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Thread: It's not your money

  1. #33
    Join Date
    Jun 2003
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    3,781

    Post Re: It's not your money

    no one should no the monthly budget more than the one who writes the checks... no lender has that type of knowledge regarding the personal finances of individuals..

    we never stopped checking credit applications... we did however get a lot of pressure from the government to make more loans in areas where foreclosures were high.. self employed people rarely can verify their income on tax returns because their write offs reduce the taxable income to where the taxabale income is not sufficient..but they actually have more income, it is just not verifiable...if your credit score is high enough, you can go with "stated" income and list a income within reason to qualify the loan...

    no one could have anticipated the values of homes going down... now they can't refinance into a lower fixed rate.. the investors are urgently working together with the lenders to re-modify these loans to avoid the foreclosures....

    government is not always the answer reines... this is planet earth USA where people do business and sometimes the market changes and things go downhill... even S&L'S in arkansas can have bumpy rides occassionally

  2. #34
    Join Date
    Feb 2001
    Posts
    9,507

    Post Re: It's not your money

    no one should no the monthly budget more than the one who writes the checks... no lender has that type of knowledge regarding the personal finances of individuals..
    Of course they do. C-mon Bigeasy- have things changed all that much? I still say any lender who doesn't make an attempt to verify income is being irresponsible. And isn't the real problem here that most of these loans don't stay with the original lender....so there is no real motivation to verify them or make sure they are solid?

    we never stopped checking credit applications... we did however get a lot of pressure from the government to make more loans in areas where foreclosures were high.. self employed people rarely can verify their income on tax returns because their write offs reduce the taxable income to where the taxabale income is not sufficient..but they actually have more income, it is just not verifiable...if your credit score is high enough, you can go with "stated" income and list a income within reason to qualify the loan...
    I'm glad your company was still being practical. I would bet that most of the loans in foreclosure or close to it weren't taken out by self-employed people.....although your point there is well taken.
    no one could have anticipated the values of homes going down... now they can't refinance into a lower fixed rate.. the investors are urgently working together with the lenders to re-modify these loans to avoid the foreclosures....
    They couldn't? They should have! I can remember Ademption and myself commenting on the ec onomy a year or so ago....and talking about the housing bubble. Which smart people knew WAS a bubble. And so did those lending institutions....they just wanted to make a profit before the shit hit the fan.
    government is not always the answer reines... this is planet earth USA where people do business and sometimes the market changes and things go downhill...
    Well somebody had better be the adult in the room! It looks like we can't rely on banks or lending institutions to be mature and responsible. And when smart people like you and MeganG are actually (I still can't believe it!) blaming the consumers for banks not being responsible........well, something's way out of whack.
    Regulation is the key, I think. To ensure that this doesn't happen again.

  3. #35
    Join Date
    Apr 1999
    Posts
    1,947

    Post Re: It's not your money

    Quote Originally Posted by reines View Post
    To blame those who believed they could get a McMansion type mortgage on a McDonald's income......and did get them....is to just absolve these lenders of any responsibility for making bad loans.
    How can you justify that?
    Easy to justify for me, how stupid is the person who thinks they can get a huge house on a min wage salary? What happened to their common sense. They go to a bank and they KNOW they are in over their head but they do it anyway? Again, personal responsibility. I had no right as a college student with no income to get credit card offers, but I did and I signed up and I got myself WAY into debt. These aren't new rules. My credit card offers came 20 years ago.

    But I think you and are are talking two different scenarios. I'm talking about the majority of people who financed huge homes with ARM's or all interest mortgages. I'm also talking those who signed up to take out all their equity on an ARM. They used the cash for vacations, credit cards, bigger cars and etc. Those people are now in huge trouble. My ex is one of them. He, like me, financed his new house when we divorced with two mortgages because he had to finance the whole house as our joint house hadn't sold. Once the joint house sold, I paid off my second mortgage and re-fi'd into a 30 year fixed at 6%. Not a bad deal. He used the money to pay off credit card debt and other debt he was personally irresponsible for (bamboo floors in the new house/flat screen TV, top of the line appliances). Now he's in bankruptcy. Again, not the banks fault for lending him the money, he certainly qualified. But his fault for being stupid and not paying off the second mortgage at an ARM and 10%.

    That's why I say no matter how regulated you make it, people will work the system. To let people off the hook for making bad decisions is just regulation gone amuck IMHO.

  4. #36
    Join Date
    Apr 1999
    Posts
    1,947

    Re: It's not your money

    Don't get me wrong, I'm not saying I want no regulation. I just think that there are currently rules in place that accomodate the issues we're discussing here. I think that banks and lenders were flowing credit given a set of market circumstances and investors fed that. There was certainly a subprime market that made money and opportunity in lots of ways. There are people out there who did benefit by getting credit and buying a home. And they've not gone to forclosure. And the money the subprime market did make provided jobs for many and an influx of capital that also helped the economy. I'm an advocate of enforcing the rules in place, and holding people accountable for their actions. Again, just cause the pie is offered, we don't have to eat it.

  5. #37
    Join Date
    Feb 2001
    Posts
    9,507

    Post Re: It's not your money

    Agreed that a lot of this was people using the equity in their homes to finance their lifestyles. Now many of these people are ending up owing much more than their homes are worth.
    Of course, consumers were flooded with come-ons for home equity loans. For every homeowner susceptible to re-financing so they'd have money for remodeling or vacations or a new vehicle, there were several lending institutions hounding them to do it....and making it so easy.
    It sounds like you did all the right things in your case.......but unfortunately, many people didn't. They let greed overcome common sense.
    The shame is that the fallout from all this will affect all of us negatively. We were tentatively planning on downsizing this spring....before the market headed south! Now I'm not so sure. I wish we had done it two years ago!

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