MaxedOutMama
Sunday, February 25, 2007
Giving Credit Cards To Illegals
The average individual has the sneaking suspicion that somehow he or she is going to end up paying for that credit card given to an illegal, because the illegal can just skip. The average individual is right. Why would a bank do something like that?
FDIC Stats
Quarterly profitability percentages by asset concentrations - fourth quarter (loans):
CR posted about a Denver article, and these are the telling quotes:
This is how the little guys get hurt. His income is probably around $50,000, and even though he's reaching the point where his principal paydown rate is rising, on that income he really can't save AND pay an amortized mortgage of around $207,000 originally. There is a reason for the old ratios - violating them causes insecurity and financial instability. His PITI to Gross Monthly Income ratio is about at 35-36%, when it should be no higher than 30%. So he's locked into working 50-60 hours a week, not getting ahead in any way, and feeling extremely financially insecure - and he is. He's been in the house for 4-1/2 years, and by now by all usual economic rules his payments in comparison to his earned income should have have dropped enough to provide him some margin even if the house value didn't increase - but that hasn't happened either.
Not that's he's an illegal, but the same dynamic holds. When people such as these cannot prosper, in the end the nation cannot prosper. Jeremiah:
FDIC Stats
Quarterly profitability percentages by asset concentrations - fourth quarter (loans):
Agricultural:It's amazing what the inability to refi out of credit card debt can do to increase profitability on that credit card debt, especially when you slam those 30% default rates on for a late payment of a utility bill, etc. Think about what I am trying to tell you here. I realize that a lot of people don't want to read the writing on the wall, but incomes have not kept pace with inflation over five years. Last year they started rising, but the accumulated damage has not been made up in comparison to inflation. The consumer made up the deficit by using home equity loans, so having a home became having the ability to borrow. It's all coming to an end now.
2005: 91.2
2006: 89.8
Commercial:
2005: 91.5
2006: 88.6
Mortgages:
2005: 89.1
2006: 85.5
Consumer:
2005: 85.6
2006: 84.0
Credit Cards:
2005: 81.8
2006: 96.2
CR posted about a Denver article, and these are the telling quotes:
Hector Garcia figured he was doing everything right.He's trying to sell:
...
Garcia took out a 30-year, fixed-rate mortgage at 6.5 percent interest, bought a three-bedroom home for $207,000, and began fixing it up.
...
Bank-owned properties now represent more than 80 percent of all homes on the market there, putting even seemingly stable homeowners like Garcia up against a financial wall.
"I just can't take it anymore," he says of his street's overgrown yards, abandoned houses, and declining property values. "I put so much into this house and this community, but I don't have no equity."
Garcia's house two years ago "would have gone for $210,000, maybe more," says David Cabrera, the real-estate agent whom Garcia hired last fall to sell the home, now priced at $195,500. "But nobody's buying now with all the foreclosures."He's not in trouble on paying the loan - it's just that it's not worth it to him, because the more he pays down the more the house drops in value, and he can't save otherwise because he's using all his spare cash to pay the mortgage. The neighborhood is unlikely to get better and provide a safe environment for his family. The entire housing bubble was created by the idea that paying a high percentage of your income for a home would create a financial cushion for your future.
...
...Garcia (...) has yet to receive an offer. "I feel bad," he says. "Everyone thinks they want to get a house to get money for the family. But I need to have a life, too."
This is how the little guys get hurt. His income is probably around $50,000, and even though he's reaching the point where his principal paydown rate is rising, on that income he really can't save AND pay an amortized mortgage of around $207,000 originally. There is a reason for the old ratios - violating them causes insecurity and financial instability. His PITI to Gross Monthly Income ratio is about at 35-36%, when it should be no higher than 30%. So he's locked into working 50-60 hours a week, not getting ahead in any way, and feeling extremely financially insecure - and he is. He's been in the house for 4-1/2 years, and by now by all usual economic rules his payments in comparison to his earned income should have have dropped enough to provide him some margin even if the house value didn't increase - but that hasn't happened either.
Not that's he's an illegal, but the same dynamic holds. When people such as these cannot prosper, in the end the nation cannot prosper. Jeremiah:
Like cages full of birds,
their houses are full of deceit;
they have become rich and powerful
28 and have grown fat and sleek.
Their evil deeds have no limit;
they do not plead the case of the fatherless to win it,
they do not defend the rights of the poor.
Labels: Jeremiah was right
