C Vishy asked:


Banks and importantly, the Treasury has realized the grave situation. So much so that the Bush government announced a $700 Million bailout package deal. But consider the root cause of the sub prime crisis, and you would find that the problems have been far underlying.



How can banks invest in risky assets? – The problem really is with banks investing in risky assets. We can still blame couple of other reasons for the fallout, but you would find that responsible entities like banks had a major role to play in this.





ARM Products – If a set of products had to be blamed for the sub prime defaults, it has to be ARM Products. These products used to be the blue-eyed products for customers, and shockingly, even for banks. Did you believe that as of now, these products still find favor amongst people, and shockingly, banks have not learnt their lessons?





We, the people – This is a mistake most of us made. When we started receiving foreclosure notices, we feared, and tried to escape the problem. We were okay with our homes getting confiscated, and our credit being tarnished, but we wished to run away from the whole deal, and yet wait for a better tomorrow.



And at the end of the day, we stand up with conviction and say that the banks and the federal authorities have to be blamed. Yes, they have their share of blame, but isn’t it our moral responsibility to honor our financial commitments. By doing things like speaking to the financial institutions, we could have prevented a part of the damage, if not entirely.

It is not too late even now. If we do not wish that USA’s economy plunges deeper, let us join hands and promise that we will, in all circumstances, honor our financial commitments.



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synchronised asked:


What is this problem all about and why is it causing such a big problem?

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ep asked:


I understand they are mortgages in bad shape but does that mean good mortgages aren’t called sub prime mortgages as well. Does it mean that the people taking out mortgages can’t pay so the mortgage company goes bankrupt? I want to do a term paper on the issues with mortgages and foreclosures going on now.

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Daniel Riley asked:


There are advantages and disadvantages to both home equity loans (HELs) and home equity lines of credit (HELOCs), making the choice between the two dependent on your unique needs and circumstances.

Amount You Can Borrow

Both home equity loans and lines of credit allow you to borrow up to 100% of the equity in your home. In some cases, lenders will even allow you to borrow up to 125% of your home equity.

Qualifying Requirements

Both HELs and HELOCs require you show proof of the following:

* personal income;

* ownership of the home ownership (ie. Title);

* current mortgage;

* current value of the home (via a professional appraisal).

A home equity loan additionally requires proof that at least 20% of the home’s value has already been paid off. So, if you have yet to pay off at least that much of your home’s value, then your choice of which instrument to apply for is made for you.

Purpose for the Money

If you wish to use the money borrowed in a lump sum for a single, one-time expense (ie. a particular renovation, an emergency, a desired purchase, or to consolidate debt), then a home equity loan may be the better choice.

If you don’t have a single, particular use for the money in mind and don’t think you’ll need the money all at once but rather feel that you’ll be needing it on a periodic basis (ie. for lengthy and drawn-out remodels, medical bills, or college tuition payments that will be made in intermittent sums), then a home equity line of credit may be the better choice.

The HELOC gives you a flexibility that a home equity loan does not, allowing you to borrow however much you need, at the time that you need it, rather than taking out more than you need at once and, subsequently, paying interest on the whole amount from day one. Rather than receiving a fixed lump sum all at once, with a HELOC, you’re usually given checks or a credit card to use on an as needed basis. Part of the risk inherent in home equity lines of credit is that you could end up borrowing more over time that you can realistically pay off.

Interest Rate and Monthly Payments

Both HELOCs and HELs generally carry lower interest rates than conventional bank loans and credit cards, as they are secured by borrowing against your home. They both, however, commonly carry interest rates higher than that of your primary mortgage (or first mortgage). Interest on both instruments may be tax deductible (to find out, check with your tax advisor).

Interest paid on both of these instruments (HELs and HELOCs) is also usually tax deductible, whereas interest paid on conventional bank loans and credit cards is not.

The interest rate and monthly payments on a home equity loan is fixed, allowing you to budget accordingly, though in many cases you could opt for an adjustable rate (though that isn’t always advisable). The payment term on a home equity loan is also fixed, meaning that you must pay it off in full by a predetermined point in time.

The interest rate and monthly payments on a home equity line of credit is not fixed and will fluctuate over time, based on fluctuations in the prime rate, so budgeting accordingly can be much more challenging. The interest on a home equity line of credit is also typically higher than that of a home equity loan. The payment term on a home equity line of credit, however, is not fixed, and so long as you keep making minimum payments, you could conceivably stretch out the payment period indefinitely.

Closing Costs

Like other loans, a home equity loan comes with certain closing costs that must be covered in advance of receiving the loan.

There are usually no closing costs involved in a home equity line of credit, though you may have to pay an annual fee.

Collateral

Remember, that in either case, your home is considered the collateral for payment.

Rada S asked:


then what excuse is the Wise Democratic Congress going to have when people realized that they signed a Trillion Dollar spending bill without reviewing the details much of which are not good ideas and will enslave our children and grand children with a financial burden……they were taken advantage of by the sub prime Stimulus Guru? And who is the master mind?
Did we really elect botox Pelosi?

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Susie C asked:


paid from a home equity loan on my current residence?
I already borrowed the money for the rental property from my primary home.

WYN asked:


I am in a little over $45,000 credit card debt. I am trying to figure out if it would be better for me to use a consolidation company or to get a home equity loan.

bradwelljackson asked:


I have tried to research this question elsewhere, but the answers were too complicated for me. Can you please put this in simple, layman’s terms?

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tisaroo asked:


A friend needs a home equity loan and needs a co-signer. Can the co-signer write off the interest paid in his/her taxes?

mivi asked:


I am looking for a lawyer who represents clients who have received sub prime loans. Can anyone offer some help?

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