here is a list of banking laws over the years

Damocles said:
The problem is, the new regulation was created so those who couldn't afford the loans could get the loans in the name of "equality" and so some few politicians could be proud of the record that groups that before were lower on average now had "record numbers" of home owners. Specifically the law created the problem itself...
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I don't disagree with that. I also believe that the laws helped to allow the problem to occur. But in the end, it is the consumer and lender that actually arranged the financing. In the end, as pissed as we are at the politicians for mucking this up.... the consumer and lender are to blame.
 
Superfreak said:
I don't disagree with that. I also believe that the laws helped to allow the problem to occur. But in the end, it is the consumer and lender that actually arranged the financing. In the end, as pissed as we are at the politicians for mucking this up.... the consumer and lender are to blame.
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I do believe that people should be responsible enough to know what they can afford and wise enough to view a future that may have some uncertainty.

I just find it funny that the regulations need to be rewritten as they were before an insistence by those in power that people be able to receive them as they are...

The fix is to return to before. It was the whole "equality" thing that mucked it up to begin with.
 
Desh said:
http://www.sbaonline.sba.gov/ADVO/laws/comments/joint04_0415.pdf

This one looks interesting.

What were the "burdensome regulations" which were ended?
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Those were mostly for the little lenders, not the ones that created the larger portion of the problem. It removed some regulations that kept smaller lenders from competing with the larger ones. However, smaller lenders were not required to make those loans that caused the problem (as I understand it) and usually stuck with the safer loans.

This is one reason that you hear about the huge companies going down, but the smaller ones are trudging along as usual and many are giving the loans that will bring people out of the problematic loans.

Of course, they could easily have hidden more regulations for the larger banks in that "deregulation" that could have ramped up the issue....

Never put it past the legislators to add stuff to bills that makes them unbearably worse...
 
Damocles said:
I do believe that people should be responsible enough to know what they can afford and wise enough to view a future that may have some uncertainty.

I just find it funny that the regulations need to be rewritten as they were before an insistence by those in power that people be able to receive them as they are...

The fix is to return to before. It was the whole "equality" thing that mucked it up to begin with.
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Agreed.
 
http://www.nytimes.com/imagepages/2005/10/22/business/20051022_CHARTS_GRAPHIC.html

Notice the blip up of housing starts in 2004. The same year this took place. Many of these smaller companies may have gotten bought by the larger ones who then packaged them in with other loans to then sale. Hmmm looks kinda interesting.


It seems to me at first the boom was just on a housing need. Then when it began to cool off I heard alot about these new alternative loans. Am I remembering wrong?
 
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Desh said:
http://www.nytimes.com/imagepages/2005/10/22/business/20051022_CHARTS_GRAPHIC.html

Notice the blip up of housing starts in 2004. The same year this took place. Many of these smaller companies may have gotten bought by the larger ones who then packaged them in with other loans to then sale. Hmmm looks kinda interesting.


It seems to me at first the boom was just on a housing need. Then when it began to cool off I heard alot about these new alternative loans. Am I remembering wrong?
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Well, hard to say if it was due to this or due to the reversal of the stock market in 2003. Once the market began rallying in March of 2003, individuals started feeling more confident about investing again, felt their worth increase and subsequently started looking for homes. This combined with the 30-40 year lows in interest rates is probably why you saw the pick up in housing starts in 2004 and 2005.

Note: this is not to say that your suggestion is without merit. I just don't know how you would break out the cause/effect between the varying factors.
 
Superfreak said:
Well, hard to say if it was due to this or due to the reversal of the stock market in 2003. Once the market began rallying in March of 2003, individuals started feeling more confident about investing again, felt their worth increase and subsequently started looking for homes. This combined with the 30-40 year lows in interest rates is probably why you saw the pick up in housing starts in 2004 and 2005.

Note: this is not to say that your suggestion is without merit. I just don't know how you would break out the cause/effect between the varying factors.
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that is one reason that business models fail to be accurate. complex situations that keep being changed by rules, environment, etc...
 
Desh said:
http://www.nytimes.com/imagepages/2005/10/22/business/20051022_CHARTS_GRAPHIC.html

Notice the blip up of housing starts in 2004. The same year this took place. Many of these smaller companies may have gotten bought by the larger ones who then packaged them in with other loans to then sale. Hmmm looks kinda interesting.


It seems to me at first the boom was just on a housing need. Then when it began to cool off I heard alot about these new alternative loans. Am I remembering wrong?
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Yeah, you are remembering wrong. Many people were on low interest teaser rates in the 90s. They were just able to ride the wave.
 
It seems the surge in these types of loans as percentage of all loans rose dramtically in those years though Damo.
 
Desh said:
It seems the surge in these types of loans as percentage of all loans rose dramtically in those years though Damo.
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It is expected that many will rise. This had little to do with the rules, as those had been in effect for a while. Too many institutions found that at cusp of the bubble, in order to get loans, they had to offer more of these things. Wiser people were waiting for the bubble to burst before purchasing.

I will say that more of the foolish people who don't look to the future also got the loans at this time. There were warnings already about the housing bubble, too many people ignored them.
 
Desh said:
It seems the surge in these types of loans as percentage of all loans rose dramtically in those years though Damo.
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True, the surge occured in 2004/05, but I believe you have to look at the interest rate environment. They were at 30-40 year lows over that time. That by itself will spark a surge in loans through new purchases as well as refinancing. You had many people jump from renting to the ARMs and I-only loans because that was the way they could buy and build equity rather than pay rent.
 
Desh said:
How was it the interest rates got so low?
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They were working to stave off the housing bubble, which was created by the buildup of these idiotic loans first forced on the banks, later used by them (I guess if you have to, you may as well do it with enthusiasm) to secure loans that never would be repaid. Small downturn in the economy coupled with housing bubble fears kept interest rates low.

The thing of it is, if used properly some of the loans were actually good.

We used the interest only loans until just recently because they amortized monthly and thus equity was grown faster when you paid down principle with each payment. In that way we cut YEARS off our next mortgage.
 
Somewhere someone should have limmited the use of these types of loans.

Thus the whole point of this thread.
 
Desh said:
Somewhere someone should have limmited the use of these types of loans.

Thus the whole point of this thread.
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LOL. And as I said, they should have left well enough alone. It was working to "equalize" and to have more "representative" home ownership that caused them to force loans they otherwise would not give on the banks. Previous to that banks didn't give the loans because they were likely to be defaulted on, suddenly they had to.
 
Or was it an attempt to keep the cash cow alive instead of doing what was good for the long term market.

Who originated the escalation of these types of loan? what was the catalyst?

Were there really never any protections and then someone just used the system or was there a protections in place which were changed?
 
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