$700 B Bailout

[firstdown]

Originally Posted by saden1

Assuming you own your own home I am curious as to how many people in here actually read their loan documents in their entirety before they signed them?

I read very little of my loan papers but I also have an established ralationship with the person who did my loan. We did not have any fancy stuff in the loan and put 15% down (conservative traditional banking) and have a fixed 30 year loan with a rate around 5 3/4. We had to buy 4 years ago when the market was just crazy. We found a home that we liked ( could have been bigger) but we also found a home for sale by owner which was about $80,000 below its market value. I'm not the smatest guy in the world but common sense said the market had to correct itself and could not keep up the pace it was on. We have our eye open for another home if we find something that we really like at a good price (I want to live on the water). We can sell our current home and still make around $100,000 with the price we paid for the home. Oh, if I did not have the relationship with my lender I would have read more of the papper work.

[Sheriff Gonna Getcha]

Originally Posted by saden1

Assuming you own your own home I am curious as to how many people in here actually read their loan documents in their entirety before they signed them?

I did. No one should ever expect that people who are in the business of making money off of you (e.g., lenders) are also looking out for your best interests. To absolve people of all blame for signing documents that they did not read doesn't seem right. The lenders deserve some blame for this crisis, but so do the borrowers.

[djnemo65]

By law in most states an independent lawyer is required to be present during the closing process. It is their job to make sure the borrower understands the terms of the loan, as well as to alert them if they feel the borrower is being swindled in any way. This is not true in all states but in most. So, while it's easy to blame the lenders for this mess, the public was eager to buy in. They wanted big screens and new cars; as their homes swelled in value they viewed that as free money to finance a lifestyle they couldn't otherwise afford. This was fine as long as houses were appreciating at 20 percent per year, and many wanted to believe it would go on forever, but it didn't. While it's politically expedient to absolve the public of all blame in this, the fact is that people largely did understand the terms of their loans. They wanted the cash. They gambled on the US housing market expanding forever and were wrong. So did Wall Street, and that is why we are where we are.

[Slingin Sammy 33]

Since YouTube videos seem to be the thing to do I thought this was appropriate. Seems like there is some serious blame lying a the feet of the Dems in this video. At 8:15, President Clinton weighs in also.

YouTube - Democrats Defend Fannie/Freddie from...

I do NOT agree with the accusation in the video that "Frank Raines is Obama's economic advisor". I haven't researched any other claims the video makes, but it looks pretty damning for the Dems in that committee.

[FRPLG]

The basis for the current credit crunch this country is facing comes directly from our government's deisre to get more people owning houses. Efforts to create a market of "affordable housing" initially forced banks via legislation and litigation to loosen decades of conventional lending practices based on financial sense and empircal evidence. Basically the gov't forced lenders to create programs that allowed people who were broke to buy houses. In a lot a ways this was a good gesture and even smart. Hell they even implemented it somewhat properly initially essentially guaranteeing the loans via Fannie and Freddie. The problem is then they got politcally greedy and really started pushing to open this "affordable housing" market up, despite what smart people knew were probable long term issues. They let Freddie and Fannie become bastions of bad loans and they couldn't support them and they failed. This has sucked the value out of the credit market because all these loans, bundled as securities and bonds so they could be sold(because they were shit and banks knew it) became "valueless" because the net(freddie and fannie) was gone. On top of that the "real value", the actual values of the homes within these loans, aren't considered within the market as part of the asset value of the securities BY LAW. So loans worth 30B in actual property are only worth 10B on paper. Market seizure time baby!

The video Slinggin posts actully has a good timeline of what has gone on from a political standpoint if you just try and ignore the rhetoric.

Make no mistake, the fault on this from a purely politcal standpoint lays at the feet of the democrats and their blind mission to get poor people to buy houses but in all honesty the Repubs had plenty of opportunity to fix this in the 15 years and didn't do it. It would have been politically unpopular to basically end the free ride and none of them had the cajones to what was right. They ignored it out of self preservation while dems were too dumb to even realize what was happening.

What is pissing me off right now though is this bullshit about "8 years of failed economic policies". This has nothing to do with deregulation at all or any of Bush's economics. This crap was going on before Bush and regulators told everyone and everyone basically couldn't figure out a way it helped them politically so they did nothing.

F 'em all. Blame Bush for a lot of crap but this doesn't even remotely have anything do with him from a causation standpoint.

[hesscl34]

Originally Posted by saden1

Assuming you own your own home I am curious as to how many people in here actually read their loan documents in their entirety before they signed them?

I did. I got it right at the beginning of the bubble at a 30yr fixed 5.5% rate. I locked it and stayed there. I never refinanced and took money out when my equity started to go through the ceiling. The average American is not financially savvy enough to know the loans the banks are selling were high risk.

[saden1]

Originally Posted by Slingin Sammy 33

Since YouTube videos seem to be the thing to do I thought this was appropriate. Seems like there is some serious blame lying a the feet of the Dems in this video. At 8:15, President Clinton weighs in also.

YouTube - Democrats Defend Fannie/Freddie from Regulation - 2004 Video


I do NOT agree with the accusation in the video that "Frank Raines is Obama's economic advisor". I haven't researched any other claims the video makes, but it looks pretty damning for the Dems in that committee.

Man, those people need a beat down. The Dems look like they were bought and paid for by Fannie and Freddie. Waters seems like Raines mistress.

[firstdown]

Originally Posted by FRPLG

The basis for the current credit crunch this country is facing comes directly from our government's deisre to get more people owning houses. Efforts to create a market of "affordable housing" initially forced banks via legislation and litigation to loosen decades of conventional lending practices based on financial sense and empircal evidence. Basically the gov't forced lenders to create programs that allowed people who were broke to buy houses. In a lot a ways this was a good gesture and even smart. Hell they even implemented it somewhat properly initially essentially guaranteeing the loans via Fannie and Freddie. The problem is then they got politcally greedy and really started pushing to open this "affordable housing" market up, despite what smart people knew were probable long term issues. They let Freddie and Fannie become bastions of bad loans and they couldn't support them and they failed. This has sucked the value out of the credit market because all these loans, bundled as securities and bonds so they could be sold(because they were shit and banks knew it) became "valueless" because the net(freddie and fannie) was gone. On top of that the "real value", the actual values of the homes within these loans, aren't considered within the market as part of the asset value of the securities BY LAW. So loans worth 30B in actual property are only worth 10B on paper. Market seizure time baby!

The video Slinggin posts actully has a good timeline of what has gone on from a political standpoint if you just try and ignore the rhetoric.

Make no mistake, the fault on this from a purely politcal standpoint lays at the feet of the democrats and their blind mission to get poor people to buy houses but in all honesty the Repubs had plenty of opportunity to fix this in the 15 years and didn't do it. It would have been politically unpopular to basically end the free ride and none of them had the cajones to what was right. They ignored it out of self preservation while dems were too dumb to even realize what was happening.

What is pissing me off right now though is this bullshit about "8 years of failed economic policies". This has nothing to do with deregulation at all or any of Bush's economics. This crap was going on before Bush and regulators told everyone and everyone basically couldn't figure out a way it helped them politically so they did nothing.

F 'em all. Blame Bush for a lot of crap but this doesn't even remotely have anything do with him from a causation standpoint.

I agree the Rep had time to fix this but what would the headlines have read if they decided to tighten credit and loans which would affect lower income the most. It would have been a politial suicide and they knew that. Just look back at the early 90's and Newt and all the starving children and hurting old people news articles that went on with everything he tried to do.

[firstdown]

Originally Posted by hesscl34

I did. I got it right at the beginning of the bubble at a 30yr fixed 5.5% rate. I locked it and stayed there. I never refinanced and took money out when my equity started to go through the ceiling. The average American is not financially savvy enough to know the loans the banks are selling were high risk.

I believe that most people knew what they were doing when they took out these loans. Its just easier to blame someone else now that things have gone south.

[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?

[FRPLG]

Originally Posted by firstdown

I agree the Rep had time to fix this but what would the headlines have read if they decided to tighten credit and loans which would affect lower income the most. It would have been a politial suicide and they knew that. Just look back at the early 90's and Newt and all the starving children and hurting old people news articles that went on with everything he tried to do.

Not only do they not get a pass from me for avoiding fixing this because it would have been political suicide, they also get to share the blame. They had a job to do and didn't. Just like the dummies who supposedly didn't vote for the bill because of Pelosi's speech. I hated the bill and I am glad they voted against it but if their reason for voting against this truly was that her speech was mean then they all need to get kicked in the head.

[firstdown]

Originally Posted by FRPLG

Not only do they not get a pass from me for avoiding fixing this because it would have been political suicide, they also get to share the blame. They had a job to do and didn't. Just like the dummies who supposedly didn't vote for the bill because of Pelosi's speech. I hated the bill and I am glad they voted against it but if their reason for voting against this truly was that her speech was mean then they all need to get kicked in the head.

I was not giving anyone a pass just making a statement of how it would have gone down if they tried. Have not heard anything about people not voting on a bill because of what Pelosi said.

[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."

[saden1]

Please explain to me what this guy is saying: