Archive for the ‘Economy’ category

Understanding the Subprime Mortgage Crisis

September 21, 2008

Our economy is in deep shit and like it or not – you’re sitting smack dab in the middle it.  Lots of people are asking the same questions:  “How the hell did we end up like this?”,   “Isn’t this just a Wall Street problem?” and “could this recession really effect me? – If so, how bad could things get?”    To fully understand why the U.S. economy is in such bad shape and getting worse, one of the things you need to do, is get a firm grip on understanding the Subprime Mortgage Crisis…

The prudent man’s rule when calculating how much one can afford to pay for a home without getting in over your head is typically no more than 3-4x your annual income. 

In 2005 (the peak of the United States housing bubble) the economy was booming, jobs were plentiful, consumers were spending and the real estate market was unstoppable. However, irresponsibly unnoticed the median home price had become six to nine times greater than median income.  That was the sign banks chose to ignore.  Despite this dislocation, lenders were tripping over themselves to make loans based on the unrealistic misconstrued concept that property values would always continue to soar.

Competition became so fierce among lenders they began seducing the unfortunates, people with bad debt, low paying jobs and sketchy credit histories.  Based on their less than adequate financials, this subprime underclass that had no business even buying property, had become mortgagors.  Both the lender and the buyer knew they couldn’t really afford that dream home – but what the hell, those (more…)

One Eyed Jack

September 5, 2008

Back in the late 70’s and early 80’s, my brother and I spent many road trips in the back of my mother’s station wagon. Booster seats didn’t exist, there were no such thing as air bags and seat belts were just something you tucked into the crack of the seat to get them out of the way. We were simply tossed into the back cargo area like loosely packed groceries.

There were no handheld gaming devices or cell phones – we had one of those primitive triangular peg board puzzle games and the Rubic’s Cube.  Most of the time we would just sit back there and watch the other cars.  Like many kids on long trips we found amusement in waving to anyone who would wave back, signaling truck drivers to blow their horns… but, our favorite pass time was One Eyed Jack.

If you were playing One Eyed Jack, you had your nose pressed against the window and would once-over every car driving on the road… the shiny cars, the dirty cars, the new cars, the old cars, the fancy Cadillac’s and the dilapidated rust buckets. What you were looking for was a car with a broken (more…)

Your House As Seen By…

September 5, 2008

As Seen by Yourself

As Seen by Your Buyer

As Seen by Your Buyer

As seen by Your Lender

As seen by Your Lender

As Seen by Your Appraiser

As Seen by Your Appraiser

As Seen by Your Tax Assessor

As Seen by Your Tax Assessor