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I have an ING Orange savings account online. Periodically I get advertisements from them about new products they have. Today I was shocked by what I saw in my inbox. They were offering a 5/1 ARM to replace my existing 30yr fixed mortgage.
I mean good grief....isn't this a big part of the whole real estate meltdown? People getting these ARM's and then later defaulting because they did what ARM's do?
They stand to profit twice. First, when they get you into the mortgage. Second, when you pay them exorbitant fees to refinance you into a government-backed 30-yr loan. Perverse incentives are created when the government becomes the market.
I think the blow-ins ads are just done by the clueless marketing types. They sorta know that ARMs can be attractive to both lenders and the bank's orignators, especially as rates spike up.
I know MANY fairly bright people that DO have ARMs and, like Dr. Greenspan, use them to save THOUSANDS of dollars in interest. BUT if this is the ONLY way to get into a house you can afford that is the WRONG way to look at the whole picture and that OUGHT TO carry a sort of "surgeon general's warning" about "missusing ARM's may be ruinouis to your financial future"...
And Citi is raising executive salaries by 50% to compensate for the bonuses that public outcry made them backburner. They're doing this, they say, to keep top talent. That would be the same top talent that ran their business so far into the ground that AmeriCo (AKA the taxpayers) had to bail them out?
And 125% mortgages are back, with the support and encouragement of the boys (and Pelosi) in Washington.
I'd put the government in the "learned nothing" category, too.
Well the Fed and Treasury are coming up with a plan to buy the toxic paper from the banks and sell to investors. When I read that what I saw was that the banks get a clean slate to start all over again.
The Treasury and Fed have spent the last year handing money to the banks and doing nothing to prevent the same thing from happening. Well here we are and the banks are forging ahead with ARMs and now 125% mortages. And where's the Fed/Treasury/Congress outrage on this ?
Well the Fed and Treasury are coming up with a plan to buy the toxic paper from the banks and sell to investors. When I read that what I saw was that the banks get a clean slate to start all over again.
The Treasury and Fed have spent the last year handing money to the banks and doing nothing to prevent the same thing from happening. Well here we are and the banks are forging ahead with ARMs and now 125% mortages. And where's the Fed/Treasury/Congress outrage on this ?
Does the government really think people are stupid enough to buy toxic debt all over again? We are not only going keep this crisis going, but we are going to make it even worse.
I have an ING Orange savings account online. Periodically I get advertisements from them about new products they have. Today I was shocked by what I saw in my inbox. They were offering a 5/1 ARM to replace my existing 30yr fixed mortgage.
I mean good grief....isn't this a big part of the whole real estate meltdown? People getting these ARM's and then later defaulting because they did what ARM's do?
I get these all the time from ING. Yeah I'm going to refinance out of my 30 year fixed at 5.375 into an 5/1 arm at 5.5! Sign me up!!
Does the government really think people are stupid enough to buy toxic debt all over again? We are not only going keep this crisis going, but we are going to make it even worse.
I'm not! My household is on the right track!
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