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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (6628)	5/18/2004 2:43:32 PM
From: RealMuLan	Respond to of 116555

Yeah, I heard that now 1st time home buyers can buy a house with the "down payment" from refinancing the house they are going to buy<g>

To: mishedlo who wrote (6628)	5/18/2004 2:58:55 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 116555

Low interest rates and dumbed down lending requirements now mean that anyone who can still fog a mirror can qualify for a loan. i read an anecdote about the Great Depression--a man went into a nice restaurant and had a steak dinner with all the trimmings and dessert. then he told them to call the cops because he couldn't pay. just wanted to have a nice meal before going to jail. so in the Depression, the "fog the mirror" standard meant somebody could get a meal with no money down, and the price was a trip to jail. nowadays, it seems the fog the mirror standard lets near-bankrupt people buy a luxury home, and the penalty is a bankruptcy filing, which might have been advisable or inevitable anyway. if i was on the verge of bankruptcy, i could think of worse things to do than buy a nice place with a 125% interest-only loan and hope the housing bubble blows a bit further. it just sounds like this credit bubble is going to wring the last decent credit out of the market before utterly imploding.

To: mishedlo who wrote (6628)	5/18/2004 3:26:48 PM
From: FrozenZ	Respond to of 116555

>>>Mortgage lenders would respond to a recession and increasing defaults by tightening lending requirements, which of course would quickly make a bad situation worse. It is not hard at all to imagine this getting very badly out of control very quickly. <<<<< Wrong. They will respond by loosening requirements. Allowing missed payments. Allowing additional low interest loans, no payments for the first four years. The fed will make sure of this. If you can meet the heartbeat test you will qualify for a loan to get everyone over the hump. This has only just started.