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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: TheSlowLane who wrote (13725)	5/12/2004 6:05:53 PM
From: Gemlaoshi	Read Replies (1) \| Respond to of 110194

SlowLane... How ironic that that it has taken only 75 years to come full circle from the real estate debacle of the Great Depression years. the-history-of.net The primary cause of so many home foreclosures during the depression was the short-term (usually <5 years) and the ARM-like nature of housing mortgages. The FHA and other New Deal programs finally gave Americans financial and housing security with the 30-year fixed rate mortgage. I believe our grandparents would roll over in their graves at the sheer stupidity of 1-year ARMs and interest-only mortgages that the financial hucksters are pushing like cocaine to an addict. These new products violate the most basic of risk management techniques and are the exact same idiocy that brought down the whole S&L industry in the late 1980s. That is, you must be able to hedge if the maturity of your assets and liabilities do not match. Or, in other words, never finance a long-term asset with short-term money. It is very possible that in the event of a liquidity crisis, ARM money may not be available at any price. Many innocent people are unfortunately going to be hurt, but it sure is going to make one hell of a splash when it tumbles!!

To: TheSlowLane who wrote (13725)	5/12/2004 10:53:30 PM
From: t4texas	Read Replies (2) \| Respond to of 110194

i saw it. the punchline was really nuts. sharon epperson showed a guy who bought a greater than $400K house for no money down. all he had to do was bring $15K to the closing. in addition epperson showed some "creative" ways financing is happening. one i always laugh at is the mortgage where up to 10 monthly payments can be missed, and they are just rolled back into the mortgage. then there is the "interest" only mortgage. i don't know how that works, unless there is some balloon payment at some end point.

To: TheSlowLane who wrote (13725)	5/13/2004 1:15:53 AM
From: t4texas	Read Replies (1) \| Respond to of 110194

i think cnbc should offer lots of disclaimers and verbage against some of these shaky mortgage techniques. more useful to investors and home buyers would be a cnbc spot that gets into the details of what these tricky mortgage programs are and how they really function over the life of some of these too-good-to-be-true mortgage deals. cnbc could take the opportunity to do some real investigation and reporting. cnbc is just being irresponsible by not providing the pros and the cons of this stuff. even though old john boggle says he is a friend of the little guy (i know he is just a mutual fund guy), i don't see why boggle doesn't call out some of these mortgage deals for what they are potentially going to mean. he is on cnbc enough to spend five minutes describing the potential problems for the little guys and their "creative" mortgages that are going to blow up on lots of little (and some big) guys.