patrick.net

I am just saying that “Should taxpayer dollars be used…” automatically creates a NO bias.

If the poll were phrased, "Should the subprime borrowers with bad loans be bailed out?" I still think the answer would be "no" for most people. Poll participants are not THAT stupid - where do they think the bailout money comes from - Google?

Poll writing and analysis is clearly a vague, mystic art, and you can write questions to bias answers pretty easily, it seems.

SFBubble, would you please give us your definition of predatory lending? What is a normal premium a subprime borrower should pay verses crossing the line and being predatory?

KT, I loved that quote from a renter where they said, "at least we're not running to the government for a bail out!"

I should note that Joe has yet to make a statement on whether or not he has stopped beating his wife.

I should note that Joe has yet to make a statement on whether or not he has stopped beating his wife.

Huh? Do you want to incite yet more sophistry?

Hide your ass-ets! Shave your head! Move to Bolivia!

Just the kind of crowd I know "I'D" like to be hanging out... with...?

I just want to take a minute here to showcase JUST HOW DESPERATE these friggin' bastards must be to actually seek out complicated legal advice (for free of course) from anonymous people on the internet.

How different is this clown from CS? Bouncing investment ideas around is one thing, openly soliciting ways to circumvent RESPA is another. Just look how brazen this crap is? Can you imagine this post?

"Well guys, it looks like the SEC is really serious about that insider stuff. Has anyone here placed restricted shares in like a niece's account or anything like that? I opened up several accounts under various names at different brokerages across a few states so I'm pretty sure it won't get back to me but have any of you guys had this hassle w/ Reg. 144? TIA for your reply!"

Ha ha, just between me and a zillion readers can someone tell me if the crime I committed can be traced back? Good one DinOR.

Malcom,

Predatory lending is a lot like smut. I can't define it (but I know it when I see it).

Isn't that the most incredible collection of scumbags ever assembled or WHAT! Jeez, I swear they're like pedophiles. They just seem to be able to find one another?

Yup, one of those fuzzy concepts. A lot of people don't know but a broker can charge any interest rate a borrower is willing to pay. In CA usuary doesn't apply to brokers.

In my circles certain people are known as predatory, but that is a moral judgment not a legal definition. There are some hard money lenders who lend with the hope of owning the property, they are what we consider predatory, but they operate perfectly legally.

Good old gambler's dilema!

I'll say up front I'm *not familiar w/RESPA, at all. I have my hands full with an ever changing securities regulatory environment.

AG "The Great" himself has said that had homes continued to appreciate 10% this year all of the subprime/predatory lending issue would have simply gone away.

So.... it was a "good" deal as long as the Home ATM (TM) was hitting on all 8 cylinders and now... it's a "bad" deal? For me, it's all about disclosure. If you're complaining b/c you can't get out from under a PPP BUT I have a document with YOUR signature on it...!?

Btw, I've had several people I thought were pretty smart tell me they can't re-fi until_____. I usually leave it at that.

Jon, I think I've read on some of the links that some polls are leaning 85% to not bailing anyone out. I remember feeling pleasantly relieved reading it.

PITI, give us a little more info. First how much more is it to buy than rent with a typical 30 year fixed mortgage? If you don't know just share the approx price of the house, and what comprable rents are.

Also, if you anticipate that the values will drop further what is the rush?

I support a limited bailout too: Free patrick.net logo mug. :)

The most common ’suckers’ in internet scams are young males, in my experience.

Studies show that people who fall for the Nigerian scams tend to be older men who are educated professionals - like professors.

Very strange.

I define 'predatory lending' as something you can prove to be fraudulent in a court of law. And obviously, if you can prove fraud in a court of law, you can try and recoup your damages from the fraudsters. This would be best done in a class action suit method to spread the payout to the victims to try and minimize the 'these guys get paid, but the rest don't because the fraudster is now bankrupt.' (And hopefully in jail.)

I support NO tax bailout in ANY form to FBs or FLs. But I'm all for siezing every last asset of anybody who engaged in fraud. Including the FBs. If they committed fraud on their apps, they deserve less than nothing. Lose the house AND get fined. Wage garnishment! WHEE! Don't grumble, you know they'd just sink it into AMWAY or whatever the next 'get rich quick' scheme is.

PITI or RENT,

You might find the NY Times rent vs. buy calculator helpful:

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ex=1177732800&en=130ba5207ce7376e&ei=5070

Of course much of this decision is very personal in that there is a financial calculation for renting vs. buying, but there's also personal utility. For you, it sounds like staying put in one place, particularly in the same school district is very important. This makes buying earlier than the numbers would tell you to perhaps more worthwhile in your case.

The numbers you supply roughly make sense if you buy and stay put for at least 5-7 years. On a gestalt level, those rental prices vs sale prices are much more favorable towards buying than they are here in the Bay Area.

Jon, even the smallest things suck me into long discussions here just because I love the angles. Your suspicion of the 85% made me think of the Muslim polls saying 75% of Muslims don't believe in attacking civilians. The press was trying to spin that as a good thing, let alone explaining the 25%. Holy crap!

PITI, my only support for a decision to buy would have to be based on your certainty of staying put for the 10-15 years you are talking about. I live in California, so I am very suspicious of people saying they would stay put for 5 years, but hey it's California.

Anyway, your numbers have some overlap, so buying is not so easily shot down as a good option in this situation. My caution here is that why not try to time it a little better? People on the buying side are so quick to throw in an extra $10,000 in purchase price but don't realize how much it can suck if you are trying to get out from under a negative 10K equity. It seems to me it is roughly a push now, I'd like to see you weigh the freedoms that come with renting a place, verses basically what the tax break will be with a gain in equity through owning. I'm leaning to continue renting until you really see a deal, I know it's tough because it is a pretty close call.

Remember on average you need to have an increase of 10% in the value of the house just to be able to walk away from it.

Jon,

Yep. We already have the safety nets for these people. I don't see why they should get anything more than that.

SF Bubble,
I agree, proveable fraud is a legitimate civil tort to charge in court. Fraud is its own area so I try to caution people about emotional terms like predatory lending. It is really being hyped up, and blurrs the real issue. Like you said, we want to punish fraud.

The problem becomes circular because in contract law normally the written contract takes precidence over verbal promises, and oral contracts don't hold up with property transactions so what exactly would the fraud be? The fraud would have to be something in the contract that is not delivered, or is illegal in some way. I try to stretch to sympathize with ignorant people who don't understand loan documents but somewhere we have to draw the line and say to people, you are responsible for your side of a contract.

1800/mo verses 200K purchase price would be a true push. Remember taxes and maint.

"let alone explaining the 25%"

I remember in one of the Philippine elections Marcos got 4% of the vote. Nothing remarkable there (other than that he was dead). So... you can always count on at least a certain segment of society to do unpredictable things.

What we "should" be doing (as evidenced by the "warm and fuzzy" poll posted above) is to recruit mainstream home owners toward our way of thinking. If you're none to excited about your home dropping in value how do you feel about propping up someone else that never really could afford their's to begin with?

Bubble bloggers: 1 :) F@cked Borrowers: 0 :(

Hey, I'm one of them, and I'm on your side.

If 200K sounds extremely low, keep in mind that just a few years ago that's what a house that rents for that much would have sold for.

I turned my nose up at a duplex for 130K which had $1200 per month coming in. I had even better deals going on back then.

FormerAptBroker,

My favorite is from “RentsAreUp” who says “Come back and ask that when your rent has tripled and the house is valued at 3 million.”
At 5% per year inflation in “only” about 25-30 years rents will triple and $770K homes will be selling for $3mm…

Actually, I know that this house was bought with $260K 15 years ago. So assuming the $770K sale price, it has roughly tripled with an annual appreciation of 7.5%. If housing price continues to grow at the same rate in next 30 years, it will actually be about $7 MILLION. :)

Jon

There was a ponzi called 12dailypro which was hot news a couple years ago. I think it took in over 50 million from around 300,000 people. They even had a message board and used ‘plants’ to say how great the whole thing was and how people who tried to call the whole thing a scam were just jeolous of their financial success.

You can also google ‘HYIP’, which stands for ‘high yield investment program’. They’re all scams.

If you haven't already, click my name and read my articles on "Second Life". In my opinion, the game/virtualworld/whatever is a clear case of a HYIP. All the same factors come to play, which I detailed in my 3rd article on the subject. They have a devoted following (the people who have made money -- all 20 or so of them), and a huge army of shills who infiltrate every forum and attack critics. In fact, there is an outside chance one will google this very comment I'm writing now and appear here to counter my claims.

I can buy the 911 distraction theory. There seems to be almost *no* enforcement of scams, cons, ponzi and pyramid schemes. Just watch CNBC about midnight on a Saturday night. There are essentially guys on there telling you how to take business loans, buy pickup trucks and boats with the money, then walk away from the obligation. Right afterwards you'll find out how 3 easy payments of $79.99 will double the size of your choad. People who get scammed are too ashamed to admit it, so they just pay the 3 payments and move on in life. Meanwhile the average infomercial run grosses something like $0.5m - $2.0m. And these are guys working out of a garage who know how to rent a studio stage and a camera crew for a weekend.

In my opinion, the game/virtualworld/whatever is a clear case of a HYIP.

Randy, are you still in the business of enraging people with more time than senses?

IMO Peter P is going to get burned in a sushi pyramid scam, in Second Life. :)

tinyurl.com/2bbb72

ahahahah, my cup runnith over, does this make me bad? Or does being bad make me bad?

Randy H,

I've seen a lot of HYIP scams but fail to see how that necessarily fits with what SL is doing? Classic HYIP scams offer outrageous returns that can be paid out "daily" with minimal investment. Supposedly this money (or "e-gold") is yours. Whenever they're pressed as to how they can offer such high rates of return the answers are garbled at best. Usually something along the lines of "The Fed (or the wealthy) have been doing this for years. Now you too can...."

SL OTOH makes no such pretense!

Surfer-X,

Don't get too excited about broke boomers. They'll just vote themselves more Social Security. I.E. taxes on employed people.

HelloKitty,

They put the 'tool' in Toolbox over there.

This particular bank has, like others, been expecting losses post-housing boom and has stepped up reserves to make up for the problem loans. “Oh, I’ve seen this all before,” said the career banker. “We always have some losses, but it’s contained. The banks are going to be just fine. In fact, I see business picking up by summer.”

This to me, is where it gets interesting... what business will be picking up by the summer? Seems like the calm before the Alt-A storm. I keep getting (ir?)rational urges to short WaMu, even with their 5% dividend yield.

DinOR

I’ve seen a lot of HYIP scams but fail to see how that necessarily fits with what SL is doing? Classic HYIP scams offer outrageous returns that can be paid out “daily” with minimal investment. Supposedly this money (or “e-gold”) is yours. Whenever they’re pressed as to how they can offer such high rates of return the answers are garbled at best. Usually something along the lines of “The Fed (or the wealthy) have been doing this for years. Now you too can….”

SL OTOH makes no such pretense!

Oh, but they do. That's what I detailed. Look at the hundreds of comments I got back from "shills" claiming they were running Second Life "businesses" which were growing at 30% PER MONTH, and they were pulling thousands of $ per month. That's a pretty outrageous return for maybe $20 investment, no? The entry "fees" are very low. The only difference here is that there is a real *game* going on at the same time. There are people who just go there to play and have fun.

But I was specifically talking about the "businesses", which the company and all their cultists have pushed and pushed and pushed. The CEO said "Play Second Life, have fun, and pay your rent at the same time". USA Today said 'Quit your job and earn your living in Second Life'.

But I proved there are only a couple dozen people making net positive profits -- and HUGE net positive profits, while everyone else loses money. And the game makers make millions per month "printing" all the fake money.

HYIPs are increasingly wrapped in some legitimate facade. I have no argument that Second Life as an online game platform isn't interesting and legitimate. But the business model isn't to charge people to play the game. The game is free. The only money anyone makes is from the company printing fake money, and a bunch of "businesses" try to hit the virtual gold mine.

And their claim as to why they can earn something like 12,000% returns? "It's no different than the real world economies. The dollar is worthless, rich people are always at the top, this is how they make money. Come into Second Life and you can be one of those rich people at the top".

And Peter P, that probably answers your question too, lol