Chicago526
<font color=red>Any dream will do...<br><font colo
- Joined
- May 6, 2003
- Messages
- 11,024
One of my friends is married to a guy that used to work as a mortgage broker. He didn't have any special training or education to be one, and usually the first thing out of his mouth after telling you he was a mortgage broker is that he really doesn't like math. Anyway, DH and I were engaged at the time and looking to sell my condo and buy a single family home. He of course offered to help me find a loan. I told him thanks for the offer but we'd set up financing already. He asked if it was okay if he asked what kind of loan we got, rate, etc., just out of profesional curiosity. I didn't mind talking about it and let him know we got a 30 year fixed for 5.75% (this was in 2005, just for reference). He said that was great, but if I was interested, he could help with 0% down, 80/20 interest only loan with a teaser rate lower than what we had with a fixed rate, so we could buy a lot more house that we had budgeted for, we'd even be able to "afford" to move back to my home town, where the housing prices had skyrocketed (awsome school district and all around good area) instead of living where we do now, where houses are cheaper (not so good school district and other problems). I didn't say anything other than "thanks but we're happy with what we have", because he's my friends husband, but I thought to myself that he had absolutly no idea what he was talking about. And it turns out he didn't!
The thing is, he's a good guy. He wasn't a preditory broker, knowing he was putting people into bad loans that they wouldn't be able to pay once the ARM expired and the higher rates caused the payment to double, or that by putting 0 down we'd be open to owing more than the house is worth should the market tank, or any of the other 100 reasons that the loan he was talking about was financial suicide. He didn't know any of these things, because he didn't have training or eduacation, he was just going along with what his company told him. He honestly thought he was giving good financial advice and helping people.
My point to all this is, that the people pushing these loans, in a lot of cases, didn't know how bad they were either. They were giving lending advice based on their own in-company training. I'll bet you dollars to donuts that many of these brokers were getting these toxic loans too. And now a lot of them are laid off and losing their homes due to overbuying and having bad loans, just like their former clients.
If the people pushing the loans had no idea, how would one expect the general public to? I only knew to stay away from those loans because I'm a geek and finacially conserviative, I don't spend a dime until I've researched something to death and I'm adverse to risk. But most people DO trust the banks and the brokers, because they think the banks won't loan them money if they have no realistic way of paying it back. And honestly, why would one think otherwise? Why would a bank lend money unless they had a decent expectation they'd get their money repaid? What most people didn't know, what even I didn't know even with all my research, was that the big banks were bundleing the high risk loans with the low risk ones to spread out the the risk, and selling them as investments on the stock market. The banks and investors didn't CARE if a certain percentage went into foreclosure because, theoretically, the risk was spread out and the overall investment would make money. With the risk to the bank (who sold the loan) and the invester almost zero (on paper anyway), they could care less if a family making $50k a year bought a $350,000 house. Not their problem.
Yes, there IS an aspect of personal responsiblity. Absolutely, people should do more independant research before making such a large and life altering financial decision. But when the banks and brokers are giving bad information, when the brokers are just as clueless as the buyers, when the banks are taking almost no risk in lending to people with iffy finances, when people are bombarded with advertising "XYZ Bank, the name you can TRUST!", the deck is stacked against the consumers. And that's just not fair.
As for my friend and her husband. He got laid off, of course, and has had trouble finding new work. Last I heard he had a job for one of the big mortgage companies in their loss mitagation department, trying to help people who are behind in their mortgages work out deals with the bank so they can stay in their homes if possible, or get a short sale if not. Rather ironic, all things considered. He's making a fraction of what he did before, and they cannot afford to move out of their condo. Fortunatly my friend has a great job with the state (totally recesion proof, it's literally impossible for her to lose her job) so even with his reduced income, they're okay. And they are expecing their first child in November.
ETA: As for should the government bail people out? In cases of clear-cut preditory lending, absolutly. In case of flippers and investers buying multiple properties and losing their shirts, absolutly not. It's the average buyer that got in over their head that I'm honestly not sure. On one hand, I did my job and researched, why should someone who didn't get a bail out? On the other hand, I look around at the six or seven foreclosed and empty houses in my neighborhood and wonder if they'll become a crime risk in the future, and if they'll have an impact on MY home value. I look at the bailouts of Bear Sterns and Freddie/Fannie and think if we bail out these morons, why can't we help the little guy? So in short, I don't know what the right thing to do here is. I really don't.
The thing is, he's a good guy. He wasn't a preditory broker, knowing he was putting people into bad loans that they wouldn't be able to pay once the ARM expired and the higher rates caused the payment to double, or that by putting 0 down we'd be open to owing more than the house is worth should the market tank, or any of the other 100 reasons that the loan he was talking about was financial suicide. He didn't know any of these things, because he didn't have training or eduacation, he was just going along with what his company told him. He honestly thought he was giving good financial advice and helping people.
My point to all this is, that the people pushing these loans, in a lot of cases, didn't know how bad they were either. They were giving lending advice based on their own in-company training. I'll bet you dollars to donuts that many of these brokers were getting these toxic loans too. And now a lot of them are laid off and losing their homes due to overbuying and having bad loans, just like their former clients.
If the people pushing the loans had no idea, how would one expect the general public to? I only knew to stay away from those loans because I'm a geek and finacially conserviative, I don't spend a dime until I've researched something to death and I'm adverse to risk. But most people DO trust the banks and the brokers, because they think the banks won't loan them money if they have no realistic way of paying it back. And honestly, why would one think otherwise? Why would a bank lend money unless they had a decent expectation they'd get their money repaid? What most people didn't know, what even I didn't know even with all my research, was that the big banks were bundleing the high risk loans with the low risk ones to spread out the the risk, and selling them as investments on the stock market. The banks and investors didn't CARE if a certain percentage went into foreclosure because, theoretically, the risk was spread out and the overall investment would make money. With the risk to the bank (who sold the loan) and the invester almost zero (on paper anyway), they could care less if a family making $50k a year bought a $350,000 house. Not their problem.
Yes, there IS an aspect of personal responsiblity. Absolutely, people should do more independant research before making such a large and life altering financial decision. But when the banks and brokers are giving bad information, when the brokers are just as clueless as the buyers, when the banks are taking almost no risk in lending to people with iffy finances, when people are bombarded with advertising "XYZ Bank, the name you can TRUST!", the deck is stacked against the consumers. And that's just not fair.
As for my friend and her husband. He got laid off, of course, and has had trouble finding new work. Last I heard he had a job for one of the big mortgage companies in their loss mitagation department, trying to help people who are behind in their mortgages work out deals with the bank so they can stay in their homes if possible, or get a short sale if not. Rather ironic, all things considered. He's making a fraction of what he did before, and they cannot afford to move out of their condo. Fortunatly my friend has a great job with the state (totally recesion proof, it's literally impossible for her to lose her job) so even with his reduced income, they're okay. And they are expecing their first child in November.
ETA: As for should the government bail people out? In cases of clear-cut preditory lending, absolutly. In case of flippers and investers buying multiple properties and losing their shirts, absolutly not. It's the average buyer that got in over their head that I'm honestly not sure. On one hand, I did my job and researched, why should someone who didn't get a bail out? On the other hand, I look around at the six or seven foreclosed and empty houses in my neighborhood and wonder if they'll become a crime risk in the future, and if they'll have an impact on MY home value. I look at the bailouts of Bear Sterns and Freddie/Fannie and think if we bail out these morons, why can't we help the little guy? So in short, I don't know what the right thing to do here is. I really don't.
And she bragged about it
There was a woman who had her daughter's braces taken off because she couldn't pay for them and a few weeks later she was planning a trip to WDW
There are people here who file BK and then celebrate by taking a trip because "Life is too short"
Very sad day indeed. 
