Mortgage Crisis Situation-I have a solution!

[BinCo]

Now that the moron in charge has opened his mouth to help out people who are loosing homes and how home prices are falling I have a problem.

We bought a new home 3 years ago. I am self employed and because of the price of my old home and the lack of profits from it we had to take a special (stated income) mortgage. We have since been able to lock into a fixed rate with our lendor, so we're OK.

I looked at my papers again and it says that the interest rate MIGHT go up. It does not say that it is a mandatory increase every quarter or month depending on prime.

My solution is so simple you might dope slap me for it. Why can't the mortgage lendors simply NOT raise the rates for a year or two? This would allow people to keep the home (paying a mortgage) and allow lendors to still make plenty of money. To think that the greed from lendors would rather drive people out of the home and leave it vacant and at a loss instead of just being reasonable in a bad situation is unreal to me. Talk about cutting off your nose to spite your face.

It seems that all the talking heads and radio folks are always conceding that rates will go up that no one has asked if they should go up. I understand some aspects of the greed cycle, but it sure seems that they are hell bent on running this country into the ground before they give up a nickel. It's as bad as a company being driven by profit so bad that they never bother to repair a leaky roof until the building collapses.

So am I crazy or does this make sense?

What do you suppose drove this? The investment market with all the money markets driving to profit above common sense?

[luvnaturism]

Most variable rate mortgages have a statement in there somewhere linking the rate that the borrower pays to an external rate (prime rate + 3% or something similar). That external rate MIGHT go up or MIGHT go down. If it goes up, the borrower pays more; if down, then the borrower gets a break.

Generally lenders haven't thought it to be in their interest to voluntarily collect less money than the contract calls for. Maybe you can be the first to convince them. However I think there may be lots of potential legal problems if some people are not held to their contracts but others are.

[Sanslines]

Both dems and repubs are working on solutions to help those who are low income and can not afford the interest rate increases. Perhaps some kind of low interest loans will be made availible to replace the variable rate loans that may eventually crucify many people. The issue is complicated for the gov't does not want to assist those who are wealthy and can afford to continue to pay off their loans. The gov't also does not want to assist those who will make tons of profit at gov't ie taxpayer expense. This mess was completely avoidable but now the mess has to be cleaned up and it will be the taxpayers who will have to do it in one way , shape, or form.

[walter05]

Sanslines;

I appear to be the conservative on this one.

My wife and I while supporting six children received a conventional 30-year fixed rate mortgage. We are making the payments and covering the costs.

We live within our means. We don't have cable TV and don't have many luxuries that others consider necessities. We do have a happy family and are very thankful for all we have.

Others have not lived within their means and now they can't afford to pay for it. Mortgage companies and banks loaned money to people who could not afford to pay it back. Interest only, negative amortization and other loan schemes enabled people to borrow money they could not afford to pay back.

Then since there was so much of this phony money out there, prices were being bid up. This made it easier to get even more such money. Now the market has a chance to restore common sense to lending and reset prices to a healthy level. The market should be able to fix this.

The one are of relief I support is based on a quirk of tax law. If a mortgage company forgives a loan, the IRS considers the forgiven amount income. The poor person who may have lost a home is now hit with a heavy tax burden that makes it virtually impossible to climb out of the dept hole. I would support some tax relief for these people.

The government gets money from people like my wife and I who pay our taxes. It is outrageous to take money from those of us who live within our means to pay for the extravagance of those who don't. At some point, adults have to pay the consequences for choices made.

[BinCo]

walter05. Wow, you are the conservative in this one. If you lived in a town that had double digit increases in the past 10 years you might understand. In Denver you can get a 1200 sq ft, 40 yr old house for ONLY $175,000! I should know, I sold mine. BTW, it will be in a bad neighborhood, or one on the way down. To get it in a nice neighborhood with good schools and less shootings, expect about $235,000 for the same house. So when we wanted to move up a little and get into a nice neighborhood we had to move 30 miles from town and go up to $460,000. Denver is not alone in this.

So, as a conservative, you figure that it's best to keep people in their place than allow them to move up in the world? What about new home buyers? What happens when the average home is $245,000 and that is your options? I am the one advocating that the mortgage companies make a change! Not because a few people are loosing thier homes, but because 1 in 80 homes in the area are in foreclosure. Couple this with the bankruptcy laws, written by the credit companies, and someone is absolutely sure to lose that house BEFORE that have a chance to work out any sort of relief. Sure, you live within your means, as do we. My neighbor broke his foot in January and he is still not working much. He has his own business, but his crew has kept it going. Can you say the same? Can you keep your house if you lost your income for 8 months? I would think a lot of America could not, especially with mounting medical bills on top of it. He has insurance, including disability. You are not disabled until 6 months and then the payment is a joke.

I do not believe all these people bought houses they could not afford. It seems that most of them got caught in the "screw the little guy" mentality that this Republican admin and the last 12 years of Congress has allowed lendors to have. This is not the world that I grew up with when housing went up 1-3 percent per year. So, I guess the solution is exactly what the lendors are pushing us into. That people will not own their homes, just rent them for life.

I can, and do blame, the lendors for wanting to push the contracts to a level that loansharks would drool over. Their used to be laws that protected the average Joe from this, alas the Republican Congress has dismantled all of these laws in 12 years. Add that to the almost impossible prospect of protection from bankruptcy and I have no mercy for lendors going out of business. I feel sorry for the people who got taken by this.

[walter05]

Binco;

Last December, I contracted Legionaire's Disease. I still have thousands of dollars in medical bills from that.

My wife just completed her last radiation treatment for cancer. I am thankful that the surgery got it all.

I understand how medical costs work.

I live in a smaller city. One of the reasons I don't live in Atlanta is it is TOO EXPENSIVE FOR ME.

I drive an old pick up truck not to fit in to South Georgia but because I could afford to pay cash for it. My wife drives an 11 year old Dodge Grand Caravan that is paid for.

You said, "So when we wanted to move up a little and get into a nice neighborhood we had to move 30 miles from town and go up to $460,000. " You used the word WANTED and did not say NEEDED. You could have rented an apartment or done something else that was within your means. If Denver was too expensive, you could have moved.

You wanted to buy a house that cost you $460,000. I moved to a smaller city and bought a house that now would cost just over $200,000. Many here in Savannah are moving to towns around here where housing prices are even lower. We all make choices and there are consequences.

If you bought a house and can't afford it, I am sorry for your difficulty. However, you want the government to use its taxing authority to confiscate money from my family, living in a house worth less than half of yours to pay for your house. That is robin hood in reverse.

[Sanslines]

We live within our means. We don't have cable TV and don't have many luxuries that others consider necessities. We do have a happy family and are very thankful for all we have.

Walter,

You are from a generation that worked, saved, and generally lived within their means. Younger generations today are not living as you did when you started out. The past 10 years has seen enormous housing price increases in most areas. Those who purchased early have built enough equity to survive interest rate increases. Those who purchased more recently have not. Some of these individuals gambled in order to speculate and become instant millionares. Others panicked and purchased houses with the belief that prices would increase forever and they would build equity fast enough to survive interest rate resetting. Many people knew exactly what they were signing when they took out variable interest rate loans but signed anyway. They did not consider the future when the rates would adjust or consider how they would pay for the interest rate price increases.

In the late '90's we all saw fantastic greed and speculation in the stock market. The stock market eventually corrected and many people were burned. Many also became millionares. After the stock market crash, another speculative bubble was encouraged to counteract the effects of the crashed stock market. The result was that housing prices rose to dizzying heights. People need affordable housing and should not ever gamble with the roof over their heads. The result of losing this gamble is to become homeless or to wind up living with roomates or neighbors and this is not always a very good option. In this particular case, I do think that the government created an enormous mess. We are now seeing some of the initial results of this mess. Like it or not, we will all have to pay higher taxes to bail out those who can not afford their mortgages. The alternative is to close our eyes to an enormous homeless problem in the making and I do not think that most people will allow this to happen.

[BinCo]

walter05. I moved because my neighborhood was going downhill. We had gangs moving in and when the local grocery store had a shooting I said enough. Since the cops don't get to kill every punk, as much as Bobx might have said otherwise, we decided the best thing was to move. As a small business owner who does engineering I am not in the position to move to another state and change careers or go thru the growing pains again.

I am not in a problem position, but I know people who are and the economy is going in the toilet because of the mortgage crisis in America. My old neighbor had his house paid for and did not understand why everyone in the world was not in the same boat. Of course he bought his in 1971 and his mortgage was less than today's car payments (of which I have none).

I do not want to government to bail ANYONE out. I would rather they encourage the mortgage industry to take a little less bite. Like I had said before, just because they can raise the rates does not mean that the should. Especially with the situation in the country today.

IMHO, I see wall street as nothing more than a group of investors who lost site of what investing was. They clearly look for the quickest and highest profit and could care less if the company or country goes down, as long as they have a high rate of return. Investing used to be a form of being able to help a company grow and prepare for the long term. After the stupidity that was the dot com era, the large amount of IRA and 401K investment firms are only looking out for their investors and have no concern for anything in a larger picture.

BTW: Sorry for your medical situation. I have been lucky enough to not have any severe problems. Just had my gall bladder out under emergency this summer.

[LamontCranston]

Others have not lived within their means and now they can't afford to pay for it. Mortgage companies and banks loaned money to people who could not afford to pay it back. Interest only, negative amortization and other loan schemes enabled people to borrow money they could not afford to pay back. This hits it for me.

An adjustable rate mortgage starts lower than a fixed rate, so the borrowers are living at a discount during the beginning years. The get to do that because they accept *risk*. The rate might rise past the fixed rate point or they might live at a discount for many years. Lenders lend the money at a discount because they accept *risk*. They hope the rate rises past the fixed rate, but they may lose money for years.

Both sides can buy insurance to protect against the loss should one party fail.

My problem with all this sub-prime news is that these mortgagees have been living at a discount to my rate -- in a bigger house -- and now they won't continue to pay as the market changes. That's too bad, but they could have purchased a 30-year fixed and stayed out of trouble.

My other problem is with lenders extending credit to people without the means to cover it. That's there business practice and if it fails, as it is failing, then so be it. That was the risk going in. Do more research before lending money.

BTW - My first home was a condominiun in southern New Hampshire. We purchased it with a 11.0% 30-year fixed mortgage in 1988. That was a bargain deal at the time. A year later the housing market tanked and we were holding a loan $30,000 over the market value.

[Sanslines]

That's too bad, but they could have purchased a 30-year fixed and stayed out of trouble.

Many of the individuals who signed up for the teaser, low interest rate loans did not qualify or could not pay for a fixed interest rate loan. Many lenders knew fully well that many of those who took out the teaser loans were living beyond their means and would eventually not be able to keep up with their payments. Many people who took out these loans also knew this but didn't think about the future and what would happen in a year or two or just plain didn't care as they may have thought that either the gov't or other people would bail them out. The current philosophy for so many people today is 'live for today and tomorrow will take care of itself - maybe!"

[LamontCranston]

... as they may have thought that either the gov't or other people would bail them out. But let's not. Both people and businesses are free to prosper and free to fail.

If willful fraud is proven, then the abridged party gets propped up. But if these are contracts someone no longer likes the terms of... too bad.

Truth and Lending law requires full disclosure. "I thought I'd be making more money, or sold it by now" is not good enough for a public bailout.

[MJ_KC]

Originally posted by BinCo:
I can, and do blame, the lendors for wanting to push the contracts to a level that loansharks would drool over.

What interest rate would you consider to be at this level?

[luvnaturism]

A major part of the problem is that our educational system doesn't provide "real world" training about financial issues that most of us end up dealing with. People want to buy a house; understandably they want the most house they can get; the way to do that is take an ARM; not understanding the risk because they were never taught, they sign on that bottom line without realizing that they are gambling with their future.

So that's part of the problem. Another part, which has correctly been pointed out earlier, is that there are a lot of predatory lenders out there who just want the sale and will tell you anything to get it. I had a sad conversation with an elderly lady who has the care of her son who has a fatal illness. Some predator financed a house for her at payments that she could barely afford. The FIRST time that the mortgage increased she could no longer make the payments, and they lost the house. That's a loan that should never have been made, and we do need government regulation to bring some sanity into lending standards.

For several years mortgage rates have been at historically low rates. Today they're not quite that low, but are still very reasonable. The fact that so many people get into trouble at what are actually modest increases (for the most part) is an indictment of the lending industry.

[MJ_KC]

Originally posted by luvnaturism:
The fact that so many people get into trouble at what are actually modest increases (for the most part) is an indictment of the lending industry.
No, it is an indication that the borrowers do not know what they are doing. I have no sympathy for people who use an ARM to buy more house than they can afford and then get themselves into trouble.

I bought my house on a fixed rate loan for 30 years and paid it off in just over 14 years. I bought less house than I could afford and did not get into financial trouble. I even managed to buy a new Corvette while paying on the house. the car was paid off 5 months before the house.

In less than 2 months I will be done paying on my truck. My monthly debt load will be very low.

[LamontCranston]

A major part of the problem is that our educational system doesn't provide "real world" training about financial issues that most of us end up dealing with. Before I bought my first home, I took a real estate course at the local college and passed the real estate sales exam. I needed to understand everything about a 30-year loan for 3 times my annual salary before I signed.

I didn't and don't trust anyone who puts paper in front of me to sign that's longer than a page. So I educate myself in advance.

Note the difference here: instead of depending on "them" (public education or government regulation) to tell me what's going on, I seek out -- on my own time, at my own expense -- education.

If the subject is complex and I don't have the time to study, I hire an attorney.

At a real estate closing, I am paying every person at the table. They wait quietly and they answer questions. I sign when I'm satisfied.

Push the chair back and get up. It works.

[BinCo]

MJ_KC, I would consider some that I have heard on the news rising to 15% out of site. There used to be Usery laws, I am told, that kept creditors from charging too much. Not any more. They seem to be able to charge whatever they want. For a lendor to move someones rate from 8% to 12% in a year with no other excuse than "we can" is a travesty. With the credit industry as it stands today we can all look forward to paying more for credit than ever before. Phone bill lost in the mail, or in dispute, your credit card rates go up. Why the hell can they do this? GREED. It all comes down to investor greed. Not content with a modest return for the lang haul, they want a high return in the short term and the hell with the company or any customers. THIS is what will cause the economic downfall of this country. Not greed at a level 99.9% of us can deal with, but the greed that a fund manager sees. The greed that says to move the production overseas. Without a single care for the person losing their jobs or not having the ability to buy the product they used to make. It's all about the fast buck today. I went to get an angel investor for a business about 10 years ago and one guy sat with a straight face and wanted a 5x return on a $25K loan in 3 years. I walked out and told him he was a fool to even consider investing in a small business.

In Colorado we had almost no regulation of the mortgage industry, so a lot of shady things happened, including forgery and changes after the signatures. So not all of the problem can be dumped on the borrower.

As for the buying more house than they can afford. If you were in an apartment with 2 kids for $1400 a month and you found out you could get a house for $1000 a month wouldn't you at least look into it?

I must agree with luvnaturism very much on his point that people are not taught finances in the country. Money has got to be the second largest taboo at a family gathering behind sex. Our family never discussed it. I have no idea what anyone is worth or salaries or anything. If I ask, it is brought up that we just don't speak about it. I envy anyone who had parents and family that discussed it in depth and in the open.

[MJ_KC]

I remember a time in the early 80's when the interest rates were higher than 15% for a 30 year fixed rate mortgage. I think that some may have topped 18%. Not too many people were taking out home loans. I felt very fortunate when I got mine in 1986 and it was 10.5%.

I never rented, but instead I lived with relatives while saving up my down payment. My family has never had any problems discussing finances.

I loaned my sister enough money to make the down payment on the house she is in now, because a spectacular deal came along and her first house was selling real slow. I loaned her the money and moved in with her while I continued saving. When her first house sold, she paid me back and a few months later I had enough money to buy my house. It worked out really well for both of us.

[BinCo]

MJ_KC. If my dusty memory serves me right, that time is when a loan could not exceed 20% of the income. Now that is 30%. Why?

It's a tough answer. Some would say that it allowed more people to get into a home, many of which (like me) are able to keep it. Others would say that you can't afford a home, although you could somehow afford to pay more for the rent.

Congrats on your family being able to discuss finances, your about the 3rd person in my life who could say that.

As far as risk goes my wife put it pretty easy. Life is a risk.

[walter05]

Sanslines;

I am only 44. I did not get married until I was almost 30. My wife and I lived in an apartment for the first six years of our marriage. It was smaller than we wanted. I don’t think there is a generational issue.

Binco. I agree that greed is part of the problem. However that greed was on the part of borrowers and lenders.

If the borrowers did not have their own attorneys at the closing, then they did not take steps to protect themselves. This was irresponsible. It left them vulnerable. If they had the attorneys and the frauds you allege took place, they would have had the ability to fight them.

There is no doubt that lenders offered some bad products and people should not have chosen them. However, they did. Smart lenders will not force their customers to walk away leaving the lenders to eat losses. The market will have a way to fix this.

When I was in the hospital, I was one month late on two credit cards. Both lenders jacked up rates even though I had not been late before. I cancelled both cards and negotiated a lower payoff rate. I did not need the government to fix this.

Both lenders want me to reopen those cards. They can forget it. I will not trust them again. My choice of where to do business will regulate their behavior just as the government would.

Lenders don’t keep the money sitting around. If a mortgage broker sells a loan, the broker will then take that loan, and others with similar risk and sell them to another investor. The holder of the bonds backing those loans is then in a position to manage the servicing of those loans. They can charge whatever the loan agreements allow them to charge.

However, if a large number of people default on those loans, those bonds will be worthless. Therefore, the market places an upper limit on what can be charged. Smart lenders will ride this out. Predatory ones will force too many of their customers into bankruptcy. This will make the bonds worthless and force the lender into bankruptcy.

If we bail out the mortgage problems, then bad irresponsible lenders and borrowers will benefit. Those of us with lower standards of living who have lived within our means will bail out those who have what none of us can afford.

Binco, did the $1,000 a month pay off any of the loan or was it just interest? Was it a negative amortization loan where the loan company and borrower expect the home value to go up faster than the debt? If so, this was an irresponsible deal.

Irresponsible borrowers and loaners made bad loans. Now irresponsible borrowers and loaners must live with the consequences of those loans.

Nothing is free. Instead, when I was in an apartment, we lived in an adequate but plain apartment. (In hindsight, it was barely above the pits.) The rent was much lower so we could save up money for the down payment. We also figured out where we could afford and moved there. We have continued to live without many things that most find to be necessities. By not spending, we have been able to afford to pay on our house.

People wanted what they could not afford. They thought they found a way not to have to pay for them. Now they have to pay for them. I am sorry for what they are going through. However, suffering for the consequences of one’s decision is as important as benefiting from one’s decisions. The lessons learned help us make better future decisions. In a free country, where we want the benefits of our decisions, we must accept the consequences of bad decisions.

All I see in your e-mail is that this is all the bad mortgage brokers and lenders' faults. They certainly deserve a lot of blame for coming up with bad products and making irresponsible loans. People will default on those loans. A lot of investors will lose a lot of money. They will then refuse to fund these loans any more. This is how the market punishes these irresponsible lenders.

However, people who wanted to move up to a nicer house than they could afford also deserve some blame. I just don't see why I should bail out either. If the government bails them out it will be with my tax dollars which will make it harder for me to afford my smaller mortgage. Worse yet, all of us will be less free because if the government is ultimately responsible, the government will regulate us even more.

[BinCo]

http://www.msnbc.msn.com/id/20587894/

Seems my thinking isn't that goofy after all.

[BinCo]

walter. When you say that people are moving up into houses they can't afford you are wrong in Denver. The highest rates of default and fastest dropping values (as posted in the paper today) are in the poorest areas. One area dropped 57% in one year. So basically anyone who bought in the last 7-8 years has a house that is not worth anymore than they paid for it.

I do blame people for getting into situations that they can't deal with. Than again people have defaulted on loans as long as they have been around. S*&% happens to the best of us. If I lose my arms in an accident I will lose everything I have worked for. Partly because the amount of money from disability will not cover the medical costs, let alone keep a house payment. Partly because my living is based on a computer, so I need my hands. This is the most extreme case, but it happens. My wife was a paralegal at a bankruptcy firm about 10 years ago. When the anti-bankruptcy laws were passed a few years ago the righties kept bantering about how people use bankruptcy to live high on the hog. Not true. Statistics clearly show that medical costs are the #1 cause for bankruptcy, taxes #2, divorce #3. This is not something that we can always foresee. If my wife were to leave me and I had to file bankruptcy I would lose a lot before the filing could take place, including my house. I have excellent medical coverage, for a self employed person, but if cancer or something came around I might not be able to cover the several hundred thousand that insurance will not cover. Most people who filed for medical reasons had insurance.

The Bushies decided that we should not be able to file bankruptcy for 6 months and after a lot of dealings, usually by the time someone is looking to file it is too late so the 6 months is too much. Their credit is in shambles and they could not get a gas card, let alone a mortgage for a while.

The example I made of the apartment was not me. I married one kid, he is grown and out of the house. They lived in squaller to save to buy a house, so we know what it's like to skrimp and save for a house.

The lendors sell 100% of their loans and the new mortgage holders are the ones holding the bags. Yet they still make money hand over fist, so I have little pity for them. I see people work 2-3 jobs to try to keep their house and still lose it after their payments double or in some cases triple. Who wrote these loans? Why did they just tell the people that they are only approved for $x and they needed to find another house?

As hard as it is to believe, there are people who can't leave an area. Family, job, school, etc. There really are people who can't up and move. I was not one of them since I boogied out of Florida when I was 20.

[Sanslines]

Regardless of what we all say here, the housing market will correct and prices will come down to a certain extent. In San Diego, the average house price is well over $500,000. I see many properties that are listed for well over $1 million and these houses are selling. The average salary in San Diego is about $50,000. Average afordability in San Diego is down to around 8 percent, which means that only about 8 percent of the people who are living in San Diego County can afford to purchase an average price home. Given these facts, it appears that those who purchased homes in the past 2 or 3 years had to resort, in many cases, to hybrid loans and interest only loans. With an interest only loan, in most cases, there is absolutely no chance that the loan will ever be paid off and the house will most probably eventually wind up in foreclosure. People either didn't think or didn't care when they resorted to 'abnormal' loans to purchase housing in this area. There was a period of time when people basically panicked as they were told by media and lenders that if they did not purchase now, then they would never be able to afford to purchase in the future. People bought into this 'dream' (now nightmare). Since people do not have memories and remembered that this kind of advertising scam has been around in the past, people again bought into it. To those who thought that housing prices would go up forever (just like people thought of the stock market in the late 90's) well, guess what, it can't. Now that there exists a housing mess in San Diego, rents are increasing as more and more people turn back to renting housing, condos, and apts. Housing prices must correct here as too mant people just can not afford to purchase homes here. The 'fun' has just begun here.

[walter05]

Binco;

You make valid points about the changes in bankruptcy laws.

Prior to those changes, credit card issuers and the makers of mortgages had a lot of reasons to screen potential borrowers. Since the change in bankruptcy laws lowered the risk of default, this may have encouraged them to issue riskier loans.

I see nothing wrong with encouraging mortgage companies to work with borrowers. It is good for them also to limit the number of foreclosures.

I just don't want the government to ride in like a white knight and use my monet to save people who made poor choices.

As I said before, there is one change I do want. If a mortgage company does the right thing and forgives a loan or part of it, the IRS considers that a taxable benefit. This has hurt some borrowers when the mortgage companies have worked with them. I believe this should not be considered a taxable benefit so that people have a chance to climb out of the debt mess.

[usmc1]

You know what? There's a certain amount of victem blaming going on in this thread. And by the same usual suspects.

Instead of predatory lenders, let's beat the hell out of those predatory borrowers, those lazy, stupid incompetent people who did not take aq real estate course before buying a house.

Blame the ignorant yokels who believed that despite low income, shaky credit, short time on the job, low credit score, disability, single-parenthood they could live a part of the American dream and own their own home.

Nevermind that they were told that it was the low interest rates that would make their payments affordable and that if things changed they could always "refi" and things would be fine.

Anyone seen one of those ubiquitous DiTech ads lately?

Here's the deal, this country needs quality, affordable housing for all in precisely the same way it needs quality affordable heaalth care for all. QUALITY & AFFORDABLE ARE THE OPERATIVE ADJECTIVES.

$200-million dollars a day going into the occupation of Iraq with Medicare under assualt, infrastructure decaying, home-ownership slipping away, the middle class evaporating and victems being blamed for their misery.

Shame, shame, shame!

[BinCo]

walter05. Wow, I didn't think that the IRS would consider that a taxable benefit. I agree, people should be allowed to climb out, no use having the mortgage company give a little only to have the IRS take it back. I don't want the government to ride in either. If the mortgage company can work with people, everyone wins.

Sanslines, I understand Silicone Valley is just as bad as SD. That is one market where I can certainly belive people took way too much risk for a potential return.

[BinCo]

USMC1

Let me explain my experience with predatory lendors.

I bought my wife's house in a refi about 15 years ago. The loan was with a major company, I can't remember who right now. They sold it to Ford Consumer Finance. Now MY paperwork said that the account would be credited the day they recieved payment. What FCF did was to collect checks at a clearing house in, of all places, Texas. They would then send these envelopes to Chicago to be processed once a week. This was technically legal and met my loan paperwork. What it also did was to quickly push my loan into negative territory since we got nailed for 12-14 weeks of interest a year that was not accounted for since every payment was 1-2 weeks later then the due date. About 2 years after getting the loan our accountant noticed that the loan balance had not moved and called FCF. They said that the balance had actually gone up $3000 because of interest even if it was not on any of our monthly statements. In other words, when we called to get a balance it was the same as the loan, when asked for a payoff amount it was higher. This is something FCF was taken before Congress about. We refi'd immediately and got rid of them. The last I knew it was still in some negotiations about any retribution. Usually NONE of those retributions will make it into the hands of any victims though. Funny how that works.

So please do not spread the blame around. I'm sure there are just as many stupid incompitent people as there are a-holes looking to screw them over.

[BinCo]

Oops, I meant to say. Please spread the blame around.

[Sanslines]

QUALITY & AFFORDABLE ARE THE OPERATIVE ADJECTIVES.

What is quality to one person is junk to another. What is affordable to one person is not affordable to another. These are beautiful sounding words but unfortunately mean different things to different people. This brings to mind another relevent phrase.........one man's trash is another's treasure.

Instead of predatory lenders, let's beat the hell out of those predatory borrowers, those lazy, stupid incompetent people who did not take aq real estate course before buying a house.

There is plenty of blame to go around for everyone including predatory lenders and greedy borrowers. All people are not always innocent victims of an evil society, as some might think.

[Qikdraw]

BinCo

That sorta sounds like what these guys (http://www.ripoffreport.com/reports/0/174/RipOff0174936.htm) went through...

Strangly there is only one reference to FCF at Ripoffreport.com. But 57 for CitiFinancial Mortgage, which they are now it seems.

However there are 267 for HomEq, which was our mortgage holers for awhile. They tried pulling all kinds of crap on us, but we refied through New Century, but they kept selling it back to HomEq. So we refied through someone else, someone who holds their loans and doesn't sell em.

Like USMC1 I have seen a lot of blaming the home buyers here, and have started to reply a few times, but just gave up because I know people just go off their personal stories and don't see how that does not apply to the whole. Preditory lenders lieing to people to get them to live the American Dream is the main problem. A few people are making bank off of this and its caused a worldwide problem, yet they are gonna walk. It really is criminal.

Qikdraw

[usmc1]

Originally posted by Sanslines:
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">QUALITY & AFFORDABLE ARE THE OPERATIVE ADJECTIVES.

What is quality to one person is junk to another. What is affordable to one person is not affordable to another. These are beautiful sounding words but unfortunately mean different things to different people. This brings to mind another relevent phrase.........one man's trash is another's treasure.

Instead of predatory lenders, let's beat the hell out of those predatory borrowers, those lazy, stupid incompetent people who did not take aq real estate course before buying a house.

There is plenty of blame to go around for everyone including predatory lenders and greedy borrowers. All people are not always innocent victims of an evil society, as some might think. </div></BLOCKQUOTE>

Utter nonsense. You're confusing (why am I not surprised) taste and preference with quality.

Yes, affordability varies. For some a nice home is easily doable, for others a nice home might mean a stretch or requiring tax breaks or other forms of assistane--but, all Americans deserve the opportunity to own their own well-built, quality home without the fear of losing it to economic downturn or market adjustments and other esoteric vagaries.

I did not state, nor did I infer that "All people are victims of an evil society" and as far as I can tell, from reading the replies in this, has anyone else.

Your reference to greedy borrowers is precisely the sort of crap I was referring to. It is not greedy to want to buy your own home under the best possible terms---or do you believe that only "certain people" deserve home ownership?

It is not greedy to want to participate in the American Dream. It is greedy to have that for yourself but to want to deny it to others.

[Sanslines]

Utter nonsense. You're confusing (why am I not surprised) taste and preference with quality.

The point that I was making is that quality is a subjective word that means different things to different people. I have no idea what your background is with structure construction and / or the selection and use of construction materials but anyone who has anything to do with this field can tell you this: In some ways, the quality of construction materials has improved. However, due to economic cost reasons, the quality of many construction materials has actually decreased. This is due to simple economics (make as much money as you can as fast as you can) pure and simple. You continue to use beautiful sounding words and platitudes but always leave out the specifics. The word quality is a subjective word and is open to different interpretations by different people. Also, in so many cases today, people may want (what they perceive to be) quality but are unwilling to pay for it.

Your reference to greedy borrowers is precisely the sort of crap I was referring to. It is not greedy to want to buy your own home under the best possible terms---or do you believe that only "certain people" deserve home ownership?

It is not greedy to want to participate in the American Dream. It is greedy to have that for yourself but to want to deny it to others.

The exhorbatant cost of home ownership is a barrier to home ownership for many people now. However, what did you expect? Housing was used as a means to mitigate the effects of a major stock market correction several years back. This should never have been allowed for the resulting effects on society have created a major problem. All sorts of people made use of easy financing and cheap money. Some purchased homes that they simple could not afford and/or could never afford. Some even used the cheap money to purchase properties for investments and then flip them to make quick profit. So, now we have a real mess and it will be impossible to separate those who purchased housing to make quick profits versus those who purchased housing to live in them.

You seem to have lost touch with the younger members of our society who are living in this century. The American Dream is now 'make money - as much as you can and as fast as you can'. This is the real dream, as everything else in life will follow from having money.

[nudebushwalker]

Also : Those "predatory" style lenders (world-wide..) have been having a field-day over the past 5 or 6 years, on the back of "cheap" money and (near-record..) low interest rates, so they thought they were on a 'great wicket' there, and just kept 'churning' those loans, and on-selling to those companies that are now going belly up. Fortunately down here, those careless and predatory loans make up a lot smaller proportion of the property market than in the USA..

Like a couple of others above I would be spreading the blame around, too -

* manipulative land speculators : buying up large parcels and forming 'land banks', releasing that land slowly, and creating artificial land "shortages";
* Real estate agents : the parasites who profit from both sides - buying and selling - it's no wonder they're always on the bottom of the ethics polls - along with used car salesmen, lawyers, journalists and politicians..);
* Greedy developers - some of them seem to be operating on 30% profit margins in some areas;
* Predatory, and careless, lenders;
* Greedy, ignorant, and overly-optimistic (i.e. gamblers..) Buyers;
* Those government regulatory bodies - who either took their eyes off the ball, or should have been better educating the consumers (this will vary a lot from country to country, and state to state..).

http://oakhurstonline.com/icon/freak.gif

[walter05]

Binco;

Please send me a PM. I have contacts. I think you may have a legal issue with a chance to collect. Even if the mortgage company can't or won't pay there may be a couple of ways to get this resolved so you get your money or some of it.

I don’t have good help form Macro resolution but in your Micro case there is a possibility. Particularly since your case involves fraud. A good attorney would like a case like this since the attorney should be able to collect all fees from the mortgage company.

USMC1;

Perhaps we should have a process where borrowers receive some education prior to receiving the loan.

While I agree that the mortgage companies have contributed to the problem. I also believe that borrowers contributed to the problem.

Mortgage companies made bad loans to people who could not afford them because they could quickly sell the loans and make big profits on fees. Borrowers borrowed what they could not afford irresponsibly. Both contributed to the problems. Both are now suffering consequences.

[Baron Lake]

Walter, before you go tootling off into the sunset in your new Caveat Emptor Mark Two, you might want to reflect on the difference between borrowers driven by greed and those seeking simply to better their lives. I would suspect the latter far outnumber the former.

So, how badly did you get burned anyway? http://oakhurstonline.com/icon/happy.gif
b.l.

[walter05]

Baron Lake;

As I mentioned above, my family lived in a pretty bad apartment for years. I understand wanting better.

However, it takes discipline and wise choices for most people to get something better. Wanting better is not enough.

That being said, I do have sympathy for those who are suffering though the mortgage problems.

[oldbob]

This is just a theory totally unsubstantiated by any research, but it seems to me that part of the problem was caused by lenders who made the loans, bundled them up and sold them to investors. If you make your money whether or not the loan is repaid, there is little incentive to carefully qualify a borrower. Lenders who retain the loan and bear the risk of the borrower defaulting are going to be more careful about who they lend to.

Bob

[BinCo]

http://oakhurstonline.com/icon/applause.gif
oldbob hits the nail on the proverbial head.

[LamontCranston]

This is just a theory totally unsubstantiated by any research, but it seems to me that part of the problem was caused by lenders who made the loans, bundled them up and sold them to investors. If you make your money whether or not the loan is repaid, there is little incentive to carefully qualify a borrower. Lenders who retain the loan and bear the risk of the borrower defaulting are going to be more careful about who they lend to. Right on Bob. And they do not qualify for government assistance to get out of the mess.

The CEOs with the $1 million + salary need to manage their way out or go under.

There's new development in our town of those Toll Brothers McMansions: 5,400 square feet for a family of four. People buy one at $480k at a below market rate planning to sell it at $650k before the rate rises. Meanwhile the market cools off and the price doesn't rise. Now the people can't pay a market rate and can't sell at a big profit.

I don't feel bad about either side of that business deal. And I'll be angry if even one dime of my salary is taken to help either party.

That's risk-reward and greed gone bad, not hardship.

[usuallylurk]

Originally posted by LamontCranston:
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">This is just a theory totally unsubstantiated by any research, but it seems to me that part of the problem was caused by lenders who made the loans, bundled them up and sold them to investors. If you make your money whether or not the loan is repaid, there is little incentive to carefully qualify a borrower. Lenders who retain the loan and bear the risk of the borrower defaulting are going to be more careful about who they lend to. Right on Bob. And they do not qualify for government assistance to get out of the mess.

The CEOs with the $1 million + salary need to manage their way out or go under.

There's new development in our town of those Toll Brothers McMansions: 5,400 square feet for a family of four. People buy one at $480k at a below market rate planning to sell it at $650k before the rate rises. Meanwhile the market cools off and the price doesn't rise. Now the people can't pay a market rate and can't sell at a big profit.

I don't feel bad about either side of that business deal. And I'll be angry if even one dime of my salary is taken to help either party.

That's risk-reward and greed gone bad, not hardship. </div></BLOCKQUOTE>

Yes, but unfortunately - WE ALL PAY.

If your retirement funds are in a position of "safety" (money market), you may not lose your investment, but it won't gain as much.

If you note events of late, the government did pump something like $40-60 billion into the mortgage system to bolster it. This may cost you something, but will cost you far less than if the market totally collpased.

I have no sympathy for those who used some excess money they had floating around and engaged in "house flipping". Go down to Florida and if you get to Cypress Cove, look at the developments around there, where a lot of people "invested" in housing to resell it. I have little feeling for those who played in the game.

[BinCo]

usuallylurk I would like to know what government pumped money into the mortgage system. The Federal Reservse is a PRIVATE banking system not part of the US Government. That's right, US money is not printed or owned by the US.

[nudebushwalker]

Your Federal Reserve isn't owned by the banks - its a government mandated, regulated and controlled QANGO (quasi-autonomous non government organisation) that is invested in by the banks (where the government stipulates a minimum percentage of bank deposits must be invested..).

Every country in the world needs a central government-regulated bank to control interest rates, and to influence financial markets in line with the governments monetary policy..
This central bank must be at arm's length, and be seen to be (semi-)independent from both the government and the banking system.
If too close to the government - the result could be Germany in the 1930's, Argentina in the 1970's, Zimbabwe today. Too much influence by the private system - think of some things that have happened in Japan and the USA over the last couple of decades..

***********************************************

The following is from Wikipedia:

Federal Reserve System

The Federal Reserve System Eccles Building (Headquarters)
Headquarters Washington, D.C.
Chairman Ben Bernanke
Central Bank of United States
Currency US dollar
ISO 4217 Code USD
Base borrowing rate 5.25%
Base deposit rate 5.25%
Website federalreserve.gov
The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States.
The Federal Reserve System is a quasi-governmental/quasi-private banking system composed of (1) the presidentially-appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) 12 regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors; (4) numerous private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils.

[usuallylurk]

Originally posted by BinCo:
usuallylurk I would like to know what government pumped money into the mortgage system. The Federal Reservse is a PRIVATE banking system not part of the US Government. That's right, US money is not printed or owned by the US.

Technicaly the Federal Reserve is NOT a part of the government but it is controlled by the government.

I'm not going to get into semantics over whether it's an agency , etc. but it is INTERTWINED with the US Government, no matter how you look at it -- created by Congress, etc. etc. etc.

And, oh yeah, it is PROTECTED by the federal government. Try to start your own monetary system to deliberatly undermine it and see where it gets you.

US money is printed at the bureau of printing and engraving -- which IS a government, not a private bureau. The Fed Reserve *controls* the currency but the government does print it.

So the semantics of it, yes, the Fed is not a government department or agency, but it's as close to one as you can get.

[usuallylurk]

Originally posted by nudebushwalker:
Your Federal Reserve isn't owned by the banks - its a government mandated, regulated and controlled NGO (non government organisation) that is invested in by the banks (where the government stipulates a minimum percentage of bank deposits must be invested..).

Every country in the world needs a central government-regulated bank to control interest rates, and to influence financial markets in line with the governments fiscal policy..
This central bank must be at arm's length, and be seen to be (semi-)independent from both the government and the banking system.
If too close to the government - the result could be Germany in the 1930's, Argentina in the 1970's, Zimbabwe today. Too much influence by the private system - think of some things that have happened in Japan and the USA over the last couple of decades..

***********************************************

The following is from Wikipedia:

Federal Reserve System

The Federal Reserve System Eccles Building (Headquarters)
Headquarters Washington, D.C.
Chairman Ben Bernanke
Central Bank of United States
Currency US dollar
ISO 4217 Code USD
Base borrowing rate 5.25%
Base deposit rate 5.25%
Website federalreserve.gov
The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States.
The Federal Reserve System is a quasi-governmental/quasi-private banking system composed of (1) the presidentially-appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) 12 regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors; (4) numerous private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils.

nbw from nsw ...

While I'm not saying that anyone in this board adheres to this philosophy, there are some in this country that claim the following =

- the Federal Reserve System is invalid. This is not true, but some will tell you it is.

- the IRS has no authority to collect taxes. This is not true, but some will tell you that it is.

- the constitutional amendment that permits income tax (16th) was never ratified, with some bizarro argument that Ohio -- one of the ratification states, never was admitted to the Union. Go figure that one out.

- there are even hucksters who sell packages with the philosophy that you can "untax yourself" by filing "letters of sovereignty" and declaring yourself "an exempt sovereign citizen". I had a co-worker whose wife was stopped on the highway, her plate was three years expired. When the police officer asked for license and registration papers, she handed a "letter of aovereignty" to the cop. He was not amused.

We do have things in the US like the Federal Reserve, the Federal Deposit Insurance Corporation, etc. which were set up as quasi-governmental bodies -- but not specific federal agencies, so as to keep as many politics out of their operation as possible.

So technically, the Federal Reserve System is NOT part of the US government, even though the Secretary of the Treasury (a cabinet "minister", part of the executive branch) and the Treasurer of the United States, have their signatures on every piece of money -- and the only LEGAL TENDER (versus negotiable instruments) issued in this country comes from the Federal Reserve.

[BinCo]

Actually the Bureau of Printing and Engraving is a private business. There is a bill before Congress to also privatize the US Mint and give that power to the Fed Reserve also. There is huge profit in being able to print money. When the power was transferred the mint was no included because it made very little profit. Now, thanks to collectable coins (such as the quarter series), there is more profit in minting. Except for the penny, which costs more to mint than it is worth. I hope they don't get rid of it only because businesses and taxing entities will round UP every sale, not down on some and up on others. This will take more from my pocket and I don't like it.

The Fed Reserve was given the power to print and distibute notes in 1913 by Congress. It did centralize the printing of money, but it is entirely private with the only government position being the chairman. All the other entities in the Federal Reserve are private and do not answer to the US government if they choose to rate rates or lower them. All the President can do is talk to them thru the chairman. Congress can not force or control anything regarding the Fed Reserve. They are a contractor, in essence, for printing money. Congress can control what money is acceptable, but can not control the value of the money.

As for the IRS, the taxes that we pay as income taxes were set up and are written to be a profit tax, not a wage tax. Taxes on wages are entirely illegal. Taxes on profits are legal. The grey area is what they consider your time worth vs the amount you can get paid for it and how it is paid. You want to see a politician freak out suggest that we convert to the only truely equal system of a flat tax.

[usuallylurk]

Originally posted by BinCo:
Actually the Bureau of Printing and Engraving is a private business. There is a bill before Congress to also privatize the US Mint and give that power to the Fed Reserve also. There is huge profit in being able to print money. When the power was transferred the mint was no included because it made very little profit. Now, thanks to collectable coins (such as the quarter series), there is more profit in minting. Except for the penny, which costs more to mint than it is worth. I hope they don't get rid of it only because businesses and taxing entities will round UP every sale, not down on some and up on others. This will take more from my pocket and I don't like it.

The Fed Reserve was given the power to print and distibute notes in 1913 by Congress. It did centralize the printing of money, but it is entirely private with the only government position being the chairman. All the other entities in the Federal Reserve are private and do not answer to the US government if they choose to rate rates or lower them. All the President can do is talk to them thru the chairman. Congress can not force or control anything regarding the Fed Reserve. They are a contractor, in essence, for printing money. Congress can control what money is acceptable, but can not control the value of the money.

As for the IRS, the taxes that we pay as income taxes were set up and are written to be a profit tax, not a wage tax. Taxes on wages are entirely illegal. Taxes on profits are legal. The grey area is what they consider your time worth vs the amount you can get paid for it and how it is paid. You want to see a politician freak out suggest that we convert to the only truely equal system of a flat tax.

OK, now I know where you're coming from.

[Naturist Mark]

The printing, and minting, of physical money has no economic relevance. Money is not created by printing or minting - such currency is merely exchanged for the real dollars - which are accounting entries - credits - in financial institutions.

Money is created by banks, not the government, by extending credit to borrowers.

Printed currency is not even money until a bank exchanges it for a credit.

All this talk about who 'prints the money' is as meaningless as who prints your checkbook.

-Mark

[BinCo]

I disagree with you Mark. Talking about who is printing our money and the fact that most people think that the government prints it is not meaningless. The cost to print a $100 bill is the same as a $1 bill. So the Fed makes a higher profit on the $100 bill since it has a declared and agreed value of $100 when it cost fractions of a penny to make.

Spreading truth is always a good conversation, but not what this topic is about.

[1Ace]

Most of this mess falls on the lenders. They are the ones making the loans and they are the ones who should be making sure people could pay them. I think alot of people who took the money and ran should be behind bars...

[nudebushwalker]

Ah, the fun of the internet...
It was late at night, and I was half asleep, when I typed in my previous effort, so I just went back and made a couple of small changes ;
* changed "NGO" to QANGO" - not a big change, but more pedantically correct;
* I had "fiscal" in there, where I should have written "monetary" - this will make more sense to those who have studied basic economics and commerce, (where monetary policies cover the supply and distribution of money and credit; and fiscal policies cover the supply of government services, and the collection of taxation..).
http://oakhurstonline.com/icon/embarassed.gif

Some people will claim that decisions on monetary policy isn't costing the taxpayers anything, but in reality (in the long run) it affects everyone - and not just in one country, but all around the world - through effects on inflation, availability of credit, and the interest rates you and I pay and receive on transactions, borrowings, and deposits...
http://oakhurstonline.com/icon/sad3.gif

[nudebushwalker]

BinCo wrote:
I disagree with you Mark. Talking about who is printing our money and the fact that most people think that the government prints it is not meaningless. The cost to print a $100 bill is the same as a $1 bill. So the Fed makes a higher profit on the $100 bill since it has a declared and agreed value of $100 when it cost fractions of a penny to make.

This is misleading, as the reference to a "profit" isn't the same as a private enterprise making a profit on a transaction...

When a federal reserve/treasury issues those bank notes there must be an underlying value for them in the market, otherwise they will be worthless - and you have the same effects of run-away mega-inflation that was seen in Germany in the late 20's and early 30's, Argentina in the late 70's, and Zimbabwe now - where inflation was over 2,000 per cent - and where their currencies had no international value, (That can make a big dent on their international trade).

[Naturist Mark]

Originally posted by BinCo:
I disagree with you Mark. Talking about who is printing our money and the fact that most people think that the government prints it is not meaningless. The cost to print a $100 bill is the same as a $1 bill. So the Fed makes a higher profit on the $100 bill since it has a declared and agreed value of $100 when it cost fractions of a penny to make.

Spreading truth is always a good conversation, but not what this topic is about.

There seems to be the misconception that the Fed 'buys' money at the cost of manufacturing it, and then 'sells' it at face value. Not true.

The Fed doesn't 'sell' currency, there is no profit involved. Old bills are exchanged for new, new coins are distributed, new bills are shipped to banks as needed. The printing and or minting cost is totally separate, and a complete loss. <STRIKE>I believe it is borne by the taxpayer, not the Fed.</STRIKE>

The government DOES create money, but not through printing, it creates money by borrowing. Lately the government has been creating money at record rates.

<span class="ev_code_GREEN">Addenda: Coins are considered to be intrinsically worth their face value (or more) due to their physical content. They are essentially self backed currency, but are still distributed to banks by the Fed in the same manner as paper currency, not through open markets.</span>

[missouriboy]

I have no sympathy for those who used some excess money they had floating around and engaged in "house flipping". I haven't either, but the crisis stems not from those who used (their own) excess money but rather from those who used borrowed money. And the efforts of the predatory lenders to sucker in their victims was unconscionable. I never fell for it, but it looks like I'll not escape the consequences entirely, albeit indirectly.

Hey, I just read an old joke that is wryly ironic to this situation:

Sign in a loan office: Ask About Our Plans To Own Your Home

Gruesome, right?

[nudebushwalker]

The Fed doesn't 'sell' currency, there is no profit involved. Old bills are exchanged for new, new coins are distributed, new bills are shipped to banks as needed. The printing and or minting cost is totally separate, and a complete loss. I believe it is borne by the taxpayer, not the Fed.

The Australian Mint actually has a nice export business on the side - as well as printing and stamping Aussie currency, it actually produces the currency for more than 20 other countries around the South Pacific and South-East Asia - so in a way it does "profit" by making the hard currency itself, under contract...
http://oakhurstonline.com/icon/beam.gif

(though, of course, the sale price on such a contract would be a very small fraction of the actual face value of that currency..).

[usuallylurk]

Originally posted by nudebushwalker:
The Australian Mint actually has a nice export business on the side - as well as printing and stamping Aussie currency, it actually produces the currency for more than 20 other countries around the South Pacific and South-East Asia - so in a way it does "profit" by making the hard currency itself, under contract...
http://oakhurstonline.com/icon/beam.gif

(though, of course, the sale price on such a contract would be a very small fraction of the actual face value of that currency..).

I believe the US Bureau of Printing and Engraving and the United States Mint(s) do the same thing.

As I said, here in the states, some people have been convinced that the banking system is invalid and illegal, even though it's been in place for 70+ years.

We have hucksters here who sell "gold backed currency" which they themselves print. Radio stations carry the programming that offers them (called "infomercials") because for every person that calls in and buys, the station gets a piece of the action.

We had people on the radio before Y2K, spreading "gloom and doom" "but there is hope -- you can turn your money into gold coins, and also purchase wonderful Y2K freeze-dried tasty meals, which will pull you through the dark days of January, 2000." They also offered various survival "scare" videos as well.

Obviously, some are convinced that gold and other metals are the only chance for survival.

The gold hucksters are found on the radio between the conspiracy theorist shows, and those who sell quack medicinal cures.

[BinCo]

The only reason that the US dollar is worth as much has to do with the government stability and trade, there is no asset backing the dollars anymore. It is the most widely circulated currency on the planet because the US is backing it.

The BOE does make a profit, check out their website and you will find all kinds of information. The reason they make a profit on cash is that as soon as it is printed it has an agreed upon value that greatly exceeds it's cost.

usually lurk, the BOE and USM do the same thing, but the USM is currently operated by the Federal Government, not a private company. The BOE is a private company, not operated by the Federal Government.

Currency is a way for everyone to be able to understand the value of a purchase and the value of the transaction. Can you imagine paying for groceries in gold dust? How pure is this, sir?

Mark, if there is no profit in producing money than why are we having the dollar coin pushed on us? The coin will last decades, the bills last a few years. It is a well reported fact in Nusmismatic circles and the news as well.

[Naturist Mark]

The BOE does make a profit, check out their website and you will find all kinds of information. The reason they make a profit on cash is that as soon as it is printed it has an agreed upon value that greatly exceeds it's cost. The Bureau of Engraving and Printing sells currency to the Fed at cost plus, not at face value.
usually lurk, the BOE and USM do the same thing, but the USM is currently operated by the Federal Government, not a private company. The BOE is a private company, not operated by the Federal Government. No. Both the Mint and the BOE are US Government agencies within the Treasury Department, neither is a private company or independent agency
Mark, if there is no profit in producing money than why are we having the dollar coin pushed on us? The coin will last decades, the bills last a few years. It is a well reported fact in Nusmismatic circles and the news as well. You asked and answered your own question. The cost over time of producing a dollar coin is far less than producing a series of dollar paper bills that must be replaced after a few months of circulation. Even though the Fed pays face value for a coin and only cost for the bill, it costs far less to the Fed to keep a coin in circulation. The coin is an asset, every paper bill that the Fed buys is a loss, even though it doesn't pay face value.

http://www.federalreserve.gov/paymentsystems/coin/

-Mark

[usuallylurk]

Frankly, the dollar coin SHOULD be pushed on us.

The first attempt at it - the Susan B. Anthony dollar - was a complete failure for several reasons. One, the coin looked and even felt like a quarter and was just too confusing.

One major problem added to the size and general look of the coin - Susan B. Anthony looks too much like George Washington.

Since the "Sacajawea" and current Presidential coins have emerged, they're not confusing, they're easy to use at toll booths and drive up windows. Vending machines with those things that take $1 bills? Coins ALWAYS go through....

Canada went to the "loonie" and discontinued use of the paper $1 bill some years ago, the British pound is only in coin form, and the Euro does not have a 1 euro paper note.

[Pete Knight]

Dollar Bills are IOU's issued by your government instead of exchanging gold.

Coins are tokens issued in the same way as the Bills.

Here in the UK we still refer to our paper currency as 'Notes' which is what they are, and IOU note promising to pay the bearer 5 pounds upon demand, but as was asked once, what would you get if you asked to be paid?

A responsible country should not issue currency that exceeds the value of its gold and/or its foreign currency reserves.

To continue to issue 1 Dollar Bills is economic suicide, the cost of replacement is being paid for by your taxes, a coin would last much longer and is easier to use as has already been stated.

The US Dollar is the worlds easiest bank note to forge, costing the US economy billions each year, most countries have adopted new technologies to counter the forgery threat, indeed the Royal Mint at Llantrisant in Wales is producing currency for many other countries based on its advanced design and production capabilities.

Sticking with tradition is a costly business in the world of currency production, low denomination notes have to be replaced too often, and the simplicity of design is a forgers dream, time to move on my friends.

Adapt or die!

Pete Knight

[nudebushwalker]

Oz has $1 and $2 coins, and has been looking towards a $5 coin for a couple of years...

As with Britain, the technology that Australia has developed with its' harder-to-forge 'plastic' notes has been paramount to it's building up a "currency (i.e. notes and coins..) production" industry..

The actual value of trade going on around the globe is many times greater than the amount of currencies in circulation, [after all, "money is made round to go round.."].

Even though countries like Canada, Russia, Australia, New Zealand, Argentina and Brazil may technically be "debtor" economies at the moment, from a national/sovereign point-of-view they do have one strength - the total amount of natural resources that these countries are sitting on (where these resources are actually "owned" by these states, and the mining, oil, energy, forestry and agri-business concerns have to buy the rights to exploit these reserves).

[usmc1]

Someone mentioned the practice of "flipping" in a context that implied that the practice was bad. Gee, you'd think that in a free market economy that buying a product for a lower cost, improving it and selling it at a higher cost would be laudable. Now wouldn't you?

Take a risk - borrow money - invest that money in a product or service - market that product or service - and make a nice margin in the process.

So where's the problem?

Well, in this case, it resulted in inflated home values, which coupled with low interest rates tied to variable rate mortgages, blew a bubble which was bound to burst.

That process, along with cash for equity loans resulted in the housing market providing cough syrup to an economy with the shivers. Now the economy is slipping into malaise and ague and soon will take to bed.

Flipping alone did not cause the problem. It was contributory and certainly symptomatic of what was happing in the overall housing market. Overvalued homes, flipped or otherwise, and variable rate loans and cash for equity loans from predatory lenders targeting the desperate and unwary was the problem.

This situation, now comes the curve ball -- low and away -- really, as do so many of our other problems, stems from the the huge *** elephant in the living room: Population Growth.

Population growth = demand for "scarce" products, resulting in inflated values for those products, resulting in opportunistic and predatory practices, cloaked as "free enterprise", to meet those demands.

[Qikdraw]

Originally posted by usmc1:
Flipping alone did not cause the problem. It was contributory and certainly symptomatic of what was happing in the overall housing market.

The thing is is that 'flipping' is not new. This did not just suddenly start happening with the housing bubble. 'Flipping' has been done for years and years, it just became more noticed through all the house flipping shows on tv.

I don't think 'flipping' had anything to do with the rise or downfall of the housing market. The amount of flippers may have increased during the bubble, but I don't think it comes close to the amount of variable interest, 100% funded loans out there.

My wife & I want to start flipping at some point, we are currently watching a few properties to see if the bank will be able to get rid of them. If not we may have our first house to flip.

Qikdraw

[nudebushwalker]

"Flipping" Houses:

Watching the Sydney and Melbourne markets over here over the past few years show how many gullible buyers are out there -
see reports where someone buys a house cheap, spends around $50 - 100,000 doing it up, and then sell it for a profit of $100,000 - $300,000 or more...
[example: buy house for $400k, spend 100k, on-sell for $700,000 - that's 150 - 200k over market values, but they kept on finding buyers..]

What that depends on is a constant supply of idiots with too much money, and no real idea of the underlying value of that property.
And after 5 or 6 years it can distort those local markets to the point where your average workers are shut out those markets - ordinary workers were forced out of the Sydney market several years ago..

[John Spooner]

Hello Nudebushwalker.
My mates in Broken Hill tell me that the same situation has also ocurred there.
Rich yuppies from Sydney are buying up available stock cheaply and then reselling at inflated prices, subsequently local people can no longer afford to buy a house.
Regards.
John S.

[usuallylurk]

Originally posted by Qikdraw:
[QUOTE]Originally posted by usmc1:
The thing is is that 'flipping' is not new. This did not just suddenly start happening with the housing bubble. 'Flipping' has been done for years and years, it just became more noticed through all the house flipping shows on tv.




It depends on the type of "flipping" you're doing.

Purchasing a run-down, fixer-upper, fixing it up and selling it is one concept -- you're adding value to the house through your hard work, and profiting not just from your intuition ("this is a diamond in the rough, but it needs work") -- but from your willing to risk capital and labor.

There are some pretty neat TV shows in HGTV, my wife is glued to HGTV-HD, where people do just that. But that's not the "flipping" I'm referring to.

On the other hand, there were "flippers" who had nothing but capital to risk. They chose several areas of the country - and one was the Orlando-Kissimmee area in Florida.

Property values were rising so high, so quickly, that people flush with cash were laying in deposits on construction of new homes, and hoping to find a buyer to take it off their hands (at more than they paid) on closing day. For a couple of years, they were successful because the prices were going up and up and up.

If you were playing that game, it worked until around January, 2006. The bubble didn't burst, but it deflated somewhat.

Take a trip to the new developments around Cypress Cove. Two years ago, they were building like crazy. The builders are still building and selling, but there are a huge number of homes "for sale by owner" or "for sale".

One development that is very popular with the nudist crowd is Solavita, and that's around a 10 minute drive from Cypress Cove. A lot of people don't want to live in the Cove for a variety of reasons but want to live NEAR it, and so Solavita is a wonderful, over 55 development. Condos, and single family homes with a country club atmosphere.

If you go to the Cove, take the tour of Solavita. And if you like it, GREAT. But also look at existing inventory -- take a drive through and you'll see one or two houses on nearly every street with "For sale" signs on them.

There is a string of small developments immediately adjacent to Cypress Cove -- single family homes -- on the road on CC's southern boundary. By my best, most conservative guess, around 65 percent of the homes were available there. Either "For Rent" or "For Sale" signs.

[BinCo]

Mark- You're right. I've been sold a lie!

I also noticed that the BOE website does not say very well that they are part of the UST. The US Mint does though. Go figure.

[usuallylurk]

Originally posted by BinCo:
Mark- You're right. I've been sold a lie!

I also noticed that the BOE website does not say very well that they are part of the UST. The US Mint does though. Go figure.

It says right on the web page = Department of the Treasury. The bureau of P&E and the US Mint are part of the US Treasury, which falls under the Secretary of the Treasury.

The Federal Reserve is a SEMI-governmental agency.

Just wondering WHERE you got your information from ....

[BinCo]

I pulled my info from my memory, as a long time coin collector and one who has visited and toured both the BOE in Wash DC and the US Mint here in Denver. I remembered them telling us at the BOE that they were not part of the US Government because they printed non government papers and had made money for other countries.

The Fed shows a pyramid structure on their own website that does not include the US government, just the people. Like I said, the only position that is a government appointment is the Chairman, all others are private bankers.

[blackrebel]

(By the way, I am an independant loan officer.)

Funny how people will claim ignorance for papers that they sign that CLEARLY STATE the terms on the TIL (Truth-in-Lending) form. There is no 'fine print'.

When people speculate and lose, they want to claim ignorance, play the 'Blame Game' and want to deflect their act of failing to act responsible.

As long as people were buying and selling for inflated profits, that was cool. But, when they made bad moves that back fired on them, they blame everyone else but themselves.

When people buy stocks to try to make money, and the price plunges, do they deserve to have the same sympathy?

Why should the lenders collect less payments? When the rates were lower, did you volunteerly plan to play more interest above and beyond your rate?

A 3% spread is not a lot of money when you take out salaries and benefits and for staffs, to pay out interest on money that THEY are lending out on your home to investers, to pay taxes on properties that they are not collecting money on, legal fees, and on and on.

This is a self correcting issue and those who speculated and didnt plan ahead, are most likely to lose out. I tell my buyers to plan ahead and to pay off ALL BILLS because WHEN (not if) their payments increase in 1-2 years that they will be hit hard and if they dont plan ahead, refinancing for a lower fixed rate is less than a 1% chance.

I am stuck in the middle because I am not a genius, but I saw this coming 2 years ago. And now that it is here, my job is to educate and also help people to buy homes the RIGHT WAY. Sad thing is, many people refuse to use common sense even when they read it in black and white.

Originally posted by luvnaturism:
Most variable rate mortgages have a statement in there somewhere linking the rate that the borrower pays to an external rate (prime rate + 3% or something similar). That external rate MIGHT go up or MIGHT go down. If it goes up, the borrower pays more; if down, then the borrower gets a break.

Generally lenders haven't thought it to be in their interest to voluntarily collect less money than the contract calls for. Maybe you can be the first to convince them. However I think there may be lots of potential legal problems if some people are not held to their contracts but others are.

[Naturist Mark]

Funny how people will claim ignorance for papers that they sign that CLEARLY STATE the terms on the TIL (Truth-in-Lending) form. There is no 'fine print'.

LOL, maybe not on planet blackrebel. But 'round here there sure is.

I think we have a fundamental disagreement about the definition of 'fine print'.

-Mark

[usuallylurk]

Originally posted by blackrebel:
When people buy stocks to try to make money, and the price plunges, do they deserve to have the same sympathy?


I agree with everything you said - well put. Of course, the secondary LENDERS are to blame -- you don't extend a $400,000 loan to someone making $40,000 a year.

But I can have sympathy for the unsophisticated investor who loses big in the stock market. This is one of the reasons I gave to someone (I don't recall if it was here or another forum) on why it isn't a good idea to allow people control over their Social Security accounts and to allow them investment options.

Scenario - Joe is 58 years old. He is four years away from eligibility to collect. He has never invested anything. He has no pension. The concept of a 401K or IRA was foreign to him and besides, he never believed in those things. He never knew anything about them.

So, the government says, "Joe, you can invest your SS account money, it's $125,000. Keep in mind that if you lose that, blah blah blah."

Joe hears an ad on the radio. "Invest in oil futures, you could triple your money when oil goes to $100 a barrel. A $10,000 investment will yield a $20,000 profit when that day comes, etc.". So Joe calls the 800 number. He talks to a hustler on the phone and commits $125,000 to these oil future options (and also pays the huckster a hefty fee).

See, Joe doesn't know that he can walk into a brokerage firm as you can do here (Fidelity, Vanguard, Dreyfus) and talk about investing at any level. Joe doesn't know that the Microsofts, Coca-Colas, General Motors, IBMs, etc. will be happy to have him invest in them. He doesn't know about T-Bills, tax-free munis, etc. But I digress.

Anyway, Joe wires the money to the huckster. Oil is trading at $70 a barrel, and can only go higher, he thinks.

Whoops. A few things happen on the way to the future. The jitters involving the volatile oil market subside. All of a sudden oil is flowing out of Iraq. Iran agrees to terminate its nuclear program. Nigeria gets some political stability. The hurricane season didn't disrupt supplies. In the United States, winter weather does not arrive when it should, and home heating oil stocks overflow the tanks. And some OPEC countries start cheating on their quotas and begin dumping oil on the Rotterdam spot market.

The price of oil plunges to $40 a barrel. Joe's options at $85 expire. Joe loses everything.

Now... Joe won't even have Social Security.

Some will say "Oh, that's his fault. Too bad."

Well, Joe will become a public charge, and guess who pays the bill for it? He goes on welfare -- and you and I will pay.

[missouriboy]

Here's a Letter to the Editor written to an economic advisory publication just recently... (emphasis added)“I reside in the Denver area, and with 37,000 foreclosures here, the lenders have their hands full.

“As a lifetime banker, and still active in matters, I can assure you that the problem of housing out here is not because of poor people, but greedy builders that build houses that an average family does not need.

“The average price for a home here runs from $300,000-$l.5 million. Not too many normal wage earners can afford those prices. If they want a home, they are forced to overpurchase to have a roof over their heads. Things happen -- death, divorce (up 50%), layoffs, etc.: If the dumb lenders knew what I did in the bad years with such things, they’d put payments on the backside of the mortgage and assist the client. Banks were started in this country to help people, not hinder them.

“I wish I could take my knowledge of all my years and speak to the BIG BANKERS -- Greed has overcome.”

[usmc1]

(By the way, I am an independant loan officer.)...
...When people buy stocks to try to make money, and the price plunges, do they deserve to have the same sympathy?

I knew a couple of independent loan officers once. Vinny and Tony. Their default rate was ziltch!

When people buy stocks to make money, as opposed to investing for their future security, they know there is risk involved. When a person buys a "home", they expect the value of that home to appreciate and to acquire negotiable equity for future needs such as college for the kids or retirement.

Speculators, whether buying into the stock market on margin or flipping already over-priced houses who lose their shirts do not earn a lot of sympathy. In fact, a case can be made that those speculators flipping houses helped create a false scarcity driving housing values up and out of reach of normal buyers except for the no $ down, arm rates, and other chicanery.

Nope, not a lot of sympathy for them, or the home-builders and lenders, independent loan officers and mortgage brokers who were complicit in the process.:D

But, a ton of sympathy for the folks trying to buy a decent roof over their heads who got wedged between pretty damn tough and real damn bad.

[walter05]

In Florida, the speculators created real problems. Housing prices became so high that normal people could not buy. When the speculators reached the top of the bubble, it started to bust.

In much of Florida prices are declining as a result.

Another factor in Florida is the high insurance premiums due to Hurricanes. However, both factors are an issue.

[BinCo]

A guy at one of my customers had a mortgage with Ameri-Quest. I say HAD because they foreclosed on him in June with NO NOTICE. They then sold his property to a new company in July and then Ameri-Quest was bought out in August. The only notice he had was a warrent to go to court about when he would be out of the property. The judge had zero interest in his case, just wanted to know if he would be out by Monday last. He was not able to get everything moved out of his house and 3 barns with the horses in it in time and the Sheriff posted a no trespassing sign on the house.

His lawyer says that Ameri-quest did this to at least 68 other people. Sold the property out from under them. He has all the cancelled checks and they say it was a breach of contract but will not specify what he did to breach it. Interesting that the basta&%&s did not even give him notice. Since the new owner was at court they did not have to prove anything other than current ownership. Now this guy and his family have nothing. All the equity in the house was sold out. Apparently the house was appraised at $320K, but he owed $180K, so it was sold for $185K. He lawyer is confident that he can get some of the money back, but it could take years and he might only get pennies on the dollar. He says he contacted the county clerk about the foreclosure and they do not have to see proof that the residents were ever given notice.

All this after 18 years in the same house, always paying the mortgage.:eek:

If this is the entire story and there is anyone who can defend what happened to this guy, I would like to meet them and break....I mean shake their hand.

[Centauri4]

I was wondering if it would be possible for groups of people to buy homes the same way we buy health insurance?

When you think about it, what good is buying a single car yourself? Or a single home? It is ridiculously expensive, takes to long to pay off, makes the "other guys" rich and burns me to know a $155,000 house is putting $500,000 is someone elses bank account! (essentially)

Then there is the fact the mortgage payment is OFTEN not the only monthly, quarterly or annual expense associated with home ownership!! For Pete's sake!! Homeowners being taxed AGAIN after they struggle to buy the home for the "privilege" of residing in a particular community is, IMHO, overkill! Look where it is getting us? Foreclosures at an all time high and many families perched on the edge of financial collapse (bankruptcy or otherwise).

There are far to many people that cannot afford a home, have lost a home, or being "forced" into other situations by financial issues. Yes, sometimes the fault lies with the person, couple or family themselves, but we are ONLY human after all.

I think there should be "pools" of people paying into a fund that covers the cost of homeownership on a "per room" or "per square foot" basis. This would have a leveling effect on the housing market a stop the ridiculous variations in what should be SIMPLE home pricing (instead of paying $250,000 for a 3 bedroom in city A, and $425,000 for the same size house in city B!!!).

The government SHOULD step in and do something for the welfare of the entire country! It would help people to know they are not lining someone else's pockets each month with the rent payments and ultimately getting NOTHING in return! If there is one thing I think all people, nudist or not, can agree on it is INVESTING in communities (or having a truly vested interest in the success of a community). I suspect there are many, many tens of thousands of people ready to relocate to another town when the one they rent in now gets much worse! Why? Because they do not care about the value of the dwelling they reside in; and why should they, it belongs to someone else! Even the "landlord" or owners often do only the minimal work necessary to make the building livable! Why? Because they do not care about the people living in it; those people are not family!

This is my take anyway! I would be happy to pay a 'flat rate' for a simple house to live in IF I knew all the expenses from mortgage to insurance to taxes would be COVERED by that money. And, and, I would be happy to know my friends and family were more secure in their situations and OWNING a property versus renting one temporarily.

What do you think?? Isn't there some way for America to do better?

"Pooled" home ownership would insure all costs of every participants monthly mortgage would be covered even when 1 member could not pay it themselves. The "pool" would have a credit worthiness rating rather than the individuals in it, and (sure) some pools would perform better than others! But a poorly performing pool could be mixed with a well performing one to, once again, smooth out (or level) its performance and financial dependability (from an ivestment worthiness perspective).

That's it. I'm not a money guy, but I have some imagination; I hope you agree.

[usmc1]

A guy at one of my customers had a mortgage with Ameri-Quest. I say HAD because they foreclosed on him in June with NO NOTICE. They then sold his property to a new company in July and then Ameri-Quest was bought out in August. The only notice he had was a warrent to go to court about when he would be out of the property. The judge had zero interest in his case, just wanted to know if he would be out by Monday last. He was not able to get everything moved out of his house and 3 barns with the horses in it in time and the Sheriff posted a no trespassing sign on the house.

His lawyer says that Ameri-quest did this to at least 68 other people. Sold the property out from under them. He has all the cancelled checks and they say it was a breach of contract but will not specify what he did to breach it. Interesting that the basta&%&s did not even give him notice. Since the new owner was at court they did not have to prove anything other than current ownership. Now this guy and his family have nothing. All the equity in the house was sold out. Apparently the house was appraised at $320K, but he owed $180K, so it was sold for $185K. He lawyer is confident that he can get some of the money back, but it could take years and he might only get pennies on the dollar. He says he contacted the county clerk about the foreclosure and they do not have to see proof that the residents were ever given notice.

All this after 18 years in the same house, always paying the mortgage.:eek:

If this is the entire story and there is anyone who can defend what happened to this guy, I would like to meet them and break....I mean shake their hand.

I wouldn't entirely dispute the elements of this story even though it does ring a bit apocryphal. Here's why.

At state and national levels, for years, our politicians, principally Republican, have been writing and passing laws which benefit companies, corporations, money-lenders, and other entities to the disadvantage of the consumers.

A glaring example is the recent Bankruptcy law enacted by a Republican congress and Senate prior to the 2006 elections putting the Democrats in control.

People vote for them because they say they God-loving Christians, for the family, and against abortion. Now the shift will be to race and fear based appeals against Arabs and Mexicans, but the result will be the same. Uninformed people, acting on emotion charged appeals, will vote against their own best interests and be horrified at what happens.

In every race, in every election cycle, there are websites which list the major contributors to politicians and their campaigns. If you find a politician getting boucoups of bucks from home-builders and their associations, HMOs and their associations, Insurance companies and their associations, Tom Delay's PACs, and so forth, you have a pretty good idea of who they'll line up with in the fight. If they're getting their money from AFL/CIO groups, other unions, Trial Lawyers, and such you'll have a good idea that they will be on your side against the monied corporate interests.

In America today, can a family's home, not in default, not in a right of way, be taken away from them through legal court proceedings without benefit of proof of default or itemization of the issues breaching the contract, or opportunity for redress or correction of the situation ?

Quite possibly!

[patjimkatja]

Foreclosure could happen for other reasons than non-payment of mortgage. There could be liens or judgments filed against the property. It could be unpaid taxes or contractor's liens, for example.

[usmc1]

Foreclosure could happen for other reasons than non-payment of mortgage. There could be liens or judgments filed against the property. It could be unpaid taxes or contractor's liens, for example.

there was no mention of liens or judgments. Even if such existed, there is a process by which one can make right those instruments. Even those scum sucking pigs at the IRS give adequate notification of intent before levying on a lien.

This man seems not to have been given an opportunity to remedy the problem, whatever it was. He may have been remiss or derelict. We don't, at this point, know. But, what he claims he was told was that he was in breach of contract--that's what I read, maybe you read something else.

Homestead and real estate laws differ from state to state and mortgages can be extremely complicated and very vicious in their complexity. That aside, he should, one wants to think, have been given due process, wherein he was notified of the nature and specifics of the breach and been given an opportunity to deny or repair the breach.

No doubt the laws and courts were stacked against him. And, no doubt there is something in his contracts, mortgage or whatever, with the lender that led them to believe they could expropriate his home with impunity.

[walter05]

Colorado is particularly lax in regulation of mortgages. This may be move possible in Colorado than most states.

[Odie]

I've been reading the mortage posts over the last week and felt the need to respond. I think a lot of people have made some very important observations. However, the mortgage process is much more complicated than people realize. For instance, mortgages are sold in bundles to investors. When that loan is sold, the investor now ownes that mortgage, or investment. The leander will typically collect a small fee, a portion of the monthly payment, to service the loan. When a loan goes into default, the lender does not own the loan and cannot simply go back and renegociate the terms of the loan. They do not own it and cannot change the agreed upon terms that were signed, in the prescence of a notary or attorney, at the closing. I'm not saying this is right or wrong, it's just how it works.

There are two primary processes in obtaining a loan. Retail, which is when you are dealing directly with the lender and wholesale, which is when you are working with a 3rd broker. I've worked in both areas, originally in sales and for the last 5 years underwriting and processing. When working in wholesale, the "customer" is the 3rd party broker, not the borrower. In wholesale, I never directly speak to the borrower. I have to trust that the broker is being honest and presenting me honest information. Obviously, honestly is not always the norm. But lenders have processes in place to detect dishonest behavior. Every lender I've worked for had a list of banned brokers and banned appraisers. I've denied many loans after researching and finding out the information that was presented to me was incorrect. But in wholesale, the broker will just take that loan to another leander until he/she finds one that doesn't catch the dishonesty. Like in any business, there are good people and bad people.

Passing blame around is counter productive. Borrowers lie about their income, their employment, etc. Some get caught and some don't. Brokers and inhouse loan officers are not always honest, but many are. Real Estate agents inflate housing prices and drive up the cost to own a home. Appraiser are pressured to accmodate the market. When housing starts drop, lenders and investors are pressured to offer products that make it easier to buy a home. And lets not forget that brokers, loan officers and real estate agents are all paid on commission. No pay day if the loan deosn't close. Commission is a horrible form of compensation and breed dishonesty and greed.

There are several lender that are currently puttng in place new procedures to aid in the current situation. The company I work for, which I chose not to identify since I'm not an official spokesperson, announced last month they are setting aside $2 billion to renegociate loans in default. This is portfolio money that will not be sold to investors but held inhouse. This news got no media attention. Other lender have made similar commitments and have received no media attention. Doing something good is apparently not intersting news. Today my company announced new processes in which we will be contacting borowers (in wholesale) to review the terms of the loan submitted by the 3rd party broker to make sure the borrower is aware of what they are agreeing to. We will review loan terms, income and employment, etc. I've been watching CNN and FOX all evening and so far have seen nothing. I found a msall blurp on Reuters.com but that's it. Again, a lender trying to fix a problem but getting no media attention.

Mortgages are not the norm. Many countries have no mortgage process. Homes are passed from generation to generation or paid for in cash. The US is a credit country. Buy it now and pay for it later. it's what we do and it's catching up with us. I'm 37 years old and have never been required to take a finacial planning or home ownership course. Part of the balme that is being ignored is our own cultural ignorance, or arrogance. The foreclosure process takes months to finalize. People claiming that tey jsut woke up one day and lost there home is not correct. Lenders are not interested in owning your home. They want to loan money, not sell houses. A foreclosed home never generates a profit. The legal fees, court costs, insurance, taxes, assiciation dues, etc that a lender has to carry during the foreclosure process wipes out any opportunity for profit.

Spend some time online researching some of the positive efforts many companies are attempting. This is an opportunity to learn and make changes to the process.

[usmc1]

Mortgages are not the norm. Many countries have no mortgage process. Homes are passed from generation to generation or paid for in cash. The US is a credit country. Buy it now and pay for it later. it's what we do and it's catching up with us. I'm 37 years old and have never been required to take a finacial planning or home ownership course. Part of the balme that is being ignored is our own cultural ignorance, or arrogance. The foreclosure process takes months to finalize. People claiming that tey jsut woke up one day and lost there home is not correct. Lenders are not interested in owning your home. They want to loan money, not sell houses. A foreclosed home never generates a profit. The legal fees, court costs, insurance, taxes, assiciation dues, etc that a lender has to carry during the foreclosure process wipes out any opportunity for profit.

Spend some time online researching some of the positive efforts many companies are attempting. This is an opportunity to learn and make changes to the process.

Odie, thanks for your insight and thoughts, I agree with a lot of what you wrote.

But, sadly, I have to inform you that you have been gypped, short-changed and generally screwed in your education. You are part of what is called the "Dumbed Down" generation. When I was in the ninth grade, graduation requirements were that in order to pass on to senior high school a student was required to have completed an economics course which included arcane information about: how to write checks and maintain a checking account, how various types of interest are calculated, how the mint works, how federal reserve banks work, how our local banks interacted with the federal reserve system, how mortgages work, how insurance works, and basic budgeting and financial planning.

We also had to take a basic government course that included things such as the electoral college, how our city was divided into wards and the role the city manager played versus the honorary role of the mayor.

All this was in the ninth grade. Hell, today I know college grads who are going into teaching who do not know these things.

Somewhere in the culture wars such courses and requirements were fragged and sent home in caskets. So you're correct, our consumers are not well-informed ,and very often learn as they go, and sometimes learn painful lessons from their ignorance. On the other hand, there are unscrupulous individuals and institutions who exploit that ignorance and prey on the uniformed and unwary, and I think it does serve a purpose to shine the light of blame on them.

We must take responsibility for ourselves. Hell yes! I believe that. Absolutely. But, for that to happen, individuals must be trained and empowered to do so. The situation is that as it is now victims without training, education and empowerment are being blamed because they allowed themselves to be taken advantage of. That way of thinking sucks, and we see it displayed here and throughout our society--that somehow people are poor, taken advantage of, or with limited opportunity because of some innate deficiency on their part. As I said, that way of thinking sucks.

Credit in its self is not bad. It has been contributory to the rise of the middle-class enabling it to use its earning power to achieve higher education, home-ownership, leisure, better health, and higher standards of living while helping keep oiled the machinery of commerce.

It's exploitive practices coupled with consumer ignorance which is the problem, not credit its self.

[Sanslines]

Credit is also the means that some use to live well beyond their means. The phrase " I wan't it! .... I want it all!......I wan't it NOW! " comes to mind. In a highly materialistic and consumer oriented society, credit is always promoted as a way to afford that which could not be afforded under normal circumstances.

[usmc1]

Credit is also the means that some use to live well beyond their means. The phrase " I wan't it! .... I want it all!......I wan't it NOW! " comes to mind. In a highly materialistic and consumer oriented society, credit is always promoted as a way to afford that which could not be afforded under normal circumstances.

But, those exceptions do not prove the rule. The vast majority of us use our credit wisely and well to better ourselves. Not all credit is used for "material" things. Education and healthcare come to mind

People are basically good, and when given the education and empowerment will make smart decisions about their lives.

Sure misuse of credit is problem, particularly in those instances where unethical, exploitive and predatory lenders use it to entrap the uneducated and unwary. But, as I said, it sucks to blame the victims and demonstrates a real paucity of understanding and compassion.

[Sanslines]

There is so much variation as to the reasons for credit use and abuse. In some cases, some innocent people were sold a bill of goods and did not really understand what they were signing when they signed their mortgage. Some of the mortgage applications go on for page after page and are written in an incomprehensible legalise type of language that even some lawyers can not understand. In other cases, some people were greedy and knew that they either did not have the means to pay their mortgages once the rates reset or they just didn't care what would happen when the mortgage rates reset. In other cases, people wanted to honestly believe in a brighter future and sincerely thought that they could increase their earning power and make those payments. The variations in reasons go on and on.......

In some cases, people are to blame for their circumstances. In others, they are not. It all boils down to specific and individual reasons on a case by case basis.

In this day and age, the media is an extremely negative force that is very destructive on our society. The media never promotes the good and decent within people. Instead the media portrays life in the USA in a very unreal way that 99.99 percent of people could never achieve. Rampant consumerism and materialism is not the way to happiness for most people. However, it takes a very strong individual to reject the media's message and decide to live a simple and uncomplicated life that goes against what is portrayed as mainstream. Bigger is not always better.

[walter05]

I am posting a link to a television station's website. It links to only positive stories. http://www.wtoc.com/Global/category.asp?C=81976

There is too much negativity in the media. But the media does report the postitive also. I agree they should report on the positive more often.

[Sanslines]

I am posting a link to a television station's website. It links to only positive stories. http://www.wtoc.com/Global/category.asp?C=81976

There is too much negativity in the media. But the media does report the postitive also. I agree they should report on the positive more often.



Thanks Walter, I'll take a look.