tag:blogger.com,1999:blog-1207581886255094115.post2690625744376836629..comments2024-02-26T05:51:17.859-05:00Comments on Economic Disconnect: "It's a little game that you both play, They pretend they don't see you, you pretend you don't ditch."EconomicDisconnecthttp://www.blogger.com/profile/02802078645713106743noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1207581886255094115.post-59787661949262713892010-06-01T22:11:30.033-04:002010-06-01T22:11:30.033-04:00I think the key disconnect here has been how banks...I think the key disconnect here has been how banks saw home loans. Any fool watching the home flipper shows saw full well it was a lotto ticket during the boom and if it did not pan out people would walk. Instead they relied on charts and models that said people would stop paying everything else, but not their mortgage. Another broken model.<br /><br />I would agree people were getting in way over their heads, but that is a job for thos emaking the loans to figure out who is nuts. That was not done and here we are.EconomicDisconnecthttps://www.blogger.com/profile/02802078645713106743noreply@blogger.comtag:blogger.com,1999:blog-1207581886255094115.post-91908878126131831062010-06-01T21:36:22.649-04:002010-06-01T21:36:22.649-04:00There's plenty of blame to go around in this m...There's plenty of blame to go around in this mess, from lenders who knowingly made faudulent loans to borrowers who knowingly took them out.<br /><br />It's one thing to blame the creditors. It's another to blame the debtors. It's still another to blame the brokers, realtors and appraisers. The simple fact is that everyone is at fault.<br /><br />I've been harping about fraud since I got into the real estate business, right when the bubble was taking off. Frankly, I could not believe what I was seeing. Because, you know, I try to be an honest guy, just do my job, not rip anyone off. It doesn't benefit me in any way to lie to anyone. But everywhere I looked I saw lending fraud, appraisal fraud, brokerage fraud, fraud all around.<br /><br />It was very depressing, because I kept thinking, what's wrong with these people? I started saying back in 2002, look, these houses are way overpriced, these appraisals are way overvalued, these loans have negative equity and negative amortization, these buyers cannot possibly pay off these notes because their debt-to-income ratio is way too high. And I was treated like a heretic.<br /><br />Now I feel totally vindicated. I had to go to a meeting the other day, and I met this realtor who said, "I don't have any listings under $300,000." As if that were a badge of honor. (She only deals with the supposed rich people, you see.) Oh, really, how many listings do you have?<br /><br />"Six."<br /><br />Wow. I have four listings over $300,000 and over thirty under $300,000. And they're all repossessed.<br /><br />This is what I'm talking about. Would you rather sell a few homes or a lot? I'd rather sell a lot. Doesn't matter to me what the list price is, what the condition of the home is, what the ultimate sales price is, it's all money to me. If I list and sell 120 homes in a year, with prices ranging from the low ten thousands to low hundred thousands, I'll make a hell of a lot more money than if I only listed and sold say 12 in the low hundred thousands or higher.<br /><br />This is what is bothering me. Yes, there was a lot of fraud going around. It is the great failure of government that the perpetrators have not been prosecuted and convicted.<br /><br />That does not excuse borrowers who took out loans they knew they could not afford. Those people deserve to lose everything.<br /><br />Still, it is the panic that seems to be possessing everyone. Oh, no, my house is underwater! So? That's only a problem is you're forced to sell it now.<br /><br />I understand the resentment. If I were conned into taking out a fraudulent loan, I wouldn't feel any obligation to continue to make payments. I'd skip town. But I haven't been connned, and so I make regular payments on all the debts I owe, without complaint.<br /><br />However, these days it seems to be chic to not accept any responsibility for one's decisions. All these people are walking away, because that's the in thing to do. I cannot abide that.GawainsGhosthttps://www.blogger.com/profile/16719480047404817864noreply@blogger.com