Subprime Sob Stories

[Vegas]

http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=272848804402823

Regulations: Democrats have a cure for the subprime mess: punishing banks with new red tape and fines, and rewarding borrowers with a tax-funded bailout. Now comes the sales pitch.
For that, they've turned to their pals in the press, who have covered the unfolding drama by portraying subprime lenders and investors as greedy villains, and borrowers as helpless Hottentots. The former victimized the latter, causing the mortgage meltdown.

"Blame it on the Street," Time bluntly put it. The magazine claims the demand for subprime and exotic mortgages "was coming not so much from borrowers as from Wall Street, which packaged the loans into securities to sell to investors."

In other words, foreclosed homeowners were somehow tricked into signing loans they couldn't afford by evil "financial engineers" controlling their minds from their Manhattan penthouses.

Meanwhile, the Wall Street Journal's news pages (North Korea) — not to be confused with its editorial pages (South Korea) — has trotted out sob stories about "unscrupulous" lenders preying on borrowers in minority communities.

"Subprime mortgages and the brokers who peddle them are helping to take families out of homes in which they've lived for years," the story whined in a story profiling a Detroit couple allegedly forced into a bad deal by an aggressive subprime lender.

But when you peel back the story, you find the couple is hardly a hardship case worthy of our sympathy. Turns out they live in a nice neighborhood in the burbs and drive a Lincoln Navigator.

And the loan they took out was a mortgage refinance. They used cash from the bigger loan to buy toys they couldn't afford — including stainless-steel kitchen appliances and a koi pond.

The bank has foreclosed on their property, and now they're angry at the bank. It's never good when someone loses his home, but no one held a gun to this couple's head when they signed the loan papers at the title company.

Sen. Hillary Clinton and other Democrats assume subprime and other so-called "predatory" lenders are hiding the terms of high-cost loans from customers, most of whom have poor credit and can't qualify for lower-cost loans. So they're demanding more transparency from banks, which means more regulations and disclosure forms.

We know it's been a while since her Whitewater deal, but Hillary as a lawyer should know that existing real estate laws already require full disclosure of terms. It's called a HUD-1 settlement statement, and it shows exactly what rates and fees a lender charges.

The Detroit couple, like too many subprime borrowers, simply ignored the terms of their loan. Even if they signed prematurely, they still had three days to change their minds and rip up the contract. They had ample time to comb through the documents. But they didn't. They wanted the quick and easy cash — without paying the consequences down the road.

Yes, lenders share some of the blame for the subprime crisis. Some got greedy and loaned to so-called NINJA customers — buyers with no income, no job and no assets.

But please, spare us the sob stories. Few subprime borrowers are victims of exploitation. In fact, it's because of subprime programs that homeownership has boomed among minorities. If anything, those who have defaulted are victims of their own bad judgment. Some personal responsibility must be taken here.

In many cases they bought homes with no money down and poor credit, and thought interest rates would stay low forever. But the chickens came home to roost. And now they and those who pander to them want society to bail them out while punishing lenders with tighter regs?

That will only have the unintended effect of choking off credit in those underserved communities. Then, Democrats will make genuine victims of those they now claim to be victimized and deign to protect.

[Jiddy78]

http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=272848804402823

Regulations: Democrats have a cure for the subprime mess: punishing banks with new red tape and fines, and rewarding borrowers with a tax-funded bailout. Now comes the sales pitch.
For that, they've turned to their pals in the press, who have covered the unfolding drama by portraying subprime lenders and investors as greedy villains, and borrowers as helpless Hottentots. The former victimized the latter, causing the mortgage meltdown.

"Blame it on the Street," Time bluntly put it. The magazine claims the demand for subprime and exotic mortgages "was coming not so much from borrowers as from Wall Street, which packaged the loans into securities to sell to investors."

In other words, foreclosed homeowners were somehow tricked into signing loans they couldn't afford by evil "financial engineers" controlling their minds from their Manhattan penthouses.

Meanwhile, the Wall Street Journal's news pages (North Korea) — not to be confused with its editorial pages (South Korea) — has trotted out sob stories about "unscrupulous" lenders preying on borrowers in minority communities.

"Subprime mortgages and the brokers who peddle them are helping to take families out of homes in which they've lived for years," the story whined in a story profiling a Detroit couple allegedly forced into a bad deal by an aggressive subprime lender.

But when you peel back the story, you find the couple is hardly a hardship case worthy of our sympathy. Turns out they live in a nice neighborhood in the burbs and drive a Lincoln Navigator.

And the loan they took out was a mortgage refinance. They used cash from the bigger loan to buy toys they couldn't afford — including stainless-steel kitchen appliances and a koi pond.

The bank has foreclosed on their property, and now they're angry at the bank. It's never good when someone loses his home, but no one held a gun to this couple's head when they signed the loan papers at the title company.

Sen. Hillary Clinton and other Democrats assume subprime and other so-called "predatory" lenders are hiding the terms of high-cost loans from customers, most of whom have poor credit and can't qualify for lower-cost loans. So they're demanding more transparency from banks, which means more regulations and disclosure forms.

We know it's been a while since her Whitewater deal, but Hillary as a lawyer should know that existing real estate laws already require full disclosure of terms. It's called a HUD-1 settlement statement, and it shows exactly what rates and fees a lender charges.

The Detroit couple, like too many subprime borrowers, simply ignored the terms of their loan. Even if they signed prematurely, they still had three days to change their minds and rip up the contract. They had ample time to comb through the documents. But they didn't. They wanted the quick and easy cash — without paying the consequences down the road.

Yes, lenders share some of the blame for the subprime crisis. Some got greedy and loaned to so-called NINJA customers — buyers with no income, no job and no assets.

But please, spare us the sob stories. Few subprime borrowers are victims of exploitation. In fact, it's because of subprime programs that homeownership has boomed among minorities. If anything, those who have defaulted are victims of their own bad judgment. Some personal responsibility must be taken here.

In many cases they bought homes with no money down and poor credit, and thought interest rates would stay low forever. But the chickens came home to roost. And now they and those who pander to them want society to bail them out while punishing lenders with tighter regs?

That will only have the unintended effect of choking off credit in those underserved communities. Then, Democrats will make genuine victims of those they now claim to be victimized and deign to protect.

There was never anything "bought" nor anything "owned" in any of these situations....and every f*cking asshole hocking their fraud knew it as well as those signing the papers...

FRAUD.

The entire f*cking thing.

More teeth gnashing to come....

[Vegas]

There was never anything "bought" nor anything "owned" in any of these situations....and every f*cking asshole hocking their fraud knew it as well as those signing the papers...

FRAUD.

The entire f*cking thing.

More teeth gnashing to come....

How is it fraud when it's laid out in the paperwork that the homeowner assumes risk?

[LSU]

How is it fraud when it's laid out in the paperwork that the homeowner assumes risk?



When we looked at a house a couple years ago, our realtor was praising the interest only loans and saying how it was the best option we had.

In fact, at one point, I had my wife talked out of buying a house because we didn't have much of a DP and the payments would have stretched us thin.


She called to tell him, and he convinced her we needed to keep on looking because of that gem of a loan we could get.

The loan went through the realtor's office, too...conveniently. So I'd have a hard time believing he wasn't there to sell us the loan just as much as the house.

[Vegas]

When we looked at a house a couple years ago, our realtor was praising the interest only loans and saying how it was the best option we had.

In fact, at one point, I had my wife talked out of buying a house because we didn't have much of a DP and the payments would have stretched us thin.


She called to tell him, and he convinced her we needed to keep on looking because of that gem of a loan we could get.

The loan went through the realtor's office, too...conveniently. So I'd have a hard time believing he wasn't there to sell us the loan just as much as the house.

There are a lot of realtors that are also mortgage brokers. But isn't it obvious that if you buy a house with no money down that you're assuming the risk of the house value declining?

[LSU]

There are a lot of realtors that are also mortgage brokers. But isn't it obvious that if you buy a house with no money down that you're assuming the risk of the house value declining?




Primarily the reason we decided to not buy. That, and we knew we may not be here long.

And that was in the face of Mr. Realtor saying, "At worst, the Baton Rouge market will appreciate 5% a year. There should be no problem there. And as long as you're planning on not being here long, the 'interest only' loan is your best bet. I see no problems with your situation at all."

Hey, he had a family to feed and a brand new Lexus to pay off.

[Vegas]

Primarily the reason we decided to not buy. That, and we knew we may not be here long.

And that was in the face of Mr. Realtor saying, "At worst, the Baton Rouge market will appreciate 5% a year. There should be no problem there. And as long as you're planning on not being here long, the 'interest only' loan is your best bet. I see no problems with your situation at all."

Hey, he had a family to feed and a brand new Lexus to pay off.

My favorite realtor is a good friend of mine that helped me with 4 different property deals while I lived in California. I don't believe there's a more honest realtor anywhere. In all of the dealings he say, "The realtor (or loan officer, or escrow office, etc) told me.................and no realtor has ever lied.............."

[LSU]

My favorite realtor is a good friend of mine that helped me with 4 different property deals while I lived in California. I don't believe there's a more honest realtor anywhere. In all of the dealings he say, "The realtor (or loan officer, or escrow office, etc) told me.................and no realtor has ever lied.............."


I don't doubt there are good people out there.

But there are the opposite, too. And when they know of a way in to get more people to buy houses, whether or not they can truly afford it, they'll be there to show them the way.

Which gets back to your point of it being outlined in the contract.

Now, people with money can have a lawyer friend sit down with them and show them all the potential problems. Of course, people with money don't need the loans that are in hot water now. So we need to dismiss (for the most part) a notion that these "needy" people could get much counsel. Now, perhaps, these people, not having good credit and not having a down payment may not be the most educated (a complete assumption which may be wrong). But if they're not well versed with finance, interest rates, and all that jazz, they may just be eating what the spin doctors are cooking because they seem like great guys. And why wouldn't they be great guys? The showed them this fantastic house, and devised a way that they could afford it! As if an Angel sent by God Himself.

[Vegas]

I don't doubt there are good people out there.

But there are the opposite, too. And when they know of a way in to get more people to buy houses, whether or not they can truly afford it, they'll be there to show them the way.

Which gets back to your point of it being outlined in the contract.

Now, people with money can have a lawyer friend sit down with them and show them all the potential problems. Of course, people with money don't need the loans that are in hot water now. So we need to dismiss (for the most part) a notion that these "needy" people could get much counsel. Now, perhaps, these people, not having good credit and not having a down payment may not be the most educated (a complete assumption which may be wrong). But if they're not well versed with finance, interest rates, and all that jazz, they may just be eating what the spin doctors are cooking because they seem like great guys. And why wouldn't they be great guys? The showed them this fantastic house, and devised a way that they could afford it! As if an Angel sent by God Himself.

You make many valid points, but my bottom line is that when people lose money they tend to go overboard looking for someone to blame. When it happens on a large scale, politicians get involved to make sure that it never happens again and that's when things get seriously messed up.

[LSU]

Also, if the realtor is a friend of yours, I'd sure as hell hope he wouldn't try to dick you over.

[Vegas]

Also, if the realtor is a friend of yours, I'd sure as hell hope he wouldn't try to dick you over.

He became a friend after a couple of deals. I didn't know him at all until I bought my first house over there.

[LSU]

You make many valid points, but my bottom line is that when people lose money they tend to go overboard looking for someone to blame. When it happens on a large scale, politicians get involved to make sure that it never happens again and that's when things get seriously messed up.


Yes, I don't disagree too much there.

But we can't let people get walked on because "it's their sole responsibility."

Yes, they share part of the blame for extending themselves and not being a bit more wise.

But the lendors need a certain level of responsibility, too.


You may be making it up now, but I'm sure you lost a little coin the last couple weeks. I know I did.

And any week you're not making money is a week you're losing money.

And's that's a responsibility of all involved, including the lendor's that allowed that risk to occur.

Whether or not all the regulations are worthy of talk or not is beyond me. But I do know that lendors need to be responsible with the money they hand out, just as the lendees need to be responsible with the amount of money they think they can hand out.

[Vegas]

Yes, I don't disagree too much there.

But we can't let people get walked on because "it's their sole responsibility."

Yes, they share part of the blame for extending themselves and not being a bit more wise.

But the lendors need a certain level of responsibility, too.


You may be making it up now, but I'm sure you lost a little coin the last couple weeks. I know I did.

And any week you're not making money is a week you're losing money.

And's that's a responsibility of all involved, including the lendor's that allowed that risk to occur.

Whether or not all the regulations are worthy of talk or not is beyond me. But I do know that lendors need to be responsible with the money they hand out, just as the lendees need to be responsible with the amount of money they think they can hand out.

I can see changing the qualifying rules to not get people approved for adjustable loans that they couldn't qualify for if the rates go to where they are not unlikely to go. If someone is at the hairy edge of qualifying and the current rate is at 5% (especially when interest rates are at 40 year lows) and they can't make their payments if it gets to 6%, I can't imagine why lenders want to sell those loans.

[LSU]

I can see changing the qualifying rules to not get people approved for adjustable loans that they couldn't qualify for if the rates go to where they are not unlikely to go. If someone is at the hairy edge of qualifying and the current rate is at 5% (especially when interest rates are at 40 year lows) and they can't make their payments if it gets to 6%, I can't imagine why lenders want to sell those loans.


I don't know the process, but I'm sure there's money to be made with more loans that go through. And in the end, the bank ends up with a house that has appreciated a few years when the "owners" can't make the payment and the bank gets it.

Kinda like when Jiddy goes out and buys a house, then hangs on to it for a couple of years before selling it at the appreciated price.

[Vegas]

I don't know the process, but I'm sure there's money to be made with more loans that go through. And in the end, the bank ends up with a house that has appreciated a few years when the "owners" can't make the payment and the bank gets it.

Kinda like when Jiddy goes out and buys a house, then hangs on to it for a couple of years before selling it at the appreciated price.

I should have worded it better. I know full well why mortgage brokers write those loans. But the banks and/or loan companies that buy those loans are the ones I don't get. They're going to take a bath whenever the market goes down. They're not as bad off as a family that just lost their house, but they look like idiots for holding a bunch of depreciated properties.

[LSU]

I should have worded it better. I know full well why mortgage brokers write those loans. But the banks and/or loan companies that buy those loans are the ones I don't get. They're going to take a bath whenever the market goes down. They're not as bad off as a family that just lost their house, but they look like idiots for holding a bunch of depreciated properties.



Just like when taxes get raised on oil, the oil companies don't pay for it, the consumers do.

[Roy Munson]

I should have worded it better. I know full well why mortgage brokers write those loans. But the banks and/or loan companies that buy those loans are the ones I don't get. They're going to take a bath whenever the market goes down. They're not as bad off as a family that just lost their house, but they look like idiots for holding a bunch of depreciated properties.
What do they do to balance out their "portfolio"? Write more loans to make up for the loss they're currently taking on properties.

[Jiddy78]

How is it fraud when it's laid out in the paperwork that the homeowner assumes risk?

WTF? I just told you...The buyer doesn't OWN sh*t. 120% LTV ring a bell?

Here. Have this half million dollar mansion and we'll give you 100 grand.

Really? But I don't have any money.

Not only that, in a few years the place will probably be worth 30% more and you can grab another 50k...

Really?

Sure.

Cue the hookers, booze, gambling, leased corvette, ghirardelli chocolate, granite, starbucks coffee, benihana and trips around the world.


Two to three years later.

I need that 50k now.

I'm sorry. Your house is worth 50k less than when you bought it. You owe us 150k more than it is worth. BTW, I'm gonna need an extra $600 per month from here on out fella.

What? Um...Here. Take the keys.

Why are you giving me the keys?

I don't want to play anymore.

But right here in the contract it states *yada yada bling blang*..

Ummm...Ok...But I have no money...Never did...Just like when you GAVE me this house.

Meanwhile, the stock market has performed greatly this last quarter...ghirardelli chocolate, chevrolet, starbucks coffee, benihana, the airlines and hotels, online poker sites and escorts.com all bolstered with strong financials posting good revenues...

Quotes the owner of escorts.com "I ain't never seen nothing like this! We're raking it in baby. It's like they dropped money from heaven to our consumer base! BYAAAAAAAAAAAAAHHHH!!!"