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This is the craziest mortgage scheme I’ve ever seen

Discussion in 'Topical Discussions (In Depth)' started by JayDubya, Oct 11, 2017.



  1. JayDubya

    JayDubya Platinum Bling Platinum Bling

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    This is the craziest mortgage scheme I’ve ever seen

    October 11, 2017

    Santiago, Chile


    The Great Financial Crisis happened because Wall Street was financing homes for people who couldn’t afford them.

    Leading up to the GFC, there was a voracious appetite from investors for “AAA”-rated mortgage debt. So lenders would make lots of loans to subprime borrowers and sell them to Wall Street. Wall Street would pool them together and one of the major ratings agencies (like Moody’s or Standard & Poor’s) would stamp the steaming pile of garbage with AAA.

    AAA by Moody’s definition means the investment “should survive the equivalent of the U.S. Great Depression.” In other words, it’s rock solid.

    The reasoning was that one subprime mortgage was risky. But if you bundled thousands together, you get AAA… Because they couldn’t all go bad at once. And, hey, you can’t lose money in real estate.

    The rating agencies weren’t as dumb as they appeared, though… Investigations following the crisis showed lots of incriminating emails, like this one from a Standard & Poor’s exec:

    “Lord help our fucking scam . . . this has to be the stupidest place I have worked at.”

    Like everyone else, they played along because they wanted to make money.

    To generate enough mortgages to meet demand, lenders would do anything…

    – Sell a house for no money down

    – Offer a teaser rate (which temporarily reduces monthly payments, then jumps to market rates)

    – And even offer to pay part of your mortgage for a couple months (most small lenders could sell a loan to Wall Street in a month or two, erasing their liability. If the origination payment was more than cash out of pocket, they still came out ahead).

    They called the worst of the subprime loans “NINJAs” as in “No income, No job, No assets.”

    When they couldn’t actually write enough mortgages to meet demand, Wall Street got creative. They started bundling together bundles of mortgages, something called a CDO-Squared. Then they created synthetic CDOs, which were just derivatives of subprime mortgages and even other CDOs (essentially a way for people to gamble on the mortgage market without actual mortgages).

    As we all know, it ended in disaster… because the people who took out the mortgages they couldn’t afford to buy overpriced homes stopped paying. And the CDOs, CDOs-squared and synthetic CDOs (which had been spread around the world) went bust.

    Remember, it all started with selling people homes they couldn’t afford. Which brings me to today…

    There’s a record high $1.4 trillion of student debt in the US. And millennials are struggling to pay off those balances.

    The National Association of Realtors polled 2,000 millennials between the ages of 22-35 about student debt and homeownership… Only 20% of those surveyed owned a home… Of the 8 in 10 that didn’t own, 83% of them said student debt was the reason. And 84% said they’d have to delay a home purchase for years (seven years being the median response).

    And that’s all bad for the home-selling business. Once again, the lenders are getting creative…

    Miami-based homebuilder, Lennar Homes, recently announced it would pay a big chunk of a student loan for any borrower buying a home from them.

    Through its subsidiary Eagle Home Mortgage, the company will make a payment to a buyer’s student loans of as much as 3% of the purchase price, up to $13,000.

    Debt has become such a keystone of our society, that the only way we can afford something is to swap one type of debt they can’t afford with another type of debt.

    A recent study by the Pew Charitable Trust showed 41% of US households have less than $2,000 in savings – a full one-third have zero savings (including 1 in 10 families with over $100,000 in income). Another study showed 70% of Americans have less than $1,000 in savings.

    The point is, America is broke… A single, surprise expense like a flat tire or a doctor’s visit would wipe most people out.

    And it’s only getting worse.

    Back in August, I calculated the average household account at Bank of America (which has $592 billion in consumer deposits from 46 million households)… It’s only $12,870 per household… And that includes savings, investments, retirement… EVERYTHING...And that’s lower than it was in 1997.

    Also keep in mind, that’s the average… So accountholders with huge balances skew the numbers higher.

    It’s no wonder Americans have $1.021 trillion in credit card debt – the most in history.

    Auto loans are also at a record high $1.2 trillion.

    And let’s not forget the US government, which is in the hole more than $20 trillion. The US’ debt is now 104% of GDP… And total debt has grown 48% since 2010.

    The liability side of the balance sheet keeps expanding. Meanwhile assets and productivity aren’t keeping up.

    But people continue buying homes, cars, TVs and college educations by taking on more and more debt… And now, by swapping one type of debt for another.

    Wealth is built on savings and production. Not on playing tricks with paper and going deeper into debt.

    I can’t tell when this house of cards falls. But rest assured, it will come tumbling down.

    Will you be ready when it does?
     
  2. Treasure Searcher

    Treasure Searcher Platinum Bling Platinum Bling

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    Where I live, foreclosure sales are not going well for foreclosed housing. Banks and finance companies overextended themselves on housing for credit unworthy borrowers. You guessed it, the borrowers quit paying on their loans and the property is sitting there rotting. The banks and finance companies try to auction it off now and then, but the properties will not sell for what is the borrowed amount (plus interest, late fees, etc.).
     
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  3. Goldhedge

    Goldhedge Moderator Site Mgr Site Supporter

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    I have a problem with reverse mortgages.

    They sound like the perfect solution for the elderly...but there's always a catch...
     
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  4. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    Mort-gage = Death-pledge.

    They are all mind boggling crazy fraud.
     
  5. mayhem

    mayhem Silver Member Silver Miner Site Supporter

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    I really don't think the banks care. All that mula was printed out of thin air anyway. The shock will come when it takes 1m FRN's to get one $10 treasury bill.
    In the old days mort's were made out of folks savings so it mattered. Today it's just funny money.
     
  6. Ensoniq

    Ensoniq Midas Member Midas Member Site Supporter ++

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    Hiding worthless securities in a delberately non understandable instrument should be considered fraud

    The good old 20% down standard worked for a bunch of years for a reason

    Ya just can't start with the premise that everyone deserves to own a home

    Ninja - lol
     
  7. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    The whole bank title system needs to be scrapped. Completely scrapped. AS it is, any title is split, that is, any title goes thru the bank for financing, nearly all of them, those fucks actually give themselves legal title to the property you are purchasing, using your money, and legal words of deception, you get equitable title, right of use, until, of course, the bank wants it back.

    Think you actually own something that the gov (actually the bank in their most efficient guise) demands you pay tribute, in the form of yearly house taxes. And what happens if you don't.

    This incredibly fraudulent system has been in place for so long that the great majority don't have a clue. There is Allodium, a true title system.
     
  8. Po'boy

    Po'boy Midas Member Midas Member Site Supporter

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    A jubilee is needed of course economic destruction will be the option chosen.
     
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  9. Buck

    Buck Fabian Society Gold Chaser

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    A very simple calculation we can perform (at the moment of writing this article) is dividing the median sales price of a home in the USA by its 1963 ($17,800) price in silver and gold versus its 2016 silver or gold price.

    It cost 71,200 silver 90% quarters or 178,000 silver 90% dimes to buy a median price home at the start of 1963. That equates to 12,816 oz of silver per median priced home.

    In the beginning quarter of 2016, a median priced home in the USA cost $312,800 USD while silver averaged about $15.21 oz. That means a median priced home in the USA cost about 20,565 oz of silver. Thus over the measured 53 year time span median priced homes had gained 60.4% in value versus silver.

    https://www.jmbullion.com/investing...-house-to-silver-ratio-us-home-to-gold-ratio/


    Prices are up, loans are up, foreclosures are up, new building is a bit of everything but robust, truly qualified borrowers are down, rehabilitations are up (if only because of storm damage? IDK), flipping houses is still up in some regions, the number of renters is up (while the number of owners is down, yet loans are up??), the economy is doing well yet no one seems to be getting any payraises


    begins to make no sense and to me
    that doesn't really qualify as being a very transparent market on the surface
     
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  10. Treasure Searcher

    Treasure Searcher Platinum Bling Platinum Bling

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    Another issue with home mortgages, is the standard 20 year mortgages are now for 30 years. Additional 10 years of slavery.
     
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  11. SilverCity

    SilverCity Gold Member Gold Chaser

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    We requested a 30 yr. fixed @ 5% with over 1/3 down. We could pay it off tomorrow (or Monday) if I so choose, and may yet in the next year or two. Our payments are still much cheaper than rent.

    YMMV

    SC
     
    Last edited: Nov 24, 2017
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  12. Joe King

    Joe King Gold Member Gold Chaser

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    That's because they haven't actually purchased it yet. That happens at time of final payment of the principal.

    Answer me this. If someone unrelated and previously unknown to you were to buy a $20,000 car from you with the agreement that they will pay you $5,000 per year until it is paid off, would you transfer full Title to them in exchange for the first payment? Keep in mind that if you do so, you are giving them the power to re-nig or their promise to pay.
     
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  13. latemetal

    latemetal Platinum Bling Platinum Bling

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    Allowing the banks to sell the mortgages is what lead to this mess, 5% down works as well as 20% if the bank knows it eats the bad loans.
     
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  14. Joe King

    Joe King Gold Member Gold Chaser

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    To be fair, if that were to happen we shouldn't let the buyer sell prior to the mortgage being paid off either. If it's ok for the buyer to sell, it should be ok for the financier to sell his stake in the house too.
     
  15. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    Ah no. I don't answer questions posed by a bootlicking sycophants for the banksters.
     
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  16. Joe King

    Joe King Gold Member Gold Chaser

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    Whatever. Calling names just shows you can't support the positions you take.

    Just keep thinking it possible to own something prior to paying for it. Ie: you expect to have full Rights to that which others actually own.
    We have a name for people who think they have Right to the property of others. Can you guess what that word is? lol


    Pay your payments and be glad someone thought you credit-worthy and trust-worthy enough to allow you to purchase it over a 30 year period while acting as though you actually own it. Truth is, you're merely in the process of buying it.
     
  17. Ensoniq

    Ensoniq Midas Member Midas Member Site Supporter ++

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    5% is too low in my opinion

    A little market fluctuation and the mortgage could go upside down and remove the pain of walking away

    With 20%, the mortgagee has real skin in the game. It's not easy getting 20% down payment together, which tends to weed out the higher risk borrowers

    Certainly takes the incentive away from the bank to approve high risk applicants knowing they'll just bundle them up (obscure them) and flip the, to another sucker (the taxpayer) before they blow
     
  18. Irons

    Irons Deep Sixed Site Supporter Mother Lode

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    Your best bet is to limit any and all contact with banks. Sure some debt is necessary from time to time but always have a set time frame to be back out of debt. Back when the world was young and we all had real jobs I bought and paid off a $19,000 boat in less than one year. That was fun!
     
  19. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    :tired:

    And yet again, you lie about any positions I take, or what I truly believe, in order try and ameliorate the destruction of the policies you bankster sycophants are wrecking in this country.
     
  20. latemetal

    latemetal Platinum Bling Platinum Bling

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    And there is the problem, since the bankers knew they were not going to hold the loans, anybody with a pulse got one or more...as to selling early, if the bankers get paid off or transfer the loan, they are still happy as a pig in shit
     
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  21. latemetal

    latemetal Platinum Bling Platinum Bling

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    This I like now that I'm a little older/wiser, why pay any interest if you can avoid it.
     
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  22. Joe King

    Joe King Gold Member Gold Chaser

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    They allow you to act as though it is yours. Ie: allow you to play house.
    ....and part of that is putting your big pants on and paying the tax you agreed ahead of time to pay. You chose where to buy the house, right? Why'd ya choose a place with higher taxes?


    Exactly. Either you're serious about or you're not. 20% down says "I'm serious about doing this."

    Winner winner chicken dinner!

    No, I believe you posted.....
    Purchasing, or purchased? Big difference. One denotes full ownership, the other denotes an arrangement wherein other parties want to be ensured that the purchaser actually follows through with the purchase.

    Again, would you transfer to someone full title to a car they hadn't yet paid you in full for?


    That is a very valid point. Just as borrowers need to have skin in the game, so do the lenders IMHO. If they can't police themselves and not write bad loans, they should probably be stuck with them.
     
  23. Someone_else

    Someone_else Gold Member Gold Chaser

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    This is part of the closing process. If there is a remaining mortgage, the first lender gets paid off when the sale is complete.
     
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  24. Irons

    Irons Deep Sixed Site Supporter Mother Lode

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    Yep, I still have the boat too!

    .
     
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  25. Mujahideen

    Mujahideen Black Member Midas Member

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    It depends on what you’re buying... if you’re using other peoples money to make money then it makes sense.

    If you’re buying a home and the mortgage is cheaper than what rent would be it makes sense.
     
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  26. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    Payment in full. Now that is funny. Thank you for the fantasy. Ha Ha Ha...
     
  27. Area51

    Area51 Silver Miner Seeker

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    It was a brilliant charade. Everyone involved - - realtors, mortgage brokers, bankers - - were making money hand over fist.

    Even the suckers who got duped into buying the bubble were making crazy money - - putting ZERO down on a $250k property and in six months it's "worth" $400k on paper.

    And then, as with all bubbles, the music stopped and the party was over.
     
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  28. Joe King

    Joe King Gold Member Gold Chaser

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    Yes. I asked you if you would give clear title to a car you were still accepting payments on.

    Let's say you have a car with clear Title and you want to sell it for 2000 apples. Someone wants to buy it, but they only have 500 apples. So you offer to let them pay you 500 apples per Month for four Months.

    The question is, would you give them clear Title to the car upon receiving the first payment and just trust that they would pay you the other 1500 apples?


    You expect them to give you clear title prior to fully paying off your loan? This is why I asked if you would do for others what you want others to do for you. Ie give clear Title prior to completion of the terms of purchase.
     
  29. Area51

    Area51 Silver Miner Seeker

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    Same thing is happening again with subprime auto loans.
     
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  30. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    payments / title

    you say it's this way.

    you're defining the terms.

    that's the problem, you always want to define the terms,

    And you're wrong. You can't define the terms.

    in your case it's i assume to confuse others, the way you want folks to understand, so that you and your kind can steal as much as you and your bankster bretheren can get away with
     
  31. Joe King

    Joe King Gold Member Gold Chaser

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    The point is that if a person has a mortgage through a bank, that means they applied for it. There are terms to a mortgage. If the buyer doesn't agree with them, they shouldn't sign on the dotted line just to complain later that they don't think they should have to hold up their end of the bargain. There is the option of saving up and paying cash ya know. Then you get clear Title. You were complaining about not receiving clear Title prior to fulfilling your end of the bargain. If you take out a loan denominated in frn's, you gotta pay back in that. Sorry, but that's the way it works.
    Don't take out loans denominated in frn's if it's such an issue. Use apples instead. Or btc perhaps. No bankers there, you'd be happier.


    I'm just looking at it as it is. If you agree to make payments, you shouldn't get clear title until the last whatever you agreed to pay in, is fully paid. Be it frn's or apples or btc or gold or anything else you may have agreed to.
     
  32. andial

    andial Sir Midas Member Site Supporter ++

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    Well summed up guess their isn't anything else to add.
     
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  33. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    This could be a good deal. Cannot go bankrupt on student loans but can on mortgages. Trade one for the other and file bankuptcy and you can get free. Now they need one that trades medical debt too.
     
  34. solarion

    solarion Gold Member Gold Chaser Site Supporter

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    It's a good deal for people that want useless garbage degrees issued from fool skool anyway. People that behave like financially lemmings tend to continue to do so though, so even if they do manage to offload their debt obligations, they're likely to just rack up some more.
     
  35. Po'boy

    Po'boy Midas Member Midas Member Site Supporter

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    They damn sure won't tell or sell vivages aka life pledges.

    Banker's and Satan have a lot in common.
     
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  36. Po'boy

    Po'boy Midas Member Midas Member Site Supporter

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    Who would loan them more credit from thin air?
     
  37. southfork

    southfork Mother Lode Found Mother Lode

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    ((A recent study by the Pew Charitable Trust showed 41% of US households have less than $2,000 in savings – a full one-third have zero savings (including 1 in 10 families with over $100,000 in income). Another study showed 70% of Americans have less than $1,000 in savings.))

    And the dow is over 24K, what has changed from 9 plus years ago to justify it coming back from 7ks
     
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  38. Po'boy

    Po'boy Midas Member Midas Member Site Supporter

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    Faith in fiat.
     
  39. solarion

    solarion Gold Member Gold Chaser Site Supporter

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    Trick question? A bankster peddling a NINJA loan?

    All it takes is for consequences to be removed and banksters act like crooked soulless lemmings. Consequences go away when goobermint "guarantees" loans. Look at all the ignorant fools that mistakenly believe "their" savings accounts are safe....because FDIC.
     
  40. Po'boy

    Po'boy Midas Member Midas Member Site Supporter

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    No trick you nailed it.

    Two to tango fueled by greed backed up by the American taxpayers.
     

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