Sub-Prime mortgage bail-out...the 5-year plan

[RogueFactor]

Id like to you hear your opinions. Good? Bad? Not going to change a thing?

[BigEvil]

Care to elaborate? I can speak somewhat intelligently on the workings of gravity and time, but I am an economic illiterate. :smarty:

[MedicDVG]

In my estimation, the bailout will only allow those who are in deep to get in deeper and end up with more forclosures in the long run.

In fairness though, I haven't read anything on the plan, and my response is just a knee jerk, gut reaction to the idea in the first place.

Kinda like if your dad paid off your credit card bills, and there you sit with a credit card and no balance.. what do you think would happen? Some will chop up the credit cards and make due with what they have, some will use the credit card albeit responsibly, and some will end up right back where they were in 6 months by charging like crazy on a 'clean slate.'

Just my first impression without benefit of any research or applied thought.

[RogueFactor]

Mortgage Rate Freeze Reached (http://money.aol.com/news/articles/_a/mortgage-rate-freeze-reached/n20071206200209990017)

[MedicDVG]

Doesn't look like it will help anybody really. If the article is to be believed, less then 150,000 people would benefit from this restructuring. That is statistically insignificant when compared to the millions of mortgages out there that are in 'stress.'

The DEMS are quick to point foul at the program, but so far I haven't seen ANY program from them to address the situation, only 'republican's suck' rhetoric.

[RogueFactor]

Well, Hilary wants to do this AND put a 90-day freeze on foreclosures.

All I want to know is...who is going to pay for it all?

[MedicDVG]

How the hell is that supposed to help the economy?

So you get into a predatory lending scheme cause you are high risk credit, you can't make your bills, but we won't accelerate the loan or repossess the home.... Might as well socialize the banking industry and lock the rate of interest on ALL home loans... makes about as much sense.

I don't get it. Maybe I am missing something entirely in the plan...

[BigEvil]

Im no expert on any of this crap, but wont the market fix itself and all of this just posturing and 'feel good' nonsense?

This problem looks to me like it was cause greatly in part by the hugely over priced real estate market and housing prices and banks willingness to give loans to people who really couldnt afford them.

If all of this causes housing prices to drop, more people who weren't able to afford them now will be, creating more loans for the banks.


Am I missing something?

[Mind'sEye]

Well, Hilary wants to do this AND put a 90-day freeze on foreclosures.

All I want to know is...who is going to pay for it all?

Hillary wants to preside over a nanny state where we can take less and less responsibility for our decisions and actions, until responsible people disappear. My take on the bail-out is that Bush wouldn't have acted on it if he weren't still smarting from the Katrina disaster. He's looking to salvage his public image.

[TnDeathInc]

i hate loans and interst rate crap.

[tymcneer]

I agree with BigEvil... This looks like more "feel good" crap!

If the person who signed the loan documents looked them over, they KNEW they were in for a big hit when the teaser rate changed. Back to persoanl responsibility...

When I decided to purchase my property in WV, I went through a bunch of financial scenarios. I decided what would work for me... How much I could afford... What type of salary I would have to maintain in order to keep my property... It can't be that difficult... I did it!

Needless to say... most government "bail outs" are BS! They seem to like to redistribute the "wealth" of the middle class to other folks, based on the government's wishes and whims...

I will stop, before I start foaming at the mouth!

Ty

[RogueFactor]

Interesting points. So, if its all 'feel good crap', what purpose does it serve?

Other than maybe looking good during an election year? Does it just delay the inevitable?

And I wonder why we havent heard from Greenspan or Bernanke on the issue? They usually weigh in on these sorts of matters.

[Dark Side]

Hell, I figured being an adult meant you are supposed to take care of your own descisions and any consequences (good or bad) from said descisions.

If it was up to Hillary( god I hope she doesn't become Pres) we would be in a virtual death spiral coming ever closer to a totalitarian state.

[BigEvil]

Interesting points. So, if its all 'feel good crap', what purpose does it serve?

Other than maybe looking good during an election year? Does it just delay the inevitable?

And I wonder why we havent heard from Greenspan or Bernanke on the issue? They usually weigh in on these sorts of matters.

Again, not being an expert on these matters, IMO making 'feel-good' gestures only stops things from getting worst, not make them better. When things get difficult, people look to their nannies in the gov't to do something. When they do, it makes them feel better, calms the jitters, and gets the story off the front page.

[RogueFactor]

Again, not being an expert on these matters, IMO making 'feel-good' gestures only stops things from getting worst, not make them better. When things get difficult, people look to their nannies in the gov't to do something. When they do, it makes them feel better, calms the jitters, and gets the story off the front page.

Im no expert on the matter either. Does something like this really keep things from getting worse? As you said previously, doesnt this sort of thing fix itself?

[robnix]

Hillary wants to preside over a nanny state where we can take less and less responsibility for our decisions and actions, until responsible people disappear. My take on the bail-out is that Bush wouldn't have acted on it if he weren't still smarting from the Katrina disaster. He's looking to salvage his public image.

I would like to think that it's as simple as just people not taking responsibility for their actions, but it's not. There were plenty of brokers, banks, and appraisers that were complicit in this meltdown as well by:

Manipulating home prices through above market appraisals. Washington Mutual is under investigation for threatening appraisers with no business if they didn't come in with the value that they wanted.

Misleading consumers about the terms of their ARM. The 2/28 loan is a really good example of this. Read up on them and you'll understand how someone that doesn't get the terminology can get screwed. Mortgages are not simple loan docs, most consumers need a dictionary to understand the them, and most of the people that walk you through your signing just want to get the signing done and get you out of there. We have a fixed rate, even with that, I can remember sitting at a signing asking questions about the document and getting answers like "Oh, that's just boilerplate, go ahead and sign it..."

Offering subprime loans to people knowing that while they could afford it today, there was no way that they would be able to afford it when the rate reset.

Not verifying income. This was a new one.

Ratings agencies like S&P, understating the risk associated with investing in securities backed by subprime mortgages.

20 years ago most people in the subprime market would have never gotten a loan in the first place. They would have had to go through the FHA or other resource that provides loan insurance against a default, and they damn sure wouldn't have gotten some wacky ARM just so they could get in a house.

[tymcneer]

I thought you had to have a lawyer to close a home mortgage... I was required to have one in WV!

The funny part was that the bank loaned me a fair chunk of change on my drivers license and two signatures! The lawyer explained the 6 pages of documentation in about 2 minutes, and I had to pay for an hour of his time! So I questioned him about the local laws... That is interesting story for another time and place...

I can understand needing a lawyerese to english dictionary to understand a contract, but you would figure that anyone who wants to enter into said contract, would REALLY want to know what they were signing!

Ty

[robnix]

I thought you had to have a lawyer to close a home mortgage... I was required to have one in WV!


Most likely a state requirement then.


I can understand needing a lawyerese to english dictionary to understand a contract, but you would figure that anyone who wants to enter into said contract, would REALLY want to know what they were signing!


Most people can't be bothered, they trust the institution expecting not to have any problems down the road.

[RogueFactor]

Most people can't be bothered, they trust the institution expecting not to have any problems down the road.
Most people cant be bothered with one of the biggest investements in their life? If thats true, they get what they deserved.

How can anyone, especially with the housing bubbles of years past, not expect the possiblity of any problems? Even a 25+ something year old can remember the housing bubble of the early 90's.

Its also hard to believe that people trust institutions.


Offering subprime loans to people knowing that while they could afford it today, there was no way that they would be able to afford it when the rate reset.
Who could have known that the rate would be higher? There were no certainties. And at what point is it the individuals responsibility to know what they can afford? Had the price of houses continued climbing, and had the Fed not raised interest rates...would these issues exist? Or would everyone still be happy because they could afford a house they couldnt afford?
Who doesnt understand the term "Adjustable rate"? Did anyone who borrowed not realize the possbility it could go up just as easy as it could go down?
What benefit does a bank get to loaning money to someone with 0% down, who is going to default? Its my understanding that the lenders are the ones who lose the money when a house goes into foreclosure, not the borrower. And the cost of foreclosing amounts to ~$50,000 expense for the bank/lender as well.
With 0% down, the home-buyers were in essence a de facto renter. So what did they really lose, except maybe some property tax?

20 years ago most people in the subprime market would have never gotten a loan in the first place. They would have had to go through the FHA or other resource that provides loan insurance against a default, and they damn sure wouldn't have gotten some wacky ARM just so they could get in a house.
Its my understanding that our government(from both sides of the fence) pushed for lower qualifications of home ownership through borrowing. The only way to do that for those who couldnt qualify was to come up with ARM's and Interest-only loans. They had to be creative, how else do you loan money to someone that wouldnt otherwise qualify?
Interestingly, nobody was complaining when things were good, the economy was growing, and they had 'equity' to spend spend spend. Money grew on trees, and everyone loved it.
I think the term 'If its too good to be true, it problably is' applies here. And I think even the most naive of home buyer could figure out that the housing markets overvaluation was too good to be true.

[BigEvil]

You give people WAY to much credit. People are idiots. Ive seen people sign car loans w/o even knowing the interest rate.

[RogueFactor]

You give people WAY to much credit. People are idiots. Ive seen people sign car loans w/o even knowing the interest rate.

Agreed, I realize people are idiots. Even the idiot knows he is an idiot. And what they choose to do is nobody's fault but their own.

[tymcneer]

RogueFactor... Damn you! You said everything I wanted to say!

As you all have said... too many people think that they can "trust" institutions, including the government. Remember folks! We're from the Government, we're here to help you. NOT!!!

That being said, I guess I should sit here quietly, and play with my toes! :(

Ty

[robnix]

snipped lot's of stuff

It's really easy to be smarter than the average consumer when it comes to these things isn't it?

It would be nice if everyone took the time to do the research and get a good solid understanding of what they were getting into every time they undertook something that was technically off their island of knowledge. They don't though, they rely on experts in that field to behave in an ethical manner to help them get through the process. If those experts are acting in an unethical manner, then there's complicity on both sides, which is what I believe in this case.

The Good Faith Estimate is a perfect example of this complicity. It's a short document that provides an easy to read understanding of what you're going to be getting in your mortgage loan. Where's the complicity?

For lots of people though, it's NOT easy to understand but they don't take the time to learn what the fees and rates are. For the broker, because there's no legal ramifications of any errors on it, mistakes can 'accidentally' be made or changed at the signing.

The Good Faith Estimate also doesn't include all the fees, restrictions, and penalties that your loan may have, for those you HAVE to read the loan documents. In my state that happens at the signing, and the only person that's at the signing with you is the clerk from the title company, your loan officer isn't there for some reason...

There's responsibility on both sides of this, solely blaming it on the idiot consumer smacks of arrogant jackassadness.

[RogueFactor]

It's really easy to be smarter than the average consumer when it comes to these things isn't it?
How smart do you have to be to know what the word 'Adjustable-Rate' means?

In large part this issue is no different than the debt Americans carry on their Credit Cards. 2/3's of the country in debt, by choice. 20%+ Interest rate...who cares! They want what they want, and dont care about the consequences. Charge it, we will figure out how to pay it later. Cant pay it? File bankruptcy. A wonderful message to send for irresponsibility.

That crap may work for Credit Cards, it doesnt work for real estate.

It would be nice if everyone took the time to do the research and get a good solid understanding of what they were getting into every time they undertook something that was technically off their island of knowledge.
If we let everyone use the 'I dont know excuse', the result would be a country full of uneducated people. Why? Because we catered to the lowest common denominator.
Personally, if they dont find it important to do so...it doesnt matter to me. Just dont use the excuse 'I didnt know', when the only person that can educate you is yourself. Read, study, research, ask questions....those that find this important do that...those that dont are no longer home-owners. Rightfully so.

They don't though, they rely on experts in that field to behave in an ethical manner to help them get through the process. If those experts are acting in an unethical manner, then there's complicity on both sides, which is what I believe in this case.
Those experts cant predict that house prices would continue to rise or fall, that interest rates would rise or fall. So those experts can only tell you so much. As stated, had house prices continued to rise and interest rates remained low....all those people would still be in their homes. **** happened, and their gamble didnt pay off. And in the end, as I also stated...what did they really lose? Right, next to nothing. Its the lender that gets handed the screw you. So you should be happy, the lender is getting what they deserve.
And complicity implies wrongdoing. Thats yet to be shown or proven.

The Good Faith Estimate is a perfect example of this complicity. It's a short document that provides an easy to read understanding of what you're going to be getting in your mortgage loan. Where's the complicity?
If they got the Good Faith Estimate(required by law), and its easy to read... I agree with you... where is the complicity?

For lots of people though, it's NOT easy to understand but they don't take the time to learn what the fees and rates are.
Everyone seemed to understand how to take equity out of their house when it benefited them, didnt they? I guess things are only easy to understand when someone is handing you a check, not taking one away.
People that want to be educated, educate themselves. If they dont take the time to learn, thats nobodys fault but their own. You cant make someone learn, listen, read, or understand. They have to want to. As youve said, most dont care. So why is that anybody else's fault but their own?

For the broker, because there's no legal ramifications of any errors on it, mistakes can 'accidentally' be made or changed at the signing.
If thats the case, which I doubt for the vast majority, then you have a point. I think the majority though, as youve stated, just didnt care to educate themselves.

The Good Faith Estimate also doesn't include all the fees, restrictions, and penalties that your loan may have, for those you HAVE to read the loan documents. In my state that happens at the signing, and the only person that's at the signing with you is the clerk from the title company, your loan officer isn't there for some reason...
Thats why its called an estimate.
You HAVE to read? Shouldnt that be a requirement? Im surprised youd have an issue with someone having to read a document. Considering how important a document it is.
Nothing stops someone from hiring an advisor. No different than hiring a house inspector. Its YOUR responsibility if you want one.

There's responsibility on both sides of this, solely blaming it on the idiot consumer smacks of arrogant jackassadness.
Quite the opposite. If you wanna play house, you better grow up and start acting like an adult. And that starts with taking responsiblity for your own actions---at age 18, the government no longer mandates you to go to school---so education is YOUR responsibility.
When its shown that there is no wrong-doing for the majority of these loans, blaming it on anybody but the idiot consumer who chose not to educate themselves smacks of bleeding-heart elitist jackassedness.

[RogueFactor]

It's really easy to be more responsible than the average consumer when it comes to these things isn't it?
Fixed.

And no, it isnt. It's harder to to be responsible and wait than to be enjoying what could have been bought irreseponsibly. Its harder to have to do the work & research that others cant be bothered to do. Its harder to educate oneself on those things that are 'technically off their island of knowledge".

And that should be rewarded. Not the irresponsible.

[Mind'sEye]

I would like to think that it's as simple as just people not taking responsibility for their actions, but it's not. There were plenty of brokers, banks, and appraisers that were complicit in this meltdown as well by:

Manipulating home prices through above market appraisals. Washington Mutual is under investigation for threatening appraisers with no business if they didn't come in with the value that they wanted.

Misleading consumers about the terms of their ARM. The 2/28 loan is a really good example of this. Read up on them and you'll understand how someone that doesn't get the terminology can get screwed. Mortgages are not simple loan docs, most consumers need a dictionary to understand the them, and most of the people that walk you through your signing just want to get the signing done and get you out of there. We have a fixed rate, even with that, I can remember sitting at a signing asking questions about the document and getting answers like "Oh, that's just boilerplate, go ahead and sign it..."

Offering subprime loans to people knowing that while they could afford it today, there was no way that they would be able to afford it when the rate reset.

Not verifying income. This was a new one.

Ratings agencies like S&P, understating the risk associated with investing in securities backed by subprime mortgages.

20 years ago most people in the subprime market would have never gotten a loan in the first place. They would have had to go through the FHA or other resource that provides loan insurance against a default, and they damn sure wouldn't have gotten some wacky ARM just so they could get in a house.

You've laid it all out. Basically the lender says, don't worry about how much your new house costs or what type of mortgage you'll be purchasing as long as you can afford the monthly payments that we get you in on. That should be a BIG red flag whether you're purchasing a house or an automobile or whatever. Then there's the inflated market. Did anyone really believe that the speculators' market was going to hold such a rapid price increase without a serious correction at some point? Yes, sub-prime borrowers got hit in the first wave but now speculators are selling short. Maybe there's bunch of crooks in the business (there always have been), but people who are looking to buy a home need to spend more time studying the market before laying their money down. There's plenty of people who take the time to learn the lesson and then, unfortunately, there's folks who set themselves up to be the lesson. It's a way of life.

I remember when the ARM rate advertisements starting hitting our mailbox. My wife wanted to know if we should take advantage of the lower adjustable rates in the fours. At our 5.75% fixed I said, Nah we're fine where we're at. :)

[robnix]

The Illinois AG Goes after mortgage fraud:

http://www.mortgagefraudblog.com/index.php/weblog/permalink/illinois_ag_aggressively_pursues_mortgage_fraud/
http://news.medill.northwestern.edu/chicago/news.aspx?id=71409

As a result, some consumers believed that their teaser rate or low monthly payment would last beyond the first month of the mortgage loan and even for the life of the loan. One Source allegedly told an Illinois consumer that he would have an interest rate of 0.950 percent for the first year of his loan. In reality, the consumer’s interest rate increased to 7.5 percent after the first month. One Source allegedly told another consumer that the combined principal and interest payment on her two mortgages would be $1,357.47. Sixteen months later, the principal and interest payment on this consumer’s loans was actually $2,616.16. According to the complaint, One Source told another consumer that a minimum monthly payment of $700 would cover all the accrued interest on his loan. In reality, the consumer would have to pay $1,816 per month just to cover the monthly interest.

Ameriquest Settles over Loan Fraud:

http://www.latimes.com/business/la-fi-ameriquest4feb0405,1,5202756.story
http://www.ocregister.com/ocr/sections/business/business/article_444082.php

Indeed, Bomchill -- who said he left Ameriquest because he didn't like the way the company treated its employees and customers, and now works as a mortgage broker -- contends that the drive to close deals and grab six-figure salaries led many Ameriquest employees astray: They forged documents, hyped customers' creditworthiness and "juiced" mortgages with hidden rates and fees.

Ameriquest customers filed more complaints with the Federal Trade Commission from 2000 through 2004 than did those of two of its biggest competitors combined, the agency said -- 466 compared with 101 for Full Spectrum Lending (Calabasas-based Countrywide Financial Corp.'s sub-prime unit) and 51 for Irvine-based New Century Financial Corp.

* From 2000 through 2004, 134 complaints (including allegations of fraud and unfair business practices) were registered against Ameriquest with the California Department of Corporations, compared with 39 for New Century and 21 for Full Spectrum.

* Recent lawsuits filed by consumers in California and at least 20 other states allege a pattern of fraud, falsification of documents, bait-and-switch sales tactics and other violations. Six of these suits seek class-action status to represent large groups of borrowers; such status has been granted for a 2001 suit filed in Redwood City, Calif. In a sworn declaration in that case, a former loan officer named Kenneth Kendall said Ameriquest managers encouraged employees to "promise certain interest rates and fees, only to change those rates at the time of the closing."

Countrywide and why they liked the subprime....

http://www.nytimes.com/2007/08/26/business/yourmoney/26country.html?pagewanted=1&_r=2

[robnix]

Countrywide and why they liked the subprime....

http://www.nytimes.com/2007/08/26/business/yourmoney/26country.html?pagewanted=1&_r=2[/QUOTE]

As recently as July 27, Countrywide’s product list showed that it would lend $500,000 to a borrower rated C-minus, the second-riskiest grade. As long as the loan represented no more than 70 percent of the underlying property’s value, Countrywide would lend to a borrower even if the person had a credit score as low as 500. (The top score is 850.)

The company would lend even if the borrower had been 90 days late on a current mortgage payment twice in the last 12 months, if the borrower had filed for personal bankruptcy protection, or if the borrower had faced foreclosure or default notices on his or her property.

Such loans were made, former employees say, because they were so lucrative — to Countrywide. The company harvested a steady stream of fees or payments on such loans and busily repackaged them as securities to sell to investors. As long as housing prices kept rising, everyone — borrowers, lenders and investors — appeared to be winners.

...

A few weeks ago, the former sales representative priced a $275,000 loan with a 30-year term and a fixed rate for a borrower putting down 10 percent, with fully documented income, and a credit score of 620. While a F.H.A. loan on the same terms would have carried a 7 percent rate and 0.125 percentage points, Countrywide’s subprime loan for the same borrower carried a rate of 9.875 percent and three additional percentage points.

The monthly payment on the F.H.A. loan would have been $1,829, while Countrywide’s subprime loan generated a $2,387 monthly payment. That amounts to a difference of $558 a month, or $6,696 a year — no small sum for a low-income homeowner.

“F.H.A. loans are the best source of financing for low-income borrowers,” the former sales representative said. So Countrywide’s subprime lending program “is not living up to the promise of providing the best loan programs to its clients,” he said.

Mr. Simon of Countrywide said that Federal Housing Administration loans were becoming a bigger part of the company’s business.

“While they are very useful to some borrowers, F.H.A./V.A. mortgages are extremely difficult to originate in markets with above-average home prices, because the maximum loan amount is so low,” he said. “Countrywide believes F.H.A./V.A. loans are an increasingly important part of its product menu, particularly for the homeownership hopes of low- to moderate-income and minority borrowers we have concentrated on reaching and serving.”

[Mind'sEye]

Looks like Bush and the full weight of the Federal Government needs to go after the lenders with criminal and civil prosecutions. It's crime...... I'm walking down the street and a thug hits me on the back of my head, takes my money and buys drugs with it. I can't go to George Bush and ask him for my money back. At least not yet.............

[RogueFactor]

snipped lot's of stuff
--->

If thats the case, which I doubt for the vast majority, then you have a point. I think the majority though, as youve stated, just didnt care to educate themselves.

Do any of the stories provide how many were effected? As I recall, the number of sub-prime loans is in the neighborhood of 2 million.

[robnix]

--->



Do any of the stories provide how many were effected? As I recall, the number of sub-prime loans is in the neighborhood of 2 million.

According to this, 481,000 were eligible for part of the 325 million dollar payout.

http://www.dfi.wa.gov/cs/ameriquest_restitution.htm

Under the settlement, more than 481,000 borrowers nationwide who were customers of Ameriquest Mortgage Company, Town and Country Credit Corporation, and AMC Mortgage Services, Inc. (formerly known as Bedford Home Loans) between Jan. 1, 1999, and Dec. 31, 2005, are eligible to receive restitution.

[RogueFactor]

According to this, 481,000 were eligible for part of the 325 million dollar payout.

http://www.dfi.wa.gov/cs/ameriquest_restitution.htm

Under the settlement, more than 481,000 borrowers nationwide who were customers of Ameriquest Mortgage Company, Town and Country Credit Corporation, and AMC Mortgage Services, Inc. (formerly known as Bedford Home Loans) between Jan. 1, 1999, and Dec. 31, 2005, are eligible to receive restitution.

Dating back to 1999? These arent even a part of the sub-prime loans we are discussing. Does this even have to do with the Sub-Prime mess?

Fraud has been proven in that case. They are getting restitution, they are made whole under the legal system, so whats that issue have to do with this one?

[robnix]

Dating back to 1999? These arent even a part of the sub-prime loans we are discussing. Does this even have to do with the Sub-Prime mess?

Fraud has been proven in that case. They are getting restitution, they are made whole under the legal system, so whats that issue have to do with this one?

It's the same issue, the hot market just made fraud a more attractive activity. Plus it's a class action, so they'll try to include the largest audience possible. I just got a letter about a class action that I wasn't aware of.

[RogueFactor]

It's the same issue, the hot market just made fraud a more attractive activity. Plus it's a class action, so they'll try to include the largest audience possible. I just got a letter about a class action that I wasn't aware of.
The issue here is the Bush 5-year plan for sub-prime loans. Youd have us believe that the majority who take out a (home) loan are mislead. Thats not the case, to say such would be a hasty generalization.

However, if we back date how many total mortgages go back to 1999 nationwide, well find that the vast majority(as I stated) are not fraudulent. And we will find the same of foreclosures. The vast majority of foreclosures and bankruptcy come from irresponsible borrowing and spending.

Fraud exists, in this industry and every other. To believe it doesnt would be naive. Yet, to believe its the majority would be foolish.

[Mind'sEye]

The vast majority of foreclosures and bankruptcy come from irresponsible borrowing and spending.

The vast majority of sub-primes come from irresponsible borrowing and spending. By definition sub-prime borrowers lack the credit rating and or the income to qualify for a fixed rate. These people make easy prey because they have not developed good spending habits to begin with, especially all the house flippers and speculators who got caught. "If it's to good to be true, it is" and "Buyer beware" still apply today. Class action suits bring out the pile ons and fraud stories. I'm certain that on a case by case basis there's some genuinely sad tales, but a lot of it is just people who haven't learned how to handle their money yet.

[RogueFactor]

Class action suits bring out the pile ons and fraud stories.
No doubt. Ironic huh?

I'm certain that on a case by case basis there's some genuinely sad tales, but a lot of it is just people who haven't learned how to handle their money yet.
Agreed. Im certain there are those who truly have been wronged. They just dont represent the majority.

[robnix]

The issue here is the Bush 5-year plan for sub-prime loans. Youd have us believe that the majority who take out a (home) loan are mislead. Thats not the case, to say such would be a hasty generalization.


No, all I've stated is that the fraud is there, and it's not just from small players trying to make a quick buck.

However, if we back date how many total mortgages go back to 1999 nationwide, well find that the vast majority(as I stated) are not fraudulent. And we will find the same of foreclosures. The vast majority of foreclosures and bankruptcy come from irresponsible borrowing and spending.


No doubt, my first home loan was not long after that and was a sub prime loan. Luckily for us we had a mortgage broker that wasn't just ethical, but had us do a lot of work to repair our broken credit to get us into the best deal possible. He also took the time to explain everything from the GFE to the loan documents and what the terms entailed. Our credit is now excellent, and I give a lot of the 'credit' to him for pointing us in the right direction.

Fraud exists, in this industry and every other. To believe it doesnt would be naive. Yet, to believe its the majority would be foolish.

As you said, this is the most important financial decision that someone can make. To be mislead with this isn't like getting screwed by your local plumber, it can truly **** someones life up. But it's not that it justs affects individuals, when done on a large enough scale it affects the economy as a whole.

[Mann]

--->

Do any of the stories provide how many were effected? As I recall, the number of sub-prime loans is in the neighborhood of 2 million.

According to Rush Limbauh only 5% of these people are in trouble of foreclosure.

The simple fact of the matter is that some very unintelligent people forced loaners to allow people to obtain loans that should have never been allowed to do so. In return the loaners wrote up deals that would benifit themselves. I agree completely with what they did. They out smarted an idiot.

On another note I believe that it is completely BS that the gov steps in and freezes all/any of their rates. I was one that purchased a house during this time period, and I took the higher fixed rate because I know how APRs work. It would be unfair to everone like myself to get the shaft on intrest for doing the responsible thing.

I have figured out a way for all people to be able to afford their house. It is very intense, so I probally should not say this on the internet, but here it goes.

GET A ****ING JOB.

It is a neat thing. You go, you get paid, you pay off bills.

[Mind'sEye]

Two words, due diligence. Purchasing a home is the most important financial decision of a lifetime for many people, especially for folks who don't have a lot of resources to begin with. It's not like going to the drive up window at Taco Bell. If we don't arm ourselves with knowledge and exercise our right to use it, we will lose to the crooks and BIG government.

[tymcneer]

Two words, due diligence. Purchasing a home is the most important financial decision of a lifetime for many people, especially for folks who don't have a lot of resources to begin with. It's not like going to the drive up window at Taco Bell. If we don't arm ourselves with knowledge and exercise our right to use it, we will lose to the crooks and BIG government.

I'd normally NEVER say this, but

^^^ Quoted for truth

Ty

[RogueFactor]

No, all I've stated is that the fraud is there, and it's not just from small players trying to make a quick buck.
Right, its there in a very small minority. To generalize and paint the whole sub-prime market that way is misleading.
Fraud sucks. Being mislead sucks. It exists, there is no doubt. And the legal system should certainly, as it has, rectify and make the situation whole for those who have been wronged. Which is what they are doing. And have done. But thats not the issue here. The Bush 5-year plan is. Wasnt that the title of this thread?

No doubt, my first home loan was not long after that and was a sub prime loan. Luckily for us we had a mortgage broker that wasn't just ethical, but had us do a lot of work to repair our broken credit to get us into the best deal possible. He also took the time to explain everything from the GFE to the loan documents and what the terms entailed. Our credit is now excellent, and I give a lot of the 'credit' to him for pointing us in the right direction.
This is a perfect example of personal responsibility...You cared to fix your situation, you listened, you learned, you did your OWN credit repair work, you researched...and THAT is why you are better off for it.
As you said, most cant be bothered to do these things. Had you not been bothered to do them, you would still have broken credit and all the issues that follow.:coffee:

As you said, this is the most important financial decision that someone can make. To be mislead with this isn't like getting screwed by your local plumber, it can truly **** someones life up. But it's not that it justs affects individuals, when done on a large enough scale it affects the economy as a whole.
As youve done, educate yourself. As youve done, do the research, and ask questions. Get explanations. Fix your own credit, fix your own mistakes. You cant be mislead when you are knowledgeable. Now you have that, and now you cant be mislead. Its nice how that works.:wthumpup:
With the passion you have for the subject, Id have hoped youd be preaching education. Its the only solution, as youll never get rid of the bad people.

[RogueFactor]

On another note I believe that it is completely BS that the gov steps in and freezes all/any of their rates. I was one that purchased a house during this time period, and I took the higher fixed rate because I know how APRs work. It would be unfair to everone like myself to get the shaft on intrest for doing the responsible thing.

I agree, it is unfair to penalize the responsible because the irresponsible didnt do the work they should have to educate themselves. We all get to where we are by our own personal actions or inactions.

[robnix]

According to Rush Limbauh only 5% of these people are in trouble of foreclosure.


Or did he say the the 5 year plan only HELPS 5% of the people? In some states sub prime foreclosure rates are as high as 25%

The simple fact of the matter is that some very unintelligent people forced loaners to allow people to obtain loans that should have never been allowed to do so. In return the loaners wrote up deals that would benifit themselves. I agree completely with what they did. They out smarted an idiot.


This makes no sense or I just don't get it. What you just said is that some stupid people forced the people loaning money to give bad loans to stupid people?

On another note I believe that it is completely BS that the gov steps in and freezes all/any of their rates. I was one that purchased a house during this time period, and I took the higher fixed rate because I know how APRs work. It would be unfair to everone like myself to get the shaft on intrest for doing the responsible thing.


Have you read the details of the plan? It won't help 95% of the people in this situation. The freeze is also only good for 5 years, the idea is that it will give people are current, and that can afford to keep their house at their current rate, time to find a permanent solution.

[robnix]

. The Bush 5-year plan is. Wasnt that the title of this thread?


Ok then.

The real reason for this isn't to help homeowners, that's just the pretty face on the ugly plan. The real reason is to help out the idiot investors on Wall Street that have securities and bonds backed by these ****ty mortgages. Let's talk about them for a bit.

Discuss.

[RogueFactor]

Ok then.

The real reason for this isn't to help homeowners, that's just the pretty face on the ugly plan. The real reason is to help out the idiot investors on Wall Street that have securities and bonds backed by these ****ty mortgages. Let's talk about them for a bit.

Discuss.
Do you really think it has to do with helping Wall Street? Nothing to do with the fact that its an election year coming up?

[robnix]

Do you really think it has to do with helping Wall Street? Nothing to do with the fact that its an election year coming up?

The election year is driving the spin, it's still more about the market as a whole instead of the homeowner. If it was about the homeowner, I think we'd see loan regulations being touted instead of rate freezes.

[RogueFactor]

The election year is driving the spin, it's still more about the market as a whole instead of the homeowner.
Dont you think its about the market as a whole because its an election year?

If it was about the homeowner, I think we'd see loan regulations being touted instead of rate freezes.
You wont see loan regulations, because sub-prime loan packages of recent years was pushed by the government. Ever wonder why nobody, on either side of the fence, was crying fowl then these loan packages were being handed out? To make it about loan regulations, would start a political ****-storm that the neither Dems or Reps want.

[robnix]

Dont you think its about the market as a whole because its an election year?


You wont see loan regulations, because sub-prime loan packages of recent years was pushed by the government. Ever wonder why nobody, on either side of the fence, was crying fowl then these loan packages were being handed out? To make it about loan regulations, would start a political ****-storm that the neither Dems or Reps want.

I wasn't saying that we'd see loan regulations, I said that if this was really about the little guy, that would be the solution you'd see put forward. I think what you'd see if they proposed more regulation is most people thinking it was a good thing, and only investors and banks complaining.

[RogueFactor]

I wasn't saying that we'd see loan regulations, I said that if this was really about the little guy, that would be the solution you'd see put forward. I think what you'd see if they proposed more regulation is most people thinking it was a good thing, and only investors and banks complaining.

I know you weren't. Im saying if loan regulations are the only way for it to be about the little guy, it isnt ever going to happen. The only people that could push loan regulations through are the government who were the ones who pushed through the sub-prime lending. If the gov't goes after the industry, the industry will fight back---and it will get ugly.
The banks wouldnt have given the loans in the first place, not without gov't pushing it. So, if you blame sub-prime loans...dont blame the banks or investors. Blame politicians.

[robnix]

I know you weren't. Im saying if loan regulations are the only way for it to be about the little guy, it isnt ever going to happen. The only people that could push loan regulations through are the government who were the ones who pushed through the sub-prime lending. If the gov't goes after the industry, the industry will fight back---and it will get ugly.
The banks wouldnt have given the loans in the first place, not without gov't pushing it. So, if you blame sub-prime loans...dont blame the banks or investors. Blame politicians.

I'm blaming Triangle.

[robnix]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

[RogueFactor]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

Gotta love lawyers. Ambulance chasers looking for their next big paycheck. And the SF Chronicle? A bastion of unbaised reporting:oneear:

Sean Olender is a San Mateo attorney

[TnDeathInc]

wow, just wow!

[tymcneer]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

That's an amazing piece of journalism... where did he learn to write... The Joseph Goebbels Propaganda School?

Ty

[robnix]

That's an amazing piece of journalism... where did he learn to write... The Joseph Goebbels Propaganda School?

Ty

http://www.nytimes.com/2007/12/10/opinion/10krugman.html?hp

[Mind'sEye]

http://www.nytimes.com/2007/12/10/opinion/10krugman.html?hp

Paul Krugman's Blog, http://krugman.blogs.nytimes.com/ You can learn a little more about him. :oneear:

My guess is that the sub-prime meltdown will become a big political issue. Social Progressives will once again align themselves with “under privileged Americans” and stand in opposition to the evil monsters of capitalism. There will be a host of government regulations proposed. The lawyers love regulations. I'd probably be in favor of abolishing the foolhardy sub-prime system altogether and calling it good.

I have the suspicion that Social Progressives may use this crisis as a platform from which to propose low cost home ownership as an entitlement. Mortgage debacles like this wouldn't happen if the government was in full control of the loan money and so on.....control being the operative word for Social Progressive programs. I wouldn't be surprised to see this become the subject of a Michael Moore mock-u-mentary sometime soon. He'll ask why the richest country in the world can't supply low cost home ownership for all it's citizens and he'll probably conclude that the answer lies in Cuba.

I'm really going to hold off final judgment on who bares the brunt of responsibility in this thing until we learn more, but as always, I'm going to pay close attention to the “source” of the information.

[robnix]

Paul Krugman's Blog, http://krugman.blogs.nytimes.com/ You can learn a little more about him. :oneear:

My guess is that the sub-prime meltdown will become a big political issue. Social Progressives will once again align themselves with “under privileged Americans” and stand in opposition to the evil monsters of capitalism. There will be a host of government regulations proposed. The lawyers love regulations. I'd probably be in favor of abolishing the foolhardy sub-prime system altogether and calling it good.

I have the suspicion that Social Progressives may use this crisis as a platform from which to propose low cost home ownership as an entitlement. Mortgage debacles like this wouldn't happen if the government was in full control of the loan money and so on.....control being the operative word for Social Progressive programs. I wouldn't be surprised to see this become the subject of a Michael Moore mock-u-mentary sometime soon. He'll ask why the richest country in the world can't supply low cost home ownership for all it's citizens and he'll probably conclude that the answer lies in Cuba.

I'm really going to hold off final judgment on who bares the brunt of responsibility in this thing until we learn more, but as always, I'm going to pay close attention to the “source” of the information.

I know he's turned into a Bush hater, but in this case, he may have a point.

[Mind'sEye]

I know he's turned into a Bush hater, but in this case, he may have a point.

We're either going to encourage Americans to listen to the political positions of guys like Olender and Krugman through the MSM, or we're going to insist that Americans take sound financial advice like this, http://biz.yahoo.com/pfg/e06subprime/art011.html We better make up our minds soon. :twocents:

[RogueFactor]

:lol2: He'll ask why the richest country in the world can't supply low cost home ownership for all it's citizens and he'll probably conclude that the answer lies in Cuba.

[GT]

Politically correct banking never works. I am amazed at how many high end homes around me are in the process of foreclosure. If you think this bail out has anything to do with the "under severed" you are sorely mistaken. A good number of these folks spend ever dime they have and are in very high income brackets. Subsequently to impress someone they are overly debit leveraged and when the adjustment comes they are out on the street.

Let the market readjust, trust me the lending market has plenty capacity to absorb the the sub prime market.

[wetwrks]

If you are stupid enough to take out a loan that you might not be able to pay back you deserve to lose the home. I have no sympathy. Were it an auto and you couldn't make the payments and they repo you should the government protect you? No. And this happens often enough too.