pull back the football before Charlie Brown could kick it.

The money is now in homes but the banks bit off more than they could chew and may end up owning stuff they can not sell and lose their liquid assets.

Hedge funds who bought mortage derivitivies are also losing big time.
The super wealthy will get their mondy back but it will take up to 1o years. By that time everyone who could lose a home will.

Subject: RE: BS: Fed Rate Cut
From: Becca72
Date: 20 Sep 07 - 09:36 AM

I guess my only comment is about the bar being "raised" on who qualifies for a mortgage. It's not being "raised" per se, but rather is being brought back up to where it was, say, 5 or 6 years ago after being lowered enough so pretty much anyone with an inkling to could buy a house.

Subject: RE: BS: Fed Rate Cut
From: dick greenhaus
Date: 20 Sep 07 - 09:48 AM

One thing that nobody seems to mention is that while the lowered Prime benefits investors, it penalizes those who are trying to save money.

Subject: RE: BS: Fed Rate Cut
From: skipy
Date: 20 Sep 07 - 10:51 AM

There are 279 anagrams for "fed rate cut",
on is    Faceted Rut.
Skipy

Subject: RE: BS: Fed Rate Cut
From: Amos
Date: 20 Sep 07 - 11:26 AM

Dick:

It is intended to stimulate commerce and corporate growth, which is good for those trying to save money by investing. Straight savings accounts have always been on the bottom tier of the rates ladder, except when money was incredibly tight.

A

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 20 Sep 07 - 11:51 AM

'I guess my only comment is about the bar being "raised" on who qualifies for a mortgage. It's not being "raised" per se, but rather is being brought back up to where it was, say, 5 or 6 years ago after being lowered enough so pretty much anyone with an inkling to could buy a house."

          Becca - That's true, but the whole thing really started running off the tracks when the truth in lendling laws were scrapped shortly after Ronald Reagan took the helm.

          These debacles always seem to require the lower-middle tax payers and working poor to bail them out.

Subject: RE: BS: Fed Rate Cut
From: Becca72
Date: 20 Sep 07 - 12:04 PM

I don't know about other places, but here in Maine a transaction went nowhere until the TIL form was approved during the 3 + years I worked in real estate (until January of this year).

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 20 Sep 07 - 03:29 PM

Becca - What's the TIL form?

Subject: RE: BS: Fed Rate Cut
From: Becca72
Date: 20 Sep 07 - 03:34 PM

The Truth In Lending Form.

I will grant you that in 1980 I was 8 years old and have no idea what happened under the Regan administration...but signing the TIL is essential for real estate closings here.

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 20 Sep 07 - 04:38 PM

It was scrapped completely in Oregon. That's when credit cards started charging 30%, and upping their rate based on things like whether somebody was late paying their auto insurance, or if the got laid off from work, or all kinds of things that didn't have anything to do with the account with the direct lender.

                It also allowed lenders to speed up forclosures--they didn't have to advertise the sale as long, and the notification process was speeded up, and etc.

                  For a lot of farmers in the mid-west, I know, it was a financial disaster.

Subject: RE: BS: Fed Rate Cut
From: TRUBRIT
Date: 20 Sep 07 - 05:47 PM

And no body understands a darn word of it.....it terrifies most people....this stuff is complicated and whenever the government steps in to simplify, it gets worse.......

Subject: RE: BS: Fed Rate Cut
From: The Fooles Troupe
Date: 21 Sep 07 - 08:43 AM

"a pack of thieves who rob banks because thats where the money is."

Hey! that's what Jesse James said when they asked him why he robbed banks!


As to 'banks owning a lot of houses' - well on a very recent TV doco here - it showed that once a house was surrendered - the people moved out (dunno to where, but whole parts of suburbs were evicted) and the houses were then stripped of alum cladding, bot water systems, copper piping, etc. Within a short time, the place is condemned - and bad enough to be bulldozed.

So the banks only 'own the land' and a pile of decaying junk...

Subject: RE: BS: Fed Rate Cut
From: GUEST,petr
Date: 21 Sep 07 - 06:19 PM

its nice that you can deduct interest payments /
you sure cant do that in Canada.

Bush has the biggest debt than all the past presidents but has made no attempt to pay it off by raising taxes .. So the housing bubble was intended to stimulate the economy and construction industry (thanks to low rates and easy credit)

so now the US$ is down even more (and here - in Canada- the big story is that the Can $ has reached parity - etc.. although whats really happening is that this is the Empires way of passing on the costs of its overspending and the Iraq War to the rest of the world)

Subject: RE: BS: Fed Rate Cut
From: Riginslinger
Date: 21 Sep 07 - 09:20 PM

"...its nice that you can deduct interest payments /"


               petr - In the end--though I suppose the end isn't quite here yet--it wasn't nice at all. What happened was this: the only interest one could deduct on taxes, barring businesses, was interest on mortgages. The people who were having to pay rent on a house really took it in the shorts every April 15th. That's probably the main reason people were motivated to try to buy a house, even if they really couldn't afford it.
               The other element in all of this was the fact that folks who, say, wanted to buy a new car could get a second mortgage on their home, and they could deduct the interest on that mortgage as well. Then they started buying boats, motorcycles, trips abroad, custom built hunting rifles, vintage guitars, motor homes, and Jeeps to pull around behind them, and..
               Once interest rates went up just a little bit, a lot of people found themselves in really deep shit. And once those people bailed, it put more pressure on the others, and then they had to bail, and...

               When this whole thing started gaining steam after the dot-com boom in late 2000, you could have scraped any old wino up off the sidewalk in, perhaps, Bohunk, Indiana, and he could have told you that what we're experiencing now was exactly what was going to happen. Unfortunately, out elected public officials couldn't figure it out.