Six top mortgage companies on Tuesday launched a program aimed at staving off foreclosure for seriously delinquent borrowers in the hopes that new, more affordable loan terms can be worked out.
Ugh. This entire segment of the market is going to continue to be fuxored for a long, long while.
Innovation brings profits, and ARMs were innovative.
The combination of the ARMs along with no-doc loans were a pot of hot water.
The real estate market imploding turned the heat upto nuclear inferno.
Now, the industry trying to clean this up themselves (before the government investigations get into full swing) is admirable… but still far too late.
sigh.
Hopefully the economic stimulus package “refunds” can bail us all out. :roll2:
We need to realize that a lot of these foreclosures are inevitable because too many idiots borrowed the full amount they were pre-qualified for, and then some, without doing a budget and seeing what they could actually pay back. 2 jobs ago (aka, quite a bit less salary ago) when we bought our house we pre-qualified for 235k. Had we spent that much I have no idea how we could afford our mortgage payments, but that would have been our problem not the banks, and certainly not the governments.
I remember sitting down with the wife and filling out a little Excel spreadsheet with every imaginable expense + a little room for unexpected stuff. Doing that it was pretty clear what we could afford per month. Then the bank came back with their number and we just sat there, jaws on the floor, wondering how exactly they came up with that number.
We went home and plugged their numbers into our formulas and had no money left for savings, almost none for cars, and we were going to end up in jail for tax evasion because there was no way we could pay property/school taxes on a 235k house.
But a bunch of people took that full amount, and now the government should bail them out? Fuck that. Go rent a shitty apartment and start over.
what happened for the most part was that the ARM rates were nice and low so lots of people banked on the idea of just refinancing before the higher rate kicked in. The problem was that with the economy doing poor their house values dropped below the equity in the homes so they were not able to refinance as planned. They then got stuck with insane rates they couldn’t afford and zero equity in the house.
sure there will always be people buying more house then they can afford, but this really wasn’t the whole story here.
western NY has very little to do with this problem because home prices have remained somewhat stable.
i just watched something on tv about that… the purchase price was 500k and the current value is 325k… why would they continue to pay for it when their interest rate just doubled… they decided to do a voluntary foreclosure…
it’s very easy to just say somebody is wrong, how about you prove it.
I know it’s convenient to just say it’s 100% caused by consumers buying more then they can afford, but come on, you don’t really think that this was the majority of cases do you?
Whatever i just spoke to the bank and am getting a sweet ass interest rate for a house!!! Also im with JayS on this one. It falls on the people who took too much and didnt plan a feasible living budget.
:tup:. Nobody takes responsability for themselves anymore. This is the problem with America today. They think that if they fuck up it’s the governments job to fix things and make it all better for them. SORRY BUT NO!! The government is here to make sure that we are not invaded and to ensure we retain our freedom. Thats about it. People are wayyy too dependant on the government.
Interest rates were at a 25 year low and ppl were going out getting ARM mortgages and buying the most expensive homes they were approved for. What did ppl think? The rates had no where to go but up.
Only loose lenders and stupid borrowers are to blame here. The Government should stay out of this. At most lowering the % like they are and wait for the ARMs to reset.
I totally agree. Its amazing what they approve you for, I was very surprised and can easily see that people then turn this number into the amount they are going to spend.
So they gambled on an ARM to buy more house than they could afford and lost. Should to government bail out people who lose money at the casino too? As was said, when people took out these ARM’s rates were at RECORD LOWS, so it was nothing but a gamble as to how long before they went up.
Six years ago my wife and I had the same choices all these people in trouble had when we bought our first home. Sure, we would have loved the one waterfront place we looked at on GI for 260k, and I’m sure with some creative financing using an ARM, interest only loan or some other BS we could have been approved too. Instead we did the responsible thing and looked at what we could really afford, bought a nice place in Williamsville with a traditional 30 year mortgage, and now despite all this mortgage “crisis” garbage we’re 100% fine.
Too look at it another way, do you want the government to be on the hook every time a financial institution offers someone more than they can probably pay back? Hell, I’ve got a credit card with a 60k limit. The fact that they made the limit that high must mean I can afford to spend that much by your reasoning. I guess I’ll go out and get that new express cruiser I was looking at during the boat show. When I can’t make the payments I’ll blame the CC company for their predatory lending and ask the government to bail me out so I don’t lose the boat. Because you know, god forbid I have to give up something I can’t really afford.
:tup: 
