Bush's bailing out of the irresponsible Options

[Hartmann]

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.

Regulating doesn't hurt us, but bailing these people out and not letting the market fluctuate as it should does. We depend on foreclosures to revitalize. We buy a foreclosure for a decent price, pump $20,000 into the economy fixing it up, then sell it for a slight profit. Or the other option, my dad and I watch the listings and public records that list late or missing payments and we work that person so that they don't foreclose. We buy their house for more than the estimated foreclosure and fix it up.

I am not at all putting this all on the buyer. There are certainly issues in the banking industry that need to be fixed. However, buyers are responsible to learn the T&C of their loans.

It is not the job of the federal government to adjust the free market on a whim. The Fed has enough of an impact on interest rates, the last thing we need is more government intervention.

Also, buying isn't always better than renting. There is a lot more responsibility and cost associated with buying than there is with an apartment or townhome. If people were smart and saved, then bought, things would be different.

[Hartmann]

Loan Descriptions
Lenders must give you written information on each type of ARM loan you are interested in. The information must include the terms and conditions for each loan, including information about the index and margin, how your rate will be calculated, how often your rate can change, limits on changes (or caps), an example of how high your monthly payment might go, and other ARM features such as negative amortization.

Straight from the federal reserve.

Where I think the banks are wrong is the fact that most require penalties for prepayment. That's stupid.

[Spectatrix]

Thanks, Hartmann. While ARM mortgages might be confusing, people shouldn't sign the contract if they don't understand it. I know that people do that all the time, but it's retarded. I don't have sympathy for people when their credit cards jump to a 28% interest rate after the teaser runs out and I don't have sympathy for people getting into mortgages that they don't understand.

Yes, it's confusing. Yes, it's stressful. All the more reason to research extensively before you hit the time crunch.

[blaarg]

I feel all the responsibility is on the homeowner. It is a big investment and you should know what the fuck you're getting into.

As for the lender, let me get this straight, we are criticizing them because they are trying to make more money? Everyone has to get paid....

I find it on the same lines as people who pay inordinate amount of money on name-brand stuff without looking around for better deals. I would hope that no one would go to Best Buy, see the ticket price and pay for it full price of a TV without looking around...and that is a TV, makes sense that for a house you would be 1000x more careful and wanting to "lookaround" for a better deal, shrug*

[Spectatrix]

I'm not criticizing the lenders for trying to make more money. I'm criticizing them for being stupid. You can't peddle large loans to high risk buyers and not expect to get burned. Eventually the law of averages will catch up with you. Foreclosures are damn expensive for everyone involved, including the mortgage companies. Why do you think New Century Financial Group filed for bankruptcy, with many other lenders on the verge of the same?

[Hartmann]

I'm not criticizing the lenders for trying to make more money. I'm criticizing them for being stupid. You can't peddle large loans to high risk buyers and not expect to get burned. Eventually the law of averages will catch up with you. Foreclosures are damn expensive for everyone involved, including the mortgage companies. Why do you think New Century Financial Group filed for bankruptcy, with many other lenders on the verge of the same?

This is exactly right. These lenders need to suffer as well (not just homeowners). But, they won't, just like the homeowners won't. When the freeze is up, there will be tax incentives for the lenders so that they can deal with the lost profits.

And, what do you people think the homeowners are going to do during this freezing of rates? Save their money. No. That would be too easy. They'll spend their cash and when the freeze is up, they'll go into foreclosure anyway (but Bush will be out of office and it will be someone else's problem).

[pebkac]

Thanks, Hartmann. While ARM mortgages might be confusing, people shouldn't sign the contract if they don't understand it. I know that people do that all the time, but it's retarded. I don't have sympathy for people when their credit cards jump to a 28% interest rate after the teaser runs out and I don't have sympathy for people getting into mortgages that they don't understand.

Yes, it's confusing. Yes, it's stressful. All the more reason to research extensively before you hit the time crunch.

An ARM usually has a fixed rate for a certain period of time (usually around 3-5 years), then usually jumps up to a variable interest rate. Banks love them because they don't have to have a low interest rate for too long a period of time.

An ARM is a good deal if you don't plan on keeping your house past the term. Other than that, it's better to go with a fixed rate loan.

[woody]

I blame the home owners and the lenders cause they knew damn well what they were doing.

they were even given people who could afford a home and had good credit these shitty deals.

true, the people should read the contract. but the lenders should know the outcome of it as well.

[Psykopath]

Bring on the recession.
I want to buy stocks at lower prices.

And I'm very much against the government bailout. (ZOMG Zach's not some communist freak?!?)

[pebkac]

they were even given people who could afford a home and had good credit these shitty deals.

Which is sad because that's illegal. I hate banks with a passion.

[impala454]

Regulating doesn't hurt us, but bailing these people out and not letting the market fluctuate as it should does. We depend on foreclosures to revitalize. We buy a foreclosure for a decent price, pump $20,000 into the economy fixing it up, then sell it for a slight profit. Or the other option, my dad and I watch the listings and public records that list late or missing payments and we work that person so that they don't foreclose. We buy their house for more than the estimated foreclosure and fix it up.

Maybe you and your Dad make a quick buck off of foreclosed homes, but having millions of people foreclosing on their homes does not "revitalize" anything.

[Hartmann]

Maybe you and your Dad make a quick buck off of foreclosed homes, but having millions of people foreclosing on their homes does not "revitalize" anything.

We don't make a quick buck and a lot of flippers don't. We make enough profit to buy another home and save a little, that's it.

I don't thrive off of foreclosures, I am simply saying there are people who are intelligent and buy foreclosed homes and revitalize largely poverty stricken areas. My dad and I were actually looking at the mid-ranged homes in Sugar Land as possible areas of buying when this thing first started going down the crapper.

There would be a difference in these foreclosures, no outside force (death in the family, loss of job, etc.) would be responsible, it would be on the shoulders of the buyer and the bank. Buy within your means, below even, and you'll be fine.

But thanks for assuming my dad and I are trying to 'make a quick buck'. In reality we do it because we can fund good businesses to do work for us and help them employ folks.

Also, I don't have the numbers in front of me, but I don't think the speculation was that "millions" would be foreclosing. If anything, people would have to give up their precious vehicles or 85" TVs to pay for their houses.

[impala454]

Oh please... I didn't say or even imply that flipping was a bad thing, nor is making a quick buck. But you can't really expect me to believe that you and your dad were sitting around one day and thought to yourselves "hmm lets go flip a house so we can create jobs and help others!"

Buy within your means, below even, and you'll be fine.

This is the whole friggin problem. First time home buyers don't have a clue what is within their means. They have to rely on the lender to tell them. That same lender who says, "sure you can get a $200,000 at 5% for 30 years and your payment will only be $1,500!" (and then in the fine print it says there's the possibility that it could increase).

[Spectatrix]

This is the whole friggin problem. First time home buyers don't have a clue what is within their means.

Why not? I know what's within my means and I plan to buy a home well below that. If you've been renting, you should have a pretty good idea of what monthly payment you can afford (also taking into consideration the cost of homeowners insurance, property tax, and repairs).

This post has been edited by Spectatrix: Dec 7 2007, 02:12 PM

[Hartmann]

Oh please... I didn't say or even imply that flipping was a bad thing, nor is making a quick buck. But you can't really expect me to believe that you and your dad were sitting around one day and thought to yourselves "hmm lets go flip a house so we can create jobs and help others!"

Actually, no it wasn't. My first thought was "quick buck" (my dad has been into real estate his whole life). Then we discovered that we could sell the homes at a decent value, add some nice touches, and make a little money. Then we found that there were people who were deserving of the homes and we helped them get the house funded and worked with them on the price so that they could afford it.

My dad and I do this quietly and for a reason. We are not just helping the economy, it's more than that. We're helping people who want to own a home and have a job but can't afford anything super nice or amazing. They want to put their kids in good schools or anything like that, we make sure they get with people to understand the taxes associated with a home and the financial risk.

This is the whole friggin problem. First time home buyers don't have a clue what is within their means. They have to rely on the lender to tell them. That same lender who says, "sure you can get a $200,000 at 5% for 30 years and your payment will only be $1,500!" (and then in the fine print it says there's the possibility that it could increase).

You said it better than I could. If first time home buyers don't know their means, they don't need to buy a home. They don't have to rely on a lender, that's a straight up lie. If people took the time, researched, talked with a financial advisor, etc. they would be much more aware of what is possible. But that's not how folks operate; Instead they decide they "need" a home and that they can just pop in and get one.