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You are so right. I know many people who worked as mortgage brokers on the side during that time, pocketing huge amounts of commissions. My brother's friend was a cop who did mortgage apps for people while sitting in the patrol car. Lots of people were stupid and greedy and got caught up in the money without using their brains.
I know a non-English speaking couple, a housekeeper and pizza cook, who got into a $500,000 home, of course to lose it a couple of years later. My neighbor bragged about how she refi'd her house and got enough cash to buy 2 new cars and buy another house for her daughter. That didn't end well either.
I had a smart friend who bucked the popular trend and sold his home at a ridiculous high value, invested the cash and rented a small house. It seemed like there were very few of us who could see the madness going on around us.
Another issue during that era was that in many areas it was harder to rent a place than to buy one. For example in Silicon Valley where I lived at the time, there were dozens if not hundreds of people all clamoring for the same rentals. You often had to be the first one there, and bribe the person showing it, to even be considered. However anyone with a job qualified for a $500K home loan.
You are so right. I know many people who worked as mortgage brokers on the side during that time, pocketing huge amounts of commissions. My brother's friend was a cop who did mortgage apps for people while sitting in the patrol car. Lots of people were stupid and greedy and got caught up in the money without using their brains.
I know a non-English speaking couple, a housekeeper and pizza cook, who got into a $500,000 home, of course to lose it a couple of years later. My neighbor bragged about how she refi'd her house and got enough cash to buy 2 new cars and buy another house for her daughter. That didn't end well either.
I had a smart friend who bucked the popular trend and sold his home at a ridiculous high value, invested the cash and rented a small house. It seemed like there were very few of us who could see the madness going on around us.
The housekeeper and pizza cook borrowed to buy a $500k house?
The neighbor who refinanced used her house as a bank based on an estimated "unrealized" value.
And you blame that "solely" on the banks?
Politicians.. pandering,
Banks... greed,
Borrower... oh where should I start, lack of common sense, greed, entitled?
I know way to many 20 somethings with zero employment history... and a surprising number that don't drive.
No one in my family has ever had a pension... most are self employed with long hours... especially the farming side of the family.
My brother bought an old farm in the county... I was totally amazed at the quality of the local high school and JC students he has working for him...
They show up on time and ready to work... he has seasonal work around Christmas with the tree farm and then there is planting in the Spring... really impressed.
My experience living in city is just about the opposite...
I think a lot of the housing melt down could have been avoided with old tried and true solid 20% or more down rule... people I know that walked away often had very little down...
The other thing is in my State a purchase money loan is non-recourse... the value of the home is the security... so it would seem logical for the lender to want the borrower to have skin in the game.
I know a couple of hard money lenders and they did quite well during the melt down... they use a fair value for the property and loan 50%... they really are not concerned about income, credit etc... worst case they get the property back which rarely happens and then it is at 50 cents on the dollar.
The pressure here was those with little means felt left out of the housing lotto...
They would hear about people flipping homes and walking away with a year or more salary when it was said and done...
There were actually politicians that said lending was too strict and exclusionary...
I think a lot of the housing melt down could have been avoided with old tried and true solid 20% or more down rule... people I know that walked away often had very little down...
Agree... 20% down, emergency fund, and at least 6 months of living expenses in the bank, a low income/expense ratio.
There is a reason banks established those qualifications yet they were forced through pandering politicians to lower them. That's why I say when government tinkers with things, it may help short term but the long term, well, we've seen what happened.
Yes but then we are back to common sense, understand basics, don't get pulled in, don't think you deserve, financial ducks in a row.
Unintended consequences.. people argued against easy money but we were told they hated the poor people, then there were warning bells of the coming housing crash, it was argued that those sounding the alarms were crazy. I remember it well.
Almost 40% of the area sales have been cash... I don't have a crystal ball... but I know they were not 40% during the run up to the melt down.
Follow the money...
Two Safeway Clerks bought 5 homes over two years... lost them all.
A co-worker had bought an investment property with a friend... he flaked and she was going to walk away... I advised to hang in there plus they had a tenant paying fair market rent...
I would not have bought the property but since they had... it didn't make sense to trash her good credit...
She was able, with a lawyer to get a quit claim from the other partner... the guy stopped paying for almost 2 years... and wanted to walk.
On my advice she kept the property and it recently became vacant... so she decided to sell as she was suppose to be the silent partner way back when...
It is in escrow with overbids and it looks like she will clear 135k... she is most grateful that I did not let her panic and let her ruin her 834 FICO score and perfect financial standing over the actions of a third party.
There was a lot of mass panic over Real Estate and common sense was hard to find.
The housekeeper and pizza cook borrowed to buy a $500k house?
The neighbor who refinanced used her house as a bank based on an estimated "unrealized" value.
And you blame that "solely" on the banks?
Politicians.. pandering
Banks... greed,
Borrower... oh where should I start, lack of common sense, greed, entitled?
Well I only hear the majority of people blaming the greedy bankers, even those who didn't take out a mortgage (but just jumping on the blame bandwagon without thinking).
It took two to tango + government meddling.
I've yet to hear people taking responsibility for their part. Automatically jumping on the blame bandwagon, allowing others (media, friends, people with grudges) tell them how to think, without looking at the whole picture keeps them from learning from peoples mistakes increasing the chance that they'll make the same mistakes.
Last edited by petch751; 02-24-2016 at 02:07 PM..
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