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.

[GOB]

yeah, this really pisses me off. people who shouldn't have had a mortgage in the first place are getting coddled by the fucking government. they'll never learn. i think the rates should be frozen at 10% for everybody in this situation with no option to refinance. there's a reason owning a home is the american dream: if everybody could do it, it wouldn't be a big damn deal.



as much as i do not favor supporting these people, this rate freeze really needs to happen. most investors (and analysts) are borderline retarded, so any more negative news is just going to keep the housing market in the toilet indefinitely.

these idiots royally screwed real estate for everybody else. it's going to be a million times harder to get a decent rate on a mortgage after this is all said and done


edit: a financial planner i know said some lady came to him because she has 2 homes with subprime mortgages in california. like $900k in real estate and she made $45k a year. she couldn't even cover one of the payments on her salary, so they're both going into foreclosure. he basically laughed at her told her to spend whatever she's got left on a good bankruptcy attorney.

[Mommy]

who changed their name to GOB? I cant figure it out

[GOB]

i'm posting from within your womb


now, please stay on topic

[impala454]

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.

I hope by "irresponsible" you're referring to the mortgage companies.

You can't have your cake and eat it too. You can't complain (not saying you are) about the housing market being shot, and then complain when someone starts trying to fix it. If you really read into what this is doing, I think it's great. It's bullshit that these giant mortgage companies can throw out teaser rates and ARM loans and just jack rates whenever they feel like upping their margins.

People are defaulting on these loans because of this bullshit, not because they're biting off more than they can chew (except maybe in high value areas like California and the northeast). Double digit interest rates on a f'n house!?? Hell I couldn't own a decent house with rates like that. If my mortgage interest rate was double digits right now, my payment would nearly double.

I hope a plan like this can be devised to put the hammer down on credit card companies too. I've heard of people having rates hitting the mid 30% range lately...

[jonathan83]

who changed their name to GOB? I cant figure it out

if you go to their profile it'll tell you if you click on message board user name history or whatever.
it's lamonts lament.

[GOB]

I hope by "irresponsible" you're referring to the mortgage companies.

You can't have your cake and eat it too. You can't complain (not saying you are) about the housing market being shot, and then complain when someone starts trying to fix it. If you really read into what this is doing, I think it's great. It's bullshit that these giant mortgage companies can throw out teaser rates and ARM loans and just jack rates whenever they feel like upping their margins.

People are defaulting on these loans because of this bullshit, not because they're biting off more than they can chew (except maybe in high value areas like California and the northeast). Double digit interest rates on a f'n house!?? Hell I couldn't own a decent house with rates like that. If my mortgage interest rate was double digits right now, my payment would nearly double.

I hope a plan like this can be devised to put the hammer down on credit card companies too. I've heard of people having rates hitting the mid 30% range lately...

i'm pretty sure he was referring to both buyers and lenders. the government intervention is the shit part. if we were truly a free market, this wouldn't be an option. stuff like this is what often leads to inflation/deflation or a recession/depression, depending on the situation, because the market gets the metaphorical stick shoved into its spokes while going full-speed.

and i'm glad you mentioned credit cards, too, because i believe it's the same thing. buyer beware! if there's even the slightest possibility of your rate doubling (or in the case of credit cards, tripling or quadrupling), and you can't afford the increase, you have no business using whatever it is they're offering.

[Spectatrix]

The lenders are assholes, but the homeowners are fucking retarded as well. If they'd read what they were signing, they would have known that their rate would jump after 2 or 3 years, often doubling, often with a high pre-payment penalty so that they couldn't refinance. I have little sympathy for people who don't pay attention to the financial obligations they're getting entangled in.

On general principle, I disagree with the government bailing these people out, but I really worry about how our economy in general might suffer if they didn't...

[Hartmann]

I think the economy has to suffer sometimes. It is supposed to be a free market after all and there are peaks and troughs.

The administration claims that this isn't meddling because there is no money involved, what I think the general public is missing about all this is that in 5-10 years, there is going to be government tax incentives for the mortgage companies to make sure they don't fold due to the fall out of all of this.

Oh, and the other reason I'm pissed, there are people who save up their money (me included), for such a situation so that we could buy a house at a lower rate. Now you've screwed over the well intentioned by "helping" the irresponsible (loan companies and borrowers).

[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.

[Spectatrix]

Correct me if I'm wrong, but isn't the variable rate set with respect to a reference rate like the prime rate? E.g. prime + 5%?

[impala454]

No, ARM loan interest rates set by an index the lender specifies. Essentially like I said, giving them a "margin dial" that they can turn at will.

Hartmann is trying to assume all responsibilty on the home buyer, which IMHO is wrong. Yes, you sign the paper, but the paper is intentionally ambiguous to get the buyer to sign on the dotted line. There needs to be some type of regulation on these things to prevent these kinds of problems. I'm sure someone could write up a contract that says you owe them half your paycheck the rest of your life, and make it ambiguous enough to get people to sign it. It doesn't make it right. And it doesn't mean the buyer is stupid or irresponsible. Anyone trying to purchase a home instead of renting is heading in the right direction IMO.

I don't see how regulating or doing away with ARM loans would hurt the economy in any way, or prevent you (Hartmann) from "pumping more money into the market." It doesn't penalize you in any way.