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So what you're really doing is expressing sympathy for people who put their appetite ahead of their common sense, who blew off a lot of expert advice, all so they could play Keep Up With The Joneses. And now they're paying for it. I take absolutely no pleasure in their troubles. At the same time, I don't think I should be paying for the mistakes of the borrowers or the lenders in this situation.
Well said! I don't take any pleasure in anybody's pain, either, and I really wish it didn't happen... for everybody's sake. But the ones who made their beds should be the only ones lying in them. Unfortunately, the increasing government intervention has made it clear that that's not the way it's going to play out. Just this morning, Reuters quoted Paulson as saying that the latest bailout would attempt to "prevent costs to the taxpayer to the greatest extent possible." Read between the lines: taxpayers will pay.
Last edited by goodbyehollywood; 07-10-2008 at 11:07 AM..
Reason: corrected quote
A bank gave us a loan a long time ago. It was an ARM with limits. When interest rates were falling through the floor a few years ago we refinanced with a fixed rate shorter-term mortgage and “took out some equity" for needed upgrades to the windows. At the time the banker suggested that we could finance at least four times as much money on our income. We said interesting but we are comfortable where we are. That mortgage is nearly paid off.
The system was corrupted by insufficient regulation and a reserve system that was biased to bubbles. I am willing to bail out individual borrowers on their house of residence but not the banks or the multi-house investors. Individual homeowners may have been duped but the speculators took their chances and lost.
A bank gave us a loan a long time ago. It was an ARM with limits. When interest rates were falling through the floor a few years ago we refinanced with a fixed rate shorter-term mortgage and “took out some equity" for needed upgrades to the windows. At the time the banker suggested that we could finance at least four times as much money on our income. We said interesting but we are comfortable where we are. That mortgage is nearly paid off.
The system was corrupted by insufficient regulation and a reserve system that was biased to bubbles. I am willing to bail out individual borrowers on their house of residence but not the banks or the multi-house investors. Individual homeowners may have been duped but the speculators took their chances and lost.
A good point, but I don't think homeowners were duped. After all, the terms of their loans were explained to them in detail. I know mine were at our closing.
That being said, I think the real problems happened about ten or so years ago when banks and mortgage operations started selling off their portfolios to investors or larger banks such as Citi. At one time, a lot of lenders serviced their own mortgages. In fact, for most, it was a point of pride. Suddenly, because they wouldn't be carrying the loans anymore, their own underwriting guidelines became much more lax. After all, twenty days or so after closing, it would be somebody else's problem, right?
I knew the *** was up two years ago on the mortgage business when I was sitting in a meeting with one loan officer as he explained the virtues of marketing mortgages to illegal aliens. Now here is a prospective homeowner who is undocumented, in the country illegally and subject to deportation at any minute, yet there were banks seriously considering giving the guy a 30-year mortgage! When I left that meeting, I just shook my head and knew that the good times were coming to an end. And soon.
So the cumulative result of all this is that the big investors and banks were just blindly buying a LOT of bad paper. So from the borrowers to the mortgage companies to the title companies to the big investors, everybody deserves to have their portion of misery meted out to them. Just don't ask me to pay for their collectively stupidity.
I do feel sorry for the people who lost their homes. I certainly don't feel sorry for the lenders! The Mortgage industry is just another sales "profession" - along with Real Estate. The more you spend/borrow, the more money your broker/agent/salesperson makes.
What has happened is totally due to corporate greed. While there is blame for all involved - I blame the aforementioned sales people much more than the people who trusted them... after all, they were selling the American Dream. As Americans, we all trust banks because we believe that they are governed by ethics - and we Americans trust that their practices are overseen and regulated by our government.
I worked BRIEFLY as a secretary in a Mortgage company a few years ago. It was eye opening for me to see how everything was being done.
The owner of the company drove a new car, had a big house -- the office was located in a fashionable area in a fashionable building. All of this was accomplished through interest only loans. (They tried to talk me into one while I was there)
I came into an office where all of the mortgage "brokers" were brand new. High turnover was cyclical for them. When new "brokers" came in they brought their friends and family into the office for loans. All of them were on straight commission so if they didn't start making money, they would be gone soon. When they left, all of the work they'd done - all of the contacts they made - belonged to the office.
I couldn't even get people to come do work on the office machines because they didn't pay their bills.
The job paid me more than any job I ever had but it didn't matter to me because it was such a dirty business ... I wanted nothing to do with it.
This whole sub-prime mortgage fiasco is the fault of corporate greed and a total lack of ethics. It should have been stopped much sooner!
Who is in charge of monitoring this industry? That is who I blame.
I do feel sorry for the people who lost their homes. The Mortgage industry is just another sales "profession" - along with Real Estate. The more you spend/borrow, the more money your broker/agent/salesperson makes.
What has happened is due to greed. While there is blame for all involved - I blame the aforementioned sales people much more than the people who trusted them... after all, they were selling the American Dream. As Americans, we all trust banks because we believe that they are governed by ethics - and we Americans trust that their practices are overseen and regulated by our government.
I worked BRIEFLY as a secretary in a Mortgage company a few years ago. It was eye opening for me to see how everything was being done.
The owner of the company drove a new car, had a big house -- the office was located in a fashionable area in a fashionable building. All of this was accomplished through interest only loans. (They tried to talk me into one while I was there)
I came into an office where all of the mortgage "brokers" were brand new. High turnover was cyclical for them. When new "brokers" came in they brought their friends and family into the office for loans. All of them were on straight commission so if they didn't start making money, they would be gone soon. When they left, all of the work they'd done - all of the contacts they made - belonged to the office.
I couldn't even get people to come do work on the office machines because they didn't pay their bills.
The job paid me more than any job I ever had but it didn't matter to me because it was such a dirty business ... I wanted nothing to do with it.
This whole sub-prime mortgage fiasco is the fault of corporate greed and a lack of ethics. It should have been stopped much sooner!
Who is in charge of monitoring this industry? That is who I blame.
All of what you say is true, although I think you worked for a particularly unethical player. I did a lot of consulting in this business, and knew plenty of players who played by the rules. What's more, it's not really the salesperson's job to think on behalf of the customer. It's his job to sell mortgages within the limits imposed by the bank's underwriting guidelines and the appropriate state and federal laws.
That being said, you seem willing to let the borrowers off the hook, especially when anybody with half a brain could review the terms of their loans and spot potential trouble BEFORE agreeing to them. In that situation, it is no different that an adult going out on spending sprees and maxing out their credit cards. They caved into their desires for the bigger, the better, and the flashier, rather exercising boring old common sense.
Who is in charge of monitoring this industry? That is who I blame.
In a purported free market economy, the market is supposed to self-regulate and self-cleanse. Do you really want Big Brother monitoring everything you do? Are we so stupid that we can't even check our own impulses or balance what we want with what we can afford? Surely we can at least read and attempt to understand binding legal documents before we sign our names to them... or hire an attorney to help if the legalese is beyond our comprehension. That's about a $500 expenditure against a several hundred thousand dollar purchase. Sounds reasonable to me.
So far, government interference is just making matters worse. Never mind the Bonehead Bailout. If you need proof, look at the dollar. Or maybe we should start calling it the Half-Dollar. Because that's about what it's worth in the global market.
All of what you say is true, although I think you worked for a particularly unethical player. I did a lot of consulting in this business, and knew plenty of players who played by the rules.
That being said, you seem willing to let the borrowers off the hook, especially when anybody with half a brain could review the terms of their loans and spot potential trouble BEFORE agreeing to them. In that situation, it is no different that an adult going out on spending sprees and maxing out their credit cards. They caved into their desires for the bigger, the better, and the flashier, rather exercising boring old common sense.
I find it interesting that you say this and want to blame the borrowers when it's the BUSINESS of the lenders to do exactly what you describe.
The lenders should have spotted trouble before agreeing to lend to them but they chose to lend to sub-prime borrowers - who had No Money Down - because they could charge bigger points and charge higher interest rates ... as long as it lasted. (And - we all know that Realtors want to sell you the most house you can qualify for - whether or not you can afford it!)
The lenders had their eyes on bigger, better and flashier rather than exercising boring old common sense!
Lenders are SALESPEOPLE. Salespeople sell. It's up to the buyer to decide what they can-- or should-- buy. The deal isn't made until the buyer agrees to it. It's 100% the buyer's choice.
Since when does the car salesman show buyers the cheapest car on the lot? No, the car salesman tries to sell the flashier car that puts the most money in his/her pocket... then he/she tries to package it with creative financing that gives the buyers the illusion that they can afford it. Same thing with housing. Most buyers either knew what they were getting into, gambling or didn't care. Hard to play the sympathy card there.
In a purported free market economy, the market is supposed to self-regulate and self-cleanse. Do you really want Big Brother monitoring everything you do? Are we so stupid that we can't even check our own impulses or balance what we want with what we can afford? Surely we can at least read and attempt to understand binding legal documents before we sign our names to them... or hire an attorney to help if the legalese is beyond our comprehension. That's about a $500 expenditure against a several hundred thousand dollar purchase. Sounds reasonable to me.
So far, government interference is just making matters worse. Never mind the Bonehead Bailout. If you need proof, look at the dollar. Or maybe we should start calling it the Half-Dollar. Because that's about what it's worth in the global market.
An attorney would not have advised them not to sign the documents because they could not afford the houses. He would have taken their $500 and been just another person profiting from them. For that matter, I'm sure the predatory mortgage companies would have had a list of attorneys to refer their clients to. The one I worked briefly for even had their own, in house, Property Inspector.
How many Savings and Loans and Banks, Financial Planners and Investment Brokers (and Realtors... and Insurance Companies...) have blatently ripped off their clients by various methods during my lifetime?.... and now this.
It is obvious that the financial industry does not self monitor and should not be trusted to do so.
Last edited by World Citizen; 07-10-2008 at 11:35 AM..
I find it interesting that you say this and want to blame the borrowers when it's the BUSINESS of the lenders to do exactly what you describe.
The lenders should have spotted trouble before agreeing to lend to them but they chose to lend to sub-prime borrowers - who had No Money Down - because they could charge bigger points and charge higher interest rates ... as long as it lasted. (And - we all know that Realtors want to sell you the most house you can qualify for - whether or not you can afford it!)
The lenders had their eyes on bigger, better and flashier rather than exercising boring old common sense!
Hey, I blame all the players here, lenders included. You just want to blame the lenders and let the borrowers off the hook, probably a holdover of the bitter feelings you have for a former employer.
Look. For the sake of argument, let's say you have a friend who worked as an administrative assistant making $35K/year, and she wanted to go out and buy a top-line Mercedes. Let's say that she could buy said Mercedes, as long as she took out a ten-year note that sucked up 35% of her monthly take-home pay. You and I both know that this would be a horrible idea, but she gleefully signs on the dotted line.
Now. Who gets the blame? The dealership? The financial company? The friend? Or a combination of all three?
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When I left that meeting, I just shook my head and knew that the good times were coming to an end. And soon. 
interesting...
