Comments on: ARM rate freeze might have blowback http://polizeros.com/2007/12/08/arm-rate-freeze-might-have-blowback/ Musings on politics: anti-war, global warming, peak oil and otherwise Wed, 07 Jan 2009 22:21:35 +0000 http://wordpress.org/?v=2.7 hourly 1 By: cheryl http://polizeros.com/2007/12/08/arm-rate-freeze-might-have-blowback/comment-page-1/#comment-146178 cheryl Sat, 08 Dec 2007 16:24:08 +0000 http://polizeros.com/2007/12/08/arm-rate-freeze-might-have-blowback/#comment-146178 Perhaps this is the blowback from 5 years of bad lending practices by greedy investors out for the big bucks. If they had used the same rules as banks, perhaps people would be in smaller more affordable homes instead of homes they can't pay for. To the greedy investors - you took an gamble and lost - be happy you aren't having to foreclose and pay $ especially as there is no one out there to buy that property for the return you want. Perhaps this is the blowback from 5 years of bad lending practices by greedy investors out for the big bucks. If they had used the same rules as banks, perhaps people would be in smaller more affordable homes instead of homes they can’t pay for. To the greedy investors - you took an gamble and lost - be happy you aren’t having to foreclose and pay $ especially as there is no one out there to buy that property for the return you want.

]]> By: DJ http://polizeros.com/2007/12/08/arm-rate-freeze-might-have-blowback/comment-page-1/#comment-146174 DJ Sat, 08 Dec 2007 15:13:28 +0000 http://polizeros.com/2007/12/08/arm-rate-freeze-might-have-blowback/#comment-146174 To me, it sounds more like negotiating on a bad debt: okay, I can't pay you all the money, how about 50%? The creditor takes what they can get because some is better than none. Will they ever loan to you again? Give them a year or two, and you'll be getting mailers from the same company for pre-approved credit cards. At one time, a certain large American bank sent unsolicited credit cards to every account holder. 20% of the new account holders defaulted--- but the bank made so much money on the rest that it kept up the practice until a law was passed against issuing unsolicited credit cards. Lending money at interest, though forbidden by the Bible, is a lucrative business. And, as I've said before, the market will compensate. There's a pool of private lenders who charge slightly higher rates who are always looking for new places to invest. If rates go up, new lenders will step in. Only if rates go down does lending become unattractive-- especially in a climate of rising inflation, when the income earned doesn't replace the value lost. Yet that's what the Fed is expected to do: drop interest rates some more. I'm sure that when credit dries up, people will blame the ARM rate freeze-- but the Fed's actions are heading us in that direction with or without a freeze. To me, it sounds more like negotiating on a bad debt: okay, I can’t pay you all the money, how about 50%? The creditor takes what they can get because some is better than none. Will they ever loan to you again? Give them a year or two, and you’ll be getting mailers from the same company for pre-approved credit cards.

At one time, a certain large American bank sent unsolicited credit cards to every account holder. 20% of the new account holders defaulted— but the bank made so much money on the rest that it kept up the practice until a law was passed against issuing unsolicited credit cards. Lending money at interest, though forbidden by the Bible, is a lucrative business.

And, as I’ve said before, the market will compensate. There’s a pool of private lenders who charge slightly higher rates who are always looking for new places to invest. If rates go up, new lenders will step in.

Only if rates go down does lending become unattractive– especially in a climate of rising inflation, when the income earned doesn’t replace the value lost. Yet that’s what the Fed is expected to do: drop interest rates some more. I’m sure that when credit dries up, people will blame the ARM rate freeze– but the Fed’s actions are heading us in that direction with or without a freeze.

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