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It takes two to tango. The borrowers fudged a little here and there (or a lot here and there), the lenders looked the other way. But who had the money to begin with? The lenders. It was their responsibility to make sure they only lent money to those they felt could repay.
Would you lend me 500 grand knowing i make 30 grand a year?
The simple fact is that the mortgage company does not actually loan you the money. They repackage the loan with lots of others and sell them to investor groups. Those investors set the conditions of the loans they will buy and at what rates they pay the mortgage company. The mtg company my get the servicing rights or they may not. Regardless of who services the loan, the investors only pay for the risk they are willing to take.
The fixed rate being quoted has set income limits, fees, rates, etc that are only negotiable within the parameters agreed upon by the investor buying the package.
The fact that you got a loan before is complete irrelevant to the loan you are looking at today. This is a different loan package and has different requirements, even if they both share a common originating mortgage company. You might not qualify for the new loan today even if you had not lied about your income last time and earn even more today than you did then. Different investors, different rules.
Stated income loans mean that you state your actual income, not what your income would be if you were Bill Gates' heir or married to Julia Roberts. Or what it might be if you win the lottery tomorrow or gold coins rain from the heavens. There is reality and there is dreaming. Since when did it become so difficult to differentiate the two?
There is no such thing as "legal lying." If you don't make enough to buy a certain house, you have no business buying that house. It doesn't matter if you want it. It doesn't matter if you need it. The world will not stop turning tomorrow because you don't have it. And it won't stop turning if the bank takes it back. Why should anybody cut a borrower who admits to lying any slack at all?
And it's perfectly easy for a self-employed person to get a loan. All you have to do is tell them how much you make and provide your tax returns as proof. If you don't qualify, there's a reason-- you can't afford the house. If you can't afford the house, you shouldn't have the house. People have understood these simple principles for centuries. Why are they so difficult to understand now?
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Quote:
Originally Posted by plf86
It takes two to tango. The borrowers fudged a little here and there (or a lot here and there), the lenders looked the other way. But who had the money to begin with? The lenders. It was their responsibility to make sure they only lent money to those they felt could repay.
Would you lend me 500 grand knowing i make 30 grand a year?
It does take two to tango, and I feel that the lenders were absolutely wrong in allowing not stated income loans, but stated income subprime 100% loan to value non-owner occupied mortgages. I also believe that LO's and Realtors that encouraged borrowers to lie about their income and occupancy status should be prosecuted to the full extent of the law. As you said, however, it takes two to tango and if those supposed professionals are prosecuted than I see no reason why the borrowers that indulged them should not also be prosecuted.
Of course I would not lend you $500K knowing you made $30K a year. If, however, I offered a loan program that did not require you to prove your income, would you lie to me and claim you made $150K a year?
I actually bought my home with a stated income loan. Why? Because my wife is a tip earner and I work on commissions. Her tips cannot be documented and my commission income varies greatly from month to month. We did not fudge our income, we averaged out what we actually make in a month and bought a home we could afford. So again I say that I feel little sympathy.
I just dont like to hear people bashed for making a business decision to walk from their mortgages. i dont care if the person bought low, open a HELOC and drained it then walked when the market went sour, if that person was a business that would be called a good business decision.
and I didnt lie when i was given the chance, I gave the LO everything except my first born
The LO should have disclosed what the reset payments would be. There's always 2 sides to the coin and everyone thought "refinance in a few years at a lower rate". Well the other side if the coin is.."reset is at a higher rate. Can I afford that as well".
Those teaser ARM rates were unrealistic and people should have realized that.
The current condition of the real estate market is no one's fault - - as far as the ARMs go. No one could have know - NO ONE - that property values were going to take a dip the way they did (which would also keep a lot of people from refinancing those ARMs when the time came).
No offense but that is where you are so completely WRONG.
Many, many people saw this coming. I for one was mocked, had eyes rolled at me and was told I was crazy when I said that this was a bubble. I then was further mocked when I said that prices have moved away from basic fundamentals that had been in place for 200 years!! A home should be 2.5 to 3 times an income.
The median price of a home should be then be 2.5 to 3 times the median income.
In fact there are literally dozens of WEB SITES that have been around for YEARS that predicted this credit crash.
Please don't say that no one knew.
The problem was to many greedy people refused to see or acknowledge anything unless it was the color green, could be made overnight, had a 30% yoy appreciation and could be refinanced with a simple phone call.
"The current condition of the real estate market is no one's fault"
Oh man, there are a lot of people and organizations that are at fault for the current condition of the market.
1. Alan Greenspan (FED) for lowering rates and keeping them at 1% and then raised them 17 times in a row!!
2. The Federal Government that encouraged home ownership and pushed mortgage lenders Fannie Mae and Freddie Mac to provide funding for toxic mortgages. This allowed home prices to continue to inflate far quicker than the rate of inflation. Funny how now they want to step in and do something, why did they sit back and do NOTHING but encourage this on the way up?
3. Mortgage companies, Mortgage brokers, The NAR, appraisers, builders, realtors, flippers, speculators, homeowners to name a few.
after reading some of the postings here i find that many of the people have not had the same tretment we have had. you see our loan was sold to homecommings after a month insurence was added to our account and a esgrow was opended. we had insurence and always had show proff on 9 different ststements from our insurence co. all this plis nisapllied payments fees ect lead to a complete mess. foreclosed on 3 times and still in court. you see one of the biggest part of the mog. melt down was greed and fraud by many morg. co's. the mers scam the pooling loans and selling them on the open market or should say wal street. and all these mog. co. acting as servers of loans. holding nothing.
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at me and was told I was crazy when I said that this was a bubble. I then was further mocked when I said that prices have moved away from basic fundamentals that had been in place for 200 years!! A home should be 2.5 to 3 times an income.
