hi,
All human interaction is a form of manipulation. Most of the time it is doesn't matter. It isn't a bad thing . Though when you manipulate someone to do something they normally wouldn't do. That has no benefit to them. Your getting into the realm of immoral acts.

I have stated that some people who got caught up in this deserve mercy. The people who ran up their Credit cards. TO live well beyond their means . Then refinanced and ran their Credit card right up again. Got benefits from what they where doing . Now they pay for it . They are not victims.

With millions and millions of people playing that game during the boom. It is a wonder why real wages weren't going up. Why work harder to make money . when your house was making as much money in a year as you where .Tax free.

The Economy benefited from people doing this. The tax collectors benefited. Now people are getting hurt in mass . fine thats how it goes .

Ken

Isn't that more of an indictment of the CC industry and more so consumers' lack of financial literacy than of the mortgage industry?

IMO, he/she who signs their name bears responsibility.

I think it's all three of them. But I really do believe that enablers need to share some of the responsibility. I think they're just as much to blame for this problem as drug dealers are for the drug problem (I'm talking about the serious drugs...not just pot).

I also know that a lot of those loan officers lied to meet their quotas...misled people who don't understand the loan industry.

Commercial Mortgages are scams.
The companies do not deserve 1 cent.
Look up books by "Tom Shauf" for details.

I can't believe I over looked this thread for so long...

I've got clients all over the mortgage industry...

Ironically, ARM's and Interest only loans can be your best friend if you want to build wealth –– if you are not using them to wedge yourself into a home loan that is far, far beyond your means.

A couple reasons for ARM's...

1) Lowest loan/interest over time. Banks take a 30 year bet on a 30 year loan - so they charge higher interest (except when we go into a reverse yield curve as in the last 2 years)l.

2) Banks typically foreclose on properties with equity before they foreclose on homes that are all loan.

3) Smart players use the banks money and the IRS tax code to play arbitrage... Let's say you have a 7% loan - and you can invest the money and get a 7% return. There's no payoff, right? Wrong. You get an interest deduction on the mortgage loan. Thus, your bank money only cost you say 4% while you earn 7% - a 3% spread gives you money you never would have had. (Using this strategy you will end up $100,000 plus ahead in a few years.

4) Disaster. When does the bank want to give you money? When you don't need it. When does the bank tell you to take a hike? When your in deep kimshee. If you have a big equity loan on your home with the money in a side account instead of in the house, trapped, you have access to the cash you need.

Note: these strategies DO NOT work if you do what everyone out here in So. Cal. did... use the interest only or teaser ARM rates to get into a 1.2 million dollar 4 bedroom house in the middle of suburbia.

Note 2: The folks who did that were highly educated. They used subprime financing cause that was the only way to purchase an average home around here that would at most run $150,000 anywhere else in the country. It was greed and fear of loss... don't get a home now, the market will leave you behind forever (realtors and lenders were pushing this line hard during the go-go days).

Yes there were Lender's and Realtors playing the piper's flute to the greedy and desperate. Yes, a lot of folks foolishly used financial instruments in unwise ways. But don't throw ARM's and Interest Only loans under the bus without realizing these financial instruments are very valid plays for savvy investors. Tools are amoral. A hammer can be used to drive a nail, or crush someone's skull. There are only moral/immoral uses of the tool.

Check out the the books Borrow Smart, Retire Rich, Missed Fortune and any of the books by financial advisor, Ric Edelman.

It could be argued that the bail out "promotes the general Welfare".

Alex

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

So does buying me a Lambo, a 6,000 "ski out" house in Aspen and putting me on a $1 mill a month pension because I'll be so freakin' happy that it will rub off on everyone

Now let's get back from LaLa Land and smell the $hit we're shoveling. This problem fixes itself. Nobody needs to do anything. And all those people from Wall St down to suburbia that get a black eye from it, thanks for playing. You lost!

You don't hear me asking for the 1/2 a mill I lost in the dot bomb do you? Hey, I loved those freaking 50-75% years on the way up so I have to take the 100% straight down years.

I think it was Teddy Roosevelt that, of being the President said, "You're like a jackass in a hail storm. You just have to stand there and take it"

Hello,
Sense this is sticky might as well add to the thread. I was just reading how the banks are making this worse. There is a rather large group of people out there . who have the means and the preference. To buy foreclosed homes. The banks are not selling them though.

With real estate in decline. The banks have large stocks of these homes .That are losing value. To make it worse. The upkeep on these homes isn't getting taken care of. The grass isn't getting cut ,snow shoveled. And dozens of other things . So they push down the values of the homes around them. To make it even worse. The heat is off in the homes. So the pipes are freezing and bursting. Driving down the value even more.

Ken

In a report I saw recently the point was made that some of the
people who are now complaining walked away with up to $100K
at closing from their purchase. I agree that some of the lenders
were agressive in their marketing. However the person making
the purchase has to exercise some thought about what they
are doing. As my brother who is an accountant and I were talking
on this subject, the comment he made was logical. If you are going
to invest 100 to 200k or more and don't understand all the terms
and pitfalls of the deal isn't it a good idea to spend 100 tp 500
dollars and get an attorney to go over the deal and explain it to you?

I heard on the news the other night that Americans now owe more money for their homes than they have built up in equity.

That is the first time that economic boundary has been breached.

The report went on to talk about many of things brough up in this thread like...

Greedy lenders taking advantage of the "system" to get folks to sign up for these sup-prime mortgages.

Greedy home buyers figuring they could own a much nicer home than they could afford, without them ever having to "pay the fiddler."