Comments on: Now we all get to invest in the real estate bubble http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/ A posting every day; an interesting idea every three months... Wed, 02 Dec 2009 17:45:57 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Thomas http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75932 Thomas Sat, 01 Mar 2008 06:36:34 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75932 Steve, If a person chooses to "give their house back to the bank" they would ruin their credit standing. A foreclosure or even a deed in lieu of foreclosure ranks as one of the the worst scores a person can suffer on their credit report. It would be very much worse than renting if one suffered a foreclosure and ruined their credit. Steve,
If a person chooses to “give their house back to the bank” they would ruin their credit standing. A foreclosure or even a deed in lieu of foreclosure ranks as one of the the worst scores a person can suffer on their credit report.
It would be very much worse than renting if one suffered a foreclosure and ruined their credit.

]]> By: dilbert dogbert http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75922 dilbert dogbert Sat, 01 Mar 2008 03:19:05 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75922 Philip, Please read <a href="http://calculatedrisk.blogspot.com/" rel="nofollow">Calculated Risk</a>. Tanta will give you an education about the various proposals to bail out the banks and hedge funds. Don't think for a minute that any bail out will be to "save" greedy homedebtors. That will be the "cover" story but the banks and wall street are the targets. No millonair R or D in congress gives a hoot about stupid Joe6pack. Philip,
Please read Calculated Risk. Tanta will give you an education about the various proposals to bail out the banks and hedge funds. Don’t think for a minute that any bail out will be to “save” greedy homedebtors. That will be the “cover” story but the banks and wall street are the targets. No millonair R or D in congress gives a hoot about stupid Joe6pack.

]]> By: Steve Johnston http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75893 Steve Johnston Fri, 29 Feb 2008 15:50:48 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75893 I thought you'd enjoy this quote: Professor Sinai said. “Now it’s like they can do their renting from the bank, and if house values go up, they become the owner. If they go down, you have the choice to give the house back to the bank. You aren’t any worse off than renting, and you got a chance to do extremely well. If it’s heads I win, tails the bank loses, it’s worth the gamble.” From: http://www.nytimes.com/2008/02/29/us/29walks.html I thought you’d enjoy this quote:

Professor Sinai said. “Now it’s like they can do their renting from the bank, and if house values go up, they become the owner. If they go down, you have the choice to give the house back to the bank. You aren’t any worse off than renting, and you got a chance to do extremely well. If it’s heads I win, tails the bank loses, it’s worth the gamble.”

From:

http://www.nytimes.com/2008/02/29/us/29walks.html

]]> By: Chuck http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75624 Chuck Wed, 27 Feb 2008 18:09:52 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75624 While I hate to hear "taxpayer-funded bailout" in any context, I tend to agree with Andy in that this would be small-change compared to the United States' other financial issues. See Scott Burns' (MIT grad!) latest column at http://assetbuilder.com/blogs/scott_burns/archive/2008/02/22/hazard-at-the-extremes.aspx for some reassurance as to the extent of the problem. I wish we could fix the monster Iraq money toilet so that issues like this would actually be our biggest financial concern as taxpayers. While I hate to hear “taxpayer-funded bailout” in any context, I tend to agree with Andy in that this would be small-change compared to the United States’ other financial issues. See Scott Burns’ (MIT grad!) latest column at

http://assetbuilder.com/blogs/scott_burns/archive/2008/02/22/hazard-at-the-extremes.aspx

for some reassurance as to the extent of the problem. I wish we could fix the monster Iraq money toilet so that issues like this would actually be our biggest financial concern as taxpayers.

]]> By: Andy http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75578 Andy Wed, 27 Feb 2008 05:05:03 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75578 Any government backed bail-out of the foreclosure mess with effect a person who couldn't afford a home very little, if any. Interestingly, the hardest hit ares fall into two distinct categories: They were either already part of a mad ruch of speculation (Florida, California and Nevada) or they were already downtrodden (Ohio). Personally, I think Hillary or Obama's universal healthcare plan costs to taxpayers will make this purported bail-out of bank and unfortunate buyers (which has not happened so far) look like a trip to the Five and Dime... Any government backed bail-out of the foreclosure mess with effect a person who couldn’t afford a home very little, if any.
Interestingly, the hardest hit ares fall into two distinct categories:
They were either already part of a mad ruch of speculation (Florida, California and Nevada) or they were already downtrodden (Ohio).
Personally, I think Hillary or Obama’s universal healthcare plan costs to taxpayers will make this purported bail-out of bank and unfortunate buyers (which has not happened so far) look like a trip to the Five and Dime…

]]> By: Geoff http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75549 Geoff Tue, 26 Feb 2008 21:17:36 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75549 Yep. We will be taking money away from people who didn't buy houses becaue they couldn't afford them and giving it to people who bought houses they couldn't afford. Actually, it's one step worse than that. Many of the people in foreclosure were sub-prime borrowers on ARMs with teaser rates who put nothing down. These people have no assets to go after, no down payment to lose, and the house won't sell for enough to cover the loan. Aside from damage to their credit (which was subprime anyway), the actual "owners" don't stand to lose much. They probably got to "own" for less than their rent would have been (due to the teaser rates), and now they'll go back to being renters. The banks who made the loans stand to lose huge, though. This is what the bailout is really about. The banks loaned lots of money to people who aren't going to pay it back. So now they want everyone else to chip in through taxes to cover their losses. Yep. We will be taking money away from people who didn’t buy houses becaue they couldn’t afford them and giving it to people who bought houses they couldn’t afford.

Actually, it’s one step worse than that. Many of the people in foreclosure were sub-prime borrowers on ARMs with teaser rates who put nothing down. These people have no assets to go after, no down payment to lose, and the house won’t sell for enough to cover the loan. Aside from damage to their credit (which was subprime anyway), the actual “owners” don’t stand to lose much. They probably got to “own” for less than their rent would have been (due to the teaser rates), and now they’ll go back to being renters.

The banks who made the loans stand to lose huge, though. This is what the bailout is really about. The banks loaned lots of money to people who aren’t going to pay it back. So now they want everyone else to chip in through taxes to cover their losses.

]]> By: jen http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75546 jen Tue, 26 Feb 2008 20:14:47 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75546 Or you never bought a house because even though you viewed tons of houses, you also read prolifically about the mortgages, housing values and economics you decided not to take a chance in your very expensive area on jumbo loans and ballooning payments...then the same ending. Or you never bought a house because even though you viewed tons of houses, you also read prolifically about the mortgages, housing values and economics you decided not to take a chance in your very expensive area on jumbo loans and ballooning payments…then the same ending.

]]> By: Karl http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75543 Karl Tue, 26 Feb 2008 18:44:02 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75543 Put in such stark terms, it makes me think a better move would be to auction off the debtors kidneys, livers, and children to pay their debts. Put in such stark terms, it makes me think a better move would be to auction off the debtors kidneys, livers, and children to pay their debts.

]]> By: tony http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75541 tony Tue, 26 Feb 2008 17:25:29 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75541 Couldn't agree with you more Philip. We end up rewarding stupid behavior and punishing prudent investment. Couldn’t agree with you more Philip. We end up rewarding stupid behavior and punishing prudent investment.

]]> By: Chris Colohan http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-estate-bubble/comment-page-1/#comment-75540 Chris Colohan Tue, 26 Feb 2008 17:23:34 +0000 http://blogs.law.harvard.edu/philg/2008/02/26/now-we-all-get-to-invest-in-the-real-es#comment-75540 Now imagine that you are a couple of years out of college, looking into buying your first house. Real estate prices are still unimaginably high (at least, in the SF Bay Area where my job is). You are hoping that this bursting bubble reaches your neighbourhood so that you have a chance of actually owning a home someday... And the government wants to take your tax dollars and use them to stop prices from returning to reality. I suspect that these bailouts hurt those of us who don't own a home even more than those who do. Now imagine that you are a couple of years out of college, looking into buying your first house. Real estate prices are still unimaginably high (at least, in the SF Bay Area where my job is). You are hoping that this bursting bubble reaches your neighbourhood so that you have a chance of actually owning a home someday…

And the government wants to take your tax dollars and use them to stop prices from returning to reality. I suspect that these bailouts hurt those of us who don’t own a home even more than those who do.

]]>