by katiekitten 37 Replies latest jw friends
No we're not, although we did get a primary and a second on our house to avoid PMI. The second is a variable with a 5 yr lock. It was only $60,000, so we'll have it paid off in time.
Our mortgage guy was great and we even closed in our new kitchen. He made it so easy, we literally only talked on the phone twice.
momzcrazy
I bought a home a little over a year ago. Before that happened I had to learn alot and I remember that virtually every time I tuned into a financial show on TV they said over and over and over...STAY AWAY FROM THE ARM's unless you are SURE you can handle it. BEWARE was being screamed from everywhere. Like Brent said, people hear a lender tell them they are qualified for X and they think that they're good to go, the lender said so. It's difficult to have a lot a sympathy for those that basically dove in without educating themselves.
My agent is a friend of mine and kept telling me that the bank said I was good for $xx so I should go the limit. I on the other hand tried to educate myself the best I could and I knew to stay well below what the lenders told me I could afford. Had to look for a good while but bought for about 20% less than the current value. Stayed away from a second mortgage and made sure I had a large cushion to boot. I'm no whiz at this stuff by any stretch of the imagination and I had to avoid a lot of bad info but, I think I did ok.
Let's use some common sense here...why would any lender lend to someone who they KNOW is going to default on a loan? Don't you think the lender is going to lose money on those loans? Does this make any sense? Some people here should stop and think for a minute how stupid some of their comments are.
BP
why would any lender lend to someone who they KNOW is going to default on a loan
The comments are NOT so stupid - think about it. The crash didn't happen overnight - it's take years. First I loan you 1 million to buy your house on credit. Housing prices escalate and even though I know you are still risky, I bundle up your mortgage into a few bonds that I own and sell it all to Mr Zoom who lives 4,000 miles away at a substantial gain to me. I just made half a million dollars on my investment - sold your mortgage and you didn't even know it. Mr Zoom waits a year and then sells your mortgage to Mrs Cash and he makes a quarter of a million on his combined bundle to her. By the end of 5 years, your mortgage has been bought and sold for a whack of cash to any number of investors. Every single person working on a fee or commission along the way has also made money on the transactions. sammieswife.
I still ask the question, why, if all that money is being made, would a lender intentionally lend to someone they know is going to default? YOU can't answer that question because there is no logical answer to that question. YOU can't blame it on anyone but the borrower for defaulting....even though you would like to try. The promblem is...in this day and age...noone wants to take responsibility for their actions, so they pass the buck onto the next guy.
It's now become commonplace to place the blame on everyone but yourself. And as long as our society allows this kind of thinking, we will continue on the path of "Blame the next guy for my problems."
BP
Blame the bank.
Blame the Government.
Blame the WT.
Blame, blame, blame.
If you signed on the dotted line without calculating for yourself if you could actually afford the house, then I don't feel one bit sorry for you when you find yourself living in your car that will also be repossessed as you really couldn't afford that either.
Its so interesting to see opinions from people who have direct experience of this issue, im sure im getting a better picture here than the articles I read in the news.
"It takes two greedy people to make a good scam" - thats a great quote, and im sure this whole fiasco is down to lots of greedy people. I do think however, that lenders should be partly responsible as well as buyers.
Here in the UK there are laws that attempt to curb the worst excesses of financial institutions - such as outlandinsh APRs. Now why would the government want to do that if we truly believed in 100% Caveat Emptor? Surely because financial institutions can make spohisticated packages designed to deliberately obscure the issue and fool people (who whatever you think they should be, by and large are mainly ill-educated and easy to fool).
In addition in the UK a bank has to go to court to get an order to reposess a house. My friend worked in this department for a large UK bank and he told me that where banks had lent a ridiculously high loan to earnings ratios (1:8, 1:10, 1:11 etc) the court was refusing repossession because they said the bank should have known that person was likely to be unable to service such a debt. As a result banks in the UK are becoming more cautious about the ratios they lend (although there are still ways round this if both parties want to be greedy).
I have read the stories about greedy people getting caught up the the ARM mortgage boom and buying very expensive houses, but all the stories coming through in the press are of very poor neighbourhoods, and also predominantly black neighbourhoods where people have attempted to buy fairly humble houses that are now being reposessed. I see George Dubya has been asked to consider the problem, because I think it will affect lots of people who havent got into the mortgage trap, but who will soon be living in devastated neighbourhoods, or whose poperty value will be reduced.
Heres how its being reported in the British press, if you are interested:
Lenders don't "knowingly" lend money they know will be defaulted on. That's why there are underwriters to review files to qualify a borrower. The rules got very lax. Oh well. Investors got greedy and now the market turned on them. Loan defaults are soaring. Some of the blame goes to the borrowers. They assumed the market would continue to escalate. Go in with 100% financing because in 2-3 years, the market will improve and we'll flip the property or refinance into one new loan at a better rate. Worked for a while. But what goes up must come down. Sorry if you are now upside down in a turd of an investment. But it's called a risk for a reason. Some of the blame goes to banks when they would bait and switch. True the borrower has to sign on the dotted line, but here's the catch. On a refinance the borrower has invested little in the loan process. An appraisal fee and maybe an application fee. If the loan docs don't match then he can either walk or sign with a three day right of recission and then later change their mind. On a purchase, the offer to purchase is made and a deposit changes hands. usually a substantial amount. The offer is made with a 10-15 day loan contingency. In other words, If I can't qualify for a loan in 10-15 days then I am not bound to the contract. Here's the rub. As the process continues and agreements are made, the loan contingency comes due and you have to provide proof of a loan approval or the seller can pull the offer. Well the approval arrives and you sign off your loan contingency. Now if you pull out, at the very least you can lose your deposit. In some cases the agents can sue for lost commissions. Well the paperwork arrives and guess what. So much for what's promised. Here's the loan you get. You can either take the loan and save your deposit. Maybe refi out of the horrible loan later but wait. The loan has a pre-payment penalty. Which means if you refi or sell in a certain amount of time, (1-5 years in California), you will get hit with a fine equal to 80% of 6 months interest. I have helped 6 borrowers this year refi into better loans this year to date who were scammed. It's a crappy industry because the rules are just loose enough for scam artists to thrive. There's plenty of blame for everyone to share.
I agree that borrowers need to be more informed but whose job is it to inform them? I believe it is the lenders job to make sure the borrower fully understands. They are the experts. They have to accept the responsibility. They are well paid for the service they are supposed to be providing! Instead what did they do? They made sure to make it MORE DIFFICULT by OBSCURING THE TERMS so that people were deceived.
This is criminal! And some heads need to roll. And I hope they DO ROLL!
Bailing out the industry is just so typical though. What about the people who lost their homes? And we're not talking about these so-called "investors" who took "risks" to make millions by flipping homes. I don't give a flying rat's arse about them. What I'm talking is the regular people who were scammed left and right to make lenders rich. People who were buying homes to live in and raise families in. And that's the vast majority of the population who is being hit the hardest.
And to be honest with you, I think the realtors were greedy asses also. They knew what they were recommending to their clients. And they couldn't care less so long as that commission check was coming.
While I have a 30 year fixed mortgage that we paid down the interest rate.....yes, I am definately affected by the sub-prime mess.
The house values in my area have hit rock bottom. Just when I think it can't go any lower, it does.
Skeeter
