wolfhaven

Who caused the housing meltdown of 2008?

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As researchers are digging through mounds of data they are discovering the 2008 housing market crash wasn't caused by the poor, subprime lenders.  After nearly a decade of blaming the poor, the actual data shows it was the wealthier and middle class with good credit scores who forced the collapse.  Speculators and house flippers who got caught up in the rising markets borrowed too much and invested in too many houses.  The subprime borrowers, who accounted for a majority of foreclosures actually became a much lower portion of foreclosures when it crashed.  People with good credit bought investments property to rent and then flip after a while were the ones in mass who were foreclosed on.  It's much easier to let a house go into foreclosure when it's just an investment and doesn't disrupt the primary residence.  

A long but interesting read on the new findings.  https://qz.com/1064061/house-flippers-triggered-the-us-housing-market-crash-not-poor-subprime-borrowers-a-new-study-shows/

Do you believe the new analysis or have another point of view?  

 

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Funny thing. I always thought that was the way of it. Most of us poor folk found a way to hang on to our homes. They may not be much, but they are all we have.

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I have a feeling it might happen again. Housing in most major cities are at  value and in a few major cities they are over valued. Right when I put my house on the market, the market jumped up. I think we had planned on listing our house at $75,000 and expected to get $70,000. Just as we started looking before placing it on the market there was a surge in price. Freaked us out because we only had so much for a home. Luckily the house we found had been sitting for a year and the seller had just got sick of waiting. Got them down from $180,000 to $156,000. Agent was pretty impressed with the deal we got for a move in ready 1800 Sq ft home.

But in the mean time our agent decided to revisit what we originally decided to list our house for. Initially "January 2026" he said he would not even list our house if we asked $90,000 for it. I agreed at that time it would be too much. Aug 2016 he decided $90,000 was totally doable. Listed and it sold in 30 Days for $85,000. Could not believe how crazy prices jumped. I know it does not seem like a lot, but in that price range that is a significant increase. There is very little inventory and most homes are being bought by investors as rentals which was really frustrating for us. I had an investor offer me $30,000 for my little house. Oh heck no way. We made sure our house went to a family. 

Edited by TigerLilly

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On 9/7/2017 at 6:36 PM, wolfhaven said:

As researchers are digging through mounds of data they are discovering the 2008 housing market crash wasn't caused by the poor, subprime lenders.

With respect, I simply don't understand this.  No-one has ever said the crash was caused by poor, sub-prime lenders.  There is no such thing as a poor, sub-prime lender.  And, if you mean sub-prime borrowers, it still makes no sense.  The crash was caused by bankers lending money to folks who had little or no prospect of paying the money back.  That's called a sub-prime loan:

Quote

In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule

https://en.wikipedia.org/wiki/Subprime_lending

On 9/7/2017 at 6:36 PM, wolfhaven said:

After nearly a decade of blaming the poor, the actual data shows it was the wealthier and middle class with good credit scores who forced the collapse.

No-one has ever blamed the poor.  Everyone, rightly, has blamed the banks.

On 9/7/2017 at 6:36 PM, wolfhaven said:

The subprime borrowers, who accounted for a majority of foreclosures

Oh, my.  My head is about to explode.   Stop blaming the victims.  Please.

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On 9/14/2017 at 5:30 PM, 4legsgood said:

With respect, I simply don't understand this.  No-one has ever said the crash was caused by poor, sub-prime lenders.  There is no such thing as a poor, sub-prime lender.  And, if you mean sub-prime borrowers, it still makes no sense.  The crash was caused by bankers lending money to folks who had little or no prospect of paying the money back.  That's called a sub-prime loan:

https://en.wikipedia.org/wiki/Subprime_lending

No-one has ever blamed the poor.  Everyone, rightly, has blamed the banks.

Oh, my.  My head is about to explode.   Stop blaming the victims.  Please.

I mistyped lender ILO borrower in that sentence.  The premise stands.  The poor, as you say, the "folks who had little or no prospect of paying the money back", are not the ones who caused the crash.  You should quit victim blaming.  The data in the referenced study, which you apparently didn't read, indicates the middle and upper class, with good or better credit scores, caused the crash.  By all banking standards, good or better credit indicates you have the credit worthiness to borrow and pay the loans back.  Try going back and reading the actual study.  It's linked above.  If you need more help, let me know and I'll see what I can do to help you.  

Prior to the crash the subprime lenders did account for a majority of the foreclosures.  Once the implosion started that changed.  Too bad facts make your head explode.  Aspirin may help with that, or an open mind.  

Just an FYI.  If a new study is released, the best source to conduct current research wouldn't be wikipedia.    

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The people who took out these home loans, knowing full well, they couldn't afford them, don't share any of the blame?

 I mean, I KNOW how much mortgage I can afford, regardless of a stranger telling me I can afford a lot more.

 I know my finances, I know what comes in, as opposed to what goes out and, no fast talking, slick mortgage lender can make me believe otherwise.

 This isn't one of those, one sided situations, there's blame on both sides.

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1 hour ago, wolfhaven said:

The poor, as you say, the "folks who had little or no prospect of paying the money back", are not the ones who caused the crash. 

I've never said they did.

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You should quit victim blaming.

I've never blamed the victims.  I've always blamed the bankers, insurance companies, mortgage lenders and credit ratings agencies. 

Who borrowed the money is neither here nor there.  What matters is who lent it and why.  The film Inside Job explains how tens of millions of people lost their savings, their jobs and their homes.  It's a tale of greed, corruption and fraud.  A tale of private jets and private elevators.  A tale of strippers, hookers and drugs. A tale of the "systemic corruption of the US by the financial services industry and the consequences of that systemic corruption."  A tale of bankers, insurance companies, mortgage lenders and credit ratings agencies in other words.  You can watch it here:

http://documentarylovers.com/film/inside-job/

Also, too, The Big Short is terrific:

https://www.rottentomatoes.com/m/the_big_short/

From memory, and I've watched both films twice, neither even mentions house flippers as a cause of the crisis.

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  We left a bank 30-40 years ago, & went to a credit union, they have provided all services we need, & are small, & when I walk in, I'm not a number but I''m called by first name.  Been told that big is better, but I thing big, just leads to big problems. So I'll stay small. PD

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On ‎9‎/‎15‎/‎2017 at 12:30 AM, 4legsgood said:

With respect, I simply don't understand this.  No-one has ever said the crash was caused by poor, sub-prime lenders.  There is no such thing as a poor, sub-prime lender.  And, if you mean sub-prime borrowers, it still makes no sense.  The crash was caused by bankers lending money to folks who had little or no prospect of paying the money back.  That's called a sub-prime loan:

https://en.wikipedia.org/wiki/Subprime_lending

No-one has ever blamed the poor.  Everyone, rightly, has blamed the banks.

Oh, my.  My head is about to explode.   Stop blaming the victims.  Please.

 

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keep the contents in your head please.  want to sent you a PM  but been away for awhile (i'll tell you why).  they changed the format, please advise. 

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JPMorgan, it appears, was running an elaborate shell game. In the depths of the financial collapse, the bank had unloaded tens of thousands of toxic loans when they were worth next to nothing. Then, when it needed to provide customer relief under the settlements, the bank had paperwork created asserting that it still owned the properties. In the process, homeowners were exploited, investors were defrauded, and communities were left to battle the blight caused by abandoned properties. JPMorgan, however, came out hundreds of millions of dollars ahead, thanks to using other people’s money.

https://www.thenation.com/article/how-americas-biggest-bank-paid-its-fine-for-the-2008-mortgage-crisis-with-phony-mortgages/

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