Dealing with the Subprime Meltdown
A number of Warren Reports posts over the past week have addressed the subprime mortgage meltdown. Many angles have been discussed, but it's also worth taking a look at a new report from the Center for American Progress (CAP) that suggests how the federal government should respond to rising foreclosures. You can check out the full report here.
Many state legislatures were already considering bills to expand foreclosure assistance before the release of the latest numbers. Here in Massachusetts, for example, Sen. Jarrett Barrios and Rep. Kevin Honan each have a pending bill that would create homeowner protection funds to help families avoid foreclosure. However, CAP does an excellent job showing the important role the federal government can also play here -- and the new data underscores how much is at stake not only for families that suffer foreclosure, but also for the communities that surround them.
Well, my view is, real estate has been scammy for years, decades, even, a nice little racket between your county tax assessor and his buddies down at(insert name of real estate/banking institution here). Thanks to the wonderful world of data mining, they've had your paycheck pretty well mapped out for years, and know about how much they can squeeze out of you before you start not having enough gas in the car to get to work. Bluntly spoken, in this day and age, careful collaboration between various entities largely puts you at the mercy of the lending and housing industries, that property management company may well be publicly traded, find out for yourself, and you're along for the ride.
'Read the fine print' doesn't even really cover it anymore, you may as well forget buying a house if you're in the sub-40k income bracket, and that's the god's honest truth of it. Unless you're able and prepared to basically live like a saint throughout your working years, the odds of being able to save enough to pay that mortgage(AND the attendant insurance, don't want to forget THAT parasitic industry, now) are well, pretty minimal, and that's the 'game'. When you croak, the bank gets the house back, ready to
accept another sucker. Re-finance? Taking loans out against your mortgage? WHERE did you say that bank was based, again? Hmmm...oh, and then you get into the whole FICO trip, like I say they've got your paycheck mapped pretty tightly.
The question is, when you finally do get done paying off that 400k note, what have you got to show for it?
Real estate is a racket, and mortgage lending and home'owner' insurance are a close second and third, Freddie/Fannie kind of made that apparent for all and sundry to witness. Welcome to the Perpetual Treadmill, don't be late with those payments, now! LOL
March 18, 2007 3:05 PM | Reply | Permalink
Where are the derivatives that lessen risk?
So, we have a full-fledged crisis in sub-prime mortgages and thousands of little people -- average Joes and Janes -- are losing their homes. Where's that mighty miracle of modern finance, the derivative? There's reportedly over $200 trillion in nominal values of derivatives, which, their proponents say, are supposed to lessen and help manage "risk." So, when do we start seeing the supposed saving hand of derivatives in this crisis?
Or could it be that $200 trillion in derivatives are meant only to benefit the "big boys" of world finance, and not the little people?
March 23, 2007 10:00 PM | Reply | Permalink