Quote:
Originally Posted by Locke
Bull. Part of the reason the US economy is in the tank is due in part to the sub-prime mortgage lending crisis. When times were good lending institutions had tons and tons of cash. Like any good lending institution with boatloads of dough they do what any good lender will, lend it out so you can earn interest on money that you have. How do you do that? You lend it. How do you lend someone something they dont want? Easy, make it a house. Everyone wants a house. Then make the interest rate a sweet deal. An offer they cant refuse.
At one point lending institutions were approving people for mortgages that were on welfare for christ's sake.
NINJA Mortgages. No-Income-No-Job-Approved mortgages.
This is true and part of my reasoning. Think about it this way; Governments require taxation revenue in order to continue functioning efficiently without incurring staggering debtloads. Some debt is good, alot of debt can be okay, too much and you're crippled.
Part of what is going on right now is that the Feds are allowing the tax-deduction of mortgage interest to every average joe. Part of this is in expectation of reaping profits on increased property values when the homes are sold. Problem is: those values arent increasing. Furthermore, those homes arent being sold.
The owners throw the keys in the mailbox and walking away, so they've been allowed to deduct their mortgage interest for 'X' number of years and now there are no capital gains resulting from a sale to recoup the money.
But they've already spent the money they thought they were getting. So they're in a bit of trouble. Of course theres lots more to this, but this is a general drift.
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yeah thats all true..but i think financial institutions have learned from their mistakes and are now mroe conservative in terms of giving loans etc to people and making it more difficult to get loans without down payments etc. it is becoming more difficult for people to get house loans than it was a couple of years ago. however if youre responsible like my husband and i, the benefits are fabulous. I loved our tax return!! it benefits the INDIVIDUAL if you do it right! I guess that's the difference here...I was thinkign how good it is for my husband and I compared to if we lived in Canada. Yeah I know there are all these issues and everything with people who get mortgages and cant pay them...but that's their problem. I dont care what happens to anyone else..it benefits me. Welcome to the American way
