MB Civic

This entry was posted on Thursday, February 7th, 2008 at 5:30 PM and filed under Articles, Economics. Follow comments here with the RSS 2.0 feed. Skip to the end and leave a response. Trackbacks are closed.

One Response to “AlterNet: These Loans Were Made for Walking: The End of the Subprime Crisis”

1. ben stagg said:

   This is a recuring problem in the US because by means of 2nd , 3rd and even 4th TD loans it is possible to borrow 100% or more of the value of a home, when the financial outlook seems OK.
   This is lunacy. It is as if you were renting a home, with an option to turn the rent into a purchase contribution if you feel like it.
   The consequences are that if there is only a slight dip in residential property values, the whole structure folds like a pack of cards.
   If a cash deposit of at least 20% on values up to $1,000,000 and at least 15% over £1,000,000 is required, however sweet the market looks, then the incentive for people to walk away from their commitments would be greatly lessened.
   I have had property dealings in The States, in the UK and in Europe. Only in The States have I ever known money to be leant to the puchaser by the seller.
   This residential ‘boom and bust’ scenario will continue until the US looks at it’s lending laws.
   Agent’s fees. both in Europe and The States are also dangerously excessive, but that’s another story. What costs 1.5% to 2% in the UK, costs 5% to 6% in Europe and The States. Why? This slows the market and increases the chance of a property recession.

   Posted on 08-Feb-08 at 2:05 am | Permalink