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Just to clarify: do you mean the buyers who purchased more than they should have?
Because, I really fail to see how someone could be at fault for their home falling in market value over the past few years if they: bought with 20% or more down well before the market peaked or started falling, with a comfortable payment and reserves in the bank.
Also, the people you describe above are outside the scope of this discussion, for the simple reason that they aren't contributing to the falling housing prices.
People in the scenario you described are almost certainly still in their homes, and more importantly, still paying their mortgages. As such, it makes them non-entities in this discussion. No?
If my doctor tells me I need a surgical procedure, sure I research it and probaby ask for a second opinion. I expect the medical professional to be the PROFESSIONAL. I don't see why you would not extend this though to home buyers. I'm not talking about people trying to scam the system. I'm talking about people that relied on real estate professions, mortgage professionals, lending professionals to asses their situation, their income, their job stability, their debt to income ratio etc... and make a decision, recommedation based on their PROFESSIONAL opinions.
I'm not buying this analogy.
Not everyone is a doctor, nor are they expected to be.
However everyone is capable of managing their own finances (despite the fact that I think most people are stupid as hell, I still think that if people know that they make $xxx, then they have exactly $xxx to spend). CC's/etc of course blur this, but it isn't exactly rocket science (or surgery) to maintain a budget.
Realtors and mortgage brokers aren't telling people they NEED to go buy homes. People went looking for them, not the other way around.
Your realtor is there to provide you with advice and guidance about the home buying process, not to tell you how much you can afford or which subdivision to buy in. Again take some frickin' personal responsibility, people!
Guess what? The townhome I bought in 2007 isn't worth nearly what I paid for it. Oh, and our development isn't finished being built out yet, either. However, it was MY decision to buy, where to buy and how much to pay. It's not my realtor's responsibility to be my mom/dad/nanny/wet nurse and tell me what's right for me. It was my decision and I'll live with it. If that means we don't buy a single family home for 5-10 years, so be it. I'm not gonna go around crying about it and villifying the realtor for my choices.
Quote:
Originally Posted by baybook
No I understand, but I disagree.
The homebuying process is complicated and is probably the biggest purchase any of us will ever make. That said, I do not understand why folks are so ready and willing to leave all blame at the foot of the buyer.
If my doctor tells me I need a surgical procedure, sure I research it and probaby ask for a second opinion. I expect the medical professional to be the PROFESSIONAL. I don't see why you would not extend this though to home buyers. I'm not talking about people trying to scam the system. I'm talking about people that relied on real estate professions, mortgage professionals, lending professionals to asses their situation, their income, their job stability, their debt to income ratio etc... and make a decision, recommedation based on their PROFESSIONAL opinions.
It's easy to say folks should have been educated. There are a whole lot of educated folks that lost their 20%, lost their homes, or are stuck in subdivisions that have crashed and burned.
This is because you are not getting the difference between irresponsible borrowing and unrealistic expectations. An irresponsible borrower is someone who took a loan which they could only handle if all their predictions for the future happened perfectly. Unrealistic expectations are from people assuming that we could simultaneously ship all our wealth creating jobs out of this country, and still have an environment where house prices were appreciating 10%/year.
House prices are falling due to unrealistic expectations. It was the creation of irresponsible borrowing that enabled it. In fact, the irresponsible debt, hid for years, the fact that we were lowering our ability to maintain a certain standard of living by shipping all the manufacturing out of the USA. It was a vast ponzi scheme because everyone who bought into it assumed there would be someone standing by to purchase their house for a higher price when they were ready to sell. It hid the fact the only jobs being created where ones that were in direct support of the ponzi. i.e. finance, insurance, real estate, construction, etc. It's classic ponzi and like all schemes like this, it collapses as soon as the new investors (house buyers) dries up. Now that it has, the horrors of 30 years of very bad industrial policy in this country have come to light. It's not going to be easy to fix as we have an entire generation who doesn't even believe that something is fundamentally wrong.
It's this failure to understand that is going to bring an even bigger hell to be dealt with.
So yes, someone who did as you said is responsible for the mess if their goal was to sell and make some more money.
I really am a very intelligent person in many areas, but this is just not clicking with me. When you claim "the only jobs being created where ones that were in direct support of the ponzi. i.e. finance, insurance, real estate, construction, etc." are you talking about just within the real estate industry or are you claiming that no other industry had job growth or the nation on average or what?
What exactly do you mean by "if their goal was to sell and make some more money"? Do you mean that they hoped their house would keep up with inflation, or they wanted to make a killing above inflation or something else again?
My original question was directed to someone else, who has answered they do not include these types of people in this disucssion, but it seems you are. Makes things harder to follow when people are talking at cross purposes.
Also, the people you describe above are outside the scope of this discussion, for the simple reason that they aren't contributing to the falling housing prices.
People in the scenario you described are almost certainly still in their homes, and more importantly, still paying their mortgages. As such, it makes them non-entities in this discussion. No?
See my response to others - not everyone excludes these responsible borrowers if their motives aren't pure.
The way I see these people being involved is only as a casualty when they are forced to sell or when they try to buy again. When we purchased last year, it was a PITA getting a mortgage finalized just because (1) the backlog and (2) the level of detail the underwriters wanted.
Your mortage professional is not there to advise you about the mortgage products offered to you? Your lender's evaluation of your financial circumstances means nothing?? The appraiser's professional opinion should also mean nothing? Come on?? This all falls at the feet of the uninformed buyer in your eyes? Depsite the facts that the professionals where exploiting the market to the nth degree?
Do you know what banks did to appraisers back in the late 90's early 2000's? Do you know what lenders did to the mortgage broker field back then?
**I never mentioned real estate agents.
Quote:
Originally Posted by hooligan
Well, I disagree with your analogy.
Realtors and mortgage brokers aren't telling people they NEED to go buy homes. People went looking for them, not the other way around.
Your realtor is there to provide you with advice and guidance about the home buying process, not to tell you how much you can afford or which subdivision to buy in. Again take some frickin' personal responsibility, people!
Guess what? The townhome I bought in 2007 isn't worth nearly what I paid for it. Oh, and our development isn't finished being built out yet, either. However, it was MY decision to buy, where to buy and how much to pay. It's not my realtor's responsibility to be my mom/dad/nanny/wet nurse and tell me what's right for me. It was my decision and I'll live with it. If that means we don't buy a single family home for 5-10 years, so be it. I'm not gonna go around crying about it and villifying the realtor for my choices.
I noticed some discussion earlier about "whose fault" it is that people got "hoodwinked" into buying houses they ultimately could not afford.
OH PLEASE!
I guess some folks have an excuse for everything! A justification, anyway. I know of half a dozen folks who knew damned well they could never afford the houses they were signing on the dotted line for! Some even lied about their income (back in the days of no-doc loans). Some bragged b/c they were living in houses bigger than folks they knew making a lot more money . . . b/c they had gotten "interest only" loans. Some liked to smile and say they had gotten a house they could never afford at a price less than they were renting for - and they would just "dump it back on the market" b/f the rate on the loan changed and make $50K at that.
I had a housekeeper who asked me for help with her bookkeeping. She was working hard to make her business professional as well as viable, so I agreed. She was clearing enough to live comfortably making a payment of around $900 a month (she was renting). One day, she tells me she had wandered into a model home sales office and those folks gave her paperwork that showed she could buy a 3 bedroom house on a little more than $700 a month.
Now, I admit . . . this lady was not the brightest bulb in the pack . . . but she said - how is that possible? She had the good sense to know something wasn't right! She was a-glow with excitement that she could buy a house for $700 and change a month . . . but she admitted she knew there was something very wrong with the scenario . . . and in fact, said she felt the whole thing was too good to be true.
The difference in my former housekeeper and hundreds of thousands of others out there is they didn't care that they would never be able to pay for the house when the loan adjusted in 3 years. They just wanted a house! And some folks knew full well what they were doing, and only got stuck b/c they assumed they would be able to sell that house they couldn't afford b/f the loan adjusted - but WOOPS - the economy tanked.
Sounds like calculated risks that went down the crapper to me . . .
People know full well that something is wrong if they can buy a home for less than they are paying rent.
Give me a break.
No one will ever convince me that people were so stupid as to believe in the House Fairy.
Your mortage professional is not there to advise you about the mortgage products offered to you?
Your contention is that these buyers were somehow given incorrect information about the terms of the loan they were signing?
I expect my mortgage professional to explain the requirements/conditions of the loan, not offer advice (unless solicited) about which one is "right" for me. You start asking for advice and you're opening yourself up to be pushed towards the loan that is "right" for the lender/broker and not what is right/best for you. I don't go to the car dealer asking the salesman which car I should buy, either.
Quote:
Originally Posted by baybook
Your lender's evaluation of your financial circumstances means nothing??
Of course it does, however, just because you can technically qualify for a loan, doesn't mean that you won't be house poor or in deep trouble should any sort of financial hiccup occur. People are absolutely capable of evaluating the monthly payments of their prospective home against their existing bills and salary, are they not?
Quote:
Originally Posted by baybook
The appraiser's professional opinion should also mean nothing?
To me? Not really. That's between the bank and the seller. If the house isn't worth, in the bank's eyes, the price that the seller/buyer agree upon then there is no loan and thus no problem. On to the next house.
Quote:
Originally Posted by baybook
Come on?? This all falls at the feet of the uninformed buyer in your eyes? Depsite the facts that the professionals where exploiting the market to the nth degree?
Not all, but certainly moreso than anyone else. NO ONE is more capable of deciding what is right and affordable for me than ME.
Quote:
Originally Posted by baybook
Do you know what banks did to appraisers back in the late 90's early 2000's? Do you know what lenders did to the mortgage broker field back then?
What does this have to do with the discussion at hand????
Quote:
Originally Posted by baybook
**I never mentioned real estate agents.
Quote:
Originally Posted by baybook
I'm talking about people that relied on real estate professions...
Your mortage professional is not there to advise you about the mortgage products offered to you? Your lender's evaluation of your financial circumstances means nothing?? The appraiser's professional opinion should also mean nothing? Come on?? This all falls at the feet of the uninformed buyer in your eyes? Depsite the facts that the professionals where exploiting the market to the nth degree?
Do you know what banks did to appraisers back in the late 90's early 2000's? Do you know what lenders did to the mortgage broker field back then?
**I never mentioned real estate agents.
A mortgage professional is trying to make a commission. So they will exaggerate and outright lie to make money. That's what salesman do, they usually are full of it.
Also when it comes to learning about mortgages, it can easily be learned by anyone through some reading. A doctor goes through multiple grueling years of schooling and training. The average individual can't just go to the library to learn everything about medicine in a couple hours.
The problem with using a lender's evaluation, is they don't look at all your expenses like if you have an expensive hobby or helping mom out with bills every month. Only you know this. Also, I think we all know that lenders say you can afford ALOT more than you really can.
I have no idea why people listen to what a lender advices about your own finances. When someone asks, what are the first steps to buy a home, people for some reason say talk to a lender. NO, the first step is figure out your budget and total up ALL your expenses and decide how much YOU can afford based on your income. You know what your paycheck is every month, how much your car payment is, gas, groceries, how much you need to spend on your children, entertainment, phone, spas, gym, etc.
Too many people in the past have gone into homeownership in the past blindly and seem to continue to do so.
I agree with baybrook. I think both parties are at fault but lets face it, the average American home buyer is not financially savy. The mortgage brokers and banks are. They took advantage of people's naivety and greed. Although both parties are to blame, more blame should be placed on the professionals because they had the knowledge and background to know better.
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