Don’t know if it’ll be a nationwide recession, but places where the bubble was worst are going to get it hard. These places include Miami, most of Fla, LA, San Diego, NY and the surrounding areas, DC, Atlantic City, Detroit, etc. There was a chart on the front page of the NYT last week that mapped out all the cities that are f’d.

You’re points are exactly why the feds shouldn’t bail anyone out, potential homeowners with no foresight nor the irresponsible lenders. Be big boys; take responsibility for your financial mistakes.

First, your stance is that the FHA doesn’t need to “bail these people out” (although, I’m not sure if you mean the lenders themselves, or the homeowners — that might clear up the argument somewhat…at least for me). Then, you worry about Joe Homeowner and his eyesight, as if he didn’t have the capability of actually READING THE TERMS of his home loan, arguably the largest financial decision he was making at that time.

I say this as a mortgage broker in Texas, where housing prices are nowhere near as costly as most other areas of the country (I’m looking at you, California and New York). What continues to bother me about this ongoing story, is that I’ve read a proportionately low number of articles (read: zero) that take the borrower to task for entering into a home loan, no matter the payment, that he doesn’t discipline himself to actually pay, and on time, each month.

Lending guidelines are set up as such, to where we qualify based on the financial situation of the client…at the time of purchase or refinance. We can’t possibly take into account the fact that he’s going to run about thousands of dollars in credit cards because he needs an entirely new suite of furniture, that he can’t afford to pay cash for at that time.

Don’t get me wrong, I’m not naive to think that there weren’t brokers out there making a killing off of the types of loans that are now disappearing. But, adults should still have the capacity to know how much they can afford, and maybe don’t need that house on the hill, after all.

Uh, no. Work your ass off and get yourself out of the hole.

Well, Joe Homeowner is a freaking idiot then.

I’d check the politics at the door TBL. Just sayin’.

Meanwhile, Joe Homeowner, who blindly jumped into this deal, is left scratching his ass saying, ‘hey, im going to be rich! housing values can only go up!’

Oh, but wait. Housing values can and will go down. And now that house you got into hasn’t gone up … and the ARM is resetting and your mortgage skyrockets … HELP!

Look at this chart and tell me how on earth we can avoid a recession.

http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

If you’re in a house that’s been on the market for 6 months and you need to sell, the only answer is to drop the price of it 50k-75 k and sell. Now. Or you can be stubborn and hold onto it, and risk having the bank foreclose on it and walk away.