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Old 04-10-2008, 08:42 AM   #21
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booth, much/most of what went on with mortgage securitization went on outside of the banking system, so I'm not sure its the fault of the bank regulators.

My comments were in any case focused on consumers rather than the markets as a whole.

What's a mug-punter?
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Old 04-10-2008, 08:46 AM   #22
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For many years the markets thought Greenspan was a wizard. But his engineering of the real estate and credit bubbles by overeasing back in the 2002-2004 time frame and the train wreck that resulted shows that he has no clothes, too.
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Old 04-10-2008, 08:49 AM   #23
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Quote:
Originally Posted by brewer12345 View Post
booth, much/most of what went on with mortgage securitization went on outside of the banking system, so I'm not sure its the fault of the bank regulators.

My comments were in any case focused on consumers rather than the markets as a whole.

What's a mug-punter?
Hey Brewer....yeah, don't mind me, I have just been watching my Superannuation Account (equivalent to your IRA's I guess) drop on the strength? of the Dow, completely disconnected from our local bourses....grrrr ) Still it's decimating my retirement savings

Mug-punter, I guess = your Joe Sixpack (ordinary stiff that is just trying to survive )
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Old 04-10-2008, 03:14 PM   #24
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Maybe an ARM is historically a cheaper choice, but over the last 5 years they seemed pretty risky to me. I remember the rate difference between a 5/1 ARM and a 30-year fixed was pretty low when I bought my house in 2005. It's pretty tiny right now.

I just don't think the tiny interest savings are worth the risk of a spike in rates.

One of the big advantages of a 30-year fixed mortgage is that it turns your biggest expense into a giant inflation hedge. If rates actually plummet, you can refinance. I think its crazy to give that up for less than .5%

It just seems funny that Greenspan was encouraging everyone to get more creative with their home financing at the very time they should have been getting less creative.

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Actually, he is correct. ARMs and hybrid ARMs (5/1, etc.) generally provide lower all-in costs vs. 30 year fixed loans. What happened is that people went nuts with their mortgages. For those with a smidge of discipline and common sense (a depressingly small portion of the Merkin population), ARMS are in fact a better choice.
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