$700 B Bailout

[mheisig]

Originally Posted by firstdown

It not at hard to figure out. Too many people had loans which they should not have ever had and they could not afford them. When the housing market was doing so great people with mortgage issues or payments too high could just sell their home at a profit and walk away. Now when the sh&* hits the fan they cannot sell their home in a soft market and the trouble begins. Back before the mid 90's about the only way people lost their homes was do to a loss of a job. Now days people are just loosing their homes and still have the same income as they did when they purchased them. Now its going to get much tougher to buy a home and hopefully we do not repeat this again.

Exactly.

The pattern for decades has been you may a substantial down payment on a house (20% at least). Generations before us you waited to buy a house and you put a big chunk down. All of a sudden people get greedy, want more house than they can afford, and we end up with shit like 5/1 ARMs and interest-only mortgages. People somehow feel entitled to the house of their dreams at the age of 25 and figure, "Screw down payments, screw paying the principle and all that, this is the NEW generation! We're living the American dream!"

If people weren't so damned greedy and impatient (the lenders and the borrowers) we wouldn't be in this mess.

1) Don't buy more house than you can afford.
2) That means that you can afford the house now AND 5 years from now.

[redsk1]

Originally Posted by mheisig

Exactly.

The pattern for decades has been you may a substantial down payment on a house (20% at least). Generations before us you waited to buy a house and you put a big chunk down. All of a sudden people get greedy, want more house than they can afford, and we end up with shit like 5/1 ARMs and interest-only mortgages. People somehow feel entitled to the house of their dreams at the age of 25 and figure, "Screw down payments, screw paying the principle and all that, this is the NEW generation! We're living the American dream!"

If people weren't so damned greedy and impatient (the lenders and the borrowers) we wouldn't be in this mess.

1) Don't buy more house than you can afford.
2) That means that you can afford the house now AND 5 years from now.

I understand what you're saying but what's wrong w/ a 5/1 Arm?

I think what you mean is Option Interest Only ARMs. Big difference.

[hesscl34]

Originally Posted by mheisig

Exactly.

The pattern for decades has been you may a substantial down payment on a house (20% at least). Generations before us you waited to buy a house and you put a big chunk down. All of a sudden people get greedy, want more house than they can afford, and we end up with shit like 5/1 ARMs and interest-only mortgages. People somehow feel entitled to the house of their dreams at the age of 25 and figure, "Screw down payments, screw paying the principle and all that, this is the NEW generation! We're living the American dream!"

If people weren't so damned greedy and impatient (the lenders and the borrowers) we wouldn't be in this mess.

1) Don't buy more house than you can afford.
2) That means that you can afford the house now AND 5 years from now.

Sorry, it's not the "people" that created these loans and sold them to the buyers telling them "I'll get you into a house no matter what". You want to blame someone?.. then you blame the banks and loan processors. They should go to jail for giving people those options and letting them believe they could afford it. Most home buyers are clueless when it comes to the loan process. They depend solely on their real-estate agent and loan processor for advice. They took the "good faith" out of the estimate and just made it bullshit.

[redsk1]

Originally Posted by hesscl34

Sorry, it's not the "people" that created these loans and sold them to the buyers telling them "I'll get you into a house no matter what". You want to blame someone?.. then you blame the banks and loan processors. They should go to jail for giving people those options and letting them believe they could afford it. Most home buyers are clueless when it comes to the loan process. They depend solely on their real-estate agent and loan processor for advice. They took the "good faith" out of the estimate and just made it bullshit.

I'm a Mortgage Loan Officer going on my 8th year in the business. I'm not saying that SOME loan officers are not to blame. There are some of them.

I've got to take up for alot of good loan officers that you are just throwing under the bus. I offer recommendations to clients based on their situation.

I've never done an Option Arm (which i'm proud of now). I have done Alt A loans though (less than perfect credit) over the last few years of the housing boom. When a client calls to get pre-approved i routinely ask, "What do you want to keep your payments under?"

Once i tell them what they can afford, I routinely would get.. how much are my payments at this higher sales price? I would consult, advise, and tell them...make sure you are comfortable w/ your payments! That's the #1 thing.

Now should I not offer them or tell them they don't qualify b/c i don't think they can afford it...even when Fannie Mae guidelines say they do qualify? I can only advise but so much. So, when you come out and put a blanket statement that Loan Officers should go to jail...come on. That's what makes me mad.

I've done maybe 2 subprime deals in 8 years and I have done some Alt A's, but 90% of my business is A paper.

Hell, I remember a couple years ago, getting folks qualified for Alt A's, consulting them, and saying theres no way these people can afford this house. They were approved by Fannie Mae's online underwriting guidelines. Maybe i should have let the 10 other lenders that were lining up behind me to do the loan. I did my job and my customers knew exactly what they were getting. I can speak for the majority of other lenders i know that handles things similar to me.

By the way the majority of Alt A's are fixed too....people couldn't afford the fixed payment.

By the way...i have a 5/1 I/O Arm that's fixed for 5 years at 3.5%...not bad huh. When I make my "normal amortizing payment" each month I get more principal reduction that the normal fixed rate that i would have gotten at the time. So structured right and explained right an ARM is not a bad thing. The worst regular ARM adjustment over the last 7 years....was in the 7.5% range...but has averaged in the lower 6's

[firstdown]

Originally Posted by redsk1

I'm a Mortgage Loan Officer going on my 8th year in the business. I'm not saying that SOME loan officers are not to blame. There are some of them.

I've got to take up for alot of good loan officers that you are just throwing under the bus. I offer recommendations to clients based on their situation.

I've never done an Option Arm (which i'm proud of now). I have done Alt A loans though (less than perfect credit) over the last few years of the housing boom. When a client calls to get pre-approved i routinely ask, "What do you want to keep your payments under?"

Once i tell them what they can afford, I routinely would get.. how much are my payments at this higher sales price? I would consult, advise, and tell them...make sure you are comfortable w/ your payments! That's the #1 thing.

Now should I not offer them or tell them they don't qualify b/c i don't think they can afford it...even when Fannie Mae guidelines say they do qualify? I can only advise but so much. So, when you come out and put a blanket statement that Loan Officers should go to jail...come on. That's what makes me mad.

I've done maybe 2 subprime deals in 8 years and I have done some Alt A's, but 90% of my business is A paper.

Hell, I remember a couple years ago, getting folks qualified for Alt A's, consulting them, and saying theres no way these people can afford this house. They were approved by Fannie Mae's online underwriting guidelines. Maybe i should have let the 10 other lenders that were lining up behind me to do the loan. I did my job and my customers knew exactly what they were getting. I can speak for the majority of other lenders i know that handles things similar to me.

By the way the majority of Alt A's are fixed too....people couldn't afford the fixed payment.

By the way...i have a 5/1 I/O Arm that's fixed for 5 years at 3.5%...not bad huh. When I make my "normal amortizing payment" each month I get more principal reduction that the normal fixed rate that i would have gotten at the time. So structured right and explained right an ARM is not a bad thing. The worst regular ARM adjustment over the last 7 years....was in the 7.5% range...but has averaged in the lower 6's

So in your last paragraph can we reason that people did not take the savings and pay down the principle thus making their principle much lower when it adjusted to the higher rate? Caould we also assume that these people did not pay down the principle and used the money for new cars etc... now tying up that money ment for their mortgage in other things?

[redsk1]

Originally Posted by firstdown

So in your last paragraph can we reason that people did not take the savings and pay down the principle thus making their principle much lower when it adjusted to the higher rate? Caould we also assume that these people did not pay down the principle and used the money for new cars etc... now tying up that money ment for their mortgage in other things?

Yeah, no doubt there's alot of instances like that. As lenders, we try to offer different options while at the same time educating the client on how each option works, and maybe even making a recommendation to what might fit them best. But it's not really the normal ARM that's causing all these issues it's 100% financing, Alt A, subprime, second mortgages, decreasing value, and then mortgage backed securities/Wall Street.

So, all I'm saying is you can't just say "lender's are bad and should go to jail."