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W2R · 07-23-2008, 10:38 AM

Quote:

Originally Posted by cute fuzzy bunny

Canada doesnt have the subsidy because homes in canada cost $4 and are frequently eaten by beavers.

Oh, OK! You can get a tax deduction for this one down in bayou country, which costs $4 (well, $35K) but is undoubtedly frequently eaten by nutria, instead of beavers (or bunnies with pancakes and bacon). That would be the difference. Plus there would be no property taxes, due to a $75K homestead exemption.

Westernskies · 07-23-2008, 10:43 AM

Quote:

Originally Posted by ladelfina

Why is loan-sharking illegal? How is the VW lady better off with Wells Fargo than with Vinnie..

Vinnie will only break her legs if she doesn't pay. Wells Fargo will ruin her life.

NW-Bound · 07-23-2008, 10:47 AM

Quote:

Originally Posted by Want2retire

... undoubtedly frequently eaten by nutria, instead of beavers (or bunnies with pancakes and bacon).

There are people down there who catch and eat nutria. Talk about revenge ...

Have any of you ever tried?

PS. I remember now seeing it in a Bizarre Food episode.

Abreutime · 07-23-2008, 10:49 AM

Quote:

Originally Posted by ladelfina

Hmmm.. in most of Europe mortgage interest is not deductible, I don't believe.. I should check. The way they establish people being "rooted" is that -quaintly- banks require 20%-50% down before they will give you a mortgage.

Encouraging SO-CALLED home-ownership with ZERO PERCENT DOWN and other down-payment mitigation schemes (some borderline fraudulent) is not encouraging rootedness or financial stability one whit. Doesn't matter whether the house or whatever other crap you "buy" with 0% down costs $80k or $800k. There certainly could and should be caps (minimum %) on down payments.

In addition, maybe you shouldn't be able to roll all the expenses (moving expenses and so forth) into the loan, nor should you get "cash back". The bank is not getting collateral out of your movers or your new furniture.. so why should they loan on that?

Maybe because they think it would be profitable under certain conditions. I see no reason to impose caps/floors on downpayments. It's their money. I'm not worried about how they make their money; that's for the shareholders to worry about.

Abreutime · 07-23-2008, 10:52 AM

Quote:

Originally Posted by bigwonderfulwyoming

Vinnie will only break her legs if she doesn't pay. Wells Fargo will ruin her life.

I consider physical harm a worse threat than bankruptcy. But that's just me. So you would be MORE scared if Vinnie said, "Now that I've broken your legs, and you're still not paying, I'm going to...

<Brace yourself>

Report you to the credit agencies to ruin your credit and probably force you into bankruptcy, which will impede your ability to get mainstream lenders to lend you money at favorable rates for the next 7 years!!!"

ladelfina · 07-23-2008, 10:55 AM

Quote:

that's for the shareholders to worry about.

Noooo, it's for the shareholders.. and the bondholders and the holders of mortgage-backed securities, and the hedge funds and the IBs and Fannie and Freddie and now the Federal government and ultimately the taxpayer to worry about, NOW.. isn't it!?!?!?

Because they all couldn't wait to make crappy zero-percent-down loans on 110% or even 120% of the sales price!!!!! How many exclamation points will do, here?

NW-Bound · 07-23-2008, 10:59 AM

Come on, people. Don't be shy.

Are nutrias as tasty as that dude Zimmern in Bizarre Food said?

PS. OK, no answer. I'd say if it is properly cleaned and prepared, I'd try it. Unless you are a vegan, why is it any different than other familiar animals?

Abreutime · 07-23-2008, 11:04 AM

Quote:

Originally Posted by ladelfina

Noooo, it's for the shareholders.. and the bondholders and the holders of mortgage-backed securities, and the hedge funds and the IBs and Fannie and Freddie and now the Federal government and ultimately the taxpayer to worry about, NOW.. isn't it!?!?!?

And what might have happened if the government hadn't guaranteed Freddie and Fannie's losses? This structure encouraged excessive risk taking, as far as I can see it, because it was easy to sell the bundled loans to a financial institution with the government's backing.

cute fuzzy bunny · 07-23-2008, 11:09 AM

Quote:

Originally Posted by ladelfina

Encouraging SO-CALLED home-ownership with ZERO PERCENT DOWN and other down-payment mitigation schemes (some borderline fraudulent) is not encouraging rootedness or financial stability one whit. Doesn't matter whether the house or whatever other crap you "buy" with 0% down costs $80k or $800k. There certainly could and should be caps (minimum %) on down payments.

In addition, maybe you shouldn't be able to roll all the expenses (moving expenses and so forth) into the loan, nor should you get "cash back". The bank is not getting collateral out of your movers or your new furniture.. so why should they loan on that?

I'm pretty sure that in 1913 when the deduction was built into the tax code, that such practices were fairly limited.

BTW, this stuff works great when rates are low and home prices are heading north. Its only when the reverse is true that it becomes problematic.

I hear nutria tastes awful. I still remember Alton Brown mistaking a stuffed porcupine for a nutria and going on and on about nutria while his crew zipped their lips, I think it was on "feasting on asphalt". Also known for his low speed motorcycle crash that took him out for about a month.

cute fuzzy bunny · 07-23-2008, 11:23 AM

Ah yes, here's the beaver/nutria/porcupine clip...starts at 3:30...

YouTube - Feasting on asphalt S02E03 (4/5)

NW-Bound · 07-23-2008, 11:26 AM

CFB, you said it tastes awful. You wouldn't expect it to taste like chicken, would you?

Watching the clip now. AB is my favorite. I missed this episode.

PS. Disappointing. Just talk. And it was a porcupine not a nutria, as you said. No showing of meat preparation, seasoning, plating, dish presentation. You got to watch Zimmern's episode.

CitricAcid · 07-23-2008, 11:40 AM

To add on to Abreutime's comment, ummm YES it IS the bondholders job to worry (don't buy the bond), the MBS holder to worry (don'y buy the MBS), Fannie Mae and Freddie Mac's job to worry (if they didn't get hurt when things went poorly, they are hardly insuring anything) and eventually the taxpayers for that. So, the only thing I see at fault is the general idea that the government created Fannie and Freddie in the first place and (now explicitly, but originally implicitly) backed up their bonds with the federal government.

Also, if they had not existed in the first place, much of the fervor over the entire housing market may not have occurred in the first place (interest rates more in line with risk, as opposed to passing it off onto third parties, whether it's in the form of CDOs, MBSs or dishing it to the two F's)

And, to the point of the renting vs. housing deductions for the interest, one of the major reasons renting is not deducted is because principal is not deducted on the mortgage. The money they save eventually leaks through to the renter.

Don't believe it? In other words, just finding positive cash flow now is something many (not all, honobob) residential real estate investors look for. Imagine the extra difficulty if mortgage interest weren't tax deductible. All the renters would be paying for the extra interest right now (and, similarly, they ARE paying extra for the property tax). In other words, rental prices are fairly correlated to purchase prices. (not a perfect fit, but it includes ALL the expenses)

ladelfina · 07-23-2008, 11:48 AM

Quote:

Originally Posted by Abreutime

And what might have happened if the government hadn't guaranteed Freddie and Fannie's losses? This structure encouraged excessive risk taking, as far as I can see it, because it was easy to sell the bundled loans to a financial institution with the government's backing.

Sure, but a lot of this thread talks about "blame".
I just think it's crazy to focus on the bad choices of (un-savvy, ignorant, lazy, smelly, overweight, smoking) borrowers when.. -no, no-one forced them into a bad loan- but no-one forced the lenders to lend to them, either. The greater fiduciary duty lies with the lenders, who have responsibilities to shareholders, bondholders and so on down the line. They also (one assumes) would have had a greater, not lesser, understanding of risk than the QVC shopper.

The lenders went and shot themselves in the head; the borrower was merely the bullet.

CitricAcid · 07-23-2008, 11:57 AM

Quote:

Originally Posted by ladelfina

Sure, but a lot of this thread talks about "blame".
I just think it's crazy to focus on the bad choices of (un-savvy, ignorant, lazy, smelly, overweight, smoking) borrowers when.. -no, no-one forced them into a bad loan- but no-one forced the lenders to lend to them, either. The greater fiduciary duty lies with the lenders, who have responsibilities to shareholders, bondholders and so on down the line. They also (one assumes) would have had a greater, not lesser, understanding of risk than the QVC shopper.

The lenders went and shot themselves in the head; the borrower was merely the bullet.

I agree 1,000,000%. The difference I point out, however, is that when the companies fail, then the bondholders, shareholders, and employees FEEL THAT PAIN. They HAVE to deal with it (except for Bear Stearns, don't get me started). They made a poor decision based off of their own models and they are the ones who are going to pay for it. It was not brought up in the article, so I am not jumping on her specifically, because I definitely understand her situation, but the entire mindset that somebody will have to eventually bail them out (stimulus package, interest-free first homebuyer down payment of $10,000, drop interest rates to 2%) that I feel is applied unilaterally.

haha · 07-23-2008, 11:57 AM

Quote:

Originally Posted by ladelfina

The lenders went and shot themselves in the head; the borrower was merely the bullet.

Most of all it is an institutional thing. The individual loan officer and on up the line are gunning for the upfront fees, which for the most part they at least thought were pocketed for good when the deal closed. There were dis-incentives to being prudent, so people were not prudent.

The borrowers can always be found; it's just a numbers game. Dangle credit in front of enough people, you can be sure that a certain number will take it.

Ha

W2R · 07-23-2008, 12:09 PM

Quote:

Originally Posted by NW-Bound

There are people down there who catch and eat nutria. Talk about revenge ...

Have any of you ever tried?

PS. I remember now seeing it in a Bizarre Food episode.

Before I met Frank, I dated a Creole man who lived down in the bayou where he grew up, not far from the house I pointed out. He got from place to place by pirogue, and was the real deal. He LOVED nutria and kept promising me that we would eat it some time and that I would like it. There is no way I would ever eat nutria, though!! You have to draw the line somewhere.