The Market Ticker – Government: Let’s Screw More Homebuyers!
Don’t trust the government folks. They are heavily invested in bubble-blowing, and are desperately attempting to keep the game going — and don’t care if you get destroyed in the process.
(Reuters) – More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.
That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.
It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.
Please understand how this actually works.
When you take out a loan that goes into negative amortization, no matter what it is, the negative amortization portion unless backed by someone’s actual hard capital (that is, it’s a “hard money” loan) is pure inflation in the monetary system.
This acts to drive up prices for commodities and destroy your purchasing power.
That is, you not only are underwater but at the same time your ability to service the debt is intentionally and inextricably impaired at the same time.
This is an intentional act undertaken by (in this case) the government and (in the previous case) by the subslime and “ALT-A” debt merchants.
It is not an accident, it is not an incidental and unforeseen consequence, it is the intent of the entities who are making the loans they know are unbacked by anything.
Since all money in modern economies is debt-backed (in the case of the US all except for coins) and a balance sheet must always balance any time you increase credit outstanding by more than the collateral value that backs the loan you are increasing the monetary supply in relationship to GDP. That is inflation and inexorably causes your cost of living in real terms to rise. When wages are not constrained economic slippage causes you to lose ground. When wages are constrained then you literally fall off the cliff as your cost of living goes up while your wage base goes down — that is your personal leverage goes up while your ability to meet your obligations is damaged or even destroyed.
These are intentional acts and it’s bad enough when private parties do it and sucker you into foolish decisions. When governments do it this is an outrage and one that should be responded to by a complete refusal to cooperate, acquiesce and further endorse the blatant theft of your economic well-being for the purpose of looting conducted by the “favored few.”
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¡Very simple!
What I think happens is that the bankers did not share the profits in times of fat cows (Before 2007) because it was assumed that the Fed will lend money to them with almost zero interest in order to invest in the stock market and lower the mortgage interests; but it didn’t happen that way, because while interests went high rocketing, bankers forgot to share their profits earning trillions of dollars and at the same time, interests rose to hell, and if you look the way they operated, they were really robbing the government and the people of this nation. They knowingly created a bubble and now they are here looking for our sympathy.
Please, let’s set the record straight for the person who wrote this piece: FHA loans are NOT negative-amoritization loans. The subject starts with FHA and then continues to broaden to negative-am loans. There is a definite distinction as FHA does NOT allow neg-am. Those type of mortgages were touted by World Savings, Countrywide, Washington Mutual and now a host of PRIVATE INVESTORS who are looking to make a quick buck! The monies for subprime loans is not coming from any government funding source but from private individuals or entities comprised of private individuals. It is a very lucritive business for investors and people are duped into these programs.
The industry returns t o drink the kool-aid as they cannot turn away from 100% loans and move back into the lucrative derivative market. Hard to let a marvelous source of income disappear just because it ruined the economy. Remember bank money was and is not on the line, they are selling it off to the government or investors, insured by the government.
Geithner said today the housing market continues to be weak but he offers no solutions, no bail outs, no modifications, no principal write downs. Geithner said the government is backing what lending is taking place albeit a small expenditure. We are moving into a second dip. Consumers are buying short term feely goods or high mileage per cars, etc. but housing is dead in the water. People are locked in and lenders are short selling and foreclosing in RECORD numbers!
As this plays out, the economy will continue to tank despite limited consumer spending.