American Dream Rant.....

[BillyP]

You cannot protect people against their own stupidity.

I wouldn't say stupidity. It's more like ignorance. That's where the big guys step up to bat. Sure you can afford this. ...

 

[BillyP]

Suppose you buy a new tractor. You expect the tractor to go up in value, but it does not. You get laid off, sick, or were barely hanging on financially when you took out the loan to buy the tractor. You fall behind on your payments and you end up owing more than the tractor is worth. Ultimately the tractor is repossessed.

Is the lending company that lent you the money to buy the tractor responsible for the fact that you didn't make your payments?

Let me put it this way. In your earlier post #66 and you were the lender, would you?

 

[Bob_Skurka]

I wouldn't say stupidity. It's more like ignorance. That's where the big guys step up to bat. Sure you can afford this. ...

BillyP, who are these "big guys" you want to step up to bat? Most of the mortgage brokers are sleazy used-car salesman politician types of people who have no problem sleeping at night. But they are not generally big companies. Go back and read the whole article that I linked to, you can see that the loan was sold from one small company to another to another, each time it was bundled with other loans to spread the risks over a bigger pool. But it started out with some small mortgage broker.

Let me put it this way. In your earlier post #66 and you were the lender, would you?

First I am not a lender, second, if I were to invest in the sub-prime market, I would only do it on a speculative basis and both spread & moderate the risk by combining it with some better quality loans. All loans carry some sort of risk for the lender, smart lenders mitigate their risks.

But it still goes back to the person borrowing the money, they could have shopped for a better deal. They did not do that.

They could have said no when the payments were higher than they could afford. They did not do that.

They could have negotiated the price down on the house to something more managable. They did not do that and admitted they overpaid.

The could have looked for a smaller house, perhaps a 3 bedroom instead of 4? They did not do that.

As the story goes, they ran out of money right from the very start, even before they could finish painting it. They walked into the deal so far in the hole that they just got deeper and deeper as they went along. It is a sad story for sure, but had made mistake after mistake and they are ultimately to blame. In the end, they have a good outlook on things and see that they need to take more responsibilty. I think that is a good sign.

 

[BillyP]

BillyP, who are these "big guys" you want to step up to bat? Most of the mortgage brokers are sleazy used-car salesman politician types of people who have no problem sleeping at night. But they are not generally big companies. Go back and read the whole article that I linked to, you can see that the loan was sold from one small company to another to another, each time it was bundled with other loans to spread the risks over a bigger pool. But it started out with some small mortgage broker.


First I am not a lender, second, if I were to invest in the sub-prime market, I would only do it on a speculative basis and both spread & moderate the risk by combining it with some better quality loans. All loans carry some sort of risk for the lender, smart lenders mitigate their risks.

But it still goes back to the person borrowing the money, they could have shopped for a better deal. They did not do that.

They could have said no when the payments were higher than they could afford. They did not do that.

They could have negotiated the price down on the house to something more managable. They did not do that and admitted they overpaid.

The could have looked for a smaller house, perhaps a 3 bedroom instead of 4? They did not do that.

As the story goes, they ran out of money right from the very start, even before they could finish painting it. They walked into the deal so far in the hole that they just got deeper and deeper as they went along. It is a sad story for sure, but had made mistake after mistake and they are ultimately to blame. In the end, they have a good outlook on things and see that they need to take more responsibilty. I think that is a good sign.

My point is who approved the loan? Just because Joe Shmoe can sign his name and promise the world doesn't me squat. Blame the mortgage company or blame Joe? I say they both have equal blame (I still lean towards the lender). The lender was willing to take a gamble and Joe was out to buy a house he wasn't sure he could afford.

I see your point but evidently you don't see mine.

 

[cp1969]

The old rule(s) of thumb used to be:

House can't cost more than 2x your annual gross income.

House payment can't be more than 28% of gross monthly income; and ALL monthly payments can't exceed 36% of gross monthly income.

These rules didn't come into being out of thin air. It was apparently discovered through years of experience that if you go beyond those values, people tend to not make their payments.

What ever happened to "Just say No" to loan applicants who don't meet those criteria?

 

[MossRoad]

They made a bet. They had three kids, bet on both of them keeping their jobs, spent up to the max of what they could afford in a best case scenario, then they lost that bet. That sucks, but it is their fault for signing those papers. People can plan for their future. They can start small, get themselves situated, THEN have kids. What's so hard to grasp in that concept that so many people get into this same situation??? It's not fair to society and it's not fair to their kids for them to do such a bad job of planning.

 

[Bob_Skurka]

What ever happened to "Just say No" to loan applicants who don't meet those criteria?

Do gooder groups sued and said that it was racist, sexist and anything-else-you-call-it-ist to deny people loans. Heck did you know that it is now ILLEGAL to deny loans in some states to ILLEGAL ALIENS?

But that is just the start of the problem. Now let's all get real and ask it differently.

• What ever happened to "Just say No" to buying things before you could afford them?"
• What ever happened to savings accounts?
• What ever happened to putting something away for a rainy day?
• What ever happened to self restraint?
• What ever happened to living within our means?
• What ever happened to planning for the future?

What ever happened to thinking logically?

 

[BobRip]

I think some people try and save for a house and find it frustrating. You save $10,000 and the house goes up $40,000. The only chance you have is to buy something at great financial stress and hope you can make the payments, that or rent forever.

 

[tallyho8]

I think some people try and save for a house and find it frustrating. You save $10,000 and the house goes up $40,000. The only chance you have is to buy something at great financial stress and hope you can make the payments, that or rent forever.

I think if the house increases by $40,000 by the time the people save up $10,000, then this house is way too expensive for them. They need to look for a cheaper home. Everyone may want to live in a McMansion, but not everyone is financially able to. Better to have a secure future in a modest home than to live on the brink of disaster in a McMansion trying to keep up with the Joneses.

 

[alan40]

Not to change the subject much but what ever did happen to savings accounts. Both my boy's have savings accounts. My oldest use's his to put in the money that he makes from selling pumpkins. The interest rate on the account is .76%. He has a decent amount of money in the account. We've done a CD but really why put your money in a bank that get's to use it basically for free? Even he complains about the interest and he's 10. Going to be interesting next week. He's going to see the President of the bank to ask him this same question. I gradutated with the President and he told Warren to come see him anytime he had a question. Boy is he in for a surprise!! My son takes his business serious. Got to love kids who aren't afraid to ask questions. Just hope this old geezer can keep up with the answers.
Have a great day!!