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See? What did I tell you? The same conversation. Just recycled with new people in the article to babble about. "They weren't smart enough." "They should have known better." "They bought more than they could afford." Yet, there are no stories on how predatory lending SHOULDN'T have taken place in the beginning. We blame the recipients of the results of what shouldn't have happened. What inflated housing prices so high in Prince George's County and elsewhere? Why were banks allowing agents to lower the income threshold for perspective buyers? In some cases, why was there no documentation of income required; the infamous NINA (No Income No Asset) loans. What banks were involved in predatory lending in Prince George's County?
ANd we talk about there being a lack of education on the behalf of the buyers. But what about the institutional investors who got taken by Bernie Madoff? What about the mutual funds, pensions, and other major institutional investors who got taken by the toxic investments backed by default swaps? I guess they should have known better too huh? I'm pretty sure that if you look at the numbers, and I'm not sure anyone has ever gathered the data, I would bet that a very small percentage knew that they were buying more than they could afford. And it is reasonable that a larger number weren't given clear indication about what an ARM or interest only loan actually was. Even savvy financial people were hurt as a result of the recession through no fault of their own. What about the neighbors who aren't in financial straights who have seen their equity vanish? The resulting recession from the compounding toxic activity on Wall St. and what was happening on the street is what you see now.
So, why must we continue to rehash the same old tired story of a family down on their luck because their mortgage rate reset? Or how they lost their job? How was the system rigged to even get us here? How can we keep it from happening again? How can these people be made whole like the banks ,who blindly invested in toxic instruments based on greed? No. Let's pick on the Average Joe family who, "should have known better."
I don't think in many cases it was a case of education or background. People just had an attack of the stupids. They bought into the hype, and it was everywhere, that the new normal was double digit appreciation for real estate every year. The same thing had happened in the late 1980s (not to the same extent or duration) and blew up in 1991.
Some of the same people here who had gotten burned then repeated the mistake and got burned again, in most cases worse, in 2007. I'm sitting here able to look at two condo complexes with 60% vacancy/not sold rates in an area that has never, ever, been a condo market. The same thing happened in the late 1980s and those buildings took a decade to sell. At the end of my street is a high end TH development where the property was annexed into the Town specifically so the developer could get the density (Critical Areas issues). Those places started out as high end, $550K+, and marketed to empty nesters. That wasn't openly said but the first units had elevators and the price points, as well as the lack of kid amenities, indicated the market segment being aimed for.
The meltdown happened and all of a sudden the prices were down to $250K or less. Which allowed younger families to move in. It was, after all, "exclusive". They're now agitating for kid friendly amenities and have no open space on which to place them. As an aside, many people could afford to buy the units but can't afford to live there. Which I see as the Town liaison to the HOA.
I think Asian cultures, due to the family structure, teach their kids more about finances than we do here in the US. It would be interesting to see 3 generations down the road if that will continue here with the new immigrants.
I agree with you here, I think this is a factor. I think the lure of the community definitely drew people in. I think quite honestly, black people in this country are enamored with the concept of what PG County is. When I was in college, I had a lot of open their eyes wide at me when they heard I was from PG. They assumed I had a lot of money and that I lived in a place that was almost like a black Beverly Hills. PG is almost a novelty of sorts. It's considered to be this one place in the country where you can live luxuriously among other professional black people and for some people that's a dream come true, especially if they have grown up in places where they have suffered anything of prejudice from other races.
I think that is something that has caused people to go tooth and nail at what they consider a dream, but then I wonder how much these individuals understand. If you don't have enough money for a down payment, you probably don't have enough money for a rainy day and if you don't have enough money for a rainy day, are you living beyond your means? Do people understand how to manage their money or are they willing to take the risk to chase their dream? I think that is what we are talking about here.
To me it sounds like a combination. Correct me if I'm wrong but it sounds like you think these people knew what they were getting into, they just decided to take the risk. I personally think some of these individuals honestly do not understand real estate. I think if they did, they probably wouldn't have banked on the appreciation continuing or thinking they would be able to refinance before their interest rate increased. There was a comment from the first story that stated the family in there actually had a rental property the Washington Post didn't report on and they took equity out on both properties. At some point isn't that just a lack of understanding of your finances?
See? What did I tell you? The same conversation. Just recycled with new people in the article to babble about. "They weren't smart enough." "They should have known better." "They bought more than they could afford." Yet, there are no stories on how predatory lending SHOULDN'T have taken place in the beginning. We blame the recipients of the results of what shouldn't have happened. What inflated housing prices so high in Prince George's County and elsewhere? Why were banks allowing agents to lower the income threshold for perspective buyers? In some cases, why was there no documentation of income required; the infamous NINA (No Income No Asset) loans. What banks were involved in predatory lending in Prince George's County?
There actually is a large section in this article that talked about the concept of predatory lending and what legislation was done to stop it and how it impacted the types of loans individuals were getting.
Let me ask you question, if you don't mind. Let's say you and your wife are at the mall and you walk by the Sleep Number store. You both are interested in getting a new bed for your house and you go into the store. The person selling you the beds attempts to get you the most expensive bed he can think of because after all, he is making a commission off of your purchase. If you finance the purchase, but afterward realize that you are putting up the extra money you have for your child's child care expenses and you can't make the payment, is it their fault for selling you the most expensive bed or is it your fault for deciding to purchase it?
Quote:
Originally Posted by adelphi_sky
ANd we talk about there being a lack of education on the behalf of the buyers. But what about the institutional investors who got taken by Bernie Madoff? What about the mutual funds, pensions, and other major institutional investors who got taken by the toxic investments backed by default swaps? I guess they should have known better too huh? I'm pretty sure that if you look at the numbers, and I'm not sure anyone has ever gathered the data, I would bet that a very small percentage knew that they were buying more than they could afford. And it is reasonable that a larger number weren't given clear indication about what an ARM or interest only loan actually was. Even savvy financial people were hurt as a result of the recession through no fault of their own. What about the neighbors who aren't in financial straights who have seen their equity vanish? The resulting recession from the compounding toxic activity on Wall St. and what was happening on the street is what you see now.
If you don't have a clear indication of the ARM, don't sign the papers. When I brought my first home, I made my lender show me the exact terms on my loan, and to show me where it is explicitly stated on my paper work. I would not sign the document until it was clear to me that I was getting a loan with the terms I wanted.
Let's be honest, a lot of these people knew that getting an ARM was a risk. The problem is many people assumed they would be able to refinance before the higher interest rate kicked in. The thing that should have been asked is, if this higher interest kicks in, can I still handle the payments? That is the absolutely worse case scenario. If not, then does it make sense?
When has an interest only loan ever been beneficial to the buyer? There are no terms that will ever make it a great financial decision. If you need it to buy a house then you likely can't afford it and for that I do blame banks for qualifying people, but I put most of the blame on the buyers for being desperate.
Quote:
Originally Posted by adelphi_sky
So, why must we continue to rehash the same old tired story of a family down on their luck because their mortgage rate reset? Or how they lost their job? How was the system rigged to even get us here? How can we keep it from happening again? How can these people be made whole like the banks ,who blindly invested in toxic instruments based on greed? No. Let's pick on the Average Joe family who, "should have known better."
You know, you don't have to read or respond to this. I understand you are tired of it, but you can always ignore it.
..............................................
To me it sounds like a combination. Correct me if I'm wrong but it sounds like you think these people knew what they were getting into, they just decided to take the risk. I personally think some of these individuals honestly do not understand real estate. I think if they did, they probably wouldn't have banked on the appreciation continuing or thinking they would be able to refinance before their interest rate increased. There was a comment from the first story that stated the family in there actually had a rental property the Washington Post didn't report on and they took equity out on both properties. At some point isn't that just a lack of understanding of your finances?
I absolutely believe many of these people understood what they were getting into. But they were afflicted with blindness as to what "could" (and did) happen. Others may not have.
Those condo developers here I mentioned earlier are incredibly smart and successful real estate operators. They have both made their fortunes in real estate, one on new construction the other in redevelopment, by investing in single family houses. One is a close friend who told me years ago (early 90s, right after that meltdown) that he would never again ever do a townhouse development (it continues to have issues to this day) and would never touch condos. So what happens in 2000 or so? He builds a condo, high end private waterfront, that is 40% empty/unfinished.
Someone who has a rental property from which he withdrew equity is smart enough to know how to buy a house.
See? What did I tell you? The same conversation. Just recycled with new people in the article to babble about. "They weren't smart enough." "They should have known better." "They bought more than they could afford." Yet, there are no stories on how predatory lending SHOULDN'T have taken place in the beginning. We blame the recipients of the results of what shouldn't have happened. What inflated housing prices so high in Prince George's County and elsewhere? Why were banks allowing agents to lower the income threshold for perspective buyers? In some cases, why was there no documentation of income required; the infamous NINA (No Income No Asset) loans. What banks were involved in predatory lending in Prince George's County?
ANd we talk about there being a lack of education on the behalf of the buyers. But what about the institutional investors who got taken by Bernie Madoff? What about the mutual funds, pensions, and other major institutional investors who got taken by the toxic investments backed by default swaps? I guess they should have known better too huh? I'm pretty sure that if you look at the numbers, and I'm not sure anyone has ever gathered the data, I would bet that a very small percentage knew that they were buying more than they could afford. And it is reasonable that a larger number weren't given clear indication about what an ARM or interest only loan actually was. Even savvy financial people were hurt as a result of the recession through no fault of their own. What about the neighbors who aren't in financial straights who have seen their equity vanish? The resulting recession from the compounding toxic activity on Wall St. and what was happening on the street is what you see now.
So, why must we continue to rehash the same old tired story of a family down on their luck because their mortgage rate reset? Or how they lost their job? How was the system rigged to even get us here? How can we keep it from happening again? How can these people be made whole like the banks ,who blindly invested in toxic instruments based on greed? No. Let's pick on the Average Joe family who, "should have known better."
Bernie Madoff ripped off mostly wealthy investors he had nothing to do with the home lending business. You seem to be upset that the Washington Post is doing an expose on housing in a major county in the region. You're upset folks are talking about it and come from it at a different viewpoint than yours. Oh well.
It should also be noted that article now complains about the lack of loans being made to Black people today due to tightening credit standards. Darned if you do, darned if you don't. Soon articles will denounce banks for being racist for not extending credit to Blacks in equal numbers of whites, watch.
There actually is a large section in this article that talked about the concept of predatory lending and what legislation was done to stop it and how it impacted the types of loans individuals were getting.
Funny how that's not the main topic in this thread though. So, who and what is driving the narrative in dissecting the actions and decisions of the buyer and not the lender?
Quote:
Let me ask you question, if you don't mind. Let's say you and your wife are at the mall and you walk by the Sleep Number store. You both are interested in getting a new bed for your house and you go into the store. The person selling you the beds attempts to get you the most expensive bed he can think of because after all, he is making a commission off of your purchase. If you finance the purchase, but afterward realize that you are putting up the extra money you have for your child's child care expenses and you can't make the payment, is it their fault for selling you the most expensive bed or is it your fault for deciding to purchase it?
I would say it was the seller's fault and here's why. If you had a family member who asked you for $25,000 and said that they would pay you back in 4 years. And you know that they had no job. Or if they had one, it was part time. You know this family member and how irresponsible they are. You have seen how they have handled money (their family credit score). Would you lend that person $25,000? And if you do and you don't get it back, who's fault is it then? Most people would say it was your fault for lending the money, no? So, why is that not the case here?
We all know that good salespeople can spin anything to make it seem less risky for the buyer. Think about someone sitting down and understanding what an ARM is. But the sales person shows you historical home value trends that have been increasing for the past 7 years, which they have. They show incomes increasing. They tell you that even your income has increased over time. You agree. Both statements are fact. They say, by the time the ARM resets in 5 years, your salary will be able to support it. You'll have 5 years to pay down debt, etc. You'll have more cash flow. They show you numbers on how successful other people have been with ARMs. You buy into it thinking you can manage such seemingly low risk. Meanwhile, this predatory lending has been going on all over the country. And you have no clue of the impending housing crash that would subsequently get you either laid off, or make it harder for you to refinance into a fixed rate. Why? Because you're now underwater and you can't refi a home that's underwater.
We assume that banks don't lie and spin. That's what got them in trouble in the first place. But we would rather give the bankers a pass and dish on the home buyers. Meanwhile the bankers are laughing in their jets watching us peons blame each other. "Let them eat cake!" People are blinded by their own sense of nobility and can't see that even they have been bamboozled, robbed, and cheated. And what's worse, they had no power to stop it. They couldn't even stop the government giving those same bankers close to $1 trillion dollars on top of what in any court would be considered fraud. Yet here we are. The peons who got took. Blaming individuals for "buying more than they could afford." Is it because the bankers have suits, work in glass office towers, and fly around in jets? While the "perpetrators" lose their jobs, their homes, and their dignity?
The elite bankers have even spun where to put the blame. And people eat it up. Yet, their own wealth has been lowered by multiples. You may think you're whole and you escaped the effects of the recession, but deep in the recesses of your mind you know that you could be much wealthier if there was no recession.
Quote:
Let's be honest, a lot of these people knew that getting an ARM was a risk. The problem is many people assumed they would be able to refinance before the higher interest rate kicked in. The thing that should have been asked is, if this higher interest kicks in, can I still handle the payments? That is the absolutely worse case scenario. If not, then does it make sense?
Isn't that what bankers and investors do? But they are smart right? When they manage risk and it fails, well, that's just the nature of the market. But when a homeowner makes the same assessment. Well, they were just ignorant or greedy. On a daily basis bankers and investors bet on risk. They even borrow against their assets (in terms of housing - equity credit) to make more investments which may carry varying degrees of risk. Even I have taken out margins when investing. It's done millions of times on a daily basis. But that's okay. When a margin is called and I don't have the money and I have to take out a loan to cover it, that's just the normal machinations of an "investment banking."
Quote:
When has an interest only loan ever been beneficial to the buyer? There are no terms that will ever make it a great financial decision. If you need it to buy a house then you likely can't afford it and for that I do blame banks for qualifying people, but I put most of the blame on the buyers for being desperate.
Then why even offer the product to the individual who you should know through their credit and employment history, wouldn't be able to meet the risk? If Joe's salary increased 10% over 10 years, what makes you think it would increase 25% in 5 years? But no, the agent and the bank don't have to take that risk. So THEY DON'T CARE. They don't care about the buyer, the neighborhood they are lending in, OR the mortgage that they KNOW will default. Because they pass that risk on to the market, package up all the risky mortgages, buy insurance on those mortgages, then create financial instruments that allow them to make money if they fail. So, that encouraged them to make more bad loans knowing that they would actually profit from them. Knowing that the house of cards would eventually fall and because they are "too big to fail" they could just ask good ole Uncle Sam for the money. NO QUESTIONS ASKED.
Now. Who are we really blaming here?
You know, you don't have to read or respond to this. I understand you are tired of it, but you can always ignore it.
Your reasoning is off. Saying a problem happens more in one group does not mean it's exclusive to that group. At the end of the day Blacks bring up the rear in this category along with Hispanics. Frankly I think a lot of it has to do with the lack of sophistication and wanting status symbols of achievement. I don't actually fault folks for that.
Also the series and articles explicitly cites race as reason why PG can't get out of it's rut, so rant at the Washington Post.
No, you're reasoning is off. You insinuated that race, exclusively, was the procuring cause in your original post. You deduced that PG's real estate boom, bust and resurgence experience was unique. Now, knowing your origin, I'm a little surprised you didn't make this an african american issue. Stop feeding the flames of the media. Maybe you might want to quote one of Limbaugh's writings; he'll surely give you enough material to support your self-loathing beliefs.
This is why I gave C-D up, but unfortunately got sucked back into instead of avoiding the tom-foolery. I'm done. Enjoy your self-loathing.
Bernie Madoff ripped off mostly wealthy investors he had nothing to do with the home lending business. You seem to be upset that the Washington Post is doing an expose on housing in a major county in the region. You're upset folks are talking about it and come from it at a different viewpoint than yours. Oh well.
Incorrect. As I clearly stated in my very first post, I said the article lacked originality. The substance is the same. In fact, it has been repeated over multiple years. I think I have cause to critique lazy journalism. But I'm aware that the subject matter is a favorite for a few posters here. So, here we are. Another thread on the same topic about another article written on the same issue. Wash, rinse, repeat.
No way am I spending $550k+ to live in PG County particularly Bowie where a bunch of these new neighborhoods are springing up. There is nothing in the city that warrants those prices. Premium shopping? No. Fine dining with cultural diversity? Forget about it. Panera Bread and Chipotle doesn't wow me. Great public school systems? Yeah right.
Then you have the typical cost cutting cookie cutter builders such as DR Horton and Ryan Homes building all around Bowie and PG county and the homes aren't even worth half the price of their cost. The poor quality construction appears in about 5 years with these homes and they start falling apart, however the "black man" is living the American Dream with an ARM interest only loan no money down payment on a 500,000 house with a household income of 80k.
Just look at all of the foreclosures and short sales in developments like Fairwood to this day where the homes were 800k new now those folks are 400k underwater and still have to pay ridiculous hoa fees and high county taxes. And I guarantee most of these homes for sale or foreclosed in the county don't even have any updates done to them, they all still have outdated builder grade materials and white painted walls because the folks who bought the homes could barely afford them let alone maintain them. So if you buy one, just account for throwing in an extra 100k repairing and updating the home. With that hassle, I would take my 600k to Anne Arundel or Howard county and I would get more diversity, cleaner neighborhoods, better schools, better quality and well maintained homes with stabilized home values, lower taxes and car insurance rates and a plethora of dining options with much better customer service.
None of what you said is factual...more diversity in AA or Howard county Than Bowie? Show me the numbers? Cleaner Neighborhoods? Show me pics. The home quality is not better in AA or Howard County...sorry LMAO. The home prices in PG like anywhere else were INFLATED. Dont believe me check out this thread made last year from someone who BUILT a million dollar homes in Howard County...its now worth only 850k.
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