I am sick of all the petty envy and jealousy of so many Americans. When it comes down to it, how much money someone earns is nobodies damn business.
Balloon mortgages have been around since the 80's and they never caused a problem...and they didnt cause a problem in this current mortgage crisis.
The problem is 100% with the mortgage underwriters that lowered their standards and the idiots who made 100K a year and thought they really could afford that $1MM house. I dont care if its a 30 conventional fixed or a LIBOR ARM, if someone cant afford it they will end up getting forclosed on.
Derivatives have thier place in Wall Street and Main Street when they are used correctly. Credit Default Swaps have their place and were used mainly by the holders of cash bonds as a hedge....things got out of hand when they were used primarily for speculation.....kinda like the accupuncturist in Miami who bought 6 condos with option arms.....
Anyone else catch the recent largesse of congress in raising the postmaster general's salary from $186k/year (2007) to $265k/year and then because he is doing such a great job (the post office lost $2.8B last year and is about to see its revenue decline for the first time since 1946) they also awarded him a performance bonus of $135k. THis brings his total income with perks and retirement to nearly $840k for the year! And they have the nerve to fault the private sector for their management! Oh, note that they say it isn't taxpayer money that is involved. Wonder where that $2.8B loss was funded from?
Being in real estate, I get to be close to the mortgage market.
Just want you to know that Fannie and Freddie are trying to clean up their act. To do this, they have raised the points that are assessed for "conventional" mortgages that are given to buyers with high down payments and high FICO scores. (Yes, that does say high, not low.)Why does this seem to me like they are picking the pockets of the taxpayers twice? Especially focusing on those with the deeper pockets.
However, there is some respite for these buyers. If they are within the FHA limits in the price of the homes they are buying, they can get an FHA mortgage with only 3.5% down.
FHA interest rates vary compared to conventional mortgages. Usually they are a 1/4 to 1/2 point higher; though sometimes they are the same as conventional. Nobody (mortgage officers) has ever been able to explain to me how those variations are determined.
Banks are also raising rates on their credit cards. So, if someone has been able to make their payments currently, they may find they are going to be deeper in the hole with the increase in those rates. Maybe they won't be able to make those payments at the increased interest rates and increased minimum payments? Ooops! The idea backfires & the banks get more defaults instead of less? They have also found "loopholes" to do this with those balance transfers that were supposed to be at fixed rates "for the life of the balance". They simply change the terms of the card to add a "service fee" to the account. In some cases this can effectively triple the originally promised fixed rate. These changes are then applied at the bank's "whimsy" without any disclosure of how they arrive at the decision as to which accounts they will be applied to.
Really gotta give these bankers credit for using their heads, huh?