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The mortgage crisis revisited

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NC Wayne

09-16-2007 23:07:34




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Just saw the post below concerning the "mortgage crisis" and wanted to see if any one else on here has been in the same boat as me. This has happened to me a couple of times over the years, once as I refinanced to take advantage of the lower interest rates, and again to cash out on some of my equity to make some much needed improvements (ie build my shop, etc). What I"m talking about is when the lender tells you your debt to income ratio is "too high". Even though you"ve never been late with a payment, the loan your going for has a lower payment than the one your currently making, etc., they still won"t give you the lowest interest rate because of a perceived increase in risk on their part. All it takes is a credit check to see I don"t spend my money on new cars, and other "luxury" items. My home is my priority and I wouldn"t own a new car if you gave it to me....But how do you make them see that, and what good would it do anyways because they simply don"t seem to care. They give absolutely no thought to the person involved, only the numbers. The one occurance that really sticks in my mind is on my origional loan back in the early 90"s. I had had a construction loan for over a year and made all payments on time, and had a minimum of card debt, and most of it was associated with construction costs over and above the loan. Still when I went to convert to a conventional mortgage I was told that because of my debt to income ratio they couldn"t do the complete loan amount because the payment would be to high, something like $900 if I remember right. However they could do X amount on a first mortgage with a payent of something like $750 and then a second mortgage for the remaining amount with a payment of like $350. I don"t know about ya"ll but this makes absolutely no sense to me. Supposidly I"m a huge risk to the mortgage company/s with a $900 payment but less of a risk with two payments totalling $1100. Until these "risk assessors" or whatever they call the people making stupid decisions like this get their heads out of their collective a$$es and pay attention to the STUPID decisions they make and how these decisions really effect the consumer this country is always gonna have a "mortgage crisis". But that"s just my opinion for the.02 it"s worth....No, wait, I can"t afford that .02 on one payment, better make it one payment at .03 and another at .01...LOL

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LBH

09-18-2007 14:08:33




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
You can go to a lender that does manual underwriting and they don"t just look at a credit score. check out this guy. he is cool.

www.daveramsey.com



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davpal

09-17-2007 23:02:21




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
The thing with guys like you Flashback is that you are a smart guy! When you DON'T use credit cards or blow money on new cars all the time and pay cash for everything and don't buy more house than you can afford and don't get a home equity loan you will find you have a heck of a lot of money. Most people can't seem to figure that out. You are one of the lucky ones. Most people in this country just make other people rich by paying out ridiculous amounts of interest each month to live in a new house and say "look at me"! I am somebody too. The absolute worst one is a home equity loan. Borrowing money to fix up a house that isn't even paid for yet. Or getting the money and buying a car or quad with it and taking 30 years to pay for them.

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MarkB_MI

09-17-2007 19:10:03




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Understand that the mortgage company may not care whether or not you will actually repay the loan. What they care about is whether the loan conforms to some set of underwriting guidelines so they can sell the loan to someone else.



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Steven f/AZ

09-17-2007 16:39:46




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Currently in the process of almost closing a construction loan... they changed the rules part way through the process that cause us to have to pay more costs up-front - previously some or all of the closing costs could be rolled into the loan, changed the rules so we can't do that. Had to come up with a pile of money for closing costs within a week. Luckily Dad had a good harvest and was willing to pay a year's wages in advance to me!

One thing I hate is that they said we qualify for a $2400 per month mortgage payment... that would break us in about two months because we need to eat and drive to work!

Getting a loan/building a house is the MOST stressful thing we have ever been through in our lives! third party image

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Rick(IA)

09-17-2007 16:26:06




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Back in the day, we used to make our loans based mostly on our judge of the character of the borrower. Then came the farm crisis of the '80s. We didn't get hurt too badly as my dad would never let any of our customers carry their land at over $1200/acre on their balance sheets, so the hotdogs ran to PCA and promptly lost their donkeys. Then came the S&L crisis and the regulators swooped down like a flock of vultures and made all of the banks base everything on cash flow spreadsheets, ROI projections and the like...character no longer counted for anything. I bailed out of the industry back in '87 when my father retired and I've never looked back. Pardon me if I have little or no sympathy for those folks who refused to look at history before they signed those variable-rate mortagages that they now can't afford. Santayana was right.

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730virgil

09-17-2007 14:05:27




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
my only income is the return on my ethanol stock. so when we bought a newer pickup this spring they couldn't use my credit rating as i have no monthly check stub. the thing that messed us up is kids not making car and school payments that we had cosigned. and kids renting an apartment and not paying rent or electric bill. as mrs. 730 had cosigned for them it went against her. when were talking about the truck banker told us you can have to high a credit card limit and that goes against you too. but he as a banker doesn't know how that number is determined. we had some credit cards that had a 0 balance. the banker told us he would like to know when to much available credit started working against you as he would tell people to get rid of some of the credit cards they have.

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rrlund

09-17-2007 09:48:03




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Never had the debt to income ratio questioned but the bank vice president asked me one time if I knew what my credit limit was? I told him I didn't know I had one. He loaned me what I was asking for that day anyway.



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Mike (WA)

09-17-2007 08:49:33




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
The problem is that the proposed first and second mortgages are in two different "risk pools"- they have to make a conservative first mortgage loan, because those loans have to conform to standards to "package" in groups and sell to conservative investors on the secondary market (through Fannie Mae (Federal National Mortgage Assn)). Second mortgage is sort of "granny bar the door" (anything goes), and is sold to investors who are greedier and want higher return. In considering the size first mortgage they will give, they are (in your case) comparing $900 to $750, and couldn't care less about the fact that your overall payment will be higher, because their first mortgage is "senior" (recorded before) the second. If you don't perform on the first, they'll foreclose out the second, and if you don't perform on the second, its not their problem.

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msb

09-17-2007 07:55:47




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Look at the large picture. The higher the risk, the higher the reward must be for someone to lend money regardless of whom it is.That way if someone in that pool of borrowers defaults, the lender has some chance of staying in business and keeping the bank examiners happy.Chances are, if you keep your payments on time they may give you a new loan in a few years. Have you tried at Farm Credit Services? Right now bankers are VERY conservative because of this sub prime fiasco.Trouble is they are two or three years too late in tightening down the loan requirements. Then the builders would have pulled in their horns and not overbuilt the demand for new houses.There is enough guilt to go all around in this mess.

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Bob - MI

09-17-2007 05:47:05




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Any of you guys see your car insurance rates go up because of your credit rating? They do that here in Michigan. To me, it's all a scheme to get more of your money while they skirt the edges of the legal system.

What's next?



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davpal

09-17-2007 23:09:35




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 Re: The mortgage crisis revisited in reply to Bob - MI, 09-17-2007 05:47:05  
Actually Bob, I am from Michigan and I have seen my car insurance rates go down because of my credit rating. So it can't be a scam if I am giving them less money. It is an incentive for people who are good with their finances. Sort of a reward system. Lot of people with bad credit committ insurance fraud by signing up, getting the proofs and then not making the payments. Now they can pay more for being asholes and I can pay less.

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Bob - MI

09-18-2007 12:42:11




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 Re: The mortgage crisis revisited in reply to davpal, 09-17-2007 23:09:35  
I too have a good rating and see the savings. I just marvel at the way these things are justified now days.



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rich4

09-17-2007 05:33:00




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Glad to know I am not the only one. Bank rules now days don't make much sence. We sold a commercial building and bought a another bigger commercial building and remodeled it, the only option was to get a home equity loan because of our debt ratio. Then when we wanted to convert to a commercial loan, they said debt ratio again, even though a new loan would be lower monthly payments. So now we have to stay where we are and prove to them we can pay our debts before they will help us reduce our payments. Blah.

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dhermesc

09-17-2007 05:25:54




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
They might be doing you a favor.



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TGIN

09-17-2007 03:45:56




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
I`m a farmer and also do other work on the side . I dont have pay stubs and W-2s the bank can look at and when I need a loan all they can look at is my tax return . Went to the bank a yr. or so ago to borrow a few grand and the lady that we always work with for vehicle loans said to just use my wifes ( she has a pay stub )income because my tax return would hurt things . I have more $100 bills in my pocket than most folks with a 9-5 job and report them best I can but they cant see them if you dont have that pay stub . They did have me sign over a CD for colateral though !!!

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Tradititonal Farmer

09-17-2007 03:41:01




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
The reality is when you take money from someone whether its a bank,your brother in law or the gov't you are going to play by their rules.



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SDE

09-17-2007 03:38:36




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
When we purchased this house in 92, they asked us if we wanted more money. We had sold our first house and had a fair amount of equitity built up because we would always pay 2x the principal amount each month. Today, it is all about numbers. I tried to roll over my credit card balance to a new card. I had just charged my daughter's fee to go to ITALY as a foreign exchange student, and the new card would only except less than 1/5 of my balance. And I always pay the card off each month. They gave me a credit limit of $2500 and my other card had raised my limit to $9500, so that I could put the Holly's $8500 on it. That one charge scared them I guess.
SDE

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Midwest redneck

09-17-2007 02:54:40




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
You need to go to a mortgage broker who will loan you the money. Try other lenders. Back in 1999 I built my home. I went to my bank that had my checking account and I asked the manager there if they would give me a loan to build my home. He says to me "are you a licenced builder" I say nope just a guy building a home. He says "Sorry, we dont make loans to guys building homes" Get this: a month later the same manager sees me in the bank and asks me if I wanted a home equity loan. I said are you serious, he says well yeah...I laughed in his face and said I was an idiot a month ago and now you want to loan me money. I have no respect for banks, customers are a bother to them. F-them.

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sd pete

09-17-2007 00:21:50




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
Banks are greedy



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02

09-16-2007 23:57:24




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 Re: The mortgage crisis revisited in reply to NC Wayne, 09-16-2007 23:07:34  
The problem with owing money with renewal contracts is that the lender can make up any new rule at all.



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flashback

09-17-2007 07:00:40




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 Re: The mortgage crisis revisited in reply to 02, 09-16-2007 23:57:24  

I had a problem getting a low interest refinance a couple of ears ago because, get this, I didnt owe anybody any money., Thats right, I didnt use my credit cards, only buy used autos for cash etc. I had to have money borrowed to have a good credit score. Credit cards did not count if you paid them off each month. Had to make monthly payments. The real clincher was I had 3 credit card with about 50,000 credit limit with nothing on them and they said too much credit availability is harmful. I might use it.

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