How much responsibility do overzealous homeowners bear for the 08 crash?

[Ethnic Vagina Finder]

It wouldn't have happened if Wall Street wouldn't have gotten involved and created CDO's. Investment banks were the ones that green lit this bullshyt. Instead of people looking to buy homes mortgage lenders went looking for them. Real estate agents went looking for them.

And a lot of people signed shytty loans because property values were going up and they all thought by the time that adjustable rate mortgage sent their house note from $1200 a month to $2500 a month they could just refinance at a normal rate but everything fell apart and a lot of them were holding loans that were worth more than the house itself.

 

[No1]

I'd like to say two things, (1) I'm proud of the maturity of the convo because I thought I'd have to come in here and actually moderate. (2) Napoleon is who half of these people think I am. I mean really breh....your posting has entirely devolved into, "yeah we know the rich people were fukked up, but let's talk about what the poor people could have done as well."

The problem with this line of thinking is that you ignore why most of the blame is geared at the corporations in the first place. They are the sophisticated parties in the transaction and they are in the best position to avoid the calamity.

Looks @Broke Wave ....I see I spoke too soon.

 

[☑︎#VoteDemocrat]

Again, you asked the question how much responsibility the borrowers have in the financial crisis. You are the one asking to quantify it. I'm explaining to you why that's a pointless and non-sequitur question.

You're just exercising your desire to display your elitism and contempt for anybody you think you're better than again. I would say to look at the totality of the financial collapse and say it's about financial literacy of subprime loan borrowers is an example of the idiot looking at the finger when the wise man points to the moon, but it's really more like the idiot closing his eyes.

NOT ONCE have you addressed the power the consumers had.

and in NO way am I blaming the crisis ENTIRELY on the illiteracy of consumers.

You're pinning a position on me that I DO NOT hold.

 

[☑︎#VoteDemocrat]

@Mephistopheles I don't know why you're wasting time writing posts when you know this nikka ain't reading them. Once again this dude just wants to look down on people and get his dikk hard at his own perceived superiority. He's made threads about the minimum wage as a disciplinary tool and now is blaming consumers for lack of legal expertise and contract knowledge.

And I've said NONE of this, but keep trolling.

He doesn't even have a political belief he just goes with who ever is more powerful.

Have you ever asked?

He defends the drone program.

To an extent.

He's rabidly pro Israeli expansion.

False. Two state solution at this point.

I can't think of a single time this dude has gone off script and had a single creative thought outside of his world view of might is right. I'd rather argue with @DEAD7 at least he has a coherent political ideology.

Its not creative when its at odds with you, is it?

 

[Dusty Bake Activate]

NOT ONCE have you addressed the power the consumers had.

and in NO way am I blaming the crisis ENTIRELY on the illiteracy of consumers.

You're pinning a position on me that I DO NOT hold.

Okay man...whatever.

 

[tmonster]

so what's the directive if it is their fault and what is it, if it is not their fault?

 

[☑︎#VoteDemocrat]

so what's the directive if it is their fault and what is it, if it is not their fault?

I TRIED to have a conversation about a realm in which people sign onto unreasonable contracts, but people wanna turn this into a circlejerk about low-hanging fruit and pull out their pitchforks for fractional reserve banking.

This was a futile exercise.

 

[Futuristic Eskimo]

I TRIED to have a conversation about a realm in which people sign onto unreasonable contracts, but people wanna turn this into a circlejerk about low-hanging fruit and pull out their pitchforks for fractional reserve banking.

This was a futile exercise.

Uneducated people do uneducated things. How much more in depth can you get into their culpability?

 

[Domingo Halliburton]

It wouldn't have happened if Wall Street wouldn't have gotten involved and created CDO's. Investment banks were the ones that green lit this bullshyt. Instead of people looking to buy homes mortgage lenders went looking for them. Real estate agents went looking for them.

And a lot of people signed shytty loans because property values were going up and they all thought by the time that adjustable rate mortgage sent their house note from $1200 a month to $2500 a month they could just refinance at a normal rate but everything fell apart and a lot of them were holding loans that were worth more than the house

without looking this up define for me what a CDO is.

 

[Domingo Halliburton]

if some guy calls me up and says, I got a hundred grand in the bank I want to buy an "income producing" property for a mil, how much is he adding to property markets and not just speculating?

and I say, no problem if you pay the retainer I can get you the money.

and I could tell you I could probably talk to ten guys like that tomorrow. So how much are we actually adding to these markets? Is this not just pure speculation?

then say we can work with banks and get government guarantees on loans....so if the market drops, people dont pay enough rent, and the guy has to declare bankruptcy, 60-80% of the loan is on the govt.

my point is this a part of the market too. The financial illiterate regular consumer probably doesn't deserve the blame but there are a bunch of regular people who think they can flip a house too.

 

[Ethnic Vagina Finder]

without looking this up define for me what a CDO is.

You take small peices of hundreds of random mortgage loans and package them into one security called a CDO.

So basically investment banks bought home loans from mortgage lenders chopped them up into pieces packaged them into CDO's and sold them to investors for millions in profit.

Lenders didn't give a fukk because they was out from under the debt. Eventually Fannie and Freddy saw lenders were so they started doing the same thing. The more loans they gave to buyers the more they could sell to investment banks. The more loans investment banks bought, the more the can package and resell to investors.

The problem with that is 2 levels. First the CDO's took time to package so they had to sit on millions of these loans they bought which exposed them should the value drop because they leverage too much of their capital in it. And 2nd, if people started started defaulting on their loans, the value of those CDO's would drop and if housing prices drop, the value of those CDO's would drop. Both happened and when it did all those investment banks and regular banks that went bankrupt or bought got caught holding those CDO assets.

AIG got fukked because they insured all of those CDO's. They insured them because they were making a lot of money in the process but when the housing market collapsed and those CDO's turned to shyt, they had to pay out more claims that the company was worth.


Bigger picture I think this was one of the biggest redistribution's of wealth in human history. A lot of people got poorer and a lot of people got rich in the process.

Another reason why it went on for so long was because those CDO's got the highest rating you could get which made them "safe" investments. And normally it would be since most home owners paid their house notes but because the market was flooded with buyers that put up little to no down payment, it made it easier for them to walk away. That's why normally lenders require a 20 percent down payment because they know the odds of someone walking away after investing that much money is less likely.


edit: one more thing. Those CDO's were created with algorithms so complex that nobody could possibly know what the fukk they were.

There was so much fukkery in all of this that you have to respect the beauty in it all

 

[88m3]

It's come out that banks actively targeted consumers with loans that they knew the consumers couldn't afford. I really don't see what there is to talk about.



I don't think I've ever seen overzealous used as an adjective for a homeowner in my life before, good job.

 

[Domingo Halliburton]

You take small peices of hundreds of random mortgage loans and package them into one security called a CDO.

So basically investment banks bought home loans from mortgage lenders chopped them up into pieces packaged them into CDO's and sold them to investors for millions in profit.

Lenders didn't give a fukk because they was out from under the debt. Eventually Fannie and Freddy saw lenders were so they started doing the same thing. The more loans they gave to buyers the more they could sell to investment banks. The more loans investment banks bought, the more the can package and resell to investors.

The problem with that is 2 levels. First the CDO's took time to package so they had to sit on millions of these loans they bought which exposed them should the value drop because they leverage too much of their capital in it. And 2nd, if people started started defaulting on their loans, the value of those CDO's would drop and if housing prices drop, the value of those CDO's would drop. Both happened and when it did all those investment banks and regular banks that went bankrupt or bought got caught holding those CDO assets.

AIG got fukked because they insured all of those CDO's. They insured them because they were making a lot of money in the process but when the housing market collapsed and those CDO's turned to shyt, they had to pay out more claims that the company was worth.


Bigger picture I think this was one of the biggest redistribution's of wealth in human history. A lot of people got poorer and a lot of people got rich in the process.

Another reason why it went on for so long was because those CDO's got the highest rating you could get which made them "safe" investments. And normally it would be since most home owners paid their house notes but because the market was flooded with buyers that put up little to no down payment, it made it easier for them to walk away. That's why normally lenders require a 20 percent down payment because they know the odds of someone walking away after investing that much money is less likely.
.

yeah you could take the junk tranches of MBSs and package them. The rationale being if they default in phoenix they can't default in Virginia at the same time. Its "diversified" so they can get it rated higher.

it doesn't even have to be just mortgages. It can be car loans, airplane leases, rents, the interest off a mortgage seperate from the principle....anything that produces a steady cash flow.

 

[Ethnic Vagina Finder]

yeah you could take the junk tranches of MBSs and package them. The rationale being if they default in phoenix they can't default in Virginia at the same time. Its "diversified" so they can get it rated higher.

it doesn't even have to be just mortgages. It can be car loans, airplane leases, rents, the interest off a mortgage seperate from the principle....anything that produces a steady cash flow.

Honestly the way they were packaged they didn't know which was which. In essence those home owners were paying back whoever owned the CDO's instead of the lender. People were defaulting by the hundreds of thousands and that was mainly because of the adjustable rate mortgage. If peoples monthly payments didn't go up a lot of them would still be paying.

People got greedy though because a lot of them refinanced multiple times taking out home equity loans. Everybody took chances. For the collapse to be that great many people had to have a lot of risks. The losses were in the trillions of dollars which is why the bail out wasn't nearly enough.


car loans wouldn't have worked because they are small assets that depreciate. Rent and leases aren't assets.

 

[Julius Skrrvin]

and I could tell you I could probably talk to ten guys like that tomorrow. So how much are we actually adding to these markets? Is this not just pure speculation?

then say we can work with banks and get government guarantees on loans....so if the market drops, people dont pay enough rent, and the guy has to declare bankruptcy, 60-80% of the loan is on the govt.

my point is this a part of the market too. The financial illiterate regular consumer probably doesn't deserve the blame but there are a bunch of regular people who think they can flip a house too.

Yep. Its (was?) more common than a lot would be willing to admit. Everyones trying to flip a brick out here. But at the end of the day their expectations are formed out of the deals people are cutting them right? Even the greedy fukks