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I agree, not all of them should be bailed out; however it's easier and almost always cheaper to implement a blanket solution than it is to pick and choose who is worthy of a bailout, which is usually why the government or financial institutions do it this way.
Im just wondering how you know people got lied to? Based on what the people who are in these predicaments say?
When I got a mortgage in 2005, it was my second mortgage and I was only 24 yrs old. They tried to get me into an ARM. I didn't have much clue about it so I went and talked to someone who did. Guess what? I ended up getting a fixed rate instead, because I was given good advice. As for these people who were "lied to", there are people ALL OVER THE PLACE, that are willing to give you advice on mortgages. Several banks around my area offer FREE home buying classes.
Why exactly are we bailing them out?
This is just a microcosm of all that is 100% wrong with this country and why we are sliding down a very large hill very quickly. There is absolutely ZILCH for accountability in this country. It is always someone else's fault.
Did the lender guide me towards an ARM? Damn straight they did. I got FREE advice though and chose a different route.
The reason we have such a huge problem is that these people shouldn't have been buying a house in the first place. If they had taken there financials for advice, they would have been told you CAN'T buy a house. So were they lied to? Probably not. Did they just not want to hear that they couldn't afford to buy a house in the price range they wanted? I think that is obvious. And now they are trying to get out of it by tossing up the old I was lied to card.
As for the ability to refinance thing. At the time, being honest with yourself, did that seem like such a false statement? In a lot of places, definitely not. Once again, that is another very simple thing to get advice on from another source.
I agree that for the most part, buyers weren't lied to...but they were sometimes. Also, they were telling people who qualified for sub-prime mortgages who were about to be mortgaged up to the eyeballs that they could "re-fi" to a more competitive product later when they knew damn well how difficult that would be. To me that is at least unethical.
I agree, not all of them should be bailed out; however it's easier and almost always cheaper to implement a blanket solution than it is to pick and choose who is worthy of a bailout, which is usually why the government or financial institutions do it this way.
Yes, I agree; but people who use sub-prime mortgages are usually not very knowledgeable about finance and might not understand the difference. Again, it SHOULD be their responsibility to educate themselves about it but that's easier said than done, and brokers and FAs alike do take advantage of that ignorance. That's all I'm saying. I haven't voiced support for a taxpayer-funded bailout...I'm just putting that out there.
Ok, long as we agree against the bailout, the rest we can debate.
Personally, I dont care if these people were lied to, the real estate property market is some areas (not all) has gotten out of hand, and we actually need a real estate crash.
I'm failing to understand how someone who lied to qualify for their $250,000 home, should be able to keep it when I was honest, applied for my own home (much less valuable) and they expect me to bail them out.
The consumer was wrong, by spending more then they could afford, and the problem should be between the bank, and that consumer. I'll be sitting here waiting to pickup their property at their loss..
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,784,250 times
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What should- but won't be done- is reform of the whole mess. Here is what SHOULD be done:
1. Outlaw all smoke and mirror loans including things like "zero interest" and "no money down".
2. Require all buyers have at least a 625 FICO beacon score with no late payments in the past 6 months and no repos, foreclosures or bankruptcy in the past 48 months.
3. Require all buyers to have been on the job or within their profession for a period of at least 12 months.
4. Verify the income of all buyers and that all housing cost including P&I, taxes, insurance and HOA fees will consume no more than 35% of disposable income.
5. Outlaw all prepayment penalties allowing borrowers to pay off or refi the loan whenever they wish.
6. Require all lenders to produce a simplified loan disclosure sheet (1 page with "this is how much you are borrowing, this is what your monthly payments will be, this is how long you will pay, this is your interest rate and this is the total amount you will pay and this is the date when your last payment will be made.
7. Outlaw "balloon payments".
What should- but won't be done- is reform of the whole mess. Here is what SHOULD be done:
1. Outlaw all smoke and mirror loans including things like "zero interest" and "no money down".
2. Require all buyers have at least a 625 FICO beacon score with no late payments in the past 6 months and no repos, foreclosures or bankruptcy in the past 48 months.
3. Require all buyers to have been on the job or within their profession for a period of at least 12 months.
4. Verify the income of all buyers and that all housing cost including P&I, taxes, insurance and HOA fees will consume no more than 35% of disposable income.
5. Outlaw all prepayment penalties allowing borrowers to pay off or refi the loan whenever they wish.
6. Require all lenders to produce a simplified loan disclosure sheet (1 page with "this is how much you are borrowing, this is what your monthly payments will be, this is how long you will pay, this is your interest rate and this is the total amount you will pay and this is the date when your last payment will be made.
7. Outlaw "balloon payments".
So now you believe the federal government should tell me, when I should be able to loan my money to individuals?
Im just wondering how you know people got lied to? Based on what the people who are in these predicaments say?
When I got a mortgage in 2005, it was my second mortgage and I was only 24 yrs old. They tried to get me into an ARM. I didn't have much clue about it so I went and talked to someone who did. Guess what? I ended up getting a fixed rate instead, because I was given good advice. As for these people who were "lied to", there are people ALL OVER THE PLACE, that are willing to give you advice on mortgages. Several banks around my area offer FREE home buying classes.
Why exactly are we bailing them out?
This is just a microcosm of all that is 100% wrong with this country and why we are sliding down a very large hill very quickly. There is absolutely ZILCH for accountability in this country. It is always someone else's fault.
Did the lender guide me towards an ARM? Damn straight they did. I got FREE advice though and chose a different route.
The reason we have such a huge problem is that these people shouldn't have been buying a house in the first place. If they had taken there financials for advice, they would have been told you CAN'T buy a house. So were they lied to? Probably not. Did they just not want to hear that they couldn't afford to buy a house in the price range they wanted? I think that is obvious. And now they are trying to get out of it by tossing up the old I was lied to card.
As for the ability to refinance thing. At the time, being honest with yourself, did that seem like such a false statement? In a lot of places, definitely not. Once again, that is another very simple thing to get advice on from another source.
I'm glad you didn't get screwed. Plenty of people more clever than both of us did.
You asked me how do I know people were lied to...how do you know they weren't? I'm just recently back from the UK where there were major financial scandals involving financial institutions "mis-selling" financial products to people, mainly something called an "endowment mortgage", and institutions are still paying out to people who were nailed to the wall when the balance of the endowment mortgage came due. Some people were slapped with bills totalling thousands of pounds. Yep, a lot of them were lied to....what makes you think it doesn't happen here?
And don't assume I'm in favor of a taxpayer-funded bailout. I am NOT.
gregandvicky, martinez4 and tallrick, I agree with you!
Here's how it's always worked, and borrowers today are not immune, excluded or exempt:
If you made a mistake, you own it. If you bought more house than you could afford, lied (or cleverly omitted) to get it or thought you could get in and get out before the market crashed, those would be mistakes. Your mistakes.
If you couldn't understand it, it was your responsibility to find someone who could both understand and explain it to you. It's not the lender's responsibility to make you understand binding legal documents that you sign. If you don't understand it, don't sign it. If you sign it, you own it.
If your attorney or financial advisor screwed you over, your issue is with them, not the lender, not the government, not the taxpayers, not other homeowners.
If your lender was fraudulent, you have an actionable case, so see an attorney and obtain legal relief. Seek damages, if you were wronged. But seek them from those who wronged you.
Don't look to all the innocent bystanders and those who made sensible, prudent choices and did not buy properties they couldn't afford to bail you out. They hold no responsibility for the mess you're in. You got yourself into it; get yourself out of it. You weren't planning on sharing all those paper profits with anyone, were you? So why should anyone share your losses? You can't have it both ways-- keep it all when you're winning and spread the pain when you're losing. At least, you shouldn't be able to.
Actions should have consequences. Markets will self-correct, if we let them. Weak hands will be shaken out, strong hands will hold on and the market will find its footing. I vote: no bailout!
I don't think it will "save" that many people from losing their homes. I think they will lose them anyway. If they couldn't afford the bump up with the adjustment they can't afford the repairs and maintenance of a house. They will have no equity and they will lose their jobs, get relocated, get hit with medical expenses, get divorced, the house will fall apart or whatever and they will need out of the house no matter what the govt wants to do to keep them in it.
gregandvicky, martinez4 and tallrick, I agree with you!
Here's how it's always worked, and borrowers today are not immune, excluded or exempt:
If you made a mistake, you own it. If you bought more house than you could afford, lied (or cleverly omitted) to get it or thought you could get in and get out before the market crashed, those would be mistakes. Your mistakes.
If you couldn't understand it, it was your responsibility to find someone who could both understand and explain it to you. It's not the lender's responsibility to make you understand binding legal documents that you sign. If you don't understand it, don't sign it. If you sign it, you own it.
If your attorney or financial advisor screwed you over, your issue is with them, not the lender, not the government, not the taxpayers, not other homeowners.
If your lender was fraudulent, you have an actionable case, so see an attorney and obtain legal relief. Seek damages, if you were wronged. But seek them from those who wronged you.
Don't look to all the innocent bystanders and those who made sensible, prudent choices and did not buy properties they couldn't afford to bail you out. They hold no responsibility for the mess you're in. You got yourself into it; get yourself out of it. You weren't planning on sharing all those paper profits with anyone, were you? So why should anyone share your losses? You can't have it both ways-- keep it all when you're winning and spread the pain when you're losing. At least, you shouldn't be able to.
Actions should have consequences. Markets will self-correct, if we let them. Weak hands will be shaken out, strong hands will hold on and the market will find its footing. I vote: no bailout!
If they've been flat-out lied to and the terms of the contract weren't honored, it's not really their fault is it? Sure, most people defaulting on sub-prime mortgages are people whose eyes were bigger than their wallets or people who were just plain irresponsible...but not all of them were. Some people are genuine victims of con artist lenders.
People trust financial advisers. I'm an intelligent, college-educated person who makes good money but some legal contracts baffle me. They can even baffle experienced lawyers; never underestimate a swindler.
It is better to learn to be your own financial advisor than rely on someone else. If you are a victim of a con artist or swindler than you have no one to blame but yourself.....that is the way of life.
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