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EricBess

Guest
train;289581 said:
(man - I'll see if I can catch back up on this one...)

But - for the record - as we will be first time home buyers soon - I like the market and what has happened recently...

Not that I want any of our members affected negatively... but- you know...
We bought in 2004 and currently owe about $150K more on our house than it now appraises at. I think it is great that housing prices are more realistic right now and I wish you luck with your purchase. It is a great time to buy a house. I just wish it weren't on the backs of all sorts of people (like me) who tried to do everything right.

When I bought, I wasn't "pressured", but I was told not to worry about qualifying and to buy whatever "I felt like I could afford" and they would make sure that the qualification was there.

Spidey - to your point, I think this just proves what I am talking about. Sub-prime loans were available, but not such a big deal prior to 2000 because prior to that, they were mostly used for the purpose that they were intended - to get people into a house that couldn't otherwise afford it. Somewhere around 2000, lenders or speculators, or someone started realizing that they could also be taken advantage of in other ways, so they became more and more widespread.

Point being - government introduces certain things with a specific purpose (and noble intentions), but people (being greedy), use them in other ways, and the next thing you know, there is some "unforeseen" crisis.
 

Spiderman

Administrator
Staff member
Sub-prime loans were available, but not such a big deal prior to 2000 because prior to that, they were mostly used for the purpose that they were intended - to get people into a house that couldn't otherwise afford it.
I think they were mostly used for people who had less than stellar credit scores and didn't qualify for the "best rates", hence the term "sub-prime".

And as far as I know, the government doesn't really control that anyway. Bond-buyers drive the interest rates on home loans, fixed and adjustable.
 

Spiderman

Administrator
Staff member
I did some digging and found this report? from GAO... it only goes to 2006 or 2007, but probably good enough...

Page 14 shows how big a jump went from loan originations starting in 2000... before that it was pretty stable in the 90's. Also states that the nation's home ownership went from 67.4% in 2000 to 68.8 in 2006 (unfortunately, no numbers or graphs on how it was historically).

Page 18 shows the share of subprime loans held steady through 2003, then jumped up.

Page 21 shows the foreclosure rates from 1979-2007 (gotta look at the default line)... it slowly increased in the 80's, held pretty steady in the 90's, jumped from 2000-2003, pretty much held steady from 2003-2006, then jumped again.

So bottom line, everything was going as you might expect until the 2000's, when the amount of loans increased, the share of subprime loans increased, and defaults increased "dramatically" (compared to historical levels).
 
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