blzrul Posted March 27, 2008 Share Posted March 27, 2008 A friend and I got into a rather heated argument when I stated I was not sympathetic with people who were stupid and greedy and got over their heads with big mortgages for homes they couldn't afford. She insisted it was predatory lending as much as anything.... Then I read this. It starts out a tearjerker until you get into it a bit. Then you see 1) A $2,500 monthly payment which is INTEREST ONLY. You're better off renting 2) The mortgagee is a loan processor and should have known better My grandparents rented until they were in their 50's - THEN they bought a little house they could afford. My parents lived in a 3 bedroom apartment with 4 kids and finally bought a house after 9 years of marriage...when they could afford it. I have never taken out the "max" loan that I qualify for, in order to have wiggle room in event of an emergency. I could have a 6500 sq foot McMansion...but why? I don't need it, I don't want to clean it or maintain it...there's more to life. Bad stuff happens to people and some are genuinely victims, but this really ticks me off. I certainly understand the fear and anxiety she must be experiencing, and I feel very sorry for the children, but for crying out loud, this was so AVOIDABLE. Link to comment Share on other sites More sharing options...
bills_fan Posted March 27, 2008 Share Posted March 27, 2008 I totally agree. Anyone who agrees to something without reading the fine print or understanding the terms and conditions...well, I really have no sympathy. Should the commercial banks have required documentation to verify income...of course. For that, and other shady lending practices, they should bear some responsibility. But anyone who did not discuss all of the mortgage terms is either interntionally ignorant or full of it. They made the deal, now they have to get out. Problem is, if evnough walk away, the whole economy will go with them. Vaporizing trillions cannot happen, and the government know it. They are just trying to get through the election before creating Resolution Trust II to deal with the problem. Link to comment Share on other sites More sharing options...
KD in CA Posted March 27, 2008 Share Posted March 27, 2008 Bad stuff happens to people and some are genuinely victims, but this really ticks me off. I certainly understand the fear and anxiety she must be experiencing, and I feel very sorry for the children, but for crying out loud, this was so AVOIDABLE. Exactly. By my very rough math, that's about a $450,000 loan she has outstanding. $30k in payments was 43% of her gross income -- way too high for someone with apparently little or no savings (I don't even know what those metrics are supposed to be for interest only loans). Was she really not able to find a suitable home for 3 people in the $300-$350 range? And as you say, she knew better. If she couldn't afford a down payment, why not rent? She insisted it was predatory lending as much as anything.... I despise media created bullsh-- terms that people then use thinking they know what they are talking about. Predatory my ass. If you don't understand the terms of the document in front of you, DON'T F*&KING SIGN IT!! Link to comment Share on other sites More sharing options...
kegtapr Posted March 27, 2008 Share Posted March 27, 2008 I have never taken out the "max" loan that I qualify for, in order to have wiggle room in event of an emergency. When they told me the max I could borrow I laughed out loud. I like Ramen noodles, but not 7 days a week. Link to comment Share on other sites More sharing options...
GG Posted March 27, 2008 Share Posted March 27, 2008 You mean someone who was making $70K for a while, and ran out of life's savings in less than two months doesn't raise any alarm bells? (And people wonder why I act insensitive?) Link to comment Share on other sites More sharing options...
Chef Jim Posted March 27, 2008 Share Posted March 27, 2008 I hate to admit this but I was impropely sold a loan a few years ago. The terms of the loan were explained to me. I had several choices every month. The minimum payment, interest only, 15 year or 30 year. However it wasn't explained to me properly (I found out the guy who sold it to me was brand new). Did I read the whole document? Hell no, that's why I hire a mortgage broker. That's why people hire me...because they don't have time to read the whole legal document. They are in a position of professional trust, just as I am. I asked him several times if the minimum payment was a neg am. He said no. Ok, fine, I did the loan. I got my first payment coupon in the mail and immediately noticed that the minimum payment in fact was a neg am. I called the company and told him I was misinformed (I don't think the guy who sold me the loan actually lied, he probably had no idea what he was selling) and that I wanted out. The guy told me "you're in the financial services business, you should have know that". Wrong answer. I'm not in the mortgage business and these new types of loans where new to me. I called the lender directly and told them my story. They were very nice (World Savings) and explained the loan in depth. I was still pissed but there was nothing I could do. It was my fault and I knew it. I kept the loan for 12 months and refied paying a prepayment penalty. So were loans sold inproperly? Yes. Were the mortgage companies to blame for this? Yes. Where the consumers to blame? Yes. But I didn't B word, whine and complain to the goverment. I took my lumps and moved on. Link to comment Share on other sites More sharing options...
Alaska Darin Posted March 27, 2008 Share Posted March 27, 2008 "policy makers are making mistakes that will be apparent only in retrospect." A shocking take. Once again, not allowing the market to correct itself from artificial inflation pushes us further down the road to ruin. Link to comment Share on other sites More sharing options...
Chef Jim Posted March 27, 2008 Share Posted March 27, 2008 1) A $2,500 monthly payment which is INTEREST ONLY. You're better off renting Ummm, no, that's a $30,000 tax deduction that renters don't get. My question is what was she doing with her BIG refund that I guarantee she was getting? Big screen TV and trips to Hawaii anyone? Link to comment Share on other sites More sharing options...
erynthered Posted March 27, 2008 Share Posted March 27, 2008 I hate to admit this but I was impropely sold a loan a few years ago. The terms of the loan were explained to me. I had several choices every month. The minimum payment, interest only, 15 year or 30 year. However it wasn't explained to me properly (I found out the guy who sold it to me was brand new). Did I read the whole document? Hell no, that's why I hire a mortgage broker. That's why people hire me...because they don't have time to read the whole legal document. They are in a position of professional trust, just as I am. I asked him several times if the minimum payment was a neg am. He said no. Ok, fine, I did the loan. I got my first payment coupon in the mail and immediately noticed that the minimum payment in fact was a neg am. I called the company and told him I was misinformed (I don't think the guy who sold me the loan actually lied, he probably had no idea what he was selling) and that I wanted out. The guy told me "you're in the financial services business, you should have know that". Wrong answer. I'm not in the mortgage business and these new types of loans where new to me. I called the lender directly and told them my story. They were very nice (World Savings) and explained the loan in depth. I was still pissed but there was nothing I could do. It was my fault and I knew it. I kept the loan for 12 months and refied paying a prepayment penalty. So were loans sold inproperly? Yes. Were the mortgage companies to blame for this? Yes. Where the consumers to blame? Yes. But I didn't B word, whine and complain to the goverment. I took my lumps and moved on. Without getting into particulars. Any of the real estate moves that I've made over the last 25 years, I've had my pit bull attorney look over all the sh--. Its probably saved me thousands if not more. He fee's and his counsel have always been woth it. Link to comment Share on other sites More sharing options...
blzrul Posted March 27, 2008 Author Share Posted March 27, 2008 You mean someone who was making $70K for a while, and ran out of life's savings in less than two months doesn't raise any alarm bells? (And people wonder why I act insensitive?) Weeelllll - she's separated from her husband and who knows if he pays support. Many people don't have the savings they should. I just about DIED the time I read (within the past year) that most people over age 45 don't have more than $25k in retirement savings? Say WHAT? I'm freaked out about retiring on less than $2m. I don't live lavishly, but I am trying to plan ahead for horrendous healthcare costs, living into my 90's and no Social Security, in other words, worst case. I have saved for retirement since I was 21...usually the max....my mother taught me to "pay yourself first", meaning put something away right up front and don't even count it in your disposable income. I used to work with people that hit Sbux twice a day, that's about $10x5x4=$200 a month on hot milk with a little coffee flavoring! Good lord! The @#$@#$ people spend their money on. Yeah, it's their money, but you need to be responsible. An easy life is not guaranteed just before you're born on American soil. You still have to earn it, in most cases anyway. There are so many people in this country who work hard and do all the right things and still suffer, THEM I sympathize with. These people? Naw. Link to comment Share on other sites More sharing options...
blzrul Posted March 27, 2008 Author Share Posted March 27, 2008 Ummm, no, that's a $30,000 tax deduction that renters don't get. My question is what was she doing with her BIG refund that I guarantee she was getting? Big screen TV and trips to Hawaii anyone? But no equity in the home....I guess it depends on what you expect from a home. In the old days we were encouraged to buy a home because of the tax savings but those have been whittled down. When you offset the cost of maintaining a home vs the tax advantages, sometimes it's a wash. These days one is often better off renting.... Link to comment Share on other sites More sharing options...
Chef Jim Posted March 27, 2008 Share Posted March 27, 2008 Without getting into particulars. Any of the real estate moves that I've made over the last 25 years, I've had my pit bull attorney look over all the sh--. Its probably saved me thousands if not more. He fee's and his counsel have always been woth it. I know....it's my fault. My wife works for a law firm and I just never thought to do that. You know...guy thing. "Pffff, I can handle that." Link to comment Share on other sites More sharing options...
Chef Jim Posted March 27, 2008 Share Posted March 27, 2008 But no equity in the home....I guess it depends on what you expect from a home. In the old days we were encouraged to buy a home because of the tax savings but those have been whittled down. When you offset the cost of maintaining a home vs the tax advantages, sometimes it's a wash. These days one is often better off renting.... Sounds like somebody needs to buy a newer home. Link to comment Share on other sites More sharing options...
bills_fan Posted March 27, 2008 Share Posted March 27, 2008 "policy makers are making mistakes that will be apparent only in retrospect." A shocking take. Once again, not allowing the market to correct itself from artificial inflation pushes us further down the road to ruin. Too bad "Saint" Alan didn't allow us to take the pain in 2000-01. Keep shooting the economy up with drugs (low interest rates). No problem there. Now the pain has morphed into a full-blown infection that will cost dearly by the time this is over. Link to comment Share on other sites More sharing options...
blzrul Posted March 27, 2008 Author Share Posted March 27, 2008 Sounds like somebody needs to buy a newer home. Actually an older one is probably better. My first house was built in the 1920's. Updates were things I wanted, not things that broke. Next house was a 1950's house - again, needed cosmetics but structurally great. Then came my 1940's bungalow - solid house. I upgraded to circuit breakers etc, but stuff didn't BREAK. Then came the house built in 1988 - I bought it in 1994. New roof, foundation repair, air conditioning, ductwork, furnace, etc....Piece of sh-- construction. I paid 122 for it, added a 28k pool and spa, owned it for 10 years, sold it for 184. Probably cleared a $500 profit after all I had to put into it when stuff failed. I'm not even counting the cosmetic stuff I did like hardwood and ceramic floors, etc. Current house was built in 1993. It's better than the house in TX because construction codes are stricter but still...I am having to upgrade some of my plumbing from plastic to copper (plastic is just gonna leak eventually) and it's nickel-and-dime stuff, but it adds up. I would buy a 75-100 year old home any day. The fact that it's still standing is testament. I can guarantee you that much of the crap built (particularly down South) in the 80's and 90's will be crumbling in 30 years, or less. Link to comment Share on other sites More sharing options...
bills_fan Posted March 27, 2008 Share Posted March 27, 2008 BTW - LEH may be the next to suffer. Consider the article below, and the fact that April way out-of-the-money futures puts have traded substantially in the last couple of days. I hope not, but be prepared... LEH Next? Link to comment Share on other sites More sharing options...
Chef Jim Posted March 27, 2008 Share Posted March 27, 2008 Actually an older one is probably better. My first house was built in the 1920's. Updates were things I wanted, not things that broke. Next house was a 1950's house - again, needed cosmetics but structurally great. Then came my 1940's bungalow - solid house. I upgraded to circuit breakers etc, but stuff didn't BREAK. Then came the house built in 1988 - I bought it in 1994. New roof, foundation repair, air conditioning, ductwork, furnace, etc....Piece of sh-- construction. I paid 122 for it, added a 28k pool and spa, owned it for 10 years, sold it for 184. Probably cleared a $500 profit after all I had to put into it when stuff failed. I'm not even counting the cosmetic stuff I did like hardwood and ceramic floors, etc. Current house was built in 1993. It's better than the house in TX because construction codes are stricter but still...I am having to upgrade some of my plumbing from plastic to copper (plastic is just gonna leak eventually) and it's nickel-and-dime stuff, but it adds up. I would buy a 75-100 year old home any day. The fact that it's still standing is testament. I can guarantee you that much of the crap built (particularly down South) in the 80's and 90's will be crumbling in 30 years, or less. Good points. Our house is 10 years old and we just replaced the water heater today. But other than that we've had no problems. But they sure do build them like shiit these days so I could see it crumble in the next 10. The house I grew up in in WNY has been in my family for over 70 years and built in 1865 and is solid as a rock. Link to comment Share on other sites More sharing options...
RkFast Posted March 28, 2008 Share Posted March 28, 2008 When my mother had work done on her 75 year old house, I did a little test before it started...with my steel toe boots on, I ran up and kicked the wall as HARD as I could. Not-a-mark. Not one. Try that test on a newer house with wallboard and particleboard. Youll be going out to the street to retrieve your boot. And your foot! Silly little test, but I think it illustrated how lousy houses are made today compared to the past. Im in the housing market here on the Island and we are really scaling BACK on what we are willing to pay. Its KILLING me, personally, but my wife is reigning me in to be...gasp!!!...fiscally responsible. Its really sad here on Long Island. All my friends, some blue collar, some white callar, ALL with decent jobs paying good wages and salaries cannot afford a home even like the ones their parents had. Many fell for the smoke and mirrors of these lousy loans to get themselves into a place. $400K gets you a "fixer-upper" on 50x100 on a busy, busy street. Link to comment Share on other sites More sharing options...
SD Jarhead Posted March 28, 2008 Share Posted March 28, 2008 "policy makers are making mistakes that will be apparent only in retrospect." A shocking take. Once again, not allowing the market to correct itself from artificial inflation pushes us further down the road to ruin. We're coming mighty close the the end of that road...I can read the words "Dead End" on the sign because we're that close... In unison now, everyone say "Baahhhhh" Link to comment Share on other sites More sharing options...
SD Jarhead Posted March 28, 2008 Share Posted March 28, 2008 BTW - LEH may be the next to suffer. Consider the article below, and the fact that April way out-of-the-money futures puts have traded substantially in the last couple of days. I hope not, but be prepared... LEH Next? BS was just the first domino to fall...This mess is far from over and the outcome is far from certain. Link to comment Share on other sites More sharing options...
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