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Heh, I have a more mixed view. As much as I applaud them going after people who willingly just walked away from debts they could have paid back on the one hand...these banks were very greedy and knew what they were doing on the other.
So overall, I kind of think it's one evil vs. another.
Yep. Sometimes it has nothing to do with what you can't afford. I bought a condo in CT (as a residence, not an investment) in late 80s for $107K, which had originally listed for $130K. It appeared the market was nearing bottom. I had a decent job, no problem paying the mortgage/common charges.
But I had no idea how far away the bottom actually was... within four years this condo was valued at $33K. I was taking an overseas work opportunity and couldn't rent it for nearly what the mortgage/fees were costing me. Was losing $400-$500/month. I tried renegotiating the note with the bank (Dime) for a longer term (less monthly payment) or a better interest rate, but they were having nothing of it. Based on their history, it seemed they preferred to foreclose and take possession instead of working out a deal with a homeowner who wanted to keep the property functional.
So I walked. Turned out more than 60% of other owners in the complex did the same.
A whole lot of drug busts were conducted in that complex in the late 90s.
While the borrowers do have some culpability, by and large, they were sincere and law-abiding.
The lenders, on the other hand, should be brought up for RICO fraud. The loan originators immediately sold the loans to a Wall St investment bank for securitization; they then took those funds and loaned them out all over again - aggressively so, soliciting borrowers to "refinance" - and again sold the loans. They had zero money invested, and lost nothing. The investment bankers made a killing, selling these securities (MBS's) not once, but 2 and 3 times, to investors, who also went into this with clean hands. The loan "servicers", who were not the lenders, aggressively bid for the servicing rights in order to clean up on the fees. The appraisers also played a large part, fraudulently over-stating the value of these properties. MERS was also fraudulent, and denied filing fees for property transfers, to local municpal and county governments. Foreclosures were initiated not by the "lenders" (by then, the investors were technically the lenders, not the banks), but by the "trustees" for the certificate-holders - the Wall St investment banks. Most borrowers had absolutely NO IDEA who their lenders actually were.
In the end, the bankers made off with a big haul, and left the scraps to the borrowers and the investors. Homeowners and security-holders alike were fleeced. Now the vultures are back to pick the scraps off the carcasses. It's not always as simple as, "You should pay your bills..."
But then, you already knew all this, didn't you?
Not to mention the real estate industry and media hyping property as an investment, rather than a place to live, and your government in the US making mortgages tax-deductible to encourage home ownership- not a bad idea in itself but in combination with other factors an incentive to buy more house than you need or can afford.
If it were me, I would sue the bank, drag them into court and make them defend their process in which they decided to make a loan to someone who likely did not possess the means to repay it. Or, have them defend financing a loan on a purchase for a property that clearly exceeded a reasonable price.
The very banks who are pursuing satisfaction of these loans never should have made most of them to begin with and need to be held at least equally accountable.
As I said in my last post, this drawing of moral equivalency is the wrong way to view this.
I just wonder if this is a liberal perspective that allows people to ignore some significant facts. Let's not forget that pressure was brought to bear on lending institutions to lower standards to help minority applicants to get loans.
Like most liberal feel good notions, it sounds better than it will turn out. In essence it was like an affirmative action program the lending institutions were forced into. The people were unqualified based on prudent lending criteria (i.e. income, savings, credit history vs. loan size, ability to make payments long term, etc.) but that never stops liberals from screaming equality of outcome instead of equality of opportunity.
If you try to logically thwart this psychosis, you are labeled racist, which is the favorite tool of those who are losing the debate, and want to find a way to get what they want.
Here's the deal. Society at large works because most people typically do not think outside the box. Traditions are followed and laws respected. I believe the majority of the people in the world behave this way.
This is all good when laws are created to be fair and just.
However, problems arise when laws are created to favor a certain group or class. The human desire to play nice with others means that historically, it takes an immense amount of unfairness before most people would go against the laws. Think about Apartheid or how Jews were relegated to ghettos in Germany in the 1930s. They were all done within a legal framework but completely unfair.
Right now in America, some of us are convinced certain laws treat people with a lot of money differently from those who don't have as much. However, it's hard to be heard among all of you who keep screaming, "shut up and follow the laws."
Apartheid and Germany is not the United States. We have a different framework in our Judicial system. I am not aware of any law that is applied differently if your net worth is higher than someone elses. If you would be kind enough to illustrate a specific event or occurrence of this, I would be most grateful.
As I said in my last post, this drawing of moral equivalency is the wrong way to view this.
I just wonder if this is a liberal perspective that allows people to ignore some significant facts. Let's not forget that pressure was brought to bear on lending institutions to lower standards to help minority applicants to get loans.
Like most liberal feel good notions, it sounds better than it will turn out. In essence it was like an affirmative action program the lending institutions were forced into. The people were unqualified based on prudent lending criteria (i.e. income, savings, credit history vs. loan size, ability to make payments long term, etc.) but that never stops liberals from screaming equality of outcome instead of equality of opportunity.
If you try to logically thwart this psychosis, you are labeled racist, which is the favorite tool of those who are losing the debate, and want to find a way to get what they want.
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The two pieces of legislation most responsible for the crash were the Community Reinvestment Act, signed into law by (Democrat) Jimmy Carter on October 12, 1977, as part of the Housing and Community Development Act of 1977, and the Financial Services Modernization Act of 1999 (AKA the Gramm-Leach-Bliley Act), signed into law by (Democrat) Bill Clinton on November 12, 1999.
Bush shares some blame too, mostly for not acting on what was happening in the best way, but I'm not sure what could have been done by the time it was happening.
Rather than blaming Bush for anything, people should point to Clinton for the housing debaucle.
I know a guy, staffer in a senator's office on the hill, who decided he wanted to go out on disablility because he was out of shape due to obesity. He took out a loan on a house down south and skipped out on the house he has up in the DC area. He is paying on that house and has no remorse about the other.
I guess it can be chalked up to ''white privilege''.
First of all, while presidents signed those bills, they didnt write them, and those bills went through the congress and senate. Who voted for them? Who could modify them? It wasn't a president.
If its strategic defaulters, more power to the banks. These people are purposefully and intentionally avoiding a debt that they can in fact pay. If its other folks....well those folks can declare bankruptcy, and its done. Thats the cost with being underwater and walking away. It seems reasonable.
As for banks...the actions in all of this are...stunning. Truly. There was so many things done motivated by greed....which were also horrifically unwise. Loaning 500K to someone making 50K/year to buy a house? Really? And they didn't care as they handed it off to investors and fannie/freddie. Many of these people belong in jail, and im offended that not enough of them are doing time.
Yep. Sometimes it has nothing to do with what you can't afford. I bought a condo in CT (as a residence, not an investment) in late 80s for $107K, which had originally listed for $130K. It appeared the market was nearing bottom. I had a decent job, no problem paying the mortgage/common charges.
But I had no idea how far away the bottom actually was... within four years this condo was valued at $33K. I was taking an overseas work opportunity and couldn't rent it for nearly what the mortgage/fees were costing me. Was losing $400-$500/month. I tried renegotiating the note with the bank (Dime) for a longer term (less monthly payment) or a better interest rate, but they were having nothing of it. Based on their history, it seemed they preferred to foreclose and take possession instead of working out a deal with a homeowner who wanted to keep the property functional.
So I walked. Turned out more than 60% of other owners in the complex did the same.
A whole lot of drug busts were conducted in that complex in the late 90s.
I made a similar mistake when I bought my present home. I bought in late 2007, and prices had already fallen about 45% from the peak 16 months earlier. Darn near half is a pretty substantial drop, and I reasoned that we had to be near bottom. I was so wrong. Prices fell about that much again after I bought.
You know, it's one thing to owe 700k on a home worth 850k. It's quite another to owe 700k on a home worth 250k. Yet, that is the position many people around here found themselves in. Some looked at the facts and decided their best path forward was to strategically default. Note that a strategic default does not recover the money you have already put into your home. Far from being the path to riches, it was for some the most sensible course of action.
That's fine, then make bank executives pay back the bonuses they paid themselves right after they were bailed out.
It's not even relevant to the thread or topic. This demonstrates a lack of understanding of history or the mortgage/foreclosure process
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