|
Occupy Toronto (pg. 22)
|
View this Thread in Original format
| StereoPrincess |
| quote: | Originally posted by ChemEnhanced
But does it really matter if the value of the house drops if you are still living in it and paying the mortgage assuming the person could afford the monthly mortgage payment in the first place. |
lol. you would be a ing idiot to stay in a house and pay a mortgage if your house wasn't worth that anymore. people were just walking away. why would you pay 800 dollars on a mortgage, if you can buy a house down the street and pay only 400. now that would be stupid. also, if your house is an investment, why would you pay off that investment if it's not worth what you are paying in. |
|
|
| GGM |
| quote: | Originally posted by ChemEnhanced
But does it really matter if the value of the house drops if you are still living in it and paying the mortgage assuming the person could afford the monthly mortgage payment in the first place. |
It doesn't and it doesn't. There are tons who are in that scenario still making the payments on a loan higher than the value of their house because they'd rather avoid the default and ty credit that follows. Then there are some who said screw my credit, I'd rather default on the loan, buy another house and have a new loan that is under the value of the new house. Then there's the royally screwed group who lost their job or had to take a pay cut and regardless of what they wanted to do they couldn't afford their monthly payments. |
|
|
| GGM |
| quote: | Originally posted by StereoPrincess
lol. you would be a ing idiot to stay in a house and pay a mortgage if your house wasn't worth that anymore. people were just walking away. why would you pay 800 dollars on a mortgage, if you can buy a house down the street and pay only 400. now that would be stupid. also, if your house is an investment, why would you pay off that investment if it's not worth what you are paying in. |
Credit rating is the only answer to that. It's just a matter of how much more you owe on your house than it's actually worth and/or how much you care about your credit getting mangled. |
|
|
| ChemEnhanced |
| quote: | Originally posted by StereoPrincess
lol. you would be a ing idiot to stay in a house and pay a mortgage if your house wasn't worth that anymore. people were just walking away. why would you pay 800 dollars on a mortgage, if you can buy a house down the street and pay only 400. now that would be stupid. also, if your house is an investment, why would you pay off that investment if it's not worth what you are paying in. |
It seems to me people were too quick to react. Would you sell all your shares in something because it took a loss in the stock market and then reinvest all your money back into the same stock at the lower price? |
|
|
| infinity HiGH |
Weren't the ratings agencies giving all these mortgages and investments Triple A ratings when in fact they were fully aware of how toxic they were?
How do you expect the average person who probably has a college education at best to decipher all the bull that's being given to them? At a certain point people will be dealing with things that are over their head and that's where these advisers (perceived figures of authority) come in to help them out.
It's pretty easy once you tell someone that they can afford to own a house (a dream most of the working class aspire to). |
|
|
| GGM |
| quote: | Originally posted by ChemEnhanced
It seems to me people were too quick to react. Would you sell all your shares in something because it took a loss in the stock market and then reinvest all your money back into the same stock at the lower price? |
Different scenario, because you buy stocks with cash usually. To make it apples and apples you would have to give a scenario where you borrowed money to buy those stocks.
So if you borrowed $100k and put it all into stocks which went down to $50k, you now owe $50k more than the stocks are worth. The question is do you walk away from these stocks and the loan? If you don't care about credit then the answer is yes. But when you buy the stocks with cash, there's really no loan to walk away from. |
|
|
| GGM |
| quote: | Originally posted by infinity HiGH
Weren't the ratings agencies giving all these mortgages and investments Triple A ratings when in fact they were fully aware of how toxic they were?
|
That would be piece #2 to the crash but it doesn't directly involve the little guy that was actually getting the mortgage.
What had happened for awhile was a trend where institutions were realizing they could make more money by grouping tons of mortgages together and sell them off as investments instead of having their own money tied up in them. Problem being it got to the point where these packages weren't regulated or policed properly. Institutions would take for example 900 great mortgages (good borrowers, proper down payment, great collateral backing up the loan etc.) then combine it with 100 crap mortgages in one package. Because of all the good loans in the package it still received the good credit rating thus could sell for more money. They basically made bad loans only to turn around and sell them to investors who thought they were good. That is one large factor in how institutions were turning good profits off lending money that wasn't otherwise profitable to lend. It's also why it never happened in Canada as we have regulations to prevent such shoddy dealings.
What made the above situation worse plays into human emotions as I mentioned earlier. Once everyone realized this was happening they lost complete faith in the system. Investors were afraid to buy any packaged debt, banks were afraid to loan to borrowers, basically no trust. |
|
|
| rabbitjoker |
| quote: | Originally posted by infinity HiGH
How do you expect the average person who probably has a college education at best to decipher all the bull that's being given to them? |
Pick up a book and learn. And if you still can't figure it out for youself, don't do it.
Education/understanding (or lack thereof) is not an excuse. |
|
|
| ChemEnhanced |
| quote: | Originally posted by GGM
Different scenario, because you buy stocks with cash usually. To make it apples and apples you would have to give a scenario where you borrowed money to buy those stocks.
So if you borrowed $100k and put it all into stocks which went down to $50k, you now owe $50k more than the stocks are worth. The question is do you walk away from these stocks and the loan? If you don't care about credit then the answer is yes. But when you buy the stocks with cash, there's really no loan to walk away from. |
So it sounds like to me that people walked away from their investments....who's fault is that? |
|
|
| GGM |
| quote: | Originally posted by rabbitjoker
Pick up a book and learn. And if you still can't figure it out for youself, don't do it.
Education/understanding (or lack thereof) is not an excuse. |
Impossible to learn everything in life. If your doctor gave you wrong advice would you say "damn I should have gone to med school."? Or if your lawyer screwed up would you say "I should have gone to law school."?
We rely on professionals for advice and to a certain point you put your trust in their hands because they simply know more than it's possible for you to learn as a hobby. You'd generally be wary of a mechanic's advice because they are known to be scammers. The situation was that for as long as people could remember you could trust a financial adviser as you would trust your doctor. Unfortunately due to greed and deregulation that adviser went from the doctor category to the mechanic category overnight and nobody got the memo until 2008... |
|
|
| 1dawoman |
| quote: | Originally posted by rabbitjoker
Pick up a book and learn. And if you still can't figure it out for youself, don't do it.
Education/understanding (or lack thereof) is not an excuse. |
I picked up a book and educated myself and when I started explaining to my banker why I didn't agree with the mortgage that he was so aggressively pushing on me, we got into a big argument. It wasn't easy to demand for a smaller mortgage than I qualified for, nor to forego the added home equity line that he was pushing. He basically called me stupid and told me I wasn't "investing enough as I potentially could be".
If it were my parents sitting in my spot, I guarantee they would have followed his advice thinking that he was the expert in this matter.
If everyone has to be up to date on the continuously changing mortgage rules in this country then they better change the curriculum in high school to educate people on how not to get scammed by their banks! |
|
|
| infinity HiGH |
| quote: | Originally posted by rabbitjoker
Pick up a book and learn. And if you still can't figure it out for youself, don't do it.
Education/understanding (or lack thereof) is not an excuse. |
To an extent it is. Most people don't have the time or mental capacity to "pick up a book and learn" all the loopholes that career financial advisers have created to screw the population over. Not when, as a society, we've been conditioned to believe an "experts" opinion practically as fact.
What GGM said is totally true. Financial advisers/consultants went from being as reliable as doctors to mechanics. That's the systems fault, and the people behind it. And thus far nothing has been done to prevent this from happening again, which is something the Occupy movement is trying to change. |
|
|
|
|
