Random rant of the day

::Rant::

So I'm listening to the news while I get ready for work this morning, and they're doing a piece on Fannie Mae and loan modifications. They're talking to someone in the loan modification department who is reviewing a case file. She says, "Here's a typical case - the homeowners are 3 months behind on their mortgage and they've suffered an income modification (I guess that's mortgage-speak for a layoff). If I lower their interest rate from 7% to 3%, they should be able to afford to stay in their home."

What the ::Censor::? I've been a homeowner for ten years, never been so much as a day late on a mortgage payment, and I can't get that rate. Hell, I've got a credit score in the 800s, and I can't even refinance at 5% without paying thousands of dollars in fees and points so that the greedy motherf::Censor::ers at the banks can make up for their bad bets with my money. Makes me want to quit paying my mortgage until they offer me a better rate. ::Rant::

yeah, we were talking about the "loan modifications" last night...

My thing is, fine, lower the ARM mortgages back to the original ARM rate, but tack on, say, 5 years to the payout. It gets the monthly payments down, but you aren't really getting anything for free. And, if you can't afford the house at the original ARM rate you agreed to, you can't really afford the house and you probably should loose it.

That's a damn good idea, Dave. But it makes way too much sense to be implemented, I'm afraid.

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Originally Posted by altiain

That's a damn good idea, Dave. But it makes way too much sense to be implemented, I'm afraid.

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:clap::rolleyes:

I agree that sucks, but where should the blame lie?

Should it be on the bank/mortgage company that wrote a mortgage on a severly over-inflated house and gave money to a known risk? (Luckily our area never had the big real estate bubble that has now popped in other parts of the country).

Our does the blame lie with the howeowner who 'bought' (and I use that term loosely) a house they knew they couldn't afford?

As for those of us who pay on time and aren't getting bailed out, no good deed goes unpunished. ::BaHump::

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Originally Posted by sammm

I agree that sucks, but where should the blame lie?

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Can we blame Titus?? ::Banana::

;)

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Originally Posted by altiain

::Rant::

So I'm listening to the news while I get ready for work this morning, and they're doing a piece on Fannie Mae and loan modifications. They're talking to someone in the loan modification department who is reviewing a case file. She says, "Here's a typical case - the homeowners are 3 months behind on their mortgage and they've suffered an income modification (I guess that's mortgage-speak for a layoff). If I lower their interest rate from 7% to 3%, they should be able to afford to stay in their home."

What the ::Censor::? I've been a homeowner for ten years, never been so much as a day late on a mortgage payment, and I can't get that rate. Hell, I've got a credit score in the 800s, and I can't even refinance at 5% without paying thousands of dollars in fees and points so that the greedy motherf::Censor::ers at the banks can make up for their bad bets with my money. Makes me want to quit paying my mortgage until they offer me a better rate. ::Rant::

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Sucks, doesn't it?

Welcome to the dark side, altiain.;)

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Originally Posted by sammm

Should it be on the bank/mortgage company that wrote a mortgage on a severly over-inflated house and gave money to a known risk? (Luckily our area never had the big real estate bubble that has now popped in other parts of the country).

Our does the blame lie with the howeowner who 'bought' (and I use that term loosely) a house they knew they couldn't afford?

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Both, but more so of the owner who made the decision.

Altain, there are people, who my wife works with, that are talking about buying another home and just walking on their current mortage. They can get a better rate that way then they could trying to refinance their curent home.

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Originally Posted by sammm

I agree that sucks, but where should the blame lie?

Should it be on the bank/mortgage company that wrote a mortgage on a severly over-inflated house and gave money to a known risk? (Luckily our area never had the big real estate bubble that has now popped in other parts of the country).

Our does the blame lie with the howeowner who 'bought' (and I use that term loosely) a house they knew they couldn't afford?

As for those of us who pay on time and aren't getting bailed out, no good deed goes unpunished. ::BaHump::

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We can add one more to blame. Fannie and Freddie were pushing low income ownership (started in 1977 by our government) and it led to banks "HAVING TO TAKE RISKIER LOANS". Lenders had to come up with a way to get people in these homes or risk not being able to lend. Of course the lenders came up with some really bad schemes such as, 30-50 year interest only loans, ARMS that would skyrocket at years 4, 6 or 8, and also 0 down. I had a zero down loan when i lived in Tyler. Fortunately I paid extra in my payment toward principle and then sold the house to move to Cleburne. The last percentage I heard that were actually foreclores is somewhere around 10-12 %. Take all the homes in California, New York and Florida and that is a lot cash that each and every wage earner will pay for!!

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Originally Posted by HudsonHawk

Altain, there are people, who my wife works with, that are talking about buying another home and just walking on their current mortage. They can get a better rate that way then they could trying to refinance their curent home.

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Those people would never get approved on a new loan if they've walked away from their current one, especially today!

I read an article a few weeks ago and it made a good point. Some people simply shouldn't be home owners and until the media and common opinion changes to recognize that, then we will not be able to get out of this crunch.

And I'll be the first to say... if I was in Cali and paid $600k for a house now worth $400k, I'd for SURE be jingle mailing the keys into the mortgage company.

This isn't a car where you're upside down for a couple grand and if you can make the payments you're out of it in a few years (or you can roll it onto a new house). Some of these people are upside down 2-300,000 in a house. The will *never* not be upside down and at the end of 30 or 40 years they will have paid many times over the value of the house (once interest is factored in).

The issue here is that someone is going to be left on the hook for all these foreclosures and non payments. Either the bank, the PMI insurers (and they'll just go bankrupt), the government, and/or the taxpayers.

I don't have a good solution to it all, but I heard a good one pitched a couple days ago. Rather than giving money to the banks, let's just pay off/down all/part of people's mortgages. Cut out the wasteful middle man and see how that impacts the economy. I know for SURE that if my mortgage was paid off I'd be stimulating the hell out of the economy! :D

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Originally Posted by goofygrin

the government, and/or the taxpayers.

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The problem here: the government is the taxpayers!! You, most posters on this site and me. We get to pay for this...:confused:

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Originally Posted by POS Racing

Can we blame Titus?? ::Banana::

;)

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:clap:

I've got to lay blame at the people who didn't read the fine print on the loan papers when they bought way too much house to go with their brand new F250, brand new Jet Skis, brand new HDTV, and brand new pile of shit they bought on their brand new maxed-out credit cards. You got in over your head? Tough shit. Go rent a shit-hole for a while and learn from this boner.

Goofygrin, I'm going to use your example here, but this isn't directed at you. I'm just demonstrating reality vs. the dumbassedness of a lot of homebuyers in recent years... So you bought a $600K house in California? It only has 2 bedrooms and it's in a shitty neighborhood? Really? Who thought that was a good idea? Now it's worth $400K? Again, tough shit. A $600K house is not an impulse buy. Just because you're able to spread yourself as thin as a gnat's nutsack to swing the loan on that prime SoCal real estate doesn't mean it's guaranteed to triple its value again in 10 years.

Having said that, somebody needs to keep a little closer eye on lenders so they can't go hand out $300K home loans and piles of gold cards to any dipshit with a pulse and a hard on for more stuff.

I'm done counter-ranting. ;)

+1 Well said TR!

This pisses me off.

I bought a very modest condo. I had great credit, but because I had little large credit history (i.e. i had bought all my cars cash) the 'best' the bank would do was 7.5%, and that was with a 10% down payment. It angers me that I live well within my limits, yet i am penalized for doing so. I've looked into refinancing, and it is worth it if they can get me to around 5%.

Just to rant, I've never paid a bill late. I pay off the majority of my credit cards monthly (less than $100 left on anywhere, any month). I tried to work my way through school, taking out less than $10k in student loans for my bachelors. And yet the government is 'helping out' those that were irresponsible.

I get to complain for another 4 years because I sure as hell didn't vote for the majority of people in office..... Hell, I've been able to bitch since I was 18.........

\ end rant

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Originally Posted by POS Racing

Can we blame Titus?? ::Banana::

;)

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Absolutely. It's all my fault.


As to walking away from a $600k mortgage on a $400k home, here are my thoughts...
A home is a longterm investment. Like all investments, it some times doesn't make you money, but unlike other investments, a home has the wonderful value added benefit of providing shelter for you and your family. When you bought it, you decided that it was a place you were willing to live, and you felt that you could afford spending $600k on it. Unless you lost your job, these 2 facts should not have changed by what the home is worth on paper. That value is irrelevant for a permanent residence. Live in the home and continue to pay off the mortgage you agreed to. When it is paid off 25 years from now, I can almost guarantee it will be back to being worth at least $600k.

While I don't disagree with you... there has been a lot of chatter about this on the interwebs and a lot of people seem to think (myself included) that if you have virtually no assets to seize, that walking away from a $200k upside downedness in a house and dealing with the 7-10 years of bad credit might be a wise move.

The difference between a $200k paper loss in a house and a $200k paper loss in the stock market is that you aren't having to pay back that $200k @ 5-10%. As well, what you do have left is liquid. We've all ridden a stock down to nothing, but we all had the option to get out of it quickly. A house isn't like that. Your ONLY two options are to walk away or pay it off. As well, maintaining an expensive house isn't cheap (insurance, taxes, etc.).

While the moral thing to do is to fulfill your obligations, the wise thing to do might be to walk away.

(all that said, I'm with the rest of you, I pay my stuff on time and it sickens me that we're bailing companies and people out).

yeah, i should have been irresponsible and got the version of my car that is in your avatar, and a condo that cost 3x as much. Hell, its what the salespeople and realtors were try get me to do....why be responsible and save money.... right? At times, feels like I am pretty much being penalized for not being irresponsible arghhhh

Also I agree with Titus... a home shouldn't necessarily be looked at as an investment.... its shelter. A necessity. If you can make the payments it doesn't really if you are upside down.... its when you can't make the payments that it becomes an issue.

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Originally Posted by sxk122

Also I agree with Titus... a home shouldn't necessarily be looked at as an investment.... its shelter. A necessity. If you can make the payments it doesn't really if you are upside down.... its when you can't make the payments that it becomes an issue.

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I see both sides of the coin here. What you say is definitely one way to look at it. And if I were upside down in my house (which I might actually be - but probably not by much) I'd look at it that way.

However, when you're in the process of finding and buying a home - it's a damned good idea to look at it as an investment. We don't live in a culture (at least not here in North Texas) where people tend to buy a house and live in it for 30 years and then give it to their kids. Most people around here see their house as a stepping-stone to the next one. In that situation, resale value in 5-8 years is a necessary factor to consider.

The problem with all these goofy loan programs is like an onion - it's just wrong on so many levels. My wife worked at a mortgage lender for almost 6 years until we had our kid last August. Believe it or not - that company is doing better in the last year and a half than they have ever done before. Why? Because all along they refused to sell homes to people who realistically could not afford them. They stayed away from the funky loan programs and rejected anyone who was trying to do something risky. So now they can't keep up with the amount of business they have - even in this recession - because all their competition went under and they're the only ones left.

Who does the blame lie with? Anyone who had anything to do with someone signing the paperwork for a home they couldn't afford. It starts with the home owner and their realtor showing them properties that they know the prospective buyer can't afford. It ends with the bank funding the check at closing and it includes every individual in between.

The economy is OK now, right? I'm looking for a $600,000 home I can't afford. I'm glad I can count on all y'all to bail be out.

When I used to process loan modifications for a big lender and we would have people call in all the time asking us to lower the principal on their house, not because they were behind, because their homes value dropped by 10k and they didn't want to pay for the difference.

I told those people "Well if your house was worth more would you pay us more?" that never went over well :P

If someone is $200k/30%+ upside down in a house, I wouldn't blame them for considering creative solutions. Hopefully that involves a frank conversation with the lender, rather than just walking away. Still, that's one option that the lender assumed the risk for. If its not a govt backed loan, there is no way the lender should be getting reimbursed by the govt.

If the homeowner has an income that supports a 600k home purchase (250k/yr+), there isn't any good reason they can't eat the Lois's and hope for better value down the road. If they never had the income or have lost it, then foreclosure or new loan payments (lower payment, longer term) is on the table.



People gotta live within their means, even when it sucks.

The lenders are to blame. I remember when I bought my house in 2000 that I qualified for a mortgage that was 3 TIMES as much as I was getting. I absolutely had no business getting a mortgage that large. Now that I am at the end of my mortgage the greedy bastards are trying to get me to refinance at 3.5 percent because almost all of my payment is now going to principle. They have actually overnighted letters to me a dozen times trying to get me to refinance. They can kiss my ::Bum::

I'm actually not moving or looking to refinance... I just wanted to bring back a thread from 2009 so we can all reminisce about the good ole housing collapse.

The first collapse? The banks are back at it and I wouldn't be surprised to see it happen again in the near future. Perhaps not as spectacularly, but still.....

After my ranting and raving in 2009 over feeling screwed for being responsible I got 're-paid'.

The house my wife and I purchased in the spring of 2011 for a steal due to someone's irresponsibility. The house we purchased was a short sale. The PO paid 35% more for the house at the height of the market than we ended up paying the bank. We were able to purchase the house easily because we live within our means and maintain good credit. We like our house, but the icing on the cake is just 2 year later, the next door neighbor has his house listed at about what our house was sold at in 2006. It will be interesting to see what he gets for his house as his house was remodeled in a similar fashion to ours.......

Added bonus was because of the collapse, more people were forced to rent.... when one's condo won't turn a profit if sold, you rent it!


Karma.