SO upset and frustrated!!

[NHdisneylover]

What?

I am NOT saying that I think it is right for a person to accept a mortgage loan if they cannot afford it. I also don't think it's right for a mortgage company to give a loan to someone who cannot afford that monthly payment.

Mortgage companies know what the borrower's income is and if they go ahead and give them a mortgage knowing their income and that the borrower cannot afford that payment, then they should not give the loan. And this was being done in some instances before the whole housing market crashed.

Okay. Well, I have never actually heard of banks loaning out so much that the payment is MORE than the person's monthly income.

Yes, I know they made it easy for someone to overextend--but that is still not the bank's fault in my opinion. SOME people have big house payments but keep all of their other bills tiny and do okay with that. Others eat out, vacation, use lots of electricity, etc and cannot manage a large mortgage on top of all that. It is not the bank's job or obligation to analyze how you spend money (other than protect their own interests) it is the borrower's responsibility to look at their budget and decide what they can realistically manage (and to have a back up plan in the case of job loss or illness etc).

I just really cannot see how it is possible the bank's fault that someone asked for and accepted a loan that they could not handle paying back. Yes, sometimes things happen (job loss, illness) that no one was prepared for--however the vast majority of the time the person was irresponsible in their spending/saving habits if they do not have savings to help for a while AND they continue to be so because most of the time the bank WILL work with someone if they call before they are late and explain situations and make payments to the best of their abilities. It i just so much easier (in the short term) to keep spending and think you "need" ballet lessons, cable TV, etc and then "just walk away" when the $$ finally all runs out. The reality is not so simple and sadly, some people have bought into the myth and now (like the OP) are paying the price.

 

[Buckalew11]

What?

I am NOT saying that I think it is right for a person to accept a mortgage loan if they cannot afford it. I also don't think it's right for a mortgage company to give a loan to someone who cannot afford that monthly payment.

Mortgage companies know what the borrower's income is and if they go ahead and give them a mortgage knowing their income and that the borrower cannot afford that payment, then they should not give the loan. And this was being done in some instances before the whole housing market crashed.

Probably done in MOST instances!

Our offer came in 2009! I was shocked because I really thought they would have stopped doing that then but they were going to happily give us that $$$.

Of course, when it came down to the end, after the house was done and all the financial paperwork started, we had to be debt free (no CC bills, no car payments, nothing) on the Credit Report--not just "I carry a zero balance on my CC." I charged 22.00 at Christmas, paid it off in January and it did not show up on my Credit Report as a zero balance until March! We could not secure anything until that Credit Report showed 00000 across the board!

I've owned 4 houses and never went through that much scrutiny before.

 

[ols386]

Oh, we could have afforded it. But we would have been "house poor" and eating rice and beans for the next 30 years, while riding our bikes everywhere we needed to go.

We chose not to live house poor.

That certainly makes sense. I would not want to be house poor either.

When I bought my house, I could have afforded to buy a house that was more costly, but then I would have been house poor. And I don't want to live like that. I want to be able to do some fun stuff too.

Besides that, living in a small house just means less housework.

 

[ols386]

Okay. Well, I have never actually heard of banks loaning out so much that the payment is MORE than the person's monthly income.
Yes, I know they made it easy for someone to overextend--but that is still not the bank's fault in my opinion. SOME people have big house payments but keep all of their other bills tiny and do okay with that. Others eat out, vacation, use lots of electricity, etc and cannot manage a large mortgage on top of all that. It is not the bank's job or obligation to analyze how you spend money (other than protect their own interests) it is the borrower's responsibility to look at their budget and decide what they can realistically manage (and to have a back up plan in the case of job loss or illness etc).

I just really cannot see how it is possible the bank's fault that someone asked for and accepted a loan that they could not handle paying back. Yes, sometimes things happen (job loss, illness) that no one was prepared for--however the vast majority of the time the person was irresponsible in their spending/saving habits if they do not have savings to help for a while AND they continue to be so because most of the time the bank WILL work with someone if they call before they are late and explain situations and make payments to the best of their abilities. It i just so much easier (in the short term) to keep spending and think you "need" ballet lessons, cable TV, etc and then "just walk away" when the $$ finally all runs out. The reality is not so simple and sadly, some people have bought into the myth and now (like the OP) are paying the price.

Sorry you can't see it, but before the housing market crashed, there were instances when banks gave out loans knowing that the individual could not afford the monthly payment. I don't think it's so much like that now, but it was being done before the crash.

 

[tlbwriter]

Sorry you can't see it, but before the housing market crashed, there were instances when banks gave out loans knowing that the individual could not afford the monthly payment.

Surely the individuals who took out those mortgages also knew they couldn't afford that monthly payment? How is this the bank's fault? When we built our house, the bank approved us for more than we could afford to borrow, and we simply made our own decision about how much we felt comfortable borrowing. Are you saying other people are too stupid to do that? I know there was some truly shading lending going on - people being told they had one type of loan, and being given another. But you can't blame the banks when people simply don't have enough sense to know what kind of monthly payment they can afford.

 

[Buckalew11]

I think that a lot of people who are unemployed aren't necessarily sitting at home waiting for the perfect job. My dd was laid off, now working for a newspaper company. It's not the perfect job for her but it's a job for right now. She is a very talented graphic designer and would definitely like to have a better/different job, but for now it's what she can find.

So your statement definitely doesn't apply to everyone who is laid off or unmployed.

I did not say it applies to everyone. I said I have little tolerance for the man (or person) who sits at home doing nothing because they think they worth more than "that." Cudos to your DD for taking something less and hoping for better--she'll probably find it because of her work ethic.

Surely, you have known someone with the attitude I am talking about. I see it here AND in RL--"I made XXX amount of dollars at my old job and I want to make that much or more at my new one." Yet, they'll live off CCs and let themselves get depressed and sit at home looking for a jobs on the computer all day while the bills keep piling up.

My DH is similar. Was laid off from his great, well-paying professional job two years ago. His last day in the office was a Friday, and the following day he strapped on a tool belt and started building fences and doing home repairs. A couple of months later he got another professional job in his field, only it was 500 miles away from our lifelong home. He kept working home construction until the day before we loaded the moving van.

Thanks for the post; I needed a reminder on how much I love, respect and admire the man I married, after he got on my nerves this weekend.

Good for your DH! I know it wasn't easy but I have a whole lot more respect for my DH, who shoveled horse poop last summer than I would have if he had stayed home looking for a job that matched his college degree and experience level!

 

[divabydisney]

Okay. Well, I have never actually heard of banks loaning out so much that the payment is MORE than the person's monthly income.

Yes, I know they made it easy for someone to overextend--but that is still not the bank's fault in my opinion. SOME people have big house payments but keep all of their other bills tiny and do okay with that. Others eat out, vacation, use lots of electricity, etc and cannot manage a large mortgage on top of all that. It is not the bank's job or obligation to analyze how you spend money (other than protect their own interests) it is the borrower's responsibility to look at their budget and decide what they can realistically manage (and to have a back up plan in the case of job loss or illness etc).

I just really cannot see how it is possible the bank's fault that someone asked for and accepted a loan that they could not handle paying back. Yes, sometimes things happen (job loss, illness) that no one was prepared for--however the vast majority of the time the person was irresponsible in their spending/saving habits if they do not have savings to help for a while AND they continue to be so because most of the time the bank WILL work with someone if they call before they are late and explain situations and make payments to the best of their abilities. It i just so much easier (in the short term) to keep spending and think you "need" ballet lessons, cable TV, etc and then "just walk away" when the $$ finally all runs out. The reality is not so simple and sadly, some people have bought into the myth and now (like the OP) are paying the price.

Completely agree! I work for a bank and have done both underwriting and now in Loss Mitigation working with atty's, real estate agents, and homeowners. I can attest that banks do what they can to help people. As far as loaning out money? It's amazing what some people or their BROKERS do to get them more house. One thing I think people should know, when a bank analyzes what you can be approved for, they DO NOT calculate in utilities, dance lessons, groceries, gas, or any other variable/optional monthly expense. We simply review your credit liabilities (bills that show up on your credit report) and your expenses for the home, taxes, ins, etc. If you meet a certain debt ratio, you're approved, if not you're denied. Oh and don't forget 90% of the loans that were approved, were gov't backed, the bank was not really the one decisioning them. I think the public is extremely uneducated and looking for someone to point the finger at. There are isolated cases of banks loaning out too much however, they are much lower than anyone wants to believe.

 

[ols386]

Surely the individuals who took out those mortgages also knew they couldn't afford that monthly payment? How is this the bank's fault? When we built our house, the bank approved us for more than we could afford to borrow, and we simply made our own decision about how much we felt comfortable borrowing. Are you saying other people are too stupid to do that? I know there was some truly shading lending going on - people being told they had one type of loan, and being given another. But you can't blame the banks when people simply don't have enough sense to know what kind of monthly payment they can afford.

I would think the individuals who took out those mortgages knew they couldn't afford it, but they did it anyway (which IMO is wrong). But some people don't think and plan for the future (even the short-term future).

But if the bank knows what their income is, and that the monthly payment is going to be more than what they can afford, then they should not give out those loans. And they were indeed doing that before the housing market crash.

 

[Buckalew11]

Completely agree! I work for a bank and have done both underwriting and now in Loss Mitigation working with atty's, real estate agents, and homeowners. I can attest that banks do what they can to help people. As far as loaning out money? It's amazing what some people or their BROKERS do to get them more house. One thing I think people should know, when a bank analyzes what you can be approved for, they DO NOT calculate in utilities, dance lessons, groceries, gas, or any other variable/optional monthly expense. We simply review your credit liabilities (bills that show up on your credit report) and your expenses for the home, taxes, ins, etc. If you meet a certain debt ratio, you're approved, if not you're denied. Oh and don't forget 90% of the loans that were approved, were gov't backed, the bank was not really the one decisioning them. I think the public is extremely uneducated and looking for someone to point the finger at. There are isolated cases of banks loaning out too much however, they are much lower than anyone wants to believe.

Gah, that sounds like how they figure what you can afford to spend on college too.

 

[ols386]

Completely agree! I work for a bank and have done both underwriting and now in Loss Mitigation working with atty's, real estate agents, and homeowners. I can attest that banks do what they can to help people. As far as loaning out money? It's amazing what some people or their BROKERS do to get them more house. One thing I think people should know, when a bank analyzes what you can be approved for, they DO NOT calculate in utilities, dance lessons, groceries, gas, or any other variable/optional monthly expense. We simply review your credit liabilities (bills that show up on your credit report) and your expenses for the home, taxes, ins, etc. If you meet a certain debt ratio, you're approved, if not you're denied. Oh and don't forget 90% of the loans that were approved, were gov't backed, the bank was not really the one decisioning them. I think the public is extremely uneducated and looking for someone to point the finger at. There are isolated cases of banks loaning out too much however, they are much lower than anyone wants to believe.

Is that still the case?

 

[ilovemk76]

Sorry you can't see it, but before the housing market crashed, there were instances when banks gave out loans knowing that the individual could not afford the monthly payment. I don't think it's so much like that now, but it was being done before the crash.

The only ones I have ever heard were interest only mortgages. The persons knew they could afford the interest only portion but when the loan reset, there plan was to sell for a profit before the date of the reset and walk away with a downpayment on their real house. For many the plan did not work out. It was a gamble and they lost.

OP, sorry about your situation but I take filing bankrupcy very seriously. How long was your DH unemployed before you filed for bankrupcy?

For all who see bankrupcy as an easy answer just remember this thread. There are still consequences to bankruptcy.

We pay $16K/year for your health insurance. If I prefered I could vacation on that money and they file those medical bankruptcies that are considered a OK. No doing that. Having health insuranace rather than a vacation is the right thing to do. DH and I both work to be able to pay that bill. We pay it with after tax money up to 10% of our AGI, then we get to write it off our taxes.

 

[NHdisneylover]

Sorry you can't see it, but before the housing market crashed, there were instances when banks gave out loans knowing that the individual could not afford the monthly payment. I don't think it's so much like that now, but it was being done before the crash.

What do you define as "cannot afford"? We spend literally about half as much as our neighbors on utilities by line drying clothes, not leaving lights on, not running TV often, etc. (in NH we kept our house at 58-60 in the winter and we spent actually about 1/3 on heating oil compared to the neighbors). We have no pets, so there is no cost there (pets are much more expensive than most people realize). We do not smoke. Etc., etc. We have other places we chose to spend money (vacation).

My point is that the VAST majority of people who I have ever spoken to about finances spend money on things they do not need to spend money on. There are nearly always ways to cut back and yet most people do not see them. It is NOT the bank's job to know how the person spends there money (do they shop at Goodwill or Niemen's?). Only the borrower really knows what THEY can afford based on how THEY spend money.

NOTE: I say this as someone who is sitting on a house we cannot sell in NH after having had two sets of terrible renters and now the good ones are leaving. We have lost a huge amount of money on it (we moved because DH's job in NH went away and our choice was to move and he stayed employed or stay put and be out of work). So, I KNOW things happen that you do not plan on, I know the market is terrible (for jobs and housing) and i know it is hard. I also know we were grown ups who bought that house because WE wanted it and took the loan because WE looked at our budget and felt we could handle it and we will continue to take care of it one way or another but will not expect to be able to just file bankruptcy (which we will avoid at all costs and hope it to never happen) and have no repercussions from doing so.

 

[tlbwriter]

I would think the individuals who took out those mortgages knew they couldn't afford it, but they did it anyway (which IMO is wrong). But some people don't think and plan for the future (even the short-term future).

And that's not the bank's fault.

But if the bank knows what their income is, and that the monthly payment is going to be more than what they can afford, then they should not give out those loans. And they were indeed doing that before the housing market crash.

The bank is not your parents. As long as you meet the official, long-standing income-to-debt ratio, it is not the bank's business to tell you that, while you can technically afford this house, they're afraid you won't be able to make the payments. "They loaned me too much money" is a ridiculous excuse.

 

[luvmy3]

Completely agree! I work for a bank and have done both underwriting and now in Loss Mitigation working with atty's, real estate agents, and homeowners. I can attest that banks do what they can to help people. As far as loaning out money? It's amazing what some people or their BROKERS do to get them more house. One thing I think people should know, when a bank analyzes what you can be approved for, they DO NOT calculate in utilities, dance lessons, groceries, gas, or any other variable/optional monthly expense. We simply review your credit liabilities (bills that show up on your credit report) and your expenses for the home, taxes, ins, etc. If you meet a certain debt ratio, you're approved, if not you're denied. Oh and don't forget 90% of the loans that were approved, were gov't backed, the bank was not really the one decisioning them. I think the public is extremely uneducated and looking for someone to point the finger at. There are isolated cases of banks loaning out too much however, they are much lower than anyone wants to believe.

And they shouldn't have to, that is the homeowner's responsibilty and also why the banks can never really be blamed for "giving mortgages to people they knew couldn't afford them". The people knew what they could and couldn't afford when they took into account all of their expenses. Its not the bank's job to figure out what is left over for your mortgage after ballet lessons, and groceries, vacations, it's yours and yours alone. If you can't afford a 300,000 mortgage, don't sign on the dotted line. However if you do, remember nobody held a gun to your head.

 

[NHdisneylover]

And they shouldn't have to, that is the homeowner's responsibilty and also why the banks can never really be blamed for "giving mortgages to people they knew couldn't afford them". The people knew what they could and couldn't afford when they took into account all of their expenses. Its not the bank's job to figure out what is left over for your mortgage after ballet lessons, and groceries, vacations, it's yours and yours alone. If you can't afford a 300,000 mortgage, don't sign on the dotted line. However if you do, remember nobody held a gun to your head.

Exactly

 

[SaraJayne]

That certainly makes sense. I would not want to be house poor either.

When I bought my house, I could have afforded to buy a house that was more costly, but then I would have been house poor. And I don't want to live like that. I want to be able to do some fun stuff too.

Besides that, living in a small house just means less housework.

 

[ols386]

And that's not the bank's fault.



The bank is not your parents. As long as you meet the official, long-standing income-to-debt ratio, it is not the bank's business to tell you that, while you can technically afford this house, they're afraid you won't be able to make the payments. "They loaned me too much money" is a ridiculous excuse.

Then why would a bank give a loan, based on income, knowing that the income is not enough to be able to make the monthly payment?

I never said the bank is your parent.

Maybe the income-to-debt-ratio requirment should be changed?

I'm not sure why you are arguing with me. I think people know how much they can or cannot afford for a monthly payment. If they take on too much, then that is their own fault and they have to deal with it (although sometimes financial situations do change, but it's still the responsibility of the borrower). But at the same time, a bank should not give a loan knowing that the individual will not be able to make the payments, and this WAS happening before the housing crash.

 

[golfgal]

. I have little tolerance for the man who sits at home waiting until he finds the perfect , high paying job while belly aching about his bills and no one paying him what he is worth.

.

I have to comment on this-it isn't so much that people are sitting at home thinking they are worth whatever, the BUSINESS world sees it that was as well. If someone comes with a resume with a lot of experience in upper management, they aren't going to give him the time of day for a department management job (for example) because they know he will jump ship as soon as something better comes along--or that he is so over qualified for the job boredom sets in or they try to take over. It isn't so much that the person looking for the job won't TAKE that job, it is more that they won't even get an interview for the position.

 

[java]

I did not say it applies to everyone. I said I have little tolerance for the man (or person) who sits at home doing nothing because they think they worth more than "that." Cudos to your DD for taking something less and hoping for better--she'll probably find it because of her work ethic.

Add my DH to the list of the guys that took whatever job he could find to keep us afloat. He is working a night job*not in his field but it's work- and he's available to go on interviews during the day, which he has been doing. It's been almost 6 months now. But we are surviving thanks to that job. It may not be a career but it's paycheck!

 

[NHdisneylover]

Then why would a bank give a loan, based on income, knowing that the income is not enough to be able to make the monthly payment?

I never said the bank is your parent.

Maybe the income-to-debt-ratio requirment should be changed?

I'm not sure why you are arguing with me. I think people know how much they can or cannot afford for a monthly payment. If they take on too much, then that is their own fault and they have to deal with it (although sometimes financial situations do change, but it's still the responsibility of the borrower).

Unless the income is truly less than the monthly payment--the bank DOES NOT know it is not enough. As so many people have said--the bank cannot know if you buy name brand clothes or shop garage sales. They cannnot know if you eat only homecooked meals from reasonable ingredients or eat gourmet. They cannot know if you spend $200 a month on kids' lessons or not. They cannot know if you spend $400 a month on dogfood and grooming and vet bills or have no pets. They cannot know if you spend $100 a week on cigarettes or do not smoke at all. ETC. It is not their business anyway. You and only you are responsible for living within your means.

I cannot see WHY the income to debt ratio should be changed when there ARE people who can do it on that (because they reduce spending in other areas) just because some people "cannot" (which I believe means chose not to by spending in other areas).