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Thread summary:

Home foreclosure gloom, ARMs or people just walking away, buyer responsibility, no blame placed on realtors, lender fault, lender secured by asset, overextending budget

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Old 07-28-2008, 05:56 AM
 
25,346 posts, read 37,499,457 times
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Quote:
Originally Posted by Schousse View Post
n

And Va-Cat said:



What about those people who want to refinance after owning their house for 5 years and find out they are upside down in their mortgage because the house was overvalued when they bought it. I realize that there are some declining markets in this country but Oklahoma is not one of them.

What about those people who have a loan officer who "dials for dollars" ....calls around a bunch of appraisers until he/she finds one who is willing to appraise the property for what the LO needs to make the deal work?

What about the clueless realtor who works part-time, fitting real estate in between childcare and really doesn't understand the first thing about real estate and subsequently not only is incapable of advising their client properly, can actually do damage.

Many pros in the real estate business are just that ..... pros. But don't underestimate the yahoos who are in a fudicial position and should be able to be trusted by their clients but clearly can not.
So true...I have read posts from realtors stating they are not to blame and in most cases maybe not but what about the realtor who tried to convince the buyer that paying $ 5,000 or $ 10,000 more would not be so bad, just $...more a month for getting their dream house.., that one chance of getting it and pushing them over the hill that way...but the $ 50.- or $ 100 a month could be so much more, higher closing costs, high insurance, higher property taxes...maybe not much but add it all up for some one who was already at their limit....where are all the realtors selling properties under the slogan..."it will be worth so much more in a couple of months", I heard it over and over but it seems no realtor has said it according the posts I read....is this the truth or just saving their a...

How many appraissers over valued the houses and were at the houses because they were asked to by a realtor and mortgage broker working all the time together? All involved are to blame IMO, even the professionals who didn't understand it them self....if you are in the business you should understand what the concequences are for the advise you give.

And true all who signed ARM's were gambling if they could afford it or not so they are to be blamed, just like a previous poster said. it is almost like gambling in Vegas, if you lose do others have to pay back...nice try but if you lose you lose big time.
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Old 07-28-2008, 06:30 AM
 
Location: Pennsylvania, USA
5,217 posts, read 4,114,306 times
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Quote:
Originally Posted by Rose Red View Post
For crying out loud. Anyone who signs a ARM note is taking a gamble. Period. Anyone who buys a house hoping the appraised value and rates will be low enough to refinance later is taking a gamble. Period.

Seriously, when you lose money in Vegas do you ask for your money back?

When a person knows that they make $2,500 per month and they are signing a $400,000 note a question mark doesn't go off in their head? Something doesn't seem right there? They have absolutely no one in their life to consult?

Those in the industry who were dirty will get what's due to them. The people who took any loan but a fixed rate that they could actually afford need to accept the fact that they made a bad decision and stop complaining and crying victim.

Not everyone was preyed upon. Nobody was forced to jump on the housing bandwagon. Not everyone deserves to own a home. Nobody is entitled to anything.

Many have to accept the fact that they made a bad decision, bad choice and figure out how to move on.

And I understand what you are saying.. I never expected the value of my home to keep climbing.. I never expected the interest rates to stay low forever and knew they would rise (however, a steep rise was not giong to happen and hasn't happened.. that I knew.. .we weren't going to suddenly see a prime of 5% jump to 10% in two years) and the small climb in prime was accdeptable .. remember.. i was paying 6.95% anyway... above prime. My ONLY expectation was that I would be able to refinance into that fixed rate by that 2 year period. Not really that unreasonable or far fetched.

You were misssing my point of the post completely.. of which there were two. For one.. given the fact that I purchased a home and was affording an interest rate of 6.95% .. not paying interest only or an unreasonabley LOW interest rate... I'm obvious someone that could afforrd to be in a home. those that purchased and could only afford a 1 or 2 or even 3% interest or could only afford the interest and could never have afforded the house when it adjusted to a Normal (and by normal I mean what most others were paying at a fixed rate). But those people in that situation that purchased anyway and then started defaulted put into motion the conditions that created this market mess, thereby creating a scenario that has now caused me to be in foreclosure.

And the second point is that while the banks are crying because they are hurting and these investment groups (turns out my mortage is bundled with some investment group on Wall Street) they are not doing all they can to keep the pain less severe. All the investors had to do with me is keep my rate fixed and keep me paying my mortgage back at the 6.95%..not too unreasonable. I obviously have been affording that for the past ..well 2 /12 years now. There are those, like the woman making $2500/month that there really is no hope for.. But the banks/investor groups are retarded and are shooting nose off to spite their face..t hen expecting the gov't to bail them out.. This whole problem could be lessened if the banks would just work with their mortgager.

Was taking an ARM out a risk? Sure.. but without the scenario factored in that has occured in the market now, the risk was relatively low. Most of the factors I could even figure into the plan were the ones in my hand.. pay every thing on time and raise the score.. all of which I was careful to do even if my home lost a little equity that would be okay.. but what it lost was insane.. and again. I say how can anyone factor in a market condition that was not even in the relm of possibility as far as they knew. for crying out loud the big shots in finance didn't even see this coming so how the hell could I?

As for moving on .. I have. I've done my crying, done my arguing with the bank etc. Im' now short selling and grateful to get out from under it. I"m loosing my shirt and have learned a valuable and expensive lesson. I'm also movign from where I live to greener, more affordable pastures. Once I short sell I'll repair my credit and buy my next home in 2 years (hopefully the house we liked this weekend and will rent will be the one we buy in 2 years) .

but I do plan on writing the "investors" holding my mortgage a nasty letter telling them how retarded they are.. see.. my house value plummted $120K in value from the original appraisal and they woulod take 90'% of that value.. all thistime they could have kept me paying them a 6.95% of my mortgage rather than have me short sell the house for over $120K less than it's original value and $100K less than I owe (without the fees now tacked on it's more). As far as I'm concerned THEY ARE THE STUPID STUPID STUPID ONES.. but in a way I guess i should thank them because I'll no longer be overpaying for a house now worth so much less
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Old 07-28-2008, 06:32 AM
 
Location: Hernando County, FL
8,489 posts, read 17,421,176 times
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Quote:
Originally Posted by bentlebee View Post
So true...I have read posts from realtors stating they are not to blame and in most cases maybe not but what about the realtor who tried to convince the buyer that paying $ 5,000 or $ 10,000 more would not be so bad, just $...more a month for getting their dream house.., that one chance of getting it and pushing them over the hill that way...but the $ 50.- or $ 100 a month could be so much more, higher closing costs, high insurance, higher property taxes...maybe not much but add it all up for some one who was already at their limit....where are all the realtors selling properties under the slogan..."it will be worth so much more in a couple of months", I heard it over and over but it seems no realtor has said it according the posts I read....is this the truth or just saving their a...

How many appraissers over valued the houses and were at the houses because they were asked to by a realtor and mortgage broker working all the time together? All involved are to blame IMO, even the professionals who didn't understand it them self....if you are in the business you should understand what the concequences are for the advise you give.

And true all who signed ARM's were gambling if they could afford it or not so they are to be blamed, just like a previous poster said. it is almost like gambling in Vegas, if you lose do others have to pay back...nice try but if you lose you lose big time.
While you are at it why not blame the seller?

They wanted more money for the house they were selling.

If you are going to try and place blame on everyone even if they don't deserve it might as well go all the way.

As has also been explained to you Realtors do not choose the appraiser 99.9% of the time. The lender chooses the appraiser and many of them have a rotating basis that chooses from a few different appraisal companies so it is just who ever comes up on that particular loan.

You can keep throwing the same old tired argument out there but it does not make it any more true just because you keep saying it.
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Old 07-28-2008, 11:33 AM
 
Location: Cary, NC
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While Realtors do not often choose the appraiser, on more than one occasion I had a Realtor pressure me to pressure an appraiser to make a deal work. Or the Realtor simply asked me to do things WAY beyond their knowlege or experience, like take a client stated or into an ARM to qualify them for $50,000 more than we could. I would explain to the client why this was risky and why I would not recommend it, but there were always plenty of brokers willing to ramp up the loan amount to make it happen and get more big referrals from a Realtor.

Sure the loan officer and the borrower are the "most" guilty parties here.... but don't tell me that the Realtor is absolved of all guilt because he was merely selling a home. Plenty of greedy Realtors were "up-selling" borrowers with promises of 20% appreciation, same as loan officers were selling promises of refinances in 2 years. No one was an innocent party, a Realtor showing a Burger King cashier $500,000 homes should have stepped in and advised them, they have a FIDUCIARY DUTY to their clients after all.... why not step back and be the "ethical" one in the transaction than simply wash your hands of guilt by blaming the loan officer that took the application and the bank that approved it?
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Old 07-28-2008, 11:46 AM
 
48,925 posts, read 39,411,169 times
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Originally Posted by rcarrillo View Post
While Realtors do not often choose the appraiser, on more than one occasion I had a Realtor pressure me to pressure an appraiser to make a deal work. Or the Realtor simply asked me to do things WAY beyond their knowlege or experience, like take a client stated or into an ARM to qualify them for $50,000 more than we could. I would explain to the client why this was risky and why I would not recommend it, but there were always plenty of brokers willing to ramp up the loan amount to make it happen and get more big referrals from a Realtor.

Sure the loan officer and the borrower are the "most" guilty parties here.... but don't tell me that the Realtor is absolved of all guilt because he was merely selling a home. Plenty of greedy Realtors were "up-selling" borrowers with promises of 20% appreciation, same as loan officers were selling promises of refinances in 2 years. No one was an innocent party, a Realtor showing a Burger King cashier $500,000 homes should have stepped in and advised them, they have a FIDUCIARY DUTY to their clients after all.... why not step back and be the "ethical" one in the transaction than simply wash your hands of guilt by blaming the loan officer that took the application and the bank that approved it?
Um, I know people that made <50k getting 300k homes because they had OTHER sources of financial help. The Real Estate agent should help you find the house you are looking for, why should I disclose my income, inheritance etc. to them AND the lender?

My agent didn't know my income etc. when I bought my last house. I just told them my price range, locations etc. and away we went.

There is an egregious lack of personal responsibility in this mortgage mess. People lying on loans, not "understanding" how the loan worked etc. but it's always someone else's fault.
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Old 07-28-2008, 11:47 AM
 
Location: Cary, NC
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Quote:
Originally Posted by TristansMommy View Post

Was taking an ARM out a risk? Sure.. but without the scenario factored in that has occured in the market now, the risk was relatively low. Most of the factors I could even figure into the plan were the ones in my hand.. pay every thing on time and raise the score.. all of which I was careful to do even if my home lost a little equity that would be okay.. but what it lost was insane.. and again. I say how can anyone factor in a market condition that was not even in the relm of possibility as far as they knew. for crying out loud the big shots in finance didn't even see this coming so how the hell could I?

The funny part about risk is... its the UNKNOWN factors that can kill you. Borrowers ASSUMED (we know what happens when you assume) that the market would react with X, and you got Y. You might not have expected the market to increase, but you factored into your scenario that it would remain stable, that your income would be the same or more and that there would be no loss of job, medical emergency or other factor to stand in your way. It was a gamble, maybe a "low risk" one with the calculations you made... but unfortunately you made assumptions about the market that did not pan out.

Many big shots did see this coming, but of course did we expect the NAR or MBA to tell us that the market was overheated? They were trying to sell homes and loans, of course its in their best interests to keep the party going all night.


I HATED loan officers that sold on the "2 year refinance" plan. If only it was that easy... being in the business 6 years, I would never have to prospect again. Every 2 years I would just call old clients and refinance them! The loan officer sold you on a dream and hoped for the best. They knew that in 2 years, best case they would get a repeat customer from you... worst case, they wouldn't. They did not have to deal with the consequences of the rising payment and the pressure to refinance if something happened to home values, your credit, income, employment, assets or any of the other factors that would cause the loan to be denied. It was awful advice from a sales-person, no professional financial advisor makes an investment plan on wishes.


The thing I don't understand in your case is that you say you could not get a fixed loan becuase your credit was too low. Credit has NOTHING to do with if you can get a fixed or ARM loan. There is no program that says you need a credit score above a line to get a fixed loan, otherwise you go adjustable.

People go with an ARM when the DTI on the fixed rate is too high. They can not afford the fixed rate so the lower ARM rate is used to qualify them, and the assumption (another bad one) was that in 2 years your income would have increased (or your debts decreased) to the point that you could make higher payments.

Either the loan officer did not understand what they were doing, explained it wrong, or just wanted to sell you an ARM to make a bigger commission (an ARM at 6.95% would pay them more than a 30 year fixed at 6.95%).

Unfortunately there were (and still are) a lot of under-qualified salespeople in this business that sell based on rate/price and hope. It's easier than learning the business and properly advising clients about risks/rewards. After all, had the loan officer explained the possibility of what is happening to you.... would you have bought?
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Old 07-28-2008, 11:49 AM
 
Location: Pennsylvania, USA
5,217 posts, read 4,114,306 times
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Quote:
Originally Posted by rcarrillo View Post
While Realtors do not often choose the appraiser, on more than one occasion I had a Realtor pressure me to pressure an appraiser to make a deal work. Or the Realtor simply asked me to do things WAY beyond their knowlege or experience, like take a client stated or into an ARM to qualify them for $50,000 more than we could. I would explain to the client why this was risky and why I would not recommend it, but there were always plenty of brokers willing to ramp up the loan amount to make it happen and get more big referrals from a Realtor.

I agree there are unscrupulous realtors out there that did do this.. but they were in the minority NOT the majority

Sure the loan officer and the borrower are the "most" guilty parties here.... but don't tell me that the Realtor is absolved of all guilt because he was merely selling a home. Plenty of greedy Realtors were "up-selling" borrowers with promises of 20% appreciation, same as loan officers were selling promises of refinances in 2 years. No one was an innocent party, a Realtor showing a Burger King cashier $500,000 homes should have stepped in and advised them, they have a FIDUCIARY DUTY to their clients after all.... why not step back and be the "ethical" one in the transaction than simply wash your hands of guilt by blaming the loan officer that took the application and the bank that approved it?

You forget that the fiduciary responsibility you are referring to is to the client.. yes and that client , atleast here on LI , was 99% of the time the seller.. That by no means means that they should squeeze any borrower into any home.. but there also was no need to make a buyer that woullnd't work work because there were always 10 behind them that didn't need to "squeeze" to get there!

It's also NOT the Realtors responsibility to tell the borrower what he or she can or can't afford..that was discussed between the loan officer and the borrowre. Realtors do not ask for income, verification of or credit checks..

Were there unscrupulous agents out there .. Realtors otu there you bet.. but the responsiblity and their legal oblgation was to get as much for the house as possible for their client, the seller, andt hat meant if there were 5 offers on the table they had to get each buyer to their maximum in order to get the best results for the CLIENT and fulfll their fiduciary duty to their clients .. the seller.

If the person had a buyers agent that purchased.. then that agent did have a fiduciary duty to the buyer.
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Old 07-28-2008, 11:55 AM
 
Location: Cary, NC
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Originally Posted by Mathguy View Post
Um, I know people that made <50k getting 300k homes because they had OTHER sources of financial help. The Real Estate agent should help you find the house you are looking for, why should I disclose my income, inheritance etc. to them AND the lender?

My agent didn't know my income etc. when I bought my last house. I just told them my price range, locations etc. and away we went.

There is an egregious lack of personal responsibility in this mortgage mess. People lying on loans, not "understanding" how the loan worked etc. but it's always someone else's fault.

I don't expect a Realtor to get every last detail... but putting blinders on is a bad idea. Sure a Realtor can do so and claim no legal responsiblity for what happens to the buyers, but that takes away any claim they can make to "working in their client's best interests". Sometimes what is best is telling clients what they should not do.

I agree the blame lies #1 with the person that got the loan. Even if the lender manipulated their income, assets or other items after the fact... people should know what they can afford. My credit card does not ask me to prove my income when I show up at Best Buy, but I sure know I can not afford that 52" Plasma TV.

Just because we can buy something does not mean we should. It is up to the buyer to make that determination.... but that said banks, brokers, Realtors and appraisers should remember that they need to be honest and ethical in their dealings.
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Old 07-28-2008, 11:59 AM
 
Location: Pennsylvania, USA
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Originally Posted by rcarrillo View Post
The funny part about risk is... its the UNKNOWN factors that can kill you. Borrowers ASSUMED (we know what happens when you assume) that the market would react with X, and you got Y. You might not have expected the market to increase, but you factored into your scenario that it would remain stable, that your income would be the same or more and that there would be no loss of job, medical emergency or other factor to stand in your way. It was a gamble, maybe a "low risk" one with the calculations you made... but unfortunately you made assumptions about the market that did not pan out.


Actually .. since you think you know it all. I did figure in a few things.. for one.. I figure in loss of job and as a matter of fact I had a baby while living in the house and lost most of my income.. so we were able to survive on my husbands.. so that was factored in.

I even said that I factored in a slight loss.. but you have to remember.. i was making improvements on the house as well.. new roof, new boiler, new everything.. so even if the market adjusted downard slightly I had added 'value" with improvements..or so I thought..

NO ONE>> adn ai mean NO ONE expected THIS LARGE OF A DECREASE!! $120K drop of value on my home!! THAT is insane.. and not something anyone would have calculated..

again.. the financial genuises on wall street didn't see it coming and they are supposed to have all the knowledge..I don't pretend to be a financial genuise!

Many big shots did see this coming, but of course did we expect the NAR or MBA to tell us that the market was overheated? They were trying to sell homes and loans, of course its in their best interests to keep the party going all night.

I heard no such thing .. maybe a few obscure stories about a decrease this big..I also did not know that they were giving loans to McDonald employees for $400K that were making $2500/month.. didn't think the mortgage industry adn wall street could be so stupid!

I HATED loan officers that sold on the "2 year refinance" plan. If only it was that easy... being in the business 6 years, I would never have to prospect again. Every 2 years I would just call old clients and refinance them! The loan officer sold you on a dream and hoped for the best. They knew that in 2 years, best case they would get a repeat customer from you... worst case, they wouldn't. They did not have to deal with the consequences of the rising payment and the pressure to refinance if something happened to home values, your credit, income, employment, assets or any of the other factors that would cause the loan to be denied. It was awful advice from a sales-person, no professional financial advisor makes an investment plan on wishes.


The thing I don't understand in your case is that you say you could not get a fixed loan becuase your credit was too low. Credit has NOTHING to do with if you can get a fixed or ARM loan. There is no program that says you need a credit score above a line to get a fixed loan, otherwise you go adjustable.

Excuse me but that was what I was told. My score was not high enough to qualify for a fixed interest on a stated loan.. yes.. I went stated because I'm self employed although I did show bank statements AND I showed receipts from my rent that I'd paid for the last 2 years prior to purchasing. I was simply told that an ARM was my only option at this point unless my credit score was raised.

People go with an ARM when the DTI on the fixed rate is too high. They can not afford the fixed rate so the lower ARM rate is used to qualify them, and the assumption (another bad one) was that in 2 years your income would have increased (or your debts decreased) to the point that you could make higher payments.

Either the loan officer did not understand what they were doing, explained it wrong, or just wanted to sell you an ARM to make a bigger commission (an ARM at 6.95% would pay them more than a 30 year fixed at 6.95%).

Unfortunately there were (and still are) a lot of under-qualified salespeople in this business that sell based on rate/price and hope. It's easier than learning the business and properly advising clients about risks/rewards. After all, had the loan officer explained the possibility of what is happening to you.... would you have bought?
I've learned some valuable lessons and will not make the same mistaks when I own my second home. I'm moving on..getting out. Fortunatley my hsuband was NOT on title on this home or on the mortgage.. only me. His score is now excellent and we'll build a long with rebuildign mine and in2 years, once we know we like our new locatio , we will purchase again.. but this time a lot smarter and I think I will go directly to a bank to borrow... and this time I know a little more about mortgages than I did the last time.
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Old 07-28-2008, 12:03 PM
 
Location: Cary, NC
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Originally Posted by TristansMommy View Post
You forget that the fiduciary responsibility you are referring to is to the client.. yes and that client , atleast here on LI , was 99% of the time the seller.

If the person had a buyers agent that purchased.. then that agent did have a fiduciary duty to the buyer.

You should check into that.... if an agent acted in a dual agency they have a fiduciary duty to both the buyer and seller as their clients. So many times an agent does have a fiduciary duty to the buyer. At least that is the case in the states I routinely work in.

There are cases where an agent work's purely for the seller and the buyer chooses not to have an agent. Check on the Real Estate forums for specifics and details on yoru state if you want.

I am not saying an agent needs to qualify a client, but many agents went the complete way of pushing on lenders to qualify people for stated income or took my clients to lenders that would "create" tax returns for self-employed clients to qualify for more. Those Realtors are more than happy to claim they did not know about guidelines and income when it suits them.... but sure knew the system when they needed to get a client to qualify for $100,000 more.

Again, I want to say that most Realtors I worked with did a good job for their clients (I am in NC were we didn't have some of the problems of CA/FL though) but anyone that washes their entire profession of guilt is deceiving themselves or trying to sell something. Number 1, borrowers need to take responsibility as you have. But every industry from banks/brokers to appraisers and services got greedy and let ethics and common sense die.
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