1. John Walraven says:

    Boy, whatever happened to the duty of someone who signs a contract to READ what they’re signing? And if your answer is that they wouldn’t/couldn’t understand what they were signing, then my response is that they shouldn’t have signed it anyway. Nobody ever put a gun to anyone’s head and forced them into buying more home than they could afford. The idea that somehow the government is at fault for an individual’s DECISION to contract for a loan blows my mind.

    Even though I wasn’t a sub-prime borrower, I bought a house with a loan package that has an ARM after several years of a fixed rate. I know that at a date certain, I better have a plan to sell or, have already sold it, re-finance it or I’ll pay more money. Its not all that complicated. If I fail to plan, then I could end up paying more than what I pay now for the same house.

    And Sugg’s idea that deadbeats who didn’t plan for the circumstances that they agreed to when they signed a contract and now aren’t paying back the loans they commited to pay back should get protection from the government from being booted out of a house they’re not paying for is insane. To quote Ty Webb in Caddyshack: “Is this Russia? This isn’t Russia, Danny, is it?” The government doesn’t owe people who make committments to pay loans back who fail to keep their word anything.

    I will say, however, that policies that allow borrowers to borrow more than they could afford are bad. Policies that allow people with 400 credit scores to borrow money at 36% are bad policies. That being said, this isn’t Russia–we are free to make bad decisions in this country. However, when we make those destructive choices, the nanny-staters shouldn’t be looking for Uncle Sam to help you out.

    Even a populist D like Trafficant, if not in the pokey, would be on the House floor hollering his famous “beam me up” routine.

  2. Common Sense says:

    The market brings us lead based toys and credit polices that threaten to taken down the economy. A little regulation can be a good thing

  3. SpaceyG says:

    I got a mortgage, again a MORTGAGE, not a silly little Beemer loan or something, once when I didn’t even have a JOB! I was informed (by myself, certainly not by the dubious mortgage broker) yet appalled, but took the thing anyway, banking on the ability of the blogosphere to pay a living wage. Hahahahahahahaha on me.

  4. SpaceyG says:

    Forget the sex trade. There’s nothing sleazier than the mortgage business of late, or the politicians who let ’em have their way. But hey, that’s ok! They’re the ones who have to sleep at night. And get up and go to church, of course, so they can assure themselves they’re “Christians” and that Jesus said it was fine by him if they fleeced the total and utter crap outta as many, much easier-led folk as they can get their filthy hands on.

  5. Cracker says:

    Huey Lewis just sent this over…

    I want a new loan
    One that wont make me sick
    One that wont make me crash my car
    Or make me feel weak

    I want a new loan
    One that wont hurt my head
    One that wont make my mouth too dry
    Or make my eyes too red

    One that wont make me nervous
    Wondering what to do
    One that makes me feel like I can stay
    One that I can pay

    I want a new loan
    One that wont won

  6. CobbGOPer says:

    Screw John Sugg. He’s a communist anyway, at least that’s what I gather from reading his stuff.

  7. ceej says:

    You can sling all the insults at bankers and polticians all you like, but the ultimate fault lies with the mortgage holders. Getting a mortgage isn’t like playing Three Card Monty. All the terms and conditions are laid out for you in writing. By signing that contract, you’re committing to abide by the terms. If you don’t like them, you can walk.

    When I went to buy my house nearly 5 years ago, the mortgage company told us we qualified for a $350,000 mortgage. Did we run out and buy a $350,000 house? No. We bought one for half that, at a reasonable and fixed rate. Though we felt we could make the payments of a more expensive house, we wanted to play it safe in case there was a problem (like job loss). Plus, we wanted to have more cash at the end of the month to do things we love, like travel.

    Nobody “deserves” to own a home. But everyone deserves the opportunity to attain one. If you can’t swing it, then you need to make some adjustments in your life so you can. It’s simply not fair to take money from tax payers who’ve played by the rules and give it to people who gave into greed and overbought.

  8. Decaturguy says:

    And Jsm, you might be surprised, but I still believe the same thing in this case as well. I particuluarly take issue with this comment by Sugg:

    In California, there is talk among legislators of declaring a moratorium on foreclosures. That should be an absolute must-do here in Georgia.

    Huh? We’re going to allow people to take out loans, not pay them, and not allow the lender to repossess? What sort of interest rates would responsible borrowers have to pay as a result of taking that action?

    As Mark Taylor once said, “Cry me a river.” If you can’t afford the payments …. rent!

  9. SpaceyG says:

    I made it with a Communist once. Boston I think. Freakin’ awesome with Les Bedroom skillz. Least I think that’s what he said he was. Who cares after a night like that?! I mean look what happened when Putin went shirtless this week. Women went freakin’ bonkers.

  10. CobbGOPer says:

    Indeed, Spacey? Maybe I’ll give you that. A girlfriend I had in DC worked for Charlie Rangel, so she might as well have been a communist. But did she drop me for a fellow-traveller Democrat boy? No. In fact she told me she didn’t really like them, too arrogant and always bitching about us Republicans. Whereas we Republican boys would actually go out and talk about something besides politics, making us automatically a better draw for Dem girls.

    Dogs and cats, living together. Mass hysteria!

  11. Doug Deal says:

    A bad loan is both the fault of the borrower and the lender. Both should pay for the mistake. If you grant credit too easily and encourage borrower to take dangerous loans, you are no better than the borrow who takes out the loan.

    That being said, there is a distinct lack of knowledge of economics in the world. Look at what people do with cars, gambling, lotteries, the housing boom, the housing bust, the stock market bubble, etc.

    One’s first priority should be economic stability and not a new car, an expensive house, vacations or plastic surgery.

  12. Burdell says:

    Walraven, I agree with you. I want to back up to one thing you said though and get your take.

    You said “if your answer is that they wouldn

  13. SpaceyG says:

    Yeah Cobber… it’s been known to happen. Some people swear by the mixing of the politics in a relationship. Makes things more interesting when other, uh, “things” get less so.

  14. John Walraven says:

    Absolutely a lender has a duty to produce information to the borrower, such as that required by the Truth In Lending Act. If the terms are in plain English and explained by a lawyer at closing and by a loan officer during the sales process and the borrrower defaults, its not for a lack of information. Most folks just put their heads in the sand and didn’t refinance.

    All of the information about rates, payments, the trigger date for the adjustable rate–every major detail that plays into the monthly payment amount, is in the TIL statement. Willful blindness and refusal to deal with reality is at the root of the problem. Back to my example, I’m screwed if I don’t plan for a transaction, either a refi or a sale of the land, before a date certain.

    The fact that the market has tanked and that folks who bought houses with ARMs that are now triggering can’t sell for their loan amount is a tough spot to be in, no doubt. However, it was spelled out to them what the rates and payments would be (or how they’d be calculated).

  15. Nicki says:

    I ahve been really mystified by the whole business of house buying, actually. I’m youngish, and I’m a fiscal conservative. I owe about $50,000 on my house now, 5 years in, because I bought a house that was well within my means. I have coworkers and friends, however, who have bought houses that cost triple what mine did, and whose payments exceed half their income — or will when the ARM swings upward. I just don’t get it.

    I also don’t get why, on the other side, lenders are able and willing to make such loans. It is pretty evident that a loan that costs half of the borrower’s income isn’t sustainable. It also wasn’t possible or common for that lender to make that loan a few decades ago.

    So, in short, insanity’s been ruling on both sides. A question for the “just rent” crowd — why would one “just rent” when “just renting” is more expensive than “just buying”?

  16. Never fear Bush finally learned to address a problem in a somewhat timely fashion, to cover up other problems during his administration. The FHA is on their way to help:

    Let’s call this the “President Bush upstages Michael Vick to rescue the 13,000 Georgians that lost their homes last month due to Scooter Libby’s Pardon and Karl Rove & Alberto Gonzales resignations while the Georgia Legislature’s Banking Committee Members continued to allow Title Pawn lender Billboards to litter our Highway and truth in Bill Naming Act.”

    “Bush Administration to Help Nearly One-Quarter of A Million Homeowners Refinance, Keep Their Homes
    FHA to implement new “FHASecure” refinancing product

    WASHINGTON – PresidentGeorge W. Bush today announced that HUD’s Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately.”

    The only problem is that the families in foreclosure need good credit ratings to qualify for the Bush in the Bird in the Hand, Banking Industry Bailout Program…

    i’ll buy you all a diet coke if you meet me at the FHA offices in ATL and show me your questionable credit history:

    U.S. Department of Housing and Urban Development
    Atlanta Homeownership Center
    Five Points Plaza
    40 Marietta Street
    Atlanta, GA 30303-2806

  17. Bill Simon says:

    The more I read of Spacey’s stuff, the more I’m convinced she thinks money DOES grow on trees and everyone should have an equal right to an equal amount; that is, as much as they want to spend on anything they want to spend it on.

    Spacey probably celebrated all those videos of people in New Orleans looting the stores and stealing stuff. Yeah, Spacey dreams of the day when everything can be declared “free” and no one needs to earn a living to afford anything.

    To her comment on “forget the sex trade,”..yeah, let’s just forget all about those sleazy adults who traffick in child prostitution, eh?

    So, Spacey, when are you going to put your daughter up for services with whomever, eh? Or, perhaps you already do…

  18. gatormathis says:

    Awe Bill, give her a break.

    After all, she done said she has tried some of that Communist “Manifesto”………..talk about “kiss and tell”. Plus she’s bragging on Putin’s “bod” instead of Al Gore or John Edwards even, go figure.

    As for me, it says something in the Bible about the Good Lord looking after fools and children. All I know, is I have long grown out of one catagory, so I know where I fit……..lol

    All that said, borrowed money is to always be paid back. When you borrow money to pay back borrowed money, a red warning flag should go up.

    The loan officers make good revenue from processing loan papers. They need a client, to acheive this, and we’re talking about a very competive market. Especially now with junk mail solicitations, TV ads, and the internet prowling the masses hunting for easy prey.

    If they get fired for making to many dubious loans, they usually have collected their fees for such loans, and simply go to work for someone else.

    One note worth noting. A friend one time told me, ‘That little fine print on the note, it took a while, but I read every bit of it”.

    I told him, that little fine print ain’t what really kicks your ass, it’s the typewritten exhibits, the little check boxes and such that tears you a new one. That fine print is a diversion.

    The type-written stuff, it lists your property, most of the time has phrases like “Any and all other acounts……”, “any and all other assets…….”, basically, gives a reach into any other assets you have when it comes time to collect their debt.

    This gives access to a lot more stuff than you really intended to pledge as collateral. They won’t really “tell” you this, but it happens all the time.

    Most mortages and such are for 20 to 30 years, and a lot of stuff can happen in that length of time to anybody. They’ll sell your stuff just as fast for one of the last year’s payments, as they will for the first year’s.

    It’s kinda like your friend who always “makes” money trading up to a newer vehicle, that rekkoning day always comes.

  19. Mad Dog says:

    Bill Simon,

    That was low, even for Republican bathroom pickeruppers.

    Which you are not!

    Reading through this thread, I’m not sure which side individual posters are on, other than SpaceyG.

    I see the underlying issue as being very, very clear.

    The market mechanisms have been voided by the reselling of mortgage paper. IF the mortgage lender were properly holding loans that they originated, meaning they could not shift the risk, then they would have an incentive to take only reasonable and prudent risks with capital.

    I’ve heard it called Moral Hazard as well as unintended consequences.

    “A moral hazard arises if lending institutions believe that they can make risky loans that will pay handsomely if the investment turns out well but they will not have to fully pay for losses if the investment turns out badly. Taxpayers, depositors, other creditors have often had to shoulder at least part of the burden of risky financial decisions made by lending institutions.”

    When the mortgage originator has no liability, there’s the hazards of immoral lending.

    Or, if lenders have no liability, everyone suffers from the increased risk taking behavior.

    Also known as the law of perverse incentive.

    Lenders under the current “sell the paper fast” system have a perverse incentive to make horrible loans, as many as possible, as rapidly as possible.

    Some examples from …. the CIA and wikipedia

    “In CIA jargon, “blowback” describes the unintended, even undesirable consequences of covert operations. Examples include:

    * Operation Ajax, which contributed to the 1979 Iranian Revolution & the Iran hostage crisis
    * Covert funding of the Contras in Nicaragua, which lead to the Iran-Contra Affair
    * Covert funding of the Mujahideen, which led to the rise of the Taliban”

    Bill, am I making some sense to you?

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