johnnymk

http://www.thenewstribune.com/opinio...ry/668040.html

While some short-sellers are simply victims of a plunging market, most can only look into the mirror to see the real cause of their collective problems.

I watched my home soar to well more than double the purchase price; however, I managed to keep my hand out of the second mortgage cookie jar. Those who didn’t cannot blame the lenders and banks any more than a drug addict can blame his dealer. At some point the homeowners put pen to paper and took a chance on a loan they either didn’t understand or couldn’t afford.

If an adjustable loan sounded good when you couldn’t afford a fixed-rate loan, then shame on you. If borrowing against the future value of your house seemed good when every voice warned of a housing bubble, then shame on you. Those of us who held back and played the safe, prudent game now must share the burden you created.

While some lending institutions may be guilty of predatory practices, they ultimately cannot make anyone sign a loan. There are victims in this housing crisis, but most of them will never be heard from because they made safe decisions and kept their heads down.

The American dream is no illusion; it is alive and well. The only illusion is in the belief that markets only go up, money is always there to be borrowed and responsibility for poor decisions lies somewhere else.

VTGreg

I agree with your sentiments for the majority of those that are feeling the ill effects of the housing bubble, but there are some that really were taken advantage of by the lending institutions. While I realize that no one forces anyone to sign documents, there can be a great deal of pressure exerted and many are not as knowledgeable about finances as those that frequent these boards. Some thought they were finally achieving the dream of homeownership only to find out a year or two later they never could really afford it.

While even these individuals bear some of the fault, there really needs to be more education regarding mortgages and finances in general. Not sure what the answer is but there was a lot of money to be made and people were taken advantage of.

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mcs328

The pressure to buy a home was like buying a car. A lot of pressure in a short time span. I think we should start with the people who bought a second home or created a group to pool money together to buy other homes to rent or sell off.

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zippyjuan

You talk to your broker. Sure, we can fix you up with a low rate mortgage so you can afford that house you want. Yeah, it may adjust later on but that is only if interest rates go up and they have all been going down lately. You will be saving hundreds of dollars every month compared to if you went with a fixed mortgage. Even if it readjusts you will be able to refinance it again or sell the house if you have to. Home prices are going up so you could even make some money off the deal and buy a different one. No problem. I would not even worry about it. (because I will get my comission whether or not you do pay it back so what do I care what happens down the road). Homes are moving fast- we have other offers on this one so if you want it I think you should go for it now. Even if nobody else buys it, the price is going up and it will cost you more if you wait.

You find the house you want and go to sign all the papers. They put a stack of papers about an inch thick and tell you where to sign and where to initial. You are numb before you get halfway though. Even if you are knowlegable about financial matters it is daunting. You would probably sign away your life at this point if they told you to. Just sign here. And here. And here. Initial this one. This one too.

A lot of people just say "Well, how much is my payment going to be and what do I need to sign?"
Saying it is all the buyer's fault (they are not blameless but can often be uninformed or unaware of what they were actually getting into) does not cover it. The brokers share in what occured too. There is plenty of blame to go around in this mess.

There is expected to be another round of rising forclosures from people getting laid off their jobs. Plus another batch of rate adjustments will continue for about the next year to year and a half.

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renovation

sure there were some shaddy brokers around. and some shaddy lenders to. some that set up deals were you couldn't get out of the loan unless you payed a very hefty price. then there the brokers who give out loans on property that wasn't worth value of the loan even at those inflated housing prices. but arranged for the buyer to get the house and cash out they needed. i agree with loans that will buy the home ,and pay off all/part of your credit cards. but it the buyers fault if took some very heavy cash payments out. also i feel it's jointly to blame the banks and home buyers .that took out second mortgage. if your in this bad a shape you should of got out of the house. but i do feel for people who got these home equity loans thinking they were just a normal home repair loan. banks and loan companys were they sold them as home repair loans. and a lot of these loans were sold to the do it yourself to fix up there home. but its worked both ways. as some who drop all this into there homes.
now feel they can just walk away and let the bank have them .why not its not worth what i owe on it.
these are the one i feel the bank and loan companys should nail to the wall. there are a lot of these people out there right now. they buy new place at todays prices and then screw the old home they just left .they still own the property .but becouse it cant be sold for what they owe on it .they just stop making the payments and let the bank take it back.

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You could pick up Lindsay Lohan for less than a intel 990x, and still have money left over to bail her outta jail

Airencracken

Yeah Shame on AIG, Bear Sterns, Merril Lynch, Citigroup, Bank of America....

Oh wrong thread.

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YellowCoffee

There were shady decisions made at every level of the lending ladder.

However, brokers were not doing anything illegal. They were complying to the underwriting standards of the lenders. These lenders set these standards on what they felt could profit them by packaging these loans and selling them on the secondary market. Wallstreet gobbled up these securitizations given the great credit rating that the rating agencies gave the securitizations. Technically, nothing illegal was done (for the most part).

If I was to place blame, I would place the bulk of the blame on the gateskeeper to this problem: the regulators (or lack thereof). Assuming the financial markets can fully be deregulated was obviously the wrong assumption. Borrowers just wanted to buy a home (whether it was for a home, or an investment); Brokers & Lenders were just doing their job trying to compete with everyone else; Investors were looking for a high yield, "safe" security. I'm not saying what they did was not shady or completely ethical, but I'm just noting that it was NOT illegal (for the most part).

I've always had the thought that people (in general) are going to act stupid and need to be kept accountable. I'm a homeowner and I'm upset at the way people are acting, but at the same time I know that people are going to act irresponsibly and sometimes even "shady".

InfiniteNothing

I also expect people to be stupid. If you yell fire in a theater people are no going to exit in an calm manner, it's reasonable to expect some trampling to take place. In that respect I think that part of the mortgage brokers job should be sort of a financial adviser. They make a decent buck on your mortgage they should at least "give you the talk" on budget and what not.

Honestly, if the broker doesn't give the consumer that talk, who is? No really, whose responsibility is it to educate a home buyer on basics of a mortgage? They certainly don't teach that in public schools. While it's sad that some people won't take the the time to educate themselves on their own, again, it's to be expected and I think it's in the nations best interest to have brokers fill this roll.

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As for our common defense, we reject as false the choice between our safety and our ideals.

VTGreg

While I agree that it is in the nation's best interest for individuals to be educated on personal finances and basics of mortgages, why is it the broker that should be required to fulfill that role?

Why not force the individual to take some sort of intro class and that be something that is confirmed during the mortgage process? I'm sure there would be plenty of people that would be willing to provide that education (maybe for free if subsidized by the government or for a fee otherwise). This would just be another requirement for being a homeowner.

From a more holistic viewpoint, basic personal finance should be something that is taught at the high school level. Doesn't have to be anything earth shattering but some basics like building a budget, learning some basic budget rules of thumb and balancing a checkbook would be good life skills that everyone should have been taught.

InfiniteNothing

Brokers seem like the best point of contact. They already exist and have relevant experience and knowledge. The personalized attention and specifics of a persons situation seem as important as a general overview of the complexities of mortgages. A class is better than nothing. I wouldn't object to that.

Chgoman

When I started in real estate years ago, I started on the mortgage side of the business. The first question people would ask me is how big of a loan can I qualify for. My response is that they were asking the wrong question. The right question is what are you comfortable paying. I could have qualified plenty of people for a $500,000 loan who would be miserable with a $300,000 loan and comfortable at $250,000. Too many people just live under the bigger is better assumption.

renovation

i may not be the oldest or wisest on the forum. but me and the wife and a lot of are friends & relatives all said the same thing. we see these new homes being build and it seem like most of them were being sold to newer couples (younger couples). we kind of stereo type here. 24-30 age group fresh out of school. they have a brand new home ,2 brand new car ,2-3 children a lot of the time. all new toys to go along new boats,jet ski's,campers- moter homes, snowmobile's in the driveways. we ask are self's .were you think they work and how they get all the money.
keep in mind my wifes a RN with about 30 years of working in the same hospital & i have owned my own company for 20 years plus and we only had one child. we live in a modest older home that i rebuilt and got cheap as a handyman special 22 years ago. and we live pay check to pay check to and just keeping above water for years. yes we have one or 2 car payments and a house note. but i couldn't afford to get all those new extra toys. after 20 years of being marryed we are just seeing some extra cash flow. but also keep in mind were getting ready to retire now to. we just didnt understand it. we know what are homes cost with taxs and insurance and it eats up a large percentage of are monthly income and add in car insurance payments to.sure we got friends who have new homes built and buy a newly built home . but they did it by sell there old ones. just not when just starting off life. well it looks like im finding out how they did it and its a sad lesson they are learning. it was all on a credit line that didn't take into consideration what if things turned bad. and there is no safety net. there were not thought what if one of you should loose your job. also pay rate increases have also been larger then in the pass years ago .35 cents per hour was a very good raise. but now look at what the min wage is .and price's of good's are. it all relates to we priced are selfs to the point of were at how. we cant afford to buy the goods or make them here any more so we have to send the jobs over seas. and in turn people have had to be let go and factorys shut down. its a big wheel that has come to a breaking point. my first job 45 years ago i made $1.10 per hour . now i wont even think about starting a job for under $30.00 per hour and im undercutting others in my own field now a days.

nate el bueno

Well said!