I'm getting really sick of hearing about people who "bought more house than they could afford" ---

[sojourner]

and let me tell you why:

People who were victimized by dishonest bank and financial institution practices are BLAMED for their part in losing their homes. It's another way to "Blame the victim" which is a good way to feel superior, admittedly, but does precious little to help change the bad behavior of the institutions that actually caused the disaster. And that is what is wrong with the whole GD mortgage and housing failure. Nobody is being held accountable except the home-buyer.

In fact, it appears that this line of thinking (bad, bad home buyer for buying something you couldn't afford even though the nice mortgage broker told you how you COULD afford it with just a little tweaking of this and of that) is leading to ENABLING these scum-bags and stopping us from getting the steam to hold them accountable.

You blame the little old lady who pays a con-man money (thanks to his silver tongue he gets "more than she can afford to pay") to fix her roof? I guess so. But who committed the crime, the little old lady or the con-man? And why is it a crime to commit a con-job on a little old lady if it's HER stupidity (I'll say it for you!) that caused her to lose her money?

Damnit..........where is any sense of compassion in this world?

[Deja Q]

1. K&R number four, all you need is two hundred more!

This needs to be the numero uno entry on DU's main screen.

"Responsible homeowners" have good jobs and do good work in them too. Lowering wages, stagnating wages, cost of living rising... one could buy a $50,000 hovel and still run out of money due to factors outside of their control.

My sig line says it all...

[DollyM]

68. We live in a $46 thousand dollar "hovel" . . .

AKA a double wide. Our payments are $300.00 a month but yes, when my husband lost his job two years ago and medical payments have eaten up what other money we have, we could just as easily be out in the street as someone with a $500 thousand dollar home. (My mother has helped us considerably and we have cut back all expenses including cutting out the cable and telephone and heat our house with a fire place and a couple of space heaters at present. And yes, we get food stamps.)

[Deja Q]

102. Please forgive my sense of melodrama...

Houses used to cost a lot less... and were far more affordable when you tally up all the numbers.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x7096250

I'm sorry you're in dire financial straits. Our corporate countrymen really can be shameful by not providing quality jobs.

[era veteran]

133. Good luck

Hope your husband can find a job. Single payer insurance could help everyone, except insurance gangs.

[baldguy]

2. +1000

The perpetrators of the mortgage crisis are THE BANKS. Homeowners are THE VICTIMS.

[Deja Q]

8. Or some of the corporations.

Not all, but those firing left and right or dropping wages just to show they have "profits" are part of the whole picture too.

In a day where the CEO only made 40x the salary, all this might be another story. But 400~1200x depending on conditions, no way.

[FarCenter]

62. Most of the bad mortgages were not from banks

They were from mortgage brokers regulated by almost no one at all, and they were from mortgage lenders regulated hardly at all by the Office of Thrift Supervision (e.g. Golden West, IndyMac, Countrywide, WashingtonMutual, etc.)

[waiting for hope]

71. But who bought them up after they were

sold to the homeowner? When we bought out house seven years ago, we used a local mortgage broker - imagine our surprise when the bills started coming from CitiMortgage.

[TicketyBoo]

124. We got our mortgage from a LOCAL BANK,

and it didn't matter. CitiMortgage ended up with ours, too. There was too much profit in selling the mortgage to make it worth holding the paper themselves.

[FarCenter]

191. I think that CitiMortgage is part of CitiGroup, but it is not a bank

CitiBank is the banking subsidiary.

Also, if CitiMortgage is like other home lending businesses, they collect payments on behalf of other lenders who actually own the loans. They do "mortgage servicing" for a fee.

[waiting for hope]

203. CitiMortgage owns the paper on my house -

I checked.

[Go2Peace]

113. But they never would have gotten all that free money if they had admitted they were at fault

[HowHasItComeToThis]

120. BUSH'S CHEAP MONEY MAKES HIGHER PRICES POSSIBLE

AND AROUND WE GO... WITH TRICKY MORTGAGES.....

[Barack_America]

3. They didn't buy them with cash, after all.

For if they had, they could clearly "afford" it.

For nearly every person who "bought more house than they could afford", there is a bank that told them they could afford it, or at least a bank who did not verify the information on their application.

No free pass for the professionals on this. They are just as much to blame and, in many cases, more so.

[wolfgangmo]

164. In every other profession there are standards of conduct.

If a lawyer gives fraudulent advice they can lose their license, get fined, and can go to jail.
If a doctor gives fradulent advice they can lose their license, get fined, and can go to jail.
If a CPA doesn't follow IRS guidelines for your taxes they can lose their license, get fined and go to jail.
If a teacher doesn't report abuse they can lose their license, get fined and go to jail.
If a truck driver drives unprofessionally they can lose their license, get fined and go to jail.

In every case when the professional steps out of line they pay the price if they don't do their jobs or act in ways that are fraudulent of otherwise against the law or professional ethical guidelines.

My question is this, when will the bankster/mortage brokesters pay the price? Because they have clearly been fraudulent and clearly they have been unethical.

[sandnsea]

4. Countrywide lost a huge lawsuit

Bank of America is being forced to rewrite a bunch of foreclosures in 10 or so states. Problem is, they simply stopped foreclosing a lot of those homes so the people in the houses don't know they're entitled to a change in their loan terms. And people in states that didn't join the lawsuit are fucked if they don't know this happened.

[donco6]

5. When we bought our home three years ago -

We told the realtor our price range. The first three houses he showed us were almost 100K more than that! Finally, at the end, we just said, thanks - gotta go. We ended up buying a For Sale by Owner. Very happy in a house we wanted at a price we wanted. But I can see how people are flat-out TRICKED into buying these homes. It's so unfair - especially for newbies who've never done it before.

[debbierlus]

23. And, people forget that even a 'affordable' home is very expensive

With the average income....

It takes everything to just buy a average home and keep it. God help you, if you lose your job or have your hours cut back.

[glinda]

31. What was affordable may not be anymore with all the rates going up with everything.

I know for ourselves that since we bought our home three years ago, we have seen everything go up about $500 a month at least.

[TicketyBoo]

30. In 1997

we went house hunting and found my dream home. We couldn't afford it. The loan officer at the bank sat across the desk from us and told us we could afford a home $35,000 more than the one we were looking at which I knew we could not afford. I thought, "and what two other couples are going to pitch in on the payments for it?"

We walked away and bought a "For Sale by Owner" house, too, assuming a VA mortgage on it. It would have been so easy to have fallen into the trap of a loan we couldn't afford. The bank didn't care whether we could afford the loan because they were going to turn around and sell it. That was a pretty good pyramid scheme they had going there until it collapsed on them. I'm glad we didn't get suckered, and I'm sorry for those who did because I can see from personal experience how easy it would be to be taken in by somebody (who you figure should know) telling you what you want to hear.

[OnionPatch]

41. Same thing with us.

We had to go a little beyond the budget we set for ourselves just to get an average 1500 sq. ft. home in an average neighborhood, but the bank was treating us like we were being stingy and and crazy for not buying a nicer home. I can see how so many people got trapped into the scam. We're doing ok with our payments but if they were much higher, we'd be hurting.

Does anyone remember back in the old days, one could trust that the bank would NEVER loan you more than you could afford pay back? Those days are gone for sure. Today's banks are like predators.

[skepticscott]

76. What about the

"good old days" when people didn't spend money they didn't have, and when they didn't depend on someone else to tell them what they could and couldn't afford ?

[gorfle]

96. Peer pressure?

NPR did an awesome piece on the whole mortgage meltdown about a month ago. I only caught part of it as I was on the road and the station failed.

But basically, they were interviewing one of these people who were making these loans. He described how the standards kept lowering and lowering, to the point where you didn't need to provide any proof of income, nor any proof of assets. They were called "NINA" loans - no income no assets. They did it because the international demand for these bundled securities was enormous, and they made the loans and immediately sold them and thus it was no skin off their noses if the loans were not repaid.

Yes, you can blame the people who took the loans.

But when everyone was doing it, and the people making the loans were doing everything up to and including GIVING THEM AWAY, what would you expect to happen?

The fault, I am convinced, rests MOSTLY with the people who made the loans and then sold them on to other suckers. Because the people making the loans had no vested interest in whether or not the loans could or would be repaid, it was a recipe for disaster.

[Go2Peace]

115. It's not so simple, I have been sold an ajustable before and they lie through their teeth

They tried to talk me into an adjustable last time I refinanced too... Oh, it will only go up if Libor goes up. I was even educated and called them on their crap and they still would never admit that these loans adjust far beyond the changes in libor.

Every damn one of these outfits claims the adjustable rate is a "teaser rate" It allows them to skirt the law. Then they can "adjust" it through the roof and way past where it should reasonably be.

So let's say that you get a 4.75% today, with the standard flat rate going at 5.25. Hidden away in the "fine print" will be their claim that the true flat rate is 8-9%. So then, after you hit your three years you will get a 2% increase each year until you hit 9%. On top of that, if libor actually did go up you will get further increases. It is a SCAM.

Now, say you have some dings on your credit. They will then give you the "great" rate of 7% for your adjustable, and in the fine print claim 11-13% as the "true" rate. So in 5 years you could be up around 14 or 15%.

But the naive homeowner was thinking that heck, his rate will go up a percent, and they can handle it. Most don't understand it is a userious.

[Selatius]

128. It's also that people are illiterate when it comes to banking, and loan officers can prey on that.

They're in a position of authority. They work at the bank. Most people don't, so necessarily many people automatically assume the banker knows what he's talking about and is accurate in conveying that knowledge. If he says that you can buy this house even though you think you cannot afford it, what part of you says maybe he is right?

You do have a point though about "peer pressure" but the correct marketing term you would learn in business school is called "demand generation." That is, you make the target audience feel like they are missing something, and then you offer them the product that fills that void. It could be a bigger, cooler car. It could be a brand new flat-panel TV. It could be anything new and shiny that attracts people's attention. In this case, a bigger house, the dream home, the American Dream. You're not just selling a product. You're also selling dreams.

Social engineering is king in America.

[skepticscott]

140. Everyone was doing it?

Sheesh, we don't even let children get away with using that excuse for foolish behavior, so why should grownups be able to.

As far as what I'd expect, it would be for people to acknowledge responsibility for their own finances, to know what they can afford and what they can't, and to simply say no to the latter.

[gorfle]

157. See post #128 n/t.

.

[mopinko]

154. this american life- the giant pool of money. an excellent explanation of all

this shit-
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1242

they have done a most excellent job of explaining a lot of the economic mess we are in. look for other "planet money" episodes.

[gorfle]

160. thank you thank you

Thank you for hunting that down for me! I so much wanted to go back and get the whole thing but had not done it.

[KakistocracyHater]

112. yeah, & it was illegal to swap mortgages with other banks without

the home-owners' permission & with the GI Bill & interships, & also interest rates like directly before Reagan was Pres.-at 15%.
YEAH, LIKE THOSE GOOD OL' DAYS.

[fasttense]

129. You forgot the "con" in the ponzi scheme.

All of the housing bubble ponzi scheme would NOT have worked if people didn't trust that consumer protections were in place when they were Not in place. And that was the con.

The federal, and many state governments, had developed reliable consumer protections whereby people were not cheated, conned, or lied into loans they could Not afford. It use to be (and I know because I bought 2 houses during the supposed good old days) that you could trust all the restraints put into place and trust that the lender was giving you mostly accurate information. When I bought my house in the 80s at 13% interest, I knew that the bank might tell me I could afford $10,000 more than what I thought I could afford, but overall the bank was required to disclose the major points and legal framework of the loan. But when de-regulation overcame the federal government that all changed.

That expected $10,000 oversell soon changed to $25,000, then $100,000, then the sky became the limit. Soon enough the banks were just out and out lying or selling possibilities (like prices in housing Never fall) as if they were facts.

The problem was that the majority of the American consumer had not figured it out yet. The consumer had Not realized what de-regulation had brought. Sure, some smarter people caught on faster, but for a long time the majority thought it was still business as usual. Now, people know better. Now, most everyone is very careful. But no one was out there telling us these changes have occurred and be careful about your mortgage terms. With almost 300,000 million people it takes a while to learn about something newly developed.

Yet an industry can learn about the changes long before a consumer finds out because... well it's their job to know. One industry can learn very rapidly where the loop holes are. So, the more unscrupulous banks, con artists and predators took advantage of that learning curve.

And the con is almost complete except for the shame of the conned. A lot of cons go unreported because the person is ashamed to be fooled, ashamed to have fallen for the trick, ashamed to have allowed their greed to have overtaken their better judgment. But the corporate media is playing their part and ensuring that shame, that sense of humiliation is firmly saddled on the victim. And many people still buy into that false sense of shame.

[OnionPatch]

145. Well, like I said, I didn't trust them myself.

But I can see where some people did. I'm sorry, but don't think banks should have been allowed to become swindlers and purveyors of pyramid schemes. The point I was trying to make was that they used to be respectable businesses that were somewhat trustworthy.

[jmowreader]

196. What "good old days" are you dreaming of?

People have ALWAYS bought shit on credit and ALWAYS overextended themselves. Google "company store."

Also read Upton Sinclair's The Jungle, paying particular attention to Jurgis' struggle to keep the house he bought.

[Scruffy1]

153. Predators is way too nice

Having been dealing with homeowners who were scammed by fraudulent mortgages I don't think I have that much kindness left in me. Having at one time in the past been a stockbroker I know this kind of fraud would have led to big lawsuits and loss of license. A few have been fighting to keep their homes and we are not going to give up easily. Check <a href="http://MN.Peoples-Bailout.org">

[Scruffy1]

156. wrong url

it should be www.MN-peoples-bailout.org

[Selatius]

126. The bank, if it suckered you, would've taken your loan and repackaged it into a security to sell.

Typically, they bundle together several loans and sell it as a single security that acts almost like a typical bond, a collateralized debt obligation or CDO, but it doesn't meet the legal definition of a bond but does meet the definition of a security. Unfortunately, if one of the mortgages in the bundle goes into default, the entire bundle now no longer works as advertised and does not pay out as advertised. The sucker who buys it now has a toxic security on his balance sheet. It is now incapable of being valued.

Worse yet, the bank can take out a CDS on this security, a credit default swap. It works almost like insurance against default, but it doesn't meet the legal definition of insurance, so it does not fall under federal laws governing insurance activity or laws dealing with reporting/book-keeping requirements. Suckers who issue CDSs are on the hook whenever these securities do fail, and AIG was one of these suckers as well as Wachovia, Bear Stearns, Lehman Brothers, etc. Since many of these CDOs had Triple AAA ratings given to them by ratings agencies, these sucker banks thought they had themselves a racket going by selling CDSs, but when people started going into default, all these banks got fucked, and only the bastards who packaged the CDOs and knew that the mortgages were gonna go bad made out like bandits.

[wolfgangmo]

165. Maybe we should reframe "foreclosed" to be "getting Bernied (Madoff)

.

[Alcibiades]

77. Absolutely right

And the developers played into this by building many mcmansions and fairly few truly middle class homes. Getting folks to buy bigger houses meant more money for the agents, the developers, the builders, the brokers--in short, all players.

[Myrina]

6. Kick, Rec and AMEN!

:applause:

[bluestateguy]

7. People on both ends need to be held responsible

Dishonest lending institutions, mortgage brokers, realtors and bankers should all be held accountable for the behavior that you describe above. As a condition of the bailout last year the banks should have been forced to renegotiate mortgages with good faith borrowers. But personal responsibility is a two way street, and that also includes people who entered into transactions that they could not afford. I know some of them personally, in fact. They just had no clue how they would pay their mortgages even when gainfully employed. Some of us resisted the "Keeping up with the Joneses" temptation and continued to save.

[BeyondGeography]

12. The seducers and the seduced

Coddling either side is a road to nowhere.

[sojourner]

19. I'm glad for your good judgment and happy ending. But when homebuyers act like humans

-- and that means being less than rational when making a purchase of something like a home or a car -- and that reality is deliberately and criminally exploited such that the homeowner is left with NOTHING (current outcome for too many) then that is CRIMINAL. And it's happened to so many people that it no longer looks to me like bad homebuyers but more like dishonest, manipulative con-men playing a game in which THEY can't lose. And when we try to walk that damn moral tightrope we cause the common man to lose.

My friend Sherry walked from the restaurant where she works to her car late one night and was raped. Should the judge lambast Sherry for walking alone at night? She's female and she KNOWS she's a potential victim, doesn't she? So it's her fault she was raped - or at partly so, according to the argument being utilized.

And as a consequence, we let the rapist carry just a little less guilt and blame because after all, he wouldn't have had a victim if Sherry hadn't chosen to walk out to her car that night.

And worse, we confront Sherry with "told-you-so" looks and comments when the crime against her has taken everything she believed in away...her belief that she is "safe", her belief that it "won't happen to me", her ability to be vulnerable or even sexual with a man.

Yeah...those home buyers. Sick fucks....:sarcasm:

[skepticscott]

74. Lousy and hysterical analogy

Rapists force their victims. No mortgage company has ever forced anyone to walk through their door and demand a mortgage. No mortgage company has ever forced anyone to sign a mortgage contract for more than they wanted to pay.

[TicketyBoo]

125. No.

But many mortgage companies have repeatedly convinced someone that they could afford a mortgage when or that they could not.

Bump up that principal amount, because "it will refinance in three years down the road, and you'll be fine." It was a house of cards, waiting to collapse.

The bigger the mortgage, the bigger the commission for realtor, mortgage broker, and insurance agent selling insurance on the property. The borrower is triple-teamed and doesn't know what hit him.

[skepticscott]

139. In a rape, your right to say no

Is taken away. It never is when you apply for a mortgage. Of course they try to sell you more, just like sales people in every other business. The responsibility remains solely with the consumer to decide what they really need and what they can really afford, and to simply say no to anything else.

[TicketyBoo]

168. "Solely with the consumer"?

Really?

You have a professional loan person sitting across the desk from you looking at your application. They have NO responsibility to deny that application if you can't afford the loan?

Why even bother with an application, in that case? It's a SCAM.

[skepticscott]

186. No, they have none

They have no fiduciary duty to you whatsoever, and no qualification to offer financial advice to a potential borrower in any case, even if they knew all about their finances, which they wouldn't. Their sole responsibility is to their own company, and the purpose of the application is to help THEM decide if the loan is a good risk or not. In no way is it intended to help YOU decide if you can afford the payments...that is, and always will be, solely the borrower's responsibility.

[TicketyBoo]

187. Again,

they DO know all about the borrower's finances. That loan application tells them everything. THEY JUST DON'T CARE.

Their sole responsibility is to their own company, and the purpose of the application is to help THEM decide if the loan is a good risk or not.

Nope. You're wrong. They don't CARE whether the loan is a good risk or not because they're going to re-sell the loan to the next perpetrator in the pyramid scheme. That entity sells it to the next one, and so on and so on, until it is split up in bits into "derivatives," which are insured by AIG or some other "too big to fail" giant, and nobody cares whether the original loan was any good because the American taxpayer is the one bailing THEM out. Meanwhile, the borrower is forced into foreclosure. Everyone wins except him.

There is only one purpose of a loan application, and that is to make the poor sucker of a borrower THINK he can afford the loan, since the bank is "approving" him for the loan.

It is a SCAM.

[skepticscott]

190. Are you deluded?

No loan application ever contains ALL the information about anyone's finances. It doesn't requires people to disclose all of their income OR all of their expenses, including how they spend discretionary income. And no one can FORCE a borrower into foreclosure if they pay their mortgage every month. That's just hyperventilating hysteria. The final decision about whether a borrower can afford a loan is NEVER taken away from them at any stage of the process, and all of your ranting doesn't change that.

[TicketyBoo]

195. It's not a rant.

These are the facts.

People were being sold on the fact that they COULD afford a loan that they could NOT afford by people who were in a position to know better. I know because it almost happened to me. I was being assured that we could afford a loan that we could not afford by people who certainly should have been in a better position than I was to know, whereas they were working with loan applicants every day, and this was only the second time in my life I'd applied for a home loan. This was not some shady character in a dark alley selling counterfeit Rolexes. This was our local bank. The normal borrower had no reason NOT to trust their judgement. The fact that you wanted to believe (and were, therefore, an easy mark) is secondary. It was a SCAM. And it's still happening, although to a lesser degree, with the lowering of home valuations across the country.

As I said, I doubt these people even have a "Loan Denied" rubber stamp in their desk drawer. The application was a formality, a tool to make you think they were determining your ability to pay, to give you a false sense of assurance that the loan was okay for you.

[sojourner]

179. good points...i was pissed when i wrote this and thus probably not as rational as could be.

i still hold that the tendency to blame the victim -- and victims there be (though i don't claim that ALL who suffer were)...whether or not you wish to allow them the grace that:
1) they didn't know as much as you, and so were easy marks
2) they were too hopeful and were still taken in by people who KNEW better
3) they entered into one set of agreements and all too quickly faced a radically changed dynamic (lack of work, falling home values, tightening of lending)

you may choose whether to allow this, or whether you will hold that every person who buys, unless they are forced at gunpoint, is fully responsible and thus those who misrepresent facts and mislead others for their personal gain are NOT accountable...(the current state of affairs).

i still believe the last statement represents a reprehensible breakdown of human empathy and compassion in the US, and is the predictable result of glorifying greed and the 'get ahead at all cost' mentality that made Donald Trump man of the year back in 1980-something, even though he was admittedly driven by greed. It also explains why people can stand by and watch as horrors occur to their fellow man and utter their little "tsk, tsk" and wonder how those folks let themselves get into the predicament - and walk away without needing to lift a finger.

blaming the victim contributes to letting them save themselves if they can. having some compassion and understanding contributes to finding a way to help. which is your path?

[skepticscott]

188. I don't deny

That a number of lenders engaged in dishonest practices that violated the law, and as I have posted elsewhere on this thread, I believe those lenders should be held responsible to the extent the law allows, and that borrowers who have been victimized by illegal practices should be entitled to some relief. I also don't blame people who got into mortgages that they could initially afford, and then unexpected fell on financial hard times. What I have a problem with are people (and there were many of them) who knowingly and willingly took on huge mortgages that they knew perfectly well they couldn't afford, or didn't bother to understand fully, through greed or self indulgence, and now expect to be bailed out.

[sojourner]

201. i understand (and to a degree agree with) that...... the problem is,

the emphasis on holding THOSE people accountable (and by the way where are stats on how many is "many"?) has left those who really were victimized out in the cold. and the continued emphasis on THAT allows the general populace to pass the real victims by, because the assumption safely becomes: they probably asked for/or otherwise deserve it.

the current societal values make everyone "guilty" of something - except the powerful, of course, who are apparently just acting on the "prime directive" to make profit and hold onto power. this idea of holding the less powerful more responsible while giving the more powerful all sorts of ways to evade responsibility is morally reprehensible in my view.

thank you, however, for allowing us to have the discussion in spite of my emotions. it's just that i've been watching the snowball fall down the mountain for a while now and the "personal responsibility" thing is more and more a ploy to get attention away from the criminals in power.

[sojourner]

180. dupe delete

[Sherman A1]

28. Agreed

I do tend to think that the folks making the loans needed to be a bit more on the ball.

[Gormy Cuss]

34. If "personal responsibility" is a two way street here, the lenders have 5 lanes, borrowers 1

It used to be that a lender approval actually meant something, and what it meant was that the conservative bankers who were going to hold the note thought that the borrower's financials indicated that there was a very good chance that the borrower could pay back the loan.

Once the home mortgage market moved to a securitized model, there were no conservative lenders making careful decisions. It was almost a free-for-all. Qualifying for a mortgage was too easy, and the seductiveness of being told that one could buy property when it looked like there was no way to do so encouraged many to overextend, especially those at the bottom of the market. The borrowers were still operating under the old school rules, thinking that qualification meant something. The lenders weren't.

It's really easy to wag a finger and pronounce "personal responsibility" as the root cause, but the closer one looks at the way the real estate lending market has worked in recent years, the more clear it is that many on the lending side worried little about responsible lending because they were going to profit immediately and move the paper on to some other entity.

[TicketyBoo]

39. Yep.

That's exactly what was going on, and it still is, helped along with that $8,000 tax credit which makes it so people are buying just to get the $8,000.

Watch all the foreclosures happen once those $8,000 rebate checks go through.

I have a friend who is single and on disability who was paying $350 a month rent for a one-bedroom apartment and got rent assistance that paid almost half of that. She just bought a $100,000+ three-bedroom house.

Does it sound like things have improved as far as predatory lending is concerned? Not to me.

[skepticscott]

81. And was she

dragged kicking and screaming into the lender's office and forced at gunpoint to sign a loan contract?

[TicketyBoo]

121. Truth be told,

I can't imagine how she ever managed it.

I wonder if once the $8,000 is gone if she will default on the loan.

While she most likely wasn't forced at gunpoint (I know of nobody who has been), she is mentally challenged (on disability), and this is someone who, I believe, was taken advantage of.

[sojourner]

43. exactly.

[skepticscott]

79. Who ultimately has control

Over whether a mortgage is applied for? The borrower, in every single case. Who has control over whether the loan agreement is signed? Again , the borrower, in EVERY case. What does the lender have the ultimate control over?

[Gormy Cuss]

111. Who has an expectation of a well regulated mortgage market? The borrower.

Who, in most cases, is an amateur at mortgage financing? The borrower. Who is an amateur at contract law? The borrower. Who do most borrowers believe wouldn't lend them money if they were a bad risk? The lenders.

[skepticscott]

141. And what exactly does

"well regulated" mean? The law is intended to protect people from dishonest or fraudulent practices, and if any such did take place, the lenders should be held responsible to the extent of the law. The law is not intended to, and cannot protect people from living beyond their means. Saying that people have a right to expect that if they can't afford something, that someone won't try to sell it to them is just silly. We don't hold any other business to that legal standard.

[Gormy Cuss]

173. Dishonest and fraudulent practices were rampant in the mortgage industry

in the past decade or so. That's exactly why borrowers were at a disadvantage even when there was no fraud in their own dealings because the dishonest practices fueled speculation and escalated prices.

Some people like you want to hold on to the notion that borrowers deserve most of the blame here. Some of us have enough professional experience to state otherwise and that's my last word to you on this matter.

[skepticscott]

189. And as I've stated numerous times

any lenders who engaged in illegal practices should be held accountable, and lenders who were directly affected by those practices should be entitled to relief. But to say that ALL borrowers were at a disadvantage just because prices were overinflated is simply silly. If the price of a house was too high, all they had to do was say "No, I can't afford this house, no matter how nice it is and no matter how much I want it." That's the responsibility of any grown-up in any economic situation involving a non-necessity (which an owned home and mortgage is).

[TicketyBoo]

122. What does the lender have control over? Loan approval.

And I doubt that some of them have a "Denied" stamp in their desk drawer.

Also, the lender controls whether to hold or sell the loan. They may elect to hold loans with borrowers who have stellar credit, while acting as a mere broker on questionable loans, selling them off to the highest bidder or to an institution with which they have a cozy relationship.

Why bother to deny a loan application when you know that you're not going to lose, whether or not that loan is ever repaid?

[jberryhill]

47. Nigerian Scam Emailers....

Interestingly, the Nigerian spam gangs don't see their victims as victims. They actually believe they are the good guys, ensnaring greedy Westerners in their own greed.

Con artists of all kinds tend to rationalize what they are doing as being some sort of agent of karma, since falling for scams typically involves drawing out an element of greed in the victim.

[TicketyBoo]

52. I hope you aren't saying

that the victims of predatory lending practices are "greedy," because I don't think you need to be greedy to have fallen for the mortgage scams.

In some cases, it might be true, but most people caught up in loans they couldn't afford were led down the garden path by bankers they thought they could trust, not some fly-by-night e-mailer.

[jberryhill]

82. No, and I don't sympathize with con men of any type

All con men have rationalizations. That's all.

[pokercat999]

134. Con men know, you can't cheat an honest person.

There has to be some larceny in the heart of the "victim" or they'll never take the bait.

[skepticscott]

146. At the very least

It's much easier to cheat someone when they're hoping to get something for nothing.

[quakerboy]

182. That is laughable

Old people with memory issues do not have "larceny in the heart", and I would say they get cheated as much as anyone in this country. Credulous trusting people with innocent streaks are probably second in line. Followed by those with "larceny in the heart".

Any one who can trust can be conned. Anyone who does not trust but is also not omniscient can also be conned, with some work. Stupid people who think they are smart are often easy to con, but by no stretch of the imagination are they the only ones.

[pokercat999]

184. Busted, maybe I should have said the EASIEST people to

con are those with larceny in their hearts. By larceny I also include greed and the get something for nothing folks. When offered that perfect deal or insider information or stock pick or in my case the bet that can't lose. I always ask what does the principal have to gain by revealing this information when in keeping it private they would gain more or if it's so great they would be spending all THEIR time making money not bothering me. The answer to the "Why share?" question always comes down to their idea is BS and in one way or another a con.

[sojourner]

202. what the hell? where did that shit come from? are you a con man, and so privvy to the "rules"?

[emilyg]

73. Agree 100%.

I know some of these people, too.

[Stinky The Clown]

9. There used to be LAWS that protected people.

Now there are only bailouts for the Too Big To Fails.

[YOY]

10. It was the most predatory marketing I have ever seen.

When I was unemployed they'd call me weekly asking about 100% commission sales jobs selling these things.

I started cussing them out. I know it sounds rude but I saw no good coming from this. Not on the products end...not on the distribution end...not to the health of the supplier.

I heard some conserivdope saying that banks were forced to offer these mortgages...bull fucking shit. Nobody held a gun to their heads. They were loving this.

[Gold Metal Flake]

11. The banks said investing in these houses was good financial sense.

The money guys on the radio told the listeners that investing in these houses was good financial sense.

Both the bankers & lenders and the money guys on the radio said that pulling equity from your house was good financial sense.

There were advertisements on the TV from bankers and financial advice people that said investing in these houses was good financial sense.

There were advertisements on the TV from bankers and financial advice people that said pulling equity from your house was good financial sense.

Bankers and lenders lied to people about the nature of the loans. Bankers and lenders lied on the paperwork for the loans.

All they wanted was the paper, so they could turn them into equities to sell.

They squeezed the middle class for their wages starting in the 1970s, and by the 1990s the only wealth the middle class had left was in their homes. So, in the 2000s they took that.

The conservative and moiderate Democrats went along with it the entire time.

[SPedigrees]

13. Adjustable rate mortgages should be illegal.

There was no such thing back in the 1970s when we bought our house. Our mortgage payments were the same each month. We were given a book of little tear-off payment slips and 15 yrs later when they had all been mailed in with our monthly check, our home belonged to us.

The bank was very careful to ensure that our income would enable us to make our payments. Our loan application was turned down at first until the sellers lowered the price to something the bank deemed affordable for us.

This is how banks used to operate.

Now banks sell your mortgage overseas and double your monthly mortgage payment without notice, and foreclose on you when, predictably, you are unable to pay the new higher rate.

[skepticscott]

85. The bank didn't do that for you

They did it to maximize THEIR chances of being paid back. Don't delude yourself that lenders used to be warmer and fuzzier.

And "double your monthly mortgage payment without notice"? Uh, no. That's just another way to say that the borrower signed a mortgage contract they didn't read and understand.

[TicketyBoo]

127. Maybe not warmer and fuzzier,

but definitely safer for the borrower when the bank with whom you arranged the mortgage had to care whether or not you could repay the loan, since it was actually their money at risk.

Mortgage brokers and the brokering process should be outlawed so we don't ever see this happening again.

[SPedigrees]

178. Thank you. Exactly what I meant.

"Warm and fuzzy" is a concocted fiction of skepticscott. I never said or implied such a thing. I believe anti-trust law of that era kept the banks from merging into something unearthly, accountable to no one. Deregulation has allowed them to bundle mortgages and auction them off to buyers overseas who cannot even be tracked down to be held accountable.

[FreeJoe]

177. Not illegal, just restricted

Adjustable rate mortgages can be useful. The problem with them is that they are complicated and potentially risky. I'd prefer to see them restricted to people that have the knowledge to understand and the financial strength to handle the risk.

We got an ARM when we bought our last two houses. In neither case did we plan on having the mortgage for more than about five years. By eliminating the long term interest rate risk from the bank, they were able to charge us an interest rate that was about 20% lower than the fixed interest rate. It saved us a significant amount of money.

[lunatica]

14. Everyone in California has bought more house than they can afford

The cost of living in the Bay Area is insanely high. It's among the highest. A crummy gutted fixer-uper is more house than people can afford.

Yeah, I know. So everyone should move somewhere else. I'd like to know where to move where I can get a job the first day.

[Gormy Cuss]

44. And that's the other issue-- affordability at a time of rapidly escalating sales prices.

The SF Bay Area prices went nuts in the late 1990s and only stopped escalating a couple of years ago. Unfortunately even with the downturn it's not going to be a place with affordable housing anytime soon.
There are too many municipalities favoring single family detached housing rather than a careful balance of the housing types to provide affordable housing (rental and ownership units) across broad swaths of income. Even in the city and Oakland there is far too little medium to high density housing. If there were 50,000 more units in the Bay area, prices wouldn't have climbed so quickly and people wouldn't be driving from Tracy and Stockton to jobs around here. The problem is, there's no way we'll get that level of new units anytime soon. For most people the choices are: stay renting, buy crap and cross our fingers, or buy into a very long commute (Antioch's cheap these days...)

[skepticscott]

86. Your argument assumes

That everyone is entitled to own a place, whether they can afford it or not. Sorry, but it just ain't so.

[Gormy Cuss]

110. Nowhere did I state anything of the sort.

In fact,I mentioned the need for a greater number of units including rentals.

[TicketyBoo]

123. One of the problems in and around San Francisco

is the dwindling amount of land on which to build.

Building up is about the only way to increase more housing units, and that's a bit nerve-racking in earthquake country.

[Gormy Cuss]

171. Building up these days is much safer than it used to be.

In fact, many single family detached houses have been converted to two or three story dwellings. Medium density housing, specifically townhouses and smaller condo projects, are usually no more than three to four stories.

And while locals think there isn't much buildable land left, there are plenty of infill lots in the small and large cities and older low density housing or light industrial space that can be replaced with medium or high density housing. It does require a shift in attitude about urban landscapes.

In SF there's already been considerable new construction in areas like South of Market and higher density reconfigurations in other areas where that sort of construction works, with some similar activity in Oakland and Emeryville. It's possible to add units with the right incentives. Even out in burb land there's more attention to the usefulness of higher density housing built near BART stations.

[skepticscott]

149. So what specifically was the

point of your post, relative to this discussion? To point out that it's very expensive to live in some parts of California? That's not a secret, but it's simply a result of supply and demand. Short of rent control, even if you put a lot of new units in the Bay area, they will be in high demand, and the prices will eventually reflect that. If you want to live in a desireable area, it costs more. That's a law you won't change.

[Gormy Cuss]

172. It was a direct response to someone commenting about the SF Bay area market

as is obvious if one keeps track of the threading.

[Alcibiades]

78. North Dakota has 4.2% unemployment

You could sell your house and live off the proceeds while you find a job.

[lunatica]

93. Who's buying these days?

Brand new houses around my neighborhood which were built before the big meltdown last year are standing empty.

[prairierose]

167. That's a great idea...IF you can find a job....(insert sarcasm tag here )

in the parts of the country where there might be slightly more affordable or where unemployment is not very high, people are moving in while they look for a job. Except,there are NO jobs. And trust me, the pay scales in this part of the country are not what you are used to in CA, or anywhere else on the west coast or the east coast.

I live in a hovel, as someone mentioned earlier in this thread, a manufactured house. Across the street there was a double-wide for sale. It was ridiculously overpriced. It sat there empty for several months and then suddenly, there were people living there (Nevada plates on the vehicles). I think they lasted three, maybe four months before, suddenly, they were gone. The house has now been back on the market for two months at least.

People see the low unemployment rates and think they should come to this part of the country. They might even look up a real estate website and look at some home prices, lower than either coast or any of the markets that got blown up in the bubble. The bubble here did not get as inflated as some places but it is still a bubble and trust me, we have the same predatory lenders and mortgage broker con artists as any place else.

So people look at those two things and think it would be a great idea to move here because with low unemployment and lower housing costs it MUST be a great place to live.
They come here and pay the first price asked for a house and think they got a great bargain. They did not get a great price and they are contributing to the bubble here. They didn't get a good price because part of what is happening here is that people here think, and ridiculous real estate agents tell them, oh someone from CA will pay that price. Keep that price up there. Don't lower it for anyone.

This part of the country is a "bring your own job" place. There are not that many jobs here. In North and South Dakota, the unemployment rate is low but there are not jobs being created. The entire Midwest states that escaped the huge employment drops have lost jobs, not as many but there were not that many to begin with.

Don't think about moving to the midwest unless you have a job before you move.

[Warpy]

15. I read your subject line and was mentally composing a flame

but I wisely clicked on the post and read the body of the message, first.

Most of the people who got caught did so when the scam was in full swing, the mortgage companies writing what they knew to be bad paper to get the commission, the bank buying the bad paper hoping the mortgage company was on the up and up and, since it was bad paper, selling it off to the hedge fund that chopped it into little pieces and shopped it around to banks as mortgage backed securities, the insurance companies being all too willing to issue insurance that the banks couldn't lose on any of it.

Round and round and round it went, until even the most gullible realized that with a paycheck hovering around $40,000, it wasn't a great idea to go into hock for a million bucks for a slice of heaven in California, Florida, Phoenix, or Las Vegas. That's when the real fraud started.

I don't blame the people who got used by motormouthed salesmen, told if they didn't jump now, they'd be priced out tomorrow, and besides, at the rate things were going, the equity they'd have in the place after 3 years would allow them to get a real mortgage and besides, wages were rising and happy days would be here again.

They were sold a sack of hope as well as an overpriced house, and now they're left with less than they had before, everything they ever had gone, left on the street for the trash men.

Your post is great, blaming the victims might make us feel smugly smart. After all, I bought less house than the mortgage company said I could (and I did), what the hell was the matter with those people?

However, the blame lies with the scammers who sold those places on the promise of a rosy future nobody with a brain thought would occur. Bubble markets just aren't sustainable. They always pop.

[sojourner]

21. thanks, Warpy, for reading before flaming...

Your response (well thought out and articulated) says you got what I was trying to say

[dugaresa]

175. i agree with everything you said and I want to add that hope is a powerful drug

and it the one thing people cling too. they buy a home, a car, a really nice coat, and they are counting and hoping that nothing goes wrong. if everyone lived cynically, no one would buy anything for fear of what horrible thing tomorrow may bring.

sadly this mortgage mess has backed up my own mother's mantra of "don't trust anyone"

[quakerboy]

204. I would also blame

our national education and values system. Some people are born with or lucky enough to learn from family a certain level of intuitive smart in financial dealings. But a lot do not seem to, and there has been little motivation built into the system to learn. I think that this will get worse before it gets better, because in my estimation we have reached a stage where everyone knows you are going to get screwed whether you are smart or not.

And the way we have set up our system, the people who are paid to know these things are increasingly insulated from those who they do not, reducing any motivation that they might otherwise have to offer honest and equitable advice.

[QC]

16. I have no sympathy for flippers, though.

I live in a place where they drove up prices so that people who actually work for a living could no longer afford houses, and now they have damaged the market all over again by flooding it with foreclosures, so that those working people who did manage somehow to buy their own places are mostly underwater and trapped. It will be years before we have a normal housing market in Florida again, if ever.

Fuck the flippers. They deserve all the pain they are getting and more.

[Warpy]

20. It depends on the type of flipper

The ones who bought crummy houses and rehabbed them were performing a service and deserved to get paid.

The ones who bought move in ready houses and let them sit empty for a year and made a killing are scum.

[quakerboy]

205. I would moderate even that

It seemed like a lot of even the "rehabbers" went in and made mostly cosmetic improvements, as cheaply as possible, with an eye to making the most money with the least investment, rather than with turning out a quality product.

[Alcibiades]

80. There were a lot of these people

Your house is a place to live, not an investment. Make the improvements that you want, not the ones the "market finds desirable."

[QC]

100. Agreed. n/t

[Buzz Clik]

17. How true. Not one single bank has closed because of bad loans. Not one.

Right?

Well, no more than a dozen, right? More than two dozen? Gotta be less than 50 failed banks, right? No? Really? More than 100 just this year?

That can't be.

http://www.fdic.gov/bank/individual/failed/banklist.html

Well, maybe more than the homeowners are being held accountable.

[jberryhill]

18. I've changed my perspective on this...

...and agree with you.

It's easy for more sophisticated purchasers to forget that not everyone is as educated in any particular subject, and when all of the people who are supposed to "know what they are doing" seem to see nothing peculiar in selling a home that the buyer's income really doesn't support, I guess the tendency is to place trust in those folks who "know what they are doing".

It is myopic to assume that everyone knows what you might know. I guess part of it is that I have always kept well below the limits of what I can afford, so there is an element of envy of those who have bought the bigger houses in the better neighborhoods, even though they ultimately could not afford them.

[KatyMan]

46. Yes, what happened to trust?

I'm in IT, I'm not a financial guy. I would hope that someone who is advising me on a mortgage realizes how much I can afford. Luckily for us, we bought after all of this happened, and were savvy enough to not want to be house poor, but I can see young people falling for a line like "you can afford this now, and in two years when the payment changes, heck, interests rates might be lower and your payment could go down"...caveat emptor and all that, but a fair amount of responsibility lies with the person who knowingly made a loan to someone they knew would be foreclosed on in two years. More than a fair amount, really.

[FarCenter]

63. The mortgage broker makes more money if he puts you in a larger, riskier mortgage

The brokers commission is an incentive to put you into a mortgae that is most profitable to the lending company.

A mortgage broker is not being compensated by you, and he is not working in your interest.

[skepticscott]

89. Exactly

No more than a salesman in any other business is working for you. Do we blame appliance salesmen for trying to sell us the biggest TV they can, or shoe salesmen for trying to sell us as many pairs of shoes as they can?

[TicketyBoo]

130. I think people who engage a realtor

to help them shop for a house put more trust in that realtor than they do in a shoe salesman or appliance salesman. They expect a realtor to act more like a matchmaker, and find them the right house for their particular circumstances. That's what a reputable realtor should do. If a realtor steers too many clients into inappropriate purchases, he or she won't last long as a realtor, at least not in a town this size. Word will get around.

After all, you're not going to go broke buying an extra pair of shoes or an upgrade to an appliance. Realtors have a license for a reason, and it isn't to sanction fleecing people for all they can get out of them.

[skepticscott]

143. Unless you engage a buyer's agent

The real estate agent is not working for you either. They are legally an agent of the seller, and have a fiduciary duty only to them, and not to you. They are also not qualified or even legally permitted to give financial advice, and certainly shouldn't even try to tell a buyer what they can or can't afford.

[TicketyBoo]

176. In our town, at least,

and maybe even in our state, one agent represents the seller, yes, but we have always used our own agent to represent us. I believe that is the wisest way to buy. Agents here can represent buyers or sellers. I would be hesitant to buy a house listed with a particular agent from that agent because that agent would be representing the seller, and not me, the buyer.

And I would never use a mortgage broker to find me a mortgage. They are only out for themselves. My niece's husband has a Ph.d. in mathematics, and they employed a mortgage broker to find them a loan. I couldn't believe it when I heard that.

[sojourner]

49. would you mind sharing what led to change of perspective?

[jberryhill]

104. Application Of Humility and Compassion

...and watching videos of Palin supporters, actually, and reflecting on how people are misled by trust.

It's one thing to marvel at the boundless ignorance of the ignorant. But what any person doesn't know or understand is simply what that person doesn't know or understand.

All of us have blind spots, but its so much easier to see what others don't see. Once in a while, you have to just reflect on those things that you take for granted, and what others might take for granted, I guess.

[skepticscott]

87. So if a person is not ultimately responsible

for their own finances, then who, specifically, is?

[jberryhill]

105. Con jobs do take two parties... but...

I've been in the same situation described in this thread - being sold property that I knew would be difficult or impossible for me to afford on the basis of how my Depression-era parents told me to look at things.

Not everybody had my parents, and I think it is not hard to imagine that people simply trust the smart feller in the suit that tells them what they can buy.

The error is one of misplaced trust, and they are trusting the people who are screwing them.

So, on the one hand, you can say they were wrong to trust those people. But on the other hand, the people they trusted were being dishonest.

In a conflict between (a) a trusting person, and (b) a dishonest person, I put more of the moral onus on (b) - even though (a) is in some rational sense, making a mistake.

[deadmessengers]

22. The industry's bad, but the buyers are NOT blameless.

People DO buy more houses than they can afford, but it's human greed that encourages that behavior. This greed is on the part of the real estate industry (the developers, the bankers, the RE Brokers and the mortgage brokers) AND the buyers. To say that the buyers are blameless in this equation is ridiculous, because they alone had the most powerful anti-fraud tool that one can have, and that is the word "no". I'm busy making turkey for my family, but I'll link to a comment I made here a while back on this subject that covers my experience with the real estate industry and my use of that most powerful tool here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=410850&mesg_id=411695

[sojourner]

25. I'll tell you as I've told others...glad for you that you have the knowledge that brought you that

good outcome.

But to blame the victim of a crime........no matter how "stupid" that victim may appear to you......is to lift some of the blame from the perpetrator and lessen his/her culpability. Period. And that's why the perpetrator can get away with his crime. No accountability because it is hacked away by people who are so much more savvy than the victim who allowed him/herself to be victimized.

It also victimizes the victim a second time by exposing him/her to your moral outrage that they allowed themselves to be victims. I realize it makes you feel better, safer and happier to do so. This is why I ask about the place for compassion in our world. Looks like it's about dead.

[deadmessengers]

29. Please do not put words in my mouth.

First of all, stupid is your word, not mine. You put it in quotes as if to make it appear that I used that word, which I didn't. I respectfully request that you go back and edit that, so as not to further mischaracterize what I said.

Second, I'll reserve my compassion for those who weren't complicit in their own victimhood. The bottom line is that I still maintain that the word "no" would have kept people out of a whole lot of trouble, but people CHOSE not to use it because they saw blinky-shiny waving in front of their face. I stood up to the same bunch of slick-talking salesmen that they did, and somehow I didn't get screwed, because I used the word "no", repeatedly. They wanted something for nothing, and got screwed as a result. They were just as driven by greed as the banksters, and I have no compassion for the greedy.

And as far as accountability is concerned, I want accountability - just for all responsible, not the cherry-picked few that offend your sensibilities.

[sojourner]

37. and when you fall victim to someone, something that you DIDN'T have a ready defense? You will take

the responsibility required, yes? Mostly I expect that of those who use your argument. Only then will I give a pass. You of course have a right to your opinion. But I suspect you have precious little empathy for others except in a few instances where your knowledge of the crime is limited. That's both your right and your choice. I choose a path with more caring for individuals and with a call for greater responsibility for those with power.

[wtmusic]

58. +1

Yes there were victims. Then there were the people who overbought to keep up with their neighbors (I know some).

How do we help the first group without encouraging the second? No one should bail them out - they should get slapped for being greedy.

And I'll add a third group - those well-intentioned individuals who handed over a down payment without doing any research whatsoever on the market, down payments, points, adjustable & balloon mortgages, negative amortization, etc. Or consulting a financial planner (and shelling out a couple hundred bucks to do it) in advance. If you trust any salesman to tell you the truth, you're asking for trouble.

[skepticscott]

88. Your argument invalidly assumes

that every borrower who ended up not being able to afford their mortgage payments was the victim of a "crime", which is ludicrous. Yes, some lenders lied to borrowers about the terms of their mortgage contracts, and if so, they should be held legally responsible. But in many caes, lenders told the borrowers exactly what their payments would be, and the borrowers still took out loans beyond their means. That's the borrower's responsibility, ultimately.

[AllentownJake]

32. Most people don't go to sales training or have an army of lawyers to cover their ass

when they do something stupid...oh and most people can't petition the government to pay off their derivative contracts from bankrupt firms or give them billion dollar no interest loans.

People behaved stupidly and are living with it, the question is what consequences did the people who created the fraud have to live with.

[sojourner]

48. the lack of any conscience...or maybe, a sleepless night now and then? certainly nothing

more troubling than that, if the bonuses and profits that resulted are any indication.

[AllentownJake]

50. We have encourage socipathic behavior in society

and we are surprised when people act like sociopaths.

[sojourner]

51. as a collective, what you say is true. that also pisses me off. society has glorified predators

and it is part of that zeitgeist that leads people to continue blaming the victim, because the game requires the prey to be more cunning than the predator or else he/she is a LOSER! and we all know there's nothing worse than a loser.

AAARRRRGGGGG.

[AllentownJake]

53. Human nature

Human beings are animals, and despite our self awareness and other noble qualities...we always revert back to our survival instincts. Stealing as much as you can from your neighbor and buying politicians to help you with that theft is just Human Nature.

Cooperation only exists in a tribal context and well, you and I aren't a member of that tribe.

[sojourner]

55. i am proudly not a member of the tribe of those who are stealing or buying politicians

and my tribe is thankfully compassionate enough to care for others who suffer at the hands of others. there's my weakness...pride in my ability to feel compassion, and anger when compassion is withheld. my goal is of course to allow all of this to wash over me without reaction - to recognize the absurdity of it all and let it go. but i've got that damn human nature..........

[AllentownJake]

61. There used to be a name for that tribe

Christian, sadly, it has been taken over by a bunch of dominonist fascist and has been for years since Constantine.

[MrsCorleone]

70. Agreed!

:toast:

[TicketyBoo]

33. But as I said in Post #30 of this thread,

we had a loan officer of a local bank telling us we could afford a house which I absolutely knew was out of reach for us. I really wanted that house. The loan officer was telling us we could afford $35,000 more than what the asking price was. Under these circumstances, unless you really know what you're doing, your inclination would be to believe that loan officer who was telling you what you wanted to hear. The bank was simply going to sell the mortgage, so there was no incentive to get us into a mortgage we could actually afford. As a matter of fact, the bigger the loan, the bigger the commission on the sale. This was a nasty, nasty business, and it isn't really greed by the purchaser driving this because they are sold a bill of goods. Yes, it's what they want to hear, but it is a total con-job. Nobody would willingly walk into something that was destined for catastrophe. A home buyer should be able to trust a banker not to get him into an unaffordable mortgage, and you simply can't these days. That is the simple truth.

[Missy Vixen]

40. Is that a fact?

We bought less house than we could afford, then we were laid off for eight months.

You try an "affordable" house on unemployment.

We did NOTHING wrong. The fact remains that it is necessary to purchase a home if one wants to take advantage of tax deductions, period.

I am SO sick of reading this crap, over and over. Those who stick their noses in the air and insist that those who dared to buy a house "had it coming" need to get over themselves.

[sojourner]

42. that's the point of this post, actually. I am so sorry for what you're going through.

[TicketyBoo]

132. A suggestion,

if you haven't thought of it and are nearing the end of your rope, if it would help any, go to your lender and ask if you can make interest-only payments until you can get back on your feet. (This will extend your loan, of course.) Most lenders will agree to this rather than face foreclosing on your house.

Now, if you're at the beginning of your loan, it won't help much (if at all). But if you've paid on the loan for a few years, this may help.

Good luck.

[Hatchling]

Living on disability here.

I had more than one real estate agent call and try to get me in the market for a home. Even when I told them how much I earned, they claimed they could get me a mortgage close to what I'm already paying for rent.

[Sinti]

24. K&R - well said n/t

[Mopar151]

26. Friend of mine was an appraiser

He told me that upward pressure on prices is largely driven by the real estate agents. Among other things, they push hard for yearly appreciation approximately equal to their (6%) comission, to protect the property flippers. And when you're dealing with bank owned property, the banks will turn up the heat on the appraiser as well.
There is a lot more chicanery that goes on with rental/investment property, which drives up rents, which drives up prices....

My depression - raised relatives LOVE the term "bankster", too......

[TwilightGardener]

27. I haven't been "told" by any bank or credit union that I can afford

more than what I knew I could reasonably afford. This just hasn't been my experience in purchasing two homes. I mean, really, someone shows you a typical monthly payment, you don't know if that's within your budget? I know several people who bought really, really nice new houses on roughly the same income as my family (while we bought a fixer-upper), we have NO idea how they swing that payment every month. So...no. No compassion for anyone who was "tricked" into buying beyond their means. Jesus, at some point people have to behave like adults and take responsibility for their actions, I don't give a good goddamn what the bank told them. BUYER BEWARE.

[TicketyBoo]

36. Well, you haven't had our experience, then,

because that was our exact experience. They were saying we could afford way more than we could. We had bought before, so knew better than what the bank was telling us, but I can absolutely appreciate the circumstances of those who have not purchased a home before being duped into a mortgage they could not afford. It would have been so easy for it to have happened to us. I thank God that we had been there/done that so we knew better than to leap at that mortgage that would have sunk us. We walked away, but it was tough, and if we hadn't known better, it would have been so easy to have been trapped into a mortgage that would have spelled doom to us.

[TwilightGardener]

60. I guess I haven't. I remember feeling both times like we were LUCKY

to get approved for our very modest homes. We really felt like we had to prove ourselves and jump through hoops, and our loan amounts were very conservative, especially for this day and age. The only person who tried to get us to pay more than we could afford was our realtor, who found out what we were approved for and then insisted on showing us houses at the very top of that range and beyond. We dismissed his suggestions and he was peeved when we made an offer on a cheap house, but who cares? Here's the thing, though--the banks and the realtors can't get away with putting people into unaffordable homes unless the consumer is willing and overcome with greed. It's a consumer-driven problem, because who doesn't want a nice house? Who doesn't want to call up family and friends and impress them with how successful you are? Who doesn't want their kid in a tip-top school district, given the chance? You see something you want, and you just WANT it, you don't care what kind of loan or payment you're getting into. We've all been there. It's like the car dealer who says, "What will it take to get you into this car TODAY??" That's the way folks have been behaving, and banks take advantage of that. Their job isn't to regulate your finances for you, or determine what's best for you--they exist SOLELY to make a profit, and will behave accordingly. Anyone who thinks a loan officer is looking out for his or her best interests is a fool. If they offer a conservative amount, they're hedging against default, and if they offer more than someone can afford, they're maximizing profit. Either way, they're looking out for their own bottom line. Consumers have to do the same. When our culture of instant gratification, and ego, and 3000 sq ft, and four bathrooms, and three-car garages finally changes, then so will the lenders' practices.

[TicketyBoo]

67. Again, that was NOT our experience.

This loan officer in a LOCAL BANK was trying to get us to get into this house. It doesn't have a lot to do with greed. Yes, we all want the best for our families, but you're sitting across a desk from someone who is looking at your loan application. Supposedly, a loan officer should know what you can afford when they are looking at your application. And we were told that we could afford the home we were looking at plus $35,000 more than that. I knew we couldn't even afford the one we were looking at, never mind an even more expensive home. But if we had been first-time home buyers, the inclination would be to believe the loan officer. I mean, they're supposed to know what they're doing, right? And she had the figures right in front of her and was telling us this. It made me go home and check our budget, trying to figure out what she was seeing that I wasn't. It just didn't add up. But if you were young and dumb (or old and dumb) and naive and trusting, I can certainly see how a lot of people ended up in way over their heads, and greed doesn't have much to do with it, at least not on the borrower's side. The "lender" was out to make that loan as big as possible because they had no plan to hold onto that mortgage, so the bigger the mortgage, the more money they're going to get when the sell it to someone else.

A lot of people who are in over their heads don't have some big old mansion. It can happen with a very modest home, especially when you have lenders crawling out of the woodwork wanting you to refinance every few months and trying to convince you that it's the "smart" thing to do.

This was absolutely predatory lending, and it's still going on to some extent, although with lowering valuations, it's not as lucrative as it once was.

[uncle ray]

35. i have plenty of compassion for those who actually got screwn.

the situation is not as simple as good guys vs. bad guys. there is plenty of blame to go around, and yes, some of the borrowers are the ones to blame. the analogy is more like the sucker who gives 5 grand to a nigerian scammer, hoping to claim a million dollars that he is not entitled to, than a little old lady who got snookered for a roofing job. there and still are people on both sides gaming the system.

[sojourner]

45. SOME -- not most -- and probably fewer than you think ARE guilty of simple greed.

But read the posts here. More often than not it's a case of believing what what being touted, and then having no recourse after the fact. OR, of taking advantage of good economic situation and then experiencing the rotten effects of a huge economic downturn (losing your job that seemed so secure at the time) or seeing your credit downgraded by the bank just when you expected to refinance that loan.

[winyanstaz]

38. K & R....good post..thank you..

[earth mom]

54. Problem is, there are lots of people who bought more house than they could afford who are in trouble

now.

It's just that people who didn't are being painted with that same broad brush while the jerks who caused this mess walk away foot loose and filthy rich. x(

[sojourner]

56. truth

[RB TexLa]

57. By all means, we can't blame anyone for their part in something.

[sojourner]

66. you can. or you can look at walking a mile in their shoes. it's a choice of worldviews. one leads

to having compassion (which usually spurs helpful action) and the other leads to justification and rationalization and allows one to pass on by without doing anything.

[SOS]

69. After watching small town visitors to NYC get taken by Three Card Monty dealers

I always blame the tourists.

Bunch of suckers.
They should have known better.

[DuaneBidoux]

59. Some did. But there was a general mentality that forms like in any bubble.

Many people did indeed buy houses to try and "flip" them knowing they would not be able to make the payment over any long period of time. This was by far the minority, but it did happen, and like anything, it was one part of a very complex formula of what caused the bust.

There were many people who indeed should never have been more than renters in the first place. Not everyone, in fact a fairly large minority, has the skills or the income to have the responsibility of owning and maintaining a household. By definition many of those people could not have known they were getting in over their heads and it was the responsibility of lenders to not take advantage of them.

One of the biggest systemic problems was (and still is, doesn't look like Obama plans to correct it), that the same people that make a lot of money from writing the loans stand to lose nothing if the loan goes bad. They have figured out how to repackage the loan and hand the risk off to someone else. The whole banking system is fucked up, and if we don't get that fixed we will end up right back where we were real soon.

[juno jones]

64. "Buying More House" conjures up McMansions.

Where I lived modest 800-1200 sq foot houses were going for 250-500,000.

Interesting how the victims of this market and scam are the new 'cadillac welfare queens' even to liberals who should know better.

[sojourner]

65. that's what I'm saying. the meme of personal responsibility has

taken hold in the collective and it appears to give everyone a pass on caring about others, because we all "know" that if somebody is in a bad pickle, they got themselves there by their own bad choices. too bad for them!

this is what infuriates me more than anything else today. the tearing of the fabric of civil society is rendering all of us more vulnerable (easy prey) and since the game appears to be "who is the most cunning predator/prey" there is NO moral outrage and NO societal support for victims. Just blame and more blame.

sad, sad state of affairs.

[Political_Junkie]

72. Thank you

Lost my house last year and am sick of hearing how it's my fault.

[Alcibiades]

75. There were people who did this: mainly very well off people

Upper-middle class people looking to cash in and turn their houses into piggybanks were probably far worse actors than any of the poor folks. I think the mortgage crisis was probably brought on much more by these folks, financially astute folks who should have known better, but who were looking for a quick buck.

Take my Republican stepbrother. Sold his house out in Cali, bought a trendier one on the coast for $900k. Made improvements and had it reappraised at $1.8 million. Took all of his newly-minted equity out in loans, which he used to support his fancy lifestyle and make further improvements, until such time as the market dropped out. Now he owes well over a million on a house that nobody ever paid that much for. The rich part is that he expects a bailout from the government, so he has stopped making payments, even though he could afford them.

How many people like him are out there? The losses he will cost the system are equal to those of at least a dozen or so "subprime borrowers" that seem to be the focus of so much attention.

Let me say it again: much of this crisis was caused by rich assholes living beyond their means. When someone says someone "bought more house than they could afford," these are the folks of whom I think. Fuck them.

[Mimosa]

183. AMEN, Alcibiades!!!

I've seen plenty of that.

Alcibiades said:

How many people like him are out there? The losses he will cost the system are equal to those of at least a dozen or so "subprime borrowers" that seem to be the focus of so much attention.

Let me say it again: much of this crisis was caused by rich assholes living beyond their means. When someone says someone "bought more house than they could afford," these are the folks of whom I think. Fuck them.

Here in ATL where we moved when Katrina happened I also observed all the overbuilding. People tend to forget how much speculative developers have contributed to the mess.

[Recursion]

83. Some of the anger comes from those of us who feel priced out by them

That is, in a rational economy I could afford a home, but people who felt the need to buy, buy, buy whatever the price raised the prices enough to make that impossible for me.

[Kid Dynamite]

84. It is always refreshing to know that "tough love" is alive

and well on DU. Makes you feel all warm inside.

Also, it might be a sort of vicarious denial. After all a con man could never win *their* blessed hearts and then proceed to hustle them blind..

..

..

makes ya wonder

[Patchuli]

90. A pox on the skunk that unrec'ed this!

K&R!

[treestar]

91. It's people who can't afford a house at all

It's hard to get sympathy from those poorer than one.

[autorank]

92. I'm thankful for your message,k*r

Why aren't we seeing an investiation of mortgage fraud, from top to bottom.?

We know that at point, there were 10,000 ex felons working in Florida's real estate finance
industry. How did that happen? By chance.

We know that the top dogs factored in a fairly high default rate, 7-8%, for their subprimes
business. They were ready to sacrifice many buyers/ That was by plan, it just went haywire
and the losses had too much impact.

Criminals are criminals. But they're all walking.

[Riley18]

94. The banks were given so much TARP money with no strings attached.

They were deemed "too big to fail". Too bad our government does not feel the same way about people who qualify for the Making Homes Affordable Program. The banks are not complying with the program in any way, but yet nothing is being done about it. All the banks are going to do is keep the money, and take advantage of a whole new group of buyers through the $8,000 tax credit. There are so many people trying to work with their banks for months, and are no closer to a modification than they were before they began. The latest tactic the banks are using is to go ahead and foreclose even while the family thinks they are working on a modification. They get a knock on the door and are told to get out. These are not just people who bought more than they could afford either. Many people that are trying to hang onto their homes have lost jobs in this economy. They only need a fair modification which is what the the HAMP was designed to accomplish. The only problem is that the greedy banks are not going through with their end of the bargain.

Check out LoanSafe.org if you want to see for yourself.

[boppers]

118. "All the banks are going to do is keep the money"???

Uhm, TARP was a short-term loan program, not a grant.

That being said, I agree that they sure as hell aren't doing what we wanted with the loans.

[SammyWinstonJack]

95. K&R!!!

:applause:

[Lydia Leftcoast]

97. People were practically browbeaten into buying houses

Lord knows I certainly came under such pressure.

Everyone but everyone (bank advertisements, TV financial advisers, relatives, friends) was telling me I was silly not to buy a house ca. 2000. Why, there were condos with special deals for first-time buyers!

So I looked at the properties and did the math. I saw that in order to buy a small, mediocre condo equivalent to the apartment I was renting, I would have to pay more than I was paying in rent PLUS association dues PLUS property taxes. All to get back 35 cents on the dollar on my interest charges? The expenditure would far outweigh any tax advantages.

I passed.

But a lot of people gave into pressure. One friend who had been practically begging me to buy lost her job and had to sell her house after having done about $15,000 worth of renovations. By that time, she had only $18,000 worth of equity in the house, so she went to all that trouble for a $3000 profit.

As a renter, I could leave on thirty days notice. My rent money, which provided me with shelter, was no more "wasted" than my grocery money

[bertman]

98. Rec.

[pundaint]

99. Agreed, this is not the time for minor fine tuning.

In reality Corporations are nothing more than a set of Ledger Books with specifically delineated rights. Somehow in the 1880's the Supreme Court granted them Personhood. That mistake is now costing us.

We are now losing the fight between People and Ledger Books for control of the country.

Ledger Books say Wall Street and Banks have the power, and the Supreme Court has been affirming this.

Ledger Books have been hiring people who enhance their power by wielding the weapon of marketing against the People's interest. It really is a science, and it is increasingly being used against the interests of People. Using this Science, Ledger Books keep the People fractionalized because People think other People are the problem.

Historically People in America have repeatedly had to reign in these Ledger Books from time to time. Now is one of those times. But Ledger Books have never had this much power in the history of Democracy.

Fortunately People are the ones with votes. What we need is the understanding that We are all being badly led by Ledger Books. Even with the best of intentions, Ledger Books are a bad choice for leadership because Ledger Books have no way of understanding the needs of people. So we must wrest control from the grip of these inhuman Ledger Books.

It will be hard because we have turned our whole world over to the Ledger Books, and the masters have become the servants.

[Deja Q]

101. And the other line "saving up for college". At $12000+ per year, for lowt wages, nobody would be ABL

to save up for it before they died.

It's far more than compassion. The whole fucking system is bonkers.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x7096250
I just posted these costs/wages tidbits. It can instantly be accounted for online. There's no spin.

[nini]

103. I agree and disagree

The banks are surely evil and corrupt. But I also see the McMansions, boats and RVs outside, with big SUVs in the driveway. Some Americans just want more crap than they need. Jesus, I grew up in a family with 6 kids in a 3 BR house. We managed on very little and were very happy.

Nowadays, little Morgan and Tiffany need their own room with TV etc. How much crap do we need???

This issue is a double edged sword in some cases.

[bobshin]

106. I did buy much more home than most could afford...

more than 7000 sq.ft worth. But at the time it was priced less than a closet in NYC. Even though I had a great job with great pay and even after refinancing three times, retained at least 70% equity, the taxes forced me to sell in this crappy market. They quadrupled in the last four years and made up more than half of my mortgage payments. The backlash of all of this is that values are shrinking which means taxes will inevitably cause the second wave of foreclosure madness. Unless the government shrinks spending to reduce taxes we're all screwed, not just innocent victims of lending institutions.

[annm4peace]

107. FIGHT BACK

in some cases Judges give justice to the people, in some cases local politicians are calling for moratoriums. and in some cases the people start to fighting back. (with non-violence)

I just had to share one story that is still paying out but here is what is happening now.
This in happening in Minneapolis MN.

******************************

Breakthrough in Leslie Parks case!
Nov. 25, 2009
Thanks to all of your calls to IndyMac/OneWest, we are seeing some incredible progress!

1. IndyMac/OneWest initiated phone contact with Leslie on the night of Tuesday, Nov. 24. This is after months of not being able to talk to them.

2. On Wednesday, Nov. 25, IndyMac/OneWest started the process of rescinding the Sheriffs Sale! This means that eviction proceedings, which could have started the 30th, will not happen. * This is a fantastic development for many reasons.

3. Instead, on Nov. 30th Leslie Parks and her advocates will have an initial phone conference with IndyMac.* We will hold out for nothing less than the Parks family getting the home back at terms they can afford.

We should all be proud of what we have achieved so far, but we will keep up the pressure as it is needed.

For those of you in the Twin Cities area, we are going ahead with our bannering against foreclosures during the morning rush hour of Monday, Nov. 30. Gather at Leslie’s house at Park Ave. & 38th St. between 7:30 a.m. and 8:30 a.m. We will spread out between there and Portland Ave. After today’s events, Leslie Parks states, “God is good.”
Come celebrate this breakthrough with us and get more details on the case!

*Yes, we got it in writing

In Struggle,
Poor People’s Economic Human Campaign: 651-497-4644, 267-439-8419, economichumanrights.org
MN Coalition for a People’s Bailout: 612-822-8020, 612-296-5649, mn-peoples-bailout.org

Background (with some updates)
Leslie Parks lives in south Minneapolis. Her family has owned the building for nearly 20 years. Because of needing to pay for city-ordered storm windows, Leslie’s mother was swindled into getting an ARM (adjustable rate mortgage). The man from Allied Mortgage who sold her the ARM lied and insisted it was a conventional loan. It is important to note that Ms. Parks had perfect credit and qualified for a conventional loan hands down. But she was lied to, got swindled into an ARM, and after months of trying to keep up, both Leslie and her mother lost their good credit and went into foreclosure.

Time is short. The ‘redemption period’ ends Monday, Nov. 30. If nothing changes, at that point IndyMac can start eviction proceedings.

OneWest/IndyMac Federal Bank FSB is the bank that owns the mortgage. Some IndyMac reps are claiming that they won’t do a “short payoff” during the redemption period. Leslie is working on securing financing and actually has enough for a viable short payoff, if only IndyMac would agree. “I feel like IndyMac is giving us the runaround again, like have done since the beginning,” states Leslie Parks. Advocates have noted that it is common for banks to agree so some kind of short sale during the redemption period.

The FDIC stepped in to bail out the IndyMac investors and gifted the bank to OneWest. In this time of economic crisis, we need to make it clear that it’s time that the people get some help.

[rumpel]

108. thank you n/t

[gristy]

109. Agreed. Was there not a time that the banks were not allowed to loan you money

for a house you could not afford? I have a vague recollection that they checked your income and your assets minus debt, and they used a formula to calculate how much you could afford. Didn't they?

[skepticscott]

144. Banks were NEVER

"not allowed" to offer you a loan with payments that were more than you could afford. They perhaps used to be more restrictive about how big they would allow your payments to be as a percentage of your income, but that was entirely for their benefit, to minimize default and to maximize profit. They did not set such restrictions as a favor to borrowers, ever.

[bettyellen]

155. my how you parse....restrictive = not allowed and it matters not why. consumers were unaccustomed to

the idea that banks wanted to make loans whether they'd go bad or not.....people assumed that woun;t be in the ban's best interest becaus for most of the last century- it wasn't. this was a new thing and with the proliferation of media fiancial planning gurus on tv and in the bookstores, somehow there was little warning.
so, what do you do for a living?

[skepticscott]

163. You can call it parsing

if it makes you feel superior, but the difference between guidelines that lenders adopt voluntarily and internally and legal restrictions placed on them from outside. (that would be the "not allowed" part) is a real and substantial one, as you well know. If it weren't, what would be wrong with letting today's financial institutions self-regulate?

And I don't work in the financial industry, nor does anyone I'm related to, so if you're hoping to dismiss my arguments because of bias, you lose there too.

[bettyellen]

169. it doesn't make me feel anything. fact is the rules changed +despite Bloomberg et al, consumers

were largely left in the dark. most people did not realize that changes in the law made banks stopped caring if ther loans were any good. they were quite suddenly "allowed" even encouraged by their bosses to make bad loans.
and consumers-armed with more fianacial advice than at any other time in history..... they probably had an expectation that they'd be informed of this. many people found out way to late.

[Waiting For Everyman]

114. The philosophy today is: anything any shark can get away with is ok.

I agree, OP.

The pros have the responsibility to the layman. Period. Not vice versa. Those loans couldn't go through without the pros approving every bit of them. That was their job. They didn't do it.

In the 1970's and early 80's, when I was licensed in RE, none of this was legal. It's purposely legalized theft, pure and simple. The thief commits the crime not the person held up, and the homebuyers were just a means to an end, not even treated like real people, and no legitimate service was provided.

The real perps (the pros) need to be prosecuted, starting with the ones who profited the MOST - the biggest players (the big banks). Otherwise, this has not been cleaned up, much less fixed, at all.

It's simple. Put back (all of) the laws we once had, which worked. Word for word. Rewind to pre-1980. Put back everything that was repealed and watered down, undo all the legalized crime, and prosecute it. (Including those who got the legalizing of crimes done in the first place.)

We even used to have usury laws, once upon a time. And loans were made. There CAN be limits - on every industry, and there SHOULD BE. This idea that business can't be done if laws limit their conduct within constructive bounds, is BULL. It's anti-government idealogical nonsense which brought us here. It's nothing that was necessary, or unavoidable. We (as a society) did this to ourselves. And we can undo it, too, just the same way.

We need a New Deal 2.0.

http://www.newdeal20.org/?p=6560

http://www.tcfrank.com

[SoCalDem]

116. The "house-bubble" would-be-buyers are the ones in a real pickle

since they bought at the top of the market, and are now on the hook for payments on a $400K house that's "worth" $200K..that's part 1

But there is also part 2

Part 2 is the people who bought a long time ago, and in the frenzy of EZ-Re-Fi Frenzy, started using the house as an ATM

My best friend let herself be talked into this by her asshole husband.

She bought a very nice 3 BR 3 car garage home in 1991, for $99K..with $29K down.. her house payment was only $525.00 a month... 3 years into her home-loan years, she met "Asshole" and married him.. He immediately started working on her, and after multiple re-fis , when they were foreclosed on a few months ago, they owed a whopping $335K on that house.. It sold last week at auction for $88,500.00..

She was disconsolate about losing "her" house, but I talked her into walking away (they split up and she was trying to hold on by herself)..

She was very upset about losing "her house", but she finally saw that what she actually "lost" was the $29K she put down, and the security a nearly paid off home would have brought her at her "now age".. They took $207K OUT of that house in cash..and used it to pay for trips to England (for him to see his daughter), to pay off cars, to pay off his gambling debts, to pay off credit cards etc.

So actually they DID "make money" on the house, but in doing so they lost the ability to live there..

She's fine with losing it now, once she realized that she really "lost" it when she married Mr Asshole, and let herself be taken in by his big plans..

If you buy a house and do NOT remove equity on it..and pay extra so it's paid off sooner, you "win".. If you buy in a seller's market, then tap the equity every time you can, you leave yourself open to all kinds of horrors, if someone loses a job or if medical bills pile up..

If a house is used for a home, and not an investment, you usually win.

Our house is a crappy house, and in the years since we signed up to buy it (1982) we have been "upside-down" many times... It only matters if you are upside down when you have to sell it ..

[arikara]

119. Looking at it that way

paying 29k to get rid of that joker was cheap. I know very well what she is going through and she will be fine. Back in the early 90's I lost my house along with everything else... but it was worth it to get rid of my expensive joker with the deal too.

[JDPriestly]

117. Besides, the bad mortgages only caused a small part of the problem.

The gambling on whether the mortgages would be paid off (and other such things) was the real problem.

[JNelson6563]

131. I remember house shopping with my hubby long ago.

My now-ex and I were approved for x amount. I knew there was no way we could handle what they said we could. It was just that simple. I knew what we made and what we could afford as a monthly payment. We didn't go anywhere near the loan size we could have for that one very simple reason.

Of course I didn't feel I absolutely had to have 5000 sq. ft. with granite counters and all the other high end stuff people can't seem to live without anymore.

So yeah, the banks are wiley bastards but consumers do bear some responsibility too.

Julie

[era veteran]

135. Fundy's have been encouraging people to buy more than they can afford

Known as prosperity gospel. See December's Atlantic, Hanna Rosin's cover story.

[secondwind]

136. Read Nance Gregg's article today......she calls it "lack of conscience".......n/t

[DailyGrind51]

137. The "laissez faire" crowd would decriminalize flim-flam scams.

What is the REAL distinction between falling for the purchase of swamp-land in Florida or getting sold on a home with the line, "Your mortgage payments will actually be less than what you are now paying for rent!"

[skepticscott]

166. None

if the loan agreement that you read, understand and sign contains false information about the actual payment amount, in which case the lender has violated the law.

[Trailrider1951]

138. That's right, and if any one of us loses his/her job at any time,

then that person has "more house than they can afford". Something to think about.

I confess that I bought a house in the 2006 frenzy. I got one of those toxic mortgages also. It was an adjustable with a two year pre-paymnent penalty. Interest rate about 8%, adjusting to 10+ %, total payment $768. That's the only mortgage I could get because I had a bad credit report (score about 570) stemming from some unemployment issues I had had circa 1998. Loads of info on those reports that was beyond the legal reporting time. I had found my dream house, and it was affordable ($77,000). I chose to buy it with that mortgage, and I spent two years cleaning up my credit report (score now about 650). Last February, I re-financed to a new 5.5%. Total payment is now $640. That is about what I would pay for a nice 1 bedroom apt. here in the Austin area. Instead, I have a nice 2800 square foot house on 1/3 acre out in the boonies, where I can have my pets and peace and quiet. But, if I lose my job, there goes my ability to pay for my house.

[Bentcorner]

142. Why is it then that only some people were "victimized" by dishonest banks and

financial institutions? Not everyone over payed for homes in the housing bubble. These dishonest banks and financial institutions couldn't do what they did if people were not lined up, chomping at the bit to pay too much.

And yes, I do blame your hypothetical old lady that pays a con-man to fix her roof. She should know better. I'd like to think that living a long life gives you more than an arthritic hip and wrinkly skin. I'd like to think that it also gives you a certain amount of wisdom.

[TheCowsCameHome]

147. I don't know where to begin with you.

You are really something.

[Bentcorner]

150. Why thank you. Thank you very much.

[alarimer]

148. The do bear some responsibility though.

I mean, on what planet can a person making $30K afford a $300,000 house?

[Kaleva]

158. +1

[ecstatic]

170. If the broker told them they could afford it, they are not to blame!

:crazy:

[Don Draper]

151. I agree 100%

I live in a very "red" area of the Midwest and I hear idiotic conservatives blaming the buyers all the time. Not once have I heard them call out the evil actions of the lenders. I often wonder what makes people this dense?

Anyways, well said!

[kenfrequed]

152. Besides it is a repuke talking point.

We are supposed to think somehow that it is an urban (read: black) problem and that somehow minorities and poor people are to blame for buying more house than they could afford. It is total BS and not born out by any factual analysis.

[Turbineguy]

159. It's the nature of bubbles

but the people handing out the mortgage money have the greater responsibility. Banks that followed sound business practices or limited their high risk exposure did fine.

[KansDem]

161. "...where is any sense of compassion in this world?"

"Sense of compassion?" I dunno...is there money to be made with it?

[sojourner]

181. not really..........and that's the sad answer to the question, isn't it?

[quaker bill]

162. Even my credit union

was willing to finance me more house than I wanted to own or pay for. They are by no means loan-sharks or anything even similar. At some level we all have to set our own priorities. I wanted a house that was adequate for our family and that either one of us could feasibly pay for if the other was out of work for any reason. This turned out to be roughly a little more than half the mortagage we were pre-approved for.

My wife has been out of work (semi-voluntarily) for a bit more than two years now, and I am making the payments quite comfortably.

Yes, there were loan-sharks out there selling little bits and pieces of the "American Dream", and yes I hold them much at fault and wish jail time for many of them. However, no one was compelled to buy it.

I once had a neighbor who fashioned himself financially savvy and often offered me deals to "help me out". One day he was "pidgeon dropped" by a con man he met in a grocery store parking lot, for the sum of 20K. The con man was indeed guilty of a crime, but the crime itself counted on my neighbors avarice for unearned quick cash to be successful. I felt sorry for my neighbor and hoped for him to recover the money, but honestly did not spend much energy worrying about it.

[MadHound]

174. Sorry, but personal responsibility does play an important role here

After all, you are making what is probably the biggest investment of your life. If you don't know jack shit about what you're doing, then you learn. If you don't want to/can't understand the material that you need to learn, then you go out and find an objective, knowledgeable third party who can explain all of the pros and cons of the deal to you. You read the contract that you make with the lending institution beforehand, and understand it. This is your responsibility when you're buying a house, not the bank's, not the government's, your's.

You also follow the second golden rule, the one that keeps you out of serious trouble: If something seems too good to be true, then it probably is and you should walk away.

Yes, lending institutions were pushing a con job. But as in any con job it takes two to tango, and far too often borrowers let their greed get the better of their common sense, and they need to bear the responsibility of their actions. When somebody tries to push you into a half million dollar house when you're making fifty thousand, something called common sense should kick in and say "Hey, I can't afford that." But for many people, greed drowned out common sense and they got burned.

Yes, lending institutions bear a major share of responsibility for their actions, but ordinary people who bought into the madness deserve their fair share also. Hopefully we've all learned some serious lessons from this, things like our need to re-regulate the financial sector, and how to buy a home and manage our finances.

[Taitertots]

185. I'm sick of idiots who bought more house than they could afford

The bankers didn't twist their arms and make them sign anything. Anyone who would take out a mortgage without understanding the conditions is a moron. There is NO excuse for something that stupid. Anyone who thinks otherwise should PM me because I've got a good deal for them on the Mackinac Bridge.

As someone who lives within their means, I'm not willing to subsidize people who don't. That just means my quality of life is going to drop even further to prop up people who are already doing better than me.

Why don't we bail out the people who actually pay their mortgages as opposed to the people making bad decisions? This will increase GDP and decrease unemployment. This will create jobs for the people who are going to lose their house.

[treestar]

192. These are right wing talking points

The banks are even bigger experts, they should know who to lend to and who not to lend to, so it's not as if they are blameless. No one twisted the bankers' arms to make the loans either.

[Taitertots]

200. Banks making loans available is a good thing

It is only a problem when irresponsible borrowers abuse the system to try and get more than they can afford.

You know you don't have to take the largest loan made available by the banks.

[Rabrrrrrr]

194. I agree - I thik the banks need some blame, but basically, people didn't do their homework.

Anyone stupid enough to go into what is likely the largest purchase of their life, without having any knowledge about how mortgages work or any care for their own future, don't deserve a lot of "Oh, gee, you got duped, you poor, poor victim".

Nope - they brought it on themselves by refusing to educate themselves, by refusing to be temperate, and by refusing to take any kind of real look at their financial situation, as well as their own complicity in buying in lock, stock, and barrel with the consumerist American pathology of "Bigger bigger bigger!!!! Better better better!!!! Gotta do better than my friends!!!!!!!" leveraging themselves into bankruptcy to support a lifestyle that they can't fucking afford for the simple reason that they're afraid of looking "poor".

Well, now they look poor - and they look fucking stupid, too.

Banks should have done a better job and offered realistic mortgages; absolutely no doubt on that.

But unless those banks were holding guns to peoples' heads and making them sign on the dotted line, they're blame is reduced significantly.

And seriously - why would anyone trust a banker to know what the hell they're talking about? I've talked to so-called bankers when getting loans and doing financial transactions, and the ones I've come across are dumber than me, and they're supposedly "trained" by their banks to be able to do their jobs.

Well, they're not. And anyone who goes blindly into one of those meetings assuming that the banker is an expert and isn't just full of shit, is also a moron.

[QC]

193. I didn't buy a house during the bubble because I knew that I could not afford one.

I'm not a financier, by the way, just a simple schoolteacher.

Other people who did buy then, and who did buy more than they could afford, are now being foreclosed.

Some of these people do bear some responsibility for their situations. Like so many other issues, this one has some greys that are being lost in our usual black/white screaming mode.

[Taitertots]

199. Neither did I and now we are being asked to pay for their over spending n/t

[sojourner]

206. who is asking you for anything? fine to give money to bankers, no strings. fine to bail out AIG. but

god forbid we help out our fellow man who MIGHT have (because we know somebody did) tried to make a profit and lost. nevermind the 2nd generation immigrant or 1st generation college grad who only knew about the possibility of having a piece of the american dream, and didn't have the foresight to gain an MBA.

wow.

[Fla Dem]

197. The scheme was interest only or low mortgage payments and escalating home prices.

The mortgage brokers and bank loan officers, many times recommended by the realtor, would sit the buyers down, who had little to put down on a home, give them a low payment loan for the the first 3-5 years, that would then ballon up after that. But they would say, look how much home prices have gone up in the past 3-5 years. You home will probably go up as well. At that point you will have equity in your home and you can either sell it or refinance. I worked in a real estate office, not as a realtor, and saw a lot of this going on. There were people I just knew could not afford the homes they were being shown by some realtors. But they would show them the American dream and the buyers would be hooked. The realtors would show them how much the home had gone up in the past 10 years, leaving the impression the value of the home would continue to climb. Then they would give them the names of mortgage brokers to go to.

Not all the realtors did this. There were more that were honest, and would tell potential buyers to go get qualified for a loan before they would even show them any houses. But there were enough realtors across the country that took the easy way out to make themselves a good commission.

[Honeycombe8]

198. Not all those people were duped. I bought a house years ago. I knew what Icould afford.

If someone had told me that I could afford a 3,000 square foot mini-mansion, if I "creatively" finance this way or that...a red flag would've gone up. That's because I KNEW that a person with my income could not afford a big house like that.

What most of the people were PROBABLY told is that, don't worry, just SELL IT before the rates go up, or whatever. When the bottom fell out of the house market, they couldn't sell and get out of their trouble.

Some people were duped, esp. unsophisticated buyers. But many of the people knew they were buying more house than they could afford. Many of the foreclosures are of large house, where the buyers were working business people. Not dummies, by any means.