Why Handholding is Bad

December 04, 2007 11:42AM
Want to know why handholding and coddling people and businesses is bad? This blog has a cornucopia of information regarding the subprime nonsense that's been plaguing the news lately. Below is an interesting tidbit:

Quote

“Aside from violating the sanctity of a contract and scaring off potential investors, what’s the good news here? ‘It’s a big misconception to think that (mortgage) resets are responsible for the delinquencies,’ said Andy Laperriere, a managing director at the ISI Group in Washington.”

“Of the subprime loans made in 2006 and scheduled to reset in 2008, some 25 percent are already delinquent, he said. ‘What’s driving the delinquencies is that people can’t afford the initial payments,’ Laperriere said.”

“That’s a problem Paulson’s plan won’t fix.”

My personal thoughts?

1) Every entity that loans money to people without figuring out if they can pay it should go bankrupt.
2) Every person who takes a loan they can't possibly afford desserves to foreclose.

The reason why this is bad for the rest of us, even if we're not investors or homeowners, is because who is buying all these loans? The answer to that question is the states. Municipalities (states, cities, etc) buy up these loans repackaged as bonds to support their pension obligations. Who is going to pay to put more money into those funds? Furthermore, this "rate reset freeze" plan is going to be paid for by individual states.

So in other words, the rest of us will eventually pay it, only it'll show up as increased sales tax, public transportation and land taxes. In short, those of us whom are fiscally responsible will have to pay to keep the wonderful world of bottomless lines of credit going, because if it stops so does this entire economy.
Subject Author Posted

Why Handholding is Bad

Death_Claw December 04, 2007 11:42AM

Update.

Death_Claw December 05, 2007 10:45AM

No Empathy Eh?

happyorb December 04, 2007 08:07PM

This is a pretty discrete fix. Are you a subprime mortgagee?

Balrahd(VIP) December 05, 2007 01:25PM

Clinton is pushing it to, only even in a more socialist and insane way.

Death_Claw December 05, 2007 02:46PM

I hear you.

bajula December 05, 2007 08:02AM

A little addition...

bajula December 05, 2007 08:25AM

Re: A little addition...

Death_Claw December 05, 2007 08:38AM

Re: A little addition...

happyorb December 05, 2007 08:59AM

aww orb used to be happy

Stevers April 27, 2010 05:03PM

I'm sorry but you're off base arguing with DC here

Lokain December 05, 2007 12:55PM

Re: I'm sorry but you're off base arguing with DC here

happyorb December 05, 2007 03:30PM

I have to object to one point.

Death_Claw December 05, 2007 05:07PM

If you can't be bothered to read the contract don't sign it. n/t

Death_Claw December 05, 2007 09:18AM

That's what I hired my moron Lawyer to do. He failed, and I was screwed. ~

happyorb December 05, 2007 03:31PM

I would be shocked if 5% homebuyers read the final Kts.

Balrahd(VIP) December 05, 2007 01:33PM

I'm not disagreeing with that, its hardly an excuse however.

Death_Claw December 05, 2007 02:23PM

More importantly, if you're mortgaging 3-4x your income, pay a lawyer to read it for you nt

Rade December 05, 2007 09:46AM

RIF, I hired a Lawyer to read it, he sucked. ~

happyorb December 05, 2007 04:00PM

Re: No Empathy Eh?

Death_Claw December 04, 2007 08:44PM

All theory no practical experience...

happyorb December 05, 2007 08:48AM

I would rather rent.

cointreau December 05, 2007 11:27AM

Re: All theory no practical experience...

Death_Claw December 05, 2007 09:18AM

Re: All theory no practical experience...

happyorb December 05, 2007 03:59PM

Re: All theory no practical experience...

Death_Claw December 05, 2007 04:58PM

Weren't you the one who previously argued that homeownership is the end all/ beat all of human happiness? n/t

jegec December 05, 2007 02:36PM

I argued its not affordable for your typical person (and it should be).

Death_Claw December 05, 2007 02:47PM

Here's what I was thinking of

jegec December 05, 2007 03:24PM

What's your point?

Death_Claw December 05, 2007 04:50PM

Maybe I misread

jegec December 05, 2007 05:03PM

There are qualitative benefits to owning a home.

Death_Claw December 05, 2007 05:15PM

I was going to make an elaborate post about opportunity cost but i see you beat me to it

Rade December 05, 2007 09:51AM

Buy vs. Rent has a ton of variables.

ExPaladin(VIP) December 05, 2007 09:05AM

Some good points, for me it was a much better deal to buy. ~

happyorb December 05, 2007 03:33PM

Condo's also have hidden risks

ExPaladin(VIP) December 05, 2007 09:09AM

A lot of this also goes into the differences between...

Death_Claw December 04, 2007 08:59PM

*clap* *clap* Hurray for financial responsibility! nt

infi December 05, 2007 01:26AM

Ron paul plug. nt

The Forsaken(VIP) December 04, 2007 12:52PM

The US Mortgage crisis.

DurNominator(VIP) December 04, 2007 11:51AM



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