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Old 08-13-2008, 12:29 AM
 
Location: Houston, Texas
10,425 posts, read 43,523,011 times
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Quote:
Originally Posted by phantoms View Post
Desertsun, people buying more than they could afford or walking away even though they could afford to keep paying are the problem. They are the ones who signed the papers agreeing to the terms of their home purchase.

But now, hard working people who have struggled to do the right thing are losing their jobs and homes because of these people and the mess they got our economy in.

I have no sympathy for those that bought more than they could afford, used loan terms that would put them in this situation or choose to walk away instead of owning up to their contracts. The people loosing their jobs now because of this are the people I have sympathy for.
Not everyone bought more then they could afford. You seem to be laying all the blame on buyers. The economy is not the buyers fault.

I wonder who Olecapt was talking about when he mentioned the mortgage guy who just lost his home. Im trying to hold back the laughter. I see revenge in that sad story. Good ridance to the old sod huh. The Angels work in mysterious ways.............
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Old 08-13-2008, 02:28 AM
 
10,608 posts, read 13,382,632 times
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Quote:
Originally Posted by olecapt View Post
Garbage, unmitigated garbage. The number of civilian who have the skill and knowledge to know whether or not they were in over their head is very small. To master the arcane art of the mortgage on your own would take hundreds if not thousands of hours.

And note that all those professionals were wrong. None projected the bottom dropping out of the market driven almost exclusively by predatory pricing policies of lenders trying to dump non-producing assets. And that pricing policy has driven a significant pricing drop into a disaster.

Our leading local junk mortgage expert...the one who teaches the classes on mortgages to the RE community... just lost his own home in a foreclosure.

While the anarchists and libertarian cry for "self responsibiltiy" they do not even understand what happened. They cry that they should have known...but no one knew. If you were very unlucky you bought a home in Las Vegas during the market peak. You lost your equity and may well have no rational choice but to walk away. To behave irrationally because it makes Ron Paul happy is...in fact....irrational and probably indicates a problem in dealing with reality.

And thouse of you who urge others to committ financial suicide to meet some absurd goal from a Heinlen book should also have your brains checked by one skilled in that art.
Sorry, I strongly disagree. I'm no financial genius and had a mortage in 1987. It didn't take any convoluted understanding just an amortization schedule.

And it wasn't that the lenders tried to dump non producing assets. It was lenders CREATING bogus financial products one after the other simply to get the short term payday. Even friends of mine in the late 90s used to laugh that they got bonuses when selling the customer a HELOC along with each mortgage. That was the early beginning of making your income off of unsophisticated borrowers.

You only had to watch Suze Orman on TV who for MANY MANY years told the public what was right and what was wrong but they didn't want to hear it. Like high school kids dismissing the parent's wisdom.

Can you really tell me that you can't figure out that deferred payment mortgages is a difficult concept? Don't feel like making a payment this month? Tack your payment and frequently even the INTEREST onto the back end of your loan and pay yet MORE interest on it and owe MORE as time goes on. DUH.

It was obvious to a whole bunch of citizens, me included that this was a bubble and people were behaving badly. Even my office was divided between the logical people (my side) and the other bunch who:

due to their inherent feelings of "entitlement" bought into the Bush administrations propaganda that "everyone deserves homeownership"

gobbled up all their equity as often as possible for vacations and toys even though WE told them not to, that it was only a fake bubble (ala early 90's)

took predatory mortgages full well knowing they probably "could" never make the future payments when they adjusted = working in a union shop you know very well that you're only getting a 2 percent raise a year.

didn't bother to look to refi the ARMS

couldn't refi the ARMS due to crappy FICO, the same crappy FICO that put them in the predatory group to begin with

claimed WE were crazy when we told them that NO MONEY DOWN is trouble and that 20 percent down is the NORM (for US, it WAS)

claimed WE were crazy when we told them you don't buy houses to keep MOVING, they only truly appreciate when you STAY IN THEM

Shall I continue???

If you can't understand your ARM dont sign the papers. If you lie to yourself that you're going to make a certain amount of money in year 200X and depend on that income to jump then you're living your life EXACTLY like in the casinos of Las Vegas.

There WERE a zillion ridiculous forms of mortgages during this mess but you're also overlooking a MAJOR FACTOR and that is Liar Loans.

The people who TOOK the mortgage knew it, and the fiancial institutions knew it and even the state (Florida in this case) knew it and all chose to play along. NOW the state of Florida is whining they're going to sue Countrywide. What a joke.

Yes the Bush Administration was wrong for the cockamamie position that everyone "deserves" a home and the financial people were scum...so what?
Victim mentality is what separates one group of people from the other. Blame everybody else for their lack of maturity, financial or otherwise.

I've heard that this group of mortgage "deadbeats" are only a small percentage of all mortgage payers and I tend to believe it. That doesnt mitigate the apparent large number of foreclosures on the market, no, but the NORMAL citizen is still chugging along paying a fixed rate loan without a suicidal HELOC according to the numbers cited. Something like 90 percent or more...........
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Old 08-13-2008, 10:00 AM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 32,491,985 times
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Quote:
Originally Posted by runswithscissors View Post
Sorry, I strongly disagree. I'm no financial genius and had a mortage in 1987. It didn't take any convoluted understanding just an amortization schedule.
Still untrue. The amortization schedules did not reflect reality and there was every reason to believe they were inapplicable in the out years.


Quote:
And it wasn't that the lenders tried to dump non producing assets. It was lenders CREATING bogus financial products one after the other simply to get the short term payday. Even friends of mine in the late 90s used to laugh that they got bonuses when selling the customer a HELOC along with each mortgage. That was the early beginning of making your income off of unsophisticated borrowers.
In Las Vegas scuzy products are a small part of the problem. The initial run up here was done with 25% down conventional mortgages. Many here used and had always used "liar loans" as much of the local income is tips.

Note that the use of such products in the years prior to 2004 was quite successful. So if you did the same thing in 2006 you did in 2002 it turned into a disaster.

Quote:
You only had to watch Suze Orman on TV who for MANY MANY years told the public what was right and what was wrong but they didn't want to hear it. Like high school kids dismissing the parent's wisdom.

I doubt 10% of the population can identify Suze Ormond or Dave Ramsay.
Both required significant attention to learn anything.

Quote:
Can you really tell me that you can't figure out that deferred payment mortgages is a difficult concept? Don't feel like making a payment this month? Tack your payment and frequently even the INTEREST onto the back end of your loan and pay yet MORE interest on it and owe MORE as time goes on. DUH.
You are simply setting up a strawman and then setting it on fire. The use of variable interest was very small in Las Vegas. Much more common in CA.

The Las Vegas situation is simply that everyone who bought a new house with any kind of mortgage between late 2004 and early 2007 is underwater by up to 50%. Almost all that bought a resale are under water though moderated by the fact that some brought considerable equity to the transaction

Those most in trouble were first time buyers who bought into an ARM with the plan to refinance in a few years. Again the same strategy in 2002 worked very well.

Quote:
It was obvious to a whole bunch of citizens, me included that this was a bubble and people were behaving badly. Even my office was divided between the logical people (my side) and the other bunch who:

due to their inherent feelings of "entitlement" bought into the Bush administrations propaganda that "everyone deserves homeownership"

gobbled up all their equity as often as possible for vacations and toys even though WE told them not to, that it was only a fake bubble (ala early 90's)

took predatory mortgages full well knowing they probably "could" never make the future payments when they adjusted = working in a union shop you know very well that you're only getting a 2 percent raise a year.

didn't bother to look to refi the ARMS

couldn't refi the ARMS due to crappy FICO, the same crappy FICO that put them in the predatory group to begin with

claimed WE were crazy when we told them that NO MONEY DOWN is trouble and that 20 percent down is the NORM (for US, it WAS)

claimed WE were crazy when we told them you don't buy houses to keep MOVING, they only truly appreciate when you STAY IN THEM

Shall I continue???
Again you erect straw men and then set them on fire. The same tactic in 2002 worked fine. Mostly it had worked for the past 15 years.

The doomers have been around since time immemorial. I had one as a client in 2002 who got to the deal stage on a home and then turned it down to wait for the bust when he would buy it for half. He is still waiting and will be likely forever.

Well I am not sure we ever had a "housing bust". What we had was a lending bust. That lending bust and the resulting lender self off sank the entire market.


Quote:
If you can't understand your ARM dont sign the papers. If you lie to yourself that you're going to make a certain amount of money in year 200X and depend on that income to jump then you're living your life EXACTLY like in the casinos of Las Vegas.
The use of ARMs was certainly a problem. If however you looked at the prior ten years it looked fine.

Quote:
There WERE a zillion ridiculous forms of mortgages during this mess but you're also overlooking a MAJOR FACTOR and that is Liar Loans.

The people who TOOK the mortgage knew it, and the fiancial institutions knew it and even the state (Florida in this case) knew it and all chose to play along. NOW the state of Florida is whining they're going to sue Countrywide. What a joke.

Yes the Bush Administration was wrong for the cockamamie position that everyone "deserves" a home and the financial people were scum...so what?
Victim mentality is what separates one group of people from the other. Blame everybody else for their lack of maturity, financial or otherwise.

I've heard that this group of mortgage "deadbeats" are only a small percentage of all mortgage payers and I tend to believe it. That doesnt mitigate the apparent large number of foreclosures on the market, no, but the NORMAL citizen is still chugging along paying a fixed rate loan without a suicidal HELOC according to the numbers cited. Something like 90 percent or more...........
And you are overlooking the fact that stated income loans were very common in Las Vegas do to the number of tipped employees. And most of them were in fact "straight", I certainly would agree the product was mis-used in the 2004 to 2006 frame.

Note however that virtually everyone in Las Vegas who purchased in the peak period is sufficiently far underwater that they likely should walk. That certainly includes anyone whose down payment was not far, far above 20%.
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Old 08-13-2008, 11:54 AM
 
10,608 posts, read 13,382,632 times
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"Still untrue. The amortization schedules did not reflect reality and there was every reason to believe they were inapplicable in the out years."

What are you talking about ?

I don't even know what the term "the out years" means but an amortization schedule reflects the reality of MATH. It doesnt change if you stick to it. LOL ...out years meaning when you are finishing principle ? OK fine.....how does math change?

I'm not going to debate ongoing but I just want to point out that I am referring to a traditional 15 or 30 year fixed mortgage amortization schedule. Which I think I made pretty clear, since I had a fixed loan.

This other crap didn't exist back then and the early beginning of ARMS in that early period was not something the general person took all over the country. Remember "balloon" mortgages? Same thing.

Were you a homeowner then? Maybe that's what is confusing you about my post. You would know that everybody and their mother was glued to their amortization schedules AND PRE PAYING PRINCIPLE so they could pay off the loan EARLY and avoid the interest payment.

A whole different mentality than the social engineers of today, wanting US to distribute our meager "wealth" to everybody else. I can see where people from different regions like Las Vegas are so absorbed into the concept of being cheated. But that's because they took the highest RISKS.

Peace...out
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Old 08-13-2008, 12:22 PM
 
Location: Cary, NC
1,036 posts, read 3,627,833 times
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Quote:
Originally Posted by olecapt View Post
Garbage, unmitigated garbage. The number of civilian who have the skill and knowledge to know whether or not they were in over their head is very small. To master the arcane art of the mortgage on your own would take hundreds if not thousands of hours.
Not according to most states, that only require an 8-14 hour course to become a loan officer. Some states have no requirements, and bank loan officers are exempt from this. Thats not really arguing against the point, I think most loan officers need 100 more hours of education.

That said, no one needs to "master the arcane art" that involves basic math and a little finance. All you need is some common sense and basic reasoning. Can you afford to pay $2000/month for a home? If the payment might go up to $3000/month after 2 years, what will you do?

People (and banks) relied on the logic of "prices always go up" and "you can always refinance in 2 years" to justify the process. Wishful thinking is not a financial strategy... and anyone that believed it (consumers, lenders and the US Government) is now paying the price.


Quote:
Originally Posted by olecapt View Post
And note that all those professionals were wrong. None projected the bottom dropping out of the market driven almost exclusively by predatory pricing policies of lenders trying to dump non-producing assets. And that pricing policy has driven a significant pricing drop into a disaster.

Our leading local junk mortgage expert...the one who teaches the classes on mortgages to the RE community... just lost his own home in a foreclosure.

There were plenty of professionals that saw the risks. The problem is there are plenty of "professionals" out as well. It is hard for consumers to know the difference sometimes, but most consumers didn't bother to even ask.

In the last 6 years how many clients have asked about my lending license, customer referrences, degrees, experience, education, training or anything of the sort.... 10% tops for all of those combined. How many asked "what rate fo you have" or "how much more can you qualify me for", about 75%. Consumers were happy to bury their head in the sand as long as prices went up. They wanted to buy the most home possible, take out HELOCs to buy Plasma TVs or new cars and stick to ARMs and other risky products and ignore the risk for the potential to have more for less.

Should we not fault consumers that run up $50,000 in credit card bills and then can not pay them because they weren't "masters of the arcane art" of the credit card?

Plenty of blame to go around and lenders share a huge hand in this. But lenders wouldn't have any business if consumers were not buying.


Quote:
Originally Posted by olecapt View Post
Still untrue. The amortization schedules did not reflect reality and there was every reason to believe they were inapplicable in the out years.
Ummm... how does an amortization schedule not reflect reality??? Its math... as long as the right input is used the numbers will reflect reality. You pay X amount this month, your loan balance goes to Y.

2+2 = 4, thats reality... so is an amortization schedule. Not sure what you mean by the rest.

Appreciation or depreciation of the home has nothing to do with the schedule and whether your home goes up 5% or down 20% in price will not change your amortization table.


Quote:
Originally Posted by olecapt View Post
I doubt 10% of the population can identify Suze Ormond or Dave Ramsay.
Both required significant attention to learn anything.
True, but budgeting your paycheck, planning for retirement and a lot of other things aren't exaclty exciting and require work as well. So because learning about mortgages is hard or boring people can't be blamed for staying ignorant?

Lets just kill all of science, math and history... they require "significant attention to learn anything".


Quote:
Originally Posted by olecapt View Post
Well I am not sure we ever had a "housing bust". What we had was a lending bust. That lending bust and the resulting lender self off sank the entire market.

The use of ARMs was certainly a problem. If however you looked at the prior ten years it looked fine.

Past performance is never a guarantee of future results. I can look at a lot of things that worked well 10 years ago, but I wouldn't plan my future on it. The future is always changing, which is why you need to look at the risks involved.

The "lending bust" you refer to is from buyers taking on more debt than they could to buy homes. Whether it was stated income, adjustable rates, negative amortization or interest only.... the foreclosures were caused because there was a disconnect between what buyers bought and what they could afford.
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Old 08-13-2008, 12:28 PM
 
11,568 posts, read 17,501,153 times
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Quote:
Originally Posted by runswithscissors View Post
[What are you talking about ?

I don't even know what the term "the out years" means but an amortization schedule reflects the reality of MATH. It doesnt change if you stick to it. LOL ...out years meaning when you are finishing principle ? OK fine.....how does math change? ...
As i've said before, this is turning from the "mortgage" forum to the "default/bad credit" forum (or, if you will, the 'deadbeat' forum). The people that are responding are in many cases in the midst of walking away, short selling, or some kind of settlement. They come here for information on how to get out of their liabilities at the least cost and credit penalty to them. So you won't get an objective response in this forum.

A very small percentage of credit problems come from sickness, death in the family, etc. For those people there are already government programs but it's certainly not enough. As stated, that's a small percentage of the root of the problem.

However, for the rest, well now we have government bail out's to a certain degree and bad credit scores that are forgiven in 5 to 7 years. For these people you will get nowhere. They will continue with the blame game. They will have bad credit, buy another house in 7 years, and guess what - 90% will have credit problems again, and find another target to blame. It's proved that way time and again. This is their lifestyle.

They want the government to hold there hand? OK, well, we had the "thruth in lending act" where like you said the banks give an amortization schedule that a 10 year old should understand. That still didn't work. I don't think it will ever work until the government builds uniform cement one-room cylinder blocks for every U.S. citizen to live in for free and deducts a uniform amount from every paycheck. Sometimes I think we are heading in that direction.

Banks and real estate agents - yeah they are sleazeballs. Tommorrow some will be selling used cars. But there was enough greed to go around.
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Old 08-13-2008, 12:41 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,112,847 times
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Quote:
Originally Posted by Dd714 View Post
As i've said before, this is turning from the "mortgage" forum to the "default/bad credit" forum (or, if you will, the 'deadbeat' forum). The people that are responding are in many cases in the midst of walking away, short selling, or some kind of settlement. They come here for information on how to get out of their liabilities at the least cost and credit penalty to them. So you won't get an objective response in this forum.

A very small percentage of credit problems come from sickness, death in the family, etc. For those people there are already government programs but it's certainly not enough. As stated, that's a small percentage of the root of the problem.

However, for the rest, well now we have government bail out's to a certain degree and bad credit scores that are forgiven in 5 to 7 years. For these people you will get nowhere. They will continue with the blame game. They will have bad credit, buy another house in 7 years, and guess what - 90% will have credit problems again, and find another target to blame. It's proved that way time and again. This is their lifestyle.

They want the government to hold there hand? OK, well, we had the "thruth in lending act" where like you said the banks give an amortization schedule that a 10 year old should understand. That still didn't work. I don't think it will ever work until the government builds uniform cement one-room cylinder blocks for every U.S. citizen to live in for free and deducts a uniform amount from every paycheck. Sometimes I think we are heading in that direction.

Banks and real estate agents - yeah they are sleazeballs. Tommorrow some will be selling used cars. But there was enough greed to go around.

My major problem with your post is that you fail to realize that its NOT the homeowners in this situation that have gone to the governemnet with their hands out..

It's the BANKS.. the bailout is NOT for the homeowner..but the banks.. who get the gov't hand out AND take your house while they ar at it..
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Old 08-13-2008, 02:38 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 32,491,985 times
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Well -

While I agree that the education of loan officers is even more horribly deficient that that of RE Agents it in no way corrects the amount of time it requires to have reasonable mastery of the field. And note that it is much more into the practicals than the theory. How would a civilian know that such a thing as a "liar loan" exists? Or whether or not an interest only is a wise thing. My SIL took an interest only in Portland on buying their new home...did not need to but ran over two years at 3.5% before converting to a conventional. For him it was a very sweet deal.

Amortization schedules that tell you what the terms on a refi after three years will be? Ain't ever seen one of those. Or a schedule that correctly projects the direction in which a Adjustable will go? Ain't seen that one either.

The crucial projections of what would occur were made by the professionals and, after being mostly right for ten years, they were way wrong.

If you were coaching people off adjustables and interest only you were one of the rare guys and probably of no import as you got no business.

Past the grain of salt on the guy buying the big screen and cars with the HELOC. Sure he is there in the mix. But in Las Vegas anyone who bought in the bubble period is way under water and the majority if not the vast majority will end up having to take a distressed end. I hope some will catch the new program but I don't think it will be a very large group.

I do not see the banks getting much of a bailout. Effectively they have to write down to 90% or less of a current appraisal. I am skeptical they will do a lot of that in Las Vegas. Anybody actually come across one of these resets yet? I don't know of one so far.
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Old 08-13-2008, 03:31 PM
 
10,608 posts, read 13,382,632 times
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Quote:
Originally Posted by rcarrillo View Post
Not according to most states, that only require an 8-14 hour course to become a loan officer. Some states have no requirements, and bank loan officers are exempt from this. Thats not really arguing against the point, I think most loan officers need 100 more hours of education.
In Florida, if you were a felon, you couldn't VOTE but you could be a mortgage broker. It's been in the news for weeks after the media uncovered it.

Shame on Florida. All those years not even bothering to see who was behind (criminals) and what was behind (liar loans) the hijacking of the real estate market in the state. It took a grand jury in 2008?

If your personal family finances are a mess don't YOU take a peek at who's doing what?

Borrowers Betrayed: Thousands with criminal records work unlicensed as loan originators - The Miami Herald (http://www.miamiherald.com/multimedia/news/mortgage/originators.html - broken link)

Florida mortgage regulator resigns under fire (broken link)

And now Florida citizens are angry at "outsiders" ...people daring to migrate here to invest our money even though the state is a mess.... Go figure.
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Old 08-13-2008, 06:00 PM
 
Location: Cary, NC
1,036 posts, read 3,627,833 times
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Quote:
Originally Posted by olecapt View Post
Amortization schedules that tell you what the terms on a refi after three years will be? Ain't ever seen one of those. Or a schedule that correctly projects the direction in which a Adjustable will go? Ain't seen that one either.
No they dont... but thats not what you said. You said amortization schedules didn't reflect reality. They do indeed, just like 1+1=2 and always will.

Amortization tables will not tell you if 5 more are going to be taken out later, but that is not what they are for. They are 100% accurate and reflect exactly what happens to your loan every time you make a payment... and it won't change 1 penny whether the value of the home goes up or down.


Quote:
Originally Posted by olecapt View Post
If you were coaching people off adjustables and interest only you were one of the rare guys and probably of no import as you got no business.

Your right... lies get more business, so lets all lie!

I did some ARM and I/O loans, but I informed people of the risks and benefits associated with them. Maybe it wasn't the best (short-term) business decision and I could have gotten a BMW and a mansion during the boom off of my clients, but at least now I don't have to worry about any of them taking me to court, stabbing me (surprised thats only happened a few times so far) or going into bankruptcy because I did risky loans.

I can't say the same for some of the "high-rollers" I worked with that used to fly out to Vegas every other month with the "8g check" they made off selling people an Option ARM. Some of them didn't even know how an Option ARM worked, and even sold it to friends and family members to make a quick buck without telling them there were risks to that minimum payment.

The attitude of "If you were coaching people off adjustables and interest only you were one of the rare guys and probably of no import as you got no business" is a really a sad statement, but I guess a sign of the times.

Greed is good, coffee is for closers.


Quote:
Originally Posted by olecapt View Post
I do not see the banks getting much of a bailout. Effectively they have to write down to 90% or less of a current appraisal. I am skeptical they will do a lot of that in Las Vegas. Anybody actually come across one of these resets yet? I don't know of one so far.
Program isn't being done yet... but you are right, I am sure almost no one will get any help from this. Neither the banks nor consumers will get a bailout... only the politicians will get "bailed out" by winning another election claiming this will help anyone.
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