Foreclosure Alley

[kootenayguy9]

Thanks for the link Hemi. I showed the video in my High School Social Studies class today and it helped with a class discussion on whether this could also occur in Calgary.

[burn_this_city]

Read the comments at the bottom. Some of the things people describe as symptoms of a problems are happening here.

[Winsor_Pilates]

Originally Posted by Rathji

So this is due to variable interest rates rising then?

Yes. It's not just the value of the home that's changing, but payments became dramatically higher due to horrible interest rate changes on people who really couldn't afford it.
Joe Blows everywhere were already paying most of their monthly income into mortgages, and then all of the sudden their $3000 payments became $5000/mth and they were screwed.

[Ice]

The thing is though, Fannie Mae and Freddie Mac aren't supposed to buy subprime mortgages. Companies that legally purchase subprime mortgages know they're buying crap. Which is why they get them for 30 cents on the dollar (or even less in some cases) when purchased from B paper or lower lenders. Both Fannie Mae and Freddie Mac were only allowed to purchase, package and sell conforming loans, which have very strict underwriting and ratio guidelines. If they have the same crap neg am loans that they packaged and sold, that's a whole new corruption investigation that needs to be started.

[Winsor_Pilates]

Originally Posted by Ice

The thing is though, Fannie Mae and Freddie Mac aren't supposed to buy subprime mortgages. Companies that legally purchase subprime mortgages know they're buying crap. Which is why they get them for 30 cents on the dollar (or even less in some cases) when purchased from B paper or lower lenders. Both Fannie Mae and Freddie Mac were only allowed to purchase, package and sell conforming loans, which have very strict underwriting and ratio guidelines. If they have the same crap neg am loans that they packaged and sold, that's a whole new corruption investigation that needs to be started.

I heard the loans were packaged into large groups, and somehow passed off as as solid loans when packaged that way. I don't know exactly how this worked...perhaps someone can expand on this if true?

[Ice]

Nobody undertands how this happened. My mother in law was very high up in Freddie Mac, we still have dinner with people who work there now. BTW, they were shown a video from Paulson last week telling them their jobs are safe for 2008, but he can't guarantee anything for 2009 and suggested they look for work. These are people who have spent their entire careers of 20 years or more in the mortgage industry and his best advice is to look for employment.

The thing is, even people who work there don't understand how they acquired these subprime loans. Because the loans making headlines for high default rates/foreclosures are not conforming loans. Nobody can explain how Fannie Mae or Freddic Mac ended up with them.

[Mike Oxlong]

It's pretty eye opening and sobering to see what these people are going through. I couldn't imagine getting turfed from my home and having to leave everything behind. You hear about it on the news all the time but that really brings a new element of realism to the situation.

What I want to know is where are all these people going?
It's not like they get foreclosed on and don't need shelter. Are the rental markets going nuts down there? Are the people moving from California Vegas, Florida etc.. to other areas of the country?

[Mike Oxlong]

Originally Posted by fotze

So are mortgage brokers the new lawyer? I don't think lawyers have ever eroded 3 trillion dollars in value in a 3 week period.

I say we start a movement where mortgage broker jokes replace lawyer jokes.

Hey leave it to US mortgage brokers. Us Canadian guys had nothing to do with it.

And really it's not the mortgage brokers. The banks are the ones providing all the sub prime loans. The mortgage brokers just put people in them that couldn't afford them at all.

[stuck_in_chuk]

Originally Posted by fotze

So are mortgage brokers the new lawyer? I don't think lawyers have ever eroded 3 trillion dollars in value in a 3 week period.

I say we start a movement where mortgage broker jokes replace lawyer jokes.

Q: What's brown and black and looks good on an American mortgage broker?
A: A rottweiler.

[10W30]

Originally Posted by Ice

Nobody undertands how this happened. My mother in law was very high up in Freddie Mac, we still have dinner with people who work there now. BTW, they were shown a video from Paulson last week telling them their jobs are safe for 2008, but he can't guarantee anything for 2009 and suggested they look for work. These are people who have spent their entire careers of 20 years or more in the mortgage industry and his best advice is to look for employment.

The thing is, even people who work there don't understand how they acquired these subprime loans. Because the loans making headlines for high default rates/foreclosures are not conforming loans. Nobody can explain how Fannie Mae or Freddic Mac ended up with them.

The best quick summary I have seen:
http://bigpicture.typepad.com/commen...bprime-re.html

[mykalberta]

The only person I feel sorry for in that whole video is the guy with the beard.

When will people realize that if you are planning on actually living in a place, what does it help to possibly save a few 100 bucks to risk having your interest rate jacked. No one on varaialbe interest rate mortgages deserve any sympathy at all. They all had the chance to lock in longer term, 10 or 15 years at a rate which they could then plan for and they didnt, its their fault. Sure there banks and brokers are greedy but no one held a knife to these people and forced them to sign.

I am very glad I have a 10 year fixed 5.15 mortgage. Even if I lose a few hundered for the possibility of maybe getting a lower rate later on - I know that I can easily afford the monthly payment and it allows my to budget better. I think its possible the same thing could happen in Calgary in a few years when all the 5 year variable mortgages come up.

[missdpuck]

Originally Posted by Mike Oxlong

It's pretty eye opening and sobering to see what these people are going through. I couldn't imagine getting turfed from my home and having to leave everything behind. You hear about it on the news all the time but that really brings a new element of realism to the situation.

What I want to know is where are all these people going?
It's not like they get foreclosed on and don't need shelter. Are the rental markets going nuts down there? Are the people moving from California Vegas, Florida etc.. to other areas of the country?

From Florida atleast ,yeah. I can think of about 5 families who more or less walked out on their homes to move to Alabama, Tennessee, etc. lower cost of living there on average. In a previous posting someone asked why I didnt rent an apt. instead of buying when I did. One of the reasons was that the rents were insane. $1500 was cheap for a tiny 1BR in a decent neighborhood.

[missdpuck]

Originally Posted by Devils'Advocate

Hrm. You know what? Someone could make a mint scavaging the landfill that stuff was going to. Some nice furniture going out the door there.... true, the technology was old (old TV, old computers) but the furniture I would absolutely love to have here.

True, Ken, that most can't afford new furniture right now with the U.S. economy in the crapper... but I'd take the best stuff and throw it in a storage locker.

Agreed. You think some organization could do that even as a write-off or something. So the guy taking the stuff to the dump could take it elsewhere,even. O f course you can't sit around and wait for Faith Farm to come but it still seems like something else could be done since this is a pretty large scale problem.

[Julio]

Originally Posted by Devils'Advocate

Hrm. You know what? Someone could make a mint scavaging the landfill that stuff was going to. Some nice furniture going out the door there.... true, the technology was old (old TV, old computers) but the furniture I would absolutely love to have here.

True, Ken, that most can't afford new furniture right now with the U.S. economy in the crapper... but I'd take the best stuff and throw it in a storage locker.

I wouldn't be surprised that a few of the guys working for the 'trash out' company are making side money doing exactly that. Remember, they were encouraged to take away whatever they wanted out of the houses. I can see a guy, for example, selling some of the home electronics or furniture that is left behind in these places.

[mykalberta]

Originally Posted by Devils'Advocate

Hrm. You know what? Someone could make a mint scavaging the landfill that stuff was going to. Some nice furniture going out the door there.... true, the technology was old (old TV, old computers) but the furniture I would absolutely love to have here.

True, Ken, that most can't afford new furniture right now with the U.S. economy in the crapper... but I'd take the best stuff and throw it in a storage locker.

I was thinking about the buisness model needed for this. It would be very difficult, in that video there is very little stuff that is worth its own weight the "new" computers were antiquated as well as the electronics. The only way that buisness works is if you have people that work for you that know the prices of certain items. Alot of furniture is heavy and not easily stored so it doesnt make a lot of sense to keep that.

I love when the one guy made a bs comment about the lamp for the camera. That thing was the biggest piece of Walmart junk in the world, who would want that, even for free. The gas, vehicle wear and tare and labour likely couldnt be covered for that buiness most days. Its terrible all that goes to landfill but it is what it is. To make it work you would need to find enough diamonds in the ruff.

[missdpuck]

Guess you're right Myk. Perhaps we could pulverize the furniture for mulch? Just kidding. It's all just sad.