And getting the cancer removed doesn’t change the fact that it surgery hurts like hell. So what? You minimize the pain as much as you can, but the priority is the long-term health of the patient – or at least it’s supposed to be.
To be complete dick – your parents have savings, or at least they’re supposed to. Times like this are what they were saving for. Your dad is not disabled; he can still work. He may not make as much money as he did before, but if his job skills are such that nobody will pay him remotely close to what GM did, whose fault is that?
Yes, it’s a shame and kind of embarrassing when someone’s work career ends doing something he’s overqualified for, or when someone makes more at 55 than at 65; but dude, that’s life.
First off, as has been noted, it’s not their house if it’s not paid for. They are no more “out” of anything than I am because I rent and have nothing to show for it when I move out.
And yes, I would trade with them. I was told three years ago that I could qualify for a home loan. I considered doing it, thinking I could rent out the other bedrooms and pay the mortgage with that. But I held off, because the ARM was too sketchy, because I remembered that I might lose my job, because I was honest about what kind of money my skill realistically commanded and focused on that rather than what I wanted or “deserved.” So now I’ve been renting for three years, and I realize now that I should have bought, lived cheaper for the last three years, and then gone looking for my bailout.
The bailout is a fuck in the ass for all responsible people, even the ones who don’t have mortgages.
Your brother in law’s situation sounds awful, but he was already in serious trouble before getting fired, because of some truly evil-sounding divorce laws. While I’m sure it is no comfort to him, the fact is that less mortgage officers will be fired with government intervention than without. Also, by your own statements, your sister and he were not ‘doing everything they were supposed to do’.
Some people in this thread (not me) have said that people like him have made a living by fooling, hoodwinking, defrauding, and outright lying to people who were so unsophisticated that they could not understand the contracts that he mesmerized them into signing. As far as I’m concerned it sounds more like all parties (buying and selling) involved in the mortgage orgy based their strategies on a heap of wishful thinking, leavened with quite a bit of the incorrect assumption that they were smarter than everyone they were doing business with.
Yeah, you are being a fucking dick. My dad, as a mechanic, worked on 100% commission. As work goes down (which it’s been doing for a long time), his paychecks go down. 20 years ago he’d bring home $700+ per week. The past 10 years or so, the best he got was around $500 and it usually was more like $300-400.
So, his income is cut in half 20 years later. Pity my parents decided to get their credit card debt (which yes, was obviously their entire fault; but they decided to FIX it) all paid off, which took a few years. Each time they’ve managed to save, life has fucking kicked them in the goddamned ass and they’ve had to then spend the money they’ve saved. They have some savings, but no, not what they should because they’ve had to worry about things like keeping us kids fed when life fucked them over.
Also:
Yes, you’re talking about the industry/nation as a whole. I’m saying how it sucks to be the individual person (and it was a Chrysler dealership he worked at, not GM).
And yes, he can technically work, though his health is horrible and working is making his health worse. And again, where is he going to FIND a job? It took me 2+ years to get a full time job after I graduated from college with 2 degrees, and this was 2005-2007, when Michigan wasn’t quite as bad as it is now. Do you really think that a 58 year old mechanic in obviously (visibly) poor health is going to get a job over a desperate 28 year old mechanic who can get paid a lower % commission? Get real.
Oh, I know, believe me - their problems certainly didn’t come out of nowhere and even predate his employment in the mortgage industry. There is a reason he was so good at selling subprime mortgages; he understands the mentality of his customers because he lives that life. (ANd BTW, he wasn’t fired or laid off; he just saw the writing on the wall at Countrywide, and they closed the office he was working at. He could have moved to the nearest open office, but it would have left him with an insane driving commute. He got a job at another mortgage company right away, but especially in this market, it takes a while to build up a pipeline of commission sales.)
My point is that my mother and I, who have been financially responsible our whole lives, are also being negatively affected by the fallout. Mom has no privacy or peace and quiet until my sister and BIL get on their feet again and move out, and Lord only knows when that will happen. And I get to deal with all the familial stress - I only live a few blocks fom them. Let me tell you, it was no fun for me to get stuck trying to take my sister’s cat to the shelter, only to find out that they wouldn’t take him becuase he was too old. She was bawling, I was bawling, and my poor BF got to deal with all the secondary stress and watching me get upset from all the heated phone conversations. Good times.
Well, I haven’t been in the room with my BIL at work, but I think he’s basically a decent guy who made some really poor financial decisions. He did a lot of refinancing, which meant that he was often helping people essentially to bundle their huge consumer debts into their mortgages. As far as I know, he never outright lied to anyone, and most of the people he dealt with had refinanced multiple times for the same reasons, which meant he certainly didn’t get them into the original pickle they were in. And he certainly didn’t hold a gun to their heads and force them to run up their consumer debt.
There’s a lot of blame to spread around here, but let’s keep in mind that it’s not like everyone involved in subprime lending has gotten off scot-free with millions of dollars. Even when he was having his good periods, my BIL never had enough to save for a house of his own, and managed at best a middle-class lifestyle, and never managed to save any signficant sum of money. Yes, he’s blown money on things he shouldn’t have, but he doesn’t exactly live high on the hog - for example, he packs a lunch for work basically every day and always has.
Ah, OK. I misunderstood the thrust of your post. I have probably been too quick to jump on the people who were doing ethical jobs in the banking industry, and unfairly lumped them in with the boiler-room types who were passing off abyssmally bad loans to other banks.
There were hundreds of companies that originated mortgages. They were not carrying them. They made millions doing anything they could to get people to sign on the dotted line. They did not care if you could afford a house or not. They talked a lot of people into mortgages that should not have had them.
For your pleasure ,they have lost their homes and they are in the street. They have not been saved by a fictional agency that re writes mortgages. They have had the fun of having their family tossed into the street. They got what you think they deserve. Enjoy.
85,000 foreclosures in Oct. The evil people who were gaming the system got whats coming to them. What a good thing that is. 125,000 have just begun the foreclosure process. So even more evil cheats will be in the streets.
I do feel pity for people in bad situations; but the question I though we were discussing is not “is this or is it not a shame” but “should the government make everyone else pay up to help this guy out.”
Sorry, but while it is a shame, I’m still not seeing anything that makes me think it’s everyone else’s job to pay for it. He chose to live on commission for twenty years. Most people take a salaried job precisely because it’s more reliable, both on a month-to-month and a year-to-year basis. His income has been dropping for ten years, starting when he was 48 … did he consider taking a salaried job instead? Did he consider learning new job skills (and yes, people in their 50s can and do learn new job skills)? Did he consider moving somewhere cheaper? Selling the house?
Yes, the credit-card bills, which probabaly were major hindrances, were their fault. Without knowing the specifics of how life kicked them in the ass, it’s hard to know what to make of that. IME, people often blame forseeable risks on bad luck: the car breaks down, they get downsized, their job skills become obsolete, they have another kid, they get injured or sick … sorry, but those are all things you should know can/will happen, and can prepare for to varying degrees. I know someone whose house burned mostly-down, and hadn’t bought fire insurance because he though he didn’t need it. I feel bad for him, but I also know it was his own damn fault he was now broke. Now some things are obviously going to be beyond anyone’s help to reasonably prepare for (e.g., you’re left paralyzed in a car accident and have millions in medical bills … but you know what? Life isn’t fair and sometimes flat sucks. It still doesn’t mean other people should be made to pay your mortgage for you.
No, he probably isn’t. Which is where I repeat that life isn’t fair and sometimes it sucks.
A year after I finished school with my degree, I was working as a barback at $7.50 an hour. For a year and a half after I finished school with my master’s, I was living on ~$300 a week. So what? It wasn’t your fault, and it wasn’t your problem.
I have an uncle who’s 66 and driving a school bus. He used to make very good money in sales. He retired at 60, and within a couple of years “life kicked his ass” in the form of his wife getting ill. Soon a lot of his savings were gone and he had to start getting some income again, but nobody in his town wanted a 65 year old salesman five years out of the game. So he took what he could get, and now drives a school bus and does a few other odds and ends. It’s a big comedown from where he was, and it’s a damn shame. But he has no desire or intention to place the responsibility onanyone other than family.
Of course it sucks. Nobody disputes that. The question, I thought, was how much obligation our sucky lives place on other people.
If my life goes in the shitter, I think society owes me pretty much a bare minimum; I shouldn’t be left to starve in the street. But my mortgage-- that’s all on me, no matter what happens.
Who suggests that we should pay for their mortgages. If they got hooked on a crappy one ,we can redo it. They will make payments and stay in the house. That will help the economy. That will help you.
If it’s established that the government will re-write private mortgage contracts as it sees fit, this will result in future mortgage contracts being more expensive to cover that risk. It’s easy to see people who are struggling to pay for a house they can’t afford and not think about all the people who would be adversely affected in the future by changing the rules in the middle of their purchase.
I believe there have been posters complaining about the possibility. However you and their confusion does not mean the changes the US Treasury has made in its rescue strategy are wrong.
Of course it has not happened on a substantial scale, mortgage modifications are very difficult to undertake, and have to done with caution so as not to reward speculation.
Evil, bad, etc. are scare words.
I doubt many economists have made such statements. Statements that it would be useful to avoid a foreclosure crisis, certainly, but it would seem to me that most writing and analysis to date have focused on a bubble in real estate and asset misallocation.
Of course, since you seem incapable of understanding what you read, no doubt you absolutely misunderstood what you read.
Actually your Congress inserted the clause he is using, on the observation that the original plan to buy Mortgage Backed Securities was possibly unworkable.
In what way did the US Treasury plan address mortgage modification. Be specific. The plan clauses you are complaining about were always about buying securities, that is dropping billions in the banks.
Back when I bought my first house, FHA and VA wanted not more than 25% of gross income going to PITI (principal,interest,tax and insurance escrows) AND no more than 38% of gross going to ALL loan obligations combined.
Obviously, that model got thrown away as realtors and mortgage originators, wanting to generate more loans/more fees, bought off more regulators and legislators.
Go back to that old model, and in cases of variable rates, apply it to the highest possible payment that the escalator clause could generate. In other words, if the loan that starts out @ a 4% teaser CAN go to 13% , tell the buyer whose 25% of gross won’t cover the 13% rate that he or she can’t have the house.
Qualifying a buyer @ 38% of gross for PITI alone and @the teaser 4% is irresponsible. That loan should never have been made and the secondary market ( primarily Fannie and Freddy) should never have bought that loan.
I think that people who can still make 40-year payments on their home’s newly-deflated value @ a fixed 9% interest rate and stay under 25% of gross should have their loans recast that way should stay in their homes.
In other cases, the lender can foreclose, the occupants can give the lender 25% of their
gross to stay there, and the govt. can pick up the slack.
Like it or not, we all made this mess by not overseeing the Congress and those whom they appointed to regulate the mortgage credit system, so we all must share in cleaning it up.
That’s a reasonable plan. If we went with something along those lines, a lot of the seething hate would evaporate and be replaced with resignation and mild resentment.
The huge sore spot for me is that under the current plans, the renegotiated rate would not be a reasonable-but-not-fantastic 9%, as you’ve suggested. So far, I’ve heard 3% for 5 years, then a slow upward adjustment to market rate. I’m infurated that a bank would agree to give those kind of terms to someone who has demonstrated that they are a credit risk, while extending considerably inferior terms to responsible people, like 6% on a 30 year note.
Gee ,in front of congress ,Kashkari has been accused of “bait and switch”. I suppose even you know who he works for. CNBC has referred many times to selling one thing and doing another. I think that is dishonest. A change of that sort should have been brought in front of Congress,because they approved one thing and another happened.
I was going to drop a bunch of sites describing the change except you don’t seem to be able to grasp it. Everyone else can. Just you.
So, leaving aside your hand waving (and ongoing utter incompetence in placing commas), what is response? You’d point me to website (or do you mean cites?, well no matter).
It escapes me, the logic of your wailing: US Treasury avails itself of the very option that the US Congress, and specifically the Democratic Centre Left insisted on inserting (having criticised - with good reason) the initial plan of buying the Mortgage Backed Securities.
So this is your Treasury doing a “bait and switch” - how exactly pray tell? As far as I can tell, they are belatedly taking the US Congress’ advice and using a tool the same Congress imposed on them.
You are so stunningly and amazingly deliberately ignorant on this, it takes the breath away. Okay, you have class resentments and by bloody Christ, you want to be mad. Well, I suppose then logic, facts, actual information are of no real interest.
Now, if I have made any factual errors in terms of my understanding, as an overseas observer, I welcome correction. Otherwise, I do find merely pitiful you wailing on despite the apparent fact that your complaint is 100% opposite of fact.
I think you are confused. Initially the plan was to buy up the mortgage backed securities because their mark to market value had plummeted. This had huge effects, first of because the investors in these MBS had huge amounts of capital tied up in them, but also because it seriously devalued the companies that held them. Secondly, credit default swaps, which were essentially designed to be used as hedging for these types of investments were being used speculatively and the amount of investment “insured” ballooned to over 60 trillion dollars (at least according to some sources) even though there was less than 5 trillion dollars invested in the securities. As I understand it, as the mark to market price plummeted, investors started calling in their debts to cover the swaps and Lehman Brothers was the first to go under. When Lehman went down they failed to pay 100 million dollars they had taken from the commercial paper market, usually one of the most secure investment opportunities available. This caused panic on the market, and investors who normally invest in the CPM started instead turning to short term government bonds, thus effectively cutting off the credit of the entire economy. This started to spread to letters of credit and other instruments and really freaked everyone out.
The mortgages themselves and the drop in the housing market are small potatoes and the only people that care about them are the politicians. There was talk about putting in some stimulus to help main street if we are bailing out wall street, but nothing was really put in the bill as far as I can tell. At the last moment however, someone put in the authorization to buy equity in the failing institutions instead of buying the toxic MBS. This was heavily lobbied against by banks and other institutions needing the bailout and no one that I know expected this to be part of the package. It is great however, even though it smells like we are nationalizing the companies we are bailing out. The reason it is great is that we, as taxpayers, are more likely to get our money back in the long run as the shares we are buying, while non-voting, are preferred and are first in line as far as debts go. If we had bought the mortgage backed securities, their would have been a lot of difficulties in pricing them and getting our value back out would have been questionable. It would also be unclear if we were injected enough money, or worse, too little to solve the credit problem Regardless, buying the MBS would not have helped homeowners, as it seems you are suggesting they promised…
Can someone please correct anything I have gotten wrong here?
You know, I went back and re-read this thread and there are some serious misconceptions in it. The housing crash and sub-prime fiasco, while problems, are not “THE” problem. THE problem is that the commercial paper market, where corporations raise capital for short term use, basically crashed. This means that corporations were unable to get short term credit. Basically it is like every major corporation in the country had their credit card canceled. Corporations use credit just like we do, for everything. When GM wants to send out paychecks for the month, it borrows 100 million or whatever from the CPM and sends out the checks. It the pays back the bond over the next month or so… If GM cannot borrow the 100 million, they either need to come up with the cash or not send out the paychecks… The paper market crashing would have a much, much, much worse effect than 100,000 defaulting on their home loans.
Even scarier is there were signs that the crisis was spreading to letters of credit. If the CPM is the credit card of industry, letters of credit are the checkbook. Every time a ship is unloaded or a freight train full of grain is unloaded, a letter of credit is issued to promise payment for the goods that are being unloaded. If these are not being accepted, then no commerce is possible. This means no food in the stores, no fuel at the gas stations, basically no economy.
This is why the bailout is necessary… Not for all the losers that bought more house than they could afford just because they wanted to keep up with the Jones’s. Or all the assholes who leveraged the equity in their houses to buy their damn SUVs and flat screen TVs. Fuck them.