Bloodbath only a few hours away

[koolmoecraig]

I dumped out of all my stocks last week.  Looks like it was just in time.  The market is going to get killed in the morning.

Good luck all!

[FrizzleFried]

I dumped out of all my stocks last week.  Looks like it was just in time.  The market is going to get killed in the morning.

Good luck all!

Great time to BUY...(that is,  of course,  only if you are in it for the long run).

[ChadTower]

It's not time to buy yet.... it won't bottom out today.  It will be a little while yet before that happens.

[Hoopz]

The Fed cut rates 3/4 of a point today.  That will have some affect.

I would suggest that anyone looking to buy, should dollar cost average into their positions.  Trying to time the market is never easy especially for those who can't watch it from 9:30 until 4:00 every day.

Stick to any investment plan that you have (or create one).  I would imagine that most people on these boards have a minimum of 20 years until retirement.  A small window of a one day's activity, or a month's, or 6 months compared to 20 years time horizon isn't tremendously important.  Yes, the market can move against your positions dramatically, but look for opportunities to mitigate the risk or create new positions if possible.

[ChadTower]

Hrm.  So, really, you can buy in the cash pool now while your 401k hits the toilet bowl - AGAIN.  Not much help.

I wonder if things this time will swing the mortgage rates down low enough that I would want to refi.

[Hoopz]

You'll have bond prices going up and yields going down as people leave the equity market for the bond market.  That, along with the rate cut, will have mortgage rates dropping.  Depending on where you are at on your current mortgage, it may be a great time to refi.  Especially if lenders in your area are being affected by the sub-prime crisis.  They may lower fees to generate more business.

[ChadTower]

You'll have bond prices going up and yields going down as people leave the equity market for the bond market.  That, along with the rate cut, will have mortgage rates dropping.  Depending on where you are at on your current mortgage, it may be a great time to refi.  Especially if lenders in your area are being affected by the sub-prime crisis.  They may lower fees to generate more business.

Here in MA there are two major issues in the news every day:  heating oil prices and foreclosures.  The "predatory lending" was very heavy here - I don't agree with the popular media assessment of borrowers all being victims and lenders all being scum - but this is definitely a heavier than average foreclosure zone right now.

I did refi the last time they were really low, but if I could get a 30 year in the low 5s without thousands in point costs, that would be worth doing for me.

[shardian]

It isn't near as bad as some were making it out to be today. The Dow is only down 158 as of right now. That is a hell of a rebound from how the day started.

As to me, I have  a 30 year mortgage locked in at 5.3%, and my 401k doesn't have NEAR enough in it yet for me to panic. If this is the brunt of it, then it really isn't too bad. We'll pull out of it.

If you get a chance, listen to Glen Beck on the whole issue. He has some pretty interesting points.

[ChadTower]

5.3 is damn low.  I think I'm at 5.875.  We didn't have the pocket cash to pay points and get it any lower.   

[shardian]

I went my states first time home buyers program.
No points, no fees, an additional $3000 loan with 0% for 5 years ( and not the kind you have to pay off in 5 years - it literally doesn't accumulate interest for 5 years.) It was totally sweet and hassle free. I tried to deal with a few banks (which were ---uvulas---), and CountryWide (thank goodness I didn't go with them now, huh).

The brokers that strong-armed people into ARM's are definitely part of the current economic problem. They pushed those things like crazy so they got a bigger immediate payday.

[koolmoecraig]

Man I wish I could afford a house out here so I could worry about mortgage problems.

[ChadTower]

I went my states first time home buyers program.

Wish I could have done that... not a whole lot of that here in MA.  I probably wouldn't have qualified had there been one anyway.

The brokers that strong-armed people into ARM's are definitely part of the current economic problem. They pushed those things like crazy so they got a bigger immediate payday.

Can't really blame the brokers more than you do the borrowers - no one forced these people to speculate that their property would keep increasing.  Most of the ARM borrowers here were banking on the fact that they'd be able to refi before the balloon was due - then the property value stopped increasing and they couldn't do it, sticking them with a mortgage payment they couldn't make on a house with only 2% equity in a market where the selling price wouldn't match their mortgage balance.  They took a gamble with their home and lost. 

It annoys the ---fudgesicle--- out of me that those people are victims for buying $600,000 2500 sqft houses they knew they couldn't afford.  Meanwhile people like us that bought small/old houses within our means are somehow "the lucky ones".

Sorry, not ranting at you specifically, this whole thing hits me deep in the "personal accountability" sore spot.

[shardian]

Oh I definitely agree that people should definitely be held accountable for their own finances. Still, many brokers were actually talking borrowers out of going with a fixed mortgage. Yeah I feel sorry for people who lost their homes, but that isn't who the broker screwed. It is the lending industry collapse that is screwing the economy. They are the ones out tons of money. Their brokers are the ones who screwed them. The lenders are the ones who should have taken a step back and said "Whoah, things are getting out of control here". This whole mess could have been averted if lenders would have been responsible about lending money. Maybe they were afraid of the ACLU, NAACP, etc, etc as being labeled as discriminating ---daisies---, who knows? The fact is they were lending out THEIR money to high risk borrowers they had no business lending these huge loans to.

[ChadTower]

Their brokers are the ones who screwed them.

This whole mess could have been averted if lenders would have been responsible about lending money.

If I'm reading this correctly, those two are almost mutually exclusive, in terms of who is mostly to blame.  Are you blaming the brokers for doing what they were trained to do ("write profitable loans for your employer") or the lenders' lack of oversight on their own risk levels?

[patrickl]

Aren't "lenders" and "brokers" the same thing?

[shardian]

heh, well then I guess I am definitely blaming lenders.

[shardian]

Aren't "lenders" and "brokers" the same thing?

Not always. The big lenders do have their own agents (like countrywide), but you also have mostly independent brokers who wheel and deal alot more.

For instance, when i did all of my loan paperwork, I fill out my paperwork, etc at an independent broker that was paid to handle the paperwork of my loan.

You also have banks that give loans (local banks, branch banks, etc) that can buy/sell your loan as they please.

[patrickl]

Aren't "lenders" and "brokers" the same thing?

Not always. The big lenders do have their own agents (like countrywide), but you also have mostly independent brokers who wheel and deal alot more.

Ah ok, brokers are the "middle men" between lenders and borrowers. Just wondering. Thanks

[ChadTower]

Aren't "lenders" and "brokers" the same thing?

Brokers are often independent agents or agencies that write up loans for a lender (sometimes more than one) for their own profit.   They get paid separately from closing costs and have no persistent interest in the loan once it is processed.  Same concept as insurance agents.  They can work directly for the lender but those aren't the brokers that wrote up most of the really crappy loans.

[ChadTower]

heh, well then I guess I am definitely blaming lenders.

I can buy that.  I may even finance it if you can get me interest only payments for at least 2 years.

[shardian]

heh, well then I guess I am definitely blaming lenders.

I can buy that.  I may even finance it if you can get me interest only payments for at least 2 years.

Also, unless I understand the whole process wrong I believe that bigger lenders basically depend on the brokers to evaluate potential borrowers. in THIS situation, then yes the brokers would be the a big part of the problem. But it would still fall back to lenders for not paying enough attention.

[ChadTower]

Also, unless I understand the whole process wrong I believe that bigger lenders basically depend on the brokers to evaluate potential borrowers. in THIS situation, then yes the brokers would be the a big part of the problem. But it would still fall back to lenders for not paying enough attention.

Seriously.  Why allow tons of barely trained independent contractors play with billions of your dollars and trust them to be prudent?

[shardian]

Also, unless I understand the whole process wrong I believe that bigger lenders basically depend on the brokers to evaluate potential borrowers. in THIS situation, then yes the brokers would be the a big part of the problem. But it would still fall back to lenders for not paying enough attention.

Seriously.  Why allow tons of barely trained independent contractors play with billions of your dollars and trust them to be prudent?

Well if you apply that kind of logic then even Walmart would disqualify 99% of their large workforce.

[patrickl]

Aren't "lenders" and "brokers" the same thing?

Brokers are often independent agents or agencies that write up loans for a lender (sometimes more than one) for their own profit.   They get paid separately from closing costs and have no persistent interest in the loan once it is processed.  Same concept as insurance agents.  They can work directly for the lender but those aren't the brokers that wrote up most of the really crappy loans.

Thanks. We have the same thing overhere yes.

Overhere the lenders still validate the mortgage though. They have pretty strict rules. The brokers only collect the data, forward the documents, collect signatures and help people find the right mortgage company (ie the one they get the best commission from)

Most of them actually are linked straight to the national mortgage computer network. They will evaluate the loan for you right there when you talk to them, but it's the lenders computer that actually makes the decision.

[ChadTower]

Well if you apply that kind of logic then even Walmart would disqualify 99% of their large workforce.

Walmart only allows easy employee to manage about $15 in assets, though.  Not so risky there.   

[shardian]

Well if you apply that kind of logic then even Walmart would disqualify 99% of their large workforce.

Walmart only allows easy employee to manage about $15 in assets, though.  Not so risky there.   

On that note, I assume that you have heard about the 0.001 cent gas lady from my locality, yes?

I assume the same thing happens at Walmart fairly often.

[ChadTower]

On that note, I assume that you have heard about the 0.001 cent gas lady from my locality, yes?

I assume the same thing happens at Walmart fairly often.

I haven't... bring the linkage...

[abrannan]

Oh I definitely agree that people should definitely be held accountable for their own finances. Still, many brokers were actually talking borrowers out of going with a fixed mortgage. Yeah I feel sorry for people who lost their homes, but that isn't who the broker screwed. It is the lending industry collapse that is screwing the economy. They are the ones out tons of money. Their brokers are the ones who screwed them. The lenders are the ones who should have taken a step back and said "Whoah, things are getting out of control here". This whole mess could have been averted if lenders would have been responsible about lending money. Maybe they were afraid of the ACLU, NAACP, etc, etc as being labeled as discriminating ---daisies---, who knows? The fact is they were lending out THEIR money to high risk borrowers they had no business lending these huge loans to.

This is actually the best summary I've seen on the whole mortgage mess (even if it is two comedians)
http://youtube.com/watch?v=l3kaK2_CrEw

But just to add my two cents in here, my wife and I were approached by a mortgage borker a few years back who wanted to get us out of our 20 year fixed mortgage into some convoluted, not-quite-interest-only mortgage.  During the "sell" he gave us, he spouted some absolutely absurd statistics about how the mortgage would adjust once the intro period was up, like "The maximum your payment can go up each year is 1% of your current payment, which would be $6", and so on. 

I never could find any information on the exact name of the type of mortgage he quoted, and when pressed for hard details in writing, he balked with "It's a standard mortgage type, there's tons of information out on the internet".


Now, of course we didn't fall for it, but I can imagine there were quite a few innumerate people out there who did.  So there certainly was some predatory lending going on. 

[ClubNinja]

I work with a guy who's dealing with this now.  At a time three years ago when even the modest homes were $300K+, he went with the $500K model.  Now he wants to move to the midwest to be closer to his family and attempt to secure a less drastic cost of living, but can neither afford to sell his house nor keep it for too long.  

[ChadTower]

Now, of course we didn't fall for it, but I can imagine there were quite a few innumerate people out there who did.  So there certainly was some predatory lending going on. 

That is unethical, yes, but predators have victims, not people who willingly do business with the asshat's terms.  The borrower there is just as culpable for signing away their house without doing the proper research.

You did the proper research - and as you said yourself - there wasn't much needed to expose that guy as a piece of trash.

[shardian]

I got my preapproval letter from CountryWide. They were very easy to deal with. When it came time to get a loan, I talked with them, the FTHB thing, and my bank, Suntrust. The Suntrust Broker was a fast talker, spouting things quick and making sure to say "Oh i can beat the FTHB offer real easy". Any time I asked for clarification, or asked questions, he got irritated with me and just pressed harder for what HE wanted me to have. I can totally understand overwhelmed first time buyers getting sucked in by brokers such as that.

[ChadTower]

So am I being unreasonable in expecting people do put substantial energy into researching mortgages in general and theirs in particular?  When I bought my house I spent most of my free time for three weeks doing research and learning about the process and the role of various people in it.  Hell if I was going to spend two hundred thousand dollars without a solid understanding of what I was getting my family into and what the risk/reward concepts were for the various mortgage types.

[shardian]

So am I being unreasonable in expecting people do put substantial energy into researching mortgages in general and theirs in particular?  When I bought my house I spent most of my free time for three weeks doing research and learning about the process and the role of various people in it.  Hell if I was going to spend two hundred thousand dollars without a solid understanding of what I was getting my family into and what the risk/reward concepts were for the various mortgage types.

No you are not unreasonable. I did the same thing, and totally expect others to do the same thing. Most people are either overly coddled, or are overly lazy. They take the word of the broker because he "sounds honest".
The same people that are being foreclosed on are the same people that expect the government to take responsibility and "bail them out" for their laziness. Its just the way things are.

I also have tangent to share that was a BIG lesson in life and taught me pretty much everything I know about financial responsibility. I'll also probably get made fun of for it...
When I was a clueless 22 year old college senior, I got engaged to my wife. We got one of those invites to a "seminar" with the promise of a "free vacation". It ended up being a demo for Royal Prestige cookware, if any of you are familiar with it. Anyways, there is a reason they target newly engaged young people -- they are young, dumb, and blinded by love (which coincidentally is the same target audience of home loan brokers and Cadillac dealers nowadays). Once the night was over, we were the proud owners of $2000 worth of pots, pans, and a full set of dinnerware...and we thought we wheeled and dealed like pro's.
Then, I got to learn all about high interest loans, and compounding options. Needless to say, $2000 is NOT what I paid. As a sidenote, the stuff really is super nice stuff that even pro cooks will admit to...but everything we got is more realistically worth $400-$500. We ended up paying off the amount way early, but still paid several hundred in interest.

These salespeople are just like home loan brokers - they put you in a situation in which you think they have your best interests at heart, that this is a great deal that you "have to take now before it's gone", and they browbeat you into thinking you'll never know as much as them, so you might as well not waste your time researching anything. Sure they might have a few people actually walk away, but the odds are in their favor.

I was lucky, because we learned a VERY valuable lesson in life, we aren't in debt for our mistake, and we ended up with a really nice set of kitchenware.

[ChadTower]

No you are not unreasonable. I did the same thing, and totally expect others to do the same thing. Most people are either overly coddled, or are overly lazy. They take the word of the broker because he "sounds honest".
The same people that are being foreclosed on are the same people that expect the government to take responsibility and "bail them out" for their laziness. Its just the way things are.

Exactly... but every time I pick up a freakin' newspaper I read about these poor victims as if they're 85 year old widows who were just bilked out of their meager life savings by someone pretending to be from the local VA Hospital.  How they couldn't possibly have understood what was happening and how they were forced by the market to buy the 2500 sqft house on a hill rather than a 1200 sqft house they may be able to afford.

And to put it out there that I'm not just being a condescending a-hole, 1200sqft is larger than my house.

[shardian]

People who bought mansions aren't the only ones being foreclosed on. People who are buying small 100k houses, but only have wal-mart salaries are also being foreclosed. I do know that I was approved for FAR more than I could realistically afford.

[ChadTower]

People who bought mansions aren't the only ones being foreclosed on. People who are buying small 100k houses, but only have wal-mart salaries are also being foreclosed. I do know that I was approved for FAR more than I could realistically afford.

Gotta keep the regional scale.  There are no $100k houses here.  $100k doesn't even buy you a 1 bedroom condo in a run down building.  I'm not talking about mansions.

[mr.Curmudgeon]

This is bigger than your regional scale, so I don't see how that applies.

Detroit, for example, is experiencing record foreclosures and the housing market there is not $500k-600k houses. The Detroit Free Press was 122 pages of foreclosures...TWO Sundays in a row.

Real people, making the best decision they thought they could make were hurt by this. Now we're all going to be hurt by this. Personally, I hold the banks more accountable, I mean...for Christ's sake...money is THEIR business. They have every right to manage the loans they give out, and decide if one's credit history and job fortunes are enough to loan out cash.

They got greedy.

[ChadTower]

This is bigger than your regional scale, so I don't see how that applies.

It is but all you do is shift the price involved.  The list of causes doesn't change if you go to WV or MO or TX.

[shardian]

People who bought mansions aren't the only ones being foreclosed on. People who are buying small 100k houses, but only have wal-mart salaries are also being foreclosed. I do know that I was approved for FAR more than I could realistically afford.

Gotta keep the regional scale.  There are no $100k houses here.  $100k doesn't even buy you a 1 bedroom condo in a run down building.  I'm not talking about mansions.

salaries scale accordingly along with home prices, so it's all the same...except for California and NYC. Those places are just unreal.

[mr.Curmudgeon]

Not entirely true. The median income (4-person family) in Massachusetts was the same as Michigan, when I moved out here in 2001. Haven't checked it since. And housing prices were/are OUTRAGEOUS.


EDIT:

Even right now, there's not a tremendous difference:

Massachusetts - 85,420
Michigan - 71,542

The job market makes all the difference. Michigan is hardest hit with foreclosures because of a loss of manufacturing jobs as the auto industry struggles. I know. My people are there, they're being effected and it sucks.