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Banned
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Originally Posted by aceventura3
Host,
There is a difference between my approach to a subject and yours. I understand your approach, and that is o.k. because it is grounded in the way people are taught in school.
Often, your research and citations have major fallacious arguments and disconnects with logic and reason. My approach is socratic and doesn't lend itself to blindly reporting the opinions and views of so-called experts or anyone for that matter.....
http://www.tfproject.org/tfp/showpos...58&postcount=3 |
ace....I quoted you because your comments remind me of what Greenspan had to say about the <i>"Evolution of the Consumer Finance Market"</i>, less than two years before the "subprime" portion of it, imploded, almost overnight. I read Greenspan's 2005 comments, and I read your comments, and jorgelito's, too....and I have the same reaction to the comments of all three of you....what WERE you thinking....where, on earth, did you get "that stuff"?
ace, jorgelito, and host have all had an opportunity to "paint" their respective opinions on the state of...and the prospects going forward...of the US economy. It is, as it always is here, a competition of the presentaion of ideas and opinions. There are few things that are of greater concern to me than the looming, and probably imminent, economic depression that I see unfolding in front of us. The complacency of those who posted in disagreement is displayed on the same forum pages, in sharp contrast to my presentation.
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Originally Posted by jorgelito
Can you please post a source for the Jennifer Love Hewitt underwear ad? Better yet, multiple sources and visual aids so we know what you are talking about and also from a good mix of liberal and conservative sources so that your "facts/opinions" will be well-backed and balanced.
No need to use the "hide" function either. Feel free to bold or highlight areas of "interest" or if you think we can't read the articles for ourselves or if you just want to selectively highlight text that supports your reasonong behind why the Jennifer Love Hewitt underwear ad is great and thus take it out of context and don't forget to cite some previous threads or posts and while you're at it you can quote UsTwo also just to make sure all your bases are covered.
http://www.tfproject.org/tfp/showpos...37&postcount=7 |
.....fair enough....you read what I've posted....or not.....nothing that follows in this post is highlighted text, but.....I find all of this information...especially Greenspan's "disconnect", and the folly of lending unqualified borrowers 100 percent, $700k "home mortgages", for the purpose of supporting ridiculous "bubble level", residential real estate "valuations", that rose into the stratosphere on earlier stages of the same wave of liquidity, eagerly loaned to borrowers who qualified because they were able to "fog a mirror"....."highlights" of my argument that they economic decline will be a proportional reaction, both in duration and intensity, to the excesses that enabled the accumulation of $4.7 trillion in new mortgage debt in the US, in just six years. The debt (malinvestment) remains to be paid, and the constantly added liquidity required to even maintain real estate valuations at current levels, is now absent, in a system driven by lending that could only be justified, by the ever rising prices that the profligate "easy credit", guaranteed to perpetuate.
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http://www.federalreserve.gov/BoardD...08/default.htm
Remarks by Chairman Alan Greenspan
Consumer Finance
At the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, Washington, D.C.
April 8, 2005
.....Evolution of the Consumer Finance Market
A brief look back at the evolution of the consumer finance market reveals that the financial services industry has long been competitive, innovative, and resilient. Especially in the past decade, technological advances have resulted in increased efficiency and scale within the financial services industry. Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country.
From colonial times through the early twentieth century, most people had quite limited access to credit, and even when credit was available, it was quite expensive. Only the affluent, such as prominent merchants or landowners, were able to obtain personal loans from commercial banks. Working-class people purchased goods with cash or through barter, since banks did not make consumer loans to the general public.
However, more-intense industrialization and urbanization during the late nineteenth and early twentieth centuries dramatically changed the market for small consumer loans. Urban wage earners used credit to help them purchase the vast array of durable goods being produced by the new industrial economy, such as automobiles, washing machines, and refrigerators. Naturally, this growth in demand fostered increased competition for consumer credit, and, most important, the development of new intermediaries to supply it. Early in the twentieth century, many new organizations that focused exclusively on the needs of consumers entered the field, and the structure of consumer finance began to change dramatically......
........The Impact of Technology on Financial Services Markets
As has every segment of our economy, the financial services sector has been dramatically transformed by technology. Technological advancements have significantly altered the delivery and processing of nearly every consumer financial transaction, from the most basic to the most complex. For example, information processing technology has enabled creditors to achieve significant efficiencies in collecting and assimilating the data necessary to evaluate risk and make corresponding decisions about credit pricing.
With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. The widespread adoption of these models has reduced the costs of evaluating the creditworthiness of borrowers, and in competitive markets cost reductions tend to be passed through to borrowers. Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s.
For some consumers, however, this reliance on technology has been disconcerting. Credit-scoring models are complex algorithms designed to predict risk. Consumer advocates have raised concerns about the transparency and completeness of the information fit to the algorithm, as well as the rigidity of the types of data used to render credit decisions. Consumer advocates contend that the lack of flexibility in the models can result in the exclusion of some consumers, such as those with little or no credit history, or misrepresentation of the risk that they pose.
To address these concerns, some firms have worked to customize credit-scoring systems to include new data and to revalue the weight of the variables employed. Also, new organizations have emerged, developing new systems for collecting alternative data, such as rent payments and other recurring payments that will enable creditors to evaluate creditworthiness of consumers who lack experience with credit.
Improved access to credit for consumers, and especially these more-recent developments, has had significant benefits. Unquestionably, innovation and deregulation have vastly expanded credit availability to virtually all income classes. Access to credit has enabled families to purchase homes, deal with emergencies, and obtain goods and services. Home ownership is at a record high, and the number of home mortgage loans to low- and moderate-income and minority families has risen rapidly over the past five years. Credit cards and installment loans are also available to the vast majority of households.
The more credit availability expands, however, the more important financial education becomes. In this increasingly competitive and complex financial services market, it is essential that consumers acquire the knowledge that will enable them to evaluate products and services from competing providers and determine which best meet their long- and short-term needs. Like all learning, financial education is a process that should begin at an early age and continue throughout life. This cumulative process builds the skills necessary for making critical financial decisions that affect one's ability to attain the assets, such as education, property, and savings, that improve economic well-being.
Conclusion
As we reflect on the evolution of consumer credit in the United States, we must conclude that innovation and structural change in the financial services industry have been critical in providing expanded access to credit for the vast majority of consumers, including those of limited means. Without these forces, it would have been impossible for lower-income consumers to have the degree of access to credit markets that they now have.
This fact underscores the importance of our roles as policymakers, researchers, bankers, and consumer advocates in fostering constructive innovation that is both responsive to market demand and beneficial to consumers.
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http://www.latimes.com/business/la-f...7.story?page=2
Loan turmoil closes doors for buyers
Mortgage terms are tightening as more sub-prime borrowers default and lenders reel.
By Annette Haddad and E. Scott Reckard, Times Staff Writers
March 10, 2007
ShaRon Lewis is facing a 50% hike in the payment on her adjustable-rate mortgage next month.
This week, she discovered she can't qualify for a new loan with payments that she could afford.
And although she's willing to sell the West Hills home she's owned for two years, she has been told it won't fetch what she paid for it. "I have to laugh to keep from bawling," the 30-something Lewis said.
Her situation is becoming increasingly common across the country amid the implosion of the business of sub-prime mortgages — loans for people with less-than-perfect credit or no credit histories.
Many would-be home buyers, and homeowners who want to refinance, are finding that virtually overnight their status has changed: They no longer are eligible for the kind of easy-credit loans that helped millions of people join the ranks of property owners during the housing boom.....
......As recently as two months ago, consumers could qualify for a home-purchase loan or a refinancing even if they had low credit scores and no cash for a down payment. Not anymore.
"You're back to real credit standards," said Scott Simon, a mortgage expert and money manager at Pacific Investment Management Co. in Newport Beach.
In effect, the industry and new borrowers are paying the price for what many critics say were absurdly generous lending terms in recent years. In 2005 and 2006, mortgage brokers would joke, "If you can fog a mirror, you can get a home loan."
Sub-prime loans mushroomed from $213 billion nationally in 2002, or 7.4% of all mortgages, to $665 billion in 2005, a 21.3% market share, according to trade publication Inside B&C Finance.
The volume in 2006 was $640 billion, or 21.5% of all mortgages — a level regulators and analysts say was achieved by loosening loan standards amid brutal competition as home sales began to slide.....
......Now, sub-prime loans made just last year, many of them for the full value of the homes and without proof of borrowers' incomes, are going into default at a record pace.
For some lenders, nearly 20% of their 2006 sub-prime borrowers are delinquent on payments. And with home prices falling in many parts of the country, many owners can't use the escape hatch of selling their home at a profit to make good on their loans.
Wall Street investment banks had been voracious buyers of sub-prime loans, packaging them for sale to investors via mortgage-backed bonds. Those same banks now are forcing lenders to take back bad loans, devastating the lenders' finances.
The jump in lender failures and the shut-off of credit for marginal borrowers were two of the catalysts behind the stock market's slump last week. This week, even as U.S. market indexes rebounded somewhat, worries about sub-prime loans continued to weigh on investors' mood..........
.......Still, as loan standards tighten for sub-prime and Alt-A borrowers, as many as 1.1 million people could be closed out of the housing market this year, said Dale Westhoff, head of mortgage-backed securities research at brokerage Bear, Stearns & Co., in comments to investors Friday.
That's the unhappy state in which homeowner Lewis finds herself.
Two years ago, when Lewis was looking for a larger house, she easily prequalified for a nearly $700,000 house even though she had no down payment and a spotty credit record. It helped that she was willing to take on two loans to cover 100% of the cost.
"I wasn't completely aware of the mortgage terms but I knew it would adjust in two years," she said. "Properties were still going up at the time, so I felt it might be a good time for me to buy."
But almost as soon as she and her family moved in, Southern California's housing market began to cool off, giving Lewis a chill.
"I knew I was in trouble the very next month, and it's been that way since," she said. Since mid-2005, home values in her neighborhood have flattened.
Although she has shopped around for a new loan, she can't find one that would enable her to keep her monthly payment at its current level, around $4,000. And because her house hasn't risen in value, she can't use equity as a down payment on a refinancing.
Starting next month, her payment is slated to jump to more than $6,000, an amount she says she won't be able to pay.
"It's overwhelming," said Lewis, who hopes that if she can sell her home within the next few months, she can at least break even after closing costs before she misses too many payments.
"I can completely ruin my credit," Lewis said. "Or get out the best way I can."
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http://www.ocbj.com/industry_article...45&aID2=111162
.......Nearly 13% of the country’s $10 trillion mortgage market is tied to subprime loans, according to the Washington, D.C.-based Mortgage Bankers Association.
The most popular subprime loan—a fixed teaser rate for two years, followed by a floating 28-year rate—has been a boon for first-time homebuyers, not to mention homebuilders targeting that segment of the market.
Factor in slightly less risky Alt-A loans—in between subprime loans and mortgages for those with solid credit—and a typical Orange County homebuilder could have a minimum of 20% of its business tied to buyers with riskier loans, according to a source familiar with the situation.
If subprime and Alt-A loans fall off dramatically as some predict, the market for starter homes could take a hit.
“It’s not just the marginal homeowner sector,” UC Irvine’s Vandell said. “The effect of (a subprime slowdown) could ripple through the rest of the sector. It could put a logjam on the rest of the mortgage market.”........
......During the boom years of the county’s housing market—2002 to 2006—the number of local jobs tied to “financial activities” rose from 110,000 to 139,000. A breakdown of those jobs is hard to determine, but it is reasonable to assume many were related to the subprime sector, said Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University in Orange.
Adibi is forecasting an overall loss of 1,000 jobs in financial activities this year, as larger subprime losses drag down growth in other areas. It’s the first sign of annual job losses in the sector since 1999.
“The more important question coming from the (sector’s) troubles is: Is this going to put more pressure on the local housing market? I think it will,” Adibi said.
There’s the prospect of fire sales on home foreclosures. That could have a real dampening effect on home prices, which, so far, only have seen modest declines in the past year........
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Last edited by host; 03-10-2007 at 01:09 AM..
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