Bailing out homeowners is morally wrong...

[CoffeeCat]

People who purchased big houses, that they could not afford--should not be
bailed out.

If you bought a house with an adjustable-rate mortgage, and you were enticed by
the "teaser rates" that allowed you to pay interest-only for the first couple of
years---don't come crying when those two years are over and your payments have
doubled or tripled.

You are adults and purchasing a home is a big deal. It's not like buying
a couch. You sit down with your calculator and your budget and you figure
out how much you can afford per month. If you could only afford those
teaser rates--then why did you take out an adjustable-rate mortgage knowing
full well that those enticing rates would end in two years?

I have compassion for people who make mistakes. However, compassion doesn't always
mean bailing someone out. If someone just had to have the bigger house with
the granite counter-tops, the three-car garage and the 5 bedrooms--and they got it
by ignoring the financial consequences---then why is it a good thing that we use
taxpayer dollars to solve their problems?

These people need to evaluate their budgets, and really examine their spending habits
and the way they handle money.

They don't need the government to help them evade accountability.

I believe that there are many people who deserve government assistance. Poor families
need assistance for the high cost of child care. Senior citizens need help with their heating
bills.

I don't think these middle- and upper-middle class people who bought more house than they
could afford--deserve to be rescued with our tax dollars.
our tax dollars. T

[Catherine Vincent]

1. I thought it was just the lower income folks who took out the

adjustable rate mortgages?

[CoffeeCat]

27. Those ARMS were taken out...

...by all income levels.

I live in a suburb, and those "teaser-rate" signs were all over
the lawns of the homes for sale in the more-affluent neighborhoods.

There is a subdivision in our area that has about 300 homes. Most
of these homes are among the most expensive in town. I remember
seeing those "teaser-rate" signs all over, and now I see a lot of
foreclosure signs as well.

I supposed this happened at all income levels, but in my neck of
the woods, it's many McMansions and other expensive homes that have
been vacated due.

[JeanGrey]

144. No. My freind did it and she works in real estate!! They already

had a nice home they were renting. But she wanted one of the "bells and whistles" types. So she did the ARM thing and now two years is gone and guess what? She's in foreclosure and bankruptcy and will probably be bailed out. They aren't poor at all, they just couldn't afford the house they bought.

[aquart]

2. Of course, dear.

The wholesale destruction of American families and communities should NEVER be our concern.

I am impressed by your fine morals.

[Sarah Ibarruri]

20. The well-to-do should not be bailed out, nor people who have more than 1 house. nt

[FormerDittoHead]

28. I agree that no gov't funds should be offered if it wasn't a primary residence.

If somebody was "flipping" houses by buying them, painting them, then marking them up $30,000 and selling them in a month, I have no sympathy for their "investment" going bad, and agree that they should be willing to take the responsibility for the risks, as they were more than willing to enjoy the gains.

[Sarah Ibarruri]

232. Absolutely! Oh and by the way, were you really a former Rush fan? nt

[CoffeeCat]

34. It is my opinion...

...that people who destroy their own families by making irresponsible
financial decisions---should be given the tools to make better decisions.

Throwing money at these people and making it all go away--leaves them without
the opportunity to learn from their mistakes.

I believe that our society is rotting due to materialism and everyone wanting
so many things that they can't afford.

If people have to temporarily move into an apartment or a two-bedroom house--
while they get themselves on their feet--and learn not to buy into rampant
consumerism and materialism--I think that can only improve society.

I'm sorry you don't like my morals. I happen to respect your opinions
and what you have to say on DU.

[freebrew]

162. It's not only those that made poor choices...

are you forgetting the hundreds of thousands of people that have been fired or laid-off due to the economy
or outsourcing? Or those that have had large unexpected medical bills?

There's plenty of them out there, your posts sound a little repub to me.
While I agree that people should be more responsible, not everyone is an attorney or knows a lot about
buying a home. Most folks only do that once or twice in a lifetime. They trust the realtor, as that is supposed to be their
job. What most people don't realize is the realtor is a scam artist. The more successful they are at scamming people, the richer they become.

And not everyone falsifies their income report, some are led to do that by the mortgage company. All of this is not news,
it's been reported here and even in the M$M.

Congress should have made ARMs illegal when they 'revised' the bankruptcy bill along with setting interest rate limits on the CC cos.

[Donald Ian Rankin]

263. That only works if you view children as an extension of their parents, without rights of their own.

One can make a case that people should be allowed to destroy their own lives without the government interfering.

However, the government has a duty to ensure a decent standard of living for children, even if their parents don't/can't.

[YellowRubberDuckie]

57. I am on the mortgage side of it...

And these people who got these did this whole thing to themselves. These were STATED INCOME loans. These people lied about what they made to get these loans. Then they defaulted on them. There were people who bought $500,000 homes and they made 12 bucks an hour! YEah, they had no part in getting themselves in to this mess. :eyes: If you saw what I see EVERYDAY, then you would feel the same way. People were stupid, not that the financial institutions were any better, but the people in these situations are not blameless. And anyone in this country has every right to feel like they shouldn't have to bail these people out.
Duckie

[Joe Fields]

63. These people should not be bailed out, and neither should the creepy lenders.

[YellowRubberDuckie]

64. I absolutely AGREE.

We weren't involved. All of our loans are guaranteed by someone else. WE just service them.
Duckie

[Dawgs]

194. You realize you sound EXACTLY like a Republican; even worse, Sean Hannity.

[mzmolly]

200. Sorry, did YOU write any of these loans?

Many people think if a bank will give them a loan it "must be ok."

[JuniperLea]

224. That's just plain stupid

I was offered a "stated income" loan, but passed. It doesn't take a genius to know that if a mortgage is based on a fantasy income, reality will come crashing down eventually. Even when I was yound and stupid, I had enough sense to ask, "So, exactly what will my monthly mortgage payment be?"

[mzmolly]

228. Monthly mortgage payments are provided when a loan is taken out.

Thus, I have no idea what point you're attempting to make.

The issue is that people are losing their jobs and adjustable rate mortgages are pricing some people out of their homes. I have never taken out an ARM, but I know many people who have, without any problems. That however, is changing with our current economic landscape.

[JuniperLea]

229. Monthly mortgage payments are provided when a loan is taken out.

Exactly. So these people signed for a loan with all the information in front of them. Even with stated income, the truth in lending laws still applied. What made these people think that just because they can afford the $900 a month payment now, that they are going to be able to afford the $1800 payment in a couple of years? They knew full well the larger payment was looming in the not-so-distant future.

An ARM that adjusts in five years is fine if you think you will sell before then. That's not the point. The people who are being priced out of their homes could never actually afford those homes in the first place. THAT is the point. So they either ignored the information presented, or had some strange reasoning on how they were going to come up with that much money every month once the mortgage rate adjusted.

[mzmolly]

230. I don't know of any ARM that allows for a double mortgage payment in two years.

No such loan should have been LEGAL to write in the first place.

The people who are being priced out of their homes could never actually afford those homes in the first place. THAT is the point. So they either ignored the information presented, or had some strange reasoning on how they were going to come up with that much money every month once the mortgage rate adjusted.

If I were a lender I would NOT write such a loan.

[JuniperLea]

244. There is enough blame to go around

People were stupid for biting off more than they could chew, and the mortgage industry didn't warn them strongly enough about the choking hazard. The fact remains, those people should have never bought those homes. They knew full well what they were getting into. No one held a gun to their heads and made them sign all those documents.

[mzmolly]

255. That is simply bullshit. People have lost jobs in this economy etc. Why are we so reluctant

to help homeowners as "progressives?" Must people eat dirt to have our collective compassion?

I'm appalled at what I'm seeing here. It's akin to the "poor people are stupid and lazy" meme Republicans taut over and over again. DISGUSTING!

[JuniperLea]

264. I disagree... I find your post disgusting in that you are willfully ignorant

We're talking about sub-prime mortgages here! It's a completely different issue than people losing their jobs and going into foreclosure! NOT the same thing AT ALL!!

Why should my tax dollars go to help someone who was willfully ignorant? Why should the rest of us suffer because people didn't read the paperwork in front of them? Why should those of us who are fiscally responsible bail out those who have been utterly irresponsible?

Losing a job and going into foreclosure is an entirely different subject. You should know better than this. To be so rude with your comments, to say my thinking is in line with Republicans is pretty fucked. You don't know what you are talking about.

[mzmolly]

267. I find your post willfully arrogant.

I suggest that the ignorance in this scenario was on the part of the lenders who wrote loans that were highly questionable.

Why should my tax dollars go to help someone who was willfully ignorant? Why should the rest of us suffer because people didn't read the paperwork in front of them? Why should those of us who are fiscally responsible bail out those who have been utterly irresponsible?

Again, you sound like my Republican brother in law when it comes to "social programs." I reiterate > "disgusting."

[JuniperLea]

268. It takes two to tango

No one put a gun to the borrowers head, nor was a gun placed next to the lenders heads. There is plenty of blame to go around. All concerned are responsible.

Your straw-man argument with regard to your Republican brother is ignorant. I would gladly have my tax dollars go to social programs to help people in need. People who are engaging in fiscally irresponsible practices, whether they be borrowers or lenders, should not be bailed out by our tax dollars. Our money should be going to those who truly need it, and I would gladly pay even more taxes if our money actually was going to help the needy.

People who knowingly buy more house than they can afford are irresponsible and should not be allowed to keep those homes that are far out of their means. They should have bought homes within their means, and the lenders should have made sure that was the case.

You have no idea what you are talking about. You are merely spouting some ridiculous talking point you found parroted elsewhere, without regard to thinking things through.

[mzmolly]

270. "help people in need"

People with houses are "in need" as well. Your assertion that foreclosures are due to "irresponsible people KNOWINGLY buying more home than they need" is the real straw-man here.

''The husband lost his job of 12 years. He's been employed sporadically, unemployed for two years. He just got a new job. They had to live on the wife's income. They have two children and middle-class expectations," she said. ''It's a radical transition when you go from two incomes to one. When things are good you think it's always going to be good."

Elizabeth Flattes, 56, another Brockton homeowner, knows too well what it's like when things go downhill quickly. She is fighting to avoid foreclosure, and once had to use a court injunction to fend off an auctioneer who showed up at the her house because of a foreclosure filing. The Boston-based Association of Community Organizations for Reform Now -- known as ACORN -- is trying to help her save her home.

Flattes, who is disabled, lives in a three-bedroom split-level house, which she has refinanced several times. The mortgage is more than $1,000 a month. She doesn't work and receives $840 a month in Social Security.

Until a year and half ago she ran a delivery service based out of her home. But when her truck died, so did the business. She fell $10,000 to $12,000 behind on the house, which she paid $21,900 for in 1972 and is now assessed at $270,000.

http://www.boston.com/news/local/articles/2005/06/19/housing_foreclosures_expected_to_rise/?page=2

WHO can afford a home or even a place to RENT after they lose their job? This growing issue is not as simple as ignorance and greed, sorry.

I have a fixed rate mortgage because I personally don't "trust" the Bush economy enough to gamble on an ARM, but I would never suggest that as a country, we ignore the many conditions that are adding up to record foreclosure rates.

[JuniperLea]

273. You have just illustrated my point perfectly!

Someone without solid employment history should know better than to get themselved hooked into a long term payment scenario.

And still, losing a job and going into foreclosure is not the same as getting involved in a sub-prime loan... which is the whole point of the OP.

[mzmolly]

277. Insert straw-man # 32. "No solid work history."

There is nothing in what I noted that indicates people in foreclosure don't have a "solid" work history.

[JuniperLea]

279. You really should read your own posts

And you really should thoroughly read OPs before posting in threads.

[mzmolly]

284. I have read both the OP and what I noted. Homeowner number 1 lost his job of 12 years,

homeowner AKA "greedy ignorant homeowner" number two had a business for several years that folded. I believe it is you who needs to "read?" The OP also needs to read the proposals for a solution to this issue because most of those who are impacted are not as TS has characterized them.

[LanternWaste]

256. Why were these loans approved?

Why were these loans approved? That seems to be the sticking point for me...

[YellowRubberDuckie]

287. Greed.

HAd nothing to do with my company. We're cleaning up other companies' messes.
Duckie

[Djinn]

58. the "wholesale destruction"

So the taxes of those who have never been able to even dream of buying their own homes should be used to bail out the middles classes who didn't understand that rates go UP??

WTF?

You think middle class welfare is progressive????

[JVS]

111. Yeah. That's what bugs me.

[CANDO]

66. This mortgage issue is a two-way street.

I tend to agree with the original post. When I shopped for my home five years ago, I would have loved to move into a brand new two story in a former farm field had I been able to afford it. Far too many folks don't think of the real world costs of living. I'm talking about utilities, insurances, cars, fuel, home heating/cooling, food, kids activities, daycare, entertainment, vacation, retirement savings, etc. Yes, I could have come up with the money for a huge mortgage payment,but then I'd find myself cash poor and house rich. To be sure, these mortgage companies let too much slide when they had to know what these folks could really afford. And the shear stupidity of keeping up with the Jones must have played a roll for the buyers. I feel bad for these folks, but they should have seen it coming. I say no cash bail out. Maybe bend some interest rates for a certain period. And furthermore, housing prices are obscene.

[JeanGrey]

145. What is moral about someone buying double the house they can

really afford due to greed?

[JuniperLea]

274. Well said

And what is moral about asking everyone else to chip in their hard earned dollars to bail someone out that acted out of greed and got themselves into trouble?

There were plenty of homes that were affordable, still are. They just don't keep up with the Joneses I guess.

[MADem]

3. To hell with "our tax dollars" -- just have the companies change their

mortgages--maybe they'll have forty year mortgages, instead of thirty. But it beats leaving your house.

They can do it if they have a mind to, and want to stay viable.

[michreject]

153. It's available

http://www.usatoday.com/money/perfi/housing/2006-05-09-long-mortgage-usat_x.htm

[Tesha]

177. Some of these mortgages couldn't be amortized in a million years.

> To hell with "our tax dollars" -- just have
> the companies change their mortgages--maybe
> they'll have forty year mortgages, instead
> of thirty.

Some of these mortgages were structured in such
a way that, at prevailing interest rates, they
couldn't be amortized in a million years. Some
folks will be either be bailed out or lose their
houses.

Tesha

[MADem]

233. In which case, if the house can't be saved, perhaps the best bet

is to let the person just bail out on the greedy bank or mortgage lender, and provide assistance to the INDIVIDUAL in securing housing despite the default (say, the government pays first/last/security, and takes it out of their check over a few years) and allows them minimal access to credit for basics.

Then, they work their way out of bankruptcy like everyone else, but they aren't doing the "living in a car" shit for a long period.

Leave the greedy lender holding the bag. Make them pay for not properly vetting the individuals. Don't let the individuals off scott free, but get them basic housing, that they pay for, and a couple of hundred dollar line of credit for emergencies.

[Deja Q]

4. Or the reports of banks giving out $750k loans to kids making $15/hr...

It's not in our hands. The people made the loans, refinanced with variable loans, banks gave out the loans, et cetera...

[Captain Hilts]

5. They get taxbreaks as a form of bailout we renters do not get. nt

[mrbluto]

152. I have zero houses - how much of a bailout do I get?

I was prudent and didn't buy a house I couldn't afford - I want my share of the bailout too!

I paid off my debt and started saving.

Now everything is tightening up interest rate and down payment wise - where's my bail out?

The housing market was like a game of musical chairs. When the music stopped some didn't have chairs - should I be paying for that?

[snooper2]

189. You should start looking at buying a home in foreclosure...

nt

[JVS]

238. That would be sweet

[dionysus]

196. *cough* bullshit *cough*

you don't have to pay property\school taxes!

[JVS]

237. Bullshit yourself. You think the landlord springs for that? It goes into the rent.

[dionysus]

243. In my case, I *am* the landlord!

I don't jack up my tenants rent to pay for my property taxes!

[JVS]

251. In order to cover the expense of property tax, landlords will pass it on to...

the renter. So don't spread some bullshit about renters not having to pay these things. It just gets added into the rent.

[dionysus]

254. well maybe they do if they're assholes, but i can assure you in the duplex i own and live in that

I've never increased the tenants rent to correspond with rising taxes.

[JVS]

258. Unless you lose money on the property, renters are paying all the costs of the rented property.

Including the property tax.

[JuniperLea]

265. That's not very fiscally responsible of you... eom

[dionysus]

269. well, they're poorer than i am , what can i say...

[scorpiogirl]

289. Absolutely! And we renters don't get to write off the interest either!

I'd like to know where my reward for being financially responsible will be coming from. Anyone? Oh, that's right, there isn't one.

[GirlinContempt]

288. Oh, is that why I get a property tax credit on my refund?

Because I don't pay property or school taxes?
Gee wiz.

[magellan]

6. So is bailing out the lenders that extended them the credit

That debt gets unloaded on us too.

[robinlynne]

13. That is much worse in my opinion. I dont think unreasonable loans should have to be paid back.

The government could say mortgage interest is set at X % period. Anything over that percentage is usuary and is cancelled.

[magellan]

22. Agreed. Corporations were granted "personhood" by the SCOTUS

So personal accountability should apply to them as it does to the rest of us.

NO MORE CORPORATE BAILOUTS.

[sandnsea]

7. If you smoked, ate burgers, got addicted

don't come crying to the rest of us for health care or treatment. If you didn't go to college, don't come crying to us for housing assistance because you have a minimum wage job.

There are all kinds of people who have loans that are going to reset and there isn't a thing in the world wrong with helping them keep their homes. Does someone have to become homeless before they earn your empathy?

[NashVegas]

33. Most People Eat at Age 0, Smoke as a Teen ...

But to get a mortgage, you're an adult, allegedly making an adult decision on something where you're going to be shelling out hundreds, thousands of dollars every month for the next 30 years.

There is no scientific community to change its mind about whether buying a home is going to harm you, physically. You're going to have to pay the money back. Period.

[CoffeeCat]

39. These people do have my empathy...

I do understand how hard this may be for them. I wish them well, and
I hope the next time they purchase a home--they will purchase one that
they can afford.

I don't wish these people ill will. If this happened to a friend, I would
listen, cry with them and have empathy through the entire situation.

As a friend, I would let them know that no matter where they live or what
possessions they have--that being financially stable is more important than
living in a big house.

[frankenforpres]

60. homeless???

they can get an apartment, just like me

[JVS]

112. They'll be driving up our rents though.

I wish they had acted more responsibly in the first place.

[frankenforpres]

120. im not sure thats true

at first brush, sure demand for apartments will go up, but there are going to be a lot of vacant properties that need renters


so if demand and supply go up, more people will be renters for sure, but the price effects are indeterminate

[cascadiance]

181. When the housing market demand dries up there often is a tightening of rental markets...

It happened during the dotcom bomb in the Bay Area. I saw rents skyrocketing when the boom was "tanking". The builders had only been building expensive housing, since that's where a lot of the demand was when the going was good and people were getting great returns from stock options, etc. When suddenly you have people's stock tanking, then that top end market inventory went unsold. Those that might have "moved up" into those houses stayed where they were, reducing the supply of midrange houses. Therefore those wanting to buy midrange houses also stayed in their lower priced houses and so forth. Renters weren't going anywhere, unless they were leaving the area, and therefore you suddenly had a lot less available housing for renters, both because more people weren't buying houses then, and also because the builders weren't building more capacity in the ranges that people needed housing. I had a landlord who was trying to jack up rents 40% on people at that time when their leases expired. I moved, and got a 6 month lease instead of a year's lease in a more expensive (but at least a "better" place that was worth the added dollars). When I moved at that time, it was VERY typical to see people "lining up" in droves to sign rental applications at rental units. You had cats, it was VERY difficult not too excluded as a renter. If you owned a dog, you might as well have forgotten it, unless you really wanted to pay through the nose for a friendly landlord that would allow it.

Later my new landlord there wanted to sell the house at the end of my lease, forcing me to move out, and ultimately leave the area then to less expensive pastures down here. Now the same thing is starting to happen down here, though not as aggressively as it was up there. I've seen my rent go up just in the last year double what it has since 2001 when I moved down here. And my landlord's a decent one compared to others I know around here and back in the bay area.

You are going to see a similar squeeze nationwide now. Though many people won't have anyplace to go, and many people are going to get their houses foreclosed on too. It's all about supply and demand. The "affordable" range of housing supply will be more constricted now which will keep rental prices high and may drive them up in places.

[robinlynne]

8. agreed. however, working people who had already owned their own home

for 30 years also fell prey to lenders who promised them cheaper mortgages. It happened a lot with older people, for example. People who spent their whole lives buying their house, and are losing them now. Those lenders need to go to jail. And those contracts need to be broken somehow. Because if we bail out with tax money, we are using tax money to pay the banks a ridiculous amount of interest. The lenders/banks need to take the fall. not the tax payers. and not senior citizens or hard working people.

[sandnsea]

9. The rates should be fixed

Whatever their rate is in their current contract, that's their rate. That's plenty of interest for the lenders to make a profit if they hadn't been doing screwy things themselves.

[robinlynne]

30. weell, not what's in the contract: but a reasonable rate determined by the gov't.

[sandnsea]

73. Why not?

Lots of people have gotten low interest loans over the last 5+ years.

These lenders were fraudulent, why not let people have the loans at the rate they signed up for.

Some people around here have no idea how badly these mortgage companies have been out and out lying to buyers, along with the realtors the buyers have put their trust in. I've been shocked by some of the deals I've heard about, and the young people simply had no idea what was going on. The realtors told them that this is the way it is now. Most of these people don't deserve to lose their homes.

What gets me is when this situation first broke, everybody at DU was blaming poor people who were too stupid and broke to own a home. Now it's the rich people who are too greedy and should be made to suffer. Everybody except the fuckwits at the top who pushed this scam to begin with. I do not know why we always let them turn us against each other. Who cares if somebody gets to keep their house. How can that possible hurt anybody else.

[robinlynne]

117. because the loans seemed low a year or two or 3 ago. they are not. The interest rates

are hidden. That's the whole point.

[sandnsea]

136. So leave the rates what they were

Don't allow lenders to jack the rates up. The fed is cutting rates, why should people continue to suffer?

[JuniperLea]

248. The point is...

The mortgage company sold these loans with the promise of higher earned interest to the investor down the road. The investor was promised they would receive a certain percentage return, just as the mortgage borrower was told, in exacting terms, what their interest rate would become.

There's no big mystery here. Greed drove a market. People DID have all the information... by law. They DID NOT have a gun put to their heads to force them to sign these loan docs. They knew full well what the deal was. The flood of money into the real estate market caused bidding wars, and therefore, artificially inflated home prices. Stupidity and greed got caught between the two. Plain and simple.

The mortgage lenders and holders need to get what's coming to them. They all need to learn to live within their means, and not expect those of us who were smart with our mortgages to bail everyone else out, allowing them to stay in more home than is rightfully theirs in the first place.

[JuniperLea]

246. They were NOT hidden at all!!! Those people were given truth in lending statements!

That part of the law never changed. Everyone in the USA who acquired a mortgage in the past fifty years has, by law, been told the good, the bad, and the ugly about their mortgage before they signed on the dotted line. They have signed documents, and have been given, by law, copies of said documents at the time the documents are signed, that fully disclose what the current interest rate is, what the rate is tied to, and what the highest interest rate may become.

Please do not spread myths about this situation. That helps no one.

[michreject]

156. They do have the rate they signed for...nt

[JuniperLea]

245. For some strange reason, many people here just don't get that!

No one held a gun to their heads and forced them to sign those outrageous loan documents. Why should I be forced to bail them out because of their stupidity? Why should my tax dollars go to someone who was so horribly irresponsible? I took care of my business properly. I bought a house I could actually afford, with a fixed interest rate that would never go up. The availability of these monstrous loans to those who could not afford them artificially inflated the housing market. Unreasonable demand drove the prices up. There were bidding wars, fcol!

Fiscal responsibility begins at home.

[JuniperLea]

275. They fell prey to their own greed

It's not fiscally responsible for "old" people to go further into debt when their fixed income years are looming.

[Xipe Totec]

10. Making way too many assumptions here

For every problem, there is a solution that is simple, neat, and wrong.

- H. L. Mencken

[Atman]

21. The OP shouldn't be so quick to judge...there is always another side to it...

Beyond Bad Advice
Andy Dlugolecki of Bristol says he's facing foreclosure because he was tricked into an adjustable rate deal he thought would be fixed.

--

Most of the tales of woe emanating from the subprime mortgage collapse the Advocate reported on last week came from sheer boneheadedness. People who couldn't afford the homes they wanted got them anyway because banks and mortgage companies held their noses and gave out the loans, the borrower's qualifications (or lack thereof) be damned.

<snip>

There are people facing foreclosure in the current crisis, however, who say they were defrauded, not just ill advised.

These borrowers, like Andy Dlugolecki of Bristol, claim they were flim-flammed into signing the dotted line by slick salesmen who subsequently disappeared.

Dlugolecki, 52, has been disabled since 1996 with five ruptured discs in his back, and can't walk without a cane. He lives on a Social Security disability payment of $600 per month.

"Right now I've been laying down for four days straight," Dlugolecki said last week. "I used to really run places."

Fortunately, Dlugolecki already had a house before he became disabled, a yellow two-story colonial with an attic, built more than a hundred years ago. The house, a simple narrow structure of 960 square feet on busy Farmington Avenue in Bristol, has seen better days, but it has been home to Dlugolecki for 20 years.

Dlugolecki said he has been forced to remortgage his home over the years, but "every time I was smart enough never to get an adjustable rate mortgage."

"I'm on a fixed income, there's no possible way I can have an adjustable rate mortgage," said Dlugolecki.

Then came the cold call in December 2003 from an Ameriquest agent who offered to come to Dlugolecki's home to discuss refinancing his mortgage at a lower rate.

"I thought he was being very nice because of my disability," said Dlugolecki.

<snip>

http://www.hartfordadvocate.com/article.cfm?aid=4418

.

[Xipe Totec]

26. I have a friend who's close to losing his home

With a PhD in biochemistry, specialty in protein crystallization.

He used to be a manager of a bio-tech lab. He's been on the bench for almost two years looking for a new job. He's lived off his savings for this long, but he's now at the end of his rope.

I don't know many people who could handle being out of work for two years and survive.

If people like him are in trouble, we're all screwed.

[CoffeeCat]

44. My original post was not about people...

...who have been "tricked" as the man in this article was.

I'm talking about people who bought houses that they could not
afford. They chose to get an ARM because it enabled them to
get into a home that they otherwise would not have been able to
afford.

It's very tempting to see your dream home and a sign out front
that says "You can be in this house for only $550 a month!".

When the bank explains that the $550 is only for the first year,
and after the first year the payment triples---the person should
be able to afford that payment--and not expect a bailout.

People who have been tricked or conned are victims who should
be helped, and should sue.

[Atman]

49. Fair enough. I'm not looking for scapegoats, but I'd blame the media/govt, too

How long have we been posting on DU that this balloon was going to burst? A couple of years now. Yet, every day the corporate media, with tentacles even into the mortgage industry one way or another (directly or via heavy-rotation ad buys from Ditech/General Motors, etc) read BushCo's bullshit economic numbers without ever questioning them. BushCo relied in part on the skyrocketing housing prices to prop up it's figures, so they lied, the media went along with it. Joe Blow was given every reason to believe his house would be worth another $50-$75k in a year...what was there to worry about?

There was a massive scam perpetrated on the country. Should people have been better educated? Certainly. But the usual indicators were masked or hidden, or simply lied about. That's when common sense should have come into play -- people won't keep spending 3/4 of a million dollars on two-bedroom ranches. But then, the American people haven't been showing stellar performance in the "common sense" department lately!

.

[JuniperLea]

281. Massive scam, indeed...

And who benefits? Follow the money...

[nealmhughes]

286. Ding! Ding! Ding! Ding! Winner by a KO in Round One is Atman!

Absolutely. Does anyone really think the economy is that rosy? Does anyone know anyone who has gotten a raise other than a cursory COL one in the past few years? Does anyone know of a new manufacturing facility coming into their city or county that will provide >$10 per hour employment? I know of one. A Canadian company is moving to North Alabama to make RR cars. About 1500 solid unionized jobs coming. The facility is right on the Tennessee River and the Norfolk Southern line, making two means of transport right at the site.

The entire housing industry has not been hit by the bubble, in some places the rise in prices was nowhere nearly as steep as California or Boston. I saw the same thing to a lesser degree happen when I lived on Long Island in the mid to late 80s. People had very nice houses, 3 BR, garage, yard, etc. and paid say $50K for them in 1980ish. By 85 they were over $200K for the same house. One saw the neighbors with Jags who commuted into Garden City or Manhattan lament the site of the carpenter's work truck next door! Lowly carpenters as next door neighbors! Eek! Why, some of them had clothes lines and were only ten years out of Sheepshead Bay!

One must also admit that a lot of greed on the behalf of real estate agents and mortgage brokers who took their cut right up front! Right up front with the "sale."

How does someone who earns $40K a year expect to pay for a huge mortgage? Beats me. I like to eat food and keep the lights on, myself.

[sandnsea]

75. The bank doesn't explain that

The bank says you'll be able to get a fixed rate loan when you refi your house and the fixed rate will be cheaper because you'll have better credit due to being a homeowner. That's what the bank says.

And would you really begrudge a person who can only afford $550 a month their own home?? I haven't paid $550 a month for a home since about 1995.

[ProSense]

93. Predatory lending

Jacqueline Cila, divorced with a 7-year-old son, who lives in a three-bedroom house in East Moriches, sent her usual payment of $2,000 off to her mortgage company in July. But in August, her mortgage company told her she was delinquent: Her payment had risen to $2,798.

“I started crying, I didn’t know what I was going to do,” she said. “I’m just barely making the $2,000 payments.”

Ms. Cila bought the house with her husband in 1997, and he had continued to help with payments after their divorce in 1998, she said. But in 2005, her ex-husband, a soldier, was wounded in a roadside attack in Iraq and unable to help for months as he recovered from the loss of an arm. She took an extra job to make the payments, but then decided to refinance to get a lower interest rate and reduce her mortgage payment.

“I went through a friend of a friend, and I didn’t bring a lawyer with me,” she said. “I said, ‘Is this a fixed loan?’ And they said, ‘Yes.’ What I didn’t understand was it was fixed for two years.”

Counselors at housing agencies have begun to see a stampede of new clients with payments they can’t afford and who are desperate to keep their homes.

More posted here.

How much does a mortgage rate have to get adjusted for the payment to climb nearly $800 in a month's time?

[Lance_Boyle]

174. She continued to live in too much house after a divorce.

Even with her ex still paying on it. Seems like she had a pretty good run living high on the hog for 8 years, 'til reality caught up. This is not a person I'd have much sympathy for bailing out.

[CoffeeCat]

110. I don't begrudge anyone...

...who can only afford $550 a month for their home--as you asked. It doesn't matter
to me if someone can afford $50 or $5,000 per month on their mortgage.

My concern is when someone shopping for a home with a $50,000 income, rolls up to
a $500,000 home and buys it---because of those low teaser rates.

I agree with you that banks have been really irresponsible with their lending practices.
It's a shame that banks are behaving like loan sharks. Banks used to be upstanding,
conservative institutions. There's no doubt that the realtors and the banks told
customers that they could enjoy the low teaser rates with an ARM and then re-fi later
at a fixed rate. However, I think we can all agree that it is a mistake to
get into a house that you won't be able to afford in two years---but buy it anyway--
without knowing what future interest rates will be or if you'll even qualify for
a re-fi in two years.

There were too many unknowns in that scenario. It's a real shame that banks and
realtors gave consumers just enough rope with which to hang themselves. IT's too
bad that our government allowed banks to make these loans. IT's sad all the way
around.

You can't trust a bank like you used to, so we must be hypervigilant to
protect our own interests.

[Atman]

151. Back in the old day wasn't there a set formula for how much a mortgage cost?

It was something like, a $100,000 mortgage would be $1000 a month. An $85,000 mortgage cost about $850 a month. A $500,000 mortgage cost about $5000 a month. I know ours worked right into that equation. But then they started doing all the funny-money rates, and you could get a $500,000 mortgage -- barely enough to get a crappy raised ranch in a lot of areas -- for $1200. Common sense (and educated consumers, and full disclosure from real estate agents) went out the window. Mostly because everyone seemed to think that the absurd rate of increases in house prices would go on forever.

What the hell were these people thinking? A two bedroom cape for $600,000? How did anyone believe that that house would actually go up in value? Because it DID, that's how! A lot of it is because of "house flippers," the speculators that bought homes with no intention of ever living in them, just wanting to do a rehab, jack the price up another $100,000 and unload it on some sap who thought he'd be able to make $100,000 of it, too.

It was always an unsustainable situation. That's why I was saying in my previous post, the media and BushCo bear a lot of the burden for not being honest. For pushing half a dozen "house flipping" shows as entertainment, and making people think their houses would keep going up in value forever. Or in the case of BushCo, simply lying about the strength of the economy.

.

[michreject]

158. A rough estimate would be 2-1/2 times your yearly income

If you made 50,000.00 a year, you should be able to finance 125,000.00 after the down payment.

[CoffeeCat]

166. That's what I don't understand...

How in the world does this type of financial situation happen?

Banks were once conservative institutions. They weren't about
loaning money to people, when people couldn't afford it. People
trusted banks to be gatekeepers. Why was this creative financing
ever legal?

I don't like to be paranoid, but I cannot help but feel that the
housing situation and also the credit-card industry are prongs on
BushCo's attack on those who aren't the upper crust. Why are
we being encouraged to buy things on credit? Why is it so easy
for a teacher making $40,000 to buy a $400,000 house? Why are
credit-card companies allowed to give anyone large lines of credit?
Why is it ok to use your house like an ATM machine and borrow against
your house for couches, more Pottery Barn and vacations?

Can you imagine someone daring to ask a bank--to do any of these things
in the 1950's? You would have been laughed out of the bank.

For some reason, the government and corporations are making it easier
for people to financially destroy themselves--and at the same time
they're encouraging rampant consumerism and materialism.

Anyone who purchased a home, mainly out of Iwantit-itis, needs a
serious reality check, in order to protect themselves from the
government and the corporations--which are in cahoots. That's
why I initially said that bailing out is immoral--it further
enslaves people and keeps them from realizing just what in the hell
has happened in this country. Bailing them out for another two
years keeps them in the McMansion and failing to examine how
much they've been bamboozled.

I worry about our nation and it's citizens who are behaving
in financially destructive ways, and I'm hoping that these
difficult reality checks spark people into examining their
own financial choices--which is an opportunity for growth.

[snooper2]

193. Your exactly right...

Those numbers also include PMI and homeowners insurance, taxes, etc.,, very good rule of thumb...my note is $978 on a 113,000 30year...

Also, you shouldn't every buy a house more than twice your income. You make 30,000, $60,000 or $70,000 for your house so on average your mortagage payment will be 1/4-1/3 your monthly take home.

There should be more classes in school on finances is one problem, the other is the 'Merican "got to have big better" mentality and those people deserve to be burned...

Oh, I watch a lot of the house flipping shows and the ones where they do a follow up are funny. They are to a point now between filming to re-run where every other show has the poor sap complaining about market dipping and either moving in to the house or just breaking even. :)

[jberryhill]

116. "And would you really begrudge a person who can only afford $550 a month their own home?"

I, for one, can. Especially if it is a home that does not have a realistic mortgage payment of $550 a month.

After a divorce, I planned extremely cautiously about what might or might not happen in my future, and I bought a house that everyone told me was "a lot less than you can afford"... yadda, yadda, yadda...

I know that there are folks with incomes way lower than mine who leveraged their way into houses that are way bigger than mine, and they drove up house prices in the process. You know what? It would have been nice to have more than a three bedroom townhouse when I was providing housing for myself, my second wife, two sons from my first marriage, two daughters from her first marriage, and two other teenagers that we took in.

It was pretty freaking crowded around here. And, meanwhile, I continued to watch all that "easy" ARM money chasing after larger homes and driving the prices of those homes through the freaking roof.

I'll make a deal with you. If you know of anyone who can "only afford $550 a month" and who owns a single family home in my area that they are at risk of losing because their mortgage rate spiked - I'll trade with them.

I have all the sympathy in the world for folks in all sorts of circumstances. But it's not a question of wanting to throw someone who "can only afford $550 a month" out of any home - I'd just like to know what kind of home we are talking about here. I'm all in favor of moving them into a home that is appropriate.

[sandnsea]

119. Put an ad in the paper

I'm sure you will get someone to take you up on your offer.

And, oh boo hoo, you had to live in a 3 bedroom like most of the rest of the country does. I raised 4 kids in a 3 bedroom too.

There were scams out there where realtors were setting up "non profits" to provide the down payment, allowing the seller to "donate" to the charity, and telling the buyers they were just trying to help them. There were other realtors telling young people, just get in the house, any way you can. Lenders manipulated the "Good Faith Estimates", lying about what the expected payments would be. It goes on and on.

So if somebody gets a loan on a 1200 sq ft 1965 3 br 1 ba, and it ends up being $800 a month instead of $700 because the realtor lied about the taxes and insurance, and then the housing market drops so their house isn't worth what they owe so they can't refinance, and then the payment resets to $950 a month - how can you not have empathy? And when this same couple would have to pay a similar amount in rent anyway, why the hell shouldn't they be allowed to buy a home? Do you think people who have rented the same homes for 5 and 10 years are really mortgage risks?

Another affect of income disparity is that those at the top have no clue what it's like for those scraping by on a paycheck.

[jberryhill]

127. "what it's like for those scraping by on a paycheck"

I'm not sure you understand "I can".

Your mileage may vary. Around me, the vast majority of large new homes were bought up by folks with incomes that are inappropriate to those homes under any conditions. And what jobs were they doing it on, you ask? Oh, this is Delaware... they all walked out of college into the credit card banks that grew like wildfire here after DE did away with usury laws.

And, oh boo hoo, you had to live in a 3 bedroom like most of the rest of the country does. I raised 4 kids in a 3 bedroom too.

Yeah... and you did this while people with half your income bought twice your house and thought there was something wrong with YOU?

Maybe it has something to do with the fact that to live in Delaware is to be surrounded by quite a large number of folks whose living is based upon those self-same predatory lending practices. These banks became DE's largest employers in just a few years. It's an absolute pleasure to see the beast they fed, bite them in their own asses.

So... you have no empathy for all of the people renting today, who have been priced out of the housing market for years by people who took ridiculous loans? You want to subsidize inflated home prices, so that others can't buy? Is that it? Have you no soul?

[sandnsea]

128. I'm talking about the same people

the ones who got into homes so they could get a set mortgage rate and not be at the mercy of housing prices any longer.

Just because YOUR income is such that you are surrounded by people who bought "large new homes", doesn't mean that everybody is.

Go ahead and hate the predatory banking industry that's in your state. But don't think that every person across the country is in the exact same situation.

[jberryhill]

132. Just because YOUR income is such that you are surrounded by people who bought "large new homes",

WTF?

Those homes are miles away from the seniors on fixed incomes who are the majority population in my neighborhood. Those home are on what were farms a couple of years before these crap mortgages were made available to people on moderate incomes who drove up housing prices for everyone else who was not crazy enough to sign them.

I don't have any illusion that "every person" is in the same situation, but I have no illusion whatsoever of whom the primary beneficiaries of any "bail out" are going to be.

Or maybe you were talking about my next door neighbor, whose wife and kids here had to fend for themselves when he got stuck getting back in from Mexico over a visa snafu that took months to untangle before he could get back to his painting and drywall job. They've been renting their unit for years and saving up to buy. For their sake, I'm looking forward to home prices taking a tumble back to something that real people can afford with sane mortgages.

[sandnsea]

135. Believe what you want I guess

Subprime borrowers are the people like your neighbor who went ahead and bought so they could lock in a monthly rate. Subprime borrowers are not people with moderate incomes buying $500,000 homes. Unless you're one of those who think $100,000 is a moderate income.

One minute DU is pissing all over poor people who have no business buying at all. The next they're pissing all over wealthier people who bought McMansions.

Everybody should be focusing their anger at the banks, mortgage companies, realtors, and developers. They're the ones who intentionally caused this mess.

[Midlodemocrat]

222. And what about people like the young lady I used to work with?

Her husband is a secret service agent. They relocated from TX to Maryland, so he could work in DC.

Bought the smallest house they could find, but could only afford the payments if they got an interest only loan. So they did. They are beyond fucked if they have to move.

What should she have done? Live in her car with a baby on the way?


Too many assumptions in your post TwoSparkles. Very few people who are in this mess got there because they were greedy. Most were desperate.

[Djinn]

61. that isn't "another side" to the story

people say they were "tricked" or "duped" but that'd be why it's wise to read contracts before signing them, or get independent advice if you don't understand it.

Since when do adults believe banks are "nice" because someone is disabled?

This guy readily admits he signed a form that was not even complete. Would you sign a blank cheque?

Dlugolecki assumed he would have to go to the Ameriquest office to finish filling out the application, but no, he learned, they could wrap things up right there, even though the mortgage papers weren't completely filled out. Dlugolecki admits now he was stupid to sign them.

READ your contract, if it said in there that your rate was fixed then YES you've been duped if not then sorry you were simply gullible and/or greedy

[MissB]

11. Some people just aren't as financially savvy as the rest of us.

Some very foolish people signed on to those types of loans, convinced by their mortgage broker that they qualified.

[Gormy Cuss]

46. It's worse than that. The complexity of the loan products offered makes it hard for even some savvy

consumers to make the right choice, and brokers are sometimes paid better for originating loans with terms that are more beneficial to the mortgage bankers rather than consumers. It is a stacked deck.
See this Harvard Joint Center for Housing Studies paper for some interesting discussion:
www.jchs.harvard.edu

MM07-1: Understanding Mortgage Market Behavior: Creating Good Mortgage Options for all Americans

Mortgage Market Complexity Foils Consumers and Undermines Fair Lending,
Harvard Research Finds

(Cambridge, MA) The recent rise in foreclosures suggests that some borrowers are taking on debt that they have little or no capacity to repay, selecting products that are not suitable for their needs, or signing up for mortgages that they don’t understand. Two reports by Harvard University researchers contend that these are just some of the inevitable consequences of an increasingly complex mortgage market and a regulatory system that has failed to adapt to the dramatic changes that have transformed the mortgage lending landscape in recent years.

(snip)
“Despite the fact that our society values consumer choice,” observes Nicolas P. Retsinas, Joint Center Director, “the ability of consumers to make informed choices about complex mortgage products is limited.” “The situation facing consumers is made even more difficult” continues Retsinas, “by the widespread use of targeted incentives that encourage some mortgage brokers and loan officers to aggressively market confusing, and often more costly, subprime products to less than knowledgeable and often desperate borrowers.”

(snip)

Consumer and lender behavior also prompts ongoing fair lending concerns, as many minorities are especially vulnerable to the aggressive marketing tactics of what the study describes as “low-roaders.” These concerns are magnified by the fact that the rise of subprime mortgage lending is linked to the rise of new and typically lightly regulated non-bank subprime mortgage specialists and their network of mortgage brokers, as well as new mortgage conduits that sell securities backed by “higher-risk” mortgages to the secondary market.

“Unfortunately, many of these new players are subject to the least regulatory scrutiny,” says William Apgar, one of the study authors. “As a result,” continues Apgar, “the lack of effective and uniform regulatory oversight, along with the lack of readily available mortgage pricing data results in a mortgage delivery system in which some borrowers pay more for mortgage credit and/or receive less favorable treatment than other similarly situated and equally credit-worthy borrowers.”

(snip)

The research also suggests the need to create more uniform oversight of secondary market participants. These initiatives include efforts to strengthen monitoring of securities involving subprime mortgages, as well as efforts to hold secondary market investors accountable by eliminating or modifying existing legislation and regulations that limit assignee liability. Such efforts would substantially increase incentives for secondary market investors to more carefully consider whether the loans that they purchase comply with fair lending standards, and ensure that they are not the product of illegal or abusive lending practices.

[TheFriendlyAnarchist]

143. Aye, the house always wins.

People need to remember that the lenders and their like are ALL out to make money. They're not there to be your friend, they are there so that they can take as much money as possible to make a profit. If a deal sounds too good to be true, it is. They are not going to set up a deal where they will willingly lose money.

[Purveyor]

12. Indeed! Are there no prisons, are there no workcamps for these lowly bastards?

:sarcasm:

[madrchsod]

14. do`t give them any ideas....

[CoffeeCat]

50. I"m not suggesting prison...

I'm suggesting that people buy homes that they can afford
and that people quit putting themselves and their families
in financial jeopardy by buying into society's rampant consumerism
and materialism.

When you chase "things" and buy "things" that you cannot afford, it is
nearly impossible to lead a healthy, functional life.

In a way, living in a house that puts financial strain on you and your
family---is a prison.

Downsizing and re-evaluating how you live your life can be an opportunity
for growth.

Getting bailed out, so you can continue to live beyond your means--is
not helping people. It further imprisons them.

[madfloridian]

113. This post upsets me. People are facing many crises today.

Things change rapidly in this economy. People in Florida who retired comfortably may lose their homes because their income has gone down due to interest rates cuts.

Real estate taxes are soaring, insurance rates are scary, so high some are having to move because they can't afford it.

I know people with paid for homes, nice homes, who may have to go live with children because they expected to be able to partially live on their interest income.

We have friends who have gone back to work in the mid-sixties just to be able to afford the taxes and insurances.

I am upset you posted this. They bail out corporations all the time, why not bail out the victims?

[Ganja Ninja]

197. I don't own a home I rent.

The speculation in the housing market has driven up the cost of rent and made it harder for all of us to afford housing. Home owners already get tax breaks that renters don't. I feel for them but what about me? How do I get a home out of this bailout?

[michreject]

160. I agree

There was greed on both parties who wanted something for next to nothing.

[madfloridian]

227. OMG thank you for not suggesting prison!!

:wow:

[Djinn]

68. so does the expectation

extend to all other forms of financial overextension?

If I went on a shopping frenzy when my credit card rates were low but they were increased slightly afterwards can I expect a taxpayer bail out?

If I started a business without doing my homework and go broke, can I put my hand out?

Anyone who can afford a mortgage in the first place is doing better than an enormous swathe of the US population and I don't see why those at the bottom should constantly help us those on top of them

[knitter4democracy]

15. I know a family losing their home over a bank error.

They went into bankruptcy for a failed business that was partially financed by a second mortgage on their home. A third mortgage was supposedly paid off but never was--and they were never notified at all until after bankruptcy proceedings were over. They're losing their home and everything.

Bank errors, banks loaning money they knew they shouldn't have, people losing all that equity they'd put in (it's not just flippers and interest-only owners losing their homes)--what about them? The banks have screwed these people. I knew a knitter who used to work in mortgage lending for a bank, and she said that she was glad to get out when her boss kept pressuring her to make deals that she knew were going to end badly (and often did). The lenders knew better and still went through with it--what about them? Is there any accountability for them?

[taught_me_patience]

199. There already has been accountablity for them

Many subprime lenders have gone out of business and thousands of people are out of jobs. This fraud is only a very small reason why people are losing their homes. The overwhelming reason is becuase people simply were caught up in the housing bubble hype and believed that home appreciation would continue forever.

[knitter4democracy]

210. Regular banks, though?

They're not going under. These were both regular banks, not subprime lenders.

[taught_me_patience]

215. They aren't going under

but there have been thousands of workers laid off from the big banks. Shareholders are suffering too, as stock prices for big banks have plummeted.

[Double T]

16. Allowing scumbag corporate mortgage lenders to act like criminals is morally wrong.

The scumbag corporate mortgage lenders are bailed out by the FED on almost a daily basis at the expense of the value of the US Dollar.
Why should WE bail out the filthy rich criminals and NOT everyone else?

[Djinn]

70. the answer isn't to bail everyone out

it's that whole two wrongs thing. Welfare should be for those that need it. NOT corporations and NOT middle class home owners

[Double T]

101. Which came FIRST? Without scumbag criminal mortgage lenders......

there would NOT be homeowners with ARMs, interest ONLY, NO money down and other forms of 'designer mortgages'.

[Djinn]

104. did those

scumbag bank salespeople put a gun to their head?

In Oz there's REALLY aggresive pushing of credit cards, people have them sent to them without even asking and the bank will constantly try and get you to up your limit.

Since becoming an adult I must have received over 100 of these offers. I didn't get my first credit card till last year (I'm in my thirties now). You don't actually have to succumb to every shiny sales pitch you hear, you are perfectly capable of driving PAST the hording or throwing away the junk mail.

You make a bad decision as a adult, you have my sympathy but not my tax dollars.

[ProSense]

108. Does that go for the people who decided to live in that

awful flood zone in Louisiana? What about those who volunteered to serve in the military? I really don't get this argument. Paraphrasing Rumsfeld: Shit happens (I think he was talking about Iraq, but it doesn't seem applicable). On edit: he was.

[Pithlet]

207. In the real world

not everyone is as smart as we are. That doesn't mean corporations get free reign to reap profits because of them. The truth is, no one can do anything about the fact that human beings aren't perfect. That's never going to change. Even the smart ones can make mistakes. That is why it is the corporations who preyed on the imperfect are ultimately to blame. And the fact is if we're just going to shake our fingers at them from our lofty perches and do nothing about it, we all get hurt. If bailing the imperfect, unwashed masses out of this mess undoes some of the mess these unethical corporations created, then I think we need to set our feelings of pride and superiority aside for the greater good.

[Donald Ian Rankin]

146. By "acting like criminals", do you mean "breaking the law" or something else?

If so, what examples are you thinking of?

[muntrv]

17. Lenders giving mortgages to people knowing full well they cannot afford it

is equally wrong.

[Raine]

18. I don't have a problem with the home owner

being helped...it's the lender's getting bailed out that make me mad. :mad:

[XOKCowboy]

19. Remember.. This also is a bailout for the banks too

It's the banks and the mortgage lenders that got us into this crisis, made BILLIONS of dollars refinancing loans and encouraging people to spend above their means and now they don't want those loans to go into receivership. They know Big Daddy Bush will protect them. What's sick is it's being labeled as a means to help the people you speak of. In truth it's just funneling OUR money back to the shysters.

As to your OP, sure those people should have used better judgment (as I did) and waited till they had the cash on hand to really afford a house. Once again it's the shrinking middle class that'll have to eat the majority of the losses but I'm somewhat surprised at your ire at people who were encouraged by our government and the lenders to buy houses.

[robinlynne]

35. Giving tax money to those people to pay off loans with ridiculous rates would be

handing the money over to the lenders. There should be one fixed mortgage rate of 5 or 6% or whatever is just, and anyone paying more interest than that should not have to. It is already against the law to lend money at a ridiculous rate, and that is what the lenders did.

[XOKCowboy]

54. Exactly. Those lenders are resigning in "disgrace" with their six figure golden parachutes

No one gets hurt. The Repugs look like angels rescuing the poor, the bankers get the money and and we pay the bill.

SNAFU

[robinlynne]

118. again. remember the savings and loan "scandals"?

[freebrew]

168. Sure, I think everyone realizes

that in the end, the banks will get the money. But, by giving it to the homeowner(borrower) at least he can keep his home.
Alternatively, if only the banks get bailed out, the homeowner will still lose his home. The banks won't be of any help to the consumer unless it's mandated by law.

[XOKCowboy]

292. "The banks won't be of any help to the consumer"

might be one of the biggest understatements or all time. What you say is true and I think that all of the money should go to the borrowers. The Lenders (all the way down the chain) have already made enough money on the "housing boom".

[SoCalDem]

23. Easy solution.. Re-regulation on ALL money-lending institutions

and have computers Re-figure ALL outstanding mortgages.. set them all at 6.5% FIXED and let the chips fall where they may..

In a house you cannot afford?...move to one you CAN afford..

Banks can no longer skin people alive with outrageous charges..and cannot make money??? .... your business model must suck..close up & open a chain of car washes..

To GET a new loan, people must have to PROVE they are credit-worthy...(like they USED to have to do)..

Credit cards should have a cap of 10% interest ..with upper credit limits of 1K.. for every $20K of income..

Banks & financial institution used to be there for the benefit of the community and the citizenry..not so a few fatcats at the top could get hideously rich by screwing their own customers..

The banking & real estate "industries" need immediate and HARSH regulations set into place... and they should be national...not state by state.

[havocmom]

29. Yep.

The industry did this and proved it is not trustworthy enough to be without stringent regulation.

[MissB]

31. Hmmm..

When we got our loan 4 years ago, we had to provide massive documentation of income, bills and outstanding debt. Even though we were putting more than *half* of the selling price down. Even though we were buying a house well below our means. Even though we had perfect credit.

We were rewarded for our good credit with a very decent interest rate. Our interest rate doesn't need to go up.

Capping the interest rate would be far more effective than a straight-across the board interest rate.

[Mojorabbit]

32. Hey! my mortgage is at 4.5 fixed

leave mine alone. LOL

[SoCalDem]

36. Okay okay.. just for you, though

:evilgrin:

[Mojorabbit]

41. Thanks. Smooch! eom

[NashVegas]

38. Works For Me

I'm having a hard time remaining unbiased; I work in an unstable field where it's taken for granted that taking out a mortgage based on your salary is a bad idea.

9 years ago, I could have bought a 1500 sq ft, charming fixer-upper for under $100k. Now, that same house would be $300k. And if the person who holds it is in default, when they paid a ridiculously inflated price, well, it's unkind of me but ... tough shit.

[Joe Fields]

24. If the government is, indeed bailing out lenders with tax dollars,

then I, too am very much opposed to it. Greedy corporations who are about to go under, due to unbridled greed and gross mismanagement should not be rewarded with tax dollars, in order to stay afloat.

[PSPS]

25. Maybe. But the predatory lenders and their backers need to be hit first.

These Alt-A mortgages, where you could simply state what your income was without any documentation, were peddled like crazy. WalMart workers could have "qualified" for a McMansion. They could make the payments at first because they were allowing a negative amortization on the loan.

Then these Alt-A mortgages were bundled and sold as securities.

As this blows up, I think it's the lenders and the "investors" who got in on this obvious Ponzi scheme by purchasing the securities who need to eat the loss. After all, investment does entail risk. And these investors who provided a market for the fraud were chasing after a better return. In other words, they were greedy. But the promise of a higher return should always entail a higher risk.

We all know that the only "solution" bush will think up is one which will enrich his "have mores" base while doing nothing to help the average family.
Expect some kind of taxpayer-financed (meaning borrowed from China on our kids' and grandkids' credit card) bailout for his fat-cat cronies.

[Mojorabbit]

40. that is easier said than done

I read this today. http://www.nytimes.com/2007/12/02/world/europe/02norway.html?_r=2&hp&oref=slogin&oref=slogin

This is reverberating all over the world and a lot of people are being hurt because they were naive. The people who spun up these bogus investments need to be held accountable.

NARVIK, Norway, Nov. 30 — At this time of year, the sun does not rise at all this far north of the Arctic Circle. But Karen Margrethe Kuvaas says she has not been able to sleep well for days.

What is keeping her awake are the far-reaching ripple effects of the troubled housing market in sunny Florida, California and other parts of the United States.

Ms. Kuvaas is the mayor of Narvik, a remote seaport where the season’s perpetual gloom deepened even further in recent days after news that the town — along with three other Norwegian municipalities — had lost about $64 million, and potentially much more, in complex securities investments that went sour.

“I think about it every minute,” Ms. Kuvaas, 60, said in an interview, her manner polite but harried. “Because of this, we can’t focus on things that matter, like schools or care for the elderly.”

Norway’s unlucky towns are the latest victims — and perhaps the least likely ones so far — of the credit crisis that began last summer in the American subprime mortgage market and has spread to the farthest reaches of the world, causing untold losses and sowing fears about the global economy.

Where all the bad debt ended up remains something of a mystery, but to those hit by the collateral damage, it hardly matters.

Tiny specks on the map, these Norwegian towns are links in a chain of misery that stretches from insolvent homeowners in California to the state treasury of Maine, and from regional banks in Germany to the mightiest names on Wall Street. Citigroup, among the hardest hit, created the investments bought by the towns through a Norwegian broker.

For Ms. Kuvaas, being in such company is no comfort. People here are angry and scared, fearing that the losses will hurt local services like kindergartens, nursing homes and cultural institutions. With Christmas only weeks away, Narvik has already missed a payroll for municipal workers.

Above all, the residents want to know how their close-knit community of 18,000 could have mortgaged its future — built on the revenue from a hydroelectric plant on a nearby fjord — by dabbling in what many view as the black arts of investment bankers in distant places.

“The people in City Hall were naïve and they were manipulated,” said Paal Droenen, who was buying fish at a market across the street from the mayor’s office. “The fund guys were telling them tales, like, ‘This could happen to you.’ It’s a catastrophe for a small town like this.”

[stillcool]

37. I think the requisite for a 'bail-out'

has to do with 'national security' Like when the airlines got bailed out...or when the government eases tax laws on the multi-national corporations..or when the stock market gets billions of dollars pumped into it...or when global corporations who break our environmental laws and get a hefty fine...litigate for years and then end up having their fines drastically reduced or eradicated. I'm pretty sure you don't have to worry about our government bailing out too many in the middle/lower classes. However the lending institutions might need a 'bail-out'.

[TwilightGardener]

42. Agreed--no subsidizing greed and/or stupidity.

[wundermaus]

43. smoke and mirrors...

It isn't about a bailout to the homeowners that bit off more than they could afford, it is to bail out the lending industry from imploding with massive loan defaults. Do you really think they "government" i.e. the lobbyists, would give a second thought to private citizens defaulting on loans? Hell, that's why bankruptcy laws were changed to indenture your sorry ass if you fall behind in payments. But a massive default of loans impacts the money lending industry... not THAT is a different matter, all together. Remember the savings & loan bailout debacle? This one will make that one look like a pimple on the ass of an elephant.

[ProSense]

51. Exactly, but that's not the only reason the post is misguided.

People are defaulting on small loans because part of the predatory lending practice was the extremely high interest rates that the banks charged and the misrepresentation of some of these loans as fixed-rate when they were actually adjustable.

There was a report of a bank raising a single mom's mortgage by $700 within a month's time. These banks are preying on people, period!

[gratuitous]

45. Anyone with more money than me doesn't deserve help

And anyone with less money than me is lazy, and doesn't deserve any help.

Only people who have exactly the same amount of money at me deserve any help of any kind at any time. And even they might not deserve help if I don't like them for some reason.

Me. Just me. That's who deserves any help or consideration. The hell with the rest of you.

[ProSense]

52. Well said!

This is Bush's ownership society, every man, woman and child for themselves. Take responsibility, you're smart, go forward and become the CEO of Blackwater or Halliburton.

[ileus]

71. glad I make the same as you.

[Djinn]

72. who the hell said that?

but presumably YOU also put limits on welfare? Or would you be OK with Donald Trump claiming benefits?

not one person here claimed poor people were lazy but it was a nice strawman to throw in in your attempt at being righteous

[gratuitous]

103. I forgot people who wear plaid

And who don't have a sense of humor. Screw 'em!

[man4allcats]

47. That could have been me. It wasn't, but it could have been.

I bought my first and present home four years ago. It is 50+ years old (I am, too!). The fixed rate mortgage was for 89K. It's an okay place for me, but you won't see it Architectural Digest. I've never owned anything in my life until the last few years so I thought it was pretty cool that I was finally getting my own home. Modest though it is, I came close to losing it when I got laid off two years into the mortgage. Try finding a job when you're over fifty. Luckily I'm back at work now and am making progress toward getting straight money-wise after my extended period of unemployment. I'm glad now of course that I bought my little house and didn't get sucked into an adjustable rate mega-mortgage on some brand new eye catching place, but I might have if I had known at the time that those kinds of options were available. It wouldn't have been wise, but realtors are in business to sell houses and I was in the market to buy. A slick salesman might have recognized a mark and said, "Hey, treat yourself. At your age you probably won't be buying another one. Why buy an old place when you can buy this nice big new place and pay less each month to live in it than you would in the old place?" Of course he would only barely mention that the mortgage might double or triple in a few years, but I might have also neglected to hear it if and when he did mention it.

I'm not saying people shouldn't be responsible, but I can see how folks can get suckered. It could have happened to me. As you say, a house is a big deal, especially these days. It's like a dream come true. When they dangle that brass ring in front of your nose, it's hard not to grab it. The lenders have a role in this as well. They knew they were suckering these people, and they knew or should have known better than the buyers what would likely happen. I'm not sure how I feel about a bailout, but if it came to spending my tax dollars on that or Iraq, the homeowners would get my money. I say that sitting here in my 89K, 50+ year old house that presently needs $1400.00 in A/C repairs.

[Manifestor_of_Light]

67. "try finding a job at fifty" Truer words were never spoken.

Employers don't want you if you're over fifty, skilled, efficient and educated. You cost them too much. You are supposed to crawl off and die if you aren't old enough for Social Security and can't find a job. I spent twelve years in college, I have 3 degrees, including a doctorate in law, and I am supposed to work in retail at $8 so my ankles swell, or stuff tacos at a fast food joint?

[man4allcats]

236. Hang in there, Perragrande.

Best wishes and best of luck.

[bullimiami]

48. im pretty sure its not the homeowners they are worried about bailing out.

but the corps that stand to get stuck with property thats worth less than the paper they have out on it.

theyd much rather bandage it up and keep the cash flowing.


and someone explain to me now that the interest rates are going down why the arms resetting should still be a problem.
oh oh oh....i know...its a rigged game.

[raccoon]

180. Ding, Ding, Ding! we have a winner.

"its not the homeowners they are worried about bailing out but the corps that stand to get stuck with property thats worth less than the paper they have out on it."

[troubleinwinter]

53. Thanks for your assitude.

My daughter and son-in-law bought their first home in the San Francisco Bay area 2 yrs ago. TWO bedrooms. He's early 40s, she's 30... both have always worked. 2 used cars. No granite countertops, no 3 car garage. A baby. They both work. They think they might lose their home.

It seemed a simple enough 'American Dream' for a working couple to own a tiny house when their in their 30s-40s. Fuck them, though, they maybe didn't "evaluate their budget" (or count on their work hours being cut). Stupid Americans. Stupid to assume they might be able to afford an old two bedroom "mansion" an hour and a half from work.

Child care? Hah. She takes the child to work. Nobody offered her any child care. If she had to buy child care, they already would have lost their "mansion".

Where do people get off assuming they can actually buy a home in this country? Maybe they are people who just want "a bail out".

What do you know about property taxes on a 2 BR home in the SF Bay Area?

Lazy-ass people who actually work two incomes, drive used cars and buy a teeny home. They shouldn't be given any concern at all. They fucked up by not figuring their jobs might be cut and let's just chuck them out on the streets. They probably have granite counter-tops and big screen TVs in those homes.

I thank you again for your assitude. I had hoped the kids were on their way to a reasonable chance at building what we used to know as "equity" and someday be able to work up to a better house. Now, I fear they may have to move in with me and take a total loss.

Shit changes, of course, there are and always have been risks, but your assitude towards some hard-working people who are taking it on the chin just fucking sucks.

[CoffeeCat]

55. I understand your anger...

I would be angry and upset too, and very concerned if this was my daughter and her
husband.

You mention that they had their work hour cuts, and now their income has changed.

In my original post, I wasn't referring to anyone who couldn't afford a home
because they lost a job, or got sick or had their hours cut at work.

I was talking specifically about people who bought a home that was beyond their
means--with loans that they knew they would not be able to make payments on in
a few years. They saw that their monthly payments would double or triple in
two years--but they wanted the house more than they wanted to be responsible.

My original post has nothing to do with people who are losing their homes due to
a loss in wages or a personal tragedy. I agree that your daughter and husband are
"taking it on the chin." Housing prices and property taxes in San Fran--are completely
outrageous, and that area has been hit the hardest by deflating housing values.

I'm sorry for their situation and I hope they don't lose their home.

[troubleinwinter]

62. OK, peace.

Yes, many did plan their budgets, but the industries they are in have already felt the economic troubles (my husband's, too).

Times have already become difficult and are bound to become much, much worse for a great many.

Thank you for your kind thoughts.

[Djinn]

77. unfortunately shit happens

If someone loses their job (or their pay/hours reduced) that is hardly the bank or other taxpayers problem.

It's also not got anything to do with this thread.

Guess what - some of us gave up on the idea of home ownership a LONG time ago.

In order to a buy a 1 bedroom flat where I currently live I'd need at least a $30,000 deposit (or I could go one of those 100% no money down loans but I know that I would have to be 100% of keeping my job in order to afford it - means I can't)

That is NEVER going to happen on my wage and frankly it annoys the heel out of me when middle class folk in my country whine that their payments have gone up.

MY rent also goes up when there's a rate increase but unlike homeowners I will never see that equity, yet when things go shaky those that DO earn equity want ME to bail em out....fuck that for a game of soldiers

[troubleinwinter]

80. I agree.

Shit happens. I'm old enough to have been through it a couple of times. Nobody bailed me out. Nor did I expect it.

I know renters are in equally hard shape in this mess. I know that your payments go up when owners' payments go up. Nobody is going to get out of this comfortably.

I did not ask for any bailouts here, I wanted to quit the smear on all people who will end up hurting in this fucked up mess as having "granite countertops".

Renting is a hard situation, as you pay without the benefit of what used to be 'equity'. Never any benefit for a renter. Talk about taking it on the chin.

[Djinn]

82. I should probably ease back too

I'm just getting a bit nippy because some folks seem to presume that those of us who agree with the OP are heartless or rich and looking down our noses at others when it couldn't be further from the truth.

[troubleinwinter]

99. 'nippy' times are just beginning, I think.

Many of us are going to have to rethink. Or think in different ways. Natural for all of us to be nippy.

Shit sucks right now, and I think we are just beginning to see it. I mean I think it really sucks. I own (OWN my roof, outright) a two-bedroom mobile. I'm thinking a time will come soon that I may need to rent a room out. Like in the depression. Our grandparents did it. Maybe someone who lost a condo needs a place to be.

Rugged times ahead, I think, and lots of us will be nippy.

[Connonym]

107. I'm sorry about your daughter

I'm a parent and I know how much that must worry you. I've made my own mother cry because of the mess I'm in and that is probably the worst part of the shame of it all.

[SoCalDem]

133. My son and daughter-in-law live in Concord, and they tell me that

"ordinary" people who work for the city, or are teachers, or firefighters or cops, cannot afford to LIVE in Concord..

That's the real shame of the rampant escalation of prices over the past 2 decades..

Families just starting out, MUST live a long ways from work and pay outrageous prices for commuting BECAUSE the jobs are sequestered in areas that contain housing that's unaffordable to all but a few ..

It's all a shell game to keep people spending every penny they make..on gas, on cars, on insurance on childcare on fast food (because they are too tired to grocery-shop or cook), on TV (because that's all they have energy for).. and then on "guilt stuff" for the kids (because parents rarely get to SEE their kids)..

It's NOT "accidental".. This IS the plan for us..

Keep the rats so busy on the treadmill, and toss them a few scraps every now and then..

[scorpiogirl]

290. I'm right down the freeway in Pleasanton.

It's the same here. In our town, they are not building the required amount of low income housing and therefore, the same teachers, firefighters, etc. are not able to afford it here. We rent a house and stay because the school system is excellent. Of course low income here is probably more than the national average salary. Our town's median income is $103k. I don't know if we'll ever be able to buy here, much less afford the ridiculous property taxes.

I agree that they are squeezing us for all we're worth. Keep us scrambling to make ends meet and we're easier to control.

[HughMoran]

190. I posted my examples of people getting screwed in another post

I am disgusted at the elitist attitude of some here - makes me very, very angry.

[CyberPieHole]

56. I agree. Ignorance is no excuse in the eyes of the law.

The government cannot be expected to protect people from their own stupidity. Greed generated the red-hot real estate bubble. People who treat their homes as investments instead of shelter, should not be surprised when their investments take a turn for the worse.

[dansolo]

59. Only subprime loans are affected

Don't be fooled into thinking that this is a bailout for borrowers. This is a bailout of the holders of the hedge funds that are bundles of the subprime mortgages.

[Baby Snooks]

65. Well the banks have all that bail-out money from the Fed...

So why shouldn't they use a little of the billions they've had access to at low interest to absorb the losses on the ARMS they shouldn't have allowed to begin with? How about some "trickle-down" finally?

[ileus]

69. ....that and these people prolly voted for GW.

[silvershadow]

74. I am SICK of people's attitudes on DU regrarding this.

I AM one of those people. I am in the process of losing my home and there is nothing I can do about it. I have been trying to finance to a fixed rate since March with NO luck whatsoever. I did NOT buy more house than I could afford. I have NEVER missed a payment on the house or ANY of my credit card bills or anything else that appears on my credit report. As for the teaser rates, you can kiss my butt, I KNEW they were teaser rates- MY teaser rates were almost 10% in 2004 when I signed my loan documents. Exactly how much interest do you think I should pay? They told me as long as I made all my house payments on time it would be no problem refinancing- they lied. After 3 1/2 years of PERFECT payments, and absolutely nothing negative added to my credit report during that time my credit score has gone up a whopping 25 points. There is much more going on here than what you hear on TV or read in the "newspapers". It is all part of the raping and pillaging that is going on right now. I am exhausted from trying. I cannot try anymore. I am filing bankruptcy (which is what "THEY" want) and moving on. I have paid a total of $55,000 of my hard earned cash in just over 3 years on $150,000 house and I may as well just have set it on fire as I earned it than have bought this house that I love and thought would be my house for the rest of my life. Don't lecture me about being naive, either. I DID have prior credit issues before purchasing. They did send me to a credit counselor and classes and I did everything they asked of me and more. Then there was more counseling at the "bank". Turns out the bank was really just a mortgage broker even thought they had bank in the name. I could go on an on, but I won't. Just to emphasize: NO late payments of any kind whatsoever for 3 and 1/2 years. My credit report looks better than it ever has. You can carry on all you want about "those people", but I can assure you if you would open your eyes and do some investigating as to what is REALLY going on, you would have a different attitude. The housing crisis hasn't even begun to hit hard yet, and when it does the fallout will affect everyone.

[uppityperson]

76. There are people all over the range on this, here as well as other places.

Sounds like you got taken and I hope that things get better for you. It has been interesting listening to the news this last wk, talk about a recession coming. As if many people haven't gotten there already. Best wishes and hope things get better. The whole thing sucks.

[sandnsea]

78. I know, I hear you

You may as well get out now because this just occurred to me a few days ago. Regardless of your credit, as house prices continue to fall, you won't be able to refinance for enough to cover your current mortgage, so you'll still be stuck when the rates reset anyway. I know a few young couples who are going to be in a real pickle.

Is there any way you can rent your house out? I think they will step in and do something, it would be a shame to lose it. Maybe you could find someone who wants to open a senior day care or home for disabled people, turn it into a business. Just a thought.

Good luck.

[silvershadow]

81. There are 100 empty homes in my neighborhood and another

100 with realtor signs in the yard. I checked comps and found that few are selling, and the ones that are are selling for tens of thousands less than what I owe. I bought for 156k, I now owe 147k, and homes like mine are selling for 129K TOPS. I called one of these investors that put a flyer on my door one day, but they want me to leave my existing financing in place while they do whatever they are going to do with it. I tried to explain that it is an adjustable rate mortgage and they acted like they could care less. I forgot to mention in the above post that while most mortgages reset every year, mine resets every six months. I took on a second full time job before the first reset knowing that it was coming in order to get myself ready for refinance. It hasn't helped. As far as doing something like a senior day care or something, it won't work (neighborhood association). As far as renting, I am not opposed to it, but with all the other options people have in these parts no one would want it for the price.

[sandnsea]

84. I guess talk to a lawyer

Have someone go through your paperwork to see if there's ANYTHING that was done wrong that can be used to force the lender to negotiate. They're going to have to start sooner or later. Your neighborhood association might have to get negotiable too. Hopefully something will shift. We should just be out there screaming over this. Sadly there's so much misinformation that I think most people are blaming the victims instead of fighting for them. And once again, the predators walk away with their money and no consequences at all.

[NashVegas]

83. I'm Sorry for Your Misfortune

But you do indicate in your post that you knew the rate was going to go up.

There are so many people who saw what was going on, knew what was coming, and chose to rent because they couldn't afford the skyrocketing real estate prices and knew it.

Given the option between having to feel sympathy to you, or screwing them (and me) if we don't let the problem correct itself, I would say, "I'm sorry for your misfortune."

[sandnsea]

85. That'll buy a trailer where I live

What would you do if you were looking at being priced out of any kind of shelter with the rising rates? Just sit and wait until you were homeless? Or would you try to buy so you could lock in a mortgage payment?

[NashVegas]

89. Sorry

I rephrased.

What's going on right now is the correction. In most markets, home prices are going back down. As they should.

[sandnsea]

90. Who knew that 3 years ago? n/t

[NashVegas]

92. Just About Anyone Who Read DU For the Past 4 Years

You've been on DU long enough to have seen all the posts about the housing bubble and what was going to happen when it popped.

[sandnsea]

97. DU is always full of henny-pennys

If you listened to every scare story at DU you'd never leave your bed in the morning.

[frankenforpres]

122. i dont get it?

you say who knew? then s poster tells you that it has been widely posted about on a message board you frequent, and then you say, yeah but DU posters are bullshit artists.



anyone that was paying attention knew

[sandnsea]

130. No, nobody "knew"

That would mean people could predict every rate cut or increase, who would replace Greenspan, and every other global economic tick - and nobody "knew" that. DUers like to pretend they "know" things when all they do is speculate. I can say I "knew" gold was going to go up because I suspected it would, but the truth is, I didn't "know". I just speculated. It isn't the same thing. Nobody knew.

If it makes you feel superior to "know" something nobody else did, then roll with the feeling. However feelings are not facts.

[jberryhill]

134. That's the point

I'd venture that most people with adjustable rate mortgages were aware the rate was "adjustable".

And it is the inability to predict rate increases or decreases that suggested to every sane person I know that one can predict, with absolute certainty, the rate on a fixed-rate mortgage ten years from now.

I remember when fixed-rate mortgages were over 15%. I can't imagine what it takes to buy into the notion they can't do that again, for the sake of saving a couple of percent today.

[sandnsea]

137. They lied

Have you not been reading these threads? They lied and told people they were fixed when they meant they were fixed for 2 years. People don't believe it, but it was harder than hell for young people to get a fixed loan. They just shoved these adjustables and wouldn't even talk to you if you pushed for a fixed rate. I don't know how you can blame people who were terrified by the housing increases and felt pressured to buy before they were completely priced out of the market. They weren't given any alternatives. All the professionals told them that this is the way it's done now. I talked to lots of young people, it was all the same. You really just don't get it.

[frankenforpres]

164. rate cut didnt matter much

rate cuts didnt matter that much on teaser rates


anyone that bought a house that cost more than 2.5x income with less than 20% down was gambling, just like people who played the stock market during the tech bubble.

i dont support privatized gains and socialized losses.

[Kingshakabobo]

100. LOL. I'm tempted to buy canned food and shotguns after reading DU.

(I still might)

[uppityperson]

86. I have a sib who had a good job, guaranteed to continue, bought a house.

Not a top of the line house, but a small 2 bedroom one, older house. Business changed hands, boss an asshole, lots of stress, trying to sell house for what paid or at least not lose to much, move on and be able to have a lower stress life. Guess my sib should've known the future to, eh?

[Kingshakabobo]

88. Take a look at NACA.

I'm in the business and have run across their name as my competition. It seems like the real deal - they have a lot of press write ups. I've referred a few people to NACA that I couldn't help but haven't received any feedback yet. (I hope I don't see TOO much of them because, after all, I'm not a communist. Seriously though, I do a lot with government/municipal backed first time buyer deals so I'm not one of the bad guys.)

They do bail outs, among other things, for people in sub-prime loans that would otherwise afford the home. Their rate is 5% no closing costs.

https://www.naca.com/index_main.jsp

NACA is a national non-profit community advocacy and homeownership organization providing the best homeownership program in America .

Home Save Program

Homeownership should be about stability without the fear of major increases in your mortgage payments. The foreclosure rate in the United States is soaring, and huge numbers of people also are saddled with mortgages that are or will become unaffordable in the near future. This is having a tremendous impact on families and neighborhoods and NACA is committed to fighting this devastation.

NACA’s Home Save Program is committed to assisting Member’s in every way possible to lower the mortgage payment to an amount that is affordable for the term of the mortgage. The NACA process considers the individual characteristics for each borrower but provides a framework and standardization to provide unprecedented home save solutions for tens of thousands of homeowners.

The Homeowner needs to following the below process:
STEP ONE:
Complete a Mortgage Submission on our website at www.naca.com
STEP TWO:
Attend a NACA Workshop to learn about the process and options.
STEP THREE:
Most importantly, meet with a NACA Mortgage Consultant who works with you throughout the process.
STEP FOUR:
Your file is referred to a NACA underwriter who then takes over the application.
STEP FIVE:
The completed file is submitted to the lender. This is through NACA’s paperless state of the art software system.
NACA’s home save options for you that are based on the terms of what you can afford, with a cascade of options as follows:

PAYMENT PLAN:
Appropriate if you have an affordable mortgage but have experienced a short term financial setback and can become current within 12 months.

MODIFICATION:
Works if you have an affordable payment but have experienced a long-term financial set back and cannot become current in 12 months. The loan is modified to include the past due amounts.

NACA REFINANCE:
This is for homeowners with a high rate and unaffordable mortgage who can meet the Refinance Eligibility Criteria (i.e. Loan-to-value, payments, etc.). NACA provides one mortgage product, the Refinance Product that is the best in America providing a below-market fixed rate interest, no points, no fees or repayment penalties. NACA has committed one billion dollars to help homeowners who have an unaffordable mortgage keep their homes in the wake of the subprime crash.

RESTRUCTURE:
This is the most powerful tool for many homeowners to save their home. We evaluate what you can afford: looking at your net income, deducting only the required debts, housing expenses and $200 for unforeseen expenses. This results in a payment that you can afford. This payment is the fixed figure or the mortgage payment (i.e. PITI). The two variables are the interest rate and outstanding mortgage amount. Servicers/Investors would reduce either or both to achieve the mortgage payment over the long-term

All of the above options provide for an affordable mortgage payment over the long-term. In fact the restructuring has sometimes lowered the fixed interest rate to less than a NACA Refinance. As opposed to the NACA Refinance, a Restructure is available throughout the country and is not based on factors such as equity, debt ratios and credit score.

We will try to assist everyone with either a NACA Refinance or working with your lender. However, we cannot assist you if you own investment properties. If you have an auction date or need immediate assistance, email NACA at [e-mail].

[PSPS]

94. 10% 'teaser' rate? That's a gouge, not a teaser!

I'm sorry to hear about your situation.

How could 10% be a teaser rate in 2004 when the 30-year fixed rate was 5.84% and the 1-year ARM rate was 3.9%? How could you have signed a 10% note under such circumstances?

It sounds like your mortgage was an Alt-A non-conforming loan. That's what I was talking about. A conforming loan would have almost guaranteed that you would be able to make your payments, and refinancing wouldn't be necessary.

Instead of walking away from the house, maybe you can sell it and salvage some of the equity. A $150,000 house should have some net appreciation over the three years you've had it.

[Kingshakabobo]

96. That's definitely a sub-prime loan.

Probably a 2/28 ARM. Probably Option One or St. Francis or someone like that is the lender.

They're SUPPOSED to be band-aid loans and refinanced out before the rate adjusted - before the musical chairs stopped.

I haven't done much sub-prime at all but I did one last year.

The customers were 2 school teachers with a combined income of about 80-90k. One year out of chapter 7 bankruptcy (I don't know why or even HOW they were allowed to file 7). They purchased a home with 10% down and I SHOULD be able to refi them in January at conventional rates. Fannie Mae will allow a chapter 7 but it has to be 2 years from discharge. Even at the higher rate of 9.8%, the deal still made sense and was affordable to these people. These rates include the PMI. Also, we took a very slightly higher rate for a fixed product.

[Connonym]

109. :hugs:

we are just the first wave of casualties in this horrible thing. People who aren't experiencing this, I don't think they have any idea of what's really going on and how we're just the beginning and it's likely to get much worse before it gets better. And you know what's going to happen? People with money are going to buy up all our houses for a fraction of what we bought them for and make bundles of money off our blood and dreams. Meanwhile we'll be stuck in a surf-like existence and at their mercy probably for the rest of our lives. I'm sorry you're going through this too. I'm actually crying my eyes out reading some of the stuff in this thread. Crying for what some of the rest of you are going through, crying for the careless attitudes of so many people who look at us with disdain. If they only knew...

[Orangepeel]

79. I don't know what to think. I feel bad for people who are about to lose their homes

but I also think that some of them shouldn't be in the homes they are in -- they should be in homes they could afford. I don't know how to differentiate between people who were taken advantage of and people who were trying to take advantage of the system.

[fishnfla]

87. But bailing out failed S&L's is morally right!

it is easier for a camel to pass thru the eye of a needle than a rich man to enter heaven

[frankenforpres]

123. of course it isnt right

those bailed out S&Ls are in this game


we'll be bailing them out again


some people act like this is an exucution. it isnt. if you cant afford it, dont buy it. if you bought it and can no longer afford it, sell it for what you can get and rent an apartment.

[Bluebear]

91. Well bully for you for being so sensible.

:silly:

[michaz]

95. The tone of this is nasty!

It is one thing to have an opinion and it is another to state it in a tone that is offensive! For my opinion, I would rather help these people out with tax dollars than waste my tax dollars by sending it to other countries. It is just about time that we do for our own instead of everybody else!

[frankenforpres]

124. i will support

allowing them access to section 8 apartments. they shouldnt keep their mcmansion that they cant afford, imo.

[michaz]

141. Why do you assume these people all live in mansions?

The people losing their homes in my area are in homes far from mansions. Many of them are not people with bad credit. Many of the people losing their homes are doing so because of the damn mess this country is in. Some have to choose to pay their mortgage or heat bill or medical bills and medicine or eat!

[frankenforpres]

165. if they lost their jobs, its terrible

nearly no one who is happy to see the housing bubble collapse is celebrating those that lost their job losing their houses. that is something totally different.

[BadgerLaw2010]

98. I've had enough credit system damage, thank you. Screw moral hazard.

Absent government intervention, this could get extremely ugly.

[blondeatlast]

150. Massive foreclosures are going to cause property values to plummet even below

pre-bubble levels. What are banks going to do with homes they can't sell? Dump 'em for pennies on the dollar. that hurts everyone.

The market needs to adjust itself, but massive foreclosure isn't the way to do it because it will hurt EVERYBODY, including those who've owned their homes for decades.

I don't wnat (quoting the OP, not a term I'd ever use) "these people" to suffer.

[jberryhill]

157. "that hurts everyone"

...except for people who need affordable housing.

...which they would have had if not for easy money chasing overpriced homes.

[blondeatlast]

161. No, it hurts all of us. Do you want your property value to plummet?

I don't. Neither do people in affordable housing, who are hit the worst.

Slums aren't good for anyone.

[frankenforpres]

172. housing getting cheaper

so cheaper housing hurts affordability?

i would expect that line from the national assoc of realtors, not DU

[jberryhill]

175. What difference does it make to me?

I don't care what the value of my home is - really. I bought far below what I could afford, and have a monthly mortgage payment that I could support on a very low paying job. The walls and roof appear likely to remain standing irrespective of its market value. Was it suddenly going to become unfit to live in, or am I some kind of idiot for not "selling high" and then finding some other place to live?

I can't fathom how any of this matters to people who have been renting for years, and watching the ridiculous phenomenon of housing prices being driven to astronomical levels.

How does the market value of an "affordable home" alter its ability to shelter its inhabitants or render the home "unaffordable" in the absence of a crazy mortgage?

My neighbors rent their unit from the owner. They've been saving for years to buy something, but there is nothing in their range and they wouldn't go for nutty mortgage schemes. I can't see how a drop in housing prices is going to hurt them one iota.

I wasn't looking for an investment vehicle - I was looking for a place to live.

[Ganja Ninja]

198. It hurts everyone except those of us ...

who would like to own a home but have been priced out of the market.

Nobody gave a damn about us, the people that haven't been able to afford a home when they were borrowing the money. While the speculation was running rampant and prices were skyrocketing home owners have borrowed against their equity to buy new cars, college educations for their kids and all sorts of frivolous toys. Not to mention the tax breaks they enjoyed while they were doing it.

I agree the market needs to adjust itself but people should not be allowed to keep equity they haven't earned. Those of us who can't afford to own and have been priced out of the market should not have to support artificially high prices with our tax dollars. Let the chips fall where they may. That's the way the cookie crumbles.

[mzmolly]

201. So you enjoy seeing housing prices plummet because you don't own a home?

That's crazy.

[Ganja Ninja]

209. I'd rather see them plummet than see my money going to pay for

someone else's home while simultaneously keeping home prices (and rents for that matter) so high that I can't afford to own. High home prices have affected more than just the homeowners. The over speculation has driven rents up as well. Where's the relief for renters if our money is used to prop-up home values?

[mzmolly]

223. How have you paid for someone else's home?

The housing crash hurts everyone, even those who don't know it. Rent will not go down because houses values are falling. In fact, it will become more competitive to rent and prices may actually increase.

What WILL effect you and others is if foreclosures continue and banks have to try and recover their losses.

[Ganja Ninja]

240. Rents will go down if housing prices fall.

The increase in home values is not due to a housing shortage. It's due to people speculating in the market, buying homes and renting them letting the renters pay the mortgage. This not only increases the cost of rent, it drives up the cost of everything. Every time someone goes out and borrows money for homes that have been overvalued they not only artificially raise home values, they help support higher costs for all consumer goods because they use that easy money to buy cars and boats and everything under the sun.

When the home owners and speculators are driven out of the market by falling home prices the new home owners and speculators will purchase those homes at lower prices. They will still want to rent those homes but at reduced rates. It's the law of supply and demand.

If my tax dollars are used to support an overvalued housing market it will hurt all of us who want to own homes now but can't afford to.

Not all of these people are charity cases deserving of pity. Many of them looked down their noses at the poor saying 'I'm a home owner because I handled my money wisely'. They drew out their equity and bought a new Lexus or put in swimming pools or even took vacations with the money. Well like the song says, "Welcome back Baby to the poor side of town."

[mzmolly]

257. That's bullshit. Rents will not go down. I am a former landlord, increased

competition will NOT bring down rents, if anything they will increase.

If my tax dollars are used to support an overvalued housing market it will hurt all of us who want to own homes now but can't afford to.

So this is what it's about isn't it? You don't own a home, and you want to capitalize on the tragedy of other families being displaced.

Nauseating.

Not all of these people are charity cases deserving of pity. Many of them looked down their noses at the poor saying 'I'm a home owner because I handled my money wisely'.

Many of them are single parents who were taking part in the American dream. My family bought a piece of crap house for 30K when I was 15. It was the first home we owned, and it was a sense of accomplishment for our family. That piece of crap house still homes my parents.

I realize many of you here wish to place a Lexus in every stall of the three car garage in your scenario, but I've got news for you, these are not the primary people who will be "losing" in this situation. "Death, job loss, medical expenses, and divorce are a few of the most common reasons people foreclose on a home." http://www.savingadvice.com/forums/home-mortgage/15988-home-foreclosure-common-reasons-happens.html but you go ahead and assume that Bushonomics was not involved and that those who will be out of a home are smug, Republican CEO's.

[Stinky The Clown]

102. I'll turn that around. The people who took out those loans were fucking victims

The perps were the shitbirds who enticed them to get in over their heads. They're fucking LOAN SHARKS who were drooling over the future vig.

I'd rather see the people get bailed out instead of the Citibanks of the world. The big financial institutions who made this shit up out of whole cloth are the criminals ...... not the dumbfucks who put their (financial) lives on the line for a shot at the ever elusive bullshit that is "The American Dream".

Here's your bank CEO:



Motherfuckers ........

[troubleinwinter]

105. You are so fucking right...

folks walk into the office and sit across the desk. They are sold a mortgage. Most poeple don't fucking understand mortgages! I'm old and know a few questions, cuz I've been there several times and have been fucked before. But most folks don't understand it at all. Ya rely on your mortgage broker/lender to tell you what's up and they shove an inch of paper at you. Ya sign, cuz your broker tells you it's cool.

[frankenforpres]

125. riiiiiiiight

so when they were bragging about all their equity, and how great of a buy they got, and how they were trading up, all was good


but when housing values go down, the tears start


the mortgage brokers and banks are scum, but the borrowers were in on it. one too many episodes of flip this house

[Stinky The Clown]

154. I pray you never get scammed

But if your position is hard on this, I pray you get to experience the same thing.

[frankenforpres]

169. you tell me what should happen

if the government wants to forgive the bankruptcy and let them walk away, that might be a plan. government wants to give them vouchers for apartments, thats fine too.

basically what you are saying is i should go out and buy the most expensive house i can get a loan for, and then when i cant keep the house, joe 6 pack should bail me out

[Stinky The Clown]

191. That's not what I'm saying and you know it.

You're being willfully obtuse and ignorant .... to say nothing of argumentative.

My view is the shyster sons of bitches who INVENTED and SOLD those shit loans deserve to take the hit. The mafia makes better terms than these 'lenders' did.

[frankenforpres]

203. what does that mean

what does it mean for those shysters to take the hit. people get to stay in there house and not pay for it?

[Stinky The Clown]

204. Let the shysters negotiate to a REALISTIC fixed rate and move on

This crisis was caused, pure and simple, by the very invention of these 'teaser' rates. No one in their right mind would think people who could BARELY affored the teaser payment were suddenly going to be able to handle a payment DOUBLE where they started. You know that and I know that and the banks knew that.

Are you REALLY as stupid as you appear? I don't think so. You act like the Carlson boy from MSNBC .... using feigned confusion as a ploy to ask a question you KNOW is stupid.

[frankenforpres]

213. people cant afford that

the crisis was not caused by the teaser rate. the teaser just exacerbates it. the problem is, people did whatever they could to get a house because the deluded themselves into believing this instant equity nonsense that scumbag realtors and mortgage originators were telling them


if house prices were still rising, no one would care about the teaser rate, they would love it.


the people cant afford a fixed rate at the market rate of 5.8%, that means they cant afford the house.

[Stinky The Clown]

220. First of all .......

They didn't delude themselves nearly as much as they were INTENTIONALLY DELUDED by all the hype on teevee.

Second ...... What if they negotiate the rate to fix it at the teaser rate? I contend that the teaser rates were criminal. Like free heroin until you're hooked.

If the market is at ...... 5.8 .... whatever, make them negotiate to ANY fixed rate higher than some floor rate and LIVE WITH IT. A VERY modest return (2%? 1%?) to the lender is WAY better than no return and house prices in the dumper.

[Connonym]

106. very compassionate

I've been trying to sell my house. Willing to take a fucking loss on the damned thing but the market is AWFUL. The foreclosure should be final any time now. I've been through the feelings of shame and guilt and I'm mostly past that now. Terribly frustrated to see my entire net worth, what I thought was my nest egg, :poof: like a cloud of dust. It wasn't an extravagant house. Same time all this was happening my job continued to be outsourced and mechanized and my income dropped to a fraction of it's former self. My life has been ripped apart. My confidence has been shredded. My faith in the American system and the whole concept of owning a home has been destroyed. My credit is destroyed and I'm living at the mercy of family members, terrified with the knowledge that I'll very likely have to give up my dogs if and when I can find an apartment that will accept me with my credit as it is. Praying that I can find something in a neighborhood that doesn't have too many meth labs. Meanwhile I still don't know whether the bank will be requiring me to pay some of the losses on my mortgage. If they don't I have to pay income tax on the amount they write off. Everything I've worked for for the past 20 years is gone. What have I done to help myself? I've sold almost everything of value that I owned. My wedding ring, all my gold jewelry, my bedroom furniture, etc. I made my house sparkle for the real estate showings. I redid the wood floors, I repainted the entire interior, polished every surface and spent a good deal of time and money to make it desirable to buy. 11 months later it still hasn't sold.

You have NO idea what people are going through. So fuck you and your judgmental attitude. Our country practices so much corporate welfare and we the fucking people get screwed AGAIN. I hope you never have to live through this. I wish nobody ever had to live through this. You really have no idea, none. I wouldn't wish this on anyone. I'm hurt that even open minded liberal people are so quick to judge. I'm struggling to forgive myself for my fuckups because part of this is my fault but a greater part is "the market" and of that I have no control. How dare you judge?

[CoffeeCat]

115. I am sorry for your horrible situation...

...and I want to stress that my original post is not about people who
buy a house, then find themselves in trouble due to a job loss or loss
of income or other personal tragedy. Not at all.

Your story is heartbreaking, and I certainly didn't mean to imply that
anyone losing a house deserved it or is not a victim. You clearly
have experienced some hard times that were no fault of your own, and
one of the tragic consequences is losing your house.

My original post is about people who purchase more home than they
can afford---and they know they can't afford it---but they buy
it any way. The people I was referring to, are the ones who want
the McMansion so much, that they don't think beyond the first two
years of their adjustable-rate mortgage. They just want that big
house that they have no business buying--because after two years, when
those payments kick in--they won't have the money to make those payments.

I also have sympathy for these people. I would never lecture anyone
who did this. However, I would hope that they find a new home--one
that they can afford and then use the situation to make better financial
choices in the future. I believe that bailing out these people robs
them of an opportunity for growth. If we bail them out, they're still
in a home that they can't afford. Nothing learned.

I am so sorry for your situation. I don't judge you. I am terribly
sorry for what has happened and I hope that are able to find some peace.
You should not feel guilty or shame. You did nothing wrong.

[sss1977]

142. Well said!

[leftofthedial]

114. yeah! Fuck you! I got mine. Don't whine to me because you lost everything.

Losers. Get some fucking boots and use the bootstraps to pull yourselves up!

And get those fucking brats of yours out from behind my Hummer!

I'm warning you!

[frankenforpres]

126. opposite really

most people that i know that are against the bailout are not homeowners. they are people who want to see the prices of home actually be affordable. bailing out the banks that made bad loans and people who way overpaid for houses loans they could not afford or at worse flippers, is an attempt to keep this scheme going.

[leftofthedial]

138. yeah! screw you!

when your dumb sorry ass loses everything, I can snatch up my dream house for 5 cents on the dollar! dumb fuckers.

[frankenforpres]

171. so you oppose affordable housing

people used to be able to afford houses in this country. alan greenspan, mortgage hucksters, real estate scam agents, banks, and specuvestors ruined that

[uppityperson]

178. the poster you are replying to forgot this...

:sarcasm: Very dry humor there. Do a search for other posts by a poster when in doubt.

[leftofthedial]

187. that's right

I'm rooting for a big crash

when no one has any money, everything will be cheaper, right?

[JCMach1]

121. ARMS are morally wrong!

[NuttyFluffers]

129. you punish the usurer not the borrower, the knowing conman not the ignorant mark...

if you cannot understand such basic principles of judgment and justice you have no business condemning victims as receiving just desserts. the principles of judgment are dependent on awareness and free will. you cannot expect such things from those suffering ignorance and duress. be aware the vast majority of these failed individual home loans were by people wanting a slice of the american dream, ignorant of the current environment of new pitfalls and labors, and under duress by pushy sales, rising costs of living, and low wages. to condemn all of those victims in the effort to "catch" a meager slice of knowing small-time exploiters on the off-chance, while letting systemic investment destruction and large-scale exploitation not only go without punishment but an epic bailout, is of an inexcusable level of heartlessness and ignorance of justice, judgment, and history.

i understand where you are coming from, and yes there may be a small delight in watching petty levels of greed get its come uppance. but the application of supposed mercy here, and in previous situations like S&L scandal of the 1980s, to bail out the biggest and most knowing offenders, is bassackwards -- but already done. to let the full force of justice now fall on the party less culpable is hypocritical 'moralism' for the sake of petty revenge. in fact, it is an insidious form of pre-emptive envy; if they are given reprieve too then no one got punished and there is a wish you 'got away with it' too. and envy is always self-destructive in the end. destroying your neighborhoods for a moment's smugness will not be worth it, i am warning you. please reconsider this enticing, but still morally wrong, temptation of envy and revenge.

[Hippo_Tron]

131. Your moral outrage is a shitty basis for an economic policy

We have bail-outs because it saves us from the poor economic conditions that will hurt millions of people not directly involved in the burst of the housing bubble.

Bail-outs in almost every situation involve giving taxpayer money to people who don't necessarily deserve it. The reason that we do it is that the alternative is far worse.

[sss1977]

139. That's why it's called "predatory lending"

What makes you think they knew what was going to happen? Perhaps they were lied to possibly?

[BronxBoy]

140. Just what exactly is the "bailout"?

The only talk I've seen of any assistance is possibly having the lenders freeze any ARMs at the original rate or something to that effect? Is something else going on? Is the government actually ponying up dollars to people who are in trouble? I really haven't seen an explanation of what exactly a bailout is? A lot of cogent points on both sides but no clear definition of what we're railing about, either for or against.

[Faryn Balyncd]

147. Irresponsible loans, & now the bailout, causes REAL ESTATE INFLATION, & makes housing UNAFFORDABLE..

for everyone.

The official government inflation figures specifically omit real estate sales prices (and substitute a hypothetical "fair rental value").

Official government inflation indexes are now a fiction, purposely employed in order to decrease all payments (such as social security benefits and labor contracts) that are contractually based on inflation.

Yet the banking industry, facilitated by the feds, has created grossly inflationary loans.

The net result has not been to make housing more attainable, but more expensive, as the inflated market has been driven by irresponsible demand - - made possible only because of these irresponsible loans.

And with a bailout, the feds are KEEPING housing prices at these astronomical levels.

[jberryhill]

155. We have a winner! /nt

[SoCalDem]

173. There used to be TWO types of loans Conventional & VA

30% down..loan based on ONE INCOME
and a favorable debt to income ratio

There were STANDARDS, and you sat opposite a loan officer BEFORE you found your "dream house".. You could feel your hands becoming clammier by the minute as he went through your paycheck stubs, bank statements , tax forms, rent receipts..

You had a "note from the bank" telling you what you qualified for, and THEN you found a realtor who showed you houses you could AFFORD..and when you were close to deciding, they realtor told you about the "extra money" you would need at closing..CASH money..not borrowed, and you know what?

You ended up with a house you could afford, you had 1/3 equity in it the day you moved in, and a payment you could truly afford. If there was a 2nd income, you had EXTRA money to pay ahead..

It was NOT a "dream house"..It probably needed paint, and new carpeting..it probably had a 1 car garage (IF it had a garage).. It was probably someone else's "moving up and away from" house, but for a first time-buyer, it was a mansion because you could finally have a pet without getting permission, or paint the walls any color you wanted, or have a party whenever you pleased without someone calling the cops..

and for many of us, as we moved up and on, that first little fixer upper may remain our favorite house ..because it was truly an optimistic labor of love..and it was not a burden

[cascadiance]

185. The government being dishonest to us about the REAL rate of inflation is a real problem!

When those who are buying a house base their estimates on affordability on whether they can pay off the loan and also pay off their expenses, if they are being mislead into thinking that their salaries are kept in pace with inflation, which is a F'IN' LIE, then they might say to themselves that they can afford the house payments, when later on, when the mortgage gets adjusted, and their other expenses go up far more than their salary goes up, then they are in a bind. The government contributes to their not planning for this properly when they try to tell us that our salaries are keeping pace with inflation when they aren't. If they had greater salaries that kept pace with the rice of their other costs (health care, food, etc.) that the government was telling them that they should expect, then perhaps their planning might not be wrong.

The problem is that most people can't and shouldn't trust our government and should allow for far greater flexibility in their ability to pay their house payments and their other expenses adequately. Loaners and the government are steering them in ways that move away from this sensibility.

I might blame the individual for not thinking hard enough about their real expenses, but I don't fault them totally, when the government, the lenders, and the media are all giving them a line of B.S. that gets them into these messes to start with. It would be a lot nicer if the consumer could feel a lot better educated and not feeling like they have to struggle to find out an accurate picture of their ability to budget their future take home pay, etc. with the dishonesty we have around us now!

If thoes in the government want to TRULY fix this sub prime mortgage problem, the real solution is to find ways to level the playing field in terms of wealth in this country. Bringing back the top marginal tax rates of the 60's before Reagan brought them down would be a good first step!

[Ganja Ninja]

212. Exactly! Over speculation has been hurting renters and ...

consumers in general for years. Meanwhile irresponsible homeowners and speculators have been pulling out their equity and enjoying new cars, college educations for their kids and all sorts of toys, keeping prices artificially high for the rest of us. All the while getting a healthy tax break in the process. Now they want our money to preserve their gains. Sorry but if you lose your home then you are in no worse shape then us renters.

[blondeatlast]

148. "These people" can be helped without "throwing money" at them.

Extend the borrowing terms and keep them interest only for several years. That would keep many families in a home while socking it to the "flippers," for whom I have NO sympathy.

It would maintain property value ('m in a new home with a responsible FRM so this issue is important to me).

Punish the flippers but keep the families housed. We've actually earned equity already (we didn't buy as an investment, fwiw) and I'd like to maintain it as a hedge against a recession, tyvm. Keeping families in their homes will go a long way to doing that.

[Faryn Balyncd]

149. WSJ: MAJORITY (up to 61%) of $2.5 Trillion of inflationary Subprime loans went to CREDIT WORTHY. .

The Wall Street Journal commissioned analysis has confirmed that the epidemic of irresponsible & predatory subprime loans that has fueled astronomical real estate inflation, and threatens to bring down our financial system went, NOT to those who could not merit better financing, but to credit-worthy purchasers with high credit ratings.

Subprime Debacle Traps Even Very Credit-Worthy


As Housing Boomed,
Industry Pushed Loans
To a Broader Market


By RICK BROOKS and RUTH SIMON, Wall Street Journal


One common assumption about the subprime mortgage crisis is that it revolves around borrowers with sketchy credit who couldn't have bought a home without paying punitively high interest rates. But it turns out that plenty of people with seemingly good credit are also caught in the subprime trap.

An analysis for The Wall Street Journal of more than $2.5 trillion in subprime loans made since 2000 shows that as the number of subprime loans mushroomed, an increasing proportion of them went to people with credit scores high enough to often qualify for conventional loans with far better terms.

In 2005, the peak year of the subprime boom, the study says that borrowers with such credit scores got more than half -- 55% -- of all subprime mortgages that were ultimately packaged into securities for sale to investors, as most subprime loans are. The study by First American Loan Performance, a San Francisco research firm, says the proportion rose even higher by the end of 2006, to 61%. The figure was just 41% in 2000, according to the study. Even a significant number of borrowers with top-notch credit signed up for expensive subprime loans, the firm's analysis found.

The numbers could have dramatic implications for how banks and U.S. regulators address the meltdown in subprime loans. Major banks, mortgage companies and investment firms have been rocked by billions of dollars in losses as shaky subprime loans -- which typically carry much higher, or rising, rates and other potentially onerous costs -- have increasingly gone into default. Many analysts expect hundreds of thousands more loans could go bad over the next several years. The Bush administration and major financial institutions are working on a plan to freeze interest rates of certain subprime loans in hopes of avoiding an even bigger meltdown.

The surprisingly high number of subprime loans among more credit-worthy borrowers shows how far such mortgages have spread into the economy -- including middle-class and wealthy communities where they once were scarce. They also affirm that thousands of borrowers took out loans -- perhaps foolishly -- with little or no documentation, or no down payment, or without the income to qualify for a conventional loan of the size they wanted.

The analysis also raises pointed questions about the practices of major mortgage lenders. Many borrowers whose credit scores might have qualified them for more conventional loans say they were pushed into risky subprime loans. They say lenders or brokers aggressively marketed the loans, offering easier and faster approvals -- and playing down or hiding the onerous price paid over the long haul in higher interest rates or stricter repayment terms. . . . . . . . . .

. . . . . . . . .



complete article at http://online.wsj.com/article/SB119662974358911035.html?mod=hps_us_whats_news

Major banking institutions have not been content to transform the industry into predatory, loan sharking parasites whose unconscionable fees and rates have been facilitated by "bankruptcy reform".

We now see that the real estate bubble which has made housing un-affordable has been built upon an epidemic of irresponsible predatory loans, not to the non-credit worthy, but to anyone who could be enticed to buy property at an unsustainable price.





Who will benefit, and who will lose, as the feds sustain astronomical real estate prices with a bailout?

[napi21]

159. Maybe I'm missing something, but as I understand it, there's NO

tax money involved in the proposed temporary solution to the current foreclosure problem, and it's certainly NOY a bailout!

I'm listening to cspan right now, and they are discussing the different proposals. They are asking the LENDERS to freeze the interest rates instead of raising them when they are supposed to reset in 2008 is one of the proposals. Another suggestion is that the lenders renegotiate the current loans instead of looking to reposession. The other statement I heard the other day was that there would be NO HELP for anyone if the property wasn't their primary residwence.

[blondeatlast]

170. Exactly. None of the proposals I've read concerns handouts to the

homeowners. The banks may take a hit, but if they didn't see this coming because they were so starry-eyed listening to Greenspan, they deserve it, oh yes, they deserve a hit.

[SoCalDem]

163. Bailing out SOME homebuyers is wrong..

Flippers...sorry no bailout

no-down/fake income data...sorry no bailout

5K sqft homes for a couple...sorry no bailout

using your house as an ATM...sorry no bailout

second homes...sorry no bailout

[Horse with no Name]

176. I agree with this

I have a very nice house. If my house sat in a prosperous town, it would be more than I could afford.
Instead, I live in a shithole-going nowhere town.
I have two options.
I can live in a nice place and find a cheap house which isn't the standard of living I am accustomed to...OR...I can live in a less desirable place and have a nice home to come home to.
I chose the latter, knowing that I couldn't afford both.
It is about making responsible decisions which is what I think the OP was trying to convey.
When you make $12 an hour, a reasonably responsible person KNOWS that a house that costs $250k or more is unattainable.
What I find reprehensible is, that IF I went in to buy a car at $12 an hour salary, I would walk out with a less than $10k car even though I might have preferred a $25k one. However, the bank would have told me that wasn't possible.
So...the next question, is why did the people that financed these homes look the other way?
A house is a bigger investment than a car, yet I can pretty much guarantee that you will NOT get more car than you can afford.

[Beelzebud]

167. Yes, our precious tax money is better spent killing people in Iraq.

[LanternWaste]

179. I don't think helping out anyone in trouble is morally wrong...

As for me, I don't think helping out anyone in trouble is morally wrong.

Helping a person is one thing. Accountability is another thing. Two different problems to address.

The three people I know who have lost their home in the last six months didn't buy big homes-- they were simply conned.


If people losing their homes were a relatively rare occurrence, I might be tempted to put the brunt of the guilt on the purchaser. yet when it begins to happen on a scale of the magnitude we've been seeing for the past nine months, I'm forced to believe that some wide-scale conning (predatory) practices were not merely tolerated, but condoned. That being the case, I can't in good conscious place the blame on the shoulders of those who were duped.

[Javaman]

dupe nt

[Javaman]

182. dupe nt

[Javaman]

183. dupe nt

[Javaman]

184. dupe nt

[Javaman]

186. So bailing out the stupid is poor politics and bad for the nation?

Look around, the nation doesn't seem to be doing gangbusters right now, as a result of this mess.

But, sadly, the reality is this. we can't bail them out even if we wanted to.

Where is the money going to come from? If we magically had the money and it would still effect the deficit in a negative way, however, I would say sure go for it, the hurt would be temporary and we would bounce back and prevent a nation wide crisis. If only.

However, we don't have the money because of the war and morons* spending habits so, as a result, where or not you think it's good or bad, the reality is, it will make things, deficit wise, a hell of a lot worse.

That being said, if we were only to help out the smart people in society, there would be no need to help them in the first place because they are smart.

So therefore, we should help them.

The temporary freeze on the mortgage rates is stupid, that will do far more long term hurt than good. They need to be frozen until the economy determines that unfreezing them will not cause the economy any harm.

that is a bail out.

Giving more money to anyone that doesn't know how to manage it isn't a bail out but stupidity.

[flashl]

214. Is bailing out Countrywide Stupid?

Sen. Schumer questions Countrywide borrowing

At the end of September, Countrywide had borrowed $51.1 billion from the Federal Home Loan Bank system -- a government-sponsored program.

"Countrywide is treating the Federal Home Loan Bank system like its personal ATM," Schumer, a New York Democrat who heads the housing panel of the Senate Banking Committee, said in the letter. "At a time when Countrywide's mortgage portfolio is deteriorating drastically, FHLB's exposure to Countrywide poses an unreasonable risk."

Countrywide is hemorraging.

Rush to Pull Money From Countrywide Bank

Anxious customers jammed the phone lines and Web site of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.

Countrywide Financial Corp., the biggest home-loan company in the United States, sought Thursday to assure depositors and the financial industry that both it and its bank were fiscally stable. And federal regulators said they weren’t alarmed by the volume of withdrawals from the bank.

What do you think? Giving more money to Countrywide that doesn't know how to manage it is stupidity?

[Javaman]

216. Bailing out the corps is, letting the little guy twist in the wind is bad.

The corps knew perfectly well what they were doing and got greedy.

The people just wanted a home. Yeah, some went in over their heads. But given the fact that we are an economy build upon purchasing power, if you eliminate a huge section of the population from that equation, you get what we have now.

Help the people and freeze the rates permanently.

Believe me, the corps will survive. And if they don't, then that gets rid of companies that deal in less than ethical practices.

[rockybelt]

188. Hey, twosparkles

How about this. You buy a home while everything is going really well. You get an adjustable rate because it seems like the right thing to do.

You lose your job and you can't find another one so you start working for yourself. No crying here, just trying to make a living. You work and you work maybe 16 hours a day and you finally start to get even.

Your wife has a stroke and she gets fired from work, where the stroke occurred, because she left without permission. I have COBRA insurance at this time, so that helps. She has to undergo 90 physical therapy sessions(90 because that's all that is allowed)and eventually qualifies for 100% disability.

It takes one year from the date you request social security disability to receive that benefit that you have paid into all of your working life.
It takes another year before you can qualify for medicare. So for two years you have to make do.

We had some money put away but after two years it had all been eaten up. Our insurance ran out and I had to neglect work to care for her.

We eventually had to file bankruptcy and we lost our home of fifteen years basically because house payments kept going up and the predatory lender would not accept anymore late payments.

So, you can kiss my ass and go straight to hell with your holier than thou bullshit.

[HughMoran]

192. Excellent post!!

Your post captures my anger at the seeming holier-than-thou heartless attitude of some here - all in the name of politics!!!

DISGUSTING!

[rockybelt]

206. It is disgusting

People have fallen onto hard time through no fault of their own and some people just want to look down their noses upon their sorry asses. Sounds like a repugnant to me.

[OzarkDem]

218. It happens every day

No one plans for these kinds of catastrophes and people should at least expect Dems to be sympathetic enough to help out and support changes to protect homeowners.

[mzmolly]

202. Hear hear!

Sorry about your situation. We own a home, but we're one minor tragedy away from being renters again.

[madfloridian]

226. Thumbs up on your post. Most people live one paycheck away from disaster.

And most often it is not their fault. Some live beyond their means, but the tragedies going on now are far deeper and more tragic than that.

Some teachers in Florida not getting paid for a while with the funds frozen.

Too much tragedy.

:thumbsup:

[CoffeeCat]

234. You can be as hostile to me as you want...

...but by being hostile and by piling on me and making me out to be the bad
guy, you are totally missing my point.

First off, never EVER get an adjustable-rate mortgage. I only wish that I could be
a mortgage lender. I do CARE about people. I would never allow anyone to take out
a mortgage like that, especially within the past several years---because interest rates
were rock bottom. Where did everyone think those rates were going to go???

Maybe I should get into the mortgage business, so I can tell people--"Buy only what
you can afford. I will not give you a mortgage unless you have stable income that
qualifies and you must show me that your housing expenses will not exceed 25 percent
of your total income. It's not worth it, hurting yourself and causing yourself pain,
just to be a homeowner. Better to stay in an apartment, save and purchase when it's
better for you to jump in."

I'm being positioned as some kind of heartless vampire. I know that's not true,
but I'm not running for homecoming queen of DU--so I'll just stick to my principles
and hope that people stop acting like lemmings and piling on me.

I'll say it for the 100th time, as I said in my initial post. I am talking specifically
about people who know they cannot afford the mortgage that they are signing up for.
They buy a 500k house, knowing they can afford the interest-only payments the first
year, but not the payments after they double or triple. This is not about people
who fall under hard time or lose a job. That's not what I'm talking about.

There was a major housing boom in this country that was spawned by people buying
up or buying very large homes--as they took advantage of really low interest rates.

This fueled our country's vacuous obsession with materialism. I'm against a bailout,
because all a bailout does is keep people in houses that they can't afford and delays
their inevitable downfall. It delays self awareness and growth. I don't give a rip
if someone lives in a 50k house an apartment or a mansion. The independent variable is...
for God's sakes take care of yourself. Don't make yourself vulnerable to the corporations
and the banks who will rob you of your life! Read your contracts, don't be in denial
about what happens to your payments in two years--because you are destroying your
life and allowing yourself to become enslaved.

I want people to be FREE and at peace. They can't have those things if they enslave
themselves because they are buying into society's sick materialism and shallow values.

My message is about empowering people.

[Tesha]

249. There is one situation where your advice is wrong.

> Maybe I should get into the mortgage business, so I can tell people--"Buy only what
> you can afford. I will not give you a mortgage unless you have stable income that
> qualifies and you must show me that your housing expenses will not exceed 25 percent
> of your total income. It's not worth it, hurting yourself and causing yourself pain,
> just to be a homeowner. Better to stay in an apartment, save and purchase when it's
> better for you to jump in."

There is one situation where your advice is wrong.

In an inflationary economy (where prices *AND* wages are both
rising), it's far better to over-extend yourself to get into
a house *NOW* than to wait for some time in the future when
you'll theoretically be able to better afford it. Buying that
first house gets you landed in an investment that:

a) will go up in value (in that inflationary market) and

b) be paid for using future, inflated (less valuable) dollars.

Once you're invested, you have an asset that will rise
along with the rest of the market. Your down-payment
savings and investments will almost never do this,
leaving you ever farther-behind the ability to first
buy-in to the market.

NB:

We do not live in such times right now. While prices are
rising rapidly, wages are stagnant. So my advice may have
applied up until, oh, December 12th 2000 or so, but it
does *NOT* necessarily apply today.

Tesha

[debbierlus]

195. I agree that people need to be responsible AND this goes beyond overspending

Many people took the ONLY loan they could qualify for to get a house....Blinded by the dream of owning their own home, they
hoped/prayed/believed blindly that somehow they would be able to meet the payments. The homes I am seeing foreclosed on in my area are not what you are describing at all.

They are meager houses. Not in the best neighborhoods, nothing fancy. What is the real problem is that home ownership has become such a hard goal to obtain & lenders capitalize on people, charging the most obscene rates, to the people who can least afford it.

Bankers are turning into loan sharks. Interest rates for a primary residence should not be allowed to be greater then 8 percent maximum.

[rAVES]

205. I would agree that Common Snob Syndrome should not be subsidized by working the Poors Tax dollars.

[L0oniX]

208. They have free first time home buyer classes which I attended for my 1st home purchase.

I guess they skipped school.

[Karenina]

211. A most unfortunate, "compassionate conservative" post.

:-( :puke:

[Tesha]

241. You know, a lot of us did the right thing.

> A most unfortunate, "compassionate conservative" post.

You know, a lot of us did the right thing. Mr. Tesha
and I passed up a wonderful house *ON TELEGRAPH HILL
IN SAN FRANCISCO* because we didn't think we could
afford it. Oh, the real estate agents said we could,
and some banks were saying that we could, but *WE*
didn't think we could. So we stayed in our plenty-
comfortable enough house in New Hampshire, even though
Mr. Tesha has wanted to move to The City for, oh, 30
years of his life or so.

I have *NO SYMPATHY* for the folks who, when presented
with the same sort of choice as we had, made the opposite
decision. "We can't afford it? So what; the bank's
willing to make it happen so let's take advantage!"
Economics may not have quite the same rigorous laws
as, say, physics, but if you don't make enough money
each month to pay the stated eventual interest on a
loan (let alone property taxes, hazard insurance, and
still have a bit left over for, say, food, heat and
the electric bill), you don't have any business
signing the mortgage note.

Were some people mislead? Sure, some were; the naive
were probably manipulated and maybe they believed someone
when they were told that the note didn't really meam
"ARM" where it said "Interest will adjust...". And I'll
gladly excuse people who were able to make the payments
until a job loss or an illness threw the budget into
the toilet.

But that's not what we're talking about for the vast
majority of these folks; we're talking about people
who knew it was 'too good to be true", went ahead
anyway, and, what-da-ya-know, it was. Their actions
helped hyper-iinflate the housing market, making it
so that your average working Joe couldn't afford a
shoebox any more and the rest of us were overpaying
for our houeses, and now these homeowners expect us
to bail them out of their deliberate malfeasance?
The hell with *THAT* idea!

Tesha

[Karenina]

276. I LOVE the way you set yourself up

as the arbiter of who is "worthy," or "deserving" and who is not. Beacon of right thinking and behaviour that you are I do wish all the best for you and your family. May no circumstance, self-inflicted or beyond your control ever visit you.

[Tesha]

293. Did you miss this sentence in my reply?

> I do wish all the best for you and your family. May no circumstance,
> self-inflicted or beyond your control ever visit you.

Did you miss this sentence in my reply?

T> And I'll gladly excuse people who were able to make
T> the payments until a job loss or an illness threw
T> the budget into the toilet.


My reply was aimed at those many folks who looked at
the housing situation, and simply made the cold calculation
that they could probably get away with something, and
the rest of us were rubes for living by the rules and
within our means.

And now, the chickens have come home to roost and we're
somehow expected to bail these assholes out? Well, "No."

Tesha

[frankenforpres]

291. common sense

it's in short supply

[Tesha]

294. Thank you. (NT)

[Hosnon]

217. What does it have to do with morality? (nt)

[Rex]

219. Taking advantage of someone else always has comes from

unethical busniess practices and is the way capitalism works, unregulated. I will NOT blame the workers of this country for what they thought was possible. We have debt and unregulated spending! Fuck the responsiblilty of government! Screw that! We give business owners a chance, to make some money and drop the liablility in the taxpayers pocket!

I call it double jeapordy bailouts at triple the taxpayer payouts! Our new DooDoo Economic plan for 2008! Money, we have you don't have!

[Danger Mouse]

221. Corporations are preying on people left and right...

and dragging this country into the toilet for THEIR bottom line, yet this thread is rife with sympathy for them?
:puke:

[TexasBushwhacker]

225. I got news for yous

The only reason "bailing out" homebuyers is even up for discussion is to cover the asses of the banks and mortgage companies that gave them the loans. The lenders are covered for 20% of the value of the property by down payments and mortgage insurance. As long as the property doesn't drop more than 20% in value, the lender does just fine by foreclosing. The problem right now is that lenders have provided 100% loans in markets where home values are declining. Homebuyers are walking away from their mortgages because their payments have gone up with ARM's and they can't refinance because their homes are worth less than what they paid for them. We had the same situation in the early 80's. As far as I know, there was no government bail out for homebuyers at the time, and lenders ended up eating millions of dollars from having to sell foreclosed homes at deep discounts.

As a single school teacher, I bought one of those foreclosures with a fixed rate mortgage and lived in it for 12 years. At one point, I was unemployed and got behind in my payments. Rather than foreclose, my lender allowed me to refinance. Lenders could do that now too, but so many of the loans have been packaged and sold several times over. IMHO, any bail out that happens is going to be because it benefits the lenders. This is the savings and loan scandal all over again.

[lonestarnot]

231. That's just the problem,

"upper-middle class people who bought more house than they
could afford," they were run through like so many ants on a trail w/o consideration as to whether they could afford or could not afford them. hmmmf. bail out! NOW!

[high density]

235. Act like an ant, expect to get squashed like one.

Sorry but I don't think the government should be bailing out people because of stupidity or general lack of curiosity. No doubt some were swindled into inappropriate mortgage products, but every buyer shares some blame in regards to emotion or ignorance. The "gotta have it" and "keeping up with the Joneses" consumerism mentality of our country doesn't help. However, it doesn't take too much effort or brainpower before signing the line on the biggest financial transaction of your life to do some research and calculations to find out whether a mortgage of x hundred thousand dollars makes long term sense.

[Oerdin]

239. Dumb.

Following your advice would see some where around 1/5 of Americans becoming homeless after their houses get foreclosed. That's just dumb. If you want to change lending practices then the proper thing to do is REGULATE the banking industry to prevent such lending practices before it gets as bad as it has. Lack of government over site and proper regulation was the big problem.

[Tesha]

242. They wouldn't be left homeless.

> Following your advice would see some where around 1/5 of Americans
> becoming homeless after their houses get foreclosed.

They wouldn't be left homeless. Many would simply
go back to renting. Others would find that because
the housing market now has a glut of (foreclosed)
houses available, the price of the housing stock
would adjust downwards ("drop") and they could
re-enter the market in a house more suited to
their budgets.

Reality is a better place to live than the house-
poor fantasyland many of these folks bought into.

Tesha

[JVS]

260. Oh the horror.

Having to rent, like the filthy proles

[dysfunctional press]

247. if bailing out homeowners is wrong, why is bailing out poor parents good?

deciding to have a child is an even BIGGER financial decision than buying a house- if people who can't afford to have a child make a decision to do so anyway, wouldn't it be just as morally wrong to bail them out as well?

[cgrindley]

250. Screw them... let's get property prices back down and let's teach people

to be a little more responsible.

I have zero sympathy for these idiots.

[JVS]

259. word!

[B Calm]

252. My dad brought me up right. He always said if you can't afford it,

don't but it!

[SyntaxError]

261. Poor advice...

I prefer, "If you can't afford, then get someone else to pay for it"... hehe not really, but I find it amusing.

[youthere]

253. On some level, I agree with you...

I'm not a financial genius and I don't know the ins and outs of the realty game. But it seems to me there has been no effort to regulate unscrupulous lenders, either. Yes people should be responsible for the debt they assume but I don't think it's as cut and dried as some people would insist.

My neighbors are currently facing foreclosure due to a subprime loan. They knew exactly what they were getting into. They had some black marks on their credit, but had saved enough for a small down payment. The house is not grand but it's adequate. They knew because of their credit history they weren't going to get approved for a conventional mortgage (they had tried) so they went the subprime route. They could afford the teaser rates, and they knew their rates were going up after 18 months, and they could afford the payment increase too..so it seemed like a good way for them to finally get a home of their own. What they didn't bank on was the husband getting laid off. Now their home is worth less than what they are mortgaged for. They can't afford to keep it, and they can't afford to sell it. They're kind of stuck. He did manage to get a new job just recently, but they don't know if it's enough to save the house.

Contrast that, to a guy that works for my husband (my husband is not his employer, only his manager). He makes $14 an hour, and his wife works at a convenience store. They were able to secure a $220,000 mortgage at sub-prime rates. When they bought the house a couple of years ago, their initial teaser payment was allready twice what my husband and I pay on our house.They could barely afford the initial payments. When they were in the process of buying the house, everyone kept telling them they were crazy. My husband even asked him "What are you going to do when your payment goes up?" and the kid just said he'd worry about it when the time came. Well the time came and now he and his wife are stuck. They are losing their house and are going to have to move in with his parents. They place ALL the blame on the lender, and none on themselves for living WAY beyond their means. They were stupid, wanting it all and not giving a thought to how they would pay for it, but that lender knew damn well they were going to default.

So I agree with you..but I also think the lenders must have some accountability, and there must be some sort of regulation, and as of yet there is none. There isn't a day that goes by that my husband and I don't receive a phone call or a mail offer to "refinance" at some ridiculously low rate that can't possibly be legitimate.

[bigtree]

262. Work hours cut, utilities and gas crippling, a few months behind on mortage, and now, foreclosure

I've got a split level. Taxes doubled in the 8 years I've lived here. Utilities, fees . . . through the roof. I got the letter from the attorney yesterday. I've got about one month's payment, trying to decide what to do with the money. The attorney processing the foreclosure is to give me a total of what it takes to reinstate the loan. I understand that the attorney fees can be ridiculously high. I'm bracing for who knows what in additional fees. I've got a chance for a loan at my credit union. I hope for about $5,000, but I don't know how this foreclosure action has already affected my credit and what that will do to the loan application. I've been leaning heavily toward filing Chapter 13 bankruptcy to stop the foreclosure before it goes too far. I don't trust applying for a lender plan to adjust the loan and schedule payments as I've been turned away before for being just over the income limit and I'm afraid they'll delay turning me down leaving me without enough time for other options.

But, I'll tell you this. I blame almost all of my indebtedness to the spike in utilities where I live, both electric and gas and oil. If the state or federal government has some plan which could help me keep my home, I feel I deserve it. I've worked all of my adult life and have paid taxes. Corporations get bailouts from the government (paid from tax revenue) by virtue of the money they hold, no matter how indebted they are. It just makes sense to me to expect them to accommodate individuals who are at risk of losing their homes, especially since they're enabling these energy vultures to rob us blind.

[JuniperLea]

280. Sorry to hear... that sucks...

But it's not the same as the sub-prime fiasco.

I blame Bush for it all. Deregulation does not work.

Have you tried renegotiating with your current lender?

[bigtree]

283. I'm going back to them, but I'm busy lining up my other options at the same time

not trusting the lender completely . . . but I realize they may not be so eager to take the house as they would be to keep me on the dole, so . . .

[JuniperLea]

285. Yep, they have a better chance of getting less money from you...

Than trying to foreclose. Especially if they sold your loan to an investment firm.

[michaz]

295. Yes, it is the same to some extent!

Many of these sub-prime people could afford their homes if they didn't have to pay so much for their utilities, etc.

[JuniperLea]

297. Oh, brother

Those costs are part of being able to own those homes. :eyes:

[LSK]

266. SINCE WHEN IS HAVING A SELFISH I GOT MINE, I AM SMARTER THAN YOU ATTITUDE

A MORAL VALUE?????

:wtf:

[mzmolly]

271. Excellent question? I presume it came after Hillary Clinton suggested a remedy?

I lean Edwards myself but I can't help but think some here "protest too much?"

[B Calm]

272. I don't understand why you are putting down the OP. People do make

stupid decisions in life, especially when it comes to money!

[minavasht]

278. I agree

I'm in the process of buying a house in pre-foreclosure.
We checked the court files for the current owner - this is her 3th foreclosure in 6 years!
She got her current mortgage from the same bank that foreclosed on her 2 years ago.

[HughMoran]

282. So all homeowners must be like this one

Freepthink much?

[minavasht]

296. How many foreclosure court files have you researched?

Do me a favor, honey and spend an hour looking trough them. Then come back and tell us if 90% of the borrowers were misled or they were just stupid or greedy.
You can see the actual mortgage papers they signed and trust me - it says right there "Adjustable Rate Mortgage".

[nonconformist]

298. I've stayed out of most of these discussions... but, we were foreclosed on last year

About this time last year, actually.

We have a fixed, prime rate 30 year mortgage and we bought what most people would say is a "cheap" house, and one that was well below what we qualified for.

You know what? Shit happens. My husband was laid off for months and couldn't find any work. Eventually he found something, but at a big paycut. We fell behind on the mortgage after expending all of our savings. We were working with the mortgage company to tack on the missed payments onto the end of the loan when we got the wonderful Christmas surprise of the sheriff at our door delivering foreclosure papers. Something got crossed with the mortgage company, but even so after it entered foreclosure we couldn't get the agreement that we were promised previously. They then wanted an exorbitant amount of money to stop it. Things were improving for us financially, and my husband got a better job, but what was done was done, so to speak. Long story short, we had to file Chapter 13 to save our home. It was worth saving because renting would not be cheaper, we had great loan terms and a small amount of equity in the house.

Being in a Chapter 13 is certainly no fun, and it will be a pretty barren Christmas around here, but there is a light at the end of the tunnel now.

I just wanted to point out that not everyone who is a "statistic" in this foreclosure mess is someone who bought a McMansion they couldn't afford with an ARM and 0 down.