US Government takes over mortgage giants

[firstdown]

Originally Posted by That Guy

the reason they're in such horrible straits is due to thousands of individual neg am. mortgage salesmen selling bad loans (which the financial sector encouraged, or at least turned a blind eye) and the huge bonuses given per loan (up to 30-40k PER mortgage contract).

those guys are obviously out of business now, but they got their money before it burst.

Blame does not all go to the loan officers. The people who took out these loans also made very poor decisions of what to do with the money they saved with the interest only loans. Many did not take the extra money and pay down their principle or put it away in savings. Allot of them took the money and spent it on new cars and other stuff and now when their loan is converting they are stuck. Why can't they just refinance at current rates? Its because they are now up side down in their loan from failure to pay down the principle or they now have other dept. Also now that their payment has gone up that money they saved with interest only has been spent and tied up in car payment or in other things. I know several loan officers and none of them made 30 to 40 k on and loans they did.

[GhettoDogAllStars]

Originally Posted by firstdown

Blame does not all go to the loan officers. The people who took out these loans also made very poor decisions of what to do with the money they saved with the interest only loans. Many did not take the extra money and pay down their principle or put it away in savings. Allot of them took the money and spent it on new cars and other stuff and now when their loan is converting they are stuck. Why can't they just refinance at current rates? Its because they are now up side down in their loan from failure to pay down the principle or they now have other dept. Also now that their payment has gone up that money they saved with interest only has been spent and tied up in car payment or in other things. I know several loan officers and none of them made 30 to 40 k on and loans they did.

Of course they did. However, it's the bank's responsibility to minimize their risk. If they give out loans to all these people who aren't financially disciplined, and they default on their loans, the bank has to bear that burden. Well, the banks overextended themselves, and now it's a crisis, because they loaned too much money to too many people who shouldn't have qualified.