mortgage aid plan

[dmarc117]

Whatever happened to the mortgage as a percentage of income standard that lenders used to use?

 

from what i hear, all these mortgage banks never required much proof of income. you just told them what you made and you were approved. like that earlier article, most of these banks and mortgage house sell these loans to other investors. so there thinking is just get the loan written and sold and make your commission. a guy i work with is buying a spec house. he just had his builder over the other night. the builder was saying that he builds around 20-30 house per year. and in 90% of those closings, he had no idea how the buyers were approved. crazy. how can people sleep at night knowing one thing could put you in foreclosure or bankruptcy.

Edited December 1, 2007 by dmarc117

[Avernus]

from what i hear, all these mortgage banks never required much proof of income. you just told them what you made and you were approved. like that earlier article, most of these banks and mortgage house sell these loans to other investors. so there thinking is just get the loan written and sold and make your commission. a guy i work with is buying a spec house. he just had his builder over the other night. the builder was saying that he builds around 20-30 house per year. and in 90% of those closings, he had no idea how the buyers were approved. crazy. how can people sleep at night knowing one thing could put you in foreclosure or bankruptcy.

 

here in Philly, mortgage banks that I've dealt with require you to disclose what your income is, where it comes from and why you get it....

 

places that do otherwise are just greedy and looking to just get paid unethically..

[AtomicCEO]

I think credit card companies should be liable for who they give credit to, and I don't think mortgage lenders should be any different.

 

Stop protecting predatory lenders.

[Big Red]

I did a total kitchen remodel and went a bit over budget. As a result, my credit cards are all maxed out.

 

Where is my handout.

 

You fix this by taking their houses from them and selling them for what you can get. The borrowers learn by becoming renters, and the lenders learn by losing a good deal of their money. Those who waited without going over would be the ones who made out.

 

I was offered an arm and I turned it down. Frack the other people who don't understand BASIC MATH.

[Avernus]

I did a total kitchen remodel and went a bit over budget. As a result, my credit cards are all maxed out.

 

Where is my handout.

 

You fix this by taking their houses from them and selling them for what you can get. The borrowers learn by becoming renters, and the lenders learn by losing a good deal of their money. Those who waited without going over would be the ones who made out.

 

I was offered an arm and I turned it down. Frack the other people who don't understand BASIC MATH.

 

+100

[dmarc117]

I did a total kitchen remodel and went a bit over budget. As a result, my credit cards are all maxed out.

 

Where is my handout.

 

You fix this by taking their houses from them and selling them for what you can get. The borrowers learn by becoming renters, and the lenders learn by losing a good deal of their money. Those who waited without going over would be the ones who made out.

 

I was offered an arm and I turned it down. Frack the other people who don't understand BASIC MATH.

 

[dmarc117]

more on the teaser freezer..........

 

http://biz.yahoo.com/ap/071202/subprime_bailout.html

 

"It's not the mortgage that's the problem" said Christopher Thornberg, a principal with Beacon Economics in Los Angeles.

 

While the market was soaring, he said, homebuyers simply paid far too much for their homes and are now facing the consequences.

[Chavez]

The plan hatched by government and industry is also intended to benefit investors who purchased these risky mortgages. Agency officials counter criticism from investors concerned the plan will deny them potential profits by arguing they will be better off in the long run through the loan modifications. It spares them the cost of a foreclosure, which can run around $50,000, and decreases the likelihood of default.

 

"Lenders and investors will ultimately benefit," Sheila Bair, chairman of the Federal Deposit Insurance Corp., said in an October speech in which she unveiled the idea to investors. "You'll come out ahead of the game with a performing mortgage that's being paid versus having a loan that's in foreclosure."

[detlef]

As I'm not in this industry and only have a consumer's knowledge of the game, could someone clarify something?

 

How does this affect the taxpayers? It's been implied by more than one person that this is a bail out that's being funded by the taxpayers. Unless the money the investors are missing out on by the rate freeze is subsidized somehow, it wouldn't seem that way.

 

From what I can tell, you have one set of winners and one set of losers (sort of). The winners, obviously, are those who got into screwy loans to buy houses they couldn't afford and are being saved from themselves. The losers are the lenders who are stuck giving people rates more favorable than they need to be. I said sort of because at least they're getting paid something.

 

Now, that doesn't mean that those of us who bought houses that were not out of our price range and got into stable mortgages that we could afford don't have reason to be irritated at the fact that greed and stupidity are being rewarded. However, if what I assume to be the case is, in fact, the case. At least they're not adding injury to insult by having us also foot the bill for this.

 

Am I missing something? Besides, that is, the fact that artificially manipulating the market place can have undesirable and unexpected results? Besides, that is, the fact that just because some ass-clown making $30K who bought a $800K home because of some no-doc loan with a 1.9% intro rate that's just been saved from the negative am loan from hell, is still an ass clown making $30K in a $800K home and is going to end up screwed eventually unless that $800K home sees yet another record appreciation.

[TimC]

We really need to grap our pitchforks and invade DC and overthrow this craphole of a government.

[dmarc117]

update

 

The plan to temporarily freeze mortgage rates is primarily aimed at borrowers who can afford their existing rates and who are current on their payments, but who would face default when the rate resets at a higher level.

 

Under the plan, homeowners who have shown they are a reasonable credit risk but who could not afford their homes with higher rates would qualify for "fast-tracked" loan modification and a five-year interest rate freeze.

 

Borrowers who have struggled to keep up their loan payments could still qualify for the freeze, but would face more scrutiny before receiving any loan modification.

 

The sources, who are familiar with details of the trade group's pitch, said the plan envisions covering subprime loans taken out between January 1, 2005, through the end of this past July, with rates that are due to reset over the coming 2-1/2 years.

 

http://www.reuters.com/article/politicsNew...=22&sp=true

Edited December 5, 2007 by dmarc117

[Caveman_Nick]

I can see how the bailout might make sense for the entire economy in the short term but in general I oppose bailouts in every form. Capitalism has a way of dealing with these things in the longer term. Fraudulent lending is a criminal offense that should be dealt with in the standard fashion - through the courts. Idiocy is not an excuse to have the government rush in to save people, using tax dollars of people who aren't idiots.

 

As for the bottom falling out of the housing market, from a selfish viewpoint it wouldn't affect me personally at all. I have a fixed rate and I haven't maxed out my equity by using my main asset as a piggy bank like so many have. I have no intention of moving for at least a decade.

 

I still think caveat emptor is a pretty good tenet.

 

maybe I am not understanding the situation, but it does not sound like the government will be assuming any expense on behalf of the people, but rather that the interest rates will be controlled so as not to allow mortgage payments to get further out of hand.

 

Is this really such a bad thing? Am I missing something?

[Ursa Majoris]

maybe I am not understanding the situation, but it does not sound like the government will be assuming any expense on behalf of the people, but rather that the interest rates will be controlled so as not to allow mortgage payments to get further out of hand.

 

Is this really such a bad thing? Am I missing something?

You're right - the earlier impressions were of a gubment bailout. That said, do these folks catching a break on their legally signed contracts wind up better off than the rest of us or is their hour of judgment simply delayed? In other words, will they be forking over every dollar they originally contracted to pay, or not? It's still an important question because one way or another it's always Joe Public that ends up paying when this kind of thing happens.

[detlef]

You're right - the earlier impressions were of a gubment bailout. That said, do these folks catching a break on their legally signed contracts wind up better off than the rest of us or is their hour of judgment simply delayed? In other words, will they be forking over every dollar they originally contracted to pay, or not? It's still an important question because one way or another it's always Joe Public that ends up paying when this kind of thing happens.

Not if the guys who are picking up the slack here are the ones who were selling BS loans. I mean, I'm sure they're not going to be tossing loans around left and right. However, they're still in the business of loaning money, so if you're good bet, you'll never have trouble getting money.

 

For instance, if you got into a shark for a bunch of money and he was somehow forced to not bleed you. Provided you didn't lose your kneecaps, who besides the shark "loses"?

[Ursa Majoris]

Not if the guys who are picking up the slack here are the ones who were selling BS loans. I mean, I'm sure they're not going to be tossing loans around left and right. However, they're still in the business of loaning money, so if you're good bet, you'll never have trouble getting money.

 

For instance, if you got into a shark for a bunch of money and he was somehow forced to not bleed you. Provided you didn't lose your kneecaps, who besides the shark "loses"?

Most mortgages are sold as investments to all sorts of outside interests. The mortgage broker usually gets his up front. The "victim" in this case would be the current owner of the mortgage, which was supposed to pay $xxxx in interest but now pays less than that. This is particularly bad because these are supposed to be the safest of investments - it's not like these people are investing in Pablo's Unseen Goldmine, Xingu, Brazil or some startup Internet wannabe.

 

In any event, whether or not the public or some nebulous investment entity pays, it's important not to put out the impression that if you make crappy decisions, someone somewhere will bail your ass out. For every victim of fraud, there's another buffoon who could make his 2% teaser on his $500,000 home and never concerned himself with the adjustment. What is it about Adjustable Rate Mortgage these folks don't get?

[Cyclones]

It this a temporary freeze, or rephrased, is this plan just postponing the day the ARMs actually adjust upwards? Couldn't this cause even more houses to hit the already saturated market if the people given the reprieve decide they want to get out before the rates move. If that's the case it could depress the market even more (which is okay by me, I'll be looking to get back in at the end of next year.)

[Ursa Majoris]

It this a temporary freeze, or rephrased, is this plan just postponing the day the ARMs actually adjust upwards? Couldn't this cause even more houses to hit the already saturated market if the people given the reprieve decide they want to get out before the rates move. If that's the case it could depress the market even more (which is okay by me, I'll be looking to get back in at the end of next year.)

Pretty much what I've been asking. No-one seems to really know if this is a reduction, a delay or a reprieve.

[yo mama]

We really need to grap our pitchforks and invade DC and overthrow this craphole of a government.

If at first you don't secede, try, try again.

[nickspicks]

Bring back Debtors Prisons Or Public Stoning. Put it on Pay-per-View, charge the throwers per rock, stone or boulder and all proceedes go to paying the shmucks mortgage.

[AtomicCEO]

What is it about Adjustable Rate Mortgage these folks don't get?

 

Is that what ARM stands for???

 

They told me it stood for Awesome Rockin' Mortgage.

[polksalet]

Whatever happened to the mortgage as a percentage of income standard that lenders used to use?

 

When we were looking into buying this crib the banker apparently used a multiplier of about4.5 times my wife's salary.Said we were borderlin foolish for wanting to borrow 1.2 times her annual salary. Whatever

[wiegie]

If at first you don't secede, try, try again.

this is way too good to go by unnoticed

[polksalet]

Several proposals about how to handle the mortgage meltdown are floating around on Capitol Hill. But politicians are not interested in helping people because they have big hearts. The talk of bailouts is to prop up the banks and lenders -- who are big political contributors -- yet it's being done under the good-natured guise of rescuing the borrowers. Does this sound cynical? Just follow the money and you'll see what Clark means. Remember that economics is often called "the dismal science." That's because the reality is that our country will suffer if we do exotic things to keep people in homes they can't afford. Look at Japan. The government over there decided to bail out the commercial speculative real estate industry and went into a recession for 2 decades as a result. Japan is still struggling 20 years later to come out of it. That example teaches us that there must be an actual business reason to do a bailout with someone.

 

Clark recently spoke to a man who was just days away from foreclosure and wanted advice. But he could not give the man false hope; some people have never even been able to make their initial teaser payments. The typical homeowner who is in over his or her spends between 45 and 55 percent of their pre-tax pay on their mortgage. Clark knows of woman who has a payment that's higher than her income. What is a bank doing making that kind of loan? Either the paperwork was forged or she didn't have to disclose her finances to get the loan. The mortgage broker, meanwhile, probably made a huge commission on that deal. These ugly abuses are the reasons why the feds should not save an industry that partied too hard during the good times and now wants a helping hand. The fact that it's being done under the guise of helping homeowners is tragic. It's really about helping cronies in the mortgage and banking worlds.

[yo mama]

this is way too good to go by unnoticed

Too subtle?

[Avernus]

Too subtle?

 

no, the subtlety is perfect...

 

going over the top is where you mess up...

Edited December 6, 2007 by Avernus