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[Kosmo]

http://www.bloomberg.com/news/2012-...victed-homeowners-who-emerged-as-winners.html

“Large numbers of people who have ‘lost’ their house through foreclosure have actually realized a profit because they carried out refinancings earlier that gave them cash in excess of their cost,” Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), said Feb. 25 in his annual letter. “In these cases, the evicted homeowner was the winner, and the victim was the lender.”

In July Buffet blamed the real-estate boom on “megalomania, insanity and evil in, I would say, investment banking, mortgage banking.” Buffett said in October 2010 that Wall Street helps society through finance, while its bets may do harm, “like a church that’s running raffles on the weekend.”

Funny how opinions change after he invest $5B in Bank of America in August 2011.

At least there will be no more talk of the "Buffet plan"

 

[Telosfortelos]

I wish nuance weren't such a rare trait. He's not blaming the crisis on home owners - far from it. He's pointing out, as an aside (in a parenthetical, in fact), that there are some on the home owner side of the crisis that made profit. The statement may seem out of place, but he's not trying to give a full history of the issue. It's generally well known that there are many on the other side of the crisis that made huge profits, and it seems here he's just trying to convey a lesser known fact. His intention isn't to equivocate or blame home owners at all. Here's the full paragraph, which in no way tries to partition and evaluate the proportion of blame:

As is well-known, the U.S. went off the rails in its home-ownership and mortgage-lending policies, and for these mistakes our economy is now paying a huge price. All of us participated in the destructive behavior – government, lenders, borrowers, the media, rating agencies, you name it. At the core of the folly was the almost universal belief that the value of houses was certain to increase over time and that any dips would be inconsequential. The acceptance of this premise justified almost any price and practice in housing transactions. Homeowners everywhere felt richer and rushed to “monetize” the increased value of their homes by refinancings. These massive cash infusions fueled a consumption binge throughout our economy. It all seemed great fun while it lasted. (A largely unnoted fact: Large numbers of people who have “lost” their house through foreclosure have actually realized a profit because they carried out refinancings earlier that gave them cash in excess of their cost. In these cases, the evicted homeowner was the winner, and the victim was the lender.)

 

[commedieu]

Telo nailed it.

But I doubt its going to stop the rest of the pitchforkers heading this way that want to make buffet appear to be a bad guy....

 

[andycapps]

From the album title I thought he was talking about how when a lot of people get foreclosed they trash the house before the bank takes it. Which happens all the time. Trashing meaning to take out all the appliances, stop up the toilets or bathtubs and turn on the water. Massive water damage (and mold in the summer).

What's in the OP is not nearly as exciting as what I described.

 

[turnbuckle]

I wish nuance weren't such a rare trait. He's not blaming the crisis on home owners - far from it. He's pointing out, as an aside (in a parenthetical, in fact), that there are some on the home owner side of the crisis that made profit. The statement may seem out of place, but he's not trying to give a full history of the issue. It's generally well known that there are many on the other side of the crisis that made huge profits, and it seems here he's just trying to convey a lesser known fact. His intention isn't to equivocate or blame home owners at all. Here's the full paragraph, which in no way tries to partition and evaluate the proportion of blame:

Kosmo
Factually Challenged

 

[Salvor.Hardin]

I still don't understand how society in large has decided that the people who couldn't pay back their loans were all victim to predatory lenders. Many of the borrowers did in fact understand the agreements they were signing, and it was just a case of the demographic, whom I refer endearingly to as 'dumbasses', who thought it was all going to be okay.

 

[dave is ok]

I still don't understand how society in large has decided that the people who couldn't pay back their loans were all victims to predatory lenders. Many of the borrowers did in fact understand the agreements they were signing, and it was just a case of the demographic, whom I refer endearingly to as 'dumbasses', who thought it was all going to be okay.

The banks gave loans to people who would not have qualified for them at any other point in history. They threw out the rule book because they found a way to make money off of people who didn't even make their first payment.

Sure, those people shouldn't have applied for the loans - or have been swayed by the sales pitch of some loan officer, but the customer isn't the one who is supposed to manage risk for the business.

 

[antonz]

Sorry the evicted/foreclosed on regardless if they got some extra cash from refinancing are not the winner. They lost their home and are now either homeless or in a very uncomfortable transition phase.

The banks have the option to try and work with people and make some money each month rather than forcing people out and sitting on properties they cant sell. No they would rather mass foreclose to the point in some cities they are forced to bulldoze homes because there are just too many that it makes sales impossible.

The banks could do a hell of alot more to work with people rather than kicking them out on their asses but working with people might mean profit margins aren't as high so god forbid that

 

[Patryn]

Don't those evicted homeowners also now have a massive hit on their credit record, something that will end up probably costing them far more than whatever profit they received from refinancing?

 

[Javaman]

From the album title I thought he was talking about how when a lot of people get foreclosed they trash the house before the bank takes it. Which happens all the time. Trashing meaning to take out all the appliances, stop up the toilets or bathtubs and turn on the water. Massive water damage (and mold in the summer).

What's in the OP is not nearly as exciting as what I described.

Which is a fucking stupid thing to do since the homeowner is still liable for the difference between what they owed the bank and what it sells for. I hope they're ready to declare bankrupcy instead of just a forclosure. If the bank forgives the difference the homeowner is going to have to treat that difference as income as soon as the tax protections expire.

 

[Gentleman Jack]

Funny how opinions change after he invest $5B in Bank of America in August 2011.

At least there will be no more talk of the "Buffet plan"

Why would an opinion on who made money from the housing collapse undermine a plan to raise taxes on the rich?

 

[Conciliator]

Not sure how this is supposed to be out of character for Buffett, or anyone for that matter. Some people who were foreclosed on made out ahead. So?

 

[Clevinger]

Not sure how this is supposed to be out of character for Buffett, or anyone for that matter. Some people who were foreclosed on made out ahead. So?

Kosmo wants liberals to hate Buffet so they'll stop talking about how he wants to raise his own/the rich's taxes. Or something.

 

[captmcblack]

I don't know what is more offensive - trying to characterize a fact (the idea that some people who refi'd their underwater homes got more money than the home's value) as some sort of evil thing to assasinate someone's character, or that there are people who do it as a matter of political policy.

Like, it is literally people's job/livelihood to distort things and lie to themselves/be disingenous like that.

 

[Staccat0]

I still don't understand how society in large has decided that the people who couldn't pay back their loans were all victim to predatory lenders. Many of the borrowers did in fact understand the agreements they were signing, and it was just a case of the demographic, whom I refer endearingly to as 'dumbasses', who thought it was all going to be okay.

"Dumbasses" can be preyed upon. Not sure what your point here is?

 

[Dead Man]

Why would an opinion on who made money from the housing collapse undermine a plan to raise taxes on the rich?

Because Kosmo, that's why.

 

[Salvor.Hardin]

"Dumbasses" can be preyed upon. Not sure what your point here is?

The dumbasses I'm refering to knew what they were getting into and were overly optimistic of their ability to pay back the loans when they really weren't in the position to.

The naive type on the other hand weren't quite understanding of the agreement they were entering.

 

[AndyD]

Man, Kosmo got Gaf 1st post /threaded

We need a good gif for 1st post /thread.

 

[turnbuckle]

I still don't understand how society in large has decided that the people who couldn't pay back their loans were all victim to predatory lenders. Many of the borrowers did in fact understand the agreements they were signing, and it was just a case of the demographic, whom I refer endearingly to as 'dumbasses', who thought it was all going to be okay.

Sure, there were a lot of dumbasses. But advertising and the power of persuasion are powerful tools, especially when trying to convince people they can have a piece of the pie. People should be able to expect banks to exercise caution; when an institution that's fronting the money is telling you that it's ok and you feel their interests lineup with your own it can be easy to fall into a reality distortion field. None of these loans would happen if the banks weren't offering them. That doesn't mean people aren't dumbasses, but surely the blame can't be laid 50/50.

The dumbasses I'm refering to knew what they were getting into and were overly optimistic...

So, mostly the lenders? They are the ones that are supposed to have a better grasp of what is and isn't financially feasible for both themselves and prospective clients. People tend to only buy 2-3 houses in a lifetime, for bankers they're doing this daily.

The naive type on the other hand weren't quite understanding of the agreement they were entering.

So, mostly the borrowers. Many of those who felt they would be getting stretched too thin were convinced - by conventional wisdom as well as lenders - that home prices were only going to go up. During this period it wasn't uncommon for a person who was saving for a down payment on a house to find themselves annually further away from being able to afford a house because of the rapidly appreciating market. These people were sold on the idea of the sooner the better and that the sky was the limit.

I was in the market for a house in the early aughts and had to argue with my potential lender (Fifth Third Bank) on what I could and couldn't afford. It was as if they were trying to force me to take as much of their money as I possibly could. I ultimately decided to just rent instead.