What's up with this mortage fraud business?

[lsiberian]

Housing prices were artificially raised by giving unqualified people mortgages solely for political gain. This created unprecedented demand for housing and drove the price up.
The beginnings of a mortgage system have been found, as early as 1190.
We haven't experienced high housing prices for centuries.

They are in the business to lend money for a fee. That's how it works.
Coke and Pepsi figured they can get money buy making and selling soda.

You are correct that it's also artificial.
The artificial demand for college, hence student loans were raised by convincing the masses that they are all are entitled to higher education.
Even intellectually unqualified people with low IQ's. School isn't for everyone; nor is the square peg for the round hole.

Lending has been going on as long as their have been cities and certainly some of it is very helpful for advancing society. Assuming you can truly afford to pay the loans off. It's the abuse of the system for political means that really got us in the mess.

Of course and if you have a bank account, 401k or mutual fund you've enjoyed some of the profit too. Nothing wrong with that, but the debt ratio are too far out there for my comfort.

I read an article of study that compared Grit to IQ for college success. Grit seemed to have a much better correlation. For all our problems we still live in one of the best countries in the world for success and opportunity. As bad as our politician might be they are still very honest compared with many place I've lived.

Adam I'm thinking way back off something I've heard from older folks. Maybe they were lying. I still think it prudent to not get into debt. A house is one debt that is okay because it's a forced savings account if the house has a good location, floorplan, etc.

 

[agarwalro]

My condo loan is underwater. I'm paying 2x the going rate and the bank refuses to lower it because of being underwater. Never missed a payment yet never saw any bailout benefits. That burns to the core of my moral fiber.

It hurts, but that's life (to date I'm kicking myself for buying said condo instead of the Lotus Exige I was prospecting). Next time I'm going to give in .

 

[GO-NAD!]

The problem is that loans have artificially raised the price of houses beyond what most people could afford to save for. It wasn't that long ago that the average person could buy land and a house with cash. You see the banks figured out they could get a nice little interest rate off people by financing the masses. In turn prices went up and the cycle spiraled out of control. Of course we can all get a slice of the profits by investing in banks. Kind of like we can get a slice of the oil profits too.

At the very least a 20 percent down-payment should be required IMO. It would be impossible to eliminate loans completely, but hopefully with education we can steer people away from debt.

You can see the same artificial raise student loans and car loans. Student loans in the US are basically a hidden tax.

I may be wrong, but my understanding is that high rates of home ownership is a North American phenomina, not reflected to the same extent in most parts of the world. Part of it is relative affluence, coupled with lower real estate values, when compared to the rest of the world. Where I grew up, "back in the day", most people built their own homes, while living with parents. And, the houses would be smaller than they are now, while having larger families. Back then, most land belonged to the "crown" and land grants were handed out to people. All of this resulted in Newfoundland having the highest rate of home ownership in the country, while being the poorest province. Banks wouldn't touch a poor fisherman with a 10 foot pole, so there wouldn't be a mortgage to pay back.