It's the actually salespeople that were so aggressively marketing home equity loans during those years of bliss lending. they got paid on the margin, and by the contracts they closed.

likewise, the salespeople that sell cars are responsible for the devaluation of american cars. i mean, they sold so many, that there are more cars than demand requires, hence the falling value.

it's all the fault of the evil salespeople, really. I mean....aren't we all guaranteed protection from 'bad luck' in America? I mean...she was a nice lady, and she needed the loan, and then something went wrong with the market. Clearly not solely her fault.

But, it's an imperfect world. screws fall out all the time.

Do we blame the mortgage broker or the mortgage applicant? Neither. Such questions are how the guilty get off.

Did predatory mortgage brokers create problems by intentionally lying to applicants? Yes. Either they are innocent or guilty. Answer: guilty.

Did many applicant who signed up for ARMs create their own problem? Answer: guilty.

It is not one or the other. Each party is either innocent or guilty regardless of what the other party did.

if i sell you 10 feet of rope, and you are unable to hang yourself with it, but the next rope vendor sells you 20ft... and you succeed, is it the second rope vendor's fault that you hung yourself?

no. the chair manufacturer is liable for making a product that falls over too easily.

That would be the greed I brought up and was chastised for. Whatever, I still agree with you ignorance and greed - nothing new there.

An effective solution to the mortgage meltdown is to establish a new mortgage where the homeowner can refinance even though he is technically bankrupt - even though he owes more on the house then it is really worth. This is not easily done without massive fraud. The details and conditions to qualify a homeowner for such a rescue plan requires very careful underwriting.

Maybe a decade or two later, the home might actually be what the homeowner owes. The homeowner would either break even or maybe reap a small profit.

Why is this so necessary? Abandon homes fall to something like 30% of their value. If banks held those mortgages, banks often would forgive late payments. But mortgage held as equities cannot do this. Just another reason by the ARMs are so destructive to homeowners, the community, and the equity markets.

A solution. But can it actually be implemented without massive fraud? Well, to do such rescues requires cooperation from one of the most easily corrupt industry in any economy - the financial industry. I have little faith that proper rules can be created to make this work because so many in the finance industry work only for a profit and believe greed is good. Screw the product and the purpose of their industry. That attitude (so common among salesmen) is too widespread which is why massive regulation in the finance industry is always required.

How much did interest rates actually go up?

My personal opinion is that if you can't wear a rate increase of at least 5%, you shouldn't take out a variable rate loan. D and I discussed this when we took out our mortgage a few years ago.

When interest rates started going up by 1/4 percent increments here, people started carrying on after the first one.

If your budget is that tight, you shouldn't be getting the loan.

I just don't understand why people think things are always going to stay the same. I think it's obvious that they don't and so we have tried to plan for all contingencies. It's possible that we'll still get into trouble, but I feel confident that if that happens, we'll be among the last the fall, not the first.

Ali, did you guys have the same bubble in the housing market over there?

absolutely. We did ok out of it personally though, although not as well as I'd have liked. We purchased a home a bit over 2 years ago and sold it earlier this year and made a profit of just under 100k, but if we'd put it on the market about 2 months sooner (as I wanted to do) our profit would have been twice that.

All in all though, it was good, and allowed us to get a bigger house to accomodate our two growing almost teenage boys and the new one on the way.

We were lucky, and I think reasonably wise. We could have done better, but we didn't do badly, and we learned some valuable lessons. (well, Dazza did. lol Mainly that when I tell him it's time to sell, it really is time to sell.)

I remember when you moved and were house hunting. You need to do a new video tour. I loved the last one.

Yeah I've been thinking about that. I might do one next week. Dazza had the camera in PNG for the last month.

Actually, he's heading over your way soon. Speaking at a conference in Miami.

Wow, I wish I was closer, I would show him around Savannah. Miami is a bit of a reach.

AGI get's another bail out check...

http://dealbook.blogs.nytimes.com/20...fed/index.html

Maybe you should get a job serving latte's or something UT? Would that disqualify you? :)

If it would help I surely would Cic!