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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Why would firing CEO's be prudent? ( NT) Posted by Spookey on August 18, 2010 at 2:19 PM In Reply to: Re: Why would firing CEO's be prudent? ( NT) posted by JK (the other JK) on August 17, 2010 at 6:21 PM : : : : : : : : I see a lot of sellers are reducing their asking prices. A seller in the neighborhood where I've got a project has reduced his price twice in the last 4 weeks. No matter how much a house is discounted and even if mortgage interest rates are at historical lows... if people can't qualify for home loans it just doesn't matter. Households are in trouble, people have lost or are worried about losing their jobs or having their hours cut, and they are scared and are saving and trying to pay off debt. Meanwhile the banks are holding back and slowly letting their REOs back out into the market so as not to depress home prices any further. Yet, we've got another 4-5 million foreclosures that will be coming over the next few years. Who knows what the government will attempt in order to solve this. Someone is going to have to buy all these homes that will be coming on the market, and the prices are going to keep dropping just based on supply and demand and the other basic dynamics of economics. It really is all about jobs and I don't see anything happening in the economy that is going to create the millions of jobs needed any time soon. These are interesting times. : : : : : : : It's about a whole lot more right now. For posssibly the first time in the history of this country there are masses of people that are losing their homes -- even though they have good paying jobs. I know of several dual income households that are comprised of firefighters, teachers, law enforcement, sales people, etc that are making double the state median household salary and are losing their homes. There are a boat load of people that are just in bad loans. For example I know a bus driver that has a 11.75% first for $380K on a home worth $150K in a bad part of town. Now her bank could very easily modify her loan, drop the interest rate to something reasonable and stop the foreclosure. Instead they've made her jumps through hoops of fire to eventually deny her for a modification. Now they are getting ready to foreclose and lock her out of home ownership for the next FIVE years. : : : : : : : Here are three simple things that could be done to change things overnight: : : : : : : : 1) Do away with the Due On Sale Clause. : : : : : : : 2) Replace EVERYONE's loan with a 30 year fixed 4.75% interest rate PITI loan regardless of whether the person is delinquent or not. Requiring people to get delinquent to be considered for a loan modification is asinne. : : : : : : : 3) Fire every single bank CEO today and let someone from another industry run the banks. : : : : : : : Chances of any of this happening? ZERO. : : : : : Because they've all proven that they are completely inept at running things. Had these same CEOs been running the banking industry in China, they would have all been executed by now. I'm no rocket scientist but even I knew it was a bad idea to loan money to people with a history of bad credit, no jobs, no downpayments, no reserves, no prior home ownership and then payments that were unaffordable. That was par for the course. Now they are out telling everyone to stop making their payments and they will CONSIDER them for a loan modification. How is NOT firing them prudent? What grade would you give the head of all the banks? : : : : But you suggest that we "Replace EVERYONE's loan with a 30 year fixed 4.75% interest rate PITI loan." Doesn't this perpetuate the same irresponsibility that you assign to the CEO's of the banks by giving loans to people "with a history of bad credit, no jobs, no downpayments, and no reserves? Of course if this fix is adopted by the Gov't, it will be the tax payers, not the banks, that pay the costs for future defaults. : : : Interest rates are down. The only reason people can't refi is they have no equity. We are discussing ways to work on the housing crisis and the foreclosure problem. Promoting irresponsibility is selectively giving loan modifications (down to 2% interest with principal payment deferrals) to people that are not paying their mortgage. Meanwhile those that took conservative loans with 20% down payments and are current get the shaft. : : The only reason interest rates are down is because of trillions of dollars of gov't (i.e. tax payers) support. It's not only a lack of equity that prevents people from refinancing. Many people can't refinance because they don't have jobs, can't afford the debt service, or have poor credit. And how exactly are "those that took conservative loans with 20% down payments" getting "the shaft." Asset values fluctuate. When they bought their home, they took the risk that it could go down in value. We need to let the market determine the price of housing, not the gov't. : You are correct. I mis-posted when I used the word "only". I meant to post a "MAJOR" reason people can't refi is lack of equity. Anyway this thread has gone on long enough. It's clear we've entered into a debate where neither side will be convincing the other. Perhaps you believe that present crop of CEOs are doing a dandy job. For the record, I do believe in the free market system, but not the "free for all" market system we've witnessed in the last 7 years. I agree with you on the performance of the banks and their CEO's. I just oppose using trillions in taxpayer money to bailout banks and homeowners from their mistakes. Government intervention will only postpone the inevitable. But what the Gov't should do is academic. What they will do is what matters to the investor. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : : : : : : : : I see a lot of sellers are reducing their asking prices. A seller in the neighborhood where I've got a project has reduced his price twice in the last 4 weeks. No matter how much a house is discounted and even if mortgage interest rates are at historical lows... if people can't qualify for home loans it just doesn't matter. Households are in trouble, people have lost or are worried about losing their jobs or having their hours cut, and they are scared and are saving and trying to pay off debt. Meanwhile the banks are holding back and slowly letting their REOs back out into the market so as not to depress home prices any further. Yet, we've got another 4-5 million foreclosures that will be coming over the next few years. Who knows what the government will attempt in order to solve this. Someone is going to have to buy all these homes that will be coming on the market, and the prices are going to keep dropping just based on supply and demand and the other basic dynamics of economics. It really is all about jobs and I don't see anything happening in the economy that is going to create the millions of jobs needed any time soon. These are interesting times. : : : : : : : : It's about a whole lot more right now. For posssibly the first time in the history of this country there are masses of people that are losing their homes -- even though they have good paying jobs. I know of several dual income households that are comprised of firefighters, teachers, law enforcement, sales people, etc that are making double the state median household salary and are losing their homes. There are a boat load of people that are just in bad loans. For example I know a bus driver that has a 11.75% first for $380K on a home worth $150K in a bad part of town. Now her bank could very easily modify her loan, drop the interest rate to something reasonable and stop the foreclosure. Instead they've made her jumps through hoops of fire to eventually deny her for a modification. Now they are getting ready to foreclose and lock her out of home ownership for the next FIVE years. : : : : : : : : Here are three simple things that could be done to change things overnight: : : : : : : : : 1) Do away with the Due On Sale Clause. : : : : : : : : 2) Replace EVERYONE's loan with a 30 year fixed 4.75% interest rate PITI loan regardless of whether the person is delinquent or not. Requiring people to get delinquent to be considered for a loan modification is asinne. : : : : : : : : 3) Fire every single bank CEO today and let someone from another industry run the banks. : : : : : : : : Chances of any of this happening? ZERO. : : : : : : Because they've all proven that they are completely inept at running things. Had these same CEOs been running the banking industry in China, they would have all been executed by now. I'm no rocket scientist but even I knew it was a bad idea to loan money to people with a history of bad credit, no jobs, no downpayments, no reserves, no prior home ownership and then payments that were unaffordable. That was par for the course. Now they are out telling everyone to stop making their payments and they will CONSIDER them for a loan modification. How is NOT firing them prudent? What grade would you give the head of all the banks? : : : : : But you suggest that we "Replace EVERYONE's loan with a 30 year fixed 4.75% interest rate PITI loan." Doesn't this perpetuate the same irresponsibility that you assign to the CEO's of the banks by giving loans to people "with a history of bad credit, no jobs, no downpayments, and no reserves? Of course if this fix is adopted by the Gov't, it will be the tax payers, not the banks, that pay the costs for future defaults. : : : : Interest rates are down. The only reason people can't refi is they have no equity. We are discussing ways to work on the housing crisis and the foreclosure problem. Promoting irresponsibility is selectively giving loan modifications (down to 2% interest with principal payment deferrals) to people that are not paying their mortgage. Meanwhile those that took conservative loans with 20% down payments and are current get the shaft. : : : The only reason interest rates are down is because of trillions of dollars of gov't (i.e. tax payers) support. It's not only a lack of equity that prevents people from refinancing. Many people can't refinance because they don't have jobs, can't afford the debt service, or have poor credit. And how exactly are "those that took conservative loans with 20% down payments" getting "the shaft." Asset values fluctuate. When they bought their home, they took the risk that it could go down in value. We need to let the market determine the price of housing, not the gov't. : : You are correct. I mis-posted when I used the word "only". I meant to post a "MAJOR" reason people can't refi is lack of equity. Anyway this thread has gone on long enough. It's clear we've entered into a debate where neither side will be convincing the other. Perhaps you believe that present crop of CEOs are doing a dandy job. For the record, I do believe in the free market system, but not the "free for all" market system we've witnessed in the last 7 years. : I agree with you on the performance of the banks and their CEO's. I just oppose using trillions in taxpayer money to bailout banks and homeowners from their mistakes. Government intervention will only postpone the inevitable. But what the Gov't should do is academic. What they will do is what matters to the investor. [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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