Let me first state I'm not a finance guy and just trying to get a better understanding of debt. All my life I've heard is that "the bank loans you money to buy your house" but that doesn't exactly seem to be the case. Every mortgage I've ever had or any more I know anyone else that has gets the initial mortgage from a bank but that mortgage is then sold to Fannie Mae/Freddie Mac.
But Freddie Mac is government sponsored (what does that even mean?) that buys mortgages and sells mortgage backed securities. It's market cap is only $450mil but holds $2Trillion in assets. Apparently the federal reserve buys these Mortgage backed securities to the tune of owning ~98% of residential morgates. Is the Fed introducing currency into the market through inflated values of housing?
In other words, my understanding is you go to buy a house and you need a mortgage. The debt flow goes Bank --> Freddie Mac --> Federal Reserve at the same time the federal reserve is printing record amounts of money. Is the housing market how they are distributing the printed money to the masses causing the record levels of inflations we're seeing?
Those mortages (not all mortgages) are backed (guaranteed) by the government, so when your neighbor doesn't make payments and is foreclosed on, the bank that lent the money is paid by the government (via the US Taxpayer) and the house is left to rot for about a year or more. Then the government makes an attempt to sell it at a far reduced price than what was owed on the mortgage (and therefore, paid by the government to the bank). And if they're lucky, some shmuck (usually a flipper type) comes along and buys the broken down house at a huge discount and then puts in granite counter tops and sells it for 4-6 times what it really ought to sell for, thereby driving up prices in the neighborhood and making the local economy such that people who were 5-6 generations (or more) deep in the community can no longer afford to buy a house in their own hometown. Move to another red state, rinse and repeat.
Yep, that’s what I do. I am the “schmuck”. What, did you expect me to work an hourly clock-in job for shit wages?
If you're driving up house prices to the point local people can't even afford to own a home in their own hometown, then ya, you're a shmuck AND an asshole.
Buying a fixer and investing $150-$200 grand to rebuild and resell a property is not for weak, timid or socialist leaning. The houses I buy are cheap, but not fit to live in until I fix n sell them. You might want to stick to your hourly job.
You're such a jerk.