These are tulmultous times. No more investment banks on Wall Street

BaggedLancer

NO WAY! People are going to have to have good credit to get a loan? Tell me it isn't true!

exalted512

BaggedLancer wrote: »

NO WAY! People are going to have to have good credit to get a loan? Tell me it isn't true!

I know! Such a novel idea, why hasn't anyone thought of this sooner?
-Cody

bobman1235

It's kinda telling that everyone blames the lenders for giving out loans to people who couldn't afford them, rather than blaming people for borrowing money they couldn't pay back.

Who knows better what your financial situation is than you? You know how much you can afford, and if you're a moron, you borrow more than that.

If someone who makes 35k a year walked into a Ferrari dealership and mortgaged away everything he had to buy a Ferrari, would you blame the Ferrari dealership for selling him a car he couldn't afford, or would you blame the guy for being a moron?

MikeC78

They're both morons. However, I blame the lender more for pushing such a big mortgage in the first place to get more initial money in his pocket.

exalted512

bobman1235 wrote: »

It's kinda telling that everyone blames the lenders for giving out loans to people who couldn't afford them, rather than blaming people for borrowing money they couldn't pay back.

Who knows better what your financial situation is than you? You know how much you can afford, and if you're a moron, you borrow more than that.

If someone who makes 35k a year walked into a Ferrari dealership and mortgaged away everything he had to buy a Ferrari, would you blame the Ferrari dealership for selling him a car he couldn't afford, or would you blame the guy for being a moron?

I'm only 22, but I've known for years how stupid people are and how they are not to be trusted. So I ask myself this:

Who's actually dumber? The people who try and get the money? Or, the people who know the people can't afford it, and give it to them anyway?

The answer to that question is ultimately up to you, and it is a two street as it takes 2 to get a loan, but I'm only 3 years senior of a teenager, and yet I know not to give people money if theres a good chance I might not get the money back. In fact, I've had many instances of this when people have asked me money for lunch, or a drink. I've kindly said, "Sorry man, I don't have the money" This was in high school! I wasn't even allowed to vote, but I could make these decisions that.

So, ultimately, yes, I do blame the moronic guy that doesn't know his own means, but I do think that the lender is more of an idiot.
-Cody

unc2701

bobman1235 wrote: »

It's kinda telling that everyone blames the lenders for giving out loans to people who couldn't afford them, rather than blaming people for borrowing money they couldn't pay back.

Who knows better what your financial situation is than you? You know how much you can afford, and if you're a moron, you borrow more than that.

If someone who makes 35k a year walked into a Ferrari dealership and mortgaged away everything he had to buy a Ferrari, would you blame the Ferrari dealership for selling him a car he couldn't afford, or would you blame the guy for being a moron?

First off, yes the borrowers are morons, however... SERIOUSLY? These people working at the banks handing out the loans have ONE job. Assessing the risk of a lender. If I made $35k a year and asked you to lend me $400k for a Ferrari ...and you gave it to me, I'm pretty sure you'd be the bigger idiot.

Most people don't know how much they can afford. The bank does know and up until this thing hit, most people would be surprised to learn that the bank would just give them more money they they could afford. Used to be that it was hard to get a loan.

So, yeah. The borrowers were stupid and should have looked at their payments and made sure that they really could afford it, but there's NO excuse for a professional to be making these kind of stupid decisions.

The borrowers need to be held accountable for the money that they owe. The Lenders need to be held accountable for their stupid and illegal practices.


Edit: Dead on, cody and much more succinctly.

Polk user

BaggedLancer wrote: »

NO WAY! People are going to have to have good credit to get a loan? Tell me it isn't true!

HOW RACIST!!!!

Lets start calling our representatives and get them to threaten to sue the banks if they don't loan to poor people.(redlining).

Call Barney Frank. He'll get right on it.

bikezappa

Hope this isn't considered political.

obieone

Polk user wrote: »

Call Barney Frank. He'll get right on it.

Don't get me started on that POS! I think Carl say's it best:eek::mad:

http://www.youtube.com/watch?v=vjiUrh_aR64&feature=related

bobman1235

I didn't mean to imply that the lenders are innocent. It's just funny that the people who are actually defaulting on the loans are considered victims rather than complicit in their own downfall and the ensuing economic problems. Saying everyone is stupid is just a cop-out. Saying the lender should know better than you what you can afford is ridiculous. Yes, it's the lender's business to know your risk level, but only you know what you can truly afford. Plenty of people who would be considered "risky" are capable of making their payments. Banks lend money based on a risk assessment, not some innate knowledge. They would never take those risks if it were IMPOSSIBLE for those people to make payments. We tend to exaggerate things like unemployed people were taking out half-million dollar mortgages. It's more like banks would say "we're willing ot give you up to X dollars" and people take the maximum they can, rather than recognizing that that upper bound is probably a difficult thing to pay back. A friend of mine bought a house a few years ago, and he was told by the bank he could have up to 300k or something, and bought a house that was 300k, and now he's struggling (though making it work with roommates and whatnot), where he would have been just as happy and much more financially comfortable with 250k. The bank just knows he's been a responsible person and makes enough money to afford up to 300k, but until he starts paying (or not) they don't know if he can REALLY afford it.

exalted512

I do agree that people defaulting are not victims by any means.

But, lenders are better apt to see how much is too much for people. Why? People are stupid, like I said above. That and the the thought of "oo, its just a couple hundred more a month and I can get this awesome house", failing to realize how much that couple of hundred bucks adds up. So yes, reasonable people should be able to know how much they can afford. Unfortunately, in our society, people want more and more and better and better. What also is unfortunate, is that lending companies, to an extent endorse this.

That's why the lenders do what they do. They are professionals in their area, where as we are not. Otherwise, there would be no lenders. I could go online, type in some numbers, get them verified by someone, then be on my merry way without having to contact a lender. This isn't the way it works.
-Cody

tcrossma

I think the borrowers are largely to blame for getting in over their head, but I think the banks took a huge risk in doling out the low variable interest rate mortgages and assuming that the borrower could refinance in a few years to get a better rate. I view banks like car dealers -- both will do anything they can to make a sale. And make no mistake, securing a mortgage with a client is the same to a bank as selling a car is to a dealer. If there's any way for the bank to make a deal happen, they will find a way -- they do NOT have the best interest of the borrower in mind.

From my personal experience in dealing with mortgage lenders, I'd be willing to bet that most of the lenders didn't fully explain to the borrower the implications of what a variable-rate mortgage could mean should the market take a downturn. Or if they did, they downplayed the significance.

brettw22

I can't even imagine the amounts of money that Lenders made for that stretch of time off all the loans that were issued with such high risk........scary.

tonyb

Both are to blame,except you'll never hear most politicians put any blame on the voteing public.We are all the victims dontcha know.Banks became greedy for sure until the housing market took a dump and they were stuck with all these high risk loans with no good ones to bundle them with.Add to that good old uncle sam mandateing banks lend money to risky consumers to try and get more minorities into homes and you have a recipe for disaster.Seems like it all started to come apart when the price of gas took off towards the sky.As an....adult,is it not our responsibility to know what we are signing up for? Don't most have attorney's at closeings to represent our interests? Alot of people are more concerned with keeping up with the Jones's than reading the small print on a contract.Personal responsibility.....these days.....seems to be chained to a cinder block at the bottom of the lake.

dkg999

Plenty of blame to go around, that's for sure. I do put a significant share of the blame on the lenders, as they knew what segments they wanted to market to and did the research on what messages to use. When you tell certain demographic segments that they too can have a part of the American dream, and that there is a quick fix for some of their nagging debt problems, it's a powerful message. I think we'll be debating some of the ethics of the situation for years to come.

krabby5

The mortgage mess has hit home with me:

I just received a letter in the mail from my original mortgage company where I have a Home equity loan. Basically they are saying that I can no longer draw off of that account with the checks they send me. Now I never wrote checks from that account anyways, but the value of my home has dropped 16% from when I refinanced 3 years ago..:mad:

Nice...Figures...all I ever heard when I was growing up was that buying a home is a great, sound investment...it will NEVER drop in value..then I buy a house 5 years ago and it's worth less than it was when I bought it:rolleyes:

I guess should just be happy that I didnt get an ARM loan.

bobman1235

Houses drop in value all the time, it's just over a long enough period of time that they never go down. Assuming you want to stay where you are, I'm sure in another five years you'll be back up.

At least your property taxes should go down!

krabby5

bobman1235 wrote: »

Houses drop in value all the time, it's just over a long enough period of time that they never go down. Assuming you want to stay where you are, I'm sure in another five years you'll be back up.

At least your property taxes should go down!

exactly...I was saying the same thing to my wife..if our property taxes go up, I'm raising holy hell

dkg999

There's the wrinkle locally! Home values go down, so property tax values should go down, so property tax revenue goes down, but local government/services costs stay the same or go up. What's next ..... raising property taxes to compensate