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alstry (35.70)

Are the banks squeezing the American People?

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February 23, 2008 – Comments (13)

"Nearly all the top home equity lenders I know of are doing this or considering doing this," said Joe Belew, president of the Consumer Bankers Association, which represents some of the nation's largest home equity lenders.

In one brief phone call, Nancy Corazzi's lender yanked away what was left of the $95,000 home equity line of credit that she and her husband took out five months ago.

The lender informed her that her Howard County home had plummeted in value and the company did not want the risk that she would owe more than the house was worth.

"I got off the phone and I was shaking," said Corazzi, who was using the money to pay preschool tuition for her twins ."I was near tears. We needed this credit line to get us through some tough times." http://www.washingtonpost.com/wp-dyn/content/article/2008/02/22/AR2008022202987_pf.html

Our banks don't want to lend poor Mrs. Corazzi a few thousand dollars to send her twins to preschool, but they are willing to lend SPF billions of dollars to build even more specs in areas where there are more homes being foreclosed than sold?  Not only that, who do you think is a better credit risk, a company owing billions paying its exectuives millions in bonuses AFTER liquidating its shareholders assets at hundreds of millions of losses or poor Mrs. Corazzi who simply wants to send her twins to preschool?

13 Comments – Post Your Own

#1) On February 23, 2008 at 10:15 PM, dwot (99.50) wrote:

Are you trying to justify one bad credit risk over another by some pink elephant comparison?

Check your facts on that one, the Corazzi are the "poster child" of the home ATM madness.

Both stink and are why the US banking system is insolvent. 

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#2) On February 23, 2008 at 10:24 PM, alstry (35.70) wrote:

Nice observation. 

Both do stink, however which smells worse?

The one that is responsible for borrowing billions intentionally overbuilding in overbuilt areas directly responsible for contributing to the downward pricing pressure of housing simply to extract a few pennies out of devalued land while grabbing millions dollars in unjustified bonuses in the process

 or

one who simply is borrowing money out of perceived equity with every intention to pay it back from personal income and protected by value that the person honestly believes exists?

You can make that call.

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#3) On February 23, 2008 at 10:28 PM, EScroogeJr (< 20) wrote:

It is sickening to hear homeowners whining about their "plight" when their equity fails to grow fast enough. It's time to put an end to this madness. Let us talk instead about 32% of the population who must pay every cent of that preschool out of their pocket because they can't use the house ATM.

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#4) On February 23, 2008 at 10:44 PM, alstry (35.70) wrote:

Again, I have no problem with the perspective on the abuse of the housing ATM.  Clearly a problem that needs to be and is being addressed.

However, little is being said about the public and banks loaning billions to public homebuilders to overbuild in overbuilt areas negatively impacting the values of billions of dollars worth of homes.

Yes, it is sickening to hear the plight of borrowers potentially abusing the system, but isn't more sickening to facilitate those intentionally destroying the system?

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#5) On February 23, 2008 at 11:17 PM, EScroogeJr (< 20) wrote:

I would much rather support a company that, for all its inefficiencies, produces a useful product, than an individual who wants to get 95K without contributing anything in return.

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#6) On February 24, 2008 at 12:03 AM, alstry (35.70) wrote:

A useful product?

How deep in the ground is your head burried?  Last month, more houses in CA were foreclosed upon than sold.  Think about that for a second.

In CA, houses have become a  non performing asset on bank's balance sheets.  You call that a useful product.  Those excess houses are driving down home values even further forcing more families into forclosure.  You call that a useful product.  Those foreclosures are costing municipalities millions per month simply to board them up.  You call that a useful product.  Squatters are now inhabiting the foreclosed homes increasing crime rates in neighborhoods.  You call that a useful product.

Faciliting the building of excess homes so its executives can get millions in bonuses while its shareholders and creditors take it up the backside, you call that producing a useful product? 

Myself, educating a young child....now I call that a useful product.

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#7) On February 24, 2008 at 1:09 AM, EScroogeJr (< 20) wrote:

I'm afraid I must take the view that anything that helps make houses cheaper is useful, while anything that helps make them expensive is harmful. This is exactly the same view that I hold with regard to cars, apparel, food, gasoline, electricity, etc, and I see no reason why housing should be viewed differently. Sure, all my real-money bets are staked on housing getting more expensive, and it's fine to root for your real estate portfolio as far as I'm concerned, but I really have no sympathy with Luddite arguments.

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#8) On February 24, 2008 at 8:50 AM, alstry (35.70) wrote:

You make an excellent point.

If local government increased property taxes 10X, then the prices of homes would fall to almost nothing and our governments would all have balanced budgets.

Now I look foward to your argument about making the usefulness of making our stock markets cheaper.

 

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#9) On February 24, 2008 at 12:11 PM, EScroogeJr (< 20) wrote:

You are speaking in bad faith. I know that you understand the difference between cheapness achieved by government making the product unusable and cheapness achieved by capitalist mass-scale production.

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#10) On February 24, 2008 at 9:41 PM, alstry (35.70) wrote:

My friend, I only make objective observations.

Homebuilders have been losing billions of dollars of the past several quarteres dumping their inventories at huge losses on the Amercan public.

Their behavior has been subsidized by the American public and American banking system.  It has been a direct cause for the evaporation of hundreds of billions of dollars of value from Amercan's net worths.

When a foreign country dumps their inventory on our markets, we jump and scream and cry foul.  When we do it to  ourselves, you call that capital mass production?

 

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#11) On February 24, 2008 at 11:43 PM, EScroogeJr (< 20) wrote:

alstry, I see your point. Cheap mass production of commodity X is evil because it reduces the net worth of an individual who bought X before it became a commodity. By that logic, Intel, Microsoft, Ford, IBM, General Electric, and virtually every other company except maybe one or two mom-and-pop grocery stores should be declared an enemy of the American people and if possible, driven into bancruptcy. In this way, we shall restore the net worth of the first buyers of refrigirators in the 1950s, stimulate demand, extend credit and live happily ever after.  See why I called you a Luddite?

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#12) On February 25, 2008 at 1:05 AM, alstry (35.70) wrote:

Sure, all my real-money bets are staked on housing getting more expensive................

You better know when to hold em, and know when to fold em.

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#13) On February 25, 2008 at 3:03 AM, EScroogeJr (< 20) wrote:

Quite so. My money is on the bad guys because the bad guys are going to win this round. To do otherwise would be pointless. I'm not going to lose half of my portfolio betting on the good cause.

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