Oh ok then. Well then I guess we should absolve you of the $500,000 mortgage you thought you could afford on a $45,000 a year salary. Enjoy your new free house.
Not sure why you put the smiley there, because that is actually a very good analogy. People get more emotional when it’s a house involved, but money is money, and plenty of people lost their homes because they invested in risky stocks. I know several of them myself.
I don’t much cotton to the notion that sticking it to somebody because they aren’t as knowledgeable as oneself is legit. YMMV.
Define “legit” and “as knowledgeable”. If a person knows there is someone out there who can do the job better and/or cheaper than he can, is he obliged to inform you of that before you hire him?
We do have regulations that cover the giving of mortgage loans. It’s still unclear to me if we simply need to enforce those regulations better of if we need new ones.
No but you should understand what kind of deal you are getting involved in. At the very least, you should understand that the A in ARM stands for “adjustable” and those adjustments can go up.
Thank you. I put in the smiley because I’m not seriously suggesting that I should get a refund, only trying to point out the absurdity of the idea that society should owe people recompense for making bad financial decisions. There isn’t really a “sarcasm” smiley.
Yeah, no kidding. Do the people who buy mattresses with “no payments until January”, think they got a free mattress? Aren’t these people supposedly adults with functioning brains?
What am I being asked to believe here? That the people who sold these mortgages all acted in complete good faith? Or even a majority of them did? The playing field isn’t remotely level.
And from what I been hearing here, a major portion of the people who got ska-rewed in this were lower income. Which tends to mean less educated, less equipped, no? (Now, you know that we are speaking in very broad terms here, right? So you’re not going to run looking for a hypothetical counterexample to try and make me look stupid, OK? Can do that all by myself, don’t need your help…)
Now, unless the experts they are talking to are no more aware of the ins and outs than they are, there’s a good chance that there’s a level of culpability here, wouldn’t you think? Especially when you consider that the rules have changed, now the seller isn’t stuck with the paper, he can pass it along, he’s all right, Jack, he got his.
But this is a perception, an opinion, make of it what you will: for some reason, people who wouldn’t dream of selling a blind man a rat’s asshole for a wedding ring seem to think that people who aren’t as smart as they are fair game. Like blind is handicapped, and dumb is prey. Stinks, and that’s the only point I’m making about this.
I don’t think it’s as simple as saying X group of people was screwed by Y group of greedy bankers. The greedy bankers you will aways have with you. They were there before this bubble, and they’ll be there afterwards. What was different this time around? Seems like it was the perfect storm of greedy consumers and greedy bankers. I’m not too sympathetic to either of them.
Your simple, homespun egalitarianism has warmed my heart, John, and I repent. Next time I see one of those poor homeless bankers, I’ll give him a dollar.
Well, where would these poor, homeless consumers be without that subprime loan they got a few years back? They’re not necessarily losing anything they wouldn’t have had without that creative loan. You buy a house with nothing down, pay little or no equity on the loan, and the bake takes the home back when you default. You get a slap on the wrist with a bad credit rating, but you have proven yourself a bad credit risk, no?
Some investor somewhere is losing money, but the homeowner isn’t necessarily losing much. Certainly not much compared to what he went into the deal with.
Where profits are concerned, there is no good faith. There is only the self-interest of the various parties.
I agree that people should educate themselves before buying a home; however, sub-prime lending brought out the fast talking, unethical lenders eager to make money in a new housing market. The poor are usually less educated, less savvy, and more desperate. Just because someone can be taken advantage of doesn’t make it okay. Irresponsible lenders hold a much higher liability than the buyers. I consider sub-prime lending predatory. This is exactly way there needs to be regulation. The tragedy of people losing their homes is only part of the picture. This is an economic disaster that will be felt by almost everyone.
Home ownership is important to the economic health of a city not just the home owner. Property taxes fund schools and other essential services. Government intervention not only allows people to keep their homes but maintain the economic health of cities.
Everyone knew or should have known it was a bubble. What wasn’t expected was the free fall in property values. People are sitting on homes that are worth less than the original loan. Banks are foreclosing on homes with no hope of even recouping the money by selling the property.
When I wrote “$10k”, I meant $10,000, not $400,000, in case that wasn’t clear.
This is an important point to make. This subprime fungus is very widespread and impacts things that you don’t normally think of.
Virtually all your investments are tainted to some degree or another.
How often do you hear about rich people getting taken for milions because of promises to make them more wealthy? Having money or an education doesn’t mean you don’t get fleeced.
To the point, where does the blame go? It goes in a lot of places. The majority of it goes on the banks and lenders that enabled this mess.
Careful. You need to define your terms. I and many people I know simply cannot get a loan through normal qualifying methods. If we were to limit all loans to strict standards such as 20% down and a payment of not more than 1/3 of gross income as documented by a tax return, we will render a huge segment of the population unable to buy a home. Period. I don’t think that’s really what you want, but that’s what would happen if only “prime” loans are allowed. Were lenders giving out bad loans like candy? Yes. Are ALL sub-prime loans “predatory”? No.
Like I said, the time to do something about it has passed. The loans were already given. Bailing out people who took out loans that they couldn’t afford is unfair to everyone who is still waiting to buy their first home, and still can’t afford it. Again, who’s helping them?
This is exactly the specious reasoning that resulted in the huge bubble that just burst. Prices fluctuate - they can’t keep going up forever, and tinkering with market forces to try to keep them on an upward trajectory is a fool’s errand. If we artificially prop up home prices, we’re decreasing home ownership. In my state, sales are down almost 50%, and the reason for that is that prices are still TOO HIGH. How does interfering to try to stop prices from falling help?
Everyone knew or should have known it was a bubble. What wasn’t expected was the free fall in property values. People are sitting on homes that are worth less than the original loan. Banks are foreclosing on homes with no hope of even recouping the money by selling the property.
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Sorry, fixed the last part:
And when those foreclosures hit the market, prices will finally begin to fall, as they should have years ago. Lesson: don’t be an idiot - you can’t buy a $600,000 home on a $50,000 salary - this is beyond common sense. This is the biggest real estate bubble in history. You’re not going to stop the market from correcting itself.
Of course, we in Silicon Valley are immune from all this “bubble” nonsense. Just thought I’d let you guys know that. 
Oh…sorry. I thought we were pulling random numbers out of our asses.
It’s not just low income people “getting screwed”. A lot of it is middle income people who want to live MTV Cribs style in a McMansion they can’t afford.
Ultimately I blame the lenders though because they shouldn’t be making loans to people who can’t pay them back. If the office deadbeat keeps asking you for money and you keep giving it to him, who’s the bigger fool?
Waitaminute! So I didn’t just get a free HDTV from Circut City?!