Whatever happened to personal responsibility?

[Joe Miner]

http://www.msnbc.msn.com/id/37444899/ns/bu...new_york_times/

 

 

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

 

WTF? How are those even close to the necessities of life? That's the **** you give up to pay for the necessities...like your house.

[Jim in Anchorage]

http://www.msnbc.msn.com/id/37444899/ns/bu...new_york_times/

 

 

 

 

WTF? How are those even close to the necessities of life? That's the **** you give up to pay for the necessities...like your house.

I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

Pretty well sums it up. Never me.

[DC Tom]

Our loan officer has advised us to do just that: stop paying the mortgage, not because we can't pay it, but because the house isn't worth what we paid. My response was simply "!@#$ off. We accepted responsibility for the loan."

 

I hope every one of those irresponsible people in that article loses their homes post-haste.

[RkFast]

That article makes me so mad, I cant see straight.

 

Its enough to make me ROOT for those "greedy bankers" to kick those !@#$turds out on their asses.

 

Let them go live on their !@#$ing "airboat"

 

!@#$.

[IDBillzFan]

Leave it to MSNBC to run a NYT story glorifying the concept of ignoring your mortgage while still living in the house, all because you were not forced to sign papers you didn't read.

 

How great is it that they can spend 18 months living in a house you don't pay for while also collecting unemployment for over 24 months.

 

America is great country, no?

[Magox]

I don't see the major problem. At the end of the day, their credit is going to get destroyed for close to a decade, and most of them won't have an opportunity to buy another home until then. Also, many people put down payments on those homes and they are going to lose it. To say that they are getting a free ride is nonsense. The banks aren't taking back those homes because they don't want them. They don't want to flood the market with too many homes, knowing that it would further depress home prices.

[Magox]

Another thing, many of those loans shouldn't of been given in the first place, the banks are just as responsible if not more so than the homeowners. One would expect consumers to lie and try to get themselves into a home that they probably shouldn't be in, but for the banks to allow this to happen, is unacceptable. The blame lies mainly with the banks, and for the government for having a system where the taxpayer at the end of the day ends up footing the bill.

[bills_fan]

I don't see the major problem. At the end of the day, their credit is going to get destroyed for close to a decade, and most of them won't have an opportunity to buy another home until then. Also, many people put down payments on those homes and they are going to lose it. To say that they are getting a free ride is nonsense. The banks aren't taking back those homes because they don't want them. They don't want to flood the market with too many homes, knowing that it would further depress home prices.

 

 

I think the reasons are far more nefarious. Lets think about this for a second....banks securitized the 1st mortgage and sold it off to pension funds, institutions etc. They act as mortgage servicers (we'll come back to this) on that 1st motgage (who do you pay each month). However, a large percentage of mortgages were done with 1sts and 2nds (90/10/10), not to mention home equity loans or lines of credit. In many (most?) cases, the banks hold the 2nds/home equity line/loan as an asset on their balance sheet, or in certain cases, off-balance sheet. The banks have that asset marked at $0.98 or $0.96 on the dollar. As soon as the 1st mortgage is foreclosed upon, the second becomes instantly worthless. The 2nd is always subordinated in that if there is not enough money to pay off the 1st lender, the second gets bupkus. If enough 2nds go belly-up, say goodbye to the bank. Take a look at how many banks the FDIC closes on a weekly basis and look at the asset haircut (loss) to the FDIC fund....its 40-50% in most cases. That 40-50% if off what the bank is reporting as "good" capital. Now, back to the servicers...a terrible conflict of interest when the banks also own a 2nd. Lets say the homeowner decides to get the free ride, as the article suggests and they have a 2nd/home equity line/loan. The banks have a vested interest in keeping the 1st as a performing loan, so that the 2nd stays a "good" asset. My theory: the banks are paying the 1st to perserve their balance sheet marks. The party ends when the cash flow runs out.

[Joe Miner]

Another thing, many of those loans shouldn't of been given in the first place, the banks are just as responsible if not more so than the homeowners. One would expect consumers to lie and try to get themselves into a home that they probably shouldn't be in, but for the banks to allow this to happen, is unacceptable. The blame lies mainly with the banks, and for the government for having a system where the taxpayer at the end of the day ends up footing the bill.

 

I disagree with the part about the blame being mostly on the banks. But I'm just nitpicking at that point, because this whole thing disgusts me.

 

Shame on the banks for offering and accepting ridiculous loans. They should have had to suffer the same kinds of consequences you or I get when we take out a loan we can't pay.

 

But at the end of the day, if you or I can't afford something, we don't buy it. If I make $50,000 a year, I cannot afford a $500,000 house. No one makes me sign a loan that makes it look like I can. I signed that loan because I wanted to, I wasn't forced. If I don't know immediately that I can't buy a $500,000 with no down payment grossing $50,000 a year in total income, then I shouldn't be buying a house to begin with. And my employer should seriously consider how valuable an employee I am if I'm that stupid. I should probably also receive daily beatings until I wise up.

 

Stupid greedy !@#$s making deals with other stupid greedy !@#$s.

 

"I'm surrounded by !@#$s" - Spaceballs

[Magox]

I disagree with the part about the blame being mostly on the banks. But I'm just nitpicking at that point, because this whole thing disgusts me.

 

Shame on the banks for offering and accepting ridiculous loans. They should have had to suffer the same kinds of consequences you or I get when we take out a loan we can't pay.

 

But at the end of the day, if you or I can't afford something, we don't buy it. If I make $50,000 a year, I cannot afford a $500,000 house. No one makes me sign a loan that makes it look like I can. I signed that loan because I wanted to, I wasn't forced. If I don't know immediately that I can't buy a $500,000 with no down payment grossing $50,000 a year in total income, then I shouldn't be buying a house to begin with. And my employer should seriously consider how valuable an employee I am if I'm that stupid. I should probably also receive daily beatings until I wise up.

 

Stupid greedy !@#$s making deals with other stupid greedy !@#$s.

 

"I'm surrounded by !@#$s" - Spaceballs

This isn't a case of one size fits all, for many people they look at it from a business perspective, and if they see that there is virtually no chance of recouping their funds any time soon and they decide to let it go, as a business would, then I don't see the problem with it. At the end of the day, his initial investment plus his credit rating will be gone.

 

The onus is on the bank more so than the consumer, they are the one's lending the money, they are the one's that the bondholders and other investors trusted in making the decision when it comes to the underwriting. If they want the home back, no one is stopping them, unless of course there is some federal or state moratorium for forclosures, but in most cases, they are free to forclose upon the house when they please.

[meazza]

I don't see the major problem. At the end of the day, their credit is going to get destroyed for close to a decade, and most of them won't have an opportunity to buy another home until then. Also, many people put down payments on those homes and they are going to lose it. To say that they are getting a free ride is nonsense. The banks aren't taking back those homes because they don't want them. They don't want to flood the market with too many homes, knowing that it would further depress home prices.

 

Depends.

 

Isn't the whole basis of a 2/28 subprime that there is virtually no cash down? Isn't that how Minsky formulated his Ponzi unit where in a growing market, you're simply long a call on your property? If not, let it expire worthless and your credit is screwed?

 

Also, given the way the American politics have functioned, wouldn't the next step be to allow those who destroyed their credit get it back through some dumbass government program?

[Chef Jim]

We forclosed on our first home that we bought at the peak of the last housing boom (1990). The value had dropped to less than half of what we owed but we did not have one of those crazy loans, they didn't exist then as far as I can remember. We could afford our payments we just didn't want to live in that neighborhood anymore (we had been there for 7 years) so we made a business decision to walk away. We didn't pay our mortgage for 6 months but instead of blowing it we saved every penny. We moved and rented for a few years, worked hard to get our credit back and bought a new place 5 years later with great credit.

[Magox]

Depends.

 

Isn't the whole basis of a 2/28 subprime that there is virtually no cash down? Isn't that how Minsky formulated his Ponzi unit where in a growing market, you're simply long a call on your property? If not, let it expire worthless and your credit is screwed?

That's exactly my point. Who's dumbass idea was it to allow people with less than stellar credit buy a home without a down payment?

 

Thank youuuu

[meazza]

That's exactly my point. Who's dumbass idea was it to allow people with less than stellar credit buy a home without a down payment?

 

Thank youuuu

 

I have no idea...

 

But if you would look at for example, the Canuck economy, there was lower lending standards just as their was south of the border, just not AS bad.

[Dan]

We forclosed on our first home that we bought at the peak of the last housing boom (1990). The value had dropped to less than half of what we owed but we did not have one of those crazy loans, they didn't exist then as far as I can remember. We could afford our payments we just didn't want to live in that neighborhood anymore (we had been there for 7 years) so we made a business decision to walk away. We didn't pay our mortgage for 6 months but instead of blowing it we saved every penny. We moved and rented for a few years, worked hard to get our credit back and bought a new place 5 years later with great credit.

And there's the kicker. The people in that article and I'd wager 90% of Americans in this mess don't know how or are unwilling to save. Taking the air boat out on weekends and going out to eat once a week is not saving money. Refinancing at the peak of the bubble to buy a new truck is not saving money. And there's the problem. People are unwilling to save; they're unwilling to live within their means. And, just as importantly, banks have been all too ready to enable this poor spending.

 

So, on one hand, I think the banks got what they deserve. They gave loans to people they knew couldn't afford them. Then they all repackaged and sold the loans so many times they lost complete ownership of it. Typically, only the bank wins by charging more and more interest. In this scenario, the consumer is winning because they're living mortgage free and taking advantage of the banking industry's complete idiocy. However, on the other hand, these people (on the surface at least) are doing absolutely nothing to actually improve themselves or their financial position. They're continuing to spend on luxury items when they should be saving and trying to take advantage of the low house prices and favorable interest rates now. So, in the end, they'll be right back in the same mess they've always been in.

[DC Tom]

That's exactly my point. Who's dumbass idea was it to allow people with less than stellar credit buy a home without a down payment?

 

Thank youuuu

 

No single person's idea. The banks could lend at those terms because people were willing to buy the mortgage off them; the government encouraged it indrectly by promoting home ownership as a right rather than a responsibility (and in some situations effectively required it - minorities in some cases couldn't be denied mortgages on basis of income because it was considered a discriminatory practice. ). Borrowers embraced it because it was "the only way" they could afford a home.

 

Ultimately, I blame the American people as a whole; we're a culture that over the past several decades has firmly embraced the belief that we can live beyond our means with no fear of repercussions (and when there are any, it's because someone else cheated us). The banks' practices, the governments' practices, and the borrowers' practices are just reflections of our entire culture's attitude.

[meazza]

No single person's idea. The banks could lend at those terms because people were willing to buy the mortgage off them; the government encouraged it indrectly by promoting home ownership as a right rather than a responsibility (and in some situations effectively required it - minorities in some cases couldn't be denied mortgages on basis of income because it was considered a discriminatory practice. ). Borrowers embraced it because it was "the only way" they could afford a home.

 

Ultimately, I blame the American people as a whole; we're a culture that over the past several decades has firmly embraced the belief that we can live beyond our means with no fear of repercussions (and when there are any, it's because someone else cheated us). The banks' practices, the governments' practices, and the borrowers' practices are just reflections of our entire culture's attitude.

 

 

The generation of entitlement.

[Magox]

Ultimately, I blame the American people as a whole; we're a culture that over the past several decades has firmly embraced the belief that we can live beyond our means with no fear of repercussions (and when there are any, it's because someone else cheated us). The banks' practices, the governments' practices, and the borrowers' practices are just reflections of our entire culture's attitude.

I don't disagree with that, however, if you are looking to specifically try to find more fault on one or the other, it's the banks responsibility to be the grown up, the consumer is like a child, they always want want want, and the bank has got to tell him, "no, you can't have this, you're not ready for it.".

 

The bank speaks on behalf of many, the consumer speaks for himself, one has more responsibility than the other.

[meazza]

I don't disagree with that, however, if you are looking to specifically try to find more fault on one or the other, it's the banks responsibility to be the grown up, the consumer is like a child, they always want want want, and the bank has got to tell him, "no, you can't have this, you're not ready for it.".

 

The bank speaks on behalf of many, the consumer speaks for himself, one has more responsibility than the other.

 

If the banks don't participate in the lending, they are missing out on "potential" profit opportunities and could have their management kicked out by the board.

 

It's a vicious circle of idiots...

[Magox]

If the banks don't participate in the lending, they are missing out on "potential" profit opportunities and could have their management kicked out by the board.

 

It's a vicious circle of idiots...

Making the prudent, wise investment decision will always trump the greed filled short term focused decision over the long haul....

 

Sure, if banks would of practiced good underwriting practices they would of made less than many others during the 2004-2007 period, but the losses they would of occured would of been far less than these same entities as well....

 

Yes, it is difficult when you have the stock and bondholders to appease, but that still doesn't excuse making a major costly mistake that caused many of these banks to shutdown just for the simple fact that they got way too greedy chasing after profits....