Allow me to pull a Rachel Maddow…somebody talk me down…

We just built a home. We contacted our financial institution for “pre-approval” were told that we were approved for $50,000 above the price range we had been looking in. So, had a choice…we either A) said “Whooo hoo! We can get a lot more of a house than we thought” but then be “house poor” or we could chose to B) call our bank back and instead of asking what we qualified for, we asked if we want our monthly payment to be $_______, what price range can you pre-approve us for? That’s what we did…there were no surprises.

Now back up a while before the foreclosures really started. Granted it was irresponsible for the loaning institutions to give mortgages to people who couldn’t afford them, but WHY remove the responsibility from the homeowners? You mean to tell me that they had no idea they wouldn’t be able to afford that home?

Therefore, I struggle to say that there is one thing I agree with McCain. America is full of a bunch of whiners…or perhaps I should tweak that to admit that we really are a spoiled nation. I realize there are many people out there that can’t afford certain things, but those of us who are “comfortable”…

Our grandparents saved to buy things…if they did not have the money for a car, they walked or took public transportation. This generation goes out and buys a car that will take them five years to pay off…IF they pay it off. You tell that to a 16-year-old who just got their license and they can’t believe their ears!

Did I hear Mr. Bush right this morning when he said that this mess started with the foreclosure crisis and “My first instinct was to let the market work until I realized, that upon being briefed by the experts of how significant this problem became.”

So in essence, as long as it was just so-and-so’s piddly $200,000 house, it’s not a concern to our govt? So who was looking at the big picture, trickle-down effect? And we’re not to believe that McCain isn’t four more years…when he wants to play with healthcare and privatize Social Security in the stock market?

I guess that was actually two arguments…deal. LOL

They didn't explain the differences to people. They put them in these loans without even offering alternatives. They intentionally sold them no interest loans as smart business moves. Home developers made it even worse.

Regardless, that is really only a small part of this meltdown. The bookcooking and trading and stock values and short selling is what really caused them to all go broke.

So now the government owns all the land in the country, can blame poor people for the problem, shut down FHA, and we're all fucked.

I think we had all better take a big step back any time the fatcats blame poor people for anything.

In laymens terms, you cant tell me that looking at one's income, one couldnt tell they wouldnt be able to own that house...whether the loan was there or not.

Let me know when you hear the "fatcats" taking blame...but I wont hold my breath...

If you don't know that you can't afford a $200,000 home when you only make $30,000 dollars a year then you are the problem, plain and simple. And to be frank your a fucking moron. These people allowed themselves to hear what they wanted to hear from the bank/mortgage company. They saw the house that the lender told them they could afford, knowing full well that they couldn't make the monthly notes, but decided to buy the home anyway. I am not saying that the mortgage companies share no blame, and I think they should eat the loss from resale as they deserve to. But to say people were confused and didn't know what they were getting into is just wrong. I know damn good and well what I can afford and what I can't. And I know damn well these people knew that also. We are not talking about people who bought a home they could afford, then lost their job or had a family emergency that caused them to lose their home, that happens all the time. It happened to my sister and her husband. These people took money from banks that they knew they couldn't afford, and that is greed, pure and simple.

...just a little less blood pressure raising... :wink:

Keep blaming working people and end up with no programs to help working people do anything.

When I was a realtor in ATL in the 1980s, selling houses, helping buyers, the ratios were prohibitive. There was little wiggle room and some people who could have -should've- been helped to get into their own homes couldn't. They'd even move to other cities so they could buy a home.

People need to be able to buy homes. But they also need to use common sense and 'settle.'

told your clients they needed to pad their income, that they had to get into a house before the market went up further, that it would be easy to get into a better loan in a couple of years, then you would have been the problem. Not your clients.

I wish people would understand that in many areas, there were no homes to settle for. NONE. Realtors and lenders and their crooked practices inflated the prices.

It's why we had regulations and banks had standards fro many years.

Blaming it on people being greedy is the EPITOMY of misunderstanding. It ignores basic psychology.

The same deal applies to claims made for health related products, for example- or to any number of consumer fraud situations.

Which is why we have (or used to have and/or enforce) laws that prevented scams and false advertising, some of which are less devious (or have less emotional involvement).

Failing to understand that- and blaming ordinary people for getting scammed (because of course- there's a sucker born every minute) simply ignores the reality of the world as it is and substitutes instead one's notion of how they'd like it to be.

Not unlike creationism.

But that still doesn't exonerate the guilty who took money they couldn't pay back.

in a civil matter, or to assume that the ordinary people involved in these transactions aren't facing consequences- sometimes very dire ones.

That's precisely the sort of simplistic black and white "thinking" that's gotten Americans into the collective mess that they're in. You can hear it every day on talk radio.

So I wonder who the fucking morons really are.

your a fucking moron.

your

They should also anticipate that wages aren't going to keep pace with inflation, that gas is going to get 5 times more expensive, that the economy will get worse and worse until they too lose their jobs.

After all, in a free market it is survival of the fitest... unless you have a government in your backpocket.

Look I used to sell cars and there are ALOT more reguations in place for auto loans than there are for mortgages. That should tell you all you need to know right there.

The smartest customers I had in the nearly 3 years I sold cars didn't know DICK about car loans. They all thought they did, but it's complicated. That's why you have financial officers at dealerships and banks who are REQUIRED to make sure that people can afford payments, that people understand the full terms of their loans, and that people don't get loans that they won't be able to pay.

Stop blaming this on the consumer. The only reason that most people get up to go to work is that they believe that their situation will improve if they do so. These balloon payment loans were not adequately explained, and were oversold to begin with. Or didn't you notice that there is a massive lawsuit going on right now on that basis?

Last October, when we were shopping around for a mortgage for this house, several of the lenders we talked to insisted that we could afford a house THREE TIMES as expensive as the one we bought, even though we still were making payments on the house we already had! I said, "Uhh, have you done the math on this? How is this possible without altering the physics of space and time?" One of them backed off, but the others were very persistent.

My husband and I are fairly experienced at this mortgage thing, so we didn't get sucked into buying more house than we could afford, but I can well imagine a first-time home buyer being fooled by this pushy bullshit.

Heh. I wonder what those same shysters would say today if I called them to ask about mortgages? Assuming they even still have jobs, that is.

Personally, I think the American public shares a good bit of blame on this mess too. You are right, many people are living beyond their means. Many people used their homes as an ATM machine and kept refinancing over and over and over, each time increasing their debt. But if you look at the underlying reasons why people were using their home as an ATM machine there are many problems: lowering wages, health care, consumer economy, etc.

But I dont think that is the real crisis that triggered this. The real crisis is the fancy financial schemes devised that were based on flawed data. It was a crime to allow so much leveraging by banks. Then you had AIG writing insurance on stuff assuming low levels of defaults, etc.

a lot of people thought they could buy a house now, even one they could barely afford, and sell it in six months or a year and make a huge profit.
Unfortunately for those people the bottom fell out of the market and now they are left with a house they can't afford to keep and can't afford to sell.

Should they have known better? yes... but when everything is crazy around you, crazy begins to seem sane.

Through use of these questionable loans, developers, realtors, and banks made people think they could afford more home than they actually could, which allowed those same sellers to set the price at that new, artificially-high level. Once a few people fall for that, that inflated price becomes the new baseline, and lower-cost alternatives are no longer available for buyers.

And "forget about buying and just rent for awhile" isn't a solution, either. Because most apartment complexes are being sold and re-sold to new owners every few years, those new owners are paying inflated prices for the same reason. So, what do they do once they take over? Raise rents, of course! Unless you're living in a rent-controlled area, that means that you're eventually going to be priced out of house and home, even if your "house and home" is a rental 2-bedroom apartment. (For example, I've been in this house for fifteen years. When I first moved in, my total mortgage payment was about twice as much as the rent I'd been paying. With housing prices in this area, were I to have stayed in that apartment, I'd likely be paying the same to rent there as I do to own here.)

It's called a "housing bubble," and it affects everyone -- not just "greedy" buyers mortgaged beyond their means.

If you could "buy in" on a house when it was 100k, and if you could make the pre balloon payments for 5 years, then sell it for 150-200k, Wheres the downside? you walk away with 50-100 grand to invest in another house, and do it all again. Eventually you can own your own house.

Alternatively, even without the greed angle, if you make the pre balloon payments for 5 years, then refinance and do it again, you may not have anything more than you started with, but you have gained the use of a house for your family, for years, that you otherwise would not have been able to afford for them. And who does not want to raise their children in a better neighborhood?

And the other side, when the economy is going well, or at least moderately, who doesn't see the potential that things will be better. Who isn't planning on getting a better job, and improving their life?

Add those in with those who have lost their jobs and livelihoods, and here we are.


Plus, to be fair, there are a lot of REALLY EXTRAORDINARILY financially illiterate people out there. I remember my HS classes, where they tried to prepare us for the realities of life. I am lucky enough to be oriented toward making a budget and living it. Most of the people around me on a daily basis are not. I do not even know how, for instance, my mother in law lives. We made her a budget, and it turns out that even after we reduce the most egregiously crazy expenditures, she still spends more each month than she makes. None of us know how she has been making the bills each month. I am just glad she has no credit, or she would be in trouble.

worst-case scenarios. If i lose my job and have to rely on savings, could I still afford this? For how long.


This is what kept me out of the market and from signing myself up for some interest only variable-rate loan, which would easily have gotten me into a house that I can't afford.

If the market crashes will i be able to sell? if interests rates are crazy, will i be able to make that balloon payment?

I'm still saving and waiting to have 20% that i will eventually put down on a 30-year mortgage on a nice house i can live in for a long long time. until then i will keep renting.

It came as quite a shock to my wife. She comes from a more "money in, money out" school of personal finances.

I have lived in a few areas around the country. I noticed that was a very strong current in the community where I lived in Colorado. I noticed that it was a very strong current in the community I Experienced in Washington, California, New York, etc. I have noticed it as a very strong current in the milky white community around here. Particularly among the younger generation, the ones that graduated around the time I did, but also in their Parents. Not nearly as much in their grandparents, for some reason.

It does not boil down to greed. That plays a part, but it comes down to understanding. I think in Excel sheets, in balances and trades to get to the desired result with the resources I have. But there are a surprising number of HS graduates that barely pass math, and that are just not wired to apply any of the skills they learned to daily life.

I don't know. It is frustrating to me, because I do not know how to impart what seems to be almost instinctual to me. But I want to help people, many of whom have more resources than I do, but who are just making it, or not making it.

right out of school, thanks to cc companies targeting college students. So i had to learn personal finance, while operating on a cash-only basis.

The best thing I ever did was read Personal Finance for Dummies. Of course my Mom was always strong on teaching me to handle my own finances, learn investing fundamentals, manage and get out of my debt, etc so that background is there.

i did have to file bankruptcy about 5 years ago, and if anything that has made me a stronger credit risk now, but i see the same thing you do. I also people who have claimed once and are preparing to claim again. that is crazy to me.

...was have a job with a bankruptcy lawyer as my FIRST job out of college. That was a learning experience in itself...people paying the minimum payment thinking they were getting out from under, but yet not even touching the principal. I had a Living On Your Own class in h.s., I dont recall them touching on credit...rather how to balance a checkbook, etc...but I certainly hope that the school systems have these classes yet...

I was a single mom, raised by a single mom...I had ONE credit card before I had a child...that was used for car repair, dental, and health (had neither insurances)...I guess we are in the minority of thinking ahead...as I said in another post here...the creditors dont care what hardships you come into...when you sign that legal and binding contract ... that is saying that you agree to pay...come hell or high water. I dont see where that is not the responsibility of the consumer...that's just irresponsible...

I rented until I was 38 and my husband and I just bought our first home...we are lucky, as he is retired USN and could utilize the VA program. Even tho it required no deposit, we still put something down and we made sure that we had a payment that was low enough we could throw some extra in. We also chose a house in the price range we knew we could do this in...even tho we were offered much higher preapproval. You have to plan for the unseen...job loss, sickness...and if it means you dont buy a house...then at least you've avoided this mess...

because i've definitely made my share of financial mistakes, but thankfully I learned from those every step of the way.

But yes there are still those of us out there, and most of my friends went with traditional loans on their homes or re-fied into them, but with some it did take me running some worst-case scenarios with them.

People get sick, they can't afford health care insurance, they go broke and lose their houses.

You think all people who are in foreclosure just bought more house than they could afford or didn't understand ARMs?

But ppl getting sick, etc isnt anything new... 0% down was...

than it has been although hardly 'new.'

People get sick and lose their jobs all the time. That is nothing new and didn't cause this crisis. We are talking about people that took loans that they knew they could not afford and like one poster said tried to make a quick profit when the value of homes were skyrocketing. There is a big difference in people who lose their jobs and get sick, versus people who just can't afford the home they buy. In the former situation that will always be a problem, but the latter is just irresponsible home owners who took on far too much debt.

but your point has been taken...

I said in an earlier post that many foreclosures occur for unforeseen financial hardships and illnesses. I am not talking about those people. And those people have not created the vast foreclosure crisis that we are in now, unless they could not afford to pay for their homes before they became ill. Come on folks, please check your sensitivities at the door, I am not talking about those people. That is not what this post is talking about. This post is talking about people who borrowed way too much money, more money than they knew they could afford, and then simply walked away from that debt. People have lost their homes do to hardship since the beginning of mortgage lending, and that will not change. This post was referring to both irresponsible lenders and borrowers.

from huge medical bills. That is something new. Insurance doesn't pay what it used to, and when it does, those scumbucket companies will claim anything to get out of paying or increase the 'copay'.

I know people who came across bad economic times...

They lost their jobs, a child got sick, and a woman's husband died.

Those are the scenarios that I know of personally. So, they lost their homes. On top of everything else. American people are working more hours then ever and it takes TWO people working full time to just meet BASIC expenses.

Yes, some people made bad financial decisions. They wanted a nice home and they couldn't afford it. The crime is that people can work so hard and not afford it. The rich own 95% of all the wealth while the rest of us struggle just to keep alive a little part of the dream. And, if people get caught up in wanting something they can't have, but have had dangled over their heads since birth, that isn't the worst crime in the world.

The discussion should be about the loan shark banks. The huge amount of interest we pay to them to afford a basic home.

We live in the Cleveland area...they would focus on people that made say $45,000 as a total household income and qualified and were loaned money for a house say $125,000...that is what I'm talking about. That to me is beyond your means...and as someone said in here...there are mortgage calculators all over the internet to see what a monthly payment would be. If you look at that payment and you can't cover it w/your other bills, they you ARE living above your means...whether it be a house payment, car payment, credit card...etc.

I don't think this is a good example, as 2 2/3 x annual income seems pretty much in the affordable range to me off the top of my head.

Anyway, see my response to your OP. The crime is not that homeowners didn't get bailed out. The crime is that debtors are getting one treatment and lenders (the ultimate lenders -- China, etc.) are getting another.

With a down payment of, say, 5,000 dollars and no other debt.

We should be creating a system where an average person can purchase a modest home (in my area that would be modest, you can't really touch a solid house around here for less the 180,000 on the low end unless you do a fixer upper).

I am all for living within your means. I am renovating a old Victorian, and we are doing it, pay as we go. If we don't have the cash, we don't get the project done. But, we should be able to keep our home. It isn't easy. After seven years, we just FINALLY got a huge tree removed from the back yard and put in grass and landscaping plus we are rebuilding the wrap around porch. And, we have a home improvement loan that is available, but we will only go to that if there is a really serious emergency such as a broken furnace. Even then, we hope to pay cash.

As for the car thing, that is tricky. The reality is that people need reliable transportation to get to work (around here, there is basically no public transportation to speak of and, it is well and good to ride a bike, but we have seven months of winter). So, a car payment is often a necessary evil to just be able to work.

The system is not set up to give people options. I have a car payment I can afford, on a older low mileage car without any extras. It is a nice car, and I put a few thousand down to get to a affordable payment. I count myself lucky.

I live in a modest two bedroom home, with one child. I am grateful to have a home. I know what I can afford and nobody is dangling anything in front of me. I don't hate the wealthy in this country. Whether they worked to acquire that wealth, or whatever I don't envy them and I don't wish I could drive a nice sports car and live in house that I can't afford just because I see other people doing it. This post was about people taking responsibility for their decisions. Yes there are many problems with lenders that are unscrupulous and I am right there with you in wanting these people punished. But that does not excuse the fact that people must make responsible decisions and not expect the government to bail them out because they borrowed more money than they should have.

So, it really hasn't registered about the ones who actually were reckless.

The people I know had modest homes, and they couldn't hold on to those. But, I see your point.

When I went back and read my reply to you I realized that it could be taken that those people who bought a more expensive house then they could afford, were not grateful to have a home. That is simply not the case, nor what I was implying. I know that it would be tough to lose my home, for whatever reason, but it would be tougher on my son who would have to say goodbye to his friends, classmates, etc. I guess I just don't like how some people think that living in a modest middle class neighborhood is something to aspire to get out of. I guess I also get mad when I see people get approved for a $200,000 loan when they damn sure know they can't afford it. Just like I know I can't afford it.

Sorry about the attitude.

I live in a Middle Class neighborhood, and I wouldn't trade it for a fancy home. I am happy here.

A working class hero is something to be.

for their mistake.

It's the institutions that are being bailed out and not accepting responsibility.

On edit: 10 years ago I worked for a major credit card company and at that time they were very careful to keep their bad debts as low as possible even if it meant turning customers away or giving them lower credit limits than they asked for. It's simply good business sense.

They bailed out of a loan. They took money and then couldn't pay it back. How is that paying for one mistake.

by losing their home. The institutions that are bailed out don't suffer any consequences for their bad decision leading to "moral hazard".

I agree with you there. The consequences can be severe for some. I am not saying I don't feel sorry for these people, that would be inhumane. But they put themselves in a situation that set themselves up for failure. The mortgage bailout will be a hotly contested issue for some time to come, especially here on DU. But understand one thing, if the mortgage companies go under then everyone's home will be devalued. And lending in the future will become even harder if not impossible for the middle class.

<<But understand one thing, if the mortgage companies go under then everyone's home will be devalued. And lending in the future will become even harder if not impossible for the middle class.>>

Are you saying now that YOU want to be bailed out of YOUR decision?

Lending should stop, or the lenders should take their lumps at least.

What I am saying is that when foreclosures go up the value of everyone's home diminishes. If the government didn't step in to "bailout" as you say the banks then billions of dollars in capital would be lost, and you could forget about getting a future home loan, especially for people in the middle class. Is that what you want to see. Do you want to see everyone's home devalued and worthless? Do you want to see mortgage companies shut their doors, and middle class families with no way to buy a home? I don't.

For the government to stand aside and allow the lending binge to end. It's going to end sometime and now is as good as time as any. People did not always buy their home with mortgages. The explosion of the finance sector over the last 60 years has really done a lot of damage to our country.

By the way, I have been posting this same argument for months over at an obscure little board on Yahoo!

But homes have skyrocketed in value since say the 1940's. Meanwhile most peoples income has not skyrocketed. Without lenders only the wealthy would be able to own homes. Then again without lenders homes values would decrease, so I guess you have a point in that regard.

How is that paying for one mistake? Well, let's count the ways. You no longer have a home, you've lost your down payment and closing costs, and you have bad credit that will follow you for years to come. That's not paying?

The more I read of your posts, the more I think you need to get back to your pals at that other web site. :eyes:

If a house painter drops by and says he has two cans of paint left over from a job, did I want the front of my house painted. I agree. Then later he says "Actually the job took four addl cans of paint so you now owe me $100"...and if I refuse he threatens to sue me and I end up paying. Who's fault is that scenerio? Mine for falling for it or his for scamming me.

And if you say I have no responsibility in the matter...then anything negative that comes my way with a second party involved, based on MY actions...I'm not responsible for being scammed...

MUTUAL RESPONSIBILITY

Its called repercussions for not holding your end of a legal binding CONTRACT stating that I am going to make monthly payments...I dont understand what is so difficult to understand about responsibilities that people take on in purchasing a house...and NO we're not talking about the sick or the jobless...we're talking about living beyond your means...

If you have a job...you do work, you get paid...right? If you dont do that job...what are the chances that you get a paycheck?

therefore you suffer repercussions. TRUST ME...none of your creditors care why you cant pay. For example: My husband's exwife foreclosed on their house...that went on HIS credit...AND she filed bankruptcy on HER half of the debt that they incurred while married, that per the divorce decree was HER responsibility and was to hold him harmless. Well guess what...when those creditors started coming after HIM...we went to the with the divorce decree...and they didnt care...HE was on the accounts...the accounts were dismissed from her w/a bankruptcy filing..and HE paid every one of them off...IN ADDITION to his share of the marital debt from the marriage...

I said no thanks.

When I first bought, the interest rate was very high, and I did not put enough down for a fixed rate.
Thankfully! - because the interest rates came down - a lot.
But, when I refinanced, the rates were so low, I thought that they could only go up.
So I insisted on a fixed rate.

However, first-time buyers might not have thought about that - and when told that an ARM was a good way to go (Greenspan said so), they could have been persuaded.

If most buyers had taken a fixed rate, the foreclosure crisis would not have happened.

for our refinance. All three tried to sell me on other terms when I just wanted a 30 year fixed. They really tried to convince me into an ARM and two other funky loan offers which I can't remember what they were now.

This was in 2003 and we sold the house in January 2007. I keep thinking about younger, inexperienced home owners who were obviously shafted in their loan agreements.

very low so people jumped on them. Once they started going up again, people could no longer afford the monthly payments.

From what I understand, these ARM mortgages were pushed very aggressively by lenders and I don't think people fully realized what they were in for in the long run.

People just aren't that sophisticated when it comes to certain aspects of financing. I think this becomes especially true when wages are so low you don't really think beyond the next paycheck, much less savings, investments, etc.

It's really too bad we don't have mandatory classes in public schools that teach about personal finances and how to budget, save, etc. I took a class like that in high school and am so glad I did.

When I was in High School, we had nothing like that (graduated in 1970). I'm sure there are people out there my age who aren't sure what they are signing. The lenders don't explain the consequences and many people don't know what questions to ask. Therefore, they are shocked when the payments balloon out of sight. It's a shame :-(.

And they intentionally muddy the waters- explaining things in a deceptive way. After my dh left I needed to buy a house and it was a nightmare. As in your case they encouraged me to buy a house over what I considered my price range. They actively and aggressively encouraged me to go for some of the iffier things such as adjustable rates etc. all the while framing it as a way of making the purchase more affordable. Thankfully I didn't fall for it, but even so I am struggling big time to make my mortgage payments. It's been very tough.

But many many people do fall for their ploys... maybe they aren't very intelligent or very informed. Maybe they are too trusting, or maybe they are for various reasons not making the best decisions. That doesn't mean that these folks are irresponsible, or slackers, or went into the deal expecting someone to bail them out... it just means they are human. And now they are looking at losing the roof over their heads. Let's give 'em a break, ok? sheesh..

sheesh.... lol

I really do- that was rude of me:blush:

But this part of your post is what sparked my reaction:
"Granted it was irresponsible for the loaning institutions to give mortgages to people who couldn’t afford them, but WHY remove the responsibility from the homeowners? You mean to tell me that they had no idea they wouldn’t be able to afford that home?"

I guess I would say that, in many cases folks really didn't know that they were getting in over their heads. They believed what they were told for whatever reasons, allowed wishful thinking to take over reason and made a bad decision. You know I saw Buckley once discussing the mortgage crisis and he basically said that anyone who was foolish enough to buy a house with an ARM deserved what they were getting. When one is intelligent and informed about a given subject it is so easy to look at the uninformed as somehow morally or character deficient, which is exactly what Buckley was doing. Really irritated me... and I guess your words reminded me of Buckley's words and I reacted.

For what it's worth, I do agree that we have become used to getting what we want in a material sense with too little effort, for the most part. And a little bit of hard times and deprivation can, at times, be beneficial to one's character... yipes, who's sounding like Buckley now??:hide:

I have really thick skin and I love love love to debate...really, I learn!!! :wink:

I posted that knowing there was a risk of it sounding ... "trollish"? LOL! And I angrily posted after listening and thinking of all this economy mess...I wasn't putting all foreclosures in the same boat (i.e. sickness, etc..) This certainly hit home more than I expected.

And there is no hiding behind walls in my threads!! :grouphug:

It's great to be on the same board with ya:hug:

Thanks mucho! I really like it here!!!! :grouphug:

I'll be looking forward to your posts:hi:

right, though. That's just stupid. Graham was talking about something entirely different.

lost our fucking jobs and couldn't find jobs at the salary we were accustomed to. Couldn't sell or refinance the house with no value left and even working 3 jobs couldn't cut it after awhile. Kid in college, and another one that needs to eat. Don't put everybody in the same boat. Where was my fucking bail out? I used every dime of savings and then some and couldn't sell the damn house. This country is shit and the regular people are not to blame.

Done with my rant and it wasn't directed at anyone in particular here. I'm just pissed off.

actually my husband's ex-wife put their marital home in foreclosure the first year that he and I were married...and it took us YEARS to get out from under her problems...so I sounded as if I were lumping everyone in the irresponsibility boat and ASSUMED ya'll had a crystal ball as to what I was saying...my apologies....

again, just talking and listening and learning...

my current income/expenses and how much of a mtg. pmt. I would be comfortable with and see what loan that matched...THEN I would have contacted the lenders and said I would like to borrow $XXX,XXX, what's the best offer you can make? There are LOTS of calculators available online where you can do that.

As to the people who signed for mtgs. they knew they couldn't afford, I do blame them in part, because they SHOULD HAVE KNOWN. BUT...many of the brokers selling these mgts. were better than car salesmen! They glossed over the part that the monthly pmt. could go up dramatically (if they mentioned it at all), and kept telling financially uneducated people "YOU'll be just FINE!" There's LOTS of blame to share!

Yes you heard Mr. Shrub right this AM.

...and I worked in real estate for years...but I hear where youre coming from...

The Co. my husband was woring for in SC was failing fast, so we decided to move. The realtor there AND the lenders all said "Oh, you can afford a $200,000 house easily!" I told them no thanks! (And no I'm not mocking Sarah...I really said it!) I explained that I had no way of knowing when my husband would find a job after coming here, and I wanted to be sure, if something went wrong, IF I lost my job, I wouldn't want to kill myself! RE agents and lenders have been pushing the "spend more, spend more" idea for YEARS! I understand why, but I sure wasn't falling into that trap, the same as I never let a car salesman get away with the "How much do you want your payments to be?" BS!

1:53

and then died six years later, and their child makes only a little more than minimum wage at a service job, and could no longer afford the payments?

That's happening, too.

who win a car in a raffle, or those we think are lucky to get on "The Price is Right". MANY of not MOST have to sell the prize, or not even take ownership because they can't afford the taxes!

...because the market is so bad there, that the only price he could fetch is less than the amount owed? :shrug:

did they grow up during or just after the Great Depression by any chance?

Did they grow up in an era when there WAS such a thing as public transportation?

Did they grow up in an era without credit cards and easy loans?


:shrug:

did they grow up during or just after the Great Depression by any chance? all four were born in 1921...so during/after...obviously they learned from that..

Did they grow up in an era when there WAS such a thing as public transportation? Uh, yeah...

Did they grow up in an era without credit cards and easy loans? Of course not...and when it did become the era of such...they were frightened of them...

So who's point am I making yours or mine???

;-) thank you

My point is that you cannot compare your grandparent's generation with the kids of today in order to argue that the kids should know better. They lived in times so different that any comparison is kind of ridiculous.

--Your grandparents had forces driving them to the 'correct' fiscal behavior, ie. to expect lean times.
An actual experience of scarcity makes people frugal.

--Societal forces today often drive people who have never known lean times to desperate and risky fiscal behavior. They will use the sanctioned vehicles of credit cards and easy loans to live better. Any of us would gamble that the future will be better than the present. How do you know what your grandparents would have done if they had had any alternative?

--At a time when gas prices are skyrocketing we have very poor public transportation, inadequate and absurdly substandard. Now WHO has allowed that particular ship to hit the pier? Not the average middle-class Joe.

I rest my case.

we just go on as we're used to living and relive history? Still sounds irresponsible to me...

yes they should have known better. But as has ben stated here, many people were convinced they could afford it. Were told the house values would go up, they would have equity in their homes. Some lived in apartment complexes, where the owner of the complex decided to turn them into condos. Renters had first refusal. So it was a case of moving or buying. Some bought that shouldn't. Established families took home equity loans to pay for college tuition, medical bill, home improvements. Thinking it wouldn't hurt because their house value would continue to climb. Now they owe more than the house is worth. I have always been frugal, not cheap, frugal. I live within my means. I splurge when I know I can. We were getting in the mail every day offers for refinancing, low cost loans, etc. Someone who really wanted a home,, wanted in on the real estate boom, thought the merry-go-round ride would never stop, jumped in with both feet and their eyes closed.

But damn the senators and congressmen who were in bed with the banking and financial industry. They are the ones who removed the regulations so the bankers could dangle the bright shinny objects before our eyes. They are the ones that should burn in hell.

afford, but rationalized it with, figuring future raises in income, house value increasing etc....didn't think job lose or decrease in value...I consider that a fault of not looking at pro/cons but win/win values....there were also those who were told by mortgagees that ARM's were good for them and not to worry because any increase would be minimal or they could refi before it kicked in and home value would be higher...or how about those 125% equity loans assuming value would increase?...Lots of blame to go around...Most of the problems started in 2002/2003 look and see what regulations were eliminated then (in 2001/2002) there would be the answer...I can remember looking at the forecloses in the paper daily back then and seeing 20 or more every single day...and it's still going on (our town only has 650,000) so all those years, at daily 20 or more forecloses, here alone...just think of this repeating itself everywhere else and it surprises me it took this long for Wall Street to fall...

As others before me have pointed out, the bulk of this problem resides on:
a) Those who aggressively pushed for banking deregulation;
b) Those who told banks to push ARMs for the good of the economy (eg. The Fed and the Treasury);
c) Banks who aggressively pushed people to take ARMs without providing any alternative options.

Yes, I will agree that a certain segment of the public bear some responsibility. The segment who thinks it's a viable financial strategy to run up one credit card and then transfer the balance to a higher limit credit card. Sure, they bear some blame here.

Banks were told to push ARMs and banks saw dollar signs in their eyes. So they loaned money to any Tom, Dick and Harry they could, consequences be damned, based on the premise that if they got all their payments on time (and why wouldn't they, they were being told pushing ARMs would make the economy stronger) they'd be raking in the money.

Responsible financial practice isn't just responsible borrowing, it's also responsible lending. Offering loans based on tangible criteria. Openly offering alternatives instead of hiding them unless borrowers specifically ask about them. Even the most responsible borrower can find themselves waist deep in financial crap if they're working with an irresponsible lender.

Our government is scared to death to tell the creditors of our nation to go take a flying fuck.

But if they don't, those irresponsible creditors will never learn anything.

Who are the creditors? China, Oil exporting countries, the FDIC (through insured deposits in US banks).

They all need to be told to fuck off!

would we tell places like China to 'fuck off' in the short term?
We can't because, thanks to "free trade", we've gutted our manufacturing and national self-sufficiency. We have nothing to base our economy on other than trade surpluses, trade deficits and market paper shuffling.

There's no way to be self-sufficient in the short term. In the long term, we could ween ourselves off of being attached to the hip with other countries by reinvesting a bundle with the single goal of rebuilding our former manufacturing infrastructure. It definitely would be a long term fix. I am all for this, mind you. Free, but fair, trade and national self-sufficiency are things we absolutely need to fix.

I'm just stating the truth that telling places like China and OPEC to "fuck off", while they hold a lot of our financial securities and we have no way to compensate if they dump it all, wouldn't help in the short term at all.

We don't get to borrow any more??

HOOORAYY! A force fed balanced budget. No more military adventurism coupled with irresponsible tax policy.

Let's be honest. We are never going to wean ourselves from debt, and someday we are going to default.

I just think it's better that it be sooner rather than later.

And I agree that if we ARE going to bail out the creditors, we should do it "trickle up" style -- by giving money to the debtors, or paying the debts on behalf of the debtors.

That's all this was about. One BUBBLE after another. We keep allowing ourselves to get duped into this shit by all the experts on the money channels. Your post is exactly right and talk about low information voters who refuse to get it.

But isnt saying this "We keep allowing ourselves to get duped into this shit by all the experts on the money channels." saying that we need to be responsible for ourselves????

I forgot this... :)

Rates are still pretty low.

I would think if there is any problem it would be teaser rates. Those should be illegal.

If the borrowers defaults on the payment, the loan doesn't get paid, and the lender has to deal with a foreclosure. Typically at a big loss.

Because these mortgages were packaged up and sold to the creditor world (= China and oil exporters), they will be the ones who take the loss.

The creditor world also funds our government. Because our government and the rest of our economy depend on constant infusions of heroin, oops I mean capital, from the creditor world, we cannot afford to tell our creditors to go fuck themselves.

Thus we have to save our standing with the creditor world, and thus the bailout.

But wouldn't it be easier to just give a little hand to the borrower, keep her in the house, and keep the bailout money here at home (sort of)?

When the debtor says I need a hand, the government responded, FUCK YOU, act responsible.

When the creditor says, Hey I never bargained for a risk of default, the government says, don't worry sir, we're here to service you.

If one side is whining, then so is the other. It just seems like a threat, because we are so addicted to credit.

Sure some people took loans they couldn't afford, plain and simple but to concentrate on that is folly.
Most of the people that can't afford their homes began in a position to handily pay their mortgages but then the rate escalation and devaluing came into play putting tons of people first dealing with huge payment increases and then upside down property values.

It was amoral greed and exploitive practices to scratch extra dollars up that lead to this and now the greediest will be propped up and empowered to rinse and repeat.

Follow the money instead of worshiping it and we might accomplish something. Who made out? Those are most likely to hold the most culpability. Making legislation focusing on the few people (that still should not have been given a loan in the first place) that couldn't afford their payments hoping like the fatcats have gotten away with millions of times over, that the property would increase in value and they could get over is simple minded, ineffective in resolving the issue long term, and of course damn unfair.

Blaming the little guy is a cop out for those who want to carve out some excuse to keep doing the same things that got us here. We'll just rotate this same bogus economy for another few generations of making the rich rich richer and wait for their insatiable greed to wreck it at the expense of the people.

The good of the people outweighs reverence for a failed system.

1) It is the lending/borrowing practices. People making bad financial decisions for their household, and predatory lenders who sold people on loans only to collect a commission.

2) It is the housing market bubble popping.


If someone's house goes into foreclosure... there is still a property that can be sold to cover the failed loan. The problem is that houses are losing 20% off the value they were purchased for. If real-estate were still booming, this wouldn't have happened... yet.


My wife and I are really glad we opted to underbuy a house and go with a 30-yr mortgage even though we're probably only going to be here a few years.

tighten your belt a bit, but then you or your spouse loose one of the many jobs that was shipped overseas because the ceo's need to make a bigger profit so they can buy yet another house.

next one pays half of what you were making and then you take a second job on top of that but the gas and food prices have tripled you're screwed...and you cannot sell it because who will buy it for what you owe when they can get a foreclosed property for cheaper? You get screwed! I was not irresponsible and hate getting lumped in with that mess.

You look for the home you can afford on one salary at it's lowest reasonable level for your career. always plan for the worst case scenario.

getting really irritated with were the flippers. These folks were looking for a quick buck and house values became over-inflated while we were looking for a long-term investment and homestead. Now the values of homes are more realistic but not worth the mortgage owed on them.

Kitkat, it used to be flippers had to have solid assets. The rules got broken by the lenders themselves.

I was a real estate agent for over 20 years and worked with all levels of buyers. You were a conservative buyer, and made a wise choice. But remember the reason that buyers use agents and go to mortgaqe loan officers is for advice. Most buyers, especially young or first time buyers, but also even many second and third time buyers, are not cognizant of the many ins and outs of homebuying. It is, therefore, incumbent on the people who are being paid to do their jobs well and honestly and to give their customers/clients true and accurate guidance. That is not what happened in many cases; this industry became predatory. It is a case of greed personified!

values have been so artificially inflated. Tax laws meant to help people afford a house had that savings rolled into the price of the property by the sellers/banks/real estate brokers. Houses ended up costing more, so the savings ended up in the pockets of the sellers/mortgage companies and brokers.

A friend of mine and her then-boyfriend bought a house. Not much of a house, but still, we're talking a $220K loan to a couple who had half a job between them- he was on disability, she worked part time at WalMart. Needless to say they didn't keep it long- fortunately for them they got behind while the bubble mentality was still in effect and they actually made $60K on a home they didn't even own for a year.

Sure, the buyer bears some responsibility, but so does the bank for writing a loan with no reasonable expectation that they could pay. And simply ridiculous loans like that were absolutely epidemic- another friend of mine bought her first house at the ripe old age of 20.

I've seen, over the years, well before these times, that a ratio of roughly 70% of a nation's wealth owned by 10% or so of the population is an inherently unstable state which leads to economic collapse.

We've seen that ratio of wealth to population twice in the last 100 years: 1929, and now.

When wealth becomes that maldistributed, business has to grind to a halt. In the Great Depression, when individual credit was rare, what "gave" was that people could no longer afford to buy what business was selling. In this, the era of credit, it is that people can no longer pay their debt.

But these are superficial differences, at least as far as whether or not an unregulated top-heavy economy crashes. We have years upon years of unregulated capitalism, pre-1930's, to examine. Without fail, unregulated capitalism crashes and burns roughly every 10-15 years, and crashes especially badly when wealth is most highly concentrated.

Unregulated capitalism crashes because it doesn't "reward greed", or "permit greed" -- it crashes because it is greed. Capitalism is all about making money -- indeed we've got a Supreme Court decision hanging like a millstone around the necks of would-be socially responsible corporations, declaring that the only legally allowable duty of corporations is to make money for their stockholders.

Nothing makes money quite like pyramid and ponzi schemes, as long as you're at the top of the pyramid. And it doesn't take a whole lot of dressing up in corporate clothing to make such a scheme nominally legal, when regulation has been weakened or eliminated.

There's simply no other way, short of discovering a gold mine under your feet, to generate the kind of "growth" we've seen in recent years. Think about it: have we been finding 11% more natural resources every year than the year before? Finding 11% more real estate, ex- nihilo? Creating 11% more salable goods with the resources we already have (despite the fall in consumers' real wages)? How then is it that a minimum of 11% growth became de rigueur for corporations that did not want to face a stockholder revolt and/or a buyout (and for executives who did not want to be unemployed)?

You can't get that kind of growth (outside of new industries or businesses who stumble upon the occasional real or metaphorical gold mine) except by making up funny money -- by creating debt that cannot be repaid, but which nonetheless circulates for a while in a highfalutin Ponzi scheme. In 1929, the funny money consisted largely of outrageously leveraged stock sales, sold at a debt ratio of ten to one under the pretense that stocks would forever rise in value. When stock values stopped going up, the whole wildly overleveraged system collapsed. In recent years, it was real estate that was always supposed to go up in value. Same tune, different lyrics, same consequences.

But you know what? In the absence of regulation, you will always hear that same tune, no matter what the particulars of the lyrics may be. Something will be overleveraged to create a profitable Ponzi scheme, and responsible businesspeople will be pushed aside or forced to participate, because capitalism is greed, and unregulated capital will always gravitate to the quick buck. And like every Ponzi scheme, sooner or later the music will stop (when there isn't any more money for the top to squeeze from the bottom) and the economy will collapse.

Unregulated capitalism is as least as much a bane as totalistic "socialism" (Stalinism, Maoism). Absolutist ideologies tend to lead people to bad places. A functional economy is a mixed, regulated, economy, guided by ethics and practicality rather than by a package of beliefs utterly prepared to justify any evil perpetrated in its name. It's high time we dump extremist capitalism in the same dustbin of history that we dumped Marxism-Leninism a few decades ago.

(I had to google the location of this pdf, while dealing with the usual household crap)

I do not entirely agree with this guy, but he has some very interesting articles on the history of the 1929 stock market crash in his Nov. 2007 newsletter online:

http://www.thelongwaveanalyst.ca/pdf/07_12_04_News.pdf

If any of it sounds familiar, well, that's because we seem to willfully forget history, then repeat it, over and over again.

I wish I could find a more detailed account of what the Hoover administration did to try to address the market collapse. Much of it sounds like today's news, and I suspect today's news will be just as "effective" in holding off k-winter (economists' jargon for a great depression).

I always advise my fellow "uninvested" members of the poor and working class to read the financial pages and dig into economics, with the caveat that they should never assume that what does not make sense to them means that they're too dumb to get it -- the system really does not make sense. Nor should they assume they're missing something when they see what appears to be flagrant thievery that, if they did it, would land them in prison for a very long time, because some of it is flagrant theft that would put the average person in prison for a very long time.

...but, as to your post being "two arguments," I couldn't even find a single coherent argument there.

:shrug:

loan, the first guy tried to get me into an ARM. When I said I was concerned that rates would go up, he just laughed. I didn't take the ARM and went somewhere else. How many people didn't? Is there no such thing as ethics? I can see how people would be taken in.

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Locally, we are in competition with some select areas in Cali and Las Vegas for the highest foreclosure rates nationally from month to month.

The brokers offered people a "real estate investment" as a home, with a note that due to some rather exotic terms, had payments lower than their current rent expense, with no money down, and no serious credit check. Sure, there was some disclosure about future higher payments, but this was buffered with notions that "your income may grow" and if all else fails "the home will be worth more, so you could sell at a profit if it becomes a problem".

The assumption of rising incomes has been a joke since Bush took office, but ever rising home values was good, until about 18 months ago.

Personally, I took a mortgage for about half the figure I could have qualified for. It has been an excellent choice.

all our lives, nobody would make you a loan unless you could afford it. The game changed without enough publicity. And when you have Party A, who is operating with an intent to deceive, lull or whatever in order to become richer and Party B who is a consumer and less sophisticate that Party A, the greater blame has always lain with the more financially sophisticated party who intentionally made less than full disclosure. Why are we changing our law and morals now?

I suspect this is part of the scam to refunnel the wealth of the nation to a few, possibly now through the Federal Reserve.

Grandma and Grandpa pay off their home but now instead of going to a relative it goes to the bank again in the end. The next move will be a hard push to make the vote a property owner thing, once again and we'll be on the fast track to a fascism.