NY Mag: 10 Years After the Financial Collapse

[PeterMP]

6 hours ago, zoony said:

Please, lets hear more about the 22 year old who had to go back to law school to find something she was passionate about.  

 

Just jokes, Im sure it sucked for millenials.  Never denied that.  Just that it paled in comparison to middle aged americans and those who had the weight of others on their shoulders.  In some ways this might be the most millenial of millenial threads ever

 

I'm not a millennial and have kids and a family and did during the crisis, and I'm the one that brought up what happened to the people that graduated those years.  I had decades of good earnings in the bank and a house that I could actually afford when it hit because of choices that I made (and I bought a house in 2006, at the top of the bubble, but before things collapsed).  I know people that lost jobs and lost homes, but mostly they were at least partly tied to decisions that they made.

 

The people that graduated in that time frame (not all millenials, just those) have had a real impact on their life time income.  I know people that were hard working, smart, and were good people that got shunted into garbage jobs because of when they graduated college and then even as the economy has recovered weren't able to get jobs at the caliber they should have because they aren't really competitive with more recent graduates that have more recent high skill education.

 

Those people have been shorted their lifetime income because of dumb luck of when they were born/graduated from college/when the recession actually hit for 100% something that was not their fault.

 

I have a lot more sympathy for them, then some of the people that had families that I know. I have more sympathy of the kids of the families that I know where the parent lost their job and then lost their home then the parent, but the kids are at least young enough to recover of the rest of their lives.  The set back might actually long term be good for them.

 

(This isn't to say that I have no sympathy for middle age people with kids that lost jobs/homes.)

[PeterMP]

1 hour ago, Kilmer17 said:

Dodd Frank keeps small local and regional banks from being able to compete.  Less choices means more big "too big to fail" size banks.

 

My friends in the mortgage industry are already talking about stated income loans being back and and increasing wildly.

 

 

 

This is a common refrain in some circles.  The number of US banks has been declining since the early 1980s and the money held by the remaining banks has been increasing.  To blame Dodd Frank for the decline in banks since it has passed, seems unnecessary.

 

And big banks have been working well before Trump was elected to get certain portions relaxed.  There is no need to use Trump's motives as a reason for why it was relaxed.

[TheGreatBuzz]

9 hours ago, PleaseBlitz said:

But millions of people, making their own decisions, took out those risky loans and either overextended themselves or lied to get homes they couldn't really afford.  The few made it possible, the many (practically all boomers) actually made it happen.  

 

So people took out loans for more than they could afford to pay for something they falsely believed was guaranteed to make them money in the long run because that investment always pays off.  And they believed that because they listened to people who really just wanted their money and didn't give a crap about them.

 

Now guess if I'm talking about people with mortgages they can't afford or student loans they can't afford.

[PleaseBlitz]

12 minutes ago, TheGreatBuzz said:

 

So people took out loans for more than they could afford to pay for something they falsely believed was guaranteed to make them money in the long run because that investment always pays off.  And they believed that because they listened to people who really just wanted their money and didn't give a crap about them.

 

Now guess if I'm talking about people with mortgages they can't afford or student loans they can't afford.

 

Well, one population is teenagers, and the other really should know better. 

 

I’ll just assume that you agree with the rest of my other 50 posts in this thread.

[TheGreatBuzz]

1 minute ago, PleaseBlitz said:

 

Well, one population is teenagers, and the other really should know better. 

 

I’ll just assume that you agree with the rest of my extremely long post that you snipped one paragraph from. 

There were also many people not much older buying houses.  This country does a HORRIBLE job teaching people about properly handling finances.  Also, many of those teens had parental assistance in getting those loans.  

 

I just grabbed this quote as I was reading through the last four pages before I saw the rest of the conversation.  It was meant for more than just you.  I was put off by people putting the blame on the home owner who signed the loan because they were "guaranteed" that it would pay off soon enough.  Yet people want to bend of backwards for the poor saps with college education debt who essentially did the same thing.  Again, not directed totally towards you.

[PleaseBlitz]

16 minutes ago, TheGreatBuzz said:

There were also many people not much older buying houses.  This country does a HORRIBLE job teaching people about properly handling finances.  Also, many of those teens had parental assistance in getting those loans.  

 

I just grabbed this quote as I was reading through the last four pages before I saw the rest of the conversation.  It was meant for more than just you.  I was put off by people putting the blame on the home owner who signed the loan because they were "guaranteed" that it would pay off soon enough.  Yet people want to bend of backwards for the poor saps with college education debt who essentially did the same thing.  Again, not directed totally towards you.

 

I agree that people generally dont know **** about finance. I wholeheartedly disagree that anyone bends over backwards for people with student loan debt. People talk about it to court votes, but nothing meaningful has ever actually been done in the real world. The student loan industry is as broken and abusive as the mortgage industry was in 2006. I say this as a consumer finance attorney with well over $100,000 in student debt. There is a thread on this somewhere. 

 

In any event, none of that changes the fact that people taking out student loans are freaking 17 years old, and the vast majority of people taking out risky loans in the 2000# were 40+ and have no excuse for being dumb other than greed; a point which you artfully dodged. 

[TheGreatBuzz]

30 minutes ago, PleaseBlitz said:

 

I agree that people generally dont know **** about finance. I wholeheartedly disagree that anyone bends over backwards for people with student loan debt. People talk about it to court votes, but nothing meaningful has ever actually been done in the real world. The student loan industry is as broken and abusive as the mortgage industry was in 2006. I say this as a consumer finance attorney with well over $100,000 in student debt. There is a thread on this somewhere. 

 

In any event, none of that changes the fact that people taking out student loans are freaking 17 years old, and the vast majority of people taking out risky loans in the 2000# were 40+ and have no excuse for being dumb other than greed; a point which you artfully dodged. 

I think you and I agree for the most part and this isn't the thread to beat up on student loans too much.  I will note that I said people want to bend over backwards for student loan debt, not that anyone is actually doing it. 

 

Also, and I could be totally wrong, but I remember hearing a statistic that the majority of toxic home loans in mod-2000's were to people average age 25ish.  I just Googled it and could not find detailed statistics for that time period.  And again, I could be remembering it wrong.  So it wasn't an artful dodge.

[AsburySkinsFan]

20 hours ago, DCSaints_fan said:

These things happen every 7-10 years.  We're overdue for another one.   

Corrections happen, 2017 was more than a correction.

[Larry]

12 minutes ago, TheGreatBuzz said:

 

 

Also, and I could be totally wrong, but I remember hearing a statistic that the majority of toxic home loans in mod-2000's were to people average age 25ish.  I just Googled it and could not find detailed statistics for that time period.  And again, I could be remembering it wrong.  So it wasn't an artful dodge.

 

Don't know about that one.  

 

I do remember reading the claim, at least early in the crisis, that of the "under water" mortgages in Florida, something like 80% of them were on second (or more) homes.  

[Nerm]

9 hours ago, Larry said:

 

It was part of the problem.  

 

Part of the problem was that banks were perfectly willing to give people loans which they knew the buyer couldn't afford.  

 

I assume that their reasoning was that hey, the bank couldn't lose money on the deal, so why not?  At least in my imagination, the bank's reasoning was along the lines of:  

 

"OK, we've got a minimum-wage employee applying for a zero-money-down mortgage on a $450K home, with terms of 2% interest, and interest-only payments, for the first five years, and then variable rates after that.  Payments are going to be $500/month for the first five years, and then $1200/month after that.  The guy can't afford $1200/month, he only makes $1300/month.  But he can make $500/month.  So, he's going to default in five years.  But if we make the loan, then we'll get $500/month interest for five years, and five years from now, the house will probably be worth $550K, and when he defaults, we'll generate foreclosure costs that will let us get all of the $650K.  So, we'll get 2% interest for five years, and then we'll get our money back, and $100K in appreciation on the house.  So who cares if he defaults, we'll make money anyway, because, as we all know, real estate prices never go down."  

 

 

I remember having this realization when I was buying my first house.  It was 2006-2007.  I just started my first job out of grad school.  My wife was just promoted to a job with a really good salary... But the position was one that several previous people had tried and were fired in a short amount of time.  

 

We we had saved a good down payment, had great credit, etc..  When the loan officer told us what they were willing to lend us, I actually had a brief flash of anger.  The amount was about tripple of what I thought was the "high end" of what I felt we should spend.  She said they would lend us this massive ammount, then threw in at the end that we didn't need to have near the down payment we had planned on to get that huge ammount.  It was odd.  

 

When she she told me the ammount of $ we could get, I had to stop myself from saying "Are you crazy?  We are both starting jobs that we have never done before,   and you are going to lend me so much money that I could buy a house so big that I would need a riding vacuum to clean".  

 

It made no sense, until I realized that they didn't have any incentive to avoid loaning money to those who might not pay it back.  It was not relevant to them if we defaulted.  It wouldn't be their loan any more at that point.

[TheGreatBuzz]

My wife and I were big on not extending ourselves more than only one of our incomes could support.  We have broken that a little bit now living states apart and essentially paying to mortgages.  But we are still at a point where if we had to default on something, the dollar is already useless.   Good lessons taught to us by parents who had struggled financially. 

[DCSaints_fan]

5 hours ago, PleaseBlitz said:

I was in the banking world at that time, and am well aware of the childish things consumers were doing (although your client seems to be particularly bad.  They stole the countertops?  I had one person that I was dealing with steal all of the copper pipes out of a house (it ****s up the whole house)). 

 

Did this client happen to live in New Jersey? 

[TheGreatBuzz]

Worst one I remember hearing is people flushing concrete mix down all the toilets.

[PleaseBlitz]

1 hour ago, TheGreatBuzz said:

I think you and I agree for the most part and this isn't the thread to beat up on student loans too much.  I will note that I said people want to bend over backwards for student loan debt, not that anyone is actually doing it. 

 

Fair enough. 

Quote

 

Also, and I could be totally wrong, but I remember hearing a statistic that the majority of toxic home loans in mod-2000's were to people average age 25ish.  I just Googled it and could not find detailed statistics for that time period.  And again, I could be remembering it wrong.  So it wasn't an artful dodge.

 

Man, I seriously doubt it. 

 

Edit:  you probably heard it from Zoony who blames everything on Millenials. 

[PeterMP]

3 hours ago, Nerm said:

When she she told me the ammount of $ we could get, I had to stop myself from saying "Are you crazy?  We are both starting jobs that we have never done before,   and you are going to lend me so much money that I could buy a house so big that I would need a riding vacuum to clean".  

 

It made no sense, until I realized that they didn't have any incentive to avoid loaning money to those who might not pay it back.  It was not relevant to them if we defaulted.  It wouldn't be their loan any more at that point.

 

I have a similar story.  We bought a house in 2006.  When we were shopping for a house, the real estate agent said it would be good to get a document from the bank saying how much you pre-approved for.

 

I'd been in my job for a few years and my wife was starting a new job.  We both had jobs where it is you are there for 5 or 6 years, and then they make a decision to keep you or not which means you likely have a job forever or they fire you, which means you are out of a job and very unlikely to get a comparable job.

 

Plus my first daughter was about 1 year old and we planned to have a 2nd in a year or so (we're both working so we have day care expenses, etc).  So we do the math, figure out what our top down payment and monthly payments could be if we really really stretched things, back calculate what that would mean in terms of total loan assuming a 30 year mortgage reasonable interest rates etc.

 

So, I go to the bank and tell them I'd like a pre-approval letter for this much.  I told them what I wanted the letter to say.  They take my information and the next day or whatever I go back to get the letter.  They pre-approve us for nearly 3X what I asked for.

 

I'm like my wife and I being extremely optimistic don't think we could afford that much.   Their response was don't worry about it.  I made them write me another letter with what I wanted in it.  I didn't want people knowing that we had been pre-approved for that much when it came time to bargain.

 

I had been planning on fighting with them to get pre-approved for as much as I wanted to be pre-approved for and I ended up fighting with them to actually reduce it.  I'd had some experiences from  a decade or more before trying to borrow money for cars and having to have it run through multiple banks before I was approved for a loan I was pretty sure I could easily pay off.  To then have somebody offer to give me a loan that was that long term for 3X what I wanted just baffled me.

[zoony]

8 hours ago, PleaseBlitz said:

Edit:  you probably heard it from Zoony who blames everything on Millenials

 

Just the bad stuff

[Bozo the kKklown]

More from the article

 

Total U.S. household net worth dropped by $11.1 trillion in 2008.

The median income for 25-to-34-year-olds in America, $34,000, hasn’t budged since 1977, adjusted for inflation.

Median household wealth collapsed.
2007: $126k
2016: $97k

The number of Americans worried about the economy multiplied nearly sixfold.
2007: 16 percent
2008: 86 percent

In 2016, the median wealth of a family headed by someone born in the 1980s was 34 percent below the level of earlier generations at the same 2007: age.

Mutual funds lost a third of their value: -38 percent.

The market value of all publicly traded companies was cut in half.
October 2007: $63 trillion
March 2009: $28.6 trillion

From 2005 to 2009, the median value of stocks and mutual funds owned by whites dropped by 9 percent.

The median value of holdings for African-Americans dropped by 71 percent (probably because of pressure to sell when prices were low).

Between 2007 and 2013, wages declined for the bottom 70 percent of all workers.

The retirement savings of black families fell by 35 percent from 2007 to 2010.

In a 2016 survey by the Fed, 28 percent of working-age adults said they had no retirement savings whatsoever.

The racial wealth gap, already large, ballooned.
Whites: $171k 
Hispanics:  $20.7k 
African-Americans: $17.6k

In terms of household wealth, every group suffered — but some more than others.
Hispanics: -66 percent 
Asian-Americans: -54 percent 
African-Americans: -53 percent 
Whites: -16 percent

Consumer credit-card debt at the end of 2017 was over $1 trillion (about 30% higher than in 2008).

Millennials have taken on at least 300 percent more student-loan debt than their parents’ generation.

The unemployed took many more weeks to find work.
May 2008: 7.9
June 2010: 25.2

In a December 2017 poll by YouGov, 38 percent of those surveyed said they didn’t know when they’d be debt-free. 30 percent of respondents thought they’d never be out of debt.

 

63 percent of Americans say they don’t have enough money in savings to cover a $500 health-care expense.

In 2017, women had nearly 500,000 fewer babies than in 2007, although there were 7 percent more women of prime childbearing age.

The suicide rate rose 4 percent from 1999 to 2010: 4,750 additional deaths.

24 million adult millennials, or 32 percent, still live at home.

79 million Americans live in a “shared household” with at least one extra, nonfamily resident.

More college grads moved in with their parents.
2005: 19 percent
2016: 28 percent

As of 2017, only 34.2 percent of homes have recovered their value from before the recession. (Still below 2008 value.)

From 2000 to 2015, homeownership declined in 90% of all U.S. metropolitan areas.

Reporting by Joy Crane and Matt Stieb

[Sticksboi05]

Given Zoony's comments, I'm waiting for some 89 year old to come in here and talk about how the world's total GDP fell less than 1% during the 2008 recession whereas the Great Depression saw a 15% drop in worldwide GDP so it wasn't that bad.

[JSSkinz]

14 hours ago, Larry said:

 

Don't know about that one.  

 

I do remember reading the claim, at least early in the crisis, that of the "under water" mortgages in Florida, something like 80% of them were on second (or more) homes.  

 

Yes, most of what I saw was Northeasterners using Florida to expand their wealth only to walk away when they realized they couldn't pull $30k out of the property every 6 months.

 

13 hours ago, TheGreatBuzz said:

Worst one I remember hearing is people flushing concrete mix down all the toilets.

 

Feces on the wall as well as urine and feces spread on the carpets, people are gross.

[JSSkinz]

10 hours ago, PeterMP said:

 

I have a similar story.  We bought a house in 2006.  When we were shopping for a house, the real estate agent said it would be good to get a document from the bank saying how much you pre-approved for.

 

I'd been in my job for a few years and my wife was starting a new job.  We both had jobs where it is you are there for 5 or 6 years, and then they make a decision to keep you or not which means you likely have a job forever or they fire you, which means you are out of a job and very unlikely to get a comparable job.

 

Plus my first daughter was about 1 year old and we planned to have a 2nd in a year or so (we're both working so we have day care expenses, etc).  So we do the math, figure out what our top down payment and monthly payments could be if we really really stretched things, back calculate what that would mean in terms of total loan assuming a 30 year mortgage reasonable interest rates etc.

 

So, I go to the bank and tell them I'd like a pre-approval letter for this much.  I told them what I wanted the letter to say.  They take my information and the next day or whatever I go back to get the letter.  They pre-approve us for nearly 3X what I asked for.

 

I'm like my wife and I being extremely optimistic don't think we could afford that much.   Their response was don't worry about it.  I made them write me another letter with what I wanted in it.  I didn't want people knowing that we had been pre-approved for that much when it came time to bargain.

 

I had been planning on fighting with them to get pre-approved for as much as I wanted to be pre-approved for and I ended up fighting with them to actually reduce it.  I'd had some experiences from  a decade or more before trying to borrow money for cars and having to have it run through multiple banks before I was approved for a loan I was pretty sure I could easily pay off.  To then have somebody offer to give me a loan that was that long term for 3X what I wanted just baffled me.

It was common to write prequal letters based on the maximum loan a customer can qualify for, it doesn't mean you have to leverage yourself to that extent.  The fact you fought with them for a reduced letter is probably because it made no sense to get one.  Showing an agent you qualify for much more than the house you are buying only makes you a stronger buyer and one that an agent and seller would want to transact with because the risk of the loan falling through is diminished.

 

What if they gave you a prequal for what you wanted and the wife falls in love with a house that's $10,000 more than the prequel letter (this happens), now you have to go back to the bank to get a new letter and by that time the house is probably gone because several bids have been placed.

 

 

 

[TheDoyler23]

I remember house hunting in early 2010 in the aftermath of the housing crash. Talk about the OPPOSITE of money being handed out. We had a huge down-payment (50K on a 250K budget) and still had to go back and forth a bunch of times. As a younger couple on a budget, we really got to see some interesting properties and critters in them. The best was the jumping spider house. We made it about 36" into that one before we noped our way out. 

[DCSaints_fan]

Just checked how much it would have cost to attend my alma mater.  Even in-state, we're looking at just under $23k/year for tuition + room/board..  So four years would be $92k ... and this is one of the cheaper institutions.    Attending a decent college is basically a no-brainer for most high school students, but good grief.. 

[Bozo the kKklown]

20 minutes ago, DCSaints_fan said:

Just checked how much it would have cost to attend my alma mater.  Even in-state, we're looking at just under $23k/year for tuition + room/board..  So four years would be $92k ... and this is one of the cheaper institutions.    Attending a decent college is basically a no-brainer for most high school students, but good grief.. 

A lot of this coincided with states not giving much money to public colleges. All of this is related. Dumbing down the population.

[zoony]

3 hours ago, Sticksboi05 said:

Given Zoony's comments, I'm waiting for some 89 year old to come in here and talk about how the world's total GDP fell less than 1% during the 2008 recession whereas the Great Depression saw a 15% drop in worldwide GDP so it wasn't that bad.

 

I actually think the great recession could have been worse than the GD.  The only difference was TARP, and a fed chief who had spent a lifetime studying the GD causes and fixes.  It was actually his PHD thesis.

 

Of course the Ron Paul dip****s knew more, and tarp was bad.  They read a blog and read atlas shrugged, after all.  Where are all those idiots anyway?  Some of them still post regularly, you all know who you are

[Kilmer17]

The GR could have been much much worse.

 

But being worse could have been better long term.