|
|
Post by pjohns1873 on May 7, 2014 2:22:42 GMT
Whereas I certainly do not believe that the federal government (or state or local government, for that matter) should "force" Americans to perform any sort of work, I do believe it should make the ability to receive unemployment compensation entirely dependent upon one's willingness to perform any sort of work that one is physically and mentally capable of doing.
All you're stating is that the government should use economic force (i.e. the threat of termination of unemployment benefits) to require a person to work at a minimum wage job.
We should note that in my state (WA) the unemployment insurance is directly tied to the industry and job which establishes the rates that the employer pays. So a "mechanical engineer" that is laid off from Boeing has his unemployment benefits tied to his job of being an aerospace mechanical engineer because that is what Boeing paid for with it's unemployment insurance payment.
Unemployment benefits, at the state level, are not "publically" funded but instead are privately funded by enterprise and managed by the State. There are no "taxes" being paid to fund the insurance and instead it's based upon an "insurance premium" paid for by the employers.
That "private" funding is actually money that comes from the overall pot, and is therefore unavailable to be paid, directly, to the employees as a part of their respective compensation packages. So that amounts, effectively, to public funding. And yes, I do, indeed, believe that the government should use "the threat of [the] termination of unemployment benefits" to require unemployed workers to take whatever work is available, unless they are either physically or mentally incapable of performing that work. (You may refer to that, pejoratively, as "economic force," if you wish.) |
|
|
|
Post by ShivaTD on May 7, 2014 13:29:02 GMT
That "private" funding is actually money that comes from the overall pot, and is therefore unavailable to be paid, directly, to the employees as a part of their respective compensation packages. So that amounts, effectively, to public funding. And yes, I do, indeed, believe that the government should use "the threat of [the] termination of unemployment benefits" to require unemployed workers to take whatever work is available, unless they are either physically or mentally incapable of performing that work. (You may refer to that, pejoratively, as "economic force," if you wish.)
This is a misrepresentation of how State unemployment benefits are derived and paid. While the "state" administers the fund it would work the same way if a private insurance company was providing the unemployment benefits. The employers pay a premium based upon economic risks of unemployment and also based upon the compensation paid to the employees. Employees receive benefits from this fund if they are laid off from work (not voluntary termination of employment) based upon their prior compensation. The fund is a zero net gain/loss financially for the State and no "public" funds generated by taxation are used.
The amount of benefits are based upon a "percentage of income" from the prior employment although there is a cap. As I recall when I investigated this previously for WA the cap was about $604/wk regardless of the prior wages for higher paid employees. $604/wk or about $2,400/mo isn't enough to meet the monthly expenditures for many higher paid professions when a person is laid off but they are expected to make up the difference out of assets (i.e. generally retirement accounts if the unemployment lasts very long).
Based upon your proposition a person that is laid off from, let's say a $80,000/yr job as a mechanical engineer that is only receiving $2.400/mo and was already having to use personal assets to survive (including their retirement investments) could be forced to accept a job at federal minimum wage that only pays $1,160/mo where they could be forced to immediately sell their home and/or use all of their retirement investments to survive.
This is in spite of the fact that their employer had been paying the highest possible unemployment premium on their behalf before they were laid off from work.
Sorry if I don't support this advocacy of economic ruin for a person that gets laid off from work generally because our government screws up the economy so often with economic interventionism and/or it's failure to prohibit enterprises from destroying the economy on it's own (case in point the collapse of the mortgage industry that was based upon pure unadulterated greed by mortgage lenders that violated sound banking practices).
|
|
|
|
Post by pjohns1873 on May 7, 2014 23:42:10 GMT
That "private" funding is actually money that comes from the overall pot, and is therefore unavailable to be paid, directly, to the employees as a part of their respective compensation packages. So that amounts, effectively, to public funding. And yes, I do, indeed, believe that the government should use "the threat of [the] termination of unemployment benefits" to require unemployed workers to take whatever work is available, unless they are either physically or mentally incapable of performing that work. (You may refer to that, pejoratively, as "economic force," if you wish.)
This is a misrepresentation of how State unemployment benefits are derived and paid. While the "state" administers the fund it would work the same way if a private insurance company was providing the unemployment benefits. The employers pay a premium based upon economic risks of unemployment and also based upon the compensation paid to the employees. Employees receive benefits from this fund if they are laid off from work (not voluntary termination of employment) based upon their prior compensation. The fund is a zero net gain/loss financially for the State and no "public" funds generated by taxation are used.
The amount of benefits are based upon a "percentage of income" from the prior employment although there is a cap. As I recall when I investigated this previously for WA the cap was about $604/wk regardless of the prior wages for higher paid employees. $604/wk or about $2,400/mo isn't enough to meet the monthly expenditures for many higher paid professions when a person is laid off but they are expected to make up the difference out of assets (i.e. generally retirement accounts if the unemployment lasts very long).
Based upon your proposition a person that is laid off from, let's say a $80,000/yr job as a mechanical engineer that is only receiving $2.400/mo and was already having to use personal assets to survive (including their retirement investments) could be forced to accept a job at federal minimum wage that only pays $1,160/mo where they could be forced to immediately sell their home and/or use all of their retirement investments to survive.
This is in spite of the fact that their employer had been paying the highest possible unemployment premium on their behalf before they were laid off from work.
Sorry if I don't support this advocacy of economic ruin for a person that gets laid off from work generally because our government screws up the economy so often with economic interventionism and/or it's failure to prohibit enterprises from destroying the economy on it's own (case in point the collapse of the mortgage industry that was based upon pure unadulterated greed by mortgage lenders that violated sound banking practices).
When employers pay into a fund to support unemployment benefits, that money is unavailable to be used as part of a worker's salary or wages. As for the "pure unadulterated greed by mortgage lenders that violated sound banking practices": Yes, I agree as regarding the "violat[ion] of sound banking practices." As, for instance, when these lenders were pressured to make loans to people who had very little prospect of repaying those loans, just so that they would not be "redlined." |
|
|
|
Post by ShivaTD on May 8, 2014 9:17:03 GMT
When employers pay into a fund to support unemployment benefits, that money is unavailable to be used as part of a worker's salary or wages. As for the "pure unadulterated greed by mortgage lenders that violated sound banking practices": Yes, I agree as regarding the "violat[ion] of sound banking practices." As, for instance, when these lenders were pressured to make loans to people who had very little prospect of repaying those loans, just so that they would not be "redlined."
The unemployment insurance payments made by an employer are actually unreported employee compensation to the worker and I know of no one that has ever been laid off from a job that wasn't greatful for payments they received because of the insurance.
The reason the loans were being made is because the lending agent received a commission on the loan. There was no pressure on them to lend money to a person where they knew realistically that the person wouldn't be able to repay the loan in the future. The lending agents pushed for the maximum loan amount possible, often using ARM's so the person could qualify for a larger loan, because they received a commission on the total amount of the loan. It wasn't uncommon for the lending agents to mislead the borrowers as to the potential future costs of the loan to encourage the borrower to take out a loan for more than they could afford.
This had absolutely nothing to do with the government and everything to do with the lending agents lining their pockets with commissions from the loans.
|
|
|
|
Post by pjohns1873 on May 8, 2014 23:16:53 GMT
When employers pay into a fund to support unemployment benefits, that money is unavailable to be used as part of a worker's salary or wages. As for the "pure unadulterated greed by mortgage lenders that violated sound banking practices": Yes, I agree as regarding the "violat[ion] of sound banking practices." As, for instance, when these lenders were pressured to make loans to people who had very little prospect of repaying those loans, just so that they would not be "redlined."
The unemployment insurance payments made by an employer are actually unreported employee compensation to the worker and I know of no one that has ever been laid off from a job that wasn't greatful for payments they received because of the insurance.
The reason the loans were being made is because the lending agent received a commission on the loan. There was no pressure on them to lend money to a person where they knew realistically that the person wouldn't be able to repay the loan in the future. The lending agents pushed for the maximum loan amount possible, often using ARM's so the person could qualify for a larger loan, because they received a commission on the total amount of the loan. It wasn't uncommon for the lending agents to mislead the borrowers as to the potential future costs of the loan to encourage the borrower to take out a loan for more than they could afford.
This had absolutely nothing to do with the government and everything to do with the lending agents lining their pockets with commissions from the loans.
Yes, any former employee who lost his (or her) job, involuntarily, was doubtless "grateful" for the fact that unemployment insurance existed. But that cannot vitiate the fact that the employer's paying into this fund necessarily reduces the amount of compensation available. (Note: I am not arguing against unemployment insurance here; I am merely pointing out that there is a tradeoff--and it is only intellectually honest to recognize that tradeoff.) It is my understanding that many home loans were made to individuals with "subprime" credit--translation: poor credit--in order to facilitate the goal of having more people owning their own homes (instead of renting); and that banks were pressured to issue these loans, lest they be charged with "redlining." |
|
|
|
Post by ShivaTD on May 9, 2014 10:18:10 GMT
Yes, any former employee who lost his (or her) job, involuntarily, was doubtless "grateful" for the fact that unemployment insurance existed. But that cannot vitiate the fact that the employer's paying into this fund necessarily reduces the amount of compensation available. (Note: I am not arguing against unemployment insurance here; I am merely pointing out that there is a tradeoff--and it is only intellectually honest to recognize that tradeoff.) It is my understanding that many home loans were made to individuals with "subprime" credit--translation: poor credit--in order to facilitate the goal of having more people owning their own homes (instead of renting); and that banks were pressured to issue these loans, lest they be charged with "redlining."
The term "redlining" referred to a practice by mortgage lenders where they wouldn't underwrite a loan for groups of people living within certain areas regardless of their credit scores or ability to repay the loan. The government did "outlaw" the practice of redlining but did not lower the standards for loan qualification. The person still had to qualify for the loan.
"Subprime" refers to any person that doesn't have a near perfect credit score and most people don't have near perfect credit scores. Most mortgate borrowers are "subprime" with credit scores probably between about 680-720. Remember that even one accidental late credit card payment in the last year can drive a person's credit score down 30-50 points and virtually no one has an 800 credit score that would qualify them as a prime borrower. Look at mortgage advertisements that offer a 30-yr fixed at 3% (for example) as being the "prime rate" and virtually no one qualifies for those loans. If the "prime" is 3% the average borrower can expect to pay 4% and that 4% is because they are a non-prime borrower.
I have a very good credit rating, have never been late on any payments of debt, and I've never qualified for a "prime rate" home mortgage. It's almost like it's a mythical number that no one qualifies for.
Finally it's the "loan agent" and not the "underwriter" that is responsible for working with the potential borrower to ensure that they don't take on more debt than they can afford to repay. Virtually everyone with a good credit score will qualify for a loan far greater than they can actually afford to repay. They qualify on what they can "theoretically" repay and not on what they can actually repay. The "loan agents" were selling people on ARM loans that, while they have a purpose, are not generally good mortgages for the average person. A person using an ARM loan needs to budget based upon the "maximum" monthly payment possible in the future and not the initial monthly payment amount but the "loan agents" were not warning the borrowers about this. The loan agents were being very unscrupulous in deceiving borrowers into taking on more dedt than they could afford to repay because it increased their commission on arranging the loans.
Numerous lawsuits have been filed and numerous financial institutions have been found to be participants in these unscrupulous lending practices none of which related to the borrowers being unqualified for a home loan.
|
|
|
|
Post by pjohns1873 on May 10, 2014 1:35:13 GMT
Yes, any former employee who lost his (or her) job, involuntarily, was doubtless "grateful" for the fact that unemployment insurance existed. But that cannot vitiate the fact that the employer's paying into this fund necessarily reduces the amount of compensation available. (Note: I am not arguing against unemployment insurance here; I am merely pointing out that there is a tradeoff--and it is only intellectually honest to recognize that tradeoff.) It is my understanding that many home loans were made to individuals with "subprime" credit--translation: poor credit--in order to facilitate the goal of having more people owning their own homes (instead of renting); and that banks were pressured to issue these loans, lest they be charged with "redlining."
The term "redlining" referred to a practice by mortgage lenders where they wouldn't underwrite a loan for groups of people living within certain areas regardless of their credit scores or ability to repay the loan. The government did "outlaw" the practice of redlining but did not lower the standards for loan qualification. The person still had to qualify for the loan.
"Subprime" refers to any person that doesn't have a near perfect credit score and most people don't have near perfect credit scores. Most mortgate borrowers are "subprime" with credit scores probably between about 680-720. Remember that even one accidental late credit card payment in the last year can drive a person's credit score down 30-50 points and virtually no one has an 800 credit score that would qualify them as a prime borrower. Look at mortgage advertisements that offer a 30-yr fixed at 3% (for example) as being the "prime rate" and virtually no one qualifies for those loans. If the "prime" is 3% the average borrower can expect to pay 4% and that 4% is because they are a non-prime borrower.
I have a very good credit rating, have never been late on any payments of debt, and I've never qualified for a "prime rate" home mortgage. It's almost like it's a mythical number that no one qualifies for.
Finally it's the "loan agent" and not the "underwriter" that is responsible for working with the potential borrower to ensure that they don't take on more debt than they can afford to repay. Virtually everyone with a good credit score will qualify for a loan far greater than they can actually afford to repay. They qualify on what they can "theoretically" repay and not on what they can actually repay. The "loan agents" were selling people on ARM loans that, while they have a purpose, are not generally good mortgages for the average person. A person using an ARM loan needs to budget based upon the "maximum" monthly payment possible in the future and not the initial monthly payment amount but the "loan agents" were not warning the borrowers about this. The loan agents were being very unscrupulous in deceiving borrowers into taking on more dedt than they could afford to repay because it increased their commission on arranging the loans.
Numerous lawsuits have been filed and numerous financial institutions have been found to be participants in these unscrupulous lending practices none of which related to the borrowers being unqualified for a home loan.
Well, I do not think it is quite accurate to assert that "virtually no one" has a credit score of 800 or higher. (My own FICO score was listed on my latest Discover Card bill--it is a new service being offered by Discover Card--and it is 804. It would have presumably been even higher, if not for the fact that my annual income is quite modest; and that accounts for a small portion of the overall score--although how long one has had credit, and how one has handled that credit, are of far greater importance.) And I thoroughly agree with you as regarding your skepticism concerning adjustable-rate mortgages. What may seem like a really good deal in the short term can easily turn into a nightmare within just a few years. A fixed-rate mortgage is far preferable, in my opinion. But we appear to be operating on the basis of very different information as concerning the matter of loans being made, under government pressure, to individuals who just really did not qualify. That is certainly what I have learned, on more than one occasion, from reports on FNC. |
|
|
|
Post by ShivaTD on May 10, 2014 12:47:37 GMT
Well, I do not think it is quite accurate to assert that "virtually no one" has a credit score of 800 or higher. (My own FICO score was listed on my latest Discover Card bill--it is a new service being offered by Discover Card--and it is 804. It would have presumably been even higher, if not for the fact that my annual income is quite modest; and that accounts for a small portion of the overall score--although how long one has had credit, and how one has handled that credit, are of far greater importance.) And I thoroughly agree with you as regarding your skepticism concerning adjustable-rate mortgages. What may seem like a really good deal in the short term can easily turn into a nightmare within just a few years. A fixed-rate mortgage is far preferable, in my opinion. But we appear to be operating on the basis of very different information as concerning the matter of loans being made, under government pressure, to individuals who just really did not qualify. That is certainly what I have learned, on more than one occasion, from reports on FNC.
For many years I didn't have a credit card or any debt except for a mortgage because I made so much money I never needed to borrow. I didn't even have a car loan because I paid cash because I could afford to. The lack of "credit history" resulted in a very low credit score and it was because I didn't need to borrow.
I'm currently in the process of a VA Refi and have discussed the past problems with my loan agent that was around at the time and he's been a valuable source of information. He's been completely open about the problems prior to 2008 and he openly condemns the practices by the loan officers that were working on commission. Also of note anecdatally I watched the news in 2008 where many of those that were facing foreclosure were being interviewed. In case after case their typical mortgages were above $250,000 and often in the mid-$300,000 range and all related to ARM loans. They could all afford to own a home but they couldn't afford the home they had purchased and I wasn't surprised at that. At the time I was in the top 25% of income earners and I was living in a $150,000 home.
It was the loan officers (and real estate agents that also work on a commission) that convinced them to purchase homes that they couldn't afford using ARM loans where the monthly payments could easily double in five years. It wasn't that they couldn't afford to purchase a home or pay a reasonable mortgage on it.
|
|
|
|
Post by pjohns1873 on May 11, 2014 1:00:13 GMT
Well, I do not think it is quite accurate to assert that "virtually no one" has a credit score of 800 or higher. (My own FICO score was listed on my latest Discover Card bill--it is a new service being offered by Discover Card--and it is 804. It would have presumably been even higher, if not for the fact that my annual income is quite modest; and that accounts for a small portion of the overall score--although how long one has had credit, and how one has handled that credit, are of far greater importance.) And I thoroughly agree with you as regarding your skepticism concerning adjustable-rate mortgages. What may seem like a really good deal in the short term can easily turn into a nightmare within just a few years. A fixed-rate mortgage is far preferable, in my opinion. But we appear to be operating on the basis of very different information as concerning the matter of loans being made, under government pressure, to individuals who just really did not qualify. That is certainly what I have learned, on more than one occasion, from reports on FNC.
For many years I didn't have a credit card or any debt except for a mortgage because I made so much money I never needed to borrow. I didn't even have a car loan because I paid cash because I could afford to. The lack of "credit history" resulted in a very low credit score and it was because I didn't need to borrow.
I'm currently in the process of a VA Refi and have discussed the past problems with my loan agent that was around at the time and he's been a valuable source of information. He's been completely open about the problems prior to 2008 and he openly condemns the practices by the loan officers that were working on commission. Also of note anecdatally I watched the news in 2008 where many of those that were facing foreclosure were being interviewed. In case after case their typical mortgages were above $250,000 and often in the mid-$300,000 range and all related to ARM loans. They could all afford to own a home but they couldn't afford the home they had purchased and I wasn't surprised at that. At the time I was in the top 25% of income earners and I was living in a $150,000 home.
It was the loan officers (and real estate agents that also work on a commission) that convinced them to purchase homes that they couldn't afford using ARM loans where the monthly payments could easily double in five years. It wasn't that they couldn't afford to purchase a home or pay a reasonable mortgage on it.
We will probably never agree as concerning the matter of the inability of some to repay their loans. On a more personal note, though, when you refinance your house, I would urge you to (1) ensure that there is no penalty for pre-payment, according to the terms of the contract; (2) ask for an amortization schedule; and (3) get in the habit of making principal-only payments each month, in addition to your regularly scheduled payments. This can result in the savings of many tens of thousands of dollars, over the lifetime of the loan. (Note: Because of the way mortgages are amortized--with the early payments being almost all interest, and very little principal--it is within the first few months, and even within the first few years, that the greatest savings are available. A payment of just $5 or so may kill an entire month's payment! Just be sure to always write the words, "Principal Only," in the lower left-hand corner of the check (under "Memo" or "For").
It may not make the lienholder especially happy; but I never have lived to make businesspeople happy. And I am guessing that you do not live for this purpose, either. |
|
|
|
Post by ShivaTD on May 11, 2014 10:21:10 GMT
We will probably never agree as concerning the matter of the inability of some to repay their loans. On a more personal note, though, when you refinance your house, I would urge you to (1) ensure that there is no penalty for pre-payment, according to the terms of the contract; (2) ask for an amortization schedule; and (3) get in the habit of making principal-only payments each month, in addition to your regularly scheduled payments. \
While eliminating "redlining" was always a talking point there has never been any evidence that it played any role in the defaults that I've read of. There have been numerous successful lawsuits against some of the lending institutions and none of them identified the elimination of redlining or any pressure being placed on lending institutions to provide loans for those that weren't qualified qualified for a mortgage per se. What the lawsits have focused on was that the lending agents engaged in unscrupulous business practices. Millions of loans went into default and they we're tied to individuals from previously "redlined" areas from anything that I've read. There simply hasn't been any linkage established to the discontinuance of "redlining" by mortgage companies from anything I've ever read.
On the personal note. (1) VA loans prohibit prepayment penalties (and I wouldn't agree to any loan that imposed a prepayment penality), (2) I have the amortiazation schedule already, and (3) I don't recall ever making a payment on any of my mortgates where I didn't add additional payments against principle as it is literally a habit for me to do that. Two that you left out are (4) don't just apply with a single lender - they will compete and that lowers the interest rates, and (5) don't pay points for a lower interest rate - if they're willing to lower the rate they will do that without charging points to do it.
|
|
|
|
Post by pjohns1873 on May 11, 2014 22:56:53 GMT
We will probably never agree as concerning the matter of the inability of some to repay their loans. On a more personal note, though, when you refinance your house, I would urge you to (1) ensure that there is no penalty for pre-payment, according to the terms of the contract; (2) ask for an amortization schedule; and (3) get in the habit of making principal-only payments each month, in addition to your regularly scheduled payments. \
While eliminating "redlining" was always a talking point there has never been any evidence that it played any role in the defaults that I've read of. There have been numerous successful lawsuits against some of the lending institutions and none of them identified the elimination of redlining or any pressure being placed on lending institutions to provide loans for those that weren't qualified qualified for a mortgage per se. What the lawsits have focused on was that the lending agents engaged in unscrupulous business practices. Millions of loans went into default and they we're tied to individuals from previously "redlined" areas from anything that I've read. There simply hasn't been any linkage established to the discontinuance of "redlining" by mortgage companies from anything I've ever read.
On the personal note. (1) VA loans prohibit prepayment penalties (and I wouldn't agree to any loan that imposed a prepayment penality), (2) I have the amortiazation schedule already, and (3) I don't recall ever making a payment on any of my mortgates where I didn't add additional payments against principle as it is literally a habit for me to do that. Two that you left out are (4) don't just apply with a single lender - they will compete and that lowers the interest rates, and (5) don't pay points for a lower interest rate - if they're willing to lower the rate they will do that without charging points to do it.
Thanks for adding points (4) and (5). You are quite correct, of course. I am glad to see that you already have this matter well in hand, as I do not wish for people to feel required to pay any more than they really must. (And if that discomfits the lender just a bit--well, then so be it.) |
|
