Why the Fed's rate cuts won't help you.

[FrankTheTank55]

From a personal standpoint, I just would like to see more activity because I have a home on the market for sale and lowering the rates would bring more buyers into the picture.

I Had my house on the market for two years. I had it listed for $15,000 under what I owed on it and still couldnt sell it. So I am renting it out. Which works out pretty good because the renter basically pays my house payment on that house. Then I bought the new house for a great price. You might want to think about renting it out and then down the road either sell it when the market turns around or keep it as a rental and one day make a profit off it.

[redsquirrel]

A COV is a certificate of value. It is basically a watered down version of an appraisal. I believe they can essentially do it curbside based on the exterior appearance and comp information. It cost ~150.

Yes, they can do an "Exterior Only", or Drive By appraisal, but $150 sounds a little light. Those are normally $250. But, if you're possibly getting a finalized contract, then don't waste your money. However- make sure that your home will appraise out:

Purchases used to be a sure thing as far as values are concerned. However, just in the past 2 days I've had 2 purchases that the values have come in LESS than the purchase price. And one of them was a new construction loft type of home, of which we included the builder's contract listing out the cost of every option, etc. Again this all relates to supply and demand- there's too much of a supply of homes right now, along with homes in foreclosure, or like Frank said he couldn't even sell his at all for $15k UNDER what he owed.

[SonofBone]

However- make sure that your home will appraise out:

Hopefully, I'll be good to go. My price is above the 2004 appraisal that was done when I bought it, but a fair deal under what zillow shows the current estimate to be. Zillow probably isn't the best gauge, but at the same time, I don't think my realtor would allow me to list it at too high of a price. I believe their game is listing low and making things happen. Reducing the sales price by 5 to 10K or whatever number isn't an issue to them when you're talking 5 or 6% commission.

In terms of renting, I hope I don't have to go there. I think it is a good option if you're close by or comfortable with it. I'm most likely going to be in another state next year. I just don't feel comfortable in renting something when I won't be that close and don't want to always be reminded of that other property that I owe on in another state.

My wife's home is 2 years old and we're anticipating taking a big hit on it when we move. She is fine w/doing so as she looks at it like she could've lost as much in 3 years paying rent while she is here. I guess when you have that outlook it isn't bad. The main thing will be moving it as it doesn't pay to chase bad money with good money. We'll just cut and hopefully minimize our losses and be done.

[babyblues]

I don't understand what the problem is. What the fed is doing WILL help the economy. The idea isn't to lower rates (mortgages, cc, whatever, student loans), that is NEVER the idea. The idea is to get lenders to buy paper like you said. Our current situation is a much a fault of irresponsible borrowing as it is the fault of those that were willing to take on the risky borrowers. All you have to do is look at these balance sheets to see that these companies are hurting. Bear Sterns is almost dead, and it survived the Great Depression. Without companies like these the world does not turn. I don't understand the problem. For now it would be stupid for companies not to try and reign in who they lend to. When things calm down, then we can talk about how evil they are.

For now, lets be happy they exist.

So, how does this not help us?

Well, I for one, am sick of all this talk about helping the economy while people are getting screwed. There has to be a better way. Help the economy, great, I'm all for it. But don't forget the little guy. I don't know, I just don't like it.

The problem is that the Fed is basically bailing out banks who have been greedy and irresponsible. You can't blame the borrowers or the mortgage companies. How can you blame people with bad credit for still wanting a chance at pursuing the American dream? These people saw a chance to own a home where no chance existed before and they took it. If a bank is willing to loan you money to buy a home when no one else will, what moron wouldn't take it? The payments for these variable rate mortgages have ballooned and borrowers are defaulting. Now, people are losing their homes, their credit is screwed up for life and mortgage companies are going out of business. But, surprise, surprise, look who's still afloat. The freakin banks. These are the same banks that were lending people money when they knew damn well they shouldn't. Where's the accountability? Well, our current administration, in it's infinite wisdom, decided that it was necessary to deregulate the industry. I don't know whether they really believed that it doesn't need to be regulated or they're too lazy to do it, but the pooch has been screwed nonetheless. True, we need the banks, but long is our government going to pass all of that loss onto us to rescue them?

It doesn't matter anyway. We're all a bunch of fat sows gorging ourselves on this country's prosperity and now that the gravy train has slowed, we're squealing and paniced. But when it starts again, we'll go right back to gorging ourselves and do it all over again. We cause our own problems.

I was listening to NPR the other day and this guy was saying how supply and demand problems don't account for oil going over $100 a barrel. Maybe $90, but not over $100. He said that with the stock market struggling, all these funds are looking for somewhere to invest their hundreds of millions of dollars. Well, low and behold, where do you think they've started investing in mass? Yep, oil stocks. That's what's pushed the price of oil so blasted high recently. How do you like that? We're doing it to ourselves. It really doesn't take long for the greedy to screw up a good thing for everyone else.

[ROCKETW19]

Damm baby blues you are pissed hu? You dont know how to make bombs or plan to be by any banks in my neighbor hood do you? lol just messin bro.

[NewbieChris]

Well, I for one, am sick of all this talk about helping the economy while people are getting screwed. There has to be a better way. Help the economy, great, I'm all for it. But don't forget the little guy. I don't know, I just don't like it.

The problem is that the Fed is basically bailing out banks who have been greedy and irresponsible. You can't blame the borrowers or the mortgage companies. How can you blame people with bad credit for still wanting a chance at pursuing the American dream? These people saw a chance to own a home where no chance existed before and they took it. If a bank is willing to loan you money to buy a home when no one else will, what moron wouldn't take it? The payments for these variable rate mortgages have ballooned and borrowers are defaulting. Now, people are losing their homes, their credit is screwed up for life and mortgage companies are going out of business. But, surprise, surprise, look who's still afloat. The freakin banks. These are the same banks that were lending people money when they knew damn well they shouldn't. Where's the accountability? Well, our current administration, in it's infinite wisdom, decided that it was necessary to deregulate the industry. I don't know whether they really believed that it doesn't need to be regulated or they're too lazy to do it, but the pooch has been screwed nonetheless. True, we need the banks, but long is our government going to pass all of that loss onto us to rescue them?

It doesn't matter anyway. We're all a bunch of fat sows gorging ourselves on this country's prosperity and now that the gravy train has slowed, we're squealing and paniced. But when it starts again, we'll go right back to gorging ourselves and do it all over again. We cause our own problems.

I was listening to NPR the other day and this guy was saying how supply and demand problems don't account for oil going over $100 a barrel. Maybe $90, but not over $100. He said that with the stock market struggling, all these funds are looking for somewhere to invest their hundreds of millions of dollars. Well, low and behold, where do you think they've started investing in mass? Yep, oil stocks. That's what's pushed the price of oil so blasted high recently. How do you like that? We're doing it to ourselves. It really doesn't take long for the greedy to screw up a good thing for everyone else.

I understand where you are coming from, believe me. It pisses me off that the fed opened the door to allow companies to borrow and didn't just let these banks fail. You do understand though, that these banks going under don't hurt the people who you think get hurt. Like, Lewis, a billionaire from England, who is heavily in vested in Bear Stearns, 7.5% iirc. Bear Stearns going under doesn't hurt him as much as it does the little guy. Keeping Bear a float, or aiding in its purchase the Fed is helping the little guy, just not directly.

As for the deal that is 'supposedly' going to happen, you should be pissed about that. JP Morgan is getting the good meat from Bear Sterns and the Fed has told them they will take over the Mortgage-Backed Securities that Bear Stearns has. That mean that we, THE AMERICAN PEOPLE, are taking on the ACTUAL crap that Bear has...ain't that a son of a bitch?

The common man never feels a direct influence of Fed action, especially not immediately. Call me naive, but the Fed isn't here to screw us.

As far responsibility. It lies no more in the hands of one party than the other. They were equally excited, stupid, greedy. What ever term you want to use, its true. I don't know why, but people thought housing prices would just go up and up and up. When that didn't happen and the ARM were indexed to their peak, this is what happened. I feel sorry for Mr. and Mrs. America who truly needed a house, but you have to face reality. The American dream is bullshit. Mobility through income levels in this country is marginal. Possible, but not realistic. However, there were just as many, if not more, people who thought they could make an ass load buying a 2nd or 3rd house. Amateur greedy investors, getting in over their head.

The entire situation is garbage and it makes me sad. Hell, its the best argument for a Gold Standard.


You know, deregulation is a good thing, but a bad thing. Heres the problem with truly free market economics at its best. People are greedy. Let me ask you a question...Would you let George W. Bush run your business? What about Nancy Pelosi? Hilary Clinton? Barack Obama? John McCain?

Hell no, I wouldn't let any of them do it! They all know jack shit about economics, all they know is how to get elected. Actually, I don't know enough about Obama to say that...

My point is, the people we let control this country are disgusting. I have almost no respect for any of them. Why would I want THEM regulating something as important as the economy?

[NewbieChris]

I just saw this today:

http://www.slideshare.net/guestd5ab5...ubprime-primer


Really Recommend that you read through it. Also, there is some bad language, just so you know.

[babyblues]

Damm baby blues you are pissed hu? You dont know how to make bombs or plan to be by any banks in my neighbor hood do you? lol just messin bro.

lol

No, if I knew how to make a bomb, with my luck, I would have blown myself up by now. Actually, I've been without a job for 3 months now, so this is a REALLY sore spot right now. It's frustrating.

[redsquirrel]

The problem is that the Fed is basically bailing out banks who have been greedy and irresponsible. You can't blame the borrowers or the mortgage companies. How can you blame people with bad credit for still wanting a chance at pursuing the American dream? These people saw a chance to own a home where no chance existed before and they took it. If a bank is willing to loan you money to buy a home when no one else will, what moron wouldn't take it? The payments for these variable rate mortgages have ballooned and borrowers are defaulting. .

You do make valid points. But you also have to remember the borrowers who took these loans in the first place are almost equally as responsible. They knew full and well that they wouldn't be able to afford the payments...either at the initial fixed rate period or after it adjusted. In addition, a good portion of these loans that have defaulted were these "stated type" loans, where the borrower AND the lender BOTH severely overstated the borrower's income. The borrower has to sign an application verifying their income BEFORE they closed on their loan. So, if they signed it, they are just as responsible for saying they made that income when they did not.

Secondly- you talk about the oil prices. Actually, the guy on NPR is right. In fact, the big oil companies really don't like it or even want oil prices to go anywhere over $90/ barrel. Because guess what happens when oil prices get that high? People get smart, and start looking for alternative means of transportation. Whether it be taking public transport, carpooling, etc. What does this mean? Less revenue & profits for the oil companies. Also- with rising oil prices, it makes it more expensive obviously to travel, but it also effects the manufacturing sector. So, while I understand your point about how we are doing it to ourselves, that really doesn't jive with inflation. If the Fed is trying to slow the inflation rate, then it doesn't make sense that they would allow something that would drive inflation. It's a total catch-22.

[goliath]

i didn't read all of the responses, so if this has been covered, i'm sorry...

while this may seem very hard to swallow, unfair, unethical, etc, etc, this is very necessary. the alternative is complete devastation of the american system (as perverse and immoral as it may have become). if these banks go under, they take the US, in it's entirety, with them. what triggered the great depression was a situation VERY similar to what is happening right now. the big difference is that the government left banks to fend for themselves. the attitude of 'you got yourself into this now get yourself out' lead to the US market collapse. people began pulling all of their assets out of banking institutions and left the banks with virtually no money. history will repeat itself if these banks aren't held up and market panic isn't kept to a minimum. nobody is using the "R" word for damn good reason. to do so would cause global panic in the american financial sector and that could turn out to be very bad for all of us. if the fed can keep a supply of money flowing, we may get out of this though only narrowly avoiding catastrophe.

BUT - what pisses me off is the fact that CEO's and upper-execs knew this would come. how could they not!? what they also knew is that a government bailout would follow in an effort to avoid another serious depression. i read a story about a woman making $40K a year who qualified for and purchased a $750K home!! WTF!? and the kicker - the author wanted us to feel sorry for the stupid bitch and blame the bank. they are BOTH at fault. now, when this is all said and done, every single CEO at every major bank should be put on trial for intentionally undermining the system that they are so tightly integrated with. treason perhaps?

[NewbieChris]

i didn't read all of the responses, so if this has been covered, i'm sorry...

while this may seem very hard to swallow, unfair, unethical, etc, etc, this is very necessary. the alternative is complete devastation of the american system (as perverse and immoral as it may have become). if these banks go under, they take the US, in it's entirety, with them. what triggered the great depression was a situation VERY similar to what is happening right now. the big difference is that the government left banks to fend for themselves. the attitude of 'you got yourself into this now get yourself out' lead to the US market collapse. people began pulling all of their assets out of banking institutions and left the banks with virtually no money. history will repeat itself if these banks aren't held up and market panic isn't kept to a minimum. nobody is using the "R" word for damn good reason. to do so would cause global panic in the american financial sector and that could turn out to be very bad for all of us. if the fed can keep a supply of money flowing, we may get out of this though only narrowly avoiding catastrophe.

BUT - what pisses me off is the fact that CEO's and upper-execs knew this would come. how could they not!? what they also knew is that a government bailout would follow in an effort to avoid another serious depression. i read a story about a woman making $40K a year who qualified for and purchased a $750K home!! WTF!? and the kicker - the author wanted us to feel sorry for the stupid bitch and blame the bank. they are BOTH at fault. now, when this is all said and done, every single CEO at every major bank should be put on trial for intentionally undermining the system that they are so tightly integrated with. treason perhaps?

This situation is much different than the Stock Market crash that dawned the beginning of the Great Depression. The Great Depression began because people would start rumors about stocks and everyone would buy up the stock. Then when nothing happened, the stock prices plummeted. So, some asshole got rich over lying to people and crushing out economy. This situation is different in the sense that it was more than one person at fault. Mortgage brokers assumed that house prices would always rise and that all the ARM they were handing out would be refinanced in a few years. The borrower wanted a house, or a bigger house at least. The investment banks bought up these mortgages and packaged them as a CDO, MBS, etc.

The difference being everyone was stupid in this case. Bear Stearns would not have 'failed', they would have been bought out, just like they were. The Federal Reserve is not doing what you think they are. They are not preventing a run on conventional banks, they are saving the asses of those who were invested in Bear, not those who have accounts there. The run on the banks that occurred because of the depression is much less likely to happen today because of FDIC regulations and other factors.

[SonofBone]

Got news today that my buyer is working on a lease to buy agreement on their home & will finalize w/me in the next day or two. I'll believe it when I see it. They wisely renogiated w/me. In November I gave them a price if they would purchase then vs. waiting until their home sold. We've now agreed to split that difference which I'm cool with because buyer's aren't exactly tearing down my door.

Uggh, this shit is depressing. After receving an email last Wed that everything should be addressed that night & I'd know something Thursday, still no word. Going from listing to contingency to them having a tentative deal to no deal to them getting a lease to buy to the contingency expiring to not hearing anything. This is one crazy emotional rollercoaster.

It sucks when you feel like the ball is in everybody else's court. I don't like having to sit back and wait for shit to happen. It is the current state of affair in a few areas of my life. Damn, I hate to wish my life away, but I'm anxiously looking forward to 3 months out to the next year.

At least I'm still getting in the gym & have my health.

[babyblues]

You do make valid points. But you also have to remember the borrowers who took these loans in the first place are almost equally as responsible. They knew full and well that they wouldn't be able to afford the payments...either at the initial fixed rate period or after it adjusted. In addition, a good portion of these loans that have defaulted were these "stated type" loans, where the borrower AND the lender BOTH severely overstated the borrower's income. The borrower has to sign an application verifying their income BEFORE they closed on their loan. So, if they signed it, they are just as responsible for saying they made that income when they did not.

Secondly- you talk about the oil prices. Actually, the guy on NPR is right. In fact, the big oil companies really don't like it or even want oil prices to go anywhere over $90/ barrel. Because guess what happens when oil prices get that high? People get smart, and start looking for alternative means of transportation. Whether it be taking public transport, carpooling, etc. What does this mean? Less revenue & profits for the oil companies. Also- with rising oil prices, it makes it more expensive obviously to travel, but it also effects the manufacturing sector. So, while I understand your point about how we are doing it to ourselves, that really doesn't jive with inflation. If the Fed is trying to slow the inflation rate, then it doesn't make sense that they would allow something that would drive inflation. It's a total catch-22.

Yeah, I certainly don't envy those guys. :D

I see what you're saying though. People don't stop to consider if they can actually afford the house they want to buy. It seems we're always stretching for just a little more than we can afford.

[SonofBone]

Looks as if it is helping some afterall. Last week, the avg. rates fell by .24 of a percent....

Mortgage applications spike after Fed action | U.S. | Reuters

NEW YORK (Reuters) - U.S. mortgage applications jumped by nearly 50 percent last week as home loan rates fell after the Federal Reserve cut interest rates and took steps to restore bond market confidence, an industry trade group said on Wednesday.

The Mortgage Bankers Association's mortgage applications index jumped 48.1 percent to a seasonally adjusted 965.9 in the week ended March 21, its highest level since early February.

An 82 percent surge in refinancing applications overshadowed a 10.6 percent rise in home purchase loan requests, lifting total applications from the previous week, when home loan demand sank to the lowest since end-December.

"The Federal Reserve acted last week to bring some stability to the mortgage-backed securities market and we saw an immediate impact with a drop in mortgage rates," Jay Brinkmann, the MBA's vice president of research and economics, said in a release.

The Fed last week slashed official lending rates by 0.75 percentage point, slashing the benchmark federal funds rate to 2.25 percent, its lowest in more than two years.

Average 30-year home loan rates fell 0.24 percentage point to 5.74 percent, the lowest since 5.72 percent in early February, according to the trade group.