[opendtv] Re: Mortgage stuff
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 12 Mar 2008 22:07:02 -0400
At 10:18 AM -0700 3/12/08, John Willkie wrote:
One of my brothers bought a home at the tail end of the real-estate
boom. He has a good job (assistant head of a community college
department; soon to be head) and could have bought a house earlier
but didn't for a number of reasons. He got out of his
negative-amortizaton loan in good time but now he has a
variable-rate loan that could reset in September. He's never missed
or been late on a payment, and his job appears to be firm. However,
he can't refinance his home, as it is worth less than the
outstanding mortgage, and he could get hit hard when the mortgage
rate resets. This is his home, not a financial 'thing.'
I see no reason not to call him a victim of the current situation.
It's the variable-rate note that will hurt.
It may hurt, but he knew this could happen going in, although he
probably did not expect to see the valuation of his home drop to the
extent that it has.
My now deceased father-in-law used to lament about how much money he
lost when the bubble burst in 2000. His portfolio was worth nearly a
million at the peak, then it lost half that value. He never did talk
much about the fact that his basis was probably less than $100,000.
I could lament about the fact that my home was worth more a year ago
than it is today. But the reality is that it is still worth about
twice what I paid for it.
Timing is everything.
In general, I agree with Craig on the points he raises. However, I
won't follow Bob's link.
In a sense, the current crisis is a mixture of the two that preceded it.
Much of the first S&L fiasco was the result of overbuilding - many
projects were built without the resources to sustain them in a
glutted market.
The stock market collapse was a mixture of "irrational exuberance"
and regulators looking the other way.
What was Spitzer doing as NY Attorney General from the time he was
elected in 1998 until the Dot Com bubble burst in 2000. Yes a bunch
of people lost money speculating in a market environment where you
could lose everything on 9 stocks as long as #10 was a shooting star.
But the corruption was taking place long before Spitzer saw the
political opportunity to go after some of the high profile Wall
Street types, AFTER the damage was done.
Many people (and governments) have been helped, then hurt because the
real estate market was ripe for the picking. Our county saw a
windfall of more than $10 million a year in property tax revenues for
a year or two - so what did they do? They added about 40 people to
the payroll. Now they are having to live like the rest of us, as they
are being forced to cut their budgets to help pay for the property
tax relief we just passed via a ballot initiative.
Perhaps we are all victims. For decades we've been enticed into
living beyond our means, just like the politicians.
Now they are sending us checks so we can spend our way out of a recession...
Looks a lot like the final days of the Roman Empire to me...
Regards
Craig
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