A picture is worth a thousand words, so I'll just add a few:
We've never been here before. And it's gonna be a long, long time until we're here again. Hope everyone had fun, 'cause now it's time to pay the piper. Read the full story at Calculated Risk.
September 24, 2006
Good god where'd all the money come from? Ahhh.. fake home equity extractions (that now need to be repaid)
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12 comments:
The extraction was very real and will have to be repaid, the equity was fake.
yes - negatives equal that good old fashioned (and now not done) thing called "paying down debt" or "building equity"
this country needs an enema, and the only way that's going to happend is a good old fashioned crash
welcome to the next great depression, when the credit got cut off, the lights came on, and Americans got spanked for being so naughty
Fake equity, fake money, fake economy, fake policy, and your right Keith..we do need to be clensed. Oh and by the way Inflation is here and true..the price of food is crazy.
Anonymous 11:48:55 AM stated:
"The extraction was very real and will have to be repaid; the equity was fake".
(Reply): Yep, this is yet another of the Great Lies regarding real estate.
There is NO SUCH THING as "home equity"!!! Don't believe that statement? Okay, try this little experiment with your friendly HELOC lender next time they offer you a "home equity loan".
Propose the following to them:
"Mr. (or Ms.) cash-out-refi-HELOC-home-equity-lender, I propose that you TRULY lend me money against the equity that you tell me I have in my home. For example if there is $100k in equity, then lend me $100k. When I sell the home, IF there is $100k left over, then you can have the $100k you lent me (plus a reasonable amount of interest of course). If there is less, you get less. If there is none, you get NOTHING!!! Yes, that's right. You are sharing in the so-called 'equity' and just like a shareholder in a corporation, you are last in line to get paid and only get paid your portion of the equity left over after all other creditors have been paid!!!"
I'd love to hear the replies you get to that proposal from your now-not-so-friendly "home equity lender"
Anon, what you're describing is SELLING the home equity.
The shareholders in a corporation get the value above the debtholders.
So in your example if the house continued to increase, the bank gets its share. It wouldn't earn interest though.
Banks aren't in the business of buying "shares" of houses though. That's why they lend against it.
“Oh and by the way Inflation is here and true..the price of food is crazy.”
___________________
So, what can you do about this?
You can make it a point of stocking up on groceries that are on sale, and you can stop buying so much processed food and learn to prepare more meals from scratch.
You can also grow some of your own food if you have a piece of land that you can plant a garden on. You’d be surprised at how much food you can grow on a relatively small piece of land! And you will also be impressed with the quality of food that you can grow for yourself, if you are willing to put the time into it.
It’s probably too late to plant a new garden this year, but you can start planning one for next year. All the information you need on gardening is available for free on the Internet, as well as from your local agricultural extension entities.
Besides, having some knowledge on producing your own food will be helpful to all of us if the SHTF.
Keith, perhaps you could do a thread on money-saving tips for us folks who are being squeezed by the rising cost of living, and also for all the FB’s out there.
(Anon 2:25:37 PM wrote:)
"Anon, what you're describing is SELLING the home equity.
The shareholders in a corporation get the value above the debtholders.
So in your example if the house continued to increase, the bank gets its share. It wouldn't earn interest though.
Banks aren't in the business of buying "shares" of houses though. That's why they lend against it."
(Reply) If banks aren't in the business of "buying" shares of houses, then they should stop LYING to the homedebtor that the loan is actually a "home equity" loan and state what it REALLY is:
A personal loan, collateralized by the house. Period. A loan that MUST be repaid irrespective of the amount of "equity" that may or may not exist in the house.
This "home equity" lie is yet another of the myriad deceptions that proliferate the entire Real Estate Industrial Complex, designed to enslave suckers into a lifetime of penury all undr the guise of "Living the American Dream".
What do those negative mean? They mean "no equity extraction" during that period.
Noticed that equity extraction is high during the Reagan and the 1st Bush presidency and low during Clinton's? I'm voting for Hill in 2008.LOL
"If banks aren't in the business of "buying" shares of houses, then they should stop LYING to the homedebtor that the loan is actually a "home equity" loan and state what it REALLY is: A personal loan, collateralized by the house. Period. A loan that MUST be repaid irrespective of the amount of "equity" that may or may not exist in the house."
+++++++++++++++++++
An "equity loan" is just a second mortgage with a fancy new name. The banks and mortgage lenders had to change the name because the Silent Generation at least knew what this "special" loan really was!
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