A diverse cast of characters combined to launch the once-in-a- lifetime housing boom of the past five years. Traditional mortgage companies and banks unleashed a barrage of loans, many to borrowers with iffy credit histories who didn't bother to read the fine print about upwardly mobile interest rates. Wall Street egged on the often-reckless underwriting by buying vast quantities of home loans for repackaging as securities. Now that the boom has fizzled and foreclosure rates are rising, the important role of large homebuilders as lenders is also coming into sharper focus.
Bonfire of the homebuilders
In addition to spitting out subdivisions, many of which now stand half-empty, builders jumped into the mortgage business to a degree they never had. Wall Street provided the same encouragement it offered other lenders. Even as the housing supply began to exceed demand last year, builders kept sales brisk by pushing adjustable-rate, interest-only, and other risky loans. In some cases they attracted clientele who couldn't afford conventional mortgages. In others, builders allegedly violated federal lending standards to get customers to sign on the dotted line.
It's all going to come crashing down soon and it won't be pretty.
Photo from MSNBC
5 comments:
Like Joshua at the battle of Jericho.....
"and the walls came a tumblin' down" !
So....the stock market quickly becomes
the stuck market !
Good luck and Amen!
Naw, no problem. Like half of Manhattan, the part from 110 St to the top of the map, was built in only 20 years, when the market crashes, as it did in 1905 and 1929, you can always fill the space with importing the people - one family house can hold three families, a studio six day laborers sleeping in shifts etc.
They would be happy, the employers would be happy, the banks and developers happy, and above all, the politicians would be happy.
Voters? Taxpayers? Middle class left with this mess? Well you can always complain, and the press will poke fun at your 'racist' rants?
There ain't nothing you can do about it!!!!!!!!!!!!!!!!!!
Is there?
Once it all collapses, there will be less small time developers, these are the ones who create the most atrocious buildings. Furthermore, home prices may drop to something close to what they were before the artificial inflation imposed by speculation.
Let's keep our fingers crossed, and hopefully this era of destruction will soon be a bad memory.
"Bonfire of the Builders" is an outstanding report that shows one of the places where the finger should be pointed-the homebuilders.
All the hype they created and scammed people out of their life savings with commericals announcing-"bad credit, don't worrry, we'll fix it". They fixed it alright.
Then we have the defetcive houses built with walls coming down, literally, while foundations split every which way.
The following is a site a tv station and newspaper came together to do their own investigative report a few years ago. I asked the producer why they did it and his response was the station and paper were overwhelmed with reports of such shoddy construction they wanted to see how bad it really.http://extra.orlandosentinel.com/buildingproblems/
After reading this report take some time and go to www.hobb.org.
All I can say is what goes around comes around.
The latest rumor has it that a bunch of Wall St. boys
(out of their vast year end bonus etc. $$$$$$$) put together some mortgage broker/real estate groups
and may have been also involved in feeding the sub prime debacle.
In other words:
First, they feed the fire by lending money....convincing risky borrowers they can afford those high mortgage payments.
Second, they foreclose on them
when they can't meet the payments.
Third, after amassing a parcel of foreclosures in a particular area....(like Corona or south Jamaica which were some of the hardest hit).... these new real estate "developers" then demolish those existing single and two family homes and build to the max (zoning permitting) and after it's all over, make a fortune on the whole deal.
So in the end its move out the poor
and move in the rich.
Thus we have (NYC condoned) urban renewal through urban removal!
Does this type of plotting sound a little far fetched ?
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