[onreact-com]

Sorry, I don't want to explain the financial crisis to you but in short it was something like this: The financial system broke down, banks either went bankrupt or had to be rescued by tax payer money.

As a result of the financial crisis many people lost their homes. Maybe that was too complex for you to understand the connection and you still trust your bank. That's OK for you, it's your choice. Still many people don't trust banks anymore with good reason.

[ptomato]

How idiotic can you be? "As a result of the financial crisis many people lost their homes." People lost their homes because they couldn't pay the mortgage. They couldn't pay the mortgage because they didn't have the money to pay the mortgage. The banks went bankrupt because they gave mortgages to too many people that couldn't pay them.

[anamax]

While it's correct that a mortage note holder (bank, pension fund, etc) going bankrupt doesn't cause the folks on the other end of said note to lose their homes, renters can be forced out when the home owner defaults.

[electromagnetic]

Some people did get caught in the cross-fire, but that's because they bought into variable rate mortgages, which are just stupid.

I don't have a variable rate on a credit card even though I never go into debt, so why would I want it on a $200,000 up-front debt?

[onreact-com]

"How idiotic can you be?"

"When disagreeing, please reply to the argument instead of calling names. E.g. "That is an idiotic thing to say; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3.""

http://ycombinator.com/newsguidelines.html

[tptacek]

Let me try to respond more appropriately:

"Nothing you said about mortgages appears to be true".

[onreact-com]

Please read this for some basic understanding my dear non-"idiotic" friend:

"The root cause for the current crisis seems to be the excessive use of leverage.

To take an example, a company with a net worth of US$ 25 billion borrowed 26 times its net worth and creates leveraged funds of US$ 650 billion to invest or lend them. When a small portion of the company's investments turns bad, as is the norm for the industry, the company's capital is under threat. To put things in perspective a 3.8 percent misjudgment in their books was enough to wipe out their shareholders' capital of $ US 25 billion."

http://economictimes.indiatimes.com/Features/Financial-Times...

[jerf]

Your attempt to look knowledgeable would be much more effective if your conversation had any sort of coherence to it. Does that link address how a bank going out of business forces you to lose your home if you have a mortgage with that bank? (Presumably not, since it's not true.) You may have forgotten the beginning here, but it looks like the rest of us haven't.

[FahnRobier]

You don't lose your home if the bank goes out of business. Mortgage holdings are sold off as assets as part of the bankruptcy settlement. The ownership of the underlying mortgage changes, not the ownership of the home.