Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-13-2007, 09:09 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Dec 2004
Posts: 1,798
Quote:
Originally Posted by Gumby View Post
When I was young, my parents were constantly in debt to Household Finance (does that even still exist?)
Yes they do.
__________________

__________________
You don't want to work. You want to live like a king, but the big bad world don't owe you a thing. Get over it--The Eagles
lets-retire is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-13-2007, 09:22 PM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by Gumby View Post
My initial thought is that these people deserve exactly what they get.

But then, I consider my parents, neither of whom graduated from high school. Could they understand all the ramifications of the zero down, no documentation, option ARM? In a word, No. They would trust the nice mortgage broker who says "look, here is the monthly payment. You can afford that, and if you have a bad month, you can pay less. Now you can buy the house that you have struggled to buy all your lives. Isn't that great!?"

. They were poor, ill educated and didn't know any better, but they weren't bad people, and they didn't deserve to have someone take advantage of their financial ignorance. ..



Should borrowers know better -- yes. But the simple fact is that many don't, and it is terrible what is happening to some of them. I would encourage people on this board to have a little empathy.

Great points, Gumby. I along with many on the board are guilty of being far more sophisticated about financial affairs, than 95% of the population and so we assume bad motives about people when simple ignorance is much better explaination.

Still, much of the time when I read an account of the "poor people lose their home to because of predatory lender", the borrowers appear to be equally to blame. When the dear old lady is encourage to put $24,000 in income from alimony which she has never recieved so she can qualify for refi. I am sure that she didn't understand that terms of the adjustable rate, negative amortization etc. However, you'd think that part where it says all the information I supplied is true under penalty of perjury wouldn't require any great financial sophistication. After all lying is something 5 years old understand is wrong.
__________________

__________________
clifp is offline   Reply With Quote
Old 08-13-2007, 11:10 PM   #23
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
And while we are at it placing blame lets not forget those who created a secondary/tertiary/quaternary market for these poorly concieved mortgages. After all if there weren't all those hedge funds etc buying them up there would have been no need to create them in the first place.

DD
__________________
DblDoc is offline   Reply With Quote
Old 08-14-2007, 08:24 AM   #24
Recycles dryer sheets
 
Join Date: Feb 2004
Posts: 81
Clearly, there were a large number of folks who did not understand what they were getting into. Many were simply trying to buy a home for their family. However, from what I read/seen, there are hundreds of thousands, if not millions, of people heading into the financial ditch due to taking on too much debt. Why did they do it? It appears to me that there were a lot of speculators who got caught up in the frenzy and were hoping to flip property, there is the crowd that we often talk about on this board, instead of LBYM, they simply used the equity in their home as an ATM machine and spent it on stuff. And of course, the lenders made it too easy to borrow and allowed people to get into loans that were not suitable for them. And so it goes......
__________________
roadkill is offline   Reply With Quote
Old 08-14-2007, 09:54 AM   #25
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Exactly what part of the variable interest rate didn't they understand ?

These banks either get criticized for not lending to higher risk people or they get criticized for charging a risk appropriate rate.

This is natural selection plain and simple.
__________________
MasterBlaster is offline   Reply With Quote
Old 08-14-2007, 06:12 PM   #26
Recycles dryer sheets
 
Join Date: May 2007
Posts: 371
Quote:
Originally Posted by Gumby View Post
My initial thought is that these people deserve exactly what they get.





Should borrowers know better -- yes. But the simple fact is that many don't, and it is terrible what is happening to some of them. I would encourage people on this board to have a little empathy.

So does that mean that you support a government bailout of all these people going into foreclosure??
__________________
novaman is offline   Reply With Quote
Old 08-14-2007, 06:23 PM   #27
Recycles dryer sheets
 
Join Date: May 2007
Posts: 371
This article couldn't be more true. I've known for a while now never to judge people by appearance or what they drive....case in point....

I had a family come into my dental practice many years ago. well dressed, hubby drove a 7 series BMW and wife a jag. my staff oohed and aahed over them. They Got some work done over a period of time and never paid the bill. We sent our normal escalating letters. Finally the wife called letting me know that she was in marketing and could help my business....turns out they couldn't pay the bill. Sent to collection, they moved away, never to be seen again.

Another story... Had a guy come in that I'd seen around town before. Hard to miss. He always wore the same blue overalls and had a scraggly beard. Looked kind of like a mountain man. Drove a late model honda. Comes in for some dental work. We get to talking and it turns out he made a fortune starting an early internet service provider company that was eventually bought out by a larger company. He is RE and lives comfortably on the buyout....so the mountain man is loaded....you just never know.
__________________
novaman is offline   Reply With Quote
Old 08-14-2007, 06:29 PM   #28
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,147
Actually, it does not mean I support a bailout. The moral hazard implicit in such a course of action is obvious -- those who did know better and were merely speculating on continued price appreciation will now speculate with greater abandon because they know the government will bail them out. No, what I am suggesting is that certain people drop the the "holier than thou" attitude and have a little heart. Many of the people who are going into foreclosure were simply ignorant and naive. They are real people experiencing real suffering. It is bad enough without the added scorn of those of us fortunate enough to better understand and appreciate financial matters.
__________________
Living an analog life in the Digital Age.
Gumby is online now   Reply With Quote
Old 08-14-2007, 11:57 PM   #29
Full time employment: Posting here.
 
Join Date: Jan 2007
Location: Thousand Oaks
Posts: 839
Quote:
Originally Posted by Gumby View Post
Actually, it does not mean I support a bailout. The moral hazard implicit in such a course of action is obvious -- those who did know better and were merely speculating on continued price appreciation will now speculate with greater abandon because they know the government will bail them out. No, what I am suggesting is that certain people drop the the "holier than thou" attitude and have a little heart. Many of the people who are going into foreclosure were simply ignorant and naive. They are real people experiencing real suffering. It is bad enough without the added scorn of those of us fortunate enough to better understand and appreciate financial matters.
is it really "many" of the people ? i don't know one way or the other.
my personal gut feeling is that in fact most of them knew what they were doing and then rolled the dice. it would be interesting to see some statistics...
__________________
mh is offline   Reply With Quote
Old 08-15-2007, 09:51 AM   #30
Full time employment: Posting here.
 
Join Date: Feb 2007
Posts: 595
Ultimately, your life belongs to only one person, and that is yourself. It is for this reason that every decision that you make in life, both the good and the bad, are in fact your fault. If a lending institution decided to outright lie to someone about the terms of their loan, then obviously these folks were not at fault, because the erroneous information they were presented, caused them to make a bad decision. However, the claim that these folks did not "know any better" is equivalent to removing personal responsibility from their decision. No one is entitled in life to more than what their own mind and decision making ability can get for them. If you choose to make bad decisions then you should have to live with the results. Everyone in their lives make mistakes, and hopefully they are small and you learn from them.
It drives me crazy listening on the news to the govt attempting to pass a bill to "bailout" all of these folks loosing their homes due to "predatory lenders". Was there some form of coersion that went on in the bank that I am not aware of? Did the loan officer produce a gun and force these people to sign up to a mortgage they could never hope to pay back? What about the banks themselves? They have lost millions of dollars in defaulted loans. Should the govt bail them out too, because the loan officers did not "know any better" as well? If the claim is to be made that someone needs to be helped because they "do no know any better", then I would make the claim that there are places these folks can go where they do not have to make any decisions anymore at all. Although completely safe, a life devoid of having to make decisions for myself is not a life I would choose to have. I appologize if this sounds cold to anyone, but the truth often is.
__________________
armor99 is offline   Reply With Quote
Old 08-15-2007, 10:00 AM   #31
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Where was all this talk about "predatory lenders" when people were taking cash-out refinancings to buy SUVs and to pay down their charged up credit cards ?

It's only now, when the party is over, that something needs to be done.
__________________
MasterBlaster is offline   Reply With Quote
Old 08-15-2007, 11:53 AM   #32
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 377
I really do not understand why ARM's are even legal, and I really do not understand why people took them out when rates were at a all time low. With over 70 lender's having went under this year already they are paying the price for doing ARMs, and the news of countrywide today is just scary.

I did reap the benefits of the undocumented income though when we purchased our home, that was right up my self-employment alley.
__________________
Bigritchie is offline   Reply With Quote
Old 08-15-2007, 04:32 PM   #33
Recycles dryer sheets
 
Join Date: Feb 2006
Posts: 82
I have no problems with ARMs, IO loans, or alot of other "fancy" loans. It is up to the person using it to understand what it gets you, and what it doesn't.

I bought my current house using an ARM. Got a almost 1% lower rate for a 7/1 ARM than fixed would have been. When it goes to adjust, I'll either pay it off, or refinance, or just let the rate ride depending on which makes most financial sense.

If my wife had to go mortgage shoping without my knowledge, my advice to her would be get a fixed rate. Why? because she doesn't really understand how those different loans work. (I've tried, but she just isn't interested in learning it right now.. probably cause she has me to do it)

Laters,
-d.
__________________
dgalbraith100 is offline   Reply With Quote
Old 08-16-2007, 10:43 AM   #34
Full time employment: Posting here.
bow-tie's Avatar
 
Join Date: Mar 2004
Posts: 687
Quote:
Originally Posted by dgalbraith100 View Post
I have no problems with ARMs, IO loans, or alot of other "fancy" loans. It is up to the person using it to understand what it gets you, and what it doesn't.... -d.
I agree.

It's both good and bad. More and more responsibility is falling on us as consumers. We need to be smarter about a lot of things - personal finance, medicine, law, accounting... you name it. It's great for those of us who are interested and eager to be informed. But it can really bite us in butt if we don't take the time to educate ourselves.

Example - Could be why a lot of people have 401ks invested in guaranteed income type stuff. They don't know any better / any worse. Maybe they appreciate what they don't know, so they are playing it safe. Is that wrong? Really depends on the person, methinks.
__________________
Diggin' my way to financial freedom, one buck-at-a-time
bow-tie is offline   Reply With Quote
Old 08-18-2007, 01:18 AM   #35
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,951
Although I agree its the consumers responsibility, I think some of us lose touch with what its like to be "on the margin". I recently heard the story of how my grandparents became the very first homeowners in our family. They were renting in Wash DC when they "discovered" the home they were renting was for sale. In order to pull this off, they went to the local neigborhood loan shark for the down payment....it all worked out in the end. I am in favor of "bailouts" for the homeowners in many cases ONLY because it works in favor of the overall economy in the long run. This is EXACTLY what happened when the Fed cut rates because the subprime problems were spreading throughout the market. Wall St Journal profiled some subprime borrowers in Detroit recently. One loan was for 9.75 for two years before resetting 12%. Nowadays, that constitutes usary. If this homeowner has made a 9.75 payment for two years, somehow there should be a way for them to stay in that home.........to do otherwise will eventually cause home values throughout that market to tumble. I'm no fan of D Trump, but I agree with his advice for homeowners such as this to "stay in your home, go back to the bank, and demand a better deal"
__________________
jazz4cash is offline   Reply With Quote
Old 08-20-2007, 09:50 PM   #36
Recycles dryer sheets
 
Join Date: Feb 2004
Posts: 81
Quote:
Originally Posted by armor99 View Post
Was there some form of coersion that went on in the bank that I am not aware of? Did the loan officer produce a gun and force these people to sign up to a mortgage they could never hope to pay back?
I happened to catch a reality type show where a real estate agent was trying to help a young married couple who were first time home buyers. I almost fell out of my chair when they indicated that their budget was $516,000.
__________________
roadkill is offline   Reply With Quote
Old 09-14-2007, 03:03 PM   #37
Recycles dryer sheets
 
Join Date: Feb 2004
Posts: 81
__________________
roadkill is offline   Reply With Quote
Old 09-14-2007, 03:08 PM   #38
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,456
Thanks Roadkill, for an awesome cartoon!
LOL!
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 09-14-2007, 03:12 PM   #39
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Man, that's funny and not funny all at the same time.
__________________
73ss454 is offline   Reply With Quote
Old 09-17-2007, 10:41 AM   #40
Thinks s/he gets paid by the post
Milton's Avatar
 
Join Date: Apr 2007
Posts: 2,077
Quote:
Originally Posted by Gumby View Post
Many of the people who are going into foreclosure were simply ignorant and naive.
These same "ignorant and naïve" people also enjoy the right to vote, own firearms, have children, etc. They can't have it both ways.

Either one is a competent adult, with all of the attendant rights and responsibilities; or one is not.
__________________

__________________
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
Milton is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
The Invisible Man yakers Other topics 12 02-09-2007 04:28 PM
The invisible rich JustCurious FIRE and Money 32 01-23-2007 01:20 PM
Rich get richer / poor get poorer renferme FIRE and Money 158 09-10-2006 12:03 PM
"Getting Rich: The Poor Man's Guide" frayne Young Dreamers 8 05-23-2006 02:08 PM
BECOME RICH AND STAY RICH idevision Young Dreamers 12 07-27-2005 04:41 PM

 

 
All times are GMT -6. The time now is 07:46 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.