Sorry such a late response. Your analogy of Wonderful Life is accurate, but as an analogy for what is going on now is too long to be pounding over anyones head. Your points after though are spot on. I was just ribbing you a little, since I mention 30 second sound bites (which is about all the time you have to get your point across to the masses without losing their attention) a movie wouldn’t cut it. But this:

“Now allow me to shed some light on the financial meltdown that many do not understand. Foreclosures are not new in real estate. What is different today is that the home values artificially inflated between 2004-2006 to astronomical and unsustainable values.

Before, when you had a guy who had a 100% loan on a $300K valued home, and he defaulted, you booted him out and put in a buyer for that $300K home. All the bank had to eat was the foreclosure costs… perhaps $5-11K if including an attorney, auction, etal.

Now, because the homes are so overinflated, you can’t do that. The guy is sitting on a $300K mortgage for a home that is valued at $225-250K. The banks already put out that extra money, and they can’t replace it with another buyer for the same money. Now they’re eating not only the foreclosure costs, but also the lost equity from overinflation.

Now multiple that problem by lots of 100% buyers in ARM loans (and it’s majority ARMs that lead to the problem, not even the subprime fixed)

I suggest that if the home values had *not* overinflated, we would not be having this problem. Bad buyers would merely be replaced with good buyers.

There’s nothing wrong with 100% loans, as long as the home is a reasonable value, based on what normal equity would be with historic annual appreciation. There’s also nothing wrong with ARMS during a transition period. But banks have to establish their own guidlines for these ARMS… meaning for those, perhaps they need to require an appropriate down payment to insure their equity in the home is covered by value.”

This in 30 second informercials would do wonders…for starters. Or even Economics 101 in 30 second bites. We have to learn to get our brand out to an informed voter, the MSM has for a reason reduced comprehension to a 5th grade level. They can then tell you what they think you need to know on a bumper sticker.

http://tinyurl.com/44bo7v

Tom

And I could not agree more wholeheartedly that too much government dabbling has been the cause of this debacle. I have friends on both sides of the aisle. The ones on the left? I know why they are advocating for more govt control. They are hooked that concept as being the end all-be all cure.

But when I hear my conservative friends start advocating for more govt interference, I know there’s a real lack of concept going out there.

Frankly, a 30 sec soundbyte/commercial wouldn’t even scratch the surface of the financial/mortgage events as they came down. It was like a perfect storm… Fannie/Freddie cooking books and running amok, lenders bending over backwards with no doc, low doc, stated income loans in order to appease the “disciminatory predator” impression Congress had… then topped off with such low interest rates (in combo with these vast number of loan packages) that buyers could buy “more” house, so sellers and real estate agents raised the prices to astronomical levels.

I watched it happen before my eyes, and I swear I had to keep pinching myself… was this really happening with absolutely no one figuring out the end result?

But… and my crystal ball IS dusty… I do believe the bottoming out will be this winter, and by next spring the real estate world will stabilize. And that is the key to the rest stabilizing. Jus’ an opinion. Nothing more. And yup… I could be wrong. But I hope not.

No offense, your preaching to the choir.

I think you make some very great points. I especially like this;

“But that’s a bank’s decision… not the federal government’s”

That is the exact problem, most of the economic problems right now are the symptom of too much government regulation rather than market forces. My point of being able for the GOP to explain this distinction in a 30 second sound bite still is valid.

Look, a’hole. I was civil to you. But thanks for so easily showing your true colors… civility is something I will show you no longer.

The movie is an analogy that even the simplest of minds… read *you*… should be able to see. Apparently, I was wrong and gave you too much credit.

In the real world, there is room for both banking styles… depending on the banks workable assets and risks. However willing choose the over regulated way as the sole measure of mortgage loads will take a sagging economy further into the depths.

Now blow it out your ear. ’tis the last I will give you posts a nanosecond of attention.

I’d be all in favor of a 30 second ad (and I’ve got an idea I am working on) along with the more detailed history that I have been attempting to present.

There is so much on this issue we could write a book. The question is whether anyone would want to read it.

P.S. Adrian is right. The funny business on the energy bill is just as bad. I’d like to cover that too but am overloaded with the crisis du jour.

It’s only a movie!

halfacarafe, be careful what you wish for. Do you remember the movie, “It’s a Wonderful Life”? Where the bad guy Potter bank was orchestrating a hostile takeover of the good guy George Bailey bank?

The Potter bank had strict guidelines, and anyone who didn’t meet them couldn’t build a home, and the community couldn’t thrive. The Bailey bank looked at the individual, and their character and history. He loaned on people.

Now that’s a generalization, but somewhat the same is happening today. And trust me, you do not want the Congress dictating to banks who they can and cannot give loans to based on little criteria check boxes.

If they clamp down on the flow of cash too tight for refi’s and purchases, the community cannot thrive. It affects construction jobs, retail, etal. In today’s world, you’ll have a hard time getting a refinance if your income is declining (and for many, it is because of the tight money). Or if you don’t have enough down payment.

Now allow me to shed some light on the financial meltdown that many do not understand. Foreclosures are not new in real estate. What is different today is that the home values artificially inflated between 2004-2006 to astronomical and unsustainable values.

Before, when you had a guy who had a 100% loan on a $300K valued home, and he defaulted, you booted him out and put in a buyer for that $300K home. All the bank had to eat was the foreclosure costs… perhaps $5-11K if including an attorney, auction, etal.

Now, because the homes are so overinflated, you can’t do that. The guy is sitting on a $300K mortgage for a home that is valued at $225-250K. The banks already put out that extra money, and they can’t replace it with another buyer for the same money. Now they’re eating not only the foreclosure costs, but also the lost equity from overinflation.

Now multiple that problem by lots of 100% buyers in ARM loans (and it’s majority ARMs that lead to the problem, not even the subprime fixed)

I suggest that if the home values had *not* overinflated, we would not be having this problem. Bad buyers would merely be replaced with good buyers.

There’s nothing wrong with 100% loans, as long as the home is a reasonable value, based on what normal equity would be with historic annual appreciation. There’s also nothing wrong with ARMS during a transition period. But banks have to establish their own guidlines for these ARMS… meaning for those, perhaps they need to require an appropriate down payment to insure their equity in the home is covered by value.

But that’s a bank’s decision… not the federal government’s.

Also there are many who are in their homes on 100% FHA/Ameridream loans who have not defaulted. These loans are not the culprits. It was primarily subprime ARMS for 100% loans.

But to give you an example of overinflation… if an area where the average selling price was $420K in summer 2008, and a usual 6% annual equity increase, it would be worth approx $530K this summer if the housing “boom” never happened, and life rolled along as usual. I can cite an area of Portland that are those very numbers, and yet the homes are still averaging a sale of $549,500 now.

So while many moan and groan they are losing money, the fact is the market is merely correcting, as it should do. And despite the housing “crash”, they have enjoyed normal appreciation. But, as you see in the area stats I quoted above, it’s still overinflated for the norm. Prices still need to come down further. Otherwise no one can afford a home. We need to get back to the realistic levels, based on incomes, cost of living indexes, etc.

Also, money needs to flow. So I’d suggest to those in DC that don’t seem to know what to do is wait out the home value drops until they return to the normal, historic appreciation value, drop the interest rate, and lighten up on the credit standards. Also, more layman language on mortgage loan disclosures. We have TIL, RESPA and GFEs already mandated. But many don’t equate that to simple “see spot run” language.

America will get our entrepreneurial engine going again. But not if a socialist takes the WH and decides to be the “fixer” of American capitalism by taxes and income distribution. Congress messed it up already by demanding more minority loans, and crying “discrimination”. So the lenders started lending more to minorities, who also happened to be a higher risk for income/credit-debt ratios. They overbought in a home because of low rates on an ARM.

The media will bury McCain and the Republicans unless the Republicans put out a lot of adds telling the public the truth. You can’t count on the media to air McCain’s message. You can surely count on the media airing and repeating Kickback Barry Hussein’s disgusting and easily rebutted lies endlessly.

The Republicans and Bush’s popularity tanked because they were afraid to tell the whole truth , not just the politically correct truth acceptable to the elite media.

The Dummycrats seized their advantage because the Pubs were afraid to call the Dems on the the Dems lies.

Time to finally call the Dems on their lies!

The Pelosi’s and the Obama’s of this country are simply orchestrating a concert to fill the ears of Americans with what should be caution, but yet it is the joy of Democrats — country first is foreign to these Democrats; they would rather see our economy screwed in their to attempt a win.

Fortunately there is an option, vote for John McCain and Sarah Palin; proven reformers and a genuine source of hope.