Where is all the outrage???

mammasan

peacegirl wrote:

Yes, there does need to be more regulation and especially on the mortgage brokers. The outrageous loans were usually the ones that involved a broker who were usually (not always) getting paid ridiculous amounts in fees on top of what the person was paying the actual lender in fees.

No the answer is not more regulation. The answer is more education. People need to educate themselves on how to be fiscally responsible. Not everyone can afford a 4 bedroom, 3.5 bath, two car garage home with cathedral ceilings and an in ground pool in the backyard. If all you can afford is a small starter home that that is what you should get. The problem is that we have become so materialistic. People are not satisfied with a smaller home or an economy car. They need the big homes and the BMWs or Mercedes-Benz in the drive way. Not everyone can afford that shit but people will dig themselves into massive debt just to keep up with the Jones'. I read somewhere that if every American stopped using their credit cards and simply bought what they could afford with cash our economy would collapse. So regulation is not going to change that.

Strangest Tribe

mammasan wrote:

Yes home prices where ridiculous but how can you say that the problem wasn't the people. No one forced these people into taking out mortgages that they where not going to afford once the introductory rate went up. No one forced the lender to approve a $600,000 mortgage to someone who makes $45,000 a year and has a credit score of 560. I give you these figures because this is what happened to my friend's brother. Now he is scrambling to pay his mortgage because he can't afford it anymore.

Where I live the new neighborhoods are outgrowing the population. People that want to sell older homes are selling well below appraisal value if they sell at all. Contractors would rather build new homes because that's where everyone is moving and the bank won't give out loans to remodel when the old home's value continues to plummet. These older homes aren't in bad neighborhoods either it's just become easier to buy a new home.

True, someone that only makes 45,000 should never be allowed a 500,000 home, but there are other factors as well.

peacegirl

mammasan wrote:

No the answer is not more regulation. The answer is more education. People need to educate themselves on how to be fiscally responsible.

I don't think there is just one answer but I do think regulation is part of the answer and as you pointed out, so is education.

But people have to use that education. I have seen loans where the borrower was required to attend a seminar or class for first time homebuyers and in fact it was a requirement of my loan and my sister's loan when we bought our houses and using a budget and fiscal responsibility was addressed.

Pacomc79

Strangest Tribe wrote:

Where I live the new neighborhoods are outgrowing the population. People that want to sell older homes are selling well below appraisal value if they sell at all. Contractors would rather build new homes because that's where everyone is moving and the bank won't give out loans to remodel when the old home's value continues to plummet. These older homes aren't in bad neighborhoods either it's just become easier to buy a new home.

True, someone that only makes 45,000 should never be allowed a 500,000 home, but there are other factors as well.

That happens quite a bit where developers are well entrenched in the local government. They are after all offering more tax money and employing people building those new homes (this is how walmart among others abuse eminent domain)... but.... what about the infrastructure is that sound? Is it safe to build under powerlines... Is there enough water for all these homes? Those are questions that have not been asked these last bunch of years.

mammasan

Strangest Tribe wrote:

Where I live the new neighborhoods are outgrowing the population. People that want to sell older homes are selling well below appraisal value if they sell at all. Contractors would rather build new homes because that's where everyone is moving and the bank won't give out loans to remodel when the old home's value continues to plummet. These older homes aren't in bad neighborhoods either it's just become easier to buy a new home.

True, someone that only makes 45,000 should never be allowed a 500,000 home, but there are other factors as well.

Contractors are building new homes because that is what people want. As I stated in my previous post about the materialistic nature of this country. People don't want to move into the 30-40 year old home they want the new McMansions.

catch22

mammasan wrote:

I completely agree. My tax dollars should not be going to bail out an irresponsible company or individual. This whole mortgage situation is a product of gross irresponsibility. Mortgage lenders and the borrowers where completely irresponsible in their dealing, offering high mortgages to those they knew couldn't afford them and people borrowing more than what they could afford. Why should the public now have to pick up the tap and clean up the mess these entities created?

i'm with you. let fannie and freddie fail. what bothers me is the citizens who could lose their homes on this. fuck fannie and freddie, don't give them a cent and let them shut down. i'm not certain how the industry works, but i feel like if we're going to be handing out billions, let's just accept that we fucked up, use it to help out the people with the actual mortgages, and put this all behind us. i have no sympathy for wall street... it brought this on itself.

puremagic

It is either the bailout or watch the banks start collapsing in a cascade effect. Then YOU could have sat back and watch as the FDIC announces that it can not insure YOUR deposits, while the stock market simultaneously began a panic. By time the government had to step in, YOU would have lost most, if not all of your life savings and the national economy would be in full blown recession.

I wish there could have been another way or that Bush had given the economy more time to adjust. This bailout gives the government too much control over the entire private sector and industry as a whole. The government now controls the banking system, it basically has operational and internal oversight over banking management, whereas before the government limited itself to regulatory policies. Add the banking system to the telecommunication system and a disturbing picture begins to emerge.

catch22

mammasan wrote:

My girlfriend works for a bank, a pretty big national bank who shall remain nameless Woo Hoo. She said that back in 2002 77% of this banks mortgages where A-paper mortgages. For those that don't have a lot of understanding of mortgages A-paper loans are usually reserved for people with good credit. Only 23% of their mortgages where B paper or sub-prime. By 2007 on the percentages had flipped. The executive management figured that they can make more money off of the B-paper mortgages because the interest rate was adjustable. So their greed led them to approve mortgages for individuals who had no business being approved in the first place.

bingo. this is a result of greed and get rich quick schemes. while i agree that some blame should be apportioned to those who took on mortgages they could never pay, they don't take the whole blame in my eye. these are unsophisticated buyers and many of themw ere duped by banks looking for a big score. it backfired on them big-time. what bothers me is the shady sons of bitches behind this will walk away having made their fortune with no consequences. the people they duped will have their lives and finances destroyed. sure, they made dumb decisions. but people were up in arms about kiddie porn the other day in another thread and i view this as part of the same problem... sick people in a position of power taking advantage of those who don't know better. i don't blame those without the resources or means or intelligence or options to know they were being had. i'm in law school and this shit is complex enough as it is. they were defrauded, plain and simple.

mammasan

catch22 wrote:

bingo. this is a result of greed and get rich quick schemes. while i agree that some blame should be apportioned to those who took on mortgages they could never pay, they don't take the whole blame in my eye. these are unsophisticated buyers and many of themw ere duped by banks looking for a big score. it backfired on them big-time. what bothers me is the shady sons of bitches behind this will walk away having made their fortune with no consequences. the people they duped will have their lives and finances destroyed. sure, they made dumb decisions. but people were up in arms about kiddie porn the other day in another thread and i view this as part of the same problem... sick people in a position of power taking advantage of those who don't know better. i don't blame those without the resources or means or intelligence or options to know they were being had. i'm in law school and this shit is complex enough as it is. they were defrauded, plain and simple.

Well to reinforce you post Kerry Killinger was just fired at WaMu's CEO. From some sources that I have he walked away with a nice package. Yet the thousands of people who had their lives turned up side down because of foreclosures don't get to go home to their multi-million dollar home with their multi-million dollar severance package.

yoke

mammasan wrote:

Contractors are building new homes because that is what people want. As I stated in my previous post about the materialistic nature of this country. People don't want to move into the 30-40 year old home they want the new McMansions.

I will take a 30/40 year old home over a McMansion any day... they are built better(at least where I live). Sure my house is smaller but it was cheaper and I have more money to play with. I also don't mind sweat equity, I enjoy working on my house and fixing it up room by room.

Pacomc79

puremagic wrote:

It is either the bailout or watch the banks start collapsing in a cascade effect. Then YOU could have sat back and watch as the FDIC announces that it can not insure YOUR deposits, while the stock market simultaneously began a panic. By time the government had to step in, YOU would have lost most, if not all of your life savings and the national economy would be in full blown recession.

I wish there could have been another way or that Bush had given the economy more time to adjust. This bailout gives the government too much control over the entire private sector and industry as a whole. The government now controls the banking system, it basically has operational and internal oversight over banking management, whereas before the government limited itself to regulatory policies. Add the banking system to the telecommunication system and a disturbing picture begins to emerge.

All under the guise of a conservative president. The guy is essentially a national socalist.

mammasan

yoke wrote:

I will take a 30/40 year old home over a McMansion any day... they are built better(at least where I live). Sure my house is smaller but it was cheaper and I have more money to play with. I also don't mind sweat equity, I enjoy working on my house and fixing it up room by room.

I'm with you. The construction of older homes are so much better plus, in my opinion, they have far more character than the McMansions.

catch22

mammasan wrote:

No the answer is not more regulation. The answer is more education. People need to educate themselves on how to be fiscally responsible. Not everyone can afford a 4 bedroom, 3.5 bath, two car garage home with cathedral ceilings and an in ground pool in the backyard. If all you can afford is a small starter home that that is what you should get. The problem is that we have become so materialistic. People are not satisfied with a smaller home or an economy car. They need the big homes and the BMWs or Mercedes-Benz in the drive way. Not everyone can afford that shit but people will dig themselves into massive debt just to keep up with the Jones'. I read somewhere that if every American stopped using their credit cards and simply bought what they could afford with cash our economy would collapse. So regulation is not going to change that.

come on. we can't teach our kids to read and do addition properly. we're going to explain the ins and outs of finance to everyone? shit, people need an MBA and a JD just to understand a basic mortgage contract... even a college degree won't do it. the people being fucked by this crisis aren't all rolling benz's and living in mansions. this is predatory lending, period. and we need to take a harder line on it.

the problem isn't just that the borrowers don't see or understand the long-term effects. the problem is that the lenders don't care about the long-term effects. they want to make their fortune and then hope to bail before it collapses and they don't care who gets burned in the collapse. THAT is what needs to be stopped.

catch22

mammasan wrote:

Well to reinforce you post Kerry Killinger was just fired at WaMu's CEO. From some sources that I have he walked away with a nice package. Yet the thousands of people who had their lives turned up side down because of foreclosures don't get to go home to their multi-million dollar home with their multi-million dollar severance package.

exactly what i'm talking about.

Strangest Tribe

mammasan wrote:

I'm with you. The construction of older homes are so much better plus, in my opinion, they have far more character than the McMansions.

I agree...We have an 80 year old home built like a fortress. It would take a 1/2 million to build a home like it today...
but what kills me is so many say they don't build homes as well today as they used and yet these same people buy the new poorly constructed houses despite this...

Sometimes it's like they just want a new home for a security system and three car garage...

blondieblue227

I think society is going thru a cycle. First in the 30’s there was a depression. People learned to live frugally. Then after WWII troops came home and lived the American dream….owning a house and working hard for the things they wanted. Somewhere between then and now, people became to think they were entitled to things without working for it.

Is it the bank’s duty to teach greedy people how to manage their money?
Did banks take advantage of these greedy people?


And I agree with the original post.
Healthcare, pricey education, gas prices, real estate.
Why don’t people protest?
Maybe we’re too busy on chat boards to actually protest anything.

blackredyellow

catch22 wrote:

come on. we can't teach our kids to read and do addition properly. we're going to explain the ins and outs of finance to everyone? shit, people need an MBA and a JD just to understand a basic mortgage contract... even a college degree won't do it. the people being fucked by this crisis aren't all rolling benz's and living in mansions. this is predatory lending, period. and we need to take a harder line on it.

the problem isn't just that the borrowers don't see or understand the long-term effects. the problem is that the lenders don't care about the long-term effects. they want to make their fortune and then hope to bail before it collapses and they don't care who gets burned in the collapse. THAT is what needs to be stopped.

Some blame has to be put on the borrowers too. Sure, mortgage contracts are complicated, but the info about the interest rate (what it is, and if it's fixed/adjustable) and the loan amount and all of the "important" details are very straight forward and simplified.

And in most cases, you have an agent and attorney that you select and pay to help clarify things.

I just can't excuse people who sign for a mortgage for several hundred thousand dollars, and either can't understand it, or don't research to figure things out.

Like I said before, I am sure that some people were screwed, with last minute term changes and things like that, and there should be some sort of appeal/grievance process to help them. But most of the problem is either people who borrowed above their means, or were counting on their home to keep increasing in value.

mammasan

catch22 wrote:

come on. we can't teach our kids to read and do addition properly. we're going to explain the ins and outs of finance to everyone? shit, people need an MBA and a JD just to understand a basic mortgage contract... even a college degree won't do it. the people being fucked by this crisis aren't all rolling benz's and living in mansions. this is predatory lending, period. and we need to take a harder line on it.

the problem isn't just that the borrowers don't see or understand the long-term effects. the problem is that the lenders don't care about the long-term effects. they want to make their fortune and then hope to bail before it collapses and they don't care who gets burned in the collapse. THAT is what needs to be stopped.

You don't need an MBA to know wether you can afford a $2,000 a month mortgage payment or not? You don't need an MBA to know that your interest rate will go up every year, if you have an adjustable rate, and while you can afford your mortgage at the introductory rate that may not be the case in 3 years? You don't need an MBA to know that someone with a 560 credit score and making $45,000 a year shouldn't be buying a $600,000 home in a neighborhood with property taxes hovering around the $10,000 a year mark? All of these are pretty much common sense, yet people ignore these simple facts and sign on the dotted line. Yes mortgage brokers and lenders are responsible for this mess but the borrowers share an equal load. You can regulate the industry till your blue in the face but that is not going to stop people from living beyond their means.

catch22

mammasan wrote:

You don't need an MBA to know wether you can afford a $2,000 a month mortgage payment or not? You don't need an MBA to know that your interest rate will go up every year, if you have an adjustable rate, and while you can afford your mortgage at the introductory rate that may not be the case in 3 years? You don't need an MBA to know that someone with a 560 credit score and making $45,000 a year shouldn't be buying a $600,000 home in a neighborhood with property taxes hovering around the $10,000 a year mark? All of these are pretty much common sense, yet people ignore these simple facts and sign on the dotted line. Yes mortgage brokers and lenders are responsible for this mess but the borrowers share an equal load. You can regulate the industry till your blue in the face but that is not going to stop people from living beyond their means.

those are not common sense decisions. i get the feeling you're in some financial field as a career. it's sometimes hard to see from the outside. i've learned things in law school that i can't believe people don't know about the law, but to an outsider of course it's going to be confusing.

i'm a pretty well educated guy and a reasonably intelligent person when it comes to handling my finances. but nonetheless, i don't know my credit score and i sure as hell don't know what it would mean if i did. i don't know what a good score is or how you get one. i read every form given to me about my federal loans and i still don't understand a goddamn word of it, with 6 of them saying one thing and 4 saying another. it's gibberish to me.

you're telling me a person who maybe finished high school is expected to be sophisticated enough to understand this all when the sales pressure is on and a smooth-talking banker who wants to lock down another loan for the bank to get a raise or promotion is telling them it's not going to be a problem? and if these people can't afford their home, how are they going to afford to retain an attorney to review all the terms and explain every contingency?

it sounds like you're viewing these buyers as largely white, upper-middle class folks who have attorneys and sophisticated finances. yes, those people are knowingly gambling at trying to live beyond their means. but i don't think they're a huge part of the people fannie and freddie were supposed to be helping. i think most of those people are unsophisticated buyers who never stood a chance of truly understanding what they were getting into.

this is why we need education reform. our schools don't teach shit worth knowing anymore. we hear about every mid-level female american that sewed a flag in the name of making sure we get balanced history, we hear about how evolution is prevailing theory but creationism should be kept in mind too, but we don't teach our kids a damn thing about a bank account, or balancing a checkbook, or how a loan works. the k-12 system is a joke.

mammasan

catch22 wrote:

those are not common sense decisions. i get the feeling you're in some financial field as a career. it's sometimes hard to see from the outside. i've learned things in law school that i can't believe people don't know about the law, but to an outsider of course it's going to be confusing.

i'm a pretty well educated guy and a reasonably intelligent person when it comes to handling my finances. but nonetheless, i don't know my credit score and i sure as hell don't know what it would mean if i did. i don't know what a good score is or how you get one. i read every form given to me about my federal loans and i still don't understand a goddamn word of it, with 6 of them saying one thing and 4 saying another. it's gibberish to me.

you're telling me a person who maybe finished high school is expected to be sophisticated enough to understand this all when the sales pressure is on and a smooth-talking banker who wants to lock down another loan for the bank to get a raise or promotion is telling them it's not going to be a problem? and if these people can't afford their home, how are they going to afford to retain an attorney to review all the terms and explain every contingency?

it sounds like you're viewing these buyers as largely white, upper-middle class folks who have attorneys and sophisticated finances. yes, those people are knowingly gambling at trying to live beyond their means. but i don't think they're a huge part of the people fannie and freddie were supposed to be helping. i think most of those people are unsophisticated buyers who never stood a chance of truly understanding what they were getting into.

this is why we need education reform. our schools don't teach shit worth knowing anymore. we hear about every mid-level female american that sewed a flag in the name of making sure we get balanced history, we hear about how evolution is prevailing theory but creationism should be kept in mind too, but we don't teach our kids a damn thing about a bank account, or balancing a checkbook, or how a loan works. the k-12 system is a joke.

I'm actually a graphic designers and wouldn't know anything about financing if it came up and gave me a lap dance. What I do know, through research is some of the basic ideas a borrower should know before even applying for a loan. Before I even bought my home, I checked my credit score to make sure that I had a good enough credit history and score to get a good fixed rate loan. I sat down, with my then wife, to go over our finances to see what we could afford to pay monthly. It doesn't take a genius to do these thing prior to buying a home.