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Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
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Quote:
Originally Posted by lchoro
A lot of buyers just lied. They wanted in on the game because it looked like it was no work and all profit. The housing bubble was like any other investment bubble.
"Analysis of census data for Sacramento shows that the region's homebuyers earned a median income of $84,000 last year, but the area's mortgage applications listed a median income of $102,000."
Again lots of lenders tell people to put smoke and mirror income on the applications. For example, here in Georgia, loan officers told applicants who had one time insurance payments to list them as "income" although they knew full well that those people would not have that "income" at all because it was a one time settlement. They would do the same thing with lottery and gambling winnings. So let's say you earn $45,000 a year but this year a relative died and left you $20,000. You decide to take that $20,000 and buy your first home. The loan officer looks at your tax return and sees that $20,000 and he tells you "put your income at $65,000" because that is what you made this year. He knows that this will qualify you for a bigger loan and thus more commission for him. But he also knows that next year you will make only $45,000 and you might not be able to pay that $300,000 loan back. But he does not care about that. He cares about the nice commision he will make today!
NO NO NO! I do not want to support this house of cards. Let it self-destruct so our monetary system can stop double-digit inflation. I hope that more people agree with this and not support any bailout. The money for a "bailout" would go right into the pockets of greedy investors.
gregandvicky, martinez4 and tallrick, I agree with you!
Here's how it's always worked, and borrowers today are not immune, excluded or exempt:
If you made a mistake, you own it. If you bought more house than you could afford, lied (or cleverly omitted) to get it or thought you could get in and get out before the market crashed, those would be mistakes. Your mistakes.
If you couldn't understand it, it was your responsibility to find someone who could both understand and explain it to you. It's not the lender's responsibility to make you understand binding legal documents that you sign. If you don't understand it, don't sign it. If you sign it, you own it.
If your attorney or financial advisor screwed you over, your issue is with them, not the lender, not the government, not the taxpayers, not other homeowners.
If your lender was fraudulent, you have an actionable case, so see an attorney and obtain legal relief. Seek damages, if you were wronged. But seek them from those who wronged you.
Don't look to all the innocent bystanders and those who made sensible, prudent choices and did not buy properties they couldn't afford to bail you out. They hold no responsibility for the mess you're in. You got yourself into it; get yourself out of it. You weren't planning on sharing all those paper profits with anyone, were you? So why should anyone share your losses? You can't have it both ways-- keep it all when you're winning and spread the pain when you're losing. At least, you shouldn't be able to.
Actions should have consequences. Markets will self-correct, if we let them. Weak hands will be shaken out, strong hands will hold on and the market will find its footing. I vote: no bailout!
If they've been flat-out lied to and the terms of the contract weren't honored, it's not really their fault is it? Sure, most people defaulting on sub-prime mortgages are people whose eyes were bigger than their wallets or people who were just plain irresponsible...but not all of them were. Some people are genuine victims of con artist lenders.
People trust financial advisers. I'm an intelligent, college-educated person who makes good money but some legal contracts baffle me. They can even baffle experienced lawyers; never underestimate a swindler.
1) First, rarely were they "flat out lied to".. They were usually told that, yeah, the interest rate is adjustible.. but you can refinance it before the interest rates go up.. Its not a brokers responsibility to make sure that the borrower can refinance, its the consumers.. (for what its worth.. interest rates still havent gone up)
2) Some people being taken advantage of, does not mean that you bail them all out. Banks have to abide by the contract signed, and if they are.. then the consumer isnt really being taken advantage of.
3) Mortgage brokers are no where near financial advisors.. they are hired, by the consumer, to obtain a mortgage, in exchange for a fee, that the consumer negotaties for..
Again lots of lenders tell people to put smoke and mirror income on the applications. For example, here in Georgia, loan officers told applicants who had one time insurance payments to list them as "income" although they knew full well that those people would not have that "income" at all because it was a one time settlement. They would do the same thing with lottery and gambling winnings. So let's say you earn $45,000 a year but this year a relative died and left you $20,000. You decide to take that $20,000 and buy your first home. The loan officer looks at your tax return and sees that $20,000 and he tells you "put your income at $65,000" because that is what you made this year. He knows that this will qualify you for a bigger loan and thus more commission for him. But he also knows that next year you will make only $45,000 and you might not be able to pay that $300,000 loan back. But he does not care about that. He cares about the nice commision he will make today!
The lenders do not tell the consumer to lie, the brokers did, so they can obtain a commission from the loan. If the consumer ultimately lied to get the loan.. then the consumer is the one at fault..
As you stated, its all about that nice commission, but tax payers should not be liable, because someone yesterday wanted their commission, and the consumer lied..
The news today reported the Treasury Department is putting the final touches on a agreement with the Banking industry to keep sub prime mortgages at their low teaser rates and have the tax payers pay the difference. If you do not want to be taxed to bail out people who were irresponsible, and greedy bankers, it is time to write your Congressman, Senator, and the White House and raise hell.
The deal makes it CLEAR that taxpayers WILL NOT pay the difference. What article did you read
When the goverment says taxpayers will not pay the difference hold onto your wallet. The goverment and specificaly the political party in power have a huge interest in doing what ever they can to postpone an enevitable recession untill after the elections. The truth is the banks stand to loose huge sums of money either way, if they forclose or if they accept a deal that pays such low interest that the loans are basicly non performing. The only way the banks would be interested in the deal is if there were some type of quid pro quo. It may take the form of a bail out down the road (ie the savings and loan bail outs) or a deal in which they are guarenteed the goverment will drop the interest rates to the point where they can borrow at low enough rates to at least break even on loans with frozen interest. Of course if they do lower interest to that extent, the devaluation of the dollar will act the same as a huge tax on the public. Which ever way they do it, the money can only come from one source. Banks and goverment get their money from the same source, the public.
don't forget to include the builders of many of these homes. Most of the homes in the foreclosure debacle originated with the building of a home. They, except for a chosen few, such as in the Pocono Mountains - skate off without blame. There was a foreclosure study done in Monroe Country in response to the fallout, and it clearly shows that these loans originated in certain developments that are built up by certain builders whose in house or partnered lenders inflated income, did not disclose loan aspects, and talked home buyers out of legal representation. Most homeowners were low to middle income buyers, enticed to build in the Pocono's instead of their home states (usuallly New York and New Jersey). These homeowners lost their homes to foreclosure within a 2-3 year period, the loss to the builders of their home - not even a night's sleep.
Three things are to blame for foreclosures:
Lender Greed
Builder Greed
Home Buyer Complacency
A lot of buyers just lied. They wanted in on the game because it looked like it was no work and all profit. The housing bubble was like any other investment bubble.
"Analysis of census data for Sacramento shows that the region's homebuyers earned a median income of $84,000 last year, but the area's mortgage applications listed a median income of $102,000."
1) First, rarely were they "flat out lied to".. They were usually told that, yeah, the interest rate is adjustible.. but you can refinance it before the interest rates go up.. Its not a brokers responsibility to make sure that the borrower can refinance, its the consumers.. (for what its worth.. interest rates still havent gone up)
I agree that for the most part, buyers weren't lied to...but they were sometimes. Also, they were telling people who qualified for sub-prime mortgages who were about to be mortgaged up to the eyeballs that they could "re-fi" to a more competitive product later when they knew damn well how difficult that would be. To me that is at least unethical.
Quote:
2) Some people being taken advantage of, does not mean that you bail them all out. Banks have to abide by the contract signed, and if they are.. then the consumer isnt really being taken advantage of.
I agree, not all of them should be bailed out; however it's easier and almost always cheaper to implement a blanket solution than it is to pick and choose who is worthy of a bailout, which is usually why the government or financial institutions do it this way.
Quote:
3) Mortgage brokers are no where near financial advisors.. they are hired, by the consumer, to obtain a mortgage, in exchange for a fee, that the consumer negotaties for..
Yes, I agree; but people who use sub-prime mortgages are usually not very knowledgeable about finance and might not understand the difference. Again, it SHOULD be their responsibility to educate themselves about it but that's easier said than done, and brokers and FAs alike do take advantage of that ignorance. That's all I'm saying. I haven't voiced support for a taxpayer-funded bailout...I'm just putting that out there.
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No Bailout!
