Foreclosures..

#1
tim

tim

Volsquatch
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Jan 19, 2007
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#1
Anyone got a grip on this? Are most of them a result of poor choices by consumers or predatory lending.. IMO interest only loans and ARM (adjustable rate mortgages) were always risky. These types of loans were options to me when I bought my first house years ago. I recognized that these were too risky and even though the reward was good up front the unknown was too risky for me. I guess what I'm trying to say is.. Is it the responsibility of the lending institution to not offer these types of loans? Because everywhere you go you see these Title loans, pawn shops, etc and everyone knows that they are predatory and yet everyone still pawns their titles and other goods with little or no hope of getting their title or goods back. I'd like to live in a million dollar house, but the reality is that I can't afford it. Is it more complicated than this?

My folks always told me that if something is too good to be true then it is too good to be true.
 
#2
#2
BHO and Hillary say blame the banks, blame the govt for not having enough laws in place, blame anyone but the person who made the decision to take such a risky loan. And then let everyone else bail these people out. Sounds like a wonderful idea.
 
#3
#3
I am a Realtor, and IMO here is the scoop on all of this, The price of home grew at a faster than normal rate, lending institutions lowered the credit score and restrictions to qualify, the lenders sold it as getting more home for less money, ALOT of lenders got extra perks and bonuses for pushing products like the 80/20 with the 20% being adjustable, That was when the rate was awesome so it was saving them alot of money over the other 100% loan products, but then the market adjusted like it needed to and prime went up. This whole thing we are seeing now is a result of borrowers who want it and want it now and at the same quality of life that their parent have without the patience to get there and lenders offering money to folks who were not ready to buy and were not qualified to buy. When you have this mix it is bound to happen. In sales history I only had one person get an ARM, I made sure to warn of the risk and she demanded it, she was a banker in our community. The 80/20 is not a bad product when the 20 is fixed, but the banks were allowing 80/20 with the 20% ARM, interest only, and other very creative but stupid products.


My two cent anyway
 
#4
#4
the loan documents have to CLEARLY state what the person is paying and what that payment will go to when it resets. i don't feel sorry for these people in the slightest. don't buy more than you can afford. end of story. I love this predatory lending talk. what the lenders were hurting these people by lending them money? isn't lending being available to more people a good thing? the liberals will on one hand complain that no one will loan to inner city people and then when they do they call it preditory lending. ridiculous. and ARMs can definetly be good investments as long as you are smart about it. the average person would have been far better in ARMs the last 20 years rather than a fixed rate due to falling interest rates.
 
#5
#5
As harsh as it sounds, I hope there is no bailout of lenders or borrowers. There has to be accountability for one's actions.

I'm very concerned that the U.S. consumer on average has overextended himself to the point that our economy can no longer sustain itself and the purging of all this debt is going to cause a very severe recession.
 
#6
#6
I'm sure there were some cases of scamming/high pressure etc.

On the other hand, I'm sure there are cases of people just buying too much house.
 
#7
#7
the average banker certainly doesn't want a loan they underwrote to default. it's not good for business and if they hold the loan they eat the loss. while there were individual agents that lied about income and such the people signed the documents and surely must have known that their financial situation was being inflated.
 
#8
#8
droski said:
the average banker certainly doesn't want a loan they underwrote to default. it's not good for business and if they hold the loan they eat the loss. while there were individual agents that lied about income and such the people signed the documents and surely must have known that their financial situation was being inflated.
Click to expand...

The good people over at Billy Bob's Mortgage Emporium aren't your average bankers!
 
#11
#11
Droski, I agree, for the most most part that it was the consumers part and these banks are getting what they have coming to them, when you loan to a 520 credit score and they burn you why is everyone so suprised?
 
#12
#12
Plano Vol said:
As harsh as it sounds, I hope there is no bailout of lenders or borrowers. There has to be accountability for one's actions.

I'm very concerned that the U.S. consumer on average has overextended himself to the point that our economy can no longer sustain itself and the purging of all this debt is going to cause a very severe recession.
Click to expand...

It's not harsh, it's common sense. Unfortunately the gov't is trying to relieve the people of that unfair burden too.
 
#13
#13
IMO people can't sell their house because of the oversupply and can no longer afford the adjustable rate mortgage. They are walking away from them. It's pretty scary.
 
#14
#14
Economy is just like a living creature. Have to clean up the weaknesses to stay healthy.
 
#15
#15
allvol123 said:
Economy is just like a living creature. Have to clean up the weaknesses to stay healthy.
Click to expand...

i agree. proping these people up doesn't help anything. clean em out and deal with the consequences and in the long run we are better off.
 
#16
#16
You are correct droski. If you bail people out because of stupid behavior, chances are they will not learn anything.
 
#17
#17
Someone emailed me this powerpoint presentation on the subprime mess a while back. I couldn't upload it but I think this link will work for most of you. This is funny and succinct and actually explains how this happened.

subprime works - Google Docs

edit: should've mentioned R-rated language
 
#18
#18
We are not just talking about the small time mortgage brokers we are talking about the big guys too like Countrywide.

The govt insures the banks that are over extended. IMO they have reason to look at banking practices and tighten them, to make it more difficult to borrow money for a home. It got way out of hand, and now we see the consequences.
 
#19
#19
it's already FAR more difficult than it previously was to get a loan for a home. more govt intervention is just going to kill the housing market even more. i'm just waiting for the stories about how inner city people can't get loans anymore or refinance. i'm sure the dems will be up in arms over that claiming racism. damned if you do, damned if you don't.
 
#20
#20
droski said:
the average banker certainly doesn't want a loan they underwrote to default. it's not good for business and if they hold the loan they eat the loss. while there were individual agents that lied about income and such the people signed the documents and surely must have known that their financial situation was being inflated.
Click to expand...

The Banker takes that loan and then sales it to someone else and does not lose money. whomever bought it gets screwed. Thats why the banks are getting tougher, they dont have anyone to buy their loans anymore. If someone out there is willing to buy these loans the Banks will go back to giving whatever they can get away with.
 
#21
#21
MontereyVol said:
The Banker takes that loan and then sales it to someone else and does not lose money. whomever bought it gets screwed. Thats why the banks are getting tougher, they dont have anyone to buy their loans anymore. If someone out there is willing to buy these loans the Banks will go back to giving whatever they can get away with.
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well first off most of those loans have provisions that if the borrower defaults within a certain amount of time the banks have to replace that loan with a new one and they eat the loss. there is a reason that most of the lenders who were doing these subprimes are now bancrupt and it's not because they got rich off of poor people.
 
#22
#22
utvolpj said:
It's not harsh, it's common sense. Unfortunately the gov't is trying to relieve the people of that unfair burden too.
Click to expand...

Common sense is so few and far between these days. All it takes is a smooth talker and another to back up what they say and poof your in somehting you didn't really want.

I am in outside sales and I am also a Realtor. Unfortunately I see things like this happen almost daily.

Just remember most of the people in this country are not free thinkers they are driven by the 5:00 news.

It is scary and also a shame.
 
#23
#23
droski said:
well first off most of those loans have provisions that if the borrower defaults within a certain amount of time the banks have to replace that loan with a new one and they eat the loss. there is a reason that most of the lenders who were doing these subprimes are now bancrupt and it's not because they got rich off of poor people.
Click to expand...

Unless they somehow have it set up they are still responsible for the loan after, say an ARM adjusts, which the average is 5 years. then they wouldnt be responsible.

Most of the subprime lenders were being backed by money flowing from China. They sold the loans they bought from the banks to them and then when the original loanee's default on their loan the subprimes didn't have the money to back it up. The US government has to intervene at this point so we dont default on the money China gave to the subprime holders.
 
#24
#24
Is the idea of bringing back "debtor's prisons" arcane? How about "indentured servitude"? I really do not feel that having your credit ruined is enough of a deterrent to most people who want to borrow well above their means.
 
#25
#25
I do believe their should be punishment for those who lied about income on their applications. Since 1 in 10 adults are in prison maybe we should try something else? like taxing them 50%-70% of their income over a period of years.
 
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