Are you a victim of the Sub Prime lending fiasco?

by katiekitten 37 Replies latest jw friends

• 

  BrentR

  My wife's uncle manages CTX Mortgage and boaght a $2 mil house just over a year ago. If anyone should have seen the writing on the wall it's him. But no he got caught in the insanity just like the rest. The rest of the family was asking him "are you out of your living mind?????".

  Nobody has aked what his monthly mortgage payment is yet. Since he is in the mortgage business he is not making anywhere near what he was a few years ago. So it doesn't look like he will hang on to it much longer. Since he is the biggest poser I have ever seen this will be extra rough on him.
• 

  5go

  When it comes right down to it, the borrower is the one at fault. The borrower knows his financial circumstances better than anyone else, how can someone else be responsible for his actions? At what point do you/we want the lending institutions telling us we can't have that house? Would you prefer a lender to tell you, "You can't have that"? It would take you only five minutes to find another bank that would lend to you on that house.

  BS the lender knows too! Yet they still lent the money they deserve to lose it. Which is why bankruptcy laws should be liberalized to prevent this from happening again.
• 

  bluesapphire

  LOL @ "poser"

  I know it's a tough pill to swallow. So many people are affected by it that aren't posers though. Just regular people who saw an opportunity to own the home of their dreams. I'm so glad we didn't go higher even though we were told we would qualify for more house. Actually, it's thanks to my hubby who said, "You hate cleaning this house, how are you gonna clean that one?"

  I DO know someone who bought a million dollar home and I have no clue how he manages it. He's a painter and his wife doesn't work. And the values have dropped at least $200K!!! Ouch. He took a second on his first house and rented it out. But he didn't put the money down on the new one. He's living off it I imagine.
• 

  JeffT

  You know they say a really good scam needs two greedy people.

  In this case you have borrowers and/or their agents who didn't care what they had to do to close the deal, and home buyers/owners who wanted more house than they could afford.
• 

  Jourles

  Let's not forget the other group -- the people who thought they lived in a virtually indestructible market(i.e. SoCal, Las Vegas, Miami, etc) where home prices were steadily rising 20-30% year over year. Many of these people bought into ARM's or interest only loans thinking they could get a bigass house and then "flipping it" in a few years making a huge profit. These are the ones I have no pity for. They thought they could get rich quick, but in the end it ruined them financially for at least 10 years.

  When you're buying a home and basing a large percentage of your decision on how much money you can make off of it in a few years, you really need to step back and reconsider your priorities. Live within your means, not the means you wish you had.
• 

  Dorktacular

  I dated a girl that worked for a mortgage broker in the late 1990s- early 2000s when the mortgage boom was on. The broker she worked for often falsified income documents, home appraisals, etc. just to get somebody in a loan. ANY loan, but particularly one that earned that broker the most commission possible. After all, the broker got their commission up front and they weren't particularly concerned about the residuals. Now, that broker is long gone, but they got their commission. And the bank has to forclose on a lot of these people, because they can't pay.

  But, let me say this..... unless the lender is not adhering to the conditions of the loan contract that both lender and borrower agreed to at closing, IT IS THE BUYER'S FAULT IF THEY GOT SCREWED!!!!!

  So, with the exception of the lender not honoring the contract, the stupid borrower got what the stupid borrower deserves for not researching and attempting to understand what was going on with the biggest investment they will ever make in their entire life! Oh, and if it can be proven that the lender isn't honoring the contract, the borrower has one hell of a lawsuit! But usually the borrower simply defaults.

  The banks (for the most part) are the ones getting screwed because a stupid broker or borrower (or usually a combination of the two) bit off more than they can chew. So the bank has to go through the expense of foreclosing and then remarketing that house. Just a little secret: The bank does not want your house. They want their money. The interest from the loan over the cost of a 30 year loan can be almost 3 times more than what the house sold for to begin with.

  I just bought a house. The mortgage broker told me that I qualified for a $300,000.00 loan. I said that I only needed $133,000. They kept pushing me telling me that I could qualify for a much bigger loan and get a much bigger house. I told them that it didn't matter what I qualified for, I knew what I was prepared to pay, and if they couldn't help me, I'd go elsewhere. So I did. I ended up with around 10 seperate good faith estimates from several lenders before I ended up with a very good interest rate on a house that I could afford and the mortgage terms that I wanted. This only happened because I researched and negotiated. If I took the first offer or contract that was put on the table in front of me, I would have made some mortgage broker's Christmas! But, I was smart and studied and researched for years before taking the plunge. Nope, no adjustable rate for me. Nope, no prepayment penalties for me! Nope, no baloon payment at the end of my mortgage! Nope..... none of that crap. Also, let me say that I could have gotten a house years ago, but I waited because I had some financial trouble. I ended up in bankruptcy when I was a single dad trying to care for an infant daughter. Yes, I could have gotten a subprime loan and I could have been in a new house, but I waited until my financial slate was clean, my income was what I needed and the real estate market turned into a buyer's market.

  If people used their brains, exersize a little self-discipline and stop trying to keep up with the Joneses, they wouldn't get screwed. The same thing happens with people's credit cards and new cars. New cars have been getting reposessed for years because of the same kind of impulsive buying and crooked sales people just out for a commission. Nobody cared when it was just cars or credit cards. Now that the same thing happens with houses, people are taking notice.
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  wha happened?

  As a licensed loan officer in the state of California, (Loan officers who work for independent brokerages require a license, Loan officers in Lending institutions such as Wells Fargo or B of A etc etc, do not require a license and therefore are not regulated by the Dept of real Estate.), I've seen both sides of the argument. I've heard many a story backed by documents of bait and switch. Especially with purchases. A promise of a fixed rate loan only to find that it is in fact an option ARM loan with a ridiculous note rate. The borrower risks losing his deposit if he doesn't take the loan.

  On the other side of the coin, money was so easy and people started to speculate. Purchases of non-owner occupied loans with zero down and zero income documentation. It got crazy. So now the speculators are crying because the music stopped and they don't have a chair. Frankly the govt shouldn't bail out these speculators anymore than me with my Vegas gambling losses.

  I am though, a big fan of what some of the lenders are doing. Before they draw up loan documents, they call the borrower and ask if the loan they are drawing up matches what they were quoted. I belong to an honest brokerage so mine always match. In fact, my fees are always the same as quoted orr lower. Always! Perhaps the govt should make that a requirement. It will chase all the bait and switchers out of the industry.
• 

  5go

  I dated a girl that worked for a mortgage broker in the late 1990s- early 2000s when the mortgage boom was on. The broker she worked for often falsified income documents, home appraisals, etc. just to get somebody in a loan. ANY loan, but particularly one that earned that broker the most commission possible. After all, the broker got their commission up front and they weren't particularly concerned about the residuals. Now, that broker is long gone, but they got their commission. And the bank has to forclose on a lot of these people, because they can't pay.

  But, let me say this..... unless the lender is not adhering to the conditions of the loan contract that both lender and borrower agreed to at closing, IT IS THE BUYER'S FAULT IF THEY GOT SCREWED!!!!!

  You pointed out a reason why the borrower wasn't at fault ( they didn't falsify anything ) then say they are screwed anyway. Sorry the lender is at fault they should pay for it! They should now work with the borrower to fix the mistake they made, which was taking the loan info from a crooked broker.
• 

  BrentR

  I always tell my younger friends to use a 1:4 debt to income ratio and not the 1:3 the bank uses. They get completely intoxicated when they find out "we prequalified for it" and lose all sense of reason. My wife and I have a 1:20 ratio and we still are not sure where all the money goes each month.
• 

  sammielee24

  Oh, I'm sorry, when did lenders start giving mortgages out to people with no jobs, or people that couldn't ever afford the house in the first place? Why did lenders start giving out down payment free mortgages. I'm sorry, but people will do what you let them do. It's the lenders fault, not people who want a freakin roof over their head

  The investors stood to make a few gazillion and took advantage of doing so when the lending rules were deregulated - thanks to the government. The changes made to the parameters of who can borrow - clearly spelled out that a person with no job, a person receiving welfare and/or a person with bad credit and/or no credit could borrow.

  Listening to one man in the industry - he clearly acknowledged that in the early days of this mortgage inflation - it was his job to go out and write up the mortgages. He was paid a substantial fee for doing so and he clearly stated that they (the banks, the adjusters, the insurance companies and the real estate agents) went out and got people loans that the lenders knew the people would most likely default on. He said that after a year, the person would default and the bank would go in and take the house - it was sold again, the real estate agent made another sale/profit, the writer made another fee, the investor made more money and the lawyers made theirs - all on the same piece of property.

  Bottom line is that there are almost 7 million forclosures in the USA alone from this - once this happens, people aren't shopping at the Walmarts and Home Depots much anymore. Sales of all household goods go down. The value of other housing in the community will fall and those people most often end up paying for a house that is worth far less than they bought it for. Yeah people should be smarter but so should the top government paid treasurer - and when they tell the people that they didn't see it coming, how can you blame the people at the bottom who have far less knowledge and experience in finance?..........sammieswife.