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Old 09-23-2008, 08:52 AM
 
630 posts, read 1,677,421 times
Reputation: 287

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Quote:
Originally Posted by MommyV View Post
It's unfortunate that people don't know how to manage money. Perhaps, it might be in the best interest of the banks and mortgage lenders to educate people with low credit scores before lending them money.
Actually its not. Its in the banks best interest to get people to pay as much as possible in interest charges without defaulting on the loan. That way the bank can make the most profit off of the money they lend. They are just like any other company out there that tries to walk the fine line between profit and loss of customers.

When people start learning that banks and credit card companies are not there to be your friend, but to make as much money as they can off of you, we can start to turn around this money crisis and educate the population.


Quote:
The banks have an obligation to protect themselves and their customers.
The banks have no obligation to protect their customers, that's why there's the FDIC. The banks have an obligation to protect themselves and their shareholders.
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Old 09-23-2008, 08:53 AM
 
Location: Charlotte, NC
714 posts, read 2,030,844 times
Reputation: 794
I think that there is plenty of blame to go around in this mix. Predatory lending practices by banks and mortgage companies are certainly to blame. But homeowners who didn't do their homework and just blindly trusted lenders without logically understanding what they were getting themselves into are also just as much to blame.

I did not learn for some time that you simply can't trust people who "make money off you spending money" as flexysteve put it, but I never put my credit at risk due to that ignorance. If I didn't understand something, I didn't do it. I was advised to take a margin loan against stock options. It was too complicated for me, a financial novice, to comfortably grasp, so I didn't do it.

I was also advised, at the ripe old age of 26 with a single income, that I could afford up to a $400,000 house, particularly if I did a creative mortgage. I thought that was BS, I knew what I could afford, and it wasn't that, so I took a 30 year fixed rate mortgage for $150,000 instead.

Both lenders and homeowners created this mess. Lenders found a gullible bunch they could prey upon, and some homeowners blindly let themselves be led to the slaughter. I don't have much sympathy for any of them.
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Old 09-23-2008, 09:00 AM
 
Location: New Jersey
1,181 posts, read 2,750,596 times
Reputation: 460
Quote:
Originally Posted by Hoagie58 View Post
Seriously, good for you. But, you know, when people go to a broker they expect that the broker is looking out for their best interest. It's the brokers job to educate the consumer. It's not the brokers job to put the consumer in to a loan with crappy terms just because it means more to their bottom line- yet all too often that happened. The banks created these products to sell houses. The convinced people they could afford things they couldnt. As far as Im concerned, they gave away the keys! Banks were giving 300k loans on STATED incomes. Now that the chickens are coming home to roost, we're going to bail out the freaking banks and leave the homeowners who tried to do right hung out to dry.

The banks have an obligation to protect themselves and their customers. Many, many banks failed to do this. If they hadn't been so greedy, they wouldnt have sold products that people ultimately couldnt afford. Conversely, there are people who used those same crappy products the way they were designed, and got trapped when the industry imploded.

So, cast your stones, all of you that have never made financial mistakes. But truth be told, there are probably far more people with some "bumps" than there are with none!
Who said we never made financial mistakes? But you learn and move on. They had to accept a 9% rate for a reason. And yes, if they fixed their credit and made responsible financial decisions for the past 2 years, they may have been able to refi for less. Refi is not impossible these days. People are still buying homes and banks are still lending money. But chances are that their habits did not change and that's why they can't refi.

Right now, they could do so many things to earn an extra $2200. How about a second job? Sell something or several things. Have a garage sale.

You can feel sorry for them if it makes you feel better, but people need to take responsibility for the situations that they put themselves into. Once that happens, they can begin to figure out how to dig themselves out.
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Old 09-23-2008, 09:02 AM
 
Location: State of Being
35,885 posts, read 67,154,265 times
Reputation: 22373
I have heard this thing about buyers being so naive . . . didn't understand . . . caught in bad situation . . . thought they could refinance later . . . etc. Sorry. No sympathy.

I had to learn about finance the hard way - ON MY OWN. And the first rule I learned: only borrow what you know you can pay back and NEVER NEVER NEVER get a variable loan. End of story.

People got stated loans and KNEW DAMN WELL they could not afford them or if they lost their jobs, they were up the creek. That is just like people buying expensive cars and paying $800 a month when they make $50,000 a year.

Sorry, Hoagie. Anyone who does not RESEARCH and learn the basics of budgeting has no business even buying a home.

Yes, predators out there . . . for sure. But why would anyone trust his/her future to some "advisor?" Caveat Emptor. You go to a car lot, you know you will get BS. SURELY? Yet, people take out loans for $300,000 and assume someone else is LOOKING OUT FOR THEM? Now that is just plain STUPID. Anyone who works on commission could be only looking out for their own commission.

Sorry. We have a generation of people out there who wanted something for nothing. Way too many Gen X'ers have thought they should buy a first home as nice as - or nicer - than it took their parents a lifetime to acquire!

Anyone who thinks he/she can afford a $300,000 on income of $50-75,000 a year, and take out a variable loan that will escalate to 13 % . . . really. Totally irresponsible.
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Old 09-23-2008, 09:08 AM
 
Location: New Jersey
1,181 posts, read 2,750,596 times
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Quote:
Originally Posted by flexysteve View Post
Actually its not. Its in the banks best interest to get people to pay as much as possible in interest charges without defaulting on the loan. That way the bank can make the most profit off of the money they lend. They are just like any other company out there that tries to walk the fine line between profit and loss of customers.

When people start learning that banks and credit card companies are not there to be your friend, but to make as much money as they can off of you, we can start to turn around this money crisis and educate the population.



.
I disagree. It's in the banks' best interest not to have to deal with foreclosures and shortsales. Don't you remember when there weren't many of those and they were charging over 10% for mortages? Nothing's going to stop them from making money, but it would be in their best interest to educate their consumers on how to manage their money.
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Old 09-23-2008, 09:10 AM
 
Location: Wouldn't you like to know?
9,114 posts, read 15,670,466 times
Reputation: 3695
Quote:
Originally Posted by anifani821 View Post
Sorry. We have a generation of people out there who wanted something for nothing. Way too many Gen X'ers have thought they should buy a first home as nice as - or nicer - than it took their parents a lifetime to acquire!
.
You hit the nail on the head....unfortunately my generation and younger are a materialistic society.......not ALL of us want that, some of us really do try to live below their means, but "keeping up w/the joneses" is really ruining this country.....
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Old 09-23-2008, 09:19 AM
 
Location: New Jersey
1,181 posts, read 2,750,596 times
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Quote:
Originally Posted by anifani821 View Post

Anyone who thinks he/she can afford a $300,000 on income of $50-75,000 a year, and take out a variable loan that will escalate to 13 % . . . really. Totally irresponsible.
Totally agree... It simply looks like the "I want" syndrome took over and when it came time to pay the bills, they thought they could get away with skipping this one.

When I first started my career, I worked in audit & collections for the State of NJ-Taxation Division. I learned how people prioritize what bills they pay and which they ignore. Looking at the lifestyle they were striving to achieve here, it looks pretty obvious that they just put this bill on the bottom of the pile until it was too big and then it became too big to pay off.

Saying that she chose to feed her children rather than pay this bill was just her attempt at seeking sympathy rather than the evident blame. Feeding small children doesn't cost much at all. Feeding adults costs an arm and a leg.
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Old 09-23-2008, 09:20 AM
 
Location: Right where I want to be.
4,507 posts, read 8,025,722 times
Reputation: 3332
Quote:
Originally Posted by Hoagie58 View Post
You know that is easy enough to say, but many banks specifically catered to people with "less than perfect credit". It's easy to pass judgement, but when a buyer is assured they'll be able to refi their mortgage, and they cant, what are they to do? I would be willing to bet a months pay that when these young people bought, the broker told them that with a 2 yr on time payment history they could refi with no problem. I would further bet that their mortgage is probably nearly 100% LTV. That being said, there are NO products available right now that would help them refi without significant upfront cash.

Instead of anger and apathy with these kids, where is the anger and apathy for the banks? Aren't they just as responsible for letting them get the loans in the first place? As a banker, how do you sleep at night, charging someone 13% interest? The banks are at least equally as guilty as the consumers for all of this financial mess we're in now!

For the others who lack sympathy- how do you know they have cable? How do you know they have cell phones? Is the real solution to this for them to lose their house over $2200??? The artcicle states they're still current on their mortgage(s), inspite of a 50% increase. If it were food or HOA dues for me, you can damn sure bet my kids would be fed!
I don't know...that's why I said "I wonder if...."

Either way, if $66 a month is going to break the budget, if the choice is between between food and HOA dues then they had no business buying that house in the first place, putting themselves and their children in such a compromising position was unwise (if not downright stupid!!).

Of course the banks are at fault, but that doesn't release this couple (and others like them) from their blame. You don't sign up for a mortgage hoping you can refi later so you can still afford it, that is common sense...something banks and some home buyers have been lacking, both parties putting greed above common sense.

If they had rented for these 2 years, made sure their budget and credit were in good order they might be in the position to get a great deal on a house right now instead of losing their home over $66 a month.

That's the part I can't get over....$66 a month. Again, I don't think the HOA should be able to foreclose, I think a lawsuit and wage garnishment (including legal fees, etc.) is enough but Either way....$66 a month is nothing. How about a part time job on the weekends or evenings? How about a yard sale or cut back expenses, babysitting a few hours a week. It is ridiculous they let it go this far over $66 a month!!!
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Old 09-23-2008, 09:23 AM
 
Location: Charlotte, NC
2,193 posts, read 4,543,320 times
Reputation: 1072
I think there needs to be a place where people can go to figure out how much they can afford and how to budget their money. A lot of people probably don't know how to do that. Buyers think realtors and lenders should be the one advising them and others think the buyers should be the one to know.
I've been looking at homes recently and frankly I am having a very hard time figuring out how much it will cost. And this is me who took Calculus and Differential Equations and getting As in them thru college. But while math is my strong suit, I don't know all the variables to take into consideration. I've been reading about home buying and I completely forgot about school taxes. Which is an additional expense on top of HOA, homeowner's insurance, city tax, county tax, and state tax. Nobody tells you these things when you are looking to buy a home. No one breaks it down for you.

Those of you who bought a home, did you know beforehand EXACTLY how much your monthly payment will be? Since I personally am math oriented, it really bothers me when I am looking for a home, I have no idea how much it'll exactly cost. Since it all depends on the interest rate you get, how much down payment you put, whether you put 20% down or not, whether you get a 15 year or a 30 year fixed. Then there is thing called points and origination fees as well as closing costs to add on top of that. I wish there was a little bit of an easier method.

Maybe lenders and buyers can come together to figure this out. We can only do it by helping each other rather than just trying to screw each other over which got us into this mess.
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Old 09-23-2008, 09:24 AM
 
Location: State of Being
35,885 posts, read 67,154,265 times
Reputation: 22373
Quote:
Originally Posted by CouponJack View Post
You hit the nail on the head....unfortunately my generation and younger are a materialistic society.......not ALL of us want that, some of us really do try to live below their means, but "keeping up w/the joneses" is really ruining this country.....
Jack, it is all gonna change. And ALL of us - the straight-arrow types like me who have been soooooo careful, as well as the types loaded with debt - are gonna find ourselves washing off aluminum foil, and recycling our clothes, like my Depression Era grandma did.

Uncle Sam is printing money like crazy . . . and inflation is gonna be the status quo (contradictory, but we will have to learn to live with the flux).

I was wringing my hands when my son bought a $270,000 house seven years ago w/ $90,000 down and a fixed 6% loan. Looks like he is gonna be okay, but even w/ a decent salary, I was concerned for him. Compared to what I have seen w/ so many others his age, I feel he was pretty restrained.

I am concerned about the attitude of so many people his age. No one can "have it all" at 36, unless they are making mega big bucks. Many of us find it difficult to "have it all" - EVER, even w/ six figure salaries. Kids to educate, retirement planning, and health issues . . .

Everyone needs to take a deep breath and assess. Nothing is free; it takes hard work and planning to lay a foundation for a solvent life.

The irresponsible amongst us (and yes, I mean lenders as well as consumers) have created a situation that is going to affect ALL of us for years to come.

As far as keeping up w/ the Joneses . . . I believe conspicuous consumerism is gonna be the last thing most of us will want to emulate . . . And that is a GOOD THING.

Last edited by brokensky; 09-23-2008 at 09:45 AM.. Reason: typo
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