It's no longer just people with bad credit who are feeling the squeeze. Americans with good credit at all income levels are now caught in a full-blown credit crunch.
Comment: Thank's very much for this article. Its explanatory language, sans-technicallity made me comprehend way economy's in spiralling downturn. Now, God has all my 'credo'!
Comment: Thank's very much for making things more understandable to me. This article was very helpful to me. Its language used, san-technicallity and direct approach it is educational, in-sightfull. I just pray things get better. GOD has all my 'credo'!!
Comment: Correction, my income is $80k, not 40...
Comment: Everyone will end up feeling the results of the over lending and overspending. Me, I have never had a line of credit in my life. I make $40k a year, have no debt and save for those important buys like car repairs, food, you know...the necessities. As far as my standard of living. I live in an apartment, am saving my pennies for a house or condo for when I get married. I am not stupid enough to risk getting a woman pregnant, I would really love a new computer, but mine gets the job done just fine. I still have a CRT television. The issue here is that people are not taught to develop responsible spending practices in childhood, adolescence, and young adulthood. I was, and I will buy my next car (probably a fuel efficient car with cool toys at $36k) without a loan. PS- I don't have a college degree. I couldn't afford college and learned how to work in IT and do programming by myself....I made a portfolio and got my career the old old fashioned way...very rough considering most companies won't even interview you if you don't have a degree...I'm doing just fine. I took on only as much responsibility as my income would allow without debt. It's a simple concept. LIVE WITHIN YOUR MEANS...And when all the fools out there end up weakening our great nation's infrastructure because they needed help to get bailed out, and all the prices of everything goes up because the government is posting up to handle the incredible burden, I will be extremely angry, but I will do what is responsible and adapt, and it won't phase my standard of living one bit...
Comment: What happens to students like me who went to private college for their undergraduate studies and now pursuing a Master's degree with two classes left only to find that they have reached their aggregate lifetime loan limits? As a single mother I have no resources and am trying to better my life by ensuring that I have a worthwhile education behind my belt so that I can remain successful in this competitive job market. I am two classes away from earning my MBA and college has very expensive for me especially since I have had to pay for housing, book, etc. totally off loans. I do not have family or friends who are able to co-sign for me to get private loans and my credit score is no where near high enough. I have searched and searched through 1000's of resources only to find that a person in my position is completely out of luck. My regret is that the school nor the lender informed me that the aggregate limits applied to both undergraduate and graduate combined as I was under the impression from my Stafford entrance information that it would be seperate amounts. With 2 classes left this whole situation has left me truly desperate for any and all forms of help. Any suggestions?
Comment: stupid americans? that's a short sighted statement. who has the cash to buy cars and homes outright? credit creates the middle class. unless you want everyone storing all of their cash in banks and not putting it in the economy.
Comment: Stupid americans living beyond their means and whining as victims of their own stupidity. Serves you right. JayMM is right on all counts.
Comment: Jaymm is right, most americans
Comment: Listen....Home inventories (new and existing) are falling. The estimated time to turn the existing inventory is also falling. This means that, everything else constant, the US housing market will come back to equilibrium eventually. Of course, foreclosures will add more inventory and push prices down. This could extend the time to equilibrium, but its about time and price. Today, foreclosed homes are selling at prices below the cost to build the house. At that level, new homes are not competitively priced. Consequently, the supply of new homes will continue to contract, causing remaining demand to switch to existing homes.
There are several facts about his whole mess.....First, Americans have lived well beyond their means for a long time and this is exactly how the problem corrects itself. Quit complaining....you did it to yourself!!! Second, Americans live very well, beyond their means. This should indicate they wont be too bad off if they are forced to downsize. Its OK to live in a 2000 square foot house (or even an apartment), without a boat and Hummer!!!!! Third, the media does little to suggest that people act stupidly, living way beyond their means. Rather, the media tends to describe everybody, both the truly unfortunate and truly stupid, as victims. Yet, both arent true victims. Fourth, corporations are vultures and look to take advantage of both the unfortunate and stupid. As such, corporate vultures should be taken to the wood shed, or worse. Fifth, nobody likes to take the blame and everybody, unfortunate/stupid/media/vultures, will turn to Government to bail everybody out. This will further destabilize our Government and economy, causing additional problems in the future. Pathetic politicians will actually force Government to borrow to bail us out (borrow to bail out the borrowers?). Sixth, there is plenty of blame to go around. We are all at fault (well, most of us anyway) and must endure the pain of our excesses and stupidity.
Comment: I don't think it's going to turn around any time soon. Don't forget the glut of baby boom housing that's hitting the market for the next 20 years. A lot of these folks figured they'd cash in on their houses when the time came to retire, which is starting . . . now. I cashed out my REIT in 2006 when RE was still the place to have your investment money. As for my personal house, I bought it with my partner, on a 15-year 4.5% fixed mortgage, with the expectation of staying put for the long term. The sad truth is that all bubbles eventually burst, and, like you say, camelot12, the candy eventually comes home to roost!
Comment: The real estate market will turn around again, it always has and always will. The only question is when. If I was a betting man I would say for the worst areas of the country we will hit bottom the later part of this year. HOWEVER it may take another 4-5 years before REAL appreciation (not speculation) get's housing prices closer to where they were two-three years ago
The problem is accentuated by not only a housing bubble (all investment vehicles go through bubbles brought on my greed) but we are also experiencing a credit bubble and THAT makes it tougher to figure out when the bottom hits. Most lenders at this time don't even know what kind of bad debt is on their books,or what they are liable for when they packaged CMD's and sold them to other institutions and large investment firms that got caught up in the greed of "churning money". Heck, even the three major rating services were involved and encouraged risky investments and derivities.
I've been a commercial real estate broker/syndicator/investor for over 30 years and these cycles ALWAYS occur......always have and always will. Homes will always be good investments and tax shelters as long as they aren't uses as "candy machines" or as some folks like to say an "atm machine". At some point the candy has to be replaced!
Comment: I got a great Loan... my fico had dipped since 2006....., but thankfully the folks at MoneyStuck.com
understood my situation and worked me through my debt consolidation. THey worked with me and
cut the redtape and now I have one easy payment.
Comment: well, when you have to go to sleep at night wondering if there will be oil in the tank for your shower in the morning or better yet...going out in the middle of the night to get a 5 gallon tank of diesel fuel to tie you over well, a very sad statement of affairs indeed....and guess what....neighborhood is your typical perhaps even upscale one....not once but many times....oil @ 3.50 plus a gallon has ripped this country to shreds.... and me too....and no i do not live off a line of credit ... I don't have credit cards...I work two jobs.... please don't judge...I just cannot afford to live on the salaries I make....and i simply cannot work another job....oh and by the way...the thermostat is at 55 most nights....pretty chilly
Comment: Honestly, I can't even understand how one can use his house as an ATM machine (a very good expression). How does it work? Let me think. You bought your house for $100k, with $10k down. Since its market value is up to $130k. So now you refinance it, and get a mortgage of $120k. You paid the first mortgage company $90k, and pocket $30k. Free money? Eh? Basically, you are spending the appreciation before you receive it. What if you don't get $30k's profit when you sell it? It makes me shiver to even think about this.
I don't understand the way Americans live. Why do college students have such high debts? Perhaps most of it goes to his living expenses. When I was in graduate school I lived in a poor house shared by many international students. I did not have a car. While my American counterparts lived in their own apartments and drove cars. However, I left graduate school with no debts, because I was paid $4000 a year as a teaching assistant (out of which I mailed my parents $500)
In 1988, eight years after I left my graduate school, my husband and I paid off our first house, which cost $120k in those days. It was a GREAT victory, as our mortgage rate was 13.75% - and the loan officer had raised it by 0.25% while I was signing the mortgage!!
I never had a mortgage again - and I always live in nice homes (I am on my third one.) I am not rich. I just know how to manage my finance. My mother always says no matter how much money you make, if you live beyond your means, you are always poor. In other words, she believes if you are in debt, you are poor.
Today I heard that someone has $10k in credit card loan, and $10k in the bank. I couldn't understand. Credit card loan rate is much higher than the saving rate. Even a 3rd grader would know paying off the loan is a better deal. But I think this is just American culture. A life is not fun without credit card loans.
Comment: what's coming will be known as "the great recession"
Comment: lol at all the comments about Bush or greedy corporations, blah blah blah.
It is pretty simple people. Don't buy what you can not afford. You don't need that new shiny car. You don't need that big screen plasma tv when your old tv works just fine. You don't need to use credit cards and loans to keep up with Joneses.
People want to blame Bush or the corporations, but reality is that there is no one to blame but themselves. American's are greedy fools for the most part. They just have to have what their friend or neighbor has. They can't be driving around in an 8 year old economy car. Nope they need to be driving a gas guzzling SUV with leather interior and a flip down lcd displays so they can keep their kids quiet instead of conversing with them. It would be way to embarrassing to have friends over and have them watch the football game on a 32 inch non HD TV right? Yeah we need to go open that Best Buy credit line up and get the 50 inc flat screen plasma TV and mount it on the wall right? Our wives can't just use a $30.00 purse bought from Target or Walmart right? Heck no they need to have some silly designer handbag that costs $600.00, which is put on the Macy's card of course and they certainly cant be seen with last season's handbag so they need to get a new one every 4-6 months right?
And finally we can't be in a modest 2 bedroom, 2 bath home which may require some work to fix up a liitle, which we can afford the monthly payments with 30% of our monthly income on a 30 year fixed. No we need to the 4 bedroom, 4 bath, 3 car garage monster in an affluent neighborhood that we can only afford when put on an ARM loan that we can only afford with with 75% of our monthly income and that is on an ARM loan that will reset in 3 years.
If you want someone to blame, blame all the friends and family who are doing exactly as I describe above.
Comment: it wasn't hard to get a loan, my fico had dipped since 2006, but thankfully the folks at MoneyStuck.com understood my situation and worked me through my debt consolidation.
They were a blessing. Now I can breath easier.
Comment: The author states the fuel of this mega economy is credit, when in reality it is "cash"...The solution to the current economic downturn is actually quite simple...DOnt spend more than you make...If you cant pay for it with cash you cant afford it...It really is not more complicated than that...If you cant get a fixed rate mortgage at a decent rate then you cant afford to buy a house; rent for a while and save some CASH...Cash is KING
Comment: Invading Iraq was an opportunistic move made by a lackluster president with a big chip on his shoulder. If you don't think we paid a family vendetta with 4000 American lives then you're stupid. I think we'd be much closer to a solution in Afganistan, which by the way is where the bad guys were until WE provided everyone with a nice petri dish to experiment in, make some cash and kill. Capitalism works in mysterious ways too.
Comment: Well actually I went ahead and consolidated all my bills at a low rate at MoneyStuck.com They were very helpful, and now I feel I have a new lease on Life !
Comment: I know this article is largely about homeowners, but there is a paragraph regarding the inability of private equity firms to secure financing. I find it interesting that even this "smart money" is fumbling: KKR Financial (NYSE: KFN) keeps postponing its scheduled payments. --Aseem Giri, author of "Imposters of the Gate"
Comment: Even the "smart money" is experiencing mis-steps: KKR Financial (NYSE: KFN) keeps pushing out its scheduled payment dates. -- Aseem Giri, Author of "Imposters at the Gate"
Comment: My mortgage was recently bought by CitiMortgage in November 2007. Probably because I have never payed late in 7 years and always pay extra on my principle. They promptly raised my escrow payment by 100 dollars per month and their reasoning was because my escrow account would have a projected shortfall on Octob er 1st of 2008. Also, they were changing the escrow requirement to be that there must be a minimum balance of 2 months worth of escrow payments in the account at all times. After doing the math I determined that on November 1st of 2008 my escrow account would have a surplus of over 700 dollars I asked if I could get the money back in November and they said no because they evaluate my mortgage in October and the surplus would have to occur in month in which they evaluate the mortgage in order for a refund to be granted. Their rules are such that I can't get out of the escrow account option for over a year. And if I do it will cost me more money to get out of it than the surplus. I would rather have that money sitting in my high interest savings than sitting in their coffers making them money. I have half a mind to go buy a different house, move, and then send them the keys. They got themselves into a bunch of money trouble and now are taking it out on responsible lendees by buying their mortgages and raking them over the coals using "changed" policies. With all their money from the Saudis they will get through this mess just fine, but the money they are keeping from me could be used to make me an extra fifty bucks a year. Not much, but fifty here and fifty there adds up. Also, all this lowering interest rates isn't doing consumers any good. Credit is harder to get and the lenders just raise fees. The only thing it has done to me is take my savings interest rates from 5.26 down to 3.75.
Comment: I have a loan with countrywide and my credit has always been good.The company that I work for was bought by a corporation last July,and they changed our pay plan and,most importantly,WHEN we get paid.I am now forced to pay my mortgage payment 17 days late every month.So Countrywide adds a late fee.I have spoken with a few of their representatives (they all,curiously, have [Asian] Indian accents-kind of like Microsofts call center) and it is tantamount to speaking with a mindless DOLT [reading from a script] with an inability to HEAR what's being said.
After 7 months of asking them to help a bit- by changing my due date (I heard and read all of their great ads about how they want to HELP homeowners) I have to conclude that the extra 100 in late fees is needed to pay for the monthly salary of those people in India,at the Countrywide call center.
Comment: My family is currently suffering the consequences of a sub prime loan. My husband and I were first time home buyers with two children and another one on the way, we wanted out of our apartment and into a home with a backyard and bigger bedrooms. We wanted a prime loan but were discouraged by mortgage companies who said, "this (sub prime) loan is much better and you can always refinance after two years". Fast forward three years, we are in the middle of a foreclosure. We had good credit, we never missed a payment, and now after being forced out of our home and seeing our credit tank it will be years before our family will even be considered for a home loan. I don't believe it was simply a change in the economy. These companies knew what they were doing.
Comment: Financial institutions gave home loans to people that couldn't afford homes and credit cards to people who didn't have any money so that they could bundle up this debt in derivatives and sell it someone else. It was all an elaborate and highly unethical shell game. yet neither Mr. Gross nor hardly any of the other business writers seem to hold these financial institutions accountable for their unethical behavior. Why is that Mr. Gross? You make this credit mess sound like it is some benign cyclical problem when you refer to it as a "credit dry spell' when in fact it was the greed of the lenders and a complete lack of any regulation of the financial markets that caused this.
Comment: Probably the single biggest problem is fuel prices. These cascade to higher prices on everything else. It costs more to grow food,it costs more to transport, it costs more to repair transportation because the parts have to be shipped,ect.ect. Then on top of that we have to pay more in taxes to fuel the Govt. because thier expenses are rising. Now take into account that we are also supporting illegals that are skipping out on thier bills, and are receiving Govt. benifits such as welfare, and that spells big trouble.
Comment: I've been a lender for 20 yrs & have never seen it like this...wake up America...The economy is deplorable although our govnt & media is only beginning to address it...Job loss,manufacturing overseas,gas prices, medical bills & illness, cost of living, utilities, food & yes some ARM loans...rich getting richer middle class disappearing. I've never placed a person in a subprime but the media makes people think it's the entire problem...what about the auto worker who just lost his job, bank employee, mfg employee, IT support. the people just wanted the American Dream which is now the American Nightmare...who's going to purchase all these products being mfg overseas...when we have job loss there is no money to buy products. We cannot exist as a service nation (even servicing being sent overseas, credit card, computer support etc) we also need to manufacture goods....wakeup...Corporate greed has distroyed us, it's pathetic when the CEO is making hundreds if not thousands of times his employees income & then there's the jumbo year end bonus or the bonus for running the corp into the ground & when asked to step down receive millions....interesting isn't it.....Wake up people take your eye off the football & look at the ball & bigger picture.....
Comment: Lets not forget the appathy in this country, the corperate greed,and the individual greed. Too many people are saying"Screw everything and everyone as long as I get mine." and that needs to change.
Comment: Thats the reason the US will never have a national health care sytem. Too many say to hell with my neighbor as long as I get all I want.
Comment: To PABluesMan.... Amen brother!
Comment: attn capnmoroni:Unfortunatly there are an excess of people like you who have there heads inserted in their anal orfices that have a really hard time recognizing the truth even when it stands right in front of you!
Comment: With the constant increases in gas, food and healthcare, my paycheck just isn't going that far, and my husband is looking for a third job. Even though our credit is good, we have a lot of debt because we have a disabled son at home. Our bank told us to increase our line of credit we would have to have a credit score of 720....mine is 680. It is more than just those who are being irresponsible with money....it is those of us who have always been responsible with money who are feeling the real crunch.
Comment: The first step responsible step I did was fix my finances with MoneyStuck.com
I got a great loan, and finally I can breathe again!
Comment: "But as defaults on credit-card debt have risen ... credit-card issuers have morphed into Scrooges." Why is it that we criticize lenders for not giving money to people who are unlikely to pay it back? It seems like the credit-card issuers are the logical ones here.
Comment: right again. but credit card interest rates are outrageous. so are we for accepting them. their tactics are shady if not criminal. i am on my way out of the credit world. i have no choice. cash from now on. if everybody lived within their means or without credit cards maybe the cards would be affordable. INFANTRY VET said it right, but it hurts to hear the truth.
Comment: I believe the most telling phrase in this whole article is the following: "With their homes no longer functioning as ATMs, many Americans are looking to credit cards to finance purchases."
It's not "many Americans are looking to decrease their spending," or "many Americans are looking to re-evaluate their financial strategy." With one source of credit gone, we immediately move on to the next one. Saving and financial discipline are dead. Does anybody think that our economy will recover without us learning to be more responsible with our money?
Comment: Does "us" include those we call our overspending leaders in government?!
Comment: People in our society living well beyond thier means is the cause of this problem. If a homeowners mortgage doubles, they must have been one of those fools to buy into the concept of adjustable rate mortgages. Guess what, it was adjusted! The solution, is for people to pay their bills, and stop making more debt. It would also help if people finally realized that not buying American made goods (if possible) hurts jobs, and drives wages down!
Comment: I blame lawmakers for this crap. They slept on the wheel, while banks crafted this ponzi scheme and consumers lied to get unaffordable. Prices are too high in most markets. Let this meltdown continue so prices can stabilize again to more decent levels. If you can't pay your mortgage, hand back the keys, rent all over again until you save for a downpayment, then make a real purchase. That way, others don't have to suffer because of your greed and speculation. Lawmakers have to wake up as well!
Comment: The banks created this problem and now they are driving the economy into a severe recession. The logic is typical - since the homeowner now can't afford the monthly payment that has doubled because of the resets of the mortgages the banks sold them, then they are now not worthy of credit at all. Those who do qualify will have to pay for the higher interest rates to make up for the losses that the banks are responsible for in the first place. The solution is foe the Fed to circumvent the banks and massively fund the FHA and reduce it's restrictions and offer low cost loans with 60 year amortizations. The alternative is a 1930's style depression.
Comment: This is so typical. Make the people who have and are doing things correctly pay the price for those who don't. Money has been flowing to people who had NO CHANCE of paying it back. Now that these lenders are under the microscope they are afraid to lend it to anybody.
Comment: Huck Sucks! he has no reason being in there. Anybody that says he believes in miracles and needs one to win what is wrong with that picture? if you don"t know then you need your head examined. Day Dreamers out of touch with reality. If we make this an Obamanation we will be even in worse condition. The blind leading the ignorant or visa versa. I believe that if Hillary asked Collin Powell to be her Vice than she would get 90% of the black vote back! see it is about color. I would like to see a black president though just not obama he reminds me of hitler when he speaks. Also the states that voted for him on super tuesday they got wiped out by tornadoes! maybe god is trying to tell us something instead of Huck? There is no good choice in this election, it is the least worse canidate for the job. Is it Hillary? she would tax us more but she would balance the budget get us out of deficit provide heathcare and basically give more of it back to americans that might need it. McCain well "Cain" is the continue of Bush enough said....
Comment: you are right it is about color and gender and religion etc. etc. When you spell God as god it is obvious that you do not know God or read his word and do not believe in miracles. Thats o. k. You are not out of chances yet. You are also right on about Obama. However I don't think we'll have to worry about him either. It's McCain we need to watch. As it stands now, he is the next pres. Even I, as a conservative, realize he is just more Bush. Hitlary would just be more Bill with Bill as first Lady. Bill inherited a balanced budget and a smooth running whitehouse. He did nothing when Osama Bin Ladin bombed the world trade center in 93. That was the same year he bailed out an almost bankrupt Wal-Mart (also from Arkansas) by creating a trade agreement with China. Good job Clintons. Try buying anything not made in China. If you would vote for Hitlary you may as well move to China. Socialist America would soon enough be China anyway.. Same for Obama. Study political world history and see what is the end product of socialism; Liberalism leads to socialism, Socialism leads to Communism, Facism , or Naziism(racist facism) We, as a democracy need liberalism (in small doses) to balance the extreme right. Extremism is the real threat. There's some reality, Daydreamer. Therefore I see Huck as the only choice. I too, wish there were better choices. Right now , I'm just trying to pay off all debts, burn credit cards, and live on cash while raising my own food. THat's the only way I see to make it through the coming years. This mess we're in was caused mostly by Bill and not improved much by GW. Lets not vote for these guys again. I'm praying for a miracle too. That may be the only way to defeat the Christian haters. Go HUCK!!!!!
Comment: George W Bush spells god God and ran based on his faith yet he got us into this mess in Iraq. So, the fact that a candidate bases his candidacy on faith and religion is no matter to me. I think G W Bush is the great American murderer. He has sent 4000 US Men and Women to their deaths as well as opened up the country to civl war and teh influx of terrorists in Iraq all to avenge his poor daddy or maybe to try and upstage daddy by doing daddy's unfinished business. I agree, Saddham was a bad man who hurt a lot of people and deserved what he got. But he ruled that country with an iron fist and kept terroorists out. It's a shame we saved them from Saddham to surrender them to Al Queada. Only one person knows the real reason we are in Iraq and his years of coke and alcohol abuse have left him unable to smartly articulate his thoughts so I guess we'll never know.
Comment: is it Bush or God that you hate? War is war. They all suck. What makes you think Saddam was against terrorism? Are there any liked presidents who presided over a war? Where would we be today if we had not invaded Iraq? Clinton did nothing about Osama bombing the WTC in 93, but steer the media toward his sexual exploits in the whitehouse. Fair tax is just that. If you don't buy a mercedes you don't get taxed on it.. the more you spend, the more you pay tax. That includes foriegners, like tourists, diplomats, illegal alliens, pimps, drug dealers. You miss the point. Educate yourself.
Comment: It was started in part by Reagan and his Union busting. He crushed the everyday middle class worker with his mandates on the air traffic controllers union. I think if we had more union members, I don't care what union, NAFTA (set in motion and orchestrated by G H Bush) would have been fought and we would have more people with the courage to stand up to employers who don't let employees have breaks (WalMart) and others who ship jobs overseas. Maybe we would still be making things in America instead of shipping in lead laced toys for out children to chew on. I don't agree with everything unions do and all the ways they operate, but I do believe they stand up for the rank and file members. Without them we would never have had employer covered health care and pensions. Things have swung way to far to the side of the employer and big business. We need a revival of worker's rights revolt of the middle class to get the attention of the government. The president can't do anything without congress. Which is why Bush's snow job of congress is so remarkable. You know Karl Rove was the amstermind. I wonder what his beef with Saddham was? A vote for Huck is a vote against the poor. He wants a "fair tax" on consumption??? Everybody has to buy food and clothing. If you tax everybody at the same rate, people who don't even make enought to pay taxes now would be paying taxes. You must make over $250,000 a year. Because those are the people that a "fair tax" would help.
Comment: kyconservative for president! Nobody said it beter. Hillary is history.. The latino vote is sooo influenced by popularity and infamy they would vote for Tom Cruise if they could just get his autograph. Obama was a real scarey threat until Nader entered the race to once again bale out the republicans. Our only hope is that something will stop McCain and Huckabee will get his miracle. Praise Jesus. Go Huck.
Comment: Okay, does anybody remember "Check 21" that went through a few years back? It was spun by the interested parties (G. W. "Shrub" Bush, the banking industry, et al) as being good for the consumer in that it would reduce clearance times for checks. What was NOT made public, however, was that it introduced the concept of "universal default" ... that is, if you are late on your mortgage payment by one day, then your credit card company has the right to raise your interest rate because you are now deemed to be a poor risk. It also allowed for higher fees, penalties for "floating" a check (I'm getting paid tomorrow so if I write a check at the grocery store tonight then it'll be fine), and generally five thousand other ways to screw the consumer.
Some feel that penalties are suitable punishment. I feel that the credit companies and the banking industry is not my mother and has no business deciding whether or not I deserve to be "punished," much less what that punishment will be.
Nowhere is this more vividly illustrated in today's news that, despite the Fed lowering the Federal funds rate to 3%, interest rates on 30 year fixed-rate mortgages are UP over what they were a month ago -- BEFORE the Fed lowered the rate.
The current administration has turned banking regulations into a creative writing course, with the ultimate goal of figuring out how the banks can separate Joe Consumer from as many of the few dollars he has as possible without resorting to out-and-out armed robbery. Which is why I am starting to feel tentative signs of relief ... each day that goes by is one less day Bush has to f*** things up.
Comment: Common sense clearly dictates that you shouldn't write a check if you don't have the money in the bank to back it up. Ever.
I agree that banks charge way too much in fees. However, this is one case of the consumer screwing himself or herself over. The bank didn't write that check on your account, you did. You deserve to pay any fees incurred if it clears before your deposit does.
Comment: You shouldn't be writing a check if you don't have the money to cover it!
Comment: To PABluesMan.... Amen brother!!
Comment: KYconservative of course Bush signed off on all those loans. That was(according to Kanye) right after he made Katrina hit New orleans because Bushe hates black people. Hillary wants to talk about change? What is she going to change? All the stuff that Bill started? And Obama talks quite a storm but has no real answers to what his stance really is on anything. This election is shaping up like the last two where the Republican candidate is not really a good option but is the lesser of two evils.
Comment: Yes I'm voting for Hillary Clinton too! I believe that she is the best prospect for our nation that is in so much trouble. About these people and their credit problems, I do believe that it is the consumer fault. But, these finace charges are ridiculus. Buy a house, really pay for three, and that is with good credit. Borrow money in a crunch thinking that your getting ahead but pay it back and you could have done three times over. Why are people who just run up credit cards and buy things that they can't pay for allowed to keep on buying. People who do try to pay their bills their the ones who suffer through all of it. Yes, the government is responsible for some of it; we should have laws that protect our best interest like stopping some of these credit card companies. If your one day late it charges you $35 that should be your punishment. But they can cause your interest payment to go up because they fill you are at risk. There should be more play there I'm not saying that people shouldn't pay their bills on time, but just because your late don't mean your at risk sometimes things just happen you still pay interest on the balance and your late fee. Shouldn't that be enough!
Comment: ELets face it , for the last 20 years or more politics has not been about helping the country or the people. It's about setting things up to make the politicians richer after they retire from office. That also includes helping friends and relatives.
Comment: LATINO'S ARE Loyal VOTERS. THEy WILL SAVE HILLARy . THERE IS GOING TO BE AN uproar because of the power and influence of the LATINO VOTE. THERE IS NO DOUBT HILLARy WILL WIN TEXAS AND OHIO.
WHEN I THINK OF HILLARy I THINK OF My MOTHER. ROCK SOLID on my side no matter what. SOMEONE WHO KNOWS WHAT IS "GOING ON" AND ALWAyS HAS My BEST INTEREST AT HEART. I IDOLIZE MICHAEL JORDON. HOWEVER I WOULD VOTE FOR My MOM OVER MICHAEL JORDON. WHy I KNOW HER. MOST AMERICANS WOULD CHOOSE THEIR MOM OVER JORDON FOR president
Comment: Is your mother a manipulative, compulsive liar like Hillary?
Comment: Do you actually beleive that Bush approved all of these bad sub-prime mortgages? What does the President of the United States have to do with individual bank lending practices? Have you looked into Hillary's past financials? Do you remember the whole Whitewater incident? Just because there were no convictions doesn't mean there wasn't fraud. She ripped off people in a most direct way. All of you Hillary fanatics hate the idea of taking care of yourselves and want to blame the government for everything that is wrong and then you want it to fix everything that you have messed up for yourself. I have a suggestion. Why don't you shut your whiny self up, get up off your chair and get an education, then a job with some benefits and start paying real taxes. If either of the democrat candidates gets in office, they will try to raise taxes in an effort to "ease the burden" of our nations lazy poor at the expense of the middle class, hard working people. Our national government is not here to be our mothers, it is here to defend our borders and to ensure that everyone has a fair chance at life. Whether or not "YOU" choose to take that chance is up to you but do not expect us "TAXPAYERS" to willingly take care people who do not want to help themselves.
Comment: This is what happens when banks turn down people with perfect credit and extend credit to people with bankruptcies just because the bankrupt have long credit histories. I have no sympathy whatsoever for the lenders. They made bad loans and deserve to lose their money.
Comment: so true, however, the bankrupt cannot file bankruptcy for 10 more yrs. That makes them a better risk.
Comment: Why doesn't anyone blame the irresponsible consumer? What happened to only paying for what you actually REALLY have the money to pay for?
It's fine to blame the government, President, your parents for raising you with poor money sense, but ultimately, no one twisted your arm to buy that half-million dollar house when you knew you could only afford $150,000 or whatever the case may be. Look up DaveRamsey.com and work your butt off to get debt-free, then you have a right to complain about what "everyone else has DONE TO you". Grow up. ---And if you're relying on the government to take care of you, you shouldn't even be allowed to vote, because you clearly haven't figured out how government really works. They are real people who screw up regularly just like the rest of us.
Comment: Interesting article. I found the best deal at CreditLoanApproved.com
Comment: you can THANK BUSH and all the citizens who criticized their brothers for being unpatriotic for criticizing this administration. WELCOME TO THE HELL you voted FOR. I hope that you all learned a lesson and do not vote for McCAIN.
McCAIN is not economically grounded and will continue BUSH policies. ECONOMIC FEUDALISM. STAGNATION OCCURS WHEN THE GOVERNMENT RIps off it's own people.
Comment: you can THANK BUSH and all the citizens who criticized their brothers for being unpatriotic for criticizing this administration. WELCOME TO THE HELL you voted FOR. I hope that you all learned a lesson and do not vote for McCAIN.
McCAIN is not economical grounded and will continue BUSH policies. ECONOMIC FEUDALISM. STAGNATION OCCURS WHEN THE GOVERNMENT RIps off it's own people.
Comment: Banks that make bad loans will go out of business, or at least have problems. That's what we are seeing now. However, the other side of the coin is that banks that don't make good loans will have the same cash flow problems. If banks dont' make loans they will go out of business, or at least have problems, too. If businesses can't get loans then they can't expand, keep inventory up or do other necessary things. This will cause them to cut jobs, which will increase consumer defaults, which will tighten credit even further. One solution, if possible, is to create a new set of institutions, maybe new divisions of existing financials, which are isolated from the current problems from a liability standpoint. These new entities can then start making business and conforming mortgage loans. The other solution is for the current lenders to get over the jitters and start making business and conforming mortgage loans again. We have to keep the job market as strong as possible and have enough mortgage money to burn off the excess housing inventory. So far the necessary moves are slowly getting done to clear up problems such as the bond insurance ratings, Congressional hearing into causes and resolutions, closing hedge funds and CDOs, etc. We should start to see the results of the Fed cut and stimulus in about 4-5 months, so we may muddle through this somehow. It won't be pretty. The recovery, once it starts will probably be strong at the start. There is a lot of making up to do.
One key is consumer spending. We are a bit over our credit limit. We need to make sure that spending is only slowly decreased by a small amount. The reason for this is that your spending is someone else's paycheck. Even foreign goods take many US jobs to get to the consumer. Slow your spending a little, and keep that small cut going until you get back under control over time, but not overnight. That way we won't end up with a big downward spiral.
Comment: I recived a letter from a credit card company that informed that they placed a letter in my files with the credit
card bureau's telling them that they reduced my credit line from$3000 to $2125 I had the card for about 3 months and used it once on christmas to buy my wife a pair of earrings and was going to pay it off that month. then my son 's car broke down and I used it to help him to get another, I paid off the earrings and the only thing left was his lone from me.the credit card letter stated that besides them lowering my credit line they said that they did this after revewing my credit files, I have two other cards with small ballences on them but the new card had a lower intrest rate . In allmy years of using my other cards I have never been late with a payment,or a car payment ,housepayment,doctors, nothing but a top credit rating. the simple act of them doing this has in my book put a large black mark in my credit files ,and has pushed the limits of deflimation of character. I will have this payed off this month,and send a letter to the credit bureau about this incident. To the credit card company I will send a picture of there card shreded with ther logo placed on top of the pile!
Comment: February 24, 2008
Hello;
Many CREDIT CARD COMPANIES are still sending me ENTICEMENTS to ACCEPT their credit cards, even as I DEFAULTED on TWO or THREE of them in the past three years. I can't believe they are still doing this to me.
Thanks for listening.
rjm
Comment: Spouse just noted that many may have no experience with "a local banker", or laws limiting interest rates on credit cards - I agree, that's why I noted those items as common two decades ago but almost totally gone from the personal finance scene today.
Comment: Agree with the thoughts on personal responsibility, maintaining finanicial responsbility, living within one's means as thematic averviews - esp. agree with the idiotic reliance on credit scores computed by formulas not open to scrutiny. Too late, tho, to turn back time to anti-usury laws that capped the interest rates on credit cards, or the local bankers knowing their customers well enough to know who can pay/ who will pay - take away those once-upon-a-time (two decades ago) controls built into the personal financial world, and we get what we have.
Comment: Blaming others for one's mistakes is a national American past time, so it shouldn't be a surprise for those profligate consumers to blame everyone from card companies, to mortgage brokers/lenders to the Fed for their irresponsible ways. No one forced a gun to the homeowners head to buy beyond their means, or to cash-out their equity to buy non-essential items. But those homeowners who are now facing foreclosure are crying foul when they themselves were being greedy and gambling that the housing price bubble would continue uninterrupted. The real estate finance industry may have been a willing participant and an enabler of stupid personal decisions, but just as an abuser of alcohol shouldn't blame a winery for their alcoholism, those individuals should stand up and assume responsibility for their own decisions. Otherwise, if you are going to insist that the government and courts save you from yourself each and every time you are on the verge of making a mistake, you can kiss democracy and personal freedoms good bye. Beware what you ask for, because you may just get it.
Comment: I don't live in California, Las Vegas or Michigan but I'm a little appalled by people who blame the credit card companies for their problems and the call for more government intervention to deal with the credit problem. If a person or family lives within their means, the only credit that should be needed is to finance a home where the individual or family lives. Everything else can be paid for with cash. Watch the Dave Ramsey Show on Fox, you'll see what I'm writing about here. A person with good credit can still get a loan. I refinanced my home from a 30 year fixed to a 15-year fixed and saved a total of $241,000. The loan process was easy and only drawback is that I'll pay mortgage insurance for 1 year due to the calculated loan-to-balance equity ratio. A little personal responsibility and a good credit score can go a long way toward reaping financial benefits in these tough times. I read my truth-in-lending package and the closing package before I signed it to make sure I wasn't'being enticed into a deal that I didn't understand eventhough I inititated it. BTW, I stay home on my vacations, don't drive a BMW, don't have a cell phone, an ipod, a flatscreen TV, or an x-box 360. In the area of personal finance, I have found that you can do more for yourself than the government can do.
Comment: I like your thinking 1mom.
I have been thinking and saying just about the same stuff as you have said in your posting. The government allowed the banks to create the scam of credit cards and even allow them to extend to those re-bounding after they collapsed. AFTER people go full scale into credit debt, they find they are in a dead end and still in need of crdit. I agree that at this point, the answerr if for everyone to begin paying cash and only live inside your means.
The fe next posing has great crdit? Good for you! Peronsal responsiblility? Watch wahat you say - because s*^t could happen to you buddy
!!
Comment: I really don't see what the big cridit problem is and I'm generally appalled at seeing all the posts blaming the banks and credit card issuers for the sub-prime ledning problems. Last week, I refinanced my home from 30-year motrgage at 5.8% to a 15- year mortgage at 5.1% thereby saving a total of $241,000 in interest. I had no problem at all in getting this loan and the only drawback is that I'll have to pay mortgage insurance for 1 year due to the loan-to balance equity ratio of 83%. I read my truth-in-lending package and the final loan agreement before I signed it. I plan to refinance again later this year to a 10 year mortgage if the rate drops to 4.5%. The closing costs are a small price to pay for trimming the mortgage term and reducing the interest. The benefits of personal responsibility and maintaining an excellent credit score are huge. The government will only make the situation worse.
Comment: You know what needs to be done is a total restructure of the credit rating system - simplified for consumers to keep up with too - not secret voodoo numbers that even banks don't get.
The Gov't needs to step in too - call it a recession so we can all regroup. Everyone is loosing their shirt right now on the housing fiasco and that interest only loans as well as the variable interest non-sense. We need to stop that. Loans need to be simple like they used to be. You had to have 3x the amount of the payment for income to quality - simple. Interest was determined by your credit - that's fine but we all need a simple system so we can work together and credit card companies need to stop with the absurd card offers enticing folks into debt that they know full well most cannot really afford in the market now. It's time for a reality check.
No - losses are not someone elses gain any more - that's the problem. Losses are losses with no real recovery.
We the people need to step up here and push our leaders to make DRAMATIC changes. That means Washington and States need to live in their means too.
Recession may not be so bad if we all really look at things and evaluate them.
I mean for cryin' out loud. I left California because of the stupidity in the housing market there and came to Texas where we could afford a home. We were chased away from our family because banks got greedy and people got stupid. Since when is a 3/2 1300 sq ft fixxer worht $400k anyhow? Seriously.
It's got to be changed.
California is feeling the hit, hard! My family who are natives for 80 years or more there want out too because of the stupidity.
I think ultimately the sad fact of the matter is that the Gov't is gonna have to come in, put caps on housing costs to make things affordable so that the average joe can get a home and thusly keep the economy going. They will have to come up with genuinely simple guidelines for credit, and a real credit repair solution. Maybe even issue some kind of new identy so folks can really get on top again - you know forgiveness is a wonderful thing. Right now with everyone floundering so badly - we are going no where fast.
Anyhow - we need to do like our grandparents did - only get what we can afford and pay CASH if you can.
Until Uncle Sam figures a way to undo what they let happen calling it "economic growth" we are all rpetty much screwed.
Comment: Comrades
Capitalism is a barbaric, insensitive ritual steeped in social Darwinism. We cannot allow the fittest to survive in our society. Your loss is someone else's gain, and your gain is someone else's loss. Therefore, losers contribute to the society and winners take away from it. Being a winner is unethical, while a society of losers is happy, moral, and prosperous as a collective. A progressive society of the future, steeped in diversity, inclusiveness, and collectivism, shall have no winners. Everyone will be a loser.
Comment: another word for a country of this type of losers is Communism, the extreme of liberalism. Capitalism is America. love it or leave it. Learn to take care of yourself and don't make the government (taxpayers) wipe your nose for you. Darwinism is a leftist belief ( in a disproven theory, not fact). Capitalism is a freedom that drives democracy. You could find many countries full of these"losers". They would love to have you.
Comment: The idea that capitalism = democracy is the oversimplified argument that a child might make. Capitalism is certainly part of America but there is more to it than that. The idea that you are completely unaffected by what happens to others in a society is a ridiculous notion, much like your refusal to consider scientifically sound theories like Darwin's theory of evolution. Frankly attitudes like yours make me embarrassed to live in America.
Comment: The idea that capitalism = democracy is the oversimplified argument that a child might make. Capitalism is certainly part of America but there is more to it than that. The idea that you are completely unaffected by what happens to others in a society is a ridiculous notion, much like your refusal to consider scientifically sound theories like Darwin's theory of evolution. Frankly attitudes like yours make me embarrassed to live in America.
Comment: The idea of a foreclosure freeze is a good one. While the lending institutions are an absolute necessity to the economy, they cannot be allowed to be insulated from bad speculation. Nor can they be bailed out with taxpayer dollars. The notion that they 'lose' money is not a likely scenario since it's based upon forecasts and expected profit margins....that is to say they still make money, just not as much as desired. For those that have speculated wildly, let them pay the price for their speculations instead of the homeowner and taxpayer. And since the only responsibility lending institutions have is to their investors, government intervention will be a necessity. This is a matter that needs immediate action.
Comment: If I understand the housing and credit crunch correctly the loans were made by banks on speculation that rates would rise and they (the banks) would make millions on that speculation. And now that the bottom has fallen out of the housing market banks have lost millions due to their gamble and once again it is the consumer i.e. the homeowner that ends up paying the bill. If I were to gamble wildly like that and racked up a huge amount of debt would my crediters cut me any slack on paying back what I owe? They would not. So why should homeowners be held liable for a lending institutions bad gamble? Why can't banks assume resopnsibility for their actions, freeze foreclosures and work with homeowners giving them a chance to rework their morgage at a fixed rate instead of an ARM and let them stay in their home? Could this work? I honestly don' know. What I do know is that because of greed and an over reaching desire to maximize profit, banks are now reaping a bitter harvest with the homeowner assuming the risk of another's bad investment.
Comment: I would think that a forclosure freeze and required renegotiation of ARMs would be in the banks best interest. Which is better, making a bit less interest from a mortage? Or getting no interest and being stuck with a house that is worth less than was borrowed? A forclosure freeze and renegotiation of these bad loans would do a lot to shore up the sagging housing market, which in turn would increase consumer confidence. Maybe we could get our asses out of this recession.
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