Once apon a time

[DOGS THAT BARK]

--non political but I thought interesting--and scarey

Once upon a time, mortgage lending was as staid a business as you could find. Bankers offered 30-year fixed mortgages to borrowers who had a 20% down payment and sufficient income to make the monthly payments. They would reject any loan that required a payment more than 29% of a buyers' gross income or that would result in total debt service higher than 36% of gross income.

the rest of the story--
http://www.marketwatch.com/News/Sto...9F8-851F37D54B39}&siteid=myyahoo&dist=myyahoo

 

[dawgball]

I didn't read the rest of the story, but I think this might be the leading cause of the future demise of the American dollar.

The following statement will probably sound worse than it is intended....

Every country will always have it's bottom portion of the economic scale that overall do not produce and usually never are able to escape that level of income due to circumstances in society, educaction, lessons learned from parents, etc.

I think the wide array of exotic mortgages that are assigned to grossly over-extended to middle income earners (from the low to high end) are basically creating a new "poor" class.

The major factor (that is controlled by personal choice) that keeps a middle income earner from ever getting into a higher income level is how they choose to spend/save/invest their money. If you are in the middle income class, you have or have had the ability to invest a substantial portion of your income during your professional life. Most of US choose to over-extend ourselves on houses, cars, and the other "keeping up with the Joneses" purchases.

The one thing that this class historically has had going for them is the investment appreciation in a house on a fixed mortgage (while not drawing lines of credit on it). This has been completely demolished over the last 5-10 years through banks more aggressively being able to approve "qualified" borrowers.

Without this investment working for their future (as opposed to their present), the middle income earners are in for a harder retirement life than their predecessors.

Not sure if I was able to convey my thoughts correctly here. I didn't go back and improve the context, and this is the first time I have tried to get it in writing.

Anyone have thoughts on this?

 

[djv]

Interest only loans. Or three year how much can you afford loans.Then after three yeas Pow. Man it's trouble for so many. If tons don't lose there homes I would be surprised. DTB Im of course from the time period you started with 20% down or if you got lucky maybe 15%. And a average income to cover expenses.

 

[DOGS THAT BARK]

I'm with yuou DJV--and brother Dawg you didn't need to read the rest--you got the gist of it in condensed version.