Bush's bailing out of the irresponsible Options

[Hartmann]

http://seattletimes.nwsource.com/html/busi...mortgage06.html

Of course this still has to go through Congress where it will get a bunch of crap amended to it and blah, blah, blah.

It is not the government's job to intervene on the free market. If people are irresponsible then there is no reason to change the market to cater to them, hurting others who were prepared.

[pebkac]

I agree with impala (did I just type that?) on the fact that it was the banks that were irresponsible. They've been lending to people that they really shouldn't be lending to. It was just a matter of time before interest rates went up or the economy went bad and something like this happened. Maybe it isn't the best thing to do, but predictions are that this will be far worse than the S&L crisis in the 80s.

[Hartmann]

I agree with impala (did I just type that?) on the fact that it was the banks that were irresponsible. They've been lending to people that they really shouldn't be lending to. It was just a matter of time before interest rates went up or the economy went bad and something like this happened. Maybe it isn't the best thing to do, but predictions are that this will be far worse than the S&L crisis in the 80s.

I agree that banks do have some fault in this... However, people agreed to the terms of the loans which are clearly spelled out.

It's just like those places that give loans in exchange for your car title, yeah, what they do is a little shady, but the people who go in there and sign-up are just as guilty.

[impala454]

I agree that banks do have some fault in this... However, people agreed to the terms of the loans which are clearly spelled out.

To my knowledge none of you have ever bought a house (I'm sure I'll be corrected if I'm wrong). Mortgage terms are most definitely not clearly spelled out. Especially with ARM loans, which is what the President's plan targets. With these loans, lenders can basically change the terms of the mortgage at will. It's as if they have a little margin dial on their end and any time they want to increase it they just turn the dial and bam your mortgage payments double. Oh, you have to default? Shucks we'll just keep all that money you already paid us, take a huge chunk from the mortgage insurance company (driving up everyone else's mortgage insurance rates), then sell your house to some other poor soul who's buying their first home that we can trick into this situation.

I agree with impala (did I just type that?) on the fact that it was the banks that were irresponsible. They've been lending to people that they really shouldn't be lending to.

Well it's not even really that though. These people can afford the homes they're in. They're making every payment just fine, until the lender skyrockets their interest rate. If ARM loans were simply done away with, we wouldn't have any of these problems. The whole idea of a ARM loan is to suck people in with a low rate and then nail them with a high rate later. The sad part is the "low rate" has been replaced with the standard rates.

Is it partly the buyer's fault? Sure, but again I'm guessing none of you have ever purchased a home and have been through the process. It can be a daunting task when you've searched for a house for six months, find the perfect one at a great price, and then have to complete the loan process within a day or two or you'll lose the house to another buyer.

There are a lot of local city government sponsored first time home buyer classes/seminars/pamphlets you can take advantage of, I'd highly recommend them even if you post on Techsans and believe you already know everything about it .

Moral of the story:

FIXED
RATE
LOAN

[Hartmann]

To my knowledge none of you have ever bought a house (I'm sure I'll be corrected if I'm wrong). Mortgage terms are most definitely not clearly spelled out. Especially with ARM loans, which is what the President's plan targets. With these loans, lenders can basically change the terms of the mortgage at will. It's as if they have a little margin dial on their end and any time they want to increase it they just turn the dial and bam your mortgage payments double. Oh, you have to default? Shucks we'll just keep all that money you already paid us, take a huge chunk from the mortgage insurance company (driving up everyone else's mortgage insurance rates), then sell your house to some other poor soul who's buying their first home that we can trick into this situation.
Well it's not even really that though. These people can afford the homes they're in. They're making every payment just fine, until the lender skyrockets their interest rate. If ARM loans were simply done away with, we wouldn't have any of these problems. The whole idea of a ARM loan is to suck people in with a low rate and then nail them with a high rate later. The sad part is the "low rate" has been replaced with the standard rates.

Is it partly the buyer's fault? Sure, but again I'm guessing none of you have ever purchased a home and have been through the process. It can be a daunting task when you've searched for a house for six months, find the perfect one at a great price, and then have to complete the loan process within a day or two or you'll lose the house to another buyer.

There are a lot of local city government sponsored first time home buyer classes/seminars/pamphlets you can take advantage of, I'd highly recommend them even if you post on Techsans and believe you already know everything about it .

Moral of the story:

FIXED
RATE
LOAN

Have bought a home, several in fact. My dad and I flip two homes together every few months when we're not on the road. I buy one and he buys the other.

Terms of the loan are spelled out, especially the variable part. Rates on the loans are not just arbitrarily changed by the banks, they increase and decrease in flux with the market, allowing the bank to assume less risk. This is spelled out in the terms of loans. It may be in bank talk but it's there. Yeah, the terminology should be easier but people need to be doing a little research themselves don't you think, you even suggested it.

What this move has done is basically make me hold off pumping money into the market.

People can afford these homes at fixed rate prices, not variable rates. We both agree on that. However, the fact that these folks signed up for what they thought were lower rates (at the time) is not the need of government to fix.

I feel bad for people losing their homes but I don't feel bad for their judgment, which was to get a variable rate loan.