It's not a matter of if, but when.

As you'll recall from the movie "The Big Short", (and if you haven't had a chance to take a look at that, please do. It will enlighten as well as infuriate), CDOs were the big thing in the late 90s and 2000s. A CDO is a collateralized debt obligation, and it was comprised of a multitude of mortgage loans, thousands of them, which were then tossed onto the open market by the banks to make quick sales or trades, like any other stock. What people didn't take into account was the mortgage loan explosion, which drove some loan payments to balloon heights of 400%, 600% or more. People couldn't afford these payments, they lost their homes, and investors lost billions. No one, it seemed, ever realized or imagined a homeowner would not upkeep his or her mortgage loan payments. After all, it's your home. You'd do anything you could to save it, right? =)

Unfortunately, with the mortgage rate increase, and the disastrous rate at which mortgage loans were given out, even with tons of risk, it all came crumbling down. CDOs, once the rule of the roost, were destroyed.

Or were they?

Here's a little term to Google next time you have some curiosity.

"Bespoke Tranch Opportunity"

What is it? It's pretty much what a CDO was. Wild, huh? The banks didn't learn their lesson the first go around, and they're poised to learn an even harder lesson this time. Why? Because mortgage rates are going back up again, all over the country. There is a CHANCE, a slim one, the economic powers-that-be will raise the federal rate up a half-point by September, or at least by the end of 2016.

A higher federal tax rate will almost surely drive mortgage rates up again. Higher mortgage rates will almost surely lead to delinquent or non-payments while families scramble for federal assistance. More than 1,000,000 people lost their homes in 2008. Foreclosures that year rose over 80%, and there are still literal ghost towns filled with foreclosed properties that no one has touched yet.

People are going to want those homes eventually, and they're going to get a mortgage loan to cover it eventually...

Whoever becomes president in 2017 is in for a baptism by fire that could make the 2008 housing collapse seem like child's play, and I only hope he (or she) is ready to deal with it.

i disagree.. unless they lowered the credit standard again, only credit worthy people can by a house now, unlike what clinton did in his last days in office...

Oh not at all, nothing's keeping people from buying a house, not even bad credit. The banks are still happily providing the loans, the mortgage companies are still happily approving the loans, and the insurance companies are happily still underwriting the loans. Don't forget, any loan can have a co-signer.

i could have sworn bush changed it back... did obarry lower it again?

Obama created the Making Home Affordable option for the country. It not only helps people keep their homes, but easier for people to get loans for them, provided credit is worthy.

Keep in mind, bad credit doesn't necessarily destroy a person's chances for a home. You could have stellar credit, get the home of your dreams, lose your job, and everything tanks. A lot of people lost their jobs under the Bush years. =(

i think the key words there is "credit worthy"...

that he did!
I suppose this time Fanny-Mae will go Belly Up!

I can see another melt down in the financial industry... With thoughts of possible interest rate hikes and the change of Presidents at the end of the year may spook the markets a bit. Start a garden if you want to eat...!

As ranking member of the House Financial Services Committee, Frank blocked tightened oversight that Bush wanted over Fannie Mae and Freddie Mac.

In 2003 Frank said “These two entities … are not facing any kind of financial crisis,” and, “I want to roll the dice a little bit more in this situation towards subsidized housing.”

He wanted to ROLL THE DICE with the riskiest borrowers!!!!!

Frank also went after other lending institutes basically threatening that if they didn't lower their borrowing requirement for lower income people, particularly in minority areas, they would face obstacles in securing funds for lending.

the liberals put a stop to growing your food and collecting rainwater...

Yes it will tank again with programs like the RD loans..I see up here where people that make about 1/2 my wage buying homes in the 300K that no way can they afford.But with the payments adjusted to their incomes they buy them..Then buy all the toys that go along with owning a home.


Now with the oil collapsing up here yes I see it really hurting a lot of people.


Most times people hear what they qualify for and that is where they look.. They dont' stop and think about what they can really afford..IF they qualified for that amount that must mean that is what they can afford....WRONG

For example when I went in and was qualified I took one look and said that is fine and dandy what is the mortgage payment of the size of loan..I took a big gulp and said this is what I am willing to pay so what will that get me. A whole smaller home and a whole lot smaller mortgage payment. And because of that the house will paid off in 7 years..

Too many think that qualifying for a loans is the same as being able to afford the loan.

Also during the collapse a lot people let their houses go into foreclosure because they were "underwater", not because they couldn't afford the payments. That cause the prices to go down further, making more people bail on their mrtgages.

Which to me caused more of the problem. I know I bought when the market was still a bit low... And watched it go even lower and now I am seeing it rise again and so far I made a good investment.

But to me if you owe on the house keep making the payments. What goes up will come down and eventually even out. To much in this is world is now now not taking the time to stop and weigh it out for long term

China Buys the USA: What Property Boom Says About Shifting Balance of Power

http://sputniknews.com/politics/20160519/1039886949/china-us-real-estate-geopolitical-implications-analysis.html/

Money Talks: Chinese Pour $110 Billion into American Real Estate

According to a recent study, a surge of Chinese citizens have bought American real estate over the last five years, representing an estimated $110 billion into the market.

According to the study by Asia Society and Rosen Consulting Group, Chinese citizens have been increasingly purchasing American real estate over the past five years, culminating recently in an especially sharp spike last year.

Depending on the mandate that the new President sets.

** Workers: will need a cheap dollar to increase exports and stimulate internal service sectors. ( Risking trade into other then U.S.dollars.

** Consumers: need a high value dollar to buy cutting edge imports and overseas investments. ( Risking higher interest rates.

* I see a combination of higher tax rate, increasing the dollar value and increased loans to overseas investments forcing the dollar down. This will keep consumer interest rates low and a few more years of a doldrum home economy.
* Worker rewards will be in the reelection year.




** No U.S. housing bubble, clear and sunny sailing.
** With external investments Canada will have to keep devaluing its currency to maintain exports.

** U.S. Multinationals and short on CDN dollar.


* Note: I bought U.S. oil betting against Canada's N.E.P. and we know how that ended.

Apparently you aren't aware that no President can set loan policy. And none ever has.

Whoever told you otherwise was lying.

well, you can look it up, i've posted links to clinton signing the damn bill just about every time i mention it...

http://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis

tell hillary she still has to pay you, you tried and were very wrong, as she is most of the time anyway...

That's not helpful or meaningful in any way.
People have been constantly saying that for nearly a decade now.


I'm not sure you understood the movie.

The "disastrous rate" of mortgage lending wasn't the biggest problem.
That just showed how wide spread it was and how much an effect the problem would have.

The biggest issue was banks cherry picking their worst mortgages, bundling them with a small percent of prime mortgages, and calling it 100% prime.

They were basically marketing penny stocks as treasuries.

That's why it's such a big deal that no one went to jail.

Banks offer crap loans all the time. There is nothing illegal about banks giving bad loans, or giving them to any Tom, Richard, or Harry that walks in without a job.
It would just be a stupid policy that keeps banks from surviving very long.

But it's usually fraud when banks make a crappy loan then turn around and say "hey, wealthy guy that doesn't want risk, want to buy this loan from us? I guarantee there's no risk at all! Just ask this credit rating agency lady I slipped some cash to, she can verify it. Guaranteed income with no risk!"

We also have an SEC that is supposed to stop things like this.
But they seem to be in bed with the banks (like in the movie, where the sexy SEC lady was trying to get into bed, and a job, with the banker guys at the resort, a little too on the nose?)

The massive amounts of variable rate interest loans handed out was just a means to take advantage of as many fraud transactions as possible. Amount of loans simply legitimized and exacerbated the main problem.


Not really.
CDO's are still common and popular. Mortgage backed securities are simply 1 type of CDO.
CDO's aren't inherently evil.
But when they aren't adequately, accurately, or realistically assessed for risk, that's when you have a problem.


How do you know?
How are they packaging and marketing these offerings?


That only really matters if your "bespoke tranche opportunity" is packaged fraudulently.

If people know what they're buying, there isn't going to be that big of problem. Risk and costs and pricing will be reflected in the market and the people that are capable of handling that risk buy it, rather than those that can't accept the amount of risk.

Did YOU read what's in that very long and complicated link?

Apparently not, since it shows conclusively that the President CAN NOT dictate loan policy, and did not.

gunna go down swinging, huh...