Logan's Roadhouse files for bankruptcy; 18 restaurants closing

Are you really that clueless Amy? I gave you a link referencing several books and movies that were written about the Great Recession. I suggest you go back and read the link rather than asking me the question after it has already been answered.

You obviously don't know Americans or what caused the Great Recession. You may know what your circle of Americans think. But you obviously don't know what all Americans think, and you certainly have no knowledge of finance, economics, or business or what caused the Great Recession. Yes, people lost homes. That's what normally happens in a recession when people lose their jobs and can't pay their bills. They lose their homes. Homes and housing markets don't just crash without a cause. And the cause in the case of the Great Recession was very similar to what caused the Great Depression i.e. a liquidity crisis.

And finally, as I previously wrote, earned income credits can be passed in new and different ways. The way earned income tax credits are currently passed onto income earners can be changed. Just because it has been done one way in the past, it doesn't follow that it must always be that way. Things can and do change. Tax credits can be passed faster and with less paperwork e.g. Obamacare in which tax credits are passed monthly and without additional paperwork.

And after all that, you still haven't answered the question I have repeatedly as of you. Where is this tax on small business revenues you claim exists? The bottom line is it doesn't, hence all this obfuscation.

 

The stockmarket crash caused the depression. Artificially inflated appraisals and irresponsible lending caused the housing crash. Check unemployment rates following the depression and unemployment rates following the housing crash. Lemme know how they compare.
Earned income tax credits come after you file taxes. Or you can adjust your W-2 so less tax is withheld.
People walked away from homes because when the market crashed they had a $250k mortgage on a home that would sell for $175k. They didn't foreclose because they lost jobs. I don't need a link, dear. I lived this.
The market crashed because of irresponsible borrowing/lending coupled with artificially inflated real estate appraisals.

 

Your link never mentions Great Recession.
Not once.

 

And how did the "stock market crash" cause the "depression"? And how did "artificially inflated appraisals and irresponsible lending cause the housing crash"? Please explain.

The fact is they didn't. What you are doing is mindlessly repeating a Republican meme. What caused the Great Depression and the Great Recession was something called a liquidity crisis. It's one of the worst kinds of macroeconomic events.

We have had experiences with lending institutions making reckless loans en mass, but it has never caused a recession or a depression much less great ones e.g. The Savings and Loan Crisis where one third of the nation's savings and loan institutions failed. Bad loans didn't cause the Great Recession.

What caused the Great Recession was the repeal of the regulation put in place after the Great Depression to prevent another Great Depression e.g. Glass-Steagall. That's what caused the Great Recession. Before the repeal of Glass-Steagall, it was illegal for banks to trade in derivative securities. A derivative security is a security whose value is tied to the value of something else.

Banks and shadow banks made mortgage loans many of which were bad. The loans were bundled with good loans and rated as high quality loans which over valued the bundled loans. Banks and shadow banks then created derivative securities based on the over priced value of bundled loans. They then sold both the loans and the derivative security they created. Prior to the repeal of Glass-Steagall it would have been illegal for banks to engage in derivative trades. They were forbidden to create, them, or to buy and sell them.

When the loans went bad, not only did the original bad loans go bad, but all the derivative securities associated with the bad loans went bad too. You can think of a derivative security as a bet or an insurance policy. But they aren't treated as insurance products. They aren't regulated. There are no reserves required.

Let me give you an example. I'm a buyer of loans. But I want to avoid default risk. So I'll buy the loans and purchase a derivative security to ensure against a loan loss. If loans default, I have an insurance policy i.e. the derivative security I purchased. Sounds really sound, right? Wrong, because when the loans did default, that created a liability with the bank that wasn't previously disclosed or recognized. Even though the bank no longer owned the loan, they were liable for the loan through this derivative security. So when the loan defaulted, the owner of the debt (me) lost money and the counterparty of the derivative security attached to the loan lost money. My loss was only mitigated by the ability of the counterparty to make good on the derivative security. You have essentially doubled the face amount of the debt risk and potentially doubled the loss. Banks and shadow banks were making a ton of money selling loans and the derivative securities associated with them. But when these loans began to default, all of a sudden banks found themselves liable for unknown sums of money. That's what caused the liquidity crisis. That's what caused the Great Recession. The Great Depression was the result of a liquidity crisis too. The loans were over priced, and the liability and the risk weren't recognized or priced into the security. All of a sudden these banks were facing huge and previously unrecognized liabilities. Had these loans been treated in the normal fashion, there would be no derivative associated with them and loan losses would have been reserved (i.e. accounted for) on the bank's books.

Had banks been forbidden to engage in derivative trading it would have been just another bad loan. Banks would have been taken over, liquidated, and there wouldn't have been a liquidity crisis e.g. the Savings and Loan Crisis of the 80's and 90's.

No, you compare. I'm very familiar with them with the unemployment rates after the Great Depression and the Great Recession. Now if you think there is something odd about them, you need to say it.

Yes, you can lower your withholding so less tax is withheld. But that's not what we are talking about here. If tax credits are used to subsidize wages that might not work out for minimum wage earners. They may need more tax credit than they pay in tax withholding.

And you think that makes sense...seriously? Property was over appraised before the Savings and Loan Crisis of the 80's and 90's but that wasn't the case this time around. The debt which banks subsequently bundled and whose debt risk was overrated by credit agencies and the derivative securities created and sold on that debt caused the Great Recession. Bad debt isn't enough to cause a great recession. When savings and loans made massive numbers of bad loans during the 80's and 90's those bad loans didn't cause a great recession because financial institutions were prohibited from trading in derivatives per Glass-Steagall.

 

Well neither is the Great Depression mentioned in any of the book titles or movies made about the Great Depression. I suggest you go back and read the link I previously provided.

You experienced the Great Recession and you understand it based on that experience. But it's a limited experience. You or your husband may have become unemployed and experienced great economic distress, but that doesn't mean you understand the recession or what caused it, because clearly you don't. I hope I was able to help you understand it a bit better. You are not alone many people don't understand what happened or why it happened even though they experienced the brunt of it.

 

Wait, is the minimum wage amount to benefit only a few people and leave so many of us out?

I used the 52 week year and only used 40 hours per week.

People whine about the poverty level. Well, you best meet poverty level on social security and love it.

So many of the elderly who must pay rent or property taxes as owners plus all expenses, including what medicare refuses to pay, that they ought not be left out over the income levels.

Why favor teens living with parents but tell us to take a hike?

The left wingers never seek equal treatment.

 

Real estate with little equity requires PMI. It's insurance for the bank.
People didn't massively lose jobs in 2007. They walked away from homes they found themselves upside down on.
What was unemployment in the early 30's and late 2000?
I'll be happy to tell you about my mortgage with Wells Fargo in 2010 that I walked away from. Then I can tell you about renting for 3 years. Then I can tell you about buying again at 4.5% vs. 7.5% in 2000. Then we can discuss what happens at closing and how mortgage payments are made.
Tell me about filling taxes. Tell me about deposits and debits. If ya have a credit card, who is it most likely to be with?

 

The housing crash wasn't accompanied by any significant job loss.
My husband and I weren't stupid enough to pay a $250k mortgage payment on a house that was worth $175k that we had no equity in.
Understand?

 

Hourly workers get paid hourly. $7.25/hr is the federal minimum wage. It is illegal to pay less per hour.
Be a greeter at Wal-Mart, a burger flipper at McDonald's, a maid at the Marriott... $7.25/hr is minimum wage.

 

I am not clear if you mean to be amusing or mean?

 

No, I'm not being amusing or mean.
$7.25 is federal minimum wage. When someone is hired the first thing that employer will do is have you fill out a W-2. Unless you are paid under the table or a tipped employee, your employer will pay you at least $7.25/hr.

 

I owned an appraisal company when Bill Clinton was president. Appraisers in the 1980s never had to pass a test to be an appraiser. The standard of excellence then were the MAI appraisers. They had plenty of rigorous schooling and testing. MAI is private and not government.

Around 1991 all appraisers had to catch up on school if they were deficient and take a test. Then they had licenses.

Part of what we were trained for was fraud, and we knew examples from the 1980s as to examples of over appraisal values, basic fraud by appraisers.

I suspect little of this took place in the 2008 crash. Reason why? In the back room the public never hears about are professional appraisers. Working for the whole sale lenders. They will carefully review all appraisals.

Where there is a question, a new appraiser often is paid to look it over and see what is going on at the site. I know. I did those for lenders. I checked other appraisers work out.

Most of my findings was that most often the value was fine. The appraiser was sloppy and his work was not up to standard. But somehow he blundered into the right value. I recall others where the value was over the true worth and notified the lenders. So point being is they get checked for accuracy in house. In the 80s it was easier to commit fraud.

It is so lousy that today the broker that meets with the pubic can't order the appraisal. The wholesaler does not call any particular appraiser but calls a middle man. This person calls appraisers and he makes his cut by simply dealing with appraisers.

There have long been anti tampering with appraisers laws on the books. Sure, appraisers before Dodd Frank could get asked to hit a dollar number. My reply was to such things is only if the actual value is there. I promised not to deliberately low ball the number. But my numbers could be proven. And I always did prove them.

 

Amy, you must believe I am dumb. I have hired many workers and none at minimum wage. I paid them over minimum. And trust me, I know about the tax forms and the IRS and on and on and on. I have never had a job that paid tips.

 

How do appraisers ascertain value?

 

You said you made under $7/hr, correct?

 

Well, it's only a partial insurance for the bank. It doesn't insure the whole debt i.e. mortgage. PMI only covers loans where the loan to value ratio is larger than 80% i.e. the borrower has put less than 20% down, and banks are not required to have PMI. At most PMI covers only 20% of a mortgage.

Oh, and where is the evidence for that? People didn't massively loose job in 2007, but home prices were near their zenith in Q4 of 2007 per the US Housing Index. There is no evidence people walking away from their homes because they became underwater on their mortgage was of any macroeconomic consequence.

Believe it or not most people don't buy their homes to sell them when the real estate market goes sour. They buy them to satisfy a need. People need a place to live, that's why they buy homes. The real estate market isn't like the stock market. People don't trade homes like they trade stocks.

As I have repeatedly told you now, if you have a point to make, make it.

How is any of this relevant? You don't need to default on your mortgage in order to refinance at a lower rate. What do you want to know about filing taxes or what happens at closing or how mortgage payments are made or deposits and debits? Who cares about credit cards or who issued them and how is that relevant to this discussion? It isn't.

And let's get back to the issue that started all of this, the issue you have been evading for several posts now, where is this tax you assert small businesses pay on their revenues? It doesn't exist, hence all this obfuscation.

 

Well here is the thing Amy, what's the price of that home today? It isn't $175K , is it? If the home was in good shape, it should be selling for near if not above that 250K value you referenced. Real estate prices have recovered. So you ruined your credit and you lost whatever you invested into the home, your credit rating, and paid higher insurance and other costs, you incurred relocation costs out of your home and into your new home, and you made both you and your spouse less employable, just so you wouldn't take a hypothetical loss of 75k on your home. Let's look at what it cost you. You had the obvious hit on your credit rating. That means you paid more for car insurance and renter insurance and other insurances. It means you lost your investment in your home. It means you had to pay relocation expenses. It means you had to buy a new home and probably at the same if not higher price. If you or your husband were to become unemployed during the recession as many were, it made your job prospects much more difficult because of your bad credit rating. You took on a lot of cost and a lot of risk in choosing to default on on your mortgage and walk away.

And then there is the moral factor. Most people don't dishonor their word just to make a buck. If I were in your shoes, I wouldn't walk away from my debt if I could afford to pay it which is what you claim you did. Just because my home value is less than what I paid for it, that isn't sufficient reason for me to walk away from my debt. And I think most people feel that way. But some people don't, as evidenced by you. I'm an investor. It's what I do for a living. Markets and my investments go up and down all the time. I don't sell just because the market goes down. That's when I buy. You don't make money selling low and buying high.

 

By making a market study of the area first. Followed by an onsite inspection of said subject property and off visual exterior inspections of 3 or more comparable sales. Sales that closed which are in the near area of as similar size as possible and condition. We were trained in 3 ways to come up with value.
1. Cost approach. I taught my appraisers this sets the upper limit to value. Nobody will pay more used than it costs brand new.
2. Market value approach. This is the reason the nearby properties get checked out and photographed as evidence with accurate data on all homes used. This means you get accurate sizes of homes, lots and all important details. A finished appraisal report lays this all out.
3. Income approach. Not very useful on typical homes. So normally the appraiser comments he did not use it since it is not reliable. Where one appraises homes to be used for rentals, then you use the income approach.

It ends up being a judgement call. But my standards were that all comps adjustments to value had to be supported by the scientific way.

This subject is not easy to illustrate in a few words, so if you have more questions, fire away.

An appraiser ought not to use a high quality home when appraising a much lower cost home as an appraisal comp. Best practice is to try to stick to as similar as possible in the nearby sales area. You don' t run across town to find a home when adequate comparables are in the same area.

 

Why do you attempt to discuss something you don't understand at all?
Real estate has made tiny gains and $250k will get you far more today than in 2000.
It is stupid to pay a $250k mortgage payment on property worth half that, that you have no equity in. Stupid. There were no big losers.
Builders were hit hardest and they bankrupted and started over.
Check unemployment rates in mid to late 2000. The housing crash had nothing at all to do with unemployment/job loss.
Back then so many people were defaulting you could quit paying your mortgage and not be evicted for 6-12 months. Every month we stayed without paying, we banked over $1800.
You would think it would ruin your credit but the foreclosure is cancelled out by a better debt to income ratio. After foreclosure we had to rent for 3 years. You can't buy a home again until three years have passed..
Interest rates today are around 4.5...In 2000 they were 7.5+. Rates have remained very, very low to encourage buying. A monthly mortgage payment on a $250k home at 4.5% and 7.5% is VERY different.
We didn't make a buck, dear. Wells Fargo was covered by PMI.

 

When evaluating new construction, who solicits and compensates your services?

 

LOL...said the pot to the kettle. You are being either flat out dishonest or are just exceptionally ignorant.

Oh, I don't know where you live, but I live in a very normal mid-western city so we don't see the wild swings one can expect on the coasts. And my home is now worth 50% more than it was in 2000. It's worth 7% more than it was in 2007.

Well, now you are changing your story, either that or you don't understand math. You said your home was worth 175k in 2007. That's not down 50%. That's down 30%. So you are telling me you made no down payment on your home? Are you telling me you made no improvements in your home? You didn't invest in window treatments? You didn't invest in any improvements?

Even if you didn't your decision to default on your home mortgage had very real costs. All the costs previously mentioned were very real costs. According to you, you had market value loss of 75k dollars. Let's look at some numbers, shall we?

Market Price of your home prior to the recession: 250k
Less closing costs: 17,500
So if you sold your home for market prior to the recession you would have realized about: 232,500 dollars

During the recession you claim your home was worth 175k dollars
Less closing costs: 12.25k dollars
Net realized value: 162.75k dollars

So your hypothetical loss was, using your numbers, 69,750 dollars. That's not a great loss, and it was a hypothetical loss at that. If you had held on to the property and the property was in good shape it should be selling close to what it was worth before the recession. That's a fact, now there are variances by region. But overall home prices have recovered much if not all of what was lost during the recession.

And of that 69,750 dollars you need to subtract the costs associated with moving multiple relocation, the increased credit costs, insurance costs, and making you and your husband less employable should you have lost your jobs during the recession. You took on a lot of risk to avoid a hypothetical loss on your home. If you had not defaulted as you did, you would have recovered all that you really did lose. By walking away you lost all the appreciation on your home from the bottom on the market that you could have realized had you not walked away. If you had not defaulted, you would have recovered tens of thousands of lost equity.

Walking away at the bottom or near bottom was a risky and stupid move. There really is no other honest way to put it. You lost 4 years of appreciation and incurred all the previously referenced costs and put your family at great financial risk. When you walked away you took a hypothetical loss and made it a real loss.

Yes they were hit hard. But what does that have to do with price of tea in China? Nothing, at it really isn't relevant to this discussion.

Again, if you have a point to make, make it.

Yeah, but none of that is the issue here. As previously pointed out to you, don't need to default on your mortgage in order to refinance at a lower interest rate.

As previously explained to you Wells Fargo was, at most, only covered for 20% of your mortgage by your PMI, 80% of your mortgage wasn't covered by PMI. That's the part you have great difficulty understanding. And not all loans, not all mortgages have PMI.

 

Back in 2000 you didn't have to pay anything down with a good FICO score. You could even roll closing costs into your mortgage.
Realizing 230k on a home you owe $250 on leaves you 20k in the hole.
Nobody was offering a 30 year refi with no money down at 4.5% in 2007.
PMI is a buffer...the bank that financed your mortgage is pretty sure the property/structure is worth 80% of the original mortgage.
Giving that house back to Wells Fargo was the smartest thing ever. We rented for 3 years and then bought when rates and property were at all time lows. I have an extra acre of land, over 1000 more sq. Ft. in the best school district in the county and my interest rate is 4.5!

 

The owner of the property.

 

And how is that relevant exactly?

How does that change anything unless you want to sell the home at that point in time? If you you don't need to sell the home why sell it for less than what you think it's worth? You don't take a loss unless you accept a lower price. As previously pointed out to you homes are not like stocks. People don't dump homes just because they have come down in value. Unlike stocks, people need housing.

That's correct, they weren't offering refinance at 4.5% in 2007 because interest rates were higher then. But how is that even remotely relevant? The PMI is a buffer but it has nothing to do with whither the bank is "pretty sure the property/structure is worth 80% of the loan value. Foreclosure is a very expensive process for banks costing on average about $50,000 per foreclosure. You seem to think foreclosure doesn't cost banks money.

Only if you ignore the previously referenced costs and risks and I have to doubt your 4.5% rate. Where did your down payment come from? Bank credit was pretty tight for a number of years after the crisis, only those with the best credit were getting mortgage loans. So I have to doubt the veracity of your story.

 

A 640 will get you the best rate with 3.5% down. We used our tax return to pay our down payment.
People dumped houses big time in the late 2000's.
Every month you pay a little more than your actual payment to the bank. Tell me why.