Tough times/ Bad Economy

[twoplustwo]

I got laid off yesterday. No notice, no severance, no nothing, and via voicemail to boot. Very professional, don't you think? There's 9 years of my life I'll never get back.

Pineneedles, I may need to move into your garage. Hope it has lake views. And a wireless connection.

[TomC]

Originally Posted by twoplustwo

I got laid off yesterday. No notice, no severance, no nothing, and via voicemail to boot. Very professional, don't you think? There's 9 years of my life I'll never get back.

Pineneedles, I may need to move into your garage. Hope it has lake views. And a wireless connection.

I've had to lay off people for lack of work... its the worst part of the job. If one can't muster the intestinal fortitude to do that face-to-face than the person shouldn't be in management. To do that by voicemail is deplorable... in my opinion anyway.

Best of luck in finding new employment - often a bad situation like this opens up an opportunity you otherwise would have missed...

[EricP]

WaMu failed, the Fed took them over and their outgoing CEO, who was on the job for 3 weeks, gets 15 million in pay and severance. I can't even believe that can be justified. It's unreasonable to pay that and totally ridiculous. I wonder if he'll really get it all or somehow common sense will step in and make a huge adjustment. BTW, that's ~$30k per hour for his brief stint.

[secondcurve]

Originally Posted by EricP

WaMu failed, the Fed took them over and their outgoing CEO, who was on the job for 3 weeks, gets 15 million in pay and severance. I can't even believe that can be justified. It's unreasonable to pay that and totally ridiculous. I wonder if he'll really get it all or somehow common sense will step in and make a huge adjustment. BTW, that's ~$30k per hour for his brief stint.

The CEO's name is Alan Fishman and He actually got $19.1MM and it works out to over $40,000 an hour according to today's edition of Barrons. Perhaps he will refuse some of the pay as the interim CEO at AIG did.

[fatlazyless]

Wonder if the New Hampshire Employees Retirement pension plan, www.nher.org, pension fund got WaMu-ed when Washington Mutual was seized by Uncle Sam? Supposedly, the California teacher's pension fund had lots of WaMu.

[angela4design]

I know the employees of that Meredith WaMu office, which was exclusively home loans. They closed that office years ago to 'consolidate'. Layoffs began about 2-3 years ago, as I recall. Funny thing is; one of the agents since went to work for a different agent, and as I recall, it was JP Morgan Chase! Funny how these things come around.

So sorry for those struggling with employment. NH has it a little better than some metro areas I think, but that's little consolation. I'm just glad that our banks are local people (who we know), and not Wall Street Fat Cats. So, even if my job evaporates, I can still feel confident that my savings will still be there. Small consolation, but still...

Does it possibly warrant an occasional mention of job listings on this forum? I understand that we don't know 'who does what' professionally, but I think if we get priveleged information, maybe it couldn't hurt. Just throwing it out there...

[tricia1218]

It amazes me the lack of personal responsibility some homeowners seem to have. You know what you can afford, if you make 30k you should be suspicious at being prequalified at 450k with no money down.

And does no one read their loan terms??!? I had an 80/20 loan and it could not have worked out better.

I heard my hairdresser complaining that she didn't refinance in time and her rate was going up and they would have trouble paying their mortgage and had calls into a state agency to help her and her husband refinance at a lower rate and no closing costs, then in the next sentence she was talking about renting out her condo once the new loan was in place and buying a house? I was amazed she messed up once and was being helped out and was going right back in.

[jetskier]

Originally Posted by tricia1218

It amazes me the lack of personal responsibility some homeowners seem to have. You know what you can afford, if you make 30k you should be suspicious at being prequalified at 450k with no money down.

And does no one read their loan terms??!? I had an 80/20 loan and it could not have worked out better.

I heard my hairdresser complaining that she didn't refinance in time and her rate was going up and they would have trouble paying their mortgage and had calls into a state agency to help her and her husband refinance at a lower rate and no closing costs, then in the next sentence she was talking about renting out her condo once the new loan was in place and buying a house? I was amazed she messed up once and was being helped out and was going right back in.

My sense is that it was really more about the brokers and regulators. There were a number of investment vehicles that were clearly targeting buyers that were not qualified for a particular mortgage. Some of the vehicles actually required payments that did not even meet the intrest rate for the loan and the principle increased over time.

I am sure that the brokers would convince the buyers that the value of the property would go up and that they needed to own to create personal wealth.

I think that there are a number of uninformed buyers who don't know what they are doing in this world. But, IMHO it is the fault of the banks and regulators in allowing investment vehicles that target unqualified borrowers. Years ago, when we bought our house, there were strict income requirements, debt caps and limits on mortgage affordability. This was done as a basic requirement to sell the loans to Freddie Mac and Fanny Mae...not an issue these days; my cat can probably qualify for a mortgage.

Jetskier

[ITD]

Let's not forget our government's role in this debacle. I remember 5 to 10 years ago, many prominent mayors, congressmen and senators jumping up and down because banks were not writing low income people loans. They were threatening legislation and lawsuits. Well, they got their way and look what happened......

[jetskier]

Originally Posted by ITD

Let's not forget our government's role in this debacle. I remember 5 to 10 years ago, many prominent mayors, congressmen and senators jumping up and down because banks were not writing low income people loans. They were threatening legislation and lawsuits. Well, they got their way and look what happened......

The house vote on the bailout bill failed and the market closed off 7%. It is continuing to fall in after hours trading. Let's see, we have a war, energy crisis, inflation and economic meltdown. Bet the development at the lake slows way way down.

Jetskier

[Woodsy]

Its going to be fun watching the 401K evaporate... If this isnt somehow rectified and quickly the Great Depression II will be here shortly

Woodsy

[Silver Duck]

the flood of annoying unsollicited credit card applications has just about dried up!

Let's keep the faith, folks. I somehow doubt that even the "idjits" in Washington will let us slip into another Great Depression.

Silver Duck

[TiltonBB]

In the 90's the liberals thought that everyone should own a home and encouraged the relaxation of lending standards. They loved things like 100% financing, seller concessions and reduced initial payments. Certainly not the loans that us "older folks" were offered when we bought our first house. However, those easy loans sounded real good to the low income, poor credit crowd.

Now you have the liberals blaming the lack of regulation for the problems we face. If the liberals never pushed for the reduced qualifications and no down payment loans we wouldn't have this problem. The whole housing crisis wouldn't exist, and all of us that enjoy working for a living would continue to grow and prosper. Hey, some people just weren't meant to own a home. I, for one, am sick of my tax dollars going to support those who don't make it on their own because they aren't willing to put the effort in.

As has been said before "the safety net has become a hammock".

[Flylady]

Here is way brokers and RE lenders were pushing unqualified buyers into houses they could not afford....the perfect storm....6 consecutive years of home appreciation in the 10% + per year. Wall street investment bankers came up with a new investment vehicle that was paying 10% and more for mid term investments. It was labeled mortgage backed securities and since the housing market was so strong investors couldn't loose since there was more supply than demand! Now lenders like Countrywide could make all the loans they wanted and package up the loans and sell them to investors (usually like Fannie or Freddie who then repackaged and resold the loans to smaller investors and investment banks to resell to their investors including some public retirement funds.. As long as banks like Countrywide, WaMU and World Savings had buyers for their mortgages is was like the goose laying the golden egg. More commissions for the RE agents and the loan agents and the banks. Everyone from wall street to the loan officers were rolling in the money and never thought about the market not being able to sustain the growth rate or what would happen to people when their rates adjusted. Sadly most of the players that made millions (wallstreet bankers) and mortgage industry executives pulled out 18 months ago when things started to slow so they are long gone. The only ones left holding the tab are the taxpayers.
Without the bailout bill to get the system moving again I fear what the outcome may be.

[Irish mist]

I was just informed that a new sub-division in Laconia slashed close to fifty thousand dollars off of two homes that are sitting there completed. The builder still has over 30 empty lots to fill up with homes in that sub-division.....something tells me that's not going to happen.
________
EARS NOSE & THROAT FORUMS

[Woodsy]

Its not just the real estate meltdown that is causing this.... and it certainly doesnt fall with the liberals either! Its a perfect financial storm... The 600 BILLION dollar war in Iraq, sub-prime lending, speculators driving up the price of oil, huge corporate mergers, etc... The list goes on!

The easy fix for the real estate crisis was for the banks & mortgage companies to work with the property owners and rewrite the notes to make them affordable. Who cares if they blow the note out from 30 years to 40 or 50? Some cash flow is better than no cash flow especially when your talking
physical property!

Make no mistake... you and I are going to pay for this mess. The estimate I heard this morning was that 1 TRILLION dollars evaporated yesterday... another TRILLION was expected to evaporate today! This our money, mom & dads retirement funds, college funds, savings! all gone!

Its going to be very interesting to watch what the govt decides to do next....

Woodsy

[chipj29]

Originally Posted by Woodsy

Its not just the real estate meltdown that is causing this.... and it certainly doesnt fall with the liberals either! Its a perfect financial storm... The 600 BILLION dollar war in Iraq, sub-prime lending, speculators driving up the price of oil, huge corporate mergers, etc... The list goes on!

The easy fix for the real estate crisis was for the banks & mortgage companies to work with the property owners and rewrite the notes to make them affordable. Who cares if they blow the note out from 30 years to 40 or 50? Some cash flow is better than no cash flow especially when your talking
physical property!

Make no mistake... you and I are going to pay for this mess. The estimate I heard this morning was that 1 TRILLION dollars evaporated yesterday... another TRILLION was expected to evaporate today! This our money, mom & dads retirement funds, college funds, savings! all gone!

Its going to be very interesting to watch what the govt decides to do next....

Woodsy

I heard the same figures yesterday. $1 trillion. But then I thought...where does the money go? I know it sounds dumb, but that is a serious question. Did it ever exist in the first place, since it was loans?

[Woodsy]

Originally Posted by chipj29

I heard the same figures yesterday. $1 trillion. But then I thought...where does the money go? I know it sounds dumb, but that is a serious question. Did it ever exist in the first place, since it was loans?

The money existed in the form of investments that could be sold for cash....

Hypothetical (not really) situation... (this is happening all over as we speak)


Your have been saving money since your kid was born... you saved $100K for your kids college. What you really saved was $50K, but because you INVESTED the money in a fund, and Wall St. was doing good your savings grew to 100K!

Your kid started college this month....

So you decide to cash out and get some $$$ to pay the tuition.... and lo and behold your $100K has been vaporized overnight into $70K so now you can only afford to pay for 3 years of college instead of 4! and the fund is continously dropping precipitously in value by the day...

So you and (everybody else) yank whats left of your money out... enough people do that and the institution fails....

Go watch "It's A Wonderful Life".... its a pretty simple explanation of whats going on.... except on a much much larger scale....

Woodsy

[chipj29]

Thanks for the explanation Woodsy, makes perfect sense, and that is more or less what I was thinking.
However...if I had $100k, and now I only have $70k, where did my $30k go? If I had made the $30k instead of losing it, someone would have had to give it to me....

[SIKSUKR]

This economy has been a house of cards for some time now.It's very easy to blame the big guy lending institutions and Wall street traders and they should have their share but look in the mirror people.The reason we are in this situation is because most Americans have credit WAY beyond where they should.The bubble is about to bust and those us who knew better and did not over extend themselves are not in too bad of position.The problem is the rest of the over extended world will be taking us down with them like my retirement accounts.Boy Dad was soo right about staying out of high debt because when things go south you will be in a much better position.It's been hard to do when property looks like it will increase at a never ending rate and there is plenty of money to be made through speculation of higher property values.That's not reality and we now have deflation and lots of property owned upside down.Most of the people on this board are old enough to have seen the big deflation of the early 90's and what it did to the s&l's.This is now a much worse version and the stakes are higher.Bottom line.Don't buy what you can't afford to pay for if the economy goes in the crapper.

[kjbathe]

Tilton BB and SIKSUKR have it right, IMO. It's convenient for folks to want to point fingers and assess blame, but those two actions fail to address a lack of personal responsibility.

Just because I "qualify" for a ridiculous loan, mortgage or credit card limit doesn't mean I should take it. And I don't think it's the bank's fault for offering it. They take the risk of not getting their money back when they offer those absurd instruments. And to date, I haven't heard of one single case where the borrower was forced, against their will, under duress, at gun point... to take on those debts! THAT IS THE ROOT CAUSE OF THIS WHOLE MESS.

It sounded great when Frank & Co. wanted everyone to have their own home. But as noted above, not everyone can afford to or should have their own home. But that's not a de-regulation issue. It's not a bank issue. It's a personal issue to take on a loan you can't afford to pay. Sure, it's a little sketchy for a bank to offer an interest-only mortgage payment. But if you don't understand what that means and are foolish enough to think it's the right lending instrument for your needs, well, that's your issue, not the lender's.

"Bailout" has a nice ring to it, but it's not really what DC is trying to do right now. It's more of a giant loan backed by every taxpayer in the US. We, as a whole, have much more financial capacity working together to buy these bad loans, get them off the books of the financial institutions, hold on to them for 5, 10 or 15+ years, then sell them off when they are worth the paper they are printed on. For example, we, the US taxpayers, buy the $250k mortgage from Bank A on the property currently worth only $150k due to the declining market, hold it, and some day down the road when it's worth $240k, $250, or maybe even $260k, we sell it. So we're not throwing our money away, but we -- the taxpayers -- are putting our skin in the game to help everyone involved until everyone settles down, stops panicking, and we get some stability back into the market.

So here we are today waiting on DC to solve all our ills. Never a comfortable spot to be when we're looking for Washington to employ the common sense and fiscal prudence we need right now. It's ugly. And I'm not sure what the solution is. Personally, I'd like to see some banks fail. If you invested heavily on risky loans and bought a book of business that included mortgage instruments that the lenders couldn't afford to pay, well, that's business. I just personally don't think our government should be in the mortgage business, but that ship sailed long ago. And the best idea I've heard to date is to offer a form of insurance to help companies, but not put cash on the table right now. Increase the FDIC of $100k to $1M, stop folks from running on the banks, and not force through some legislation that we really haven't thought through completely. After all, the "houses for everyone" legislation took a long time to pass. Can you image the ramifications 10 years from now of something we threw together in 10 days?

Keep doing what you're doing. Keep working. Keep saving what you can. And if you can afford it, now is a great time to be getting IN, not OUT, of the market. Buy low, after all. But probably best to stay away from bank stocks at the moment.

[ITD]

This mess was caused by greedy crooks lending money to people who did not have the means to pay the loan back, it's really that simple. No doc loans, no credit check, no employment verification, all these schemes caused an implosion when the people who got the loans could not make the payments. Wall street bundled them up into bonds, twisted arms to get them rated AAA and sold them, many to oversea investors who didn't know any better. People should be going to jail for this.

Most of these people who got the loans knew what they were doing also but did it anyway. I'm still on the fence about this bailout, I think it needs to be done to prevent a run on the banks and a full blown depression, but on the other hand these banks and lending institutions really do need to die.

[Waterbaby]

Originally Posted by jetskier

I think that there are a number of uninformed buyers who don't know what they are doing in this world. But, IMHO it is the fault of the banks and regulators in allowing investment vehicles that target unqualified borrowers. Years ago, when we bought our house, there were strict income requirements, debt caps and limits on mortgage affordability. This was done as a basic requirement to sell the loans to Freddie Mac and Fanny Mae...not an issue these days; my cat can probably qualify for a mortgage.

Jetskier

Same here, people used to practically have to jump through hoops to get a mortgage. I bought my house 20 years ago and it was that way, income requirements and ratios, etc. etc. etc. Then, of course, government deregulated the banking industry, and look what happened. Greed set in, the bigwigs are getting their million-dollar parachutes and the rest of us get the parachutes full of rips.