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Culture War Roundup for the week of March 11, 2024

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Well that is the general theory of how it is supposed to work. They haven't corrected all of the mess that led up to the subprime crisis back in 2008-2009.. Sure people pay off their loans, but there are a bunch of people that use the raising equity prices to fund that they can on other liabilities.

No, if you can't pay your mortgage, the bank takes the house and kicks you out. Yeah and if you can't pay your landlord rent they kick you out. That is the point, with rising property prices people that attempt buy a house if it is too expensive you essentially rent from the bank if they ever get laid off and can't find a new job fast enough to keep up with the payments. Plenty of families ended up in that situation 15 years ago. This is tragic family history for some people.

Sure you can say that it is the customers responsibility and it is absolutely that. And they are plenty of people see that they don't have the economic means of buying property because they are being responsible. A couple of decades ago plenty of jobs it was possible to buy a house and pay it of outright, but now it is fewer and fewer people that get opportunity.

But make no mistake, if someone in the bank thinks that they can make a profit of a loan too you... they will do that, even if it is just the person approving it is just getting a bonus.

Sure people pay off their loans, but there are a bunch of people that use the raising equity prices to fund that they can on other liabilities.

I cannot parse this sentence.

if someone in the bank thinks that they can make a profit of a loan too you... they will do that, even if it is just the person approving it is just getting a bonus.

Obviously, the bank is not a charity. People enter into agreements for mutual benefit.

Sure people pay off their loans, but there are a bunch of people that use the raising equity prices to fund that they can on other liabilities.

I cannot parse this sentence.

People take out more loans when the price of the property goes up, they leverage that as an asset to have as collateral on other loans.

Obviously, the bank is not a charity. People enter into agreements for mutual benefit.

Again looking on the mechanics of the subprime crisis back in 2008, the loans given were not to the benefit of the lender. The calculus for the banks where that the value of the property would be higher when the lender defaulted, thus being the only ones benefiting on collecting the interests and get the money back with the sale of the asset.

People take out more loans when the price of the property goes up, they leverage that as an asset to have as collateral on other loans.

They'd take out loans even if the price of the property didn't go up. This is a fully general argument against homeownership.

Again looking on the mechanics of the subprime crisis back in 2008, the loans given were not to the benefit of the lender.

Why would the borrower take a loan that didn't benefit them?

Why would the borrower take a loan that didn't benefit them?

“Think of how stupid the average person is, and realize half of them are stupider than that.” - George Carlin

They'd take out loans even if the price of the property didn't go up.

I'm not sure that would be the case if they would be targeted with marketing for taking on more loans.

This is a fully general argument against homeownership.

No it is not general argument of homeownership, it is an argument against predatory practices on giving out loans without the safeguards of looking at DTI etc... i.e. the first claim you made on how it is supposed to work.

It's good that you know better what's good for someone than they themselves! If only they had you to run their lives.

No it is not general argument of homeownership, it is an argument against predatory practices on giving out loans without the safeguards of looking at DTI etc... i.e. the first claim you made on how it is supposed to work.

And indeed you cannot get a mortgage if your DTI is too big.

It's good that you know better what's good for someone than they themselves! If only they had you to run their lives.

No that is not what I'm saying. Back in the day there where a bunch of rules put in place to rein in finance industry. Banks actually had a bunch of duties to fulfill when conducting business. One by one those duties has been removed, so instead of having someone with fiduciary duty now we have someone selling you financial services when invest in funds.

And indeed you cannot get a mortgage if your DTI is too big.

Yes you can if you have collateral that the bank can see as free money. They have no responsibility towards the borrower stopping them making a bad deal, which they used to have.

Edit: to amend. We are not in disagreement here on how it should work. We are in disagreement if it works like this today. The starting point of this whole discussion is that my theory is that the 'life script' isn't working is because there has been an effort over the last 50 years to make companies more responsible towards their shareholders than to the customers of the companies. You as a customer have little recourse against a bank that tricks you out of your house with a bad loan. This is what happened 16 years ago and I've heard nothing that has changed preventing that happening again. If you don't believe me.... I'm done trying to convince you.