And the bank just had to sell them a worse loan than they qualified for.
You think the banks didn’t run ads extolling the value of home ownership to this demographic? We also know that mortgage brokers targeted people with affordable fixed rate loans to sell them subprimes with low teaser rates. If you are selling snake oil, you can’t tell your customers it is their fault for buying it without checking with a doctor first.
In NJ every deal is done with a lawyer. In California lawyers don’t get involved as part of the standard practice. The mortgage broker does, or even the mortgage company which was the case when we refinanced last year. The people we are discussing don’t have real estate attorneys on their fast dial, so let’s be a bit realistic. In any case, that nice man who is letting you fulfill your dream of owning a home, like all the politicians, left and right, say you should, says it is okay. Who needs a lawyer?
The banks have been accused of many things, but changing the terms of the contract after it has been signed is not one of them. At least not to my knowledge. Though hardly anything would surprise me nowadays.
Well, I suppose everyone in the U.S. could have just stopped buying houses back in 2005. But let’s be real, OK?
The thing here is, you’re all but defining overcharging out of existence. You can always make something go away by defining it out of existence, so that doesn’t really prove anything.
yes, overcharging is fucking definitionally out of existence in a free market, arms length, bi-lateral transaction. (that is actually completed and agreed upon)
Another example of banks doing ‘wrong’ stuff that’s gotten no attention:
In some neighborhoods, house prices have dropped rather precipitously. If you have ten houses on a street that used to sell for $800K but now only go for $300K, all the homeowners could, in theory, send their keys to the bank, move out, then rent the next house down the street at rents appropriate to the current market value. The banks would take a hit, but it would be a real inconvenience for everyone to have to move out of one house and into another.
A bank with some decency could offer to split the difference with the homeowners. They’d take a hit on the mortgage - but not nearly as big of one as if they foreclosed and found a new buyer. And the homeowners would have a way of staying if they could afford a mortgage under the reduced principal amounts.
But while this may have happened somewhere, somehow, it’s been exceedingly rare if it’s happened at all. Most banks will only accept a reduction of principal as part of a sale (“short sale”) and often not even then. The idea of reducing the principal on the mortgage as a compromise solution that works for everybody seems to be anathema to the banks, for the most part.
I don’t know why this is so, but again, nobody’s giving them a hard time about it.
Inflated prices are not the same as overcharging. Am i to understand that when the house was bought, you think that there was some other price that was in essence more correct? And there is always the freaking option not to buy a house.
Qualified for? what does that mean? The bank is the one making the loan, they are the ones who get to determine who qualifies for what loan. If they give wsomone a loan then by definition that person qualified for the loan.
And you do not remember advertisements from banks on home loans telling people the wonderful rates, and payment terms … come in and apply and then go house hunting .:rolleyes: and when we had to go in and preapply for the loan, they tried to shove a 200K loan on us, saying that we could manage an almost 1800 a month loan on a navy E6 income. Didnt matter that we had a car loan, insurance, a credit card debt left from mrAru’s previous fiancee abusing his power of attorney. I didnt have a job [I was looking at that time] and we were specifically pricing to keep our life affordable on a single salary. Try to tell me the banks had our best interest at heart and were not trying to suck as much money out of us that they could.
And yes, agents themselves were trying to show us properties for double what we were interested in paying. It took being very firm and refusing to ‘just come and look at this house, you will love it’ for anything over 100K. They tried to show us at least 4 or 5 200K houses for every 100K place we looked at. Try to tell me that they were not trying to get us to overborrow.:dubious:
How many people went along with the lure of a spiffy big expensive house without thinking that they might lose one of their jobs, or suffer some sort of catastrophic expensive problem? Properties ended up being over priced because people were buying properties, then trying to sell them off after doing some nonsensical refurbishment that also raised their appraisal value, and the appraisal value of the other similar homes in the neighborhood. People were specifically told that their houses would appreciate in value so they should buy and then turn around and resell in a couple years so they could get a bigger and better house… our damned house went from $91K to $130K and we didn’t do anything to it except replace the stove and refrigerator. All based on homes in the area. Now I doubt we could sell it for the $130k it is supposed to be worth. Nothing on our street has sold in at least 2 years.
I’ve been arguing in defense of strategic default in this thread, and i feel plenty of sympathy for those who took out a mortgage and now find themselves out of work and/or owing the bank much more than their house in worth. I also sympathize with what you had to go through. Real estate agents and bankers can be real dicks.
But salesmanship is not the same as fraud. In the end, no matter how many $200K houses they tried to show you, the only people to blame if you had signed a mortgage for a $200K house would have been yourselves. There’s no gun to your head here. There’s no obligation for you to keep going back to Realtors who won’t listen to your needs, or to take out a mortgage whose monthly payments exceed your means. Their sales tactics might be manipulative and selfish, but there is nothing that compels you to give in to them.
And if people “went along with the lure of a spiffy big expensive house without thinking that they might lose one of their jobs, or suffer some sort of catastrophic expensive problem,” then they have to take some responsibility for that decision. If you are going to make a purchase that will take 20 or 30 years to pay off, and that will eat up a sizable portion of your family income for that whole time, then you need to be thinking about this sort of stuff. If you’re not, then you have no business buying a house in the first place.
And continuing on, having missed the edit window, (a) I’ve looked up the definition of the word in a number of dictionaries, and I can’t find your definition there (Merriam-Webster Online gives as an example “Everything in the store is grossly overpriced,” so stuff that people actually buy can be overpriced, yeppers), and (b) if market manipulation of any sort artificially raises prices of a commodity, then only by your pedantic definition is the commodity not overpriced.
Yip, it’s pretty simple. A burst bubble is by definition caused by people overvaluing a commodity. It’s the difference between the actual cost and the assumed cost that causes the problem. The house is not really worth what it was sold for, or else it would be worth what it was projected to be worth.
If I go into a store and buy, say, a vacuum cleaner that costs $35, and I’m assuming it will last me a couple years, and it breaks in one day, it was not worth $35, and I was overcharged. Simple!