It's not all the banks fault.

Was watching a preview for a dateline(?) show for this weekend and they had a lady on there that was complaining how the bank, I think they said Countrywide(?)apparently she defaulted on the loan and was foreclosed on. Apparently the loan officer falsified(per her statement)the monthly income application and she was approved for the condo. apparently the loan payment was more than what her monthly income was!! Why does the media put these idiots on there and expect us to feel their pain. Those are not the people I feel bad for. Why would a person take on a loan that the payment is larger than your income! Get some people on there that have lost their jobs due to outsourcing and are losing the battle, not those other fools. People like that need to be sitting right next to the bankers when they are in the hot seat. Ok, I vented. Now for more coffee, YT, and Sour dough english muffins with honey and butter on them!

Those muffins soundgood.

Vito

So banks did no verification of income or credit ratings?

The process was corrupted from the individual borrowers all the way up to the CEOs of the investment banks. Everyone was lying and they all knew it.

A few weeks ago on NPR they interviewed a woman would worked for a mortgage underwriter. These are the people who are supposed to make sure that loans are up to snuff so they can be treated pretty much as a commodity. The underwriters had agreements with the banks that they would not reject more than a certain percent of loans. The lady said that on several occasions she rejected loans for various reasons (including outright fraud), only to have her manager override her decision.

The housing bubble was the same sort of ponsi scheme as Madoff (sp?) did to investors.

Back when Clinton was in office & nnalert controled the legislature - so both sides can be blamed, not just D or R - it was decided everyone should buy a house & rules were relaxed & encouraged to make loans for houses, few/no questions asked.

This made a good demand for houses, so their value climed. Up and up. So people buying houses they couldn't afford were able to borrow more, or refinance, or sell their too expensive house for another house, over & over. Because house values were climbing. It all works on paper, as long as values keep climbing. No problems, no worries.

Building all those houses kept people employed in real good jobs, so more people had good jobs, and could pay more for houses.

It's all good.

Until the bubble burst - we got more houses than people could keep buying, and the bad financing of people who couldn't afford a house started showing up.

And so - here we are. The bubble popped, and everything needs to - painfully - readjust to reality again.

Who is at fault? The govt who set up the loose housing? The bankers who took the plan & ran with it, setting up financing that couldn't work? The folks signing for loans that couldn't work?

Yes. All are to blame. So what? Here we are. In a painful adjustment phase....

Now, Madoff (sp?) did the same exact thing, only privatle, and with 'investing' money. He built up a bubble of his own, that caused itself to grow & pay off & look really good - until the bubble burst, and then the last investors lost it all. Very same principle as the housing scam.

The govt is printing more money; the banks are getting huge bailouts; homeowners are getting tax rebates, credits, incentives to buy, cheaper loans. This is the answer to the housing bubble.

Madoff is in jail. That is the answer to his investing bubble.

I think all should be in jail - housing & investor fraud; but it is interesting how we deal with the same type of thing in 2 very different ways.

--->Paul

(quoted from post at 08:01:32 03/21/09) So banks did no verification of income or credit ratings?

Click to expand...

Countrywide is there own bank.

There's was a man that worked for Countrywide and he told them that these loans they were giving out could come back and bite them on their backside, so here's what Countrywide did, they fired him. Hal
PS: My local paper is full of foreclosures every week being sold at the local Court House. Some of the loan rates were as high as 13.5%.

That's right NINJA - No Income, No Job, - "stated income" or No Doc. Basically, if you could breathe, you qualified. I can't really blame some people, they saw a hope of having something, even tho it really wasn't a safe bet.

A lot of the bad loans were from captive financing arms of big builders. I don't think they should be financing the homes, there is too much incentive to cheat. There is a lot to be said for "arm's length transactions".

One woman had re-financed three times in three years becauce she was told she should. Her loan was based on her husbands income and they knew that he was dead.

You are correct Spook. Banks had motgages called "Non Income Motgages". No need to proove your income.

Dave,

I do not know why someone would obligate their self to a loan of any type that they know could not be repaid.
Ultimately a person knows what they can afford and what they cannot afford.

Many local small town banks still have people running them who do business responsibly and preserve the depositers assets while making sound mortgage and small business loans within the communities they serve. Many of the large multi-national banks tried to operate on cash flow with little thought or regard for the capitalization rules, then the rules were relaxed by Congress and it was anything goes. Without a doubt, every Politician currently in Washington should be voted out in the next election cycle. You could randomly pick 435 names out of any phone book and be better off.

There's plenty of blame to go around, but it boils down to people living beyond their income. And that includes borrowers, banks and government. When I was starting out you had to have at least 20% down before you could borrow for anything. You started small and grew at a moderate pace. If your monthly mortgage and car payments were more than 1/2 your total bring home pay then you probably wouldn't get the loan. Of course this was still when the banker knew you and the loan was closed the same day that it was started.

Everyone in the "chain"--from mortgage "originator" on up: loan officers, appraisers, rating agencies, CEO's and CFO's etc--were getting paid, up front, for "approved" loans, that were being sold to other "investors" (suckers??).Human nature being what it is, anyone who objected, was ridiculed and pushed out. Anyone who couldn't stomach it quit, but was easily replaced by any of a dozen more hoping to get onto the gravy train.
The trade literature had plenty, and I mean PLENTY, of people saying it couldn't go on, but the debt-financed buying (not just houses but everything else as well) was not only holding up the US economy, but the WORLD economy as well.
Punch up any newspaper around the world: Europe, Asia, South Am; exports are down, factories, mines closing, because Americans, the buyers of the worlds products, have run out of money . China and India going to rescue the world economy??? China's prosperity was from selling to the US, India's from outsourcing US jobs.
We're replaying 1929-32 over again; we've always debated whether FDR put in too much money, or not enough; this time we're trying more "money"...we just don't know whether today (as this is written) if we're in 1930/31 (still falling) or 32 (bottoming)

I don't guess you have to feel sorry for anybody, but the crooks made it were it's coming to get you.
The Ponsi scheme of giving loans to people with unsubstantiated credit has nothing to do with poor people, it was the banks/lenders using the poor people to cover up their theft. A lot of people were lied to about the terms of their loan, not everybody is as smart as you think you are.
These unsubstantiated credit loans were available to small businesses too, some of the biggest corporations are labeled small business so they can get in on small business loans. I think the tentacles of were all this money went stretches far and wide, but I don't think poor people got any.

I hate to say it but the chickens have come home to roost and it will now be a bumpy ride for many.

Years ago a president we had put investment banks under FDIC but did not apply the same rules to them as smaller banks. It was encouraged from the top to lend money to anyone so that every American could live the good life.

Oversized houses; SUV's; 4 wheelers; boats; and RV's for everyone that wanted one.
Heck you can not make the payments; that's alright we will give you a interest only loan.

The stock market is going up at a record pace.

And now you want me to feel sorry for someone because they did not see this down turn coming.

You think low income people would have no problem paying a mortgage? What planet are you living on? With only 20k or 30K income, how much house can you realistically afford?

Our former U.S. senator probably out financed yours 12times/14years.
FLIP

I saw your comment earlier and I didnt say anything due to the amount that I could say about it.

I know that the banks/mortgage companies, greedy 8astards that run the financial institutions in the country did some real dumb lending in the past. Like for instance: Lend more then what the home is worth, (super stupid)
Then these people that kept getting home equity loans every few years, I have a neighbor that got 2 Home equity loans in the course of 4 years and it was in the 10's of thousands of dollars (he wanted the money for landscaping and putting in a large back deck) which runs into the next issue---my neighbor couldnt really afford the deck so he financed it----$15,000. As far as I know he still owes money on the home equity loans plus the base mortgage. And this is the same clown that told me to get a home equity loan to do landscaping, I pi$$ed him off when I told him I would wait till I had the money and when I decided what I was going to do in the future. (and I told him flat out I wasnt going to spend $20k on sod/boulders/trees/pavers etc.

Then the whole issue of decreasing home values---every one thought that the sky was the limit for home prices, oops.

BOTTOM LINE: personal responsibility is real important and if you dont have common sense then you will be burned.

Since I've only grossed over $30,000 a year a couple of times in my life, I think I'm qualified to answer that.

The home I live in is around 1800 square feet...originally built in 1973 as a FmHA-spec 3 BR home in a rural subdivision. The previous owner added a family room/dining room addition across the entire back of the house sometime in the late 1980's.

I bought the house in 1994 for $55,000. Since then, I've had vinyl replacement windows and vinyl siding installed, and the insurance company replaced the entire roof [hail damage] in 2003. I replaced the [original] furnace in 1996 or '97.

In 2004, when I refinanced at a fixed 5.37% rate, the house appraised at $94,000.

So THAT'S what kind of house someone making $20K-$30K can afford.

Well said.

Blame the bankers all you want, but don't forget all the politicians like Chris Dodd and Barney Frank that were in the middle of this whole scheme ever since Clinton changed the laws. They caused the problem and THEY are the ones "fixing" it now.

Rope is too good for those guys. A striped suit and a chain gang is whats appropriate. And there are at least 400-433 other guys and gals that should be going with them.

Don't know where your question come from with what I said.
I'm like Buzzman 72, been in 20-30k for last 10-15 years and I have a 150k place with no problems paying my bills.

I couldnt agree more, a striped jumpsuit, hard labor for 20 years. Maybe bust rocks at a quarry, pick fruit off of trees, shuck corn. Give these bozos hard labor to let em know what it is like to be middle class or down right poor.

Inflating housing didn't happen in my area. I guess thats why we haven't been hit as hard as some areas. My $195,000 home Still sells for that. While in CA the same home was going for $750.000 goes for a lot less. There very few Banks that are localy owned. Even in this area. the bigger they get the harder they fall. and the less service you are going to get . I quit an went with a credit union "Local one with two branchs.

Yeah, it has to be the eeevil corporations, and eeevil bankers, can't possibly be evil politicians like the banking Queen, barney frank, or the mortgage king, chris dodd, or those that took political donations from fannie mae or freddie mac(his name starts with external_link, ends with erkle). Tune into the tinfoil, and you'll hear the broadcasts live!

Yeah, it has to be the eeevil corporations, and eeevil bankers, can't possibly be evil politicians like the banking Queen, barney frank, or the mortgage king, chris dodd, or those that took political donations from fannie mae or freddie mac(his name starts with external_link, ends with erkle). Tune into the tinfoil, and you'll hear the broadcasts live!

Sorry about the double, don't know what happened there.

Sounds to me that the both of you are living your lives conservatively, even if you don't vote that way!