Consumer Financing Home New Report

Their account is frozen and on the day of my closing, I have learned there was only $1400 in their account. My new company sent the title company money to pay off my existing mortgage. Needless to say, the pay off was never sent. The homeowner's insurance check returned as well. I have contacted the BBB, Dept of Finance, Federal Trade Commission, Dept of consumers' affairs and our local tv station. It has been 30 days since the closing, January 11, 2008, and my old company just reported me late on my credit report and keeps calling for their payment or payoff. A claim has been filed with the title insurance company. Can anyone out there think of something else that can get this taken care of faster? And also, I am trying to find an attorney to handle this and protect my rights as well as home and so far, no luck with that either since this is an untreaded category. And on top of all that, I have a new mortgage that is due March 1!
I have already received new statement from new company. New company DID pay funds to title company. I DO HAVE 2 mortgages.

Ouch! Thats a nightmare of a situation and I wish you well.

Have you tried contacting your local Senators office and requesting constituent services? Generally they can assist in really odd situations and help you resolve the issue. The biggest problem is that you will have late payments tacking on because of that old mortgage.

Seriously what a hassle. Unexpected pain in the ***. Good luck.

2008-02-10 11:36:33 by mechele225

Free energy audits from your utility company are a popular way to save up to 30% on your energy bill... but you can always do it yourself!

I have written about the great imbalances of the US economy. Yet in all of my previous articles on the subject I have been unable to pinpoint when these imbalances will result in a bust.

One can never be completely sure of the future, of course, as one does not have full information about all factors shaping future events. Thus, it is possible that this prediction will go wrong if the US experiences some future positive shock, such as for example a significant decline in oil prices. Australia seemed poised for a recession in 2005 after its housing market busted, but this was averted as the prices of Australia's commodity exports soared because of increased demand from China.

However, barring such an unexpected positive shock, it seems increasingly clear that we will see a US recession this year. The main reason for this is that the housing bubble that fueled the recovery of the last few years has essentially burst.

While mortgage debt continues to climb, albeit at a slower rate than before, and while housing prices have flattened rather than declined so far, other housing market indicators point to a housing recession. New home sales have reached multi-year lows and the inventory of unsold homes reached multi-year highs. Meanwhile, residential investment has declined significantly from its peak in late 2005. From 6.3% of GDP in the third quarter of 2005 to 5.3% in the fourth quarter of 2006. However, that is still above the 4% average of the 1980s and 1990s, and also significantly above the 3.3–3.4% level of the recessions of 1982 and 1991.[1]
So far, the economy has seemingly handled this fairly well and experienced what one might call a "soft landing," with growth being slow but still well above zero. Yet there are increasing signs that the worst is yet to come. Much of the housing bubble was financed by so-called subprime mortgages, mortgages to people with a low credit rating. Subprime mortgages were encouraged greatly by the government, with the Federal Reserve providing a cheap source of credit and with Bush encouraging it as part of the "ownership society" that he envisioned. But after the Fed was forced to raise interest rates again, and as the introductory teaser offers expired, the cost of borrowing for the subprime borrowers increased sharply. And as subprime lenders almost by definition have weak personal finances, many have proven unable to handle that.
And so we now see how the default rate has increased sharply. This will mean two things: first, new subprime loans will decline sharply. So far this year, subprime loans have declined 37% from last year.[2]
This will not only mean lower demand for new houses, but also increased supply as an increasing number of subprime borrowers are forced to leave their homes. This fact, as well as the fact that construction spending is still at historically high levels means that it is likely to decline a lot more. And if this causes outright decline in housing prices, it will have a very adverse effect on consumer spending. The household savings rate was -1.2% in January and February.[3] Meanwhile, despite record high asset valuation, the household debt to asset ratio reached record levels last year, as did the mortgage debt to housing value which hit a record high of 47% in the fourth quarter of 2006.[4] Looking beyond the aggregate number, you can see that 27% of all homeowners have less than 20% equity (more than 80% mortgage debt) in their homes and 16% have less than 10% equity, making them highly vulnerable to a fall in prices.[5]
All of this implies that the current spending pattern is dependent upon a continued rapid increase in asset prices, from levels which are historically already extremely high. Household real estate values, which in my first article on the subject I reported to be 184% of disposable income, up from the historic range of 135% to 150%, had in the fourth quarter of 2006 risen to 213% of disposable income. Meaning that there is certainly a high risk of falling prices — which, given the negative savings rate and the record high level of household debt, would imply that consumer spending will have to fall.
With residential investments likely to continue to fall and with consumer spending likely to be weak as well, the one thing that could save the US economy would be business investments. Business investments are still at a relatively moderate level, and in relation to corporate profits they are in fact historically low.
However, there are signs that corporate profits have peaked. The increase in profits over the latest year has been concentrated in the financial sector and in foreign subsidiaries of US firms. In contrast, profits at domestic non-financial industries (the sector that invests) have started to decline: in seasonally adjusted terms, they were 2.5% lower in the fourth quarter of 2006 than in the first quarter.[6] And with profits showing signs of declining, it is perhaps less important that they are still at high levels in absolute terms, because what matters for business leaders is not so much current profits, but expected future profits — or to be more precise, if businesses think additional investments will generate even higher profits.

And with the pessimism generated by the decline in profits and the trouble in the housing market, an increasing number of business leaders seem to think that the days of high profits will be over soon. Business investments fell during the fourth quarter of 2006, and judging by the weak data for non-defense, non-aircraft durable goods orders,[7] the outlook for 2007 is not particularly good.

But what about the Federal Reserve? The Fed has always been "the knight in shining armor" always saving the day by cutting interest rates — and they will do so again. At least, that's what many people on Wall Street seem to think. And of course, Ben Bernanke would certainly be willing to provide "liquidity" — with or without helicopters — if he thought a recession was coming.

However, the fact that commodity prices continue to soar and the dollar is falling means that Bernanke will have limited scope to cut interest rates, particularly in the aggressive way that Greenspan did after the tech stock bubble burst. With businesses being reluctant to invest, and with subprime mortgages discredited, one has to wonder: where is Bernanke going to create the next bubble, the one that will mask the hangover from the housing bubble in the same way that the housing bubble masked the hangover from the tech stock bubble?

Dang man! You make some really good points. It is scary. However with oil going down the tubes, technology and the development of alternative forms of energy come to mind. Most of our problems have come from money grubbing government and businesses all making the wrong decisions for the wrong reasons. JMHO

2007-06-19 10:08:47 by MISES.ORG

Why can't the government bail out the citizens instead of the banks?

I've heard this proposed here and on a couple other sites, but really, what would be wrong with using that trillion dollars to buy up consumer debt?

We all owe money. For cars, homes, credit cards, college, etc. The finance companies need money. If we paid what we owe, they would get money, right?

More than that, most consumers would use the money, which they used to pay off debts with, to purchase new goods or services, thus creating a demand for products again. They might even seek more credit, further helping to revive banks.

The only drawback I can see (though there must be more) is that people who have more debt would be disproportionately helped. But, maybe this debt payoff could be based on a formula made from a combination of tax returns and credit reports to make sure everyone is helped more or less equally.

Basically, it seems like a pretty good idea to me. But I'm not an economist, not even close. I figure the idea is so obvious someone must have considered and then dismissed it. There must be a reason it wouldn't work. What is it??

If you add the $750 billion in the first stimulus bill and the $800 billion Obama wants and divide that evenly among the roughly 165 million people who filed taxes last year that would add up to just under $10,000 (I don't know where $75,000 is coming from for the first poster). First of all, some people are in so much debt that money wouldn't get them out of debt. Second, with the way the economy is and how low consumer confidence is it is very likely that very little of this money would be spent. Many people would save the money, which would do nothing to stimulate the economy.

As far as paying off the debt, that's for goods and services that consumption that has already taken place. Sure, it will be some help to the creditors that have lent the money, but they make money on interest so it's not in their best interest that every gets out of debt. And paying off debt will do very little for creating jobs which would contribute to long term spending which is what is needed.

Additionally, this wouldn't guarantee banks would be start lending again. They are in the same situation, they would likely hoard their money and not lend to individuals or banks in fear they will not get their investment back.

And even if people did start spending again, racking up credit card debt with purchases on items you really cannot afford really is not a good thing for the economy in the long run. We will just be in a similar situation further down the road. Our economy has thrived on credit card spending for decades and that is a big contributing factor to the situation we are currently in.


And Steve, 100 billion divided by 5,000,000 loans is a loan of $20,000 a piece. Not quite a medium sized home so I'm assuming you meant 500,000 homes. Even if the gov. refinanced consumers most of the people with problems currently owe more than the home is now worth. The would still owe the banks more money on top of the refinanced loan from Uncle Sam. And buying up the loans from he banks would be difficult for the same reason, valuing the mortgages would be difficult.

2009-02-02 07:39:36 by 3.14159265

I see the argument a lot, especially in places like Yahoo Answers and blogs but I have never really seen it backed up with examples or evidence. I can only assume that people are referring to the wars in Iraq and Afghanistan and our current economic status. I just want to give some perspective that I hope people take into account before bashing me, and Bush, and republicans in general so that I can really get some answers. I am still undecided on who I am voting for and have never chosen who I vote for based on party affiliation. I consider myself level headed and I try to understand situations before reacting. So, here it goes.

President Bush took office on January 20, 2001. This was immediately following the dot-com bubble and the fall out created by it. Can't blame that on him. Also, less than 8 months later 9/11 happened as we all know. Aside from the conspiracy theorists, you can't blame that on him either. He immediately took action, as the nation wanted him to and not too long after Congress declared war in Iraq. Now, I THINK one of the things people blame on Bush is the whole thing about not finding WMDs in Iraq. I am fairly certain President Bush should not be held accountable for this. Everyone believed it due to faulty intelligence. I am not sure how that is his fault. In this argument I am also ignoring reports that we did in fact find WMDs in Iraq in the form of chemical weapons. Perhaps you can blame Bush for the fact that we have been in Iraq this long but in my humble opinion, destroying a country's government then packing up and leaving isn't exactly a good plan. We have to finish what we started and I think we will prevail in the end. We have to be patient, this is a new kind of war that has never been fought before. Keep in mind that in some months more people die in Detroit due to gang violence (one city) and die in Iraq due to the war (an entire country that is at war).

As for the economy, I think the argument is that Bush somehow got us into this mess because he has been president for the last 8 years. According to one of my economics professors the blame can't be placed with any single person due to the fact that we got to this place by 30 years of deregulation of our financial systems. The guy is an economic historian and I believe him over most people who will respond to this post anyways, so lets assume that that part is not up for debate. Now in doing some reading I came across an article in the NY Times that leads me to believe if people do want to point the finger at one person for causing this Bush should not be that person, but Clinton should. The almost prophetic article starts out with the following.



In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the governme
I just noticed my post got cut off..... oh well. Looks like people are still choosing ignorance. If you want to read the article go to NYtimes.com and search for "Clinton Fannie Mae" and read the September 30, 1999 article.

Great post. I see some responders don't like you interrupting their dream. I know space is limited - too bad you couldn't add quotes from dems who saw no reason to impose controls on Fannie and Freddie. One could also point out the stock market hit an all time high with Bush in the White House. This happened in spite of the medias attempts to stifle prosperity. Did the media ever report a positive event in the Bush years without the caveat "but".

2008-10-29 11:52:27 by Drew S