The Observation Deck

That was a bank Stephen, I'm talking about Mortgage companies - BIG difference.

sharon kinsella wrote:That was a bank Stephen, I'm talking about Mortgage companies - BIG difference.

Sharon, not really, some of the subprime notes were from mortgage companies or other banks. I would venture to say that most mortgage companies do not service their own notes.

Do the names Countywide and DirectLoan ring a bell.

The one I trained with did not work with any bank, most of them don't.

What you are talking about would be more along the lines of special financing, which, if done correctly can actually help someone establish or re-establsh credit - but those loans start off high from 14% - 22% at inception. They are not adjustable they are fixed. Yes, some banks did regular sub-prime but that's not who I'm talking about.

Keep on point.

Countrywide sells some of its loans to Freddie Mac and Fannie Mae (Government). It also keeps some of it loans for Countrywide Bank (subsidary).

So the borrower signs on the dotted line and is supposed to pay the loan back. Sounds good but......

Would YOU have lent money to some of these people that got loans? They defy all standard lending practices! No documentation loans? Are they crazy?
People with erratic employment history and credit records that already prove they have trouble meeting their obligations!

The lenders DESERVE what they got.

Grace O'Malley wrote:So the borrower signs on the dotted line and is supposed to pay the loan back. Sounds good but......

Would YOU have lent money to some of these people that got loans? They defy all standard lending practices! No documentation loans? Are they crazy?
People with erratic employment history and credit records that already prove they have trouble meeting their obligations!

The lenders DESERVE what they got.

Agreed. But I also think alot of the people in trouble are also to blame.

Despite the rhetoric some like to put forth, a majority of people were not taken advantage of, they knew what they were doing or knew they were buying more than they could afford.

There was an aweful lot of greed on both sides.

A large percentage of these defaulted subprimes were refinances..

Yes because they were promised lower payments without fully explaining the ARM and they got inflated appraisals (which the borrowers have no control over). The loan officer gets the appraiser that he knows will give him the largest appraisal and they get up to 100% financing (which up until recently would never have happened). Then the ARM goes up, the market goes down, and they owe a lot more on the house than they have it financed for.

I also know a couple in Avon in a new house, that continued hiring people to finish the basement, put on a deck, paint, etc, while buying cars that cost as much as others' mortgages, even while hubby's work was cut down. So what do they do? Instead of working an extra job like some of us would to get through the hard times, they file bankruptcy and pay for nothing of all those toys, owe two years of taxes, but keep living the lifestyle to keep up with their neighbors. Yep there are people out there like that for sure.

But they don't negate the thousands that were duped by non-conforming lenders who should have had schooling and legislation in place BEFORE the crisis. You can put it ALL on the borrower all you want, but the truth is our country, and more specifically, our area, is in a CRISIS because of it. And because of that there are REACTIONARY laws and legislation going into place. If there were no blame on the mortgage industries, why all the legislation and research on these companies? You can read thousands of articles on the unethical practices of these subprime lenders whom are all closed down now. The ones who were allowed to open with a license fee, with no ethics class, no college or schooling, just snake oil salesmen who are now unemployed and losing their house too. And we all pay in our community, no matter how much we put into our own home.

I totally agree that there were bad mortgage brokers out there, but lets be honest. One of the main reasons for all the new legislation is for votes. Almost everything done on both sides of the isle is for votes. If you crack down on individual homeowners they could unite and turn against you. If you go after the "big" companies you win.

The other reason is to protect the very rich. The very rich will be hurt by the long term effects of the housing collapse. They do not have mortgages but they own the mortgages through their investments.

This is a win win for legislators, get the votes from the everyday hurting folk (that more than likely got hurt by getting in over their head, and not doing enough research) and keep getting donations from the very rich.

The problem is that the everyday folks are the only ones that are going to get hurt in the long run. The same mortgage companies that are getting yelled at now have already started cracking down. My decline rate has gone up over 20% in the past 12 months. People who used to qualify for FHA loans are now getting declined. What the President isn't telling people is that his new FHA loans are not forced upon lenders. Each lender can add their own requirements and those requirements are getting harder and harder for people to meet.

The harder the lenders get cracked down on the less and less loans they are going to offer.

Just get ready for the days of 20% down requirement and a 660+ score. They are coming fast. While I don't necessarily disagree that this may be a good thing, those same consumer activist groups that are yelling at the lenders now may be yelling "discrimination!!" in the future years when no one that makes under 80k will own a home.

Ryan Salo wrote: Just get ready for the days of 20% down requirement and a 660+ score. They are coming fast. While I don't necessarily disagree that this may be a good thing, those same consumer activist groups that are yelling at the lenders now may be yelling "discrimination!!" in the future years when no one that makes under 80k will own a home.

I agree with you Ryan it may not be a bad thing.
Home ownership was to my generation the rite of passage. It was the BIG DEAL that involved a little bit of scrimping saving and sacrificing. The idea that I could buy a $300,000 house as easily as a cell phone or even a new car ran against what I knew in my heart to be true. You would no more "walk away" from your mortgage than from your children.
The subprime era changed all that. Time to get back to what worked for generations.

ARe you kidding? Taft did everything he could to protect the mortgage industry, NOT the homeowners! And the proof is in the pudding Look around! And I am talking about you and me, the homeowners doing everything they can for their home, in an economy that leaves our homes losing value because the "industry" was giving all the "bad" loans to people walking away now! The legislation now is reactionary because something is needed, not for votes. These are people already in office doing damage control. Laws should have been in place before the crisis. No damage control legislation can even come close to fixing this problem. And like Jim pointed out, in areas such as our, with jobs disappearing, it can't get better any time soon. You have to attract people, college grads and all, to areas with jobs to buy the homes.

Yes the credit rating and deposit down were there for a reason. It was proof that you could save and budget and pay your bills. Going "backwards" to that is necessary now.

Since we can argue till the cow comes home who is at fault, and at the end of the day the results are the same, how do we get back to your original question? What can the average person do to help save their neighborhood, when people just walk away from their homes? I am not going into their mindset because we don't know how many sleepless nights they had, if they developed ulcers, got divorced, or contemplated suicide (like many did during the great depression) before we saw them "walking away" with seemingly no regard. Judging others never helps anyone. Unless your question was rhetorical, is there any solution for these abandoned homes? Is there a plan with our city, like some have thrown out on this forum, to do something to gain possession and fill them with city workers with incentives, or is there really nothing anyone can do?

fyi the quote above came from Ryan but has my name on it!

Justine Cooper wrote:Taft did everything he could to protect the mortgage industry, NOT the homeowners!

And look where that got him. You really don't think the politicians will use these new bills at re-election time?

You even said these are reactionary that won't do much good to the home owners, but it may still help the very rich. That is what one of my points was.

BTW- Ulcers don't help your neighborhood, a for sale sign out from selling it for 90% of what you owe and letting it sell does...

I feel for people hurting emotionally and financially but it doesn't take away their responsibility to do everything they can to get out rather than just getting an ulcer with some sleepless nights and then pocketing the monthly mortgage payments and walking out...

Lets stop lowering the bar for people based on emotions...the victim card is getting old and hurting our great country.

You know Ryan I am really upset with you and very disappointed. I am not a christian but you say you are and I don't see very much compassion in what you've been posting here. I don't want to do an attack but I really am very disappointed. I would expect from some, but not you.

Yes, some of these people are selfish, self-serving idiots but some are losing everything when they lose the house. They honestly thought that they were going to be able to live the American dream and that if they worked hard and paid their bills on time they would have some thing to pass down to their kids. The older people who re-financed through sub-prime programs to do needed repairs to their homes that they couldn't afford because of fixed incomes, now homeless. I know some of these people.

These are the same people that people will point at and say they are shiftless and must be somehow at fault for being homeless.

Ryan,

I agree with you on that. That they should do everything they can. What I am saying is, we don't know what he did or didn't do, try to negotiate or not, have ulcers or sleepless nights trying to figure a way out, or hell maybe he just went to the bar and threw up his hands. But we don't know is all I am saying, so judging is a waste of energy. Your original question has not been answered. Since we can only control ourselves, what can we in the community do to help this problem? I still think when the other shoe falls and things continue to get worse, Lakewood could be the one affordable and still attractive town to live in, if we each continue to work toward that. Let's find a solution to foreclosed homes within our city. Like some have mentioned on other threads.

Ryan Salo wrote:Lets stop lowering the bar for people based on emotions...the victim card is getting old and hurting our great country.

I think it's too late for that.

The concepts of individual responsiblity and accountablity have become foreign concepts to the majority of the American people. People just assume that if they don't make their house payment it must be someone elses fault. If you have every loaned money to a friend you know the scenerio.

For the last fourty years the policy of the federal government has been to encourage homeownership. Fanie Mae, Freddie Mac, FHA, tax breaks, tax credits no down payment just move on in. The underling assumption was that everyone should own a house.

The new underlying assumption is that everyone should own a house and that houses should appreciate by 10% per year ad infinitum.

If houses fail to appreciate in value or actually decline in value then the new responsiblity of government is to implement a program that will guarantee that increase. Americans have become quite comfortable in asking government to assume all personal risk.

Build a house on a flood plain? Build a house in hurricane alley? Build a house on the ocean? Don't worry the feds will foot the bill. Better yet if your insurance excludes flood damage just pass a law that says the insurance company must cover the loss anyway.

I've given up on expecting limited government. I've decided it's less frustrating just to demand a piece of the action.

The next time the feds want $100 billion to rebuild huricane damaged homes I want our congressmen and senators to hold up the check until my community gets billion or two.

After all, aren't we all victims?