sub prime
September 4th, 2007 |Credit card companies lobby Congress to pass a bank-friendly bankruptcy bill. Consumers in financial trouble respond by avoiding extra card debt and instead tapping the subprime lending market. When that turns sour, credit card companies turn around and offer yet more card debt to desperate subprime borrowers, secure in the knowledge that their shiny new bill protects them from default.
And what happens when people can’t pay their bills? They bail out of town completely leaving their house empty and bills due. Sometimes they even leave the dog in the yard when they leave in the middle of the night.
Imagine you have a 30 year loan at a reasonable rate in a decent neighborhood. In recent years the neighborhood fills up with people who took advantage of the sub-prime market. This year people start bailing out of their homes and, as credit tightens up, these homes can not be resold. Your nice neighborhood start to suffer from blight. Crime and vandalism become a problem. You decide to move but find that your house has devalued due to the neighborhood conditions and credit is so bad that no one can get a loan for your home anyway.
It’s a problem for a lot of people. Banks and credit card companies are only going to make this problem a lot worse.
9 Responses to “sub prime”
Imagine you have a 30 year loan at a reasonable rate in a decent neighborhood. In recent years the neighborhood fills up with people who took advantage of the sub-prime market. This year people start bailing out of their homes and, as credit tightens up, these homes can not be resold. Your nice neighborhood start to suffer from blight.
Not true.
This is the beginning of the period of time when smart investors — leery of entering (or making large investments) into the housing market during a period of obvious price-inflation (the “bubble”) — make their move on now-undervalued property.
You don’t need to worry about blight, Smithers; you need to worry about not being the brighest person on your block anymore.
This is the beginning of the period of time when smart investors — leery of entering (or making large investments) into the housing market during a period of obvious price-inflation (the “bubble”) — make their move on now-undervalued property.
And what if these “smart investors” can’t get a loan because the banks are too tight with credit?
The neighborhoods have went down hill becuase of the jicky jacks that moved in with sub prime loans. The housing market is Fucked and I had to sell my house for 50K less becuase of it!
I look around my city today and am reminded of the depression in housing in the mid-1970’s. New neighborhoods were left unfinished leaving the early buyers without streets, lights and other necessities because Bor-Son and other big names went bankrupt, along with a major St Paul bank. There are presently many new developments in the northern suburbs and elsewhere just sitting “on hold”. Their start-up prices are preposterous now and their buyers non-existent.
jicky jacks?
jicky jacks?
Did he mean Cracker Jacks?
You have to look at the upside of all this: better music. I mean why did all the good music come out in the late seventies and early eighties? Cheap rent and no jobs.
Face it, any modern day Joe Strummer or Joey Ramone can’t afford to live in a hipster ghetto to meet bandmates and jam. The current rocker protoge is either stuck in his parent’s basement working mindnumbing joe jobs and playing WoW or has cast his fate as an options trader — neither a good mix for becoming a rocker. Thus the void is filled up with prepackaged gunk that has no competition from budding sex pistols.
Face it, the real estate market and the rock market are polar opposites. Now is the time to invest in vinyl or whatever the kids listen to these days.
man, i knew this crap would happen.
I hope to god the Fed doesn’t bail those dickweeds out. Subprime lenders deserve to burn in hell, and lose all their money beforehand.
We need to change the bankruptcy laws back pronto or these idjit banks will never learn.
on a more positive note: 36000 financial services jobs were lost last month in the US. Im just hoping theres enough employees leftund to refinance my 460,000 mortgage for only 600 dollars a month so I can dance in front of my computer like the woman in the banner ad.
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