Mazda3 Forums banner

Whose fault is this whole "mortgage crisis"?


  • Total voters
    366
  • This poll will close: .
1 - 18 of 18 Posts

·
Registered
Joined
·
804 Posts
Discussion Starter #1
I've been very bitter about this to begin with. Why does our country insist on helping those people (and banks!) who messed up in the first place? Because first time home buyers and irresponsible people who didn't read/understand their mortgage contract and terms as well as greedy ass banks giving loans to people who couldn't back-up their income statement on their loan statements, us, the taxpayers, are paying for those deadbeats. I'm so sick of people not stepping up to the plate and admitting that it was their fault they didn't refinance before their ARM's changed and blaming the banks. These people should've sat down and really looked at whether or not they could've afforded the house to begin with, not by winging it.

I want to see everyone else's opinion on this. I'm so curious as to other's opinions, if you don't want to comment, you don't, so I've included a poll...

/rant...
 

·
Registered
Joined
·
752 Posts
[quote author=MHadden link=topic=119138.msg2504914#msg2504914 date=1217449925]
us, the taxpayers, are paying for those deadbeats.
[/quote] Well, your "Us, the taxpayers" are the ones that are in financial trouble and are losing their homes or lost their homes or are in the process, so "Us, the taxpayers" are paying for other people's misfortune and their own, it's a lose lose situation. Either way, I'd rather have "Us, the taxpayers" money helping out our economy and our own residents, than havng to fuel an effin' war in another country, but that's a different topic.

I don't mind my tax money helping out family that got completely ripped by banks and their hard as hell to read contracts that are as fishy as loan sharks!

If you're financially OK and are not in the process of losing your house, good for you, I thank god I have my house and am financially OK, but I've had 3 neighbors leave because they weren't setup for such a effed up economy. I definitely want my tax money to help them out.
 

·
Registered
Joined
·
17,662 Posts
While I have no doubt that some people were victims of shady mortgage brokers, I have little sympathy for anyone that was stupid enough to think they could afford a house costing 5+ times their annual household income.

These documents are not that complicated and, for the most part, all the info you need is included in the 1-3 page disclosure you receive at closing.

Welcome to the new Socialist Republic of the USA. Where they call for more of your money when you're successful and give it to you when you're stupid!

I'm just thankful I'm in TX. Our local economy is booming, unemployment at near record lows and stable house prices.
 

·
Registered
Joined
·
804 Posts
Discussion Starter #4
[quote author=arkenzo link=topic=119138.msg2504943#msg2504943 date=1217450334]
Well, your "Us, the taxpayers" are the ones that are in financial trouble and are losing their homes or lost their homes or are in the process, so "Us, the taxpayers" are paying for other people's misfortune and their own, it's a lose lose situation. Either way, I'd rather have "Us, the taxpayers" money helping out our economy and our own residents, than havng to fuel an effin' war in another country, but that's a different topic.

I don't mind my tax money helping out family that got completely ripped by banks and their hard as hell to read contracts that are as fishy as loan sharks!

If you're financially OK and are not in the process of losing your house, good for you, I thank god I have my house and am financially OK, but I've had 3 neighbors leave because they weren't setup for such a effed up economy. I definitely want my tax money to help them out.
[/quote]I do agree that it is nice to see the tax money getting spent within the country, I feel that its rewarding those who were careless in the first place, and not teaching them a lesson (as much as the lesson would hurt the economy, the damage has been done). Many of the people had a couple months (or more!) to refinance into a fixed rate. Some tried to sweat it as long as they could and it burned them. I just feel that those who are responsible with their money shouldn't have to bail out the irresponsible.

[quote author=fatabbot link=topic=119138.msg2504964#msg2504964 date=1217450733]
While I have no doubt that some people were victims of shady mortgage brokers, I have little sympathy for anyone that was stupid enough to think they could afford a house costing 5+ times their annual household income.

These documents are not that complicated and, for the most part, all the info you need is included in the 1-3 page disclosure you receive at closing...
[/quote]Thank you, this is exactly what I'm getting at. Some of these people were making, let's say 50k a year, but thought they could afford a 300k house....messed up.
 

·
Registered
Joined
·
1,229 Posts
well, i'm happy to report i'm one of the smart ones in this whole mess. last july i purchased my first home with my (at the time) soon to be wife. i was approved for almost half of what i determined i could afford. keep in mind, my calculations included both my wife's and my incomes combined, and they were just using mine. i was astonished at how they could possibly think i could afford that much house. i went in with a number in mind, a reasonable number that would keep my payments around 20% of our take home pay each month, and they completely blew it out of the water. well anyway, i ended up spending EXACTLY what i originally intended to spend. completely discounting the lender's approved loan amount.

my point: yes, the mortgage companies are nothin but some greedy sons o' bitches. however, the borrower needs to take responsibility for their own actions as well. common sense ftmfw!!
 

·
Registered
Joined
·
17,662 Posts
Back in 2004, I had ruined my credit and was working a crappy job. So we had to qualify for a loan with just my wife's income. Bought a nice, modest house for cheap and subsequently paid it off in better times. We own a home worth 75% of our current annual income and are content with that.
 

·
Registered
Joined
·
1,229 Posts
oh, and one more thing, the "bail out" is actually designed to replace the loan they originally took out. it's asking the bank to write off the loan to 90% of the house's current value, and the FHA will write a loan for the rest. the borrower still has a mortgage, just not as crappy a one as they had before. FYI :heresyoursign:
 

·
Registered
Joined
·
4,003 Posts
Fannie Mae and Freddie Mac couldn't go to the wolves, because these two combined control trillions of dollars in the mortgage community. If they failed where would peoples mortgages go; over to the gov't control. I'm not a fan of it, but everyone makes mistakes and it's not like one person is paying for it. All of us taxpayers are giving a helping hand to fix this. Also, this allowed crude to more or less fall back into hibernation for sometime. It was up today but I think it will be down again tomorrow. I lost all my faith when oil took all my gains twice, because I was thinking the minor corrections were only temporary. A weak dollar made oil rally and a strong(er) dollar made crude fall. The economy was in a shithole and the gov't had to step in and do something to protect the financial banks. It's a lesson learned that hopefully we as Americans will not make again.
 

·
Registered
Joined
·
1,229 Posts
and that's really all i can hope for in all of this. we (as a society) dug a pretty big hole for ourselves and it's not going to be fun climbing our way out of it. this country became WAAAY to lax with regards to credit/savings, and it shows with the negetive savings rate this country "enjoys". so once we get this mess cleaned up, we should never let it happen again. we need to learn and grow from this. we need to start taking a different view of money and how we use it.
 

·
Registered
Joined
·
4,003 Posts
I wish I would have purchased some Freddie Mac and Fannie Mae a couple weeks ago. I would be in some cash. Right now I just have $5k sitting around not doing shit. This will allow some banks to regain control and make some money. Oil companies will get to make their money for the rest of the year, because crude is still worth more than what it was a year ago. This is something that had to happen or the DOW was going to be trading under 10k pts. It's been having a very good rally the last 2 weeks, and even rallied today with the supply of crude being down. I was really surprised because the supply has been up for the last 13 weeks so I pulled my money out last week after I lost $100 of my principal investment. I rather see America's money go to something like this, then to some type of complete garbage. If the gov't would have never stepped in on the mtg crisis you would have to possibly deal with only one airline company and with a llllloooooooonnnnnnnggggggg stretch no more GM or Ford. Who knows where crude oil could have gone with a much weak(er) dollar. I guess all rallies must come to an end.
 

·
Registered
Joined
·
4,003 Posts
With an ARM rate many people were paying easily in upwards of 8-10%. That's a lot of interest on a $150k home. You can save a considerably large amount of money refinancing your home to say 5.25-6.50%. You have more money going to principal reduction and less getting eaten away by interest. An ARM's rate can and does work a lot like a negative amortization schedule. That is when you're monthly payment isn't enough to pay all the interest, so principal never gets reduced, but interest will continuously stack on top of each other. That's good for the bank if the client can continue to service debt and not realize what's going on, but it's a butt raping for that particular person or business. We have a few of those on our books at my job now that we are trying to fix. We either have to drop their rate or raise their payments. Most can't afford the increased payment (if the business is doing bad) so we have to lower our rate. It's better for us to break even then repossess the property and lose money on the books with property taxes and upkeep issues.
 

·
Registered
Joined
·
804 Posts
Discussion Starter #14
With that said, that was a whole clusterfuck in itself. Many of the houses that were vacated by these people are being destroyed by squatters, or worse, being squandered for the copper and any other valuable crap in the house. I'm surprised no one took a more interactive interest in this. You know that everyone will pay to repair these houses, more than likely through PMI or homeowners insurance...
 

·
Registered
Joined
·
9,451 Posts
Its a little of both with a big helping of quasi-gov't mismanagement (IE SEC and Fed bank screwing up by the numbers).

I am going to start from the later and work my way former :D

For the SEC and Fed bank screwing up

Little oversight of the mortgage industry. No one to tell banks "You are not lending properly", so if no one is going to tell them of course they are going to go nuts if things seem to be doing well at the time. They are there to make a profit afterall. All of these mortgage structured investment vehicles that were traded around like crazy are also to blame (way to go SEC). The way it works is you take say 100 mortgages, break them up in to maybe 1/10,000th parts mix them all up and make maybe 10,000 mortgage SIVs that you sell a bit like a bond. There is a mix of really high risk mortgages and lower risk mortgages all mixed together so you can claim it is low risk, but really high rate of return (what bond has an 8% rate of return that YOU would be willing to buy). Issue is the SIV is NOT low risk (as we can well see now) and the way it is structured the mortgages within it can NOT legally be modified, they can be refinanced, but they can't be modified PERIOD. So a bank can't look at someone's mortgage and realize there is no way the people can pay, so they'll willingly take a small hit to restructure the mortgage instead of having to foreclose on the home and deal with that headache and all of the costs. They legally CANNOT do this. Throw in the fact that in most cases the bank doesn't own the mortgage any more, they have actually sold it off and a servicing company handles the collection of the mortgage and pays it to the SIV owners and it is worse off. The servicing company couldn't give 2 damns. PS not all mortgages were sold off and broken up in to such SIVs, plenty of banks just held on to the mortgage like in the good old days before the late 90's.

Now throw in banks being greedy as hell. Of course they didn't learn anything during the savings and loan problems of the 80's. It is impossible for most people to remember a lesson more then about 6-10yrs unless it was extremely traumatic, let alone 20+ years and a collective group. Plenty of people out to make a quick buck and plenty of times if it wasn't the bank that was greedy it was a mortgage broker. They were the worst, because they had no risk. As soon as they connected you with a mortgage, they took their finders fee and they were DONE. 0 risk for them and plenty of reward. The bigger the mortgage they hooked you up with the bigger their finders fee. Throw in no or almost no oversight...................................

Tons of outright fraud as well perptrated by EVERYONE, brokers, banks, individuals trying to get a loan, etc.

Now for the individuals. Plenty of people who should never have bought a home. They couldn't afford it, the bank knew it and the individuals damn well should have known it. Sure I feel sorry for someone people, and loan applications aren't exactly the easiest thing in the world to understand, but if you don't understand it enough to have an idea of what you are applying for, DO NOT APPLY FOR IT. If you are just that uneducated about buying a house or that stupid, you should NOT be buying a house, period. No ifs ands or buts about it. If you aren't willing to take the time to become educated about buying a home you should NOT buy one. To many people were getting ARMs and had no clue how the heck they worked or were getting even fixed rate mortgages where the payments were at the very limit of what they could afford, and then maybe they lost their job with little savings, or their partner did, or what not.

Plenty of idiots among the people getting the mortgages and I feel a bit sorry for some of them, but about all I feel is a bit of pity for most of the idiots or the gullable. Maybe this time they will just rent, its safer that way.
-Matt
 

·
Registered
Joined
·
1,139 Posts
I agree with you. All these foreclosures going on around the states and all. Sure, the banks are being sneaky and giving out rediculously low interest rates for the first year, only to screw you over for the next 30 with an 18% rate. However, the only people to really blame are the homebuyers. Haven't banks been doing shady shit for YEARS now? If you're going to buy a home, which you may live in for the rest of your human life, do your research. Simply being stupid and not reading the fine print is no excuse.

I find the same situation on these forums a lot. People who get suckered into these deals when they buy a new car. They show up at the dealership, and buy the car the very same day. They have no clue how to truly buy a car without getting screwed and purchase on a whim. These people will consistently get taken for a ride by the financing companies and they're the only ones to blame, with the exception of some shady dealers.

You'd think people would treat buying a car..and buying a home completely differently and actually do some research when going through with such a huge purchase. Its just not the case.
 

·
Registered
Joined
·
804 Posts
Discussion Starter #17
[quote author=azazel1024 link=topic=119138.msg2506747#msg2506747 date=1217510250]
...Now for the individuals. Plenty of people who should never have bought a home. They couldn't afford it, the bank knew it and the individuals damn well should have known it. Sure I feel sorry for someone people, and loan applications aren't exactly the easiest thing in the world to understand, but if you don't understand it enough to have an idea of what you are applying for, DO NOT APPLY FOR IT. If you are just that uneducated about buying a house or that stupid, you should NOT be buying a house, period. No ifs ands or buts about it. If you aren't willing to take the time to become educated about buying a home you should NOT buy one. To many people were getting ARMs and had no clue how the heck they worked or were getting even fixed rate mortgages where the payments were at the very limit of what they could afford, and then maybe they lost their job with little savings, or their partner did, or what not.
[/quote]Bravo! This is exactly my point...
 

·
Registered
Joined
·
4,003 Posts
In my eyes it's no different then people who buy BMW's and want to finance them for 7-8 years. I've actually heard you could get a BMW on a 10 year finance; 10 YEARS!! I'd say if you needed to finance a car more than 72 months (and that's pushing it) you don't need to buy that car. I financed mine for 72 months, but I also had a 4500 debt consolidation added on and extended warranty. I also only put $1000 down and I traded in a car they gave me $1,000 for. You just need to be patient and never purchase anything that is worth more than you can afford.
 
1 - 18 of 18 Posts
Top