Crash of the Housing Market-FORCED recession
Its not the housing crash--that- was probably no more than a mistake-as the banks said. But THAT was pretty much over by march of 2009. Its what was done after that - that held the economy down and prolonged the decline---by design-this was no mistake.
With the gov imposing 3.5% loans on banks. next was the banks whining, weve got to protect ourselves. people will charge up their crdit cards. We have to lower credit limits 'please uncle sam".
Sure-i understand-go ahead-says the gov. problem is-- no limits or restrictions were placed on how much they could lower them. so banks lowered the limits 99.9% of available credit for everyone making $75,000 houshold income or below. and who is that you say?--only everyone that needed the 3.5% low interest loans.(just a coincidence of course [#1]) Those above 75K got hit with 10% to maybe 15% limit reduction--no severe damage there.
Here is the major problem. A missed payment or late payment will not even be reported to trw and such for 30-60 days--you are not late or missed till then and will not affect your credit score till then-perhaps not even till the end of the reporting QUARTER.

Not so however with a lowered credit limit. a lowered credit-limit- gets reported-WITHIN THE HOUR. Credit score gets re-evaluated within 12hrs. Perfect timing as this now blocked 90% of all persons needing 3.5% loans from getting them. (a 610 credit score is still required to get a obama/bush 3.5% loan). With an ave score being between 650-750--i lost 160 points just on one single card limit reduction. Do the math.

What was really cute--my card limit was lowered from 35,000 to 14,000 leaving an avail balance of 20.00. The -day before-an automatic payment was due!!!-which just happened to be credit insurance on the card. added to the card im now OVER my new limit, now a 39.00 charge. a $4.00 business debit to the card that had posted on the same day before the insurance--for 8 years--for some reason did not post to the card untill AFTER the limit was lowered and AFTER the insurance charge-- now im over the limit again -another $39.00 charge. the following day- i get a snail mail letter from the (east coast) less than 10 hrs after these posted????(this was not possible of course unless they knew id be over BEFORE my limit was lowered) stating because im over the limit 2x in one year--we have to increase your interest rate to 27.5%--my min monthly payment went from 210.00 to 615.00 per month--not including the 78.00 over limit fees.

Card number two did exactly the same move except that i only had one automatic payment(lowered 1 day before again)-$39.00-so what they had to do is they went back to the beginning of the year(359 days ago)--ohh you were -one day- late on payment. (NOT so--just not posted for 4 days--and over limit once--thats 2 violations in one year-so we have to increase your interest rate to 29.5%. payments jumped from 155.00 to 540.00.

This was folowed --by home depot canceling my card and trippling the payment.

Pep boys canceled their card--and added $415.00 in interest to the card (because i had a 2year interest free special i was paying on--that i no longer qualified for- (cardholders only)

The wifes sears and penneys--i believe were the only ones that didnt mess with my cards.

All said and done---my total monthly min payments went from $415.00 to $1,634.00/mo. (4x) Caused ONLY by lowering credit limits and no other reason.
my savings now gone-my paychecks of course didnt increase by 1,200.00 a month so we lost our home-retirement and our credit.
(we had been paying down our cards with extra $300/mo in adition to the min payments) Home flood damage/Mold abatement ran up the cards a tad more than i liked. About 7k.

Everyone seems to think you have to had done SOMETHING wrong to end up in this kind of situation. NOT so--im telling you from experience.

OH and using the savings i had- i paid down both major cards(figuring id at least still have that credit for emergencys). Wrong--they both lowered the limits a second time back to 20.00 less than 10 days after i made the payments. Savings now gone too.

In my case with no change other than the limits!! my credit score dropped from 820 (only took 40 years to build this score) to 540 in less than in 22 days. and id never missed a payment or was late on anything. it also disqualified me for the 3.5% gov home loan rate-you need a minimum 610 credit score to qualify. note here: After polling roughly 40 coworkers and neighbors-i found that virtually everyone making less than 80k/yr(household) got hit with a 90% or more drop in avail credit. No one over 85k got more than a 10-15% drop in their limits--9 people. Banks dont want to piss off the people that make enough money and have the resources to go to court and fight the change in credit-plus they probably did not need the loan anyway as their credit scores didnt dip big-and interest payments didnt increase.

obama/bush loan block Example: my case= i had a credit score on april 4th of -820- .Decided id go get a 3.5 loan-save some money on the house payment- about the 15th april. Hey no problem with an 820 score. The 25th april-the day before i was to sign the paperwork and pickup my check. I get a call--you no longer qualify for the loan--your credit score has dropped to 540. My one card limit lowered lost me 160 points. the 2nd one 6 days later cost 90 points-the other 2 smaller cards 30 more-now im below 610--I dont qualify

This score dropped 280 points in 22 days. With NO change in my credit history at all. I had to use the computer to compare the 4th to the 26th credit report to see the difference.

The difference!!= the score itself and the new credit limits on cards--otherwise no change-not one other thing. according to the big 3 trw,trans,equifax i had blown $35,000 avail credit in 22 days and my debt to income ratio was now 100%.

See the benefit to the bank here--NOW they can advertize, HEY come get your 3.5 loan here-knowing full well that 90% of those that need it cant qualify--but its not our fault no one is taking advantage of obama loans.

So now the bank can default the homes that have already been paid for. Those that have paid 10,15, 20 or more years and long since paid back the original loan amount IN INTEREST--then sit on it a couple years (makes the banks look like they are suffereing--Buuut uncle sam-we cant sell them) till housing prices rise again then make yet another loan on the same house for more money than it was worth on the original loan to begin with. Slick Huh. Mine was one- paid on it for near 20 years

The unfortunate part of that is the computers that calculate your credit score--at trw, equifax and such-- isnt smart enough to understand that your limit was lowered for no reason other than "bank is greedy". all the computers know is you -had- $35.000 in avail credit on march 31 and 2 weeks later you have "$40.00". wow-you just blew all 35.000 in 2 weeks.

never mind a single phone call from the prez-or congress-could have stopped that as well. yo-hey-TRW,transunion,equifax dont lower everyones credit score because of BANK lowered limits--has no relationship to peoples credit history. ADJUST CALCULATIONS ACCORDINGLY!!!

Pretty slick--you get to make money -twice- on the same house, collect billions in extra fees, pay off your gov debt fast (gets the watcful eye of the gov off of you) collect 10's of billions in increased interest rates on cards. and you dont have to give out 3.5 loans---but still look good advertising that he loans are avail. (seee--we are trying to help-come and getum)

NOTE: millions did apply for the loans-myself included-the gov thought no one was trying to take advantage of the low interest loan---The reality is--those that apply- the very first thing thats done is a credit check (sorry you dont qualify). so no paperwork was ever recorded on how many really applied for them. (oh well--no one wanted them i guess) looks like no one even tryed.

Didnt work out quite as good as they hoped--they were able to keep the 5.5-7.0% loans going for several months tho before being forced to lower rates.

Still made billions tho. What a hoax and what a shaft job--worked tho--and cost us trillions in increased national debt. I'm guessing--at least a third of the 16 trillion at this writing. dragging the recession on from the end of 2009 when it would have been pretty much over by 2011.