On Fri, 01 Aug 2008 21:51:18 -0400, Goomba >
wrote:

>sf wrote:
>
>> Paternalism has nothing to do with it. Sound business practice does.
>> They needed to meet the same logical standards we met when we bought
>> our first homes 30+ years ago. We put no less than 20% down and made
>> payments that were no more than 25% of our income. There was no
>> choice, that's what we did. Our world of financing was a lot less
>> complicated.
>>
>> However, if those slimy lending practices didn't exist there would
>> have been an economic downturn and subsequent inflationary period long
>> before this. Those practices fueled the new housing boom, which is
>> now a big bust.
>>
>
>
>I bought my first house in 1981, when nationally interest rates were 17%!

How well I remember 17%! That was the time we went together with
friends to build a spec house with an ocean view. At that time the
rate was 12% but we figured rates would be down by the time we
finished. Instead, rates soared. When that happens, you deal with
it. I'm just glad we didn't buy all three lots because we could have
lost three times as much. We went into it with our eyes open and
a roll of the dice. We lost.

I'm not talking about speculators though. I'm talking about people
who should not have qualified for loans of the sizes they got. It's
an entirely different game. In a tight housing market, they are
naive, desperate, sometimes barely speak English (and are told by the
loan officers "sign here) and the loan companies are sharks.

>I didn't have to put down 20% because of qualifying for a "first time"
>home loan at 9.35%. That rate would be unheard of today in the 5-6.5ish
>range. For a 40k house, my mortgage payment was $369 (taxes and PMI
>included) I was barely out of my teens yet *I* managed to study the
>papers and ask questions and learn about mortgages.

It was a simple time when you bought your first house. Ten years
earlier it was even simpler. There were no incentives for first time
buyers. Either you met the standards or you didn't. It's the same
concept for children meeting height standards to go on rides at the
amusement park. When lending institutions started designing shades of
gray to broaden who they could lend money to (translation: increase
profits), it was the beginning of the long slippery slope that ended
in the fiasco we have today.

>Even back then they
>warned people not to spend more than x percent of their income on
>housing. I believe it was no more than 30%.

There are no more warnings.


--
I never worry about diets. The only carrots that interest me are the number of carats in a diamond.

Mae West