crash2006 Posted February 8, 2008 Share Posted February 8, 2008 was used to cheat people,'' Rheingold said. ``It helped artificially keep housing prices higher than they should have been.'' Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month. Now he owes $192,000. http://www.bloomberg.com/apps/news?pid=206...refer=exclusive Quote Link to comment Share on other sites More sharing options...
Guest DissipatedYouthIsValuable Posted February 8, 2008 Share Posted February 8, 2008 http://www.bloomberg.com/apps/news?pid=206...refer=exclusive Were these sorts of mortgages sold in the UK as well? Quote Link to comment Share on other sites More sharing options...
Della Posted February 8, 2008 Share Posted February 8, 2008 (edited) Were these sorts of mortgages sold in the UK as well? I don't know about exactly the same, but there were plenty of mortgages with low low teaser rates which shot up after a while. People stupidly only looked at the teaser rate to decide whether they could afford it because tomorrow never comes. EDIT: Also you hear a lot of talk about people having difficulty refinancing their homes, but what they don't say is that they are refinancing because they have found they can't afford the loan the took out originally. Edited February 8, 2008 by Della Quote Link to comment Share on other sites More sharing options...
jp1 Posted February 8, 2008 Share Posted February 8, 2008 People stupidly only looked at the teaser rate to decide whether they could afford it because tomorrow never comes. People only looked at the teaser because they were convinced that house prices only ever go up, and when the teaser period ends they can remortgage at another teaser rate MEW a bit to pay of the cars/loans a,d but a new car Doh! Quote Link to comment Share on other sites More sharing options...
Kuma Posted February 8, 2008 Share Posted February 8, 2008 May I take this oppotunity to post this: http://www.housepricecrash.co.uk/forum/ind...=0&p=711381 It's well worth taking the time to read the iTulip article. It's nice of Bloomberg to finally catch up Quote Link to comment Share on other sites More sharing options...
Guest mattsta1964 Posted February 8, 2008 Share Posted February 8, 2008 "We call them neutron loans because they're like a neutron bomb,'' said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. "Three years later the house is still there and the people are gone.'' I shouldn't be laughing........... Quote Link to comment Share on other sites More sharing options...
huw Posted February 8, 2008 Share Posted February 8, 2008 People only looked at the teaser because they were convinced that house prices only ever go up, and when the teaser period ends they can remortgage at another teaser rate MEW a bit to pay of the cars/loans a,d but a new car I bet a lot of people didn't even think that far ahead. They just looked at the headline monthly payment and signed as instructed by the oh-so-helpful mortgage broker. Most borrowers wouldn't know negative amortization (or even ordinary amortization) from a hole in the ground. Quote Link to comment Share on other sites More sharing options...
Guest grumpy-old-man Posted February 8, 2008 Share Posted February 8, 2008 (edited) I bet a lot of people didn't even think that far ahead. They just looked at the headline monthly payment and signed as instructed by the oh-so-helpful mortgage broker. Most borrowers wouldn't know negative amortization (or even ordinary amortization) from a hole in the ground. yep. What makes dave & debby, a mechanic & a receptionist take a £150,000 mortgage on a btl property for 25 years ? additional to their existing mortgage on their terraced house that they bought in 2003 ? they have a bit of equity in their current house, not real money remember, just virtual money. they know nothing about property & have no savings. They take a 3% 2/3 year teaser rate out, the rent just covers the mortgage repayments. The teaser has expired & they are now being charged 6/7%, there are loads more properties for people to rent, so they have to take £50 per month lower than they were getting & their mortgage has gone up by £300 per month..... this IS the problem, everyone I know & meet are property experts now. Edited February 8, 2008 by grumpy-old-man Quote Link to comment Share on other sites More sharing options...
Guest DissipatedYouthIsValuable Posted February 8, 2008 Share Posted February 8, 2008 I bet a lot of people didn't even think that far ahead. They just looked at the headline monthly payment and signed as instructed by the oh-so-helpful mortgage broker. Most borrowers wouldn't know negative amortization (or even ordinary amortization) from a hole in the ground. Certainly 'capped negative amortization resets' were a new concept to me. Quote Link to comment Share on other sites More sharing options...
Tec Posted February 8, 2008 Share Posted February 8, 2008 Mercifully, negative amortization mortgages never really made it over here. Because we're dumb enough to be all over them too. Quote Link to comment Share on other sites More sharing options...
piece of paper Posted February 8, 2008 Share Posted February 8, 2008 Were these sorts of mortgages sold in the UK as well? In the 80s and 90s there used to be low-start mortgages that rolled up the resulting unpaid interest into the rest of the term of the mortgage. I think that they were superseded by securitisation. p-o-p Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 8, 2008 Share Posted February 8, 2008 Mercifully, negative amortization mortgages never really made it over here.Because we're dumb enough to be all over them too. I think they are here, they are the type where you attach a current account to the thing, the idea is that you pay down a bit quicker by having a positive balance in the current account, However, what the NAM does is give you an overdraft as well: I wonder if this is a feature of the mortgages over here, a struggling borower would use the overdraft facility and effectively increasing the debt. Quote Link to comment Share on other sites More sharing options...
wren Posted February 8, 2008 Share Posted February 8, 2008 The "house price and debt crisis" is not an accident. It takes a lot to build bubbles like these. The bankers and their politician pawns have worked at it for many years. Of course, they will pretend it was unforseen while even (some few) non-financial professionals could see what was coming and were screaming about the dangers. Debt is slavery. That was the objective. "Oh dear, the system is broken, we need a new one. Here's a great new world one." Quote Link to comment Share on other sites More sharing options...
Realistbear Posted February 8, 2008 Share Posted February 8, 2008 Make no mistake about it, this IS the "Big One." When they come to write the history of this era they will say it all began when they allowed house prices to get out of control. "They" will include the one who coined that phrase in a budget speech made in 1997. Quote Link to comment Share on other sites More sharing options...
wren Posted February 8, 2008 Share Posted February 8, 2008 Isn't the whole monetary system one of, in its very essence, negative amortization? Nice to see it in the open, showing its true colours. Quote Link to comment Share on other sites More sharing options...
RajD Posted February 8, 2008 Share Posted February 8, 2008 The "house price and debt crisis" is not an accident. It takes a lot to build bubbles like these. The bankers and their politician pawns have worked at it for many years. Of course, they will pretend it was unforseen while even (some few) non-financial professionals could see what was coming and were screaming about the dangers.Debt is slavery. That was the objective. "Oh dear, the system is broken, we need a new one. Here's a great new world one." Bang on. They're not blind and/or stupid. It must have been quite obvious to them the direction in which the global economy was heading. I also agree with you that they will propose a new way of doing things to ensure that something like this doesn't 'happen again'. If anything, it will be a greater form of debt enslavement than the current one. Those of you that haven't already done so, I advise you to watch 'The Money Masters' and 'Zeitgeist'. They will change your view of reality forever. Quote Link to comment Share on other sites More sharing options...
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