patrick.net

FunTime says

I think the adage “nothing comes for free” works with a lot of human experience. Peace of mind is worth a lot.

This is just purely childish, "life is harder, can't always have ice cream, wah wah wah". They made the choice, and they refuse to face the consequences as long as taxpayers are paying for their stupidity. If it was so bad, they would have moved on. But they choose not to, because they are living at the expense to others like some sort of parasites. I will simply disagree that these people are victims, most are just deadbeats taking advantage of the economic situation.

klarek says

The market corrects and life goes on. Trillions in artificial home equity were magically created, and thus can magically disappear.

Really? You're willing to bet the US economy on that? I don't know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn't seem too far fetched to think that without them it could have catastrophic.

corntrollio says

Please. We have a robust financial system that can roll with the punches on this. We haven’t truly gotten that close to Armageddon.
Even in many of the worst cases, many transactions offset from notional value, and some shareholders and bondholders may have lost their equity stake, but it wouldn’t have killed the economy any more than pretending the systemic problems don’t exist does.

I like the story Buffett tells of a trade he made during the worst of the crisis.

"On the insanity of the financial crisis: I sold a Treasury bill in December 2008 for $5,000,090, and it was a $5 million bill due in April. The guy was going to get $5 million for it. So he was saying that the Treasury bill was $90 better than his mattress. He could have put the $5 million under his mattress and been $90 better off."

I think we were a lot closer to Armageddon then you'd like to believe.

Here's a link to the interview with Buffett--it's pretty good.

http://www.fool.com/investing/general/2011/02/14/warren-buffett-speaks-out-about-the-financial-cris.aspx

tatupu70 says

Really? You’re willing to bet the US economy on that? I don’t know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn’t seem too far fetched to think that without them it could have catastrophic.

What do you think TARP was for? They knew roughly how overpriced the market was, and how much they'd lose. A reversion to the norm is not only unavoidable, but planned for. The b.s. of "complete destruction of the economy" if prices fall another ten or twenty percent is ludicrous. Even if it were true, the cost to prevent (delay) it from happening would be par with the cost of not doing anything at all. So fuck it, let it crash.

The other things to consider about this is liability. Let's say there's a fire, earthquake, mudslide, hurricane etc and damage is inflicted on the house. No insurance claim is going to be paid out unless the tenant is legit. If anyone runs a business out of a home like that then proof of insurance is also invalid as well.

I highly doubt that the banks would force everyone out but the risk of lack of insurance might not be worth it. All home improvements obviously would be put on pause as well.

If the bank can state that these people are legally squatters then law enforcement can ignore claims in disputes. If two homeless people are in an abandoned building and found fighting they both get kicked out. Likewise since there's no proof of ownership if something does come up an officer can tell both parties to leave.

If they aren't paying the mortgage that ALSO means they aren't paying the property taxes either. If they aren't paying the property taxes it can also mean they aren't voting in local elections (since some localities prevent that if you don't pay) and thus theres not much of any incentive by the local governments to even service such areas.

klarek says

tatupu70 says

Really? You’re willing to bet the US economy on that? I don’t know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn’t seem too far fetched to think that without them it could have catastrophic.

What do you think TARP was for? They knew roughly how overpriced the market was, and how much they’d lose. A reversion to the norm is not only unavoidable, but planned for. The b.s. of “complete destruction of the economy” if prices fall another ten or twenty percent is ludicrous. Even if it were true, the cost to prevent (delay) it from happening would be par with the cost of not doing anything at all. So fuck it, let it crash.

I don't think anyone is saying that the economy will collapse if houses fall another 10-20%. That is ridiculous. That wasn't the purpose of the bailouts.

tatupu70 says

I don’t think anyone is saying that the economy will collapse if houses fall another 10-20%. That is ridiculous.

Um okay....

tatupu70 says

No matter what the consequences are? It’s better to kill the US economy?

klarek says

tatupu70 says

I don’t think anyone is saying that the economy will collapse if houses fall another 10-20%. That is ridiculous.

Um okay….
tatupu70 says

No matter what the consequences are? It’s better to kill the US economy?

lol--there are two parts of your statement. I did mention killing the US economy. But nowhere did I or anyone that I'm aware worry that a 10-20% drop in home prices would be the cause...

In other related news:

SEC Cuts Wall Street Some Slack On Derivatives Rules

http://www.huffingtonpost.com/2011/06/10/sec-derivates-wall-street_n_874877.html

tatupu70 says

Really? You’re willing to bet the US economy on that? I don’t know one way or the other, but even with the bailouts and intervention we still had the worst downturn since the Great Depression. So it doesn’t seem too far fetched to think that without them it could have catastrophic.

What would have been better is if we nationalized the deadbeats and put them into receivership instead of maintaining the status quo with the same incompetent management and the same risky behaviors and making them "Too bigger not to fail". We could have done better, but instead we just gave these jerkoffs cash and let them pay massive bonuses. Nothing would have collapsed if the Fed or Treasury took them into receivership like what should have happened.

corntrollio says

Nothing would have collapsed if the Fed or Treasury took them into receivership like what should have happened.

True enough. But then all the Shreks of the world scream socialism at the top of their lungs. And Fox news would have the tea party wingnuts marching on Washington...

tatupu70 says

True enough. But then all the Shreks of the world scream socialism at the top of their lungs.

Yeah, instead we have corporatism, and make sure that heads the banksters win, and tails we all lose. The jerkoffs who screwed us all get all the gains, and we pay for their gambling.

corntrollio says

tatupu70 says

True enough. But then all the Shreks of the world scream socialism at the top of their lungs.

Yeah, instead we have corporatism, and make sure that heads the banksters win, and tails we all lose. The jerkoffs who screwed us all get all the gains, and we pay for their gambling.

I won't argue it was the perfect solution, but I think you overstate the negative. In terms of actual losses, the bailouts were a VERY small cost. And the shareholders of the jerkoff's companies lost huge. The actual jerkoffs probably made out better than they should--I agree.

My biggest problem is that we didn't break up the "too big to fail" banks and reinstate Glass Steagall. There are too many people spewing the CRA nonsense, keeping us from making the needed changes.

klarek says

What psychological effect? They are choosing to live in those houses, for free, and they picked out the house to begin with. Is there a psychological effect of “I get to live for thousands less per month than I was planning on living”?

I'll try to help you through what I'm thinking. You can call it bullshit. I don't think you're much of a thinker, but maybe you just don't see my angle. See if this helps.

House Buyer: I'm so happy to have finally realized the dream of buying a home. Society supports me. My friends support me. My family supports me. I've told every one that I bought this house, I've had a housewarming party. Whoohooo!!!

House Buyer: Oh shit, my house situation is fucked! What am I going to do? I was making payments thinking I was making an investment, but now it's not an investment and now I can't even make the payments. Boy this sure got complicated and confusing. This is now almost as confusing as buying the place.

House Buyer: I give up! I'm just going to stop making payments. And I seem to have found a loophole in the legal system that pretty much makes it okay. Is it really okay? I"m not that sure. If doesn't feel okay, because this wasn't my original plan. Changing plans is stressful and confusing.

House Buyer: All that societal support I had for owning my house is only there now if I keep what I'm doing a secret. This is an uncomfortable situation.

on and on, downward spiral into the same insanity that plagues most of the population anyway, so maybe nobody even sees this and maybe you're blind to it too, klarek. Hey let's all be insane criminals!

Austinhousingbubble says

The logic behind this notion is one of the most basic fallacies of all: two wrongs make a right. While I completely agree with you that banks are the more culpable of the two players, there’s a strange kind of apologist sentiment gaining traction on behalf of the deadbeat.

You're right, two wrongs don't make a right. That is not my point here. My point is that in a war, you have to do what is best for you and yours. America's home values are down the gutter primarily due to the ponsi scheme(s) that Banks orchestrated. The great majority of people that purchased at the height of the market, did so by following the, then, rules only to have the building crumble down on them due to the "criminal" activity of the banks.

To clarify there's no "apologist sentiment" at least not on my thread. I merely say that Facing the new reality, and what brought it down, people the likes of Lynn have to make a choice. Given her options I say she is making the right one. I don't regard her actions as parasitic behaviour at all, I say she has planter her flag. She will without a doubt be facing the consecuences of her actions sooner or later, however dire those may be, but the bigger question here is why do you focus on calling her a deadbeat parasite instead of asking yourself why o why hasn'the bank foreclosed on her? 5 years? really? Damn, that is a long time - isn't it? The bank can and should start the foreclosure process, as is there legal obligation to their investors, within 90 days of missed payments. Go ahead foreclose! No? Why not? There is something utterly wrong in this picture, and I do not like it not one bit, but if I have to pick a side I'm on Lynn's corner.

Austinhousingbubble says

I can actually imagine certain nightmare scenarios where a bailout is the appropriate course of action; however, I think the idea has been very badly tarnished thanks to bungling approach by this administration and the last. Just for starters, a bailout shouldn’t mean get-out-of-jail free with no-strings attached and bags of free money for your troubles. That’s another story, though.

I should have said I don't believe in baillouts without repercussions. If it is a matter of national security than, I agree, and yes it is a whole new can of worms so we'll leave it at that.

Austinhousingbubble says

Perhaps, nothing — Lynn is blatantly gaming the system.

Exactly my point but she did not ask to be invited to the game. Nor did she create it. If there were no ponsi scheme, and she tried pulling this shit? She would be out on her ass within three months. But yet here she is 5 years later...wow!

Nassim Talib stated in the Black Swan that "Capitalism without bankruptcy is Catholicism without hell"

It creates moral hazard to assuming that businesses will just be bailed out. Now instead of less risk they are more apt to take MORE risk.

If GM has a potential recall they are more apt now to ignore it because after all if they get sued they'll go to the President for another bailout. Chrysler employees have already been caught drinking and smoking weed while on lunch for some of these same reasons.
http://www.myfoxdetroit.com/dpp/news/chrysler-auto-workers-busted_20100923_dk

Saying a business can't fail is like saying you want to watch a sport where neither team wins. Yes soccer can have that but if everyone constantly tied no one would advance.

Austinhousingbubble says

In other related news:
SEC Cuts Wall Street Some Slack On Derivatives Rules
http://www.huffingtonpost.com/2011/06/10/sec-derivates-wall-street_n_874877.html

I'm loosing more faith in our government every day. I'm not sure it can go any lower at this point.

ChrisLA says

I’m loosing more faith in our government every day. I’m not sure it can go any lower at this point.

You still have some faith in our govt?

The only faith I have in our govt. is that they will say anything to get re-elected and do anything to enrich themselves.

FunTime says

I’ll try to help you through what I’m thinking. You can call it bullshit. I don’t think you’re much of a thinker, but maybe you just don’t see my angle. See if this helps.

Yes, correct, I'm not a thinker. I guess nobody here is a thinker but you since nobody is buying your horseshit projections of the prison-like circumstance this person is choosing to be in. Stop paying mortgage after extracting several hundreds of thousands of dollars, stay in house, enjoy 5 years of free living... obviously these poor victims deserve our sympathy. Thank you for clarifying it. Your imagination is unparalleled.

mdovell says

It creates moral hazard to assuming that businesses will just be bailed out. Now instead of less risk they are more apt to take MORE risk.

How'd that work out for Countrywide? Or WaMu? Or IndyMac? Or Lehman Brothers? Will they be taking on more risk next time?

...My point is that in a war, you have to do what is best for you and yours.

Not comfortable with the idea that people who sucked money out of their upside-down money pits are comparable to combatants at war... I can just see the memorial at the National Mall now; one long granite counter top stretching as far as the eye can see, with all their names etched beneath the words Uti Possidetis.

America’s home values are down the gutter primarily due to the ponsi scheme(s) that Banks orchestrated. The great majority of people that purchased at the height of the market, did so by following the, then, rules only to have the building crumble down on them due to the “criminal” activity of the banks.

If you mean the banks helped engineer the bubble with the help of the FED and the ratings agencies then YES, I agree; and like I said before, YES, this makes them more culpable. But here's the thing: you didn't have to be a genius or even possess a preternatural olfactory sense for horseshit to avoid walking into their trap. Likewise, no one forced anyone to treat their homes like a bottomless ATM machine.

To clarify there’s no “apologist sentiment” at least not on my thread. I merely say that Facing the new reality, and what brought it down, people the likes of Lynn have to make a choice. Given her options I say she is making the right one.

We'll just agree that your criterion and mine could not be more vastly dissimilar when it comes to what constitutes righteousness. Someone on here recently lamented in a comment how they wish they'd gotten on the gravy train while it was still hot. That shit depresses me just as much as the takers from CNN the article. Maybe more.

but the bigger question here is why do you focus on calling her a deadbeat parasite instead of asking yourself why o why hasn’the bank foreclosed on her?

This has to do with the 2009 FASB decision to suspend mark-to-market accounting for banks -- a whole 'nother thread. What I regard as the bigger question here is why disgust for one larcenist entity should mitigate disgust for the other?

There were actually some buyers during the bubble who were GENUINELY outrageously FUCKED. I'm referring to outright victims of fraud, including forged and unauthorized alterations to their paperwork, falsified documents and the subsequent clusterfucks like MERS, etc. THESE are the buyers worthy of your defense who get lost in the shuffle along with the worst jerks like the ones in the article.

"How’d that work out for Countrywide? Or WaMu? Or IndyMac? Or Lehman Brothers? Will they be taking on more risk next time?"

No but obviously they didn't employ enough people to be considered too big to fail. Countrywide had one office in my town with maybe a handful of people working there. Donut shops employ more here. Wa Mu ? Never really saw it here in the northeast. Indymac? again not really in the northeast. The bubble didn't really pop much here. Boston hardly has gone down. NYC isn't doing that bad.

mdovell says

“How’d that work out for Countrywide? Or WaMu? Or IndyMac? Or Lehman Brothers? Will they be taking on more risk next time?”
No but obviously they didn’t employ enough people to be considered too big to fail. Countrywide had one office in my town with maybe a handful of people working there. Donut shops employ more here. Wa Mu ? Never really saw it here in the northeast. Indymac? again not really in the northeast. The bubble didn’t really pop much here. Boston hardly has gone down. NYC isn’t doing that bad.

That's kind of a myopic view there--if it's not in my town, then it must not be very big.

How about I ask this a different way. You think that companies will purposely take on inordinate risk because they think the government will bail them out? If so, which companies?

tatupu70 says

You think that companies will purposely take on inordinate risk because they think the government will bail them out?

Is that a trick question?

klarek says

tatupu70 says

You think that companies will purposely take on inordinate risk because they think the government will bail them out?

Is that a trick question?

Nope. Just consider what really happened with the bailouts. The money was in the form of loans or preferred shares convertible to equity. There really wasn't a free lunch-the owners of the companies that took the money lost big.

I'll agree that it would have been better if they could have simply gone bankrupt as a result of their poor understanding of risk/reward. But I guarantee you that none of the banks/financial institutions wants to repeat their mistake.

FunTime says

House Buyer: I’m so happy to have finally realized the dream of buying a home. Society supports me. My friends support me. My family supports me. I’ve told every one that I bought this house, I’ve had a housewarming party. Whoohooo!!!
House Buyer: Oh shit, my house situation is fucked! What am I going to do? I was making payments thinking I was making an investment, but now it’s not an investment and now I can’t even make the payments. Boy this sure got complicated and confusing. This is now almost as confusing as buying the place.
House Buyer: I give up! I’m just going to stop making payments. And I seem to have found a loophole in the legal system that pretty much makes it okay. Is it really okay? I”m not that sure. If doesn’t feel okay, because this wasn’t my original plan. Changing plans is stressful and confusing.
House Buyer: All that societal support I had for owning my house is only there now if I keep what I’m doing a secret. This is an uncomfortable situation.

You're right. That's exactly like being in prison.

Nomograph says

The problem isn’t the government, the problem is YOU. You are NOT a victim, you are a volunteer. Turn off the god damn AM talk radio and do something about your life if it’s so crappy.

Is it possible for you to actually comment on the issues being discussed, instead of giving us the Susan Powter routine every time you post? The irony of your signature is stunning to me.

As much as we joke about the joys of having no mortgage, no one that's squatting wants to be doing it. They don't cheer that their credit is ruined and that everyone looks down upon them, or would if they found out. They don't want to wake up every morning knowing that this could be the day they take the house from them.

That said, I don't hate the squatter. The system is what needs fixed.

PockyClipsNow says

and much better to squat in a McMansion

You'd stil have to pay the bloated utility bills and proterty taxes, wouldn't you?

StoutFiles says

As much as we joke about the joys of having no mortgage, no one that’s squatting wants to be doing it.

Since they're all doing it out of choice, I'd have to fundamentally disagree with your asinine assertion.

klarek says

Since they’re all doing it out of choice, I’d have to fundamentally disagree with your asinine assertion.

Then why did they wait? Why did they ever make a payment? I think you're missing the intent of the people in the article. They planned to make payments and made payments until they ran into a financial situation where they THEN decided to squat.

I agree there were other ways they could deal with the situation, if that's what you're saying.

Living in this foreclosure limbo is "Hell," Lynn said. "I feel like I'm locked in a box. I work for a financial organization and if this came out, it could cost me my job."

tatupu70 says

My biggest problem is that we didn’t break up the “too big to fail” banks and reinstate Glass Steagall. There are too many people spewing the CRA nonsense, keeping us from making the needed changes.

Yeah, I'd agree with that. Anyone who looks at actual hard stats knows the CRA had nothing to do with it. It's an ideological argument, not a logical one.

Schizlor says

You’re right. That’s exactly like being in prison.

You wrote that, not me.

Several people in this discussion seem unable to think about more than two possibilities, or two categories. Please add some nuance to your thinking.

FunTime says

I think you’re missing the intent of the people in the article. They planned to make payments and made payments until they ran into a financial situation where they THEN decided to squat.

The intention of Lynn was to consume and speculate. Let me pull $365K+ out of my house to pay for lavish things and also put money into my sure-to-fail business. Hard to argue it wasn't a smart financial decision. So far she has pulled out almost half a mill by equity loans and squatting and pissed it away, and the number keeps increasing.

Hold the lines says

but the bigger question here is why do you focus on calling her a deadbeat parasite instead of asking yourself why o why hasn’the bank foreclosed on her? 5 years? really? Damn, that is a long time - isn’t it?

I sure would like a real answer to that as well. It's just easier for some to pick an easy blame target.

Maybe the bank hasnt foreclosed because they dont want to right down the loss on books.

So its win - win for everyone!

klarek says

StoutFiles says

As much as we joke about the joys of having no mortgage, no one that’s squatting wants to be doing it.

Since they’re all doing it out of choice, I’d have to fundamentally disagree with your asinine assertion.

Are you saying you'd want to be so underwater you can't afford your house? That your credit would be shot? You think they WANT this? Nobody would want that.

They don't have a real choice, people aren't going to do the "noble" thing and leave. There's no reward for doing so, and no penalty for staying. They're living there because no one's kicking them out. I blame them for a lot of dumb decisions to get to that situation, but once there, I don't blame them for staying.

FunTime says

Schizlor says

You’re right. That’s exactly like being in prison.

You wrote that, not me.

Um no. You wrote it up above.