Comments on: Alt-A Loans and Option ARMs meet Strategic Defaults: The Perfect Recipe for a Toxic California Housing Market in 2010. Behavioral Economics of Housing and Top 7 California Regions with Active Alt-A Loans. http://www.doctorhousingbubble.com/alt-a-loans-and-option-arms-meet-strategic-defaults-the-perfect-recipe-for-a-toxic-california-housing-market-in-2010-behavioral-economics-of-housing-and-top-7-california-regions-with-active-alt-a/ How I Learned to Love Southern California and Forget the Housing Bubble Thu, 09 Feb 2012 15:03:51 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: UrsaMajor http://www.doctorhousingbubble.com/alt-a-loans-and-option-arms-meet-strategic-defaults-the-perfect-recipe-for-a-toxic-california-housing-market-in-2010-behavioral-economics-of-housing-and-top-7-california-regions-with-active-alt-a/#comment-42855 UrsaMajor Thu, 03 Dec 2009 04:18:18 +0000 http://www.doctorhousingbubble.com/?p=2410#comment-42855 What if PartyBoy can't work anymore? What if his wife lost her job? There are lots of extenuating circumstances one might not be able to uphold their end of the bargain. I'll bet most people defaulting on their mortgage aren't happy about it. As a bank shareholder and customer, I don't want to hear that the bank was giving out loans that wouldn't at least break even if the customer defaulted on the terms. The bank should have never loaned PartyBoy the money. When I couldn't come up with 20% down on my first house, the bank required me to carry Private Mortgage Insurance until I got to a point of 20% equity. And I had to put up 10% anyway. What happened to all those good lending practices? There should never been an opportunity for PartyBoy to mess over the bank. I'm not going to make any judgmental comments about PartyBoy, since I've never been in his shoes. I think many people would do the same, rather than simply bankrupting themselves to satisfy some huge corporate bank, which probably sold the mortgage to someone else anyway. Just assume, anytime you lend, someone exactly like him is signing the paperwork. And protect yourself. What if PartyBoy can’t work anymore? What if his wife lost her job? There are lots of extenuating circumstances one might not be able to uphold their end of the bargain. I’ll bet most people defaulting on their mortgage aren’t happy about it.

As a bank shareholder and customer, I don’t want to hear that the bank was giving out loans that wouldn’t at least break even if the customer defaulted on the terms. The bank should have never loaned PartyBoy the money. When I couldn’t come up with 20% down on my first house, the bank required me to carry Private Mortgage Insurance until I got to a point of 20% equity. And I had to put up 10% anyway.

What happened to all those good lending practices? There should never been an opportunity for PartyBoy to mess over the bank.

I’m not going to make any judgmental comments about PartyBoy, since I’ve never been in his shoes. I think many people would do the same, rather than simply bankrupting themselves to satisfy some huge corporate bank, which probably sold the mortgage to someone else anyway. Just assume, anytime you lend, someone exactly like him is signing the paperwork. And protect yourself.

]]> By: BiteMe http://www.doctorhousingbubble.com/alt-a-loans-and-option-arms-meet-strategic-defaults-the-perfect-recipe-for-a-toxic-california-housing-market-in-2010-behavioral-economics-of-housing-and-top-7-california-regions-with-active-alt-a/#comment-41194 BiteMe Fri, 23 Oct 2009 00:16:12 +0000 http://www.doctorhousingbubble.com/?p=2410#comment-41194 E - You are a prick. Plenty of smart people got caught up in the housing mania. Young first-time buyers don't have the background knowledge to know when a broker they have know for 10 years is selling them on a bad loan. Don't be so full of yourself. E – You are a prick. Plenty of smart people got caught up in the housing mania. Young first-time buyers don’t have the background knowledge to know when a broker they have know for 10 years is selling them on a bad loan. Don’t be so full of yourself.

]]> By: kirk willaims http://www.doctorhousingbubble.com/alt-a-loans-and-option-arms-meet-strategic-defaults-the-perfect-recipe-for-a-toxic-california-housing-market-in-2010-behavioral-economics-of-housing-and-top-7-california-regions-with-active-alt-a/#comment-41168 kirk willaims Thu, 22 Oct 2009 16:30:02 +0000 http://www.doctorhousingbubble.com/?p=2410#comment-41168 Partyboy agreed to pay "under the terms of a contract". He did not agree to pay, period, the end, without conditions. Corporations are the capitalistic version of individuals without any moral stricture and they use contract terms to insulate thenselves and customers from the hindraces of moral agency. Customers are free to operate as autonomous agents within the agreed upon terms without moral consequence. Both parties are. It's business, not ethics. Partyboy agreed to pay “under the terms of a contract”. He did not agree to pay, period, the end, without conditions. Corporations are the capitalistic version of individuals without any moral stricture and they use contract terms to insulate thenselves and customers from the hindraces of moral agency. Customers are free to operate as autonomous agents within the agreed upon terms without moral consequence. Both parties are. It’s business, not ethics.

]]> By: OkeyDokey http://www.doctorhousingbubble.com/alt-a-loans-and-option-arms-meet-strategic-defaults-the-perfect-recipe-for-a-toxic-california-housing-market-in-2010-behavioral-economics-of-housing-and-top-7-california-regions-with-active-alt-a/#comment-40457 OkeyDokey Wed, 30 Sep 2009 06:29:47 +0000 http://www.doctorhousingbubble.com/?p=2410#comment-40457 Also, housing prices would be affordable if these lending practices were not allowed. Also, housing prices would be affordable if these lending practices were not allowed.

]]> By: OkeyDokey http://www.doctorhousingbubble.com/alt-a-loans-and-option-arms-meet-strategic-defaults-the-perfect-recipe-for-a-toxic-california-housing-market-in-2010-behavioral-economics-of-housing-and-top-7-california-regions-with-active-alt-a/#comment-40456 OkeyDokey Wed, 30 Sep 2009 06:27:00 +0000 http://www.doctorhousingbubble.com/?p=2410#comment-40456 I think we have to consider a more widespread reason for this problem. Lenders tell you that you can refinance in a few years. The buyer knows there's a risk of higher interest rates, but the current lower rate offsets this and the buyer figures they could just sell if the rate is too high. The problem is that there's an underlying assumption, spread by the media and housing industry - you will always have positive equity. I think we have to consider a more widespread reason for this problem. Lenders tell you that you can refinance in a few years. The buyer knows there’s a risk of higher interest rates, but the current lower rate offsets this and the buyer figures they could just sell if the rate is too high. The problem is that there’s an underlying assumption, spread by the media and housing industry – you will always have positive equity.

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