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No harm, no foul Renfield

Sorry if I misunderstood you, but it just seemed as if you were throwing in far too many influences that supposedly caused or added to the crisis. I saw that shopping list and thought you had joined the tinfoil hat crowd. But as far as buying a house "right now, honey" no one HAD to act. If you can't afford something right now, the fact that the price is rising on that item and it may be far more expensive in five years doesn't alter the fact that YOU STILL CAN'T AFFORD IT NOW. ARMS were originally intended for a niche of buyers, and in fact, the twenty-something college-graduate, entry-level paid today, mid-level manager in five years was exactly who they were designed for.....originally. We got where we are today because of individual and small corporate thirst for greater and ever-increasing gain. Addressing the most contentious cause first, we (as a people) have come to believe that everyone deserves everything, regardless of their ability to pay for it. I don't care if it's a cell-phone, a nice car, health insurance, or a nice house, "I have a right to all of them just as you do." (So what if you can afford them, but I can't?) Some people bought homes based upon what they wanted, not what they could afford. But truth be told, families losing homes is a small facet of the problem. Most of those "stupid borrowers" I mentioned weren't families. The largest cause was speculators suddenly saw ARMs as a short-term float to finance house flipping, insead of a long-term, low-interest way to finance your primary or vacation home. The news tells us about the ever-increasing number of foreclosures, but it doesn't tell us how many of them are failed business ventures, rather than families losing their homes. That number is rumored to be a staggering percentage, house flippers who got caught when their house wouldn't sell in the softening market and the bills came due. We also saw an explosion of mortgage brokers, many of which employed totally unethical practices in qualifying people who were truly not in a financial position to qualify. Even the big banks, the least guilty in the crowd, bear some responsibility. Just as Enron's bankers knew, "This is too good to be true," the banks that were issuing and bundling mortgages for sale had to realize that the inordinately high number of qualifiers coming from cities such as Cleveland was likely a house of cards in the making. The institutional banks and brokerage houses trading CMOs had to realize the same thing. But the money was too good...no room for doubt.... Do not miss the political aspects of this "crisis" that I mentioned elsewhere on this board. You are hearing things on the news that make absolutely no sense whatsoever from an economic (or common sense) point of view. There are people who intend to inflate this situation until it becomes a major issue on the 2008 election. One of the most laughable is the people they interview who are sooooooo depressed because their house isn't worth what they paid for it. It will be a bleak Christmas in their home this year! I am tired of screaming at my TV, "If you're not trying to sell your house RIGHT THIS MINUTE, what do you CARE what it's worth???!!! It's your home! It's where you live!" Think about it: Do you get your home appraised before you take a vacation or buy a new car? In closing, I assure you that standard thirty and fifteen year mortgages have always been available in Cleveland. Your friend hasn't given you every detail of his experience. There had to be some combination of his income, down payment amount, or desired loan amount that led the bank to conclude that they would only agree to finance that amount if he had lower payments initially, with higher payments when he was better able to pay them. Or he may have been unfortunate enough to have been sitting in front of a sleaze who was getting a better commission for ARMs that week. Either way, I would have shopped around or temporarily rented.

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