You sound off on mortgages and lending

Posted on December 14, 2007 1 Comment

Wow. I got some amazing insights from you guys regarding your thoughts on mortgages and lending. Thank you for being so smart and so passionate.

Here are some of my favorites. You can read the rest here.

Sense to Dollars said…
The thing I keep hearing is that the homeowners were advised that this was the one way that they could get into the real estate market while things were good…the house would then increase in value over the next 3-5 years, at which point they could have enough equity to refinance to a 30 year fixed before the teaser rate was up. As we all know, that didn’t happen–house values plummeted and people ended up upside down on their houses, unable to refinance. And now people are stuck with these horrible mortgages…and it’s a crazy downward spiral, ’cause when people default on their loans and the bank forecloses, the housing prices near that house go down even more! ugh.

I don’t know who is at fault–the mortgage lenders or the homeowners. It seems like a little of both. This shouldn’t have been legal, since we didn’t know FOR SURE that the housing values were going to go up.

nicole said…
Obviously, the blame has to rest with individual home buyers. When you take on a loan that could potentially be too much for you once the adjustable rate goes up, then you’re the one who will have to deal with the consequences. I’m guessing though, that too many people who are now in a bad situation didn’t take the time to find out what could happen in the future (or just didn’t want to believe it.) They just wanted what they wanted when they wanted it. And in the moment, it looked like something they could afford.

As for how the banking industry could be allowed to give people such potentially problematic loans – one word: lobbyists. The banking industry has enough money and power to have political sway, and there is enough money from this industry going into the pockets of politicians, so of course the government isn’t going to write legislation that is going to alienate the industries that keep them in private jets and luxury hotel rooms.

Darlin’ T said…
Hey Nicole, I work at a credit union and we sell mortgages …
… When I was with the mortgage broker, it was when the housing market was booming. He was putting people into homes who didn’t even have jobs or savings! The reason he did this was to 1) make money and 2) make his clients happy. I’m in no way condoning what he did, but he was under a lot of pressure to make these loans. He was on call all the time and was harassed to do all he could to get people the ‘American Dream’. He was stressed out beyond belief and I honestly think part of it was b/c he knew what he was doing was wrong.

Natalie said…
Hey, I think everyone is asking those questions — but I’ve talked to a lot (I’m a biz reporter in Cali) of brokers — and they say it needs to happen. Why? Because foreclosures hurt everyone — homeowners trying to sell their homes (drives down values), homeowners in their homes (dilapidated homes and the people that move into them can hurt the neighborhood), obviously those that go into foreclosure, and it hurts the lenders. So while it is unfair for buyers now (though interest rates here keep dropping because of it, and so do home prices — so they are getting an advantage) these buyers are likely going to creditable people and will keep their house.

The National Treasury and everyone involved with that recognized that a wrong was done by aggressive Realtors, predatory lenders and the homeowners themselves for getting in over their head, and decided to give everyone a 5-year break.

What will happen after that term is over? There will probably be a slew of foreclosures again — but many are hoping that in the next five years those people sell their homes, change status, whatever — maybe it will slow down the process instead of right now where it’s so many every month.

I kind of feel like it’s a step of procrastination, and in California, the inflated market could stand to drop a lot more — but personally, I’ll probably be ready to buy a house in five years — so I’m impartial. I know that sounds awful, but just as buyers benefited from low interest rates 3 years ago and buyers are benefiting from low home prices now — I’m guessing it will happen again in five years.

Keep reading here…

Category: Old Posts

Comments