Mortgage Meltdown 2007

on the show Friday night they blamed Greenspan for saying more people should be allowed to get mortgages other than fixed rates. They claim he suggested borrowers use ARM loans.
It was not Greenspan who made the error here. The “lenders” changed the parameters for all types of loans. No longer did a borrower need to be vested by his 5% down payment. The new home buyer in this market gets to leave the closing with money. Homes were financed for 125% of their value. Loan officers had their fault in it as well by promising the borrower they could refinance in a year into a fixed rate. What the borrower did not know was that the fixed rate may be so high in year that it did not work for the borrower or borrower had late payments within the year and did not qualify for new mortgage. Mortgage companies also changed FICA scores on credit reports allowing non qualified borrowers to get a mortgage. I could go on and on but the truth is it is not Mr. Greenspan who gave the wrong advice. I would also like to add that the lenders who are crying now and the stock holders all enjoyed a very big boom and there were no complaints from them then.
Interest only loans–what a concept!

Let ‘em twist in the wind. All of them–lenders and borrowers–this was a quite obvious pyramid scheme that artifically inflated the prices on the assumption that an ever-expanding base would bolster the profits for those at the top. Well, now that base isn’t expanding and is, in fact, contracting and people are hurting. Too bad–I have no sympathy for any of them. I’m looking forward to using my meager salary and saving to look for and vulture a house I can really afford when the time to pick over the bones of this mess comes.

To the
poor folks who borrowed more money that they could afford:

I have
financed and refinanced many times.  It
is clearly written in about 10 different ways in any language you need it in how
these loans are structured.  They
have tables where they show that show you in May 2009 your payment will be $XXXX.
 This is

America

.  If you cannot read and understand
the fine print you get screwed.  It
is our tradition.  Learn to live with
it and go back to renting until you save enough for a house.

To the
lenders who lent money to the high risk poor folks:

Comedian
Kathy Madigan put it best when describing a lender giving her $800,000 for a new
house…”They seemed to know what they
were doing.  They had nice pens and
suits and asked a lot of questions.  Bail
them out?  NO, I am sorry.”  Look
on CNNFN right now and above the articles on mortgage company losses you will
see adds from these very same Mortgage Companies offering an $800,000 loan for
$500 a month.  Do these folks even
have a clue? 

Everyone
needs to grow up.  This is capitalism
we are witnessing, where the strong and the intelligent survive and weak and
stupid don’t, and yes, that includes corporations.

I am a small business owner, and for years, banks would not lend to us, simply because we write our own paycheck. We were concidered risky. Hello…have these banks forgotten what kind of grit and determination it takes to keep a business afloat for 20 years?
Oh, wait, thats right, the big banks get billions of dollars of bail-out money from the government…so, i guess they really do not know what it takes,
Nobody ever bails out the little guy…trust me. And what will happen when the banks tighten up thier lending practices so the small independent business owner cannot finance the business? Oh, gee, how about if you are a small builder/contractor? Well, we are one, and it is going to take pure grit and determination to get thru this.
The big guys will get bailed out, and when we ask them for a loan, down the road, they will tell us that we are not worthy of thier money, because we dont measure up to the new stringent guidelines.
What really bakes my noodle, is that it is just the opposite: They are not worthy
.
Reality check: Who got free money because they could’nt make it?

“The problem is” the real estate market runs on contingencies. And when the contingency fails to sell, so also fails the :SOLD strip that triggers more moves up or down the housing ladder. What is going on now is the lending institutions have run out of “creative financing tricks” to create Qualifiers to move the dominios.
Falling sales prices will continue to undermine sales because there will not be enough equity to pay the costs to sell and re-purchas. In the “good old days” hight-price ceilings, always became the floors for the next rung hung at the top of the housing ladder.
-Well, once you reach the top, then the only way is down. -I sold homes for 42 years in the Seattle metro market.

I am 43 years old and have never lived in a house. I began saving after paying off student loans only to see housing prices skyrocket. Now that I have enough for a down payment the government will bail out (liars and cheats)keeping housing prices abnormally high and eroding the value of my savings through increased inflation. I think we have all learned a financial lesson here.

Okay, let me get this straight; first the liberals want the lenders to let anyone with a pulse have a mortgage for a home they can’t afford when rates are among the lowest in history. Second, when the whole thing blows up, because these individuals couldn’t make their house payments, now it is the lenders fault and the liberals are going to FIX it??? I must be nuts, because the only mistake I see here is the lenders should have had tighter credit policies to begin with, but they are paying with their profit margins, so they are being punished in a FREE MARKET ECONOMY! The borrowers should have never gotten a mortgage in the first place, get it?

The fault of the mortgage lies with all – The Investors that made these ridiculous programs available; the brokers for promoting them so they could make a fast buck and the borrowers for not doing their homework. The investors basically gave out mortgages with a credit card applicaton -I work in the industry as an underwriter and on more times than I can count denied loans for “unreasonable income” – waiters making $9500 per mo trying to qualify for a $500,000 mortgage. Brokers promoted this as its was a fast way for them to make a buck – Now any one could qualify for a mortgage!!Not questioning wheter there clients could actually qualify for the mortgage!! And the borrowers too – They have to sign a loan application (which does state it’s against the law to lie on the application) that said the made double – triple what they really did. If you don’t understand what you are signing don’t sign!! It is going to to be a hard and painful lesson – for everyone – But is it fair for us who knew what they could afford – and chose not to get into a mortgage we could not afford to now bail out those who did? This is financial Darwinism -the ones who lent irresponsbily and those who borrowered irresponsibly should be held accountable…Not the ones who acted responsibly.

The root of the problem isnt being addressed.

There is a pressing need for regulation stopping this from happening:

a) lending criteria should be stricter – stopping loans being issued that have little or no chance to be repaid. These rules should apply throughout the credit and economic cycles.

b) government standards for ratings of MBS, CDOs and other synthetic debt related securities.

c) computer models of security valuation should be made illegal. They are little more than fantasies, as the prices don’t get ‘reality tested’ by the markets.

The FED should stay out of this Mortgage mess and let the market take care of itself. Those people who get themselves into foreclosure debacle should blame only on themselves. Had the house price keep going up, they would have laugh all the way to the bank. For many of them with zero down, the house is not their in the first place, they loose nothing when foreclose. For those who flip houses for a quick buck, it’s payback time. Their greed has push home price to the un-affordable level for most American today.

The government always helps out the less fortunate, those who cannot help themselves. If you had built a home on the coast and a hurricane destroys it, then the government will will build you a better and bigger one.

If you have a loan that you cannot afford, then the government will help you pay for the loan.

USA, USA, USA!

To everyone out there saying that “nobody wins” by having foreclosures and a glut of inventory on the market I say this — how about all of us who prudently chose NOT to buy overpriced homes with ludicrous mortgages we could never hope to pay back. Maybe its time for us guys to win for once. Taxing our paychecks to bail out all the folks who failed to see the risks of their decisions, decisions often motivated and conceived by greed and/or ignorance, would be rewarding bad decision making at the expense of people who made good decisions. Maybe the time is coming for home prices to go down and crazy-terms mortgages to go away. When that happens regular folks will finally be able to buy regular homes at regular prices.

“The goverment along with Qwasi’s Fannie Mae and Freddie Mac should come up with plan to refinance and adjust all the subprime loans with fixed 30 – 40 Year Terms. That way people can still keep thier homes and banks get thier money.”

Nice solution, EXCEPT for two little facts: (1) if a homeowner owes more than their home is now worth, what incentive do they have to keep making payments? (2) most of the folks who took out alternative mortgages (no doc liar loans, teaser rates, no down, etc…) did so precisely because they couldn’t afford their home under standard financing. Moving these folks into a fixed 30 year gives them unaffordable payments.

Banks lent out more substantially money than homes are now worth and individuals bought more far home than they could really afford.

There is only one real solution for irresponsible banks and homeborrowers: bankruptcy and foreclosure.

Fannie, Freddie, Ginnie had absolutely nothing to do with this and have no business bailing anyone out…

I think the most important thing people should take away from this is the underlying lesson. Know the risk going in. Both borrowers and lenders took unnecessary risks. Some people got into too big a hurry to buy a home, and should have attended counseling through the FHA before getting into risky non-traditional loans. They may have also waited until there scores came up enough to qualify for a prime loan. Also too many people trying to keep up with the Jonses, bought more house than their salaries could pay for.

As for the lenders, many acted shameful, targeting certain groups, only thinking about all the interest they could make of people with less than ideal credit. Many of the hedge funds were guilty of taking way too much risk, and also wanting to profit off of the sub-prime class.

Unfortunately this may only be the tip of the credit crunch iceberg. Many more people are probably spread too thin between paycheck and car payment. the same thing holds true on credit card debt. For the past 10 years we’ve had too many people living above their means and now it’s all caught up to us.

This isn’t a subprime problem in its entirety. What happened over the last 7 years was a drop in interest rates and a devaluation of the dollar. The low interest rates facilitated questionable loans domestically, but the credit ‘crunch’ internationally is from the depressed dollar which effectively floaded foreign markets with depreciatiting dollars. Foreclosures aren’t your problem. It’s too many dollars chasing two few goods abroad.

If that were at home, we’d call it inflation.

I am in complete agreement with TR from Long Beach. I too live in Southern California and fail to see how rewarding riduculous speculation that has pricing most prudent buyers out of a market should be rewarded. With trillions of dollars in retirement savings I guess the same logic that those advocated helping these buyers means the fed or US goverment should start buying stocks to keep the market from falling? Where exactly does this stop?

As I see it, the subprime problem has been created by unscrupulous mortgage sellers, who have consciously preyed on uneducated and ill-informed or on gullible and greedy borrowers, selling them mortgages which they would definitely find difficult to service.

This was with the full backing and support of large financial institutions and investment banks, the real masterminds behind the whole issue, who bought these dicey mortgages, spliced them into bits by risk (risky, riskier, riskiest), then attractively repackaged them as securities for which they obtained disproportionately high credit ratings from credit rating agencies dependent on them for their earnings and finally sold these securities to unsuspecting investors all over the world. These buyers of securities in many cases had no way of knowing what assets were underlying the securities. The financial institutions selling the securities (who employ the top financial brains in the country) surely understood fully well the risk underlying the subprime mortgages as well as the fact that the credit ratings assigned to the securities backed by these mortgages grossly inadequately reflected the risk involved.

It is these financial institutions, who have largely got away scot free as they have palmed off most of the risk to buyers of the securities, that deserve to be hauled up and penalised for the current mess which they caused in their singular pursuit of profit by less than ethical means. By virtue of their size and tremendous clout they are able to get away leaving others to pick up the pieces and to bear the pain.

The current crisis has probably sounded the death-knoll for the subprime mortgage industry but these financial institutions will just move on to some other area of the economy and think up some other complex and opaque financial instrument which investors cannot fully understand to continue their profit-thirsty operations.

wealth without work, just sign on the dotted line. Want 250,000 or 500,000 we will give it to you, no questions asked, you don’t even need a job! And when the whole things blows up? don’t worry, the government will bail you out. I can’t wait for the next bubble.

I agree with the last post,Nobody wins if 2 million foreclosures happens. What that does is depress everyones
house values,and glut the market with inventory. The goverment along with Qwasi’s Fannie Mae and Freddie Mac should come up with plan to refinance and adjust all the subprime loans with fixed 30 – 40 Year Terms. That way people can still keep thier homes and banks get thier money. Remember nobody wins when foreclosure happens,and for you folks who keep saying “Lose the house” “Lose The house” this is going to affect you too, with a possible recession,glut of inventory,much lower value of your home.This hurts everybody all the way around.

WASHINGTON (AP) — The Federal Reserve, trying to calm turmoil on Wall Street, announced Friday that it will pump as much money as needed into the U.S. financial system to help overcome the ill effects of a spreading credit crunch.

The Fed, in a short statement, said it will provide “reserves as necessary” to help the markets safely make their way. The central bank did not provide details but said it would do all it can to “facilitate the orderly functioning of financial markets.”

–Finally.

As a license loan officer I must say I predicted this credit crisis 8 months ago. I deal with “A” paper only because the lenders for subprime loan set the bar for some loan officers to prey on uneducated borrower(s). Most of the homeowners in trouble have one of the following loans: 2/28, 3/27, or pay option ARM(s), not to mention a second note. People take a lesson now-stay away from these loans or realize you’re playing homeowner for 2-3 years before losing your home. Get 3 quotes and look for someone who puts you on a financial plan when your purchase or refinance. Make sure the person is informative about the loan program and provides literature about the program in question.

There is no way on God’s good, green Earth the Feds should step in on this matter. Living in Southern California I have watched greedy, idiotic buyers bid up the cost of home prices to insane levels.

In the summer of 2005 my wife and I had our chance. We could have ‘purchased’ a home if really wanted to. However, we looked at the price tag and actually thought about having to pay that back (plus interest). WE decided not to. I do not want to penalized for making a fiscally prudent decision.

It amazes me that everyone keeps trying to blame the mortgage brokers for loan defaults. Consumers, during a loan process receive 3 sets of disclosures, one from the mortgage broker company and one from the servicer/lender during underwriting. Then the consumer sees all the terms and conditions again at the closing table. For the loan to even be approved it must pass “The benefit to borrower test” by an underwriter, also. Try looking at the economy, the oil prices, immigration lowering wages, outsourcing taking away jobs.
Wages not going up. Try looking at the overall situation with our economy. People have been using the equity in their home like a savings account to pay off credit cards, because they do have enough discretionary income available from their jobs, or lack thereof. Now that equity is tapped out, they are still using the credit cards again which went from 2% to now 4% minimum payments. Couple this with gas prices of 3.00 gallon average and cost of living increases. Wages stagnate. People are spread thin. The credit card spending & home loan consolidation were and have been the catalyst to getting us out of the recession in 2000, not people having discretionary income to pump into the economy. Like I said, the equity “savings account” so to speak is gone. Pointing the finger at mortgage brokers as the major cause of the problem is simplistic thinking.

I don’t even know where to start. Many people are complaining about their vacation homes or homes they have no business buying. The only reason anyone could afford these homes is because the mortgage industry told you what you wanted to hear. I would assume that anyone that passed 4th grade math would realize that you can not get a $300,000 mortgage for a $1,300 payment. While signing your paperwork did you stop to question this? Did you put the reasonability on someone else to read it to you or figure it out for you?

Think about the past generations lived. They lived within their means. Also, in the past rates where between 11-14% and our parents and relatives seemed to manage.

I am in this industry. We do not make up the rates. That is left up to the federal government and private investors. They had no problem leaving rates low until the American people stopped paying their bills. Every day I listen to people who want a $250,000 house for less then a $1,000 a month. I speak to people that want to pay off $60,000 in debt with their equity. I also speak to people that have been taken advantage of by other lenders and I feel bad, but I can’t help to think “How did you think this could be true?” What makes you think you can but a $250,000 home without getting a smaller home first and building equity The American dream is something you work towards, not something you get as a reward after making it out of a bankruptcy.

What ever happened to saving up a down payment so you can afford the home you want?

The moral of the story is….sell your house that you can’t afford even if your not getting what you think full value is.….downsize! Be responsible and stop looking for other people, and the government to bail you out of the trouble you got yourself into.

1. Our government should not bailout anyone, not homeowners losing their homes, not investors who stretched for higher yield, certainly not the i-banks who pushed the MBS/CDO crap.

2. The FED should not lower interest rates. Low interest rates created this mess in 2001 (thanks A.G.). Lowering again is not the answer. In fact, rates should be higher than they are today, if inflation is in fact what the FED is concerned with (running 8-10% counting food, energy, healthcare, education).

3. The mortgage industry should be more regulated.

4. If you can’t afford to buy using a 30 year fixed rate loan, with at least 10% down, and have 6 months of mortgage expenses in liquid assests than you should be renting. By allowing people to buy property with lower income/credit/asset standards, lenders have hurt all of us through rampant speculation (higher prices=higher taxes) and now foreclosures.

Someone has been flipping houses for a decade, taking tax-free capital gains to buy bigger and bigger houses, and now they can’t pay their bills, so they think the government should just pay off their house?

Someone has been spending thousands more than they made, doing refi’s and heloc’s for the last decade, and now that their house isn’t going up in value anymore, and they can’t pay their bills, they want the government to pay their bills for them?

Both groups are responsible for running up the prices of houses to the point where they’re unaffordable to the majority of americans. Many of us have realized that houses are too expensive, and have lived within our means while renting. Why should those who lived far beyond their means, who have been benefiting for years from government giveaways (tax free capital gains on real estate) and low interest loans, why should these people be even further bailed out?

If lenders don’t want the foreclosures, they can initiate programs to lower payments, provide financial education, and whatever else it takes to help the mortgage holders make their payments. In the meantime, the rest of us can watch house prices come down 50% or more, back to where they’re affordable to the average, american willing to take responsibility for their own bills.

I’m so tired of all of the finger pointing that is going on over this issue. EVERYONE shares a piece of the blame in this STARTING with the Wall Street investment firms and Hedge Funds which went to mortgage lenders and said “If you create products along these guidelines (see low FICO stated wage earner loans) we will purchase them from you. Folks, this is supply and demand economics! The lenders in turn provided the products, and the brokers that dealt with the borrowers sold them the public. I hear all of this talk about the lenders, but hardly ever any talk about the Mortgage Brokers, and Wall Street investments firms. All that the lenders have done is act as a middle man, and supply a product that was in demand. There needs to be COMPLETE LENDING REFORM. This is not an uninformed borrower issue, this is not an unscrupulous lender, or investment firm issue. This is a capitalism issue. Capitalism is the best economic system in the world but this is a shining example of need for some industry regulation.

Some people did not know what they were getting into when they signed their mortgage note. There were a ton of predatory lenders out there that took advantage of the sky rocketing values in real estate. The media created a frenzy in real estate and now the media is being very negative about the market. Yes, lender should not have made mortgage to sub prime borrowers, but it was a very lucrative income source at the time. Subprime is just not to blame. Think about investors with good credit that took on properties only wanting to hold for a short time. Now they are stuck with and can not afford the payment, taxes, etc. Should the government step in? No, they should keep doing what they have been doing by funding FHA and VA notes. There are many programs out there that people do not know about, because the mortgage industry and real estate market has a looming black cloud above its head, that help people get into homes(and not just low income, either). If the media were a little more positive, we might see a slight up turn in purchases.

As a Mortgage Loan Officer, I can tell you that there is plenty of blame to go around. Many are complaining that there needs to be more regulation. That is a fallacy. The mortgage industry is the second most regulated industry in the nation, right behind aviation.

Credit has been cheap and abundant lately. Have there been loans extended to people who should not have been approved? Absolutely! But the vast majority of Loan Officers and Lenders are legitimate and don’t want to close risky loans. That is detrimental not only to the industry, but to the economy as a whole. Has the public pushed lenders to make loans that they should not have? Without a doubt. Many consumers want to get into a loan blinded by the stark realities of Adjustable Rate Mortgages or worse Negative Amortization Mortgages. Private investors and Real Estate Agents, too are to blame for “flipping” and artifically driving up housing costs so high, that eventually the bubble has to burst.

We are now all paying for these extravagances. The market will make a correction and if we learn our lessons, perhaps we can avoid some of the current pitfalls. In the meantime all of us unfortunately will pay the price.

The issue at hand is not the mortgage industry and/or the investors on Wall Street that backed these loans. There is a tendency in this country to cry foul and look for blame. I have worked in the mortgage industry for over 20+ years now. I can assure you that the borrower’s that took out many of these “bad” loans new what they were getting themselves in to. The short-term ARM’s (2/28’s, 3/27’s) and the option arms are the bad programs. We have never offered these loans to our clients and never will. However, industry diclosure requirements at the time of application would have clearly explained the risks. The simple fact is that people were buying homes they had no reason buying. They couldn’t afford them, but they wanted to live outside of their “true” means.

“The government should help people who was forced or mislead into this predatory loan. My rate is about to reset and I can’t sell my vacation home in FL. Foreclosure hurts everyone, not just me and the lender!”
You got to be kidding! If you can’t make your your payments you probably have no business owning a vacation home. No bailout. You AND your lender need to learn one of those hard lessons. Irresponsible borrowing and lending needs to go the way of the Dodo so that we don’t get into another bind like this in the future.

“The government should help people who was forced or mislead into this predatory loan.”

Truth be told, almost no one was forced or mislead into signing for a loan. Buyers were EAGER to buy a house at any cost and with any loan available with the dream of getting rich quick via rapid price appreciation. It is only when home prices started to decline that everyone started crying about predatory loans… prior to that they would have cried if mortgage brokers HADN’T offered them loans. Remember when “alternative” lending products were HELPING the poor get a foothold on the American dream.

If someone committed a crime put them in jail. If someone got a house they shouldn’t have qualified for in the first place, good for them. Now, though, it’s time to pay the piper and if they can’t qualify they should look at it as a gift for a couple of years and get on with their lives.

I read through some of the comments and I think the federal government should be held responsible before the mortgage brokers. Like I stated before, the lenders should eat their losses.

The Bush Administration enabled people to get creative loans pushing the cost of homes so high that Americans can barely afford them in the current economy (the rich man’s economy).

Everybody just followed suit. I also don’t think that people should be bailed out; except for hardships due to job loss, medical situations, etc. where the individual did exersize good judgement when taking out the loan. These are not the same people who took out excessive equity loans on an inflated property value to buy sports vehicles.

There has to be a way to differentiate a credit report that accurately reflects a persons’ financial standings according to their situation.

The housing market in California are going to burst except for the higher end properties. The burst won’t be accurately reflected in the charts – like our current economy because of that skew.

A lot of people are going to suffer financial hardships.

No, the government should not bail out these foreclosures. The news stories have all been about blaming the mortgage brokers because we are an easy, nameless target. Some of the responsiblity has to lie with the buyers of these homes. No one forced them to purchase a home. I can’t begin to tell you how many people stood in my office, stomped their foot and threw a fit and demanded that I get them into this half million dollar house that they knew they couldn’t afford. Loan programs, such as No Ratio and No Doc *were* available, so to say no to them could have been mistaken for discrimination. It’s the “I want it NOW” mentality that got people into hot water. I’m sure there are some unscrupulous brokers who put people into junk loans and didn’t do a good job disclosing the loan’s terms. But honestly, any consumer should know full well that it’s their responsibility to understand what they’re getting into before they sign on the dotted line.

I find it interesting how everyone is against a bailout for borrowers who default on their mortgages, but nobody seems to realize that the Fed bails out banks and large corporations all the time. Why should banks tighten their lending standards when they know if things turn sour the Fed will be right there to pick up the slack. No, there should be no bailout for daulted borrowers, just as there shouldnt be corporate bailouts. Does anyone wonder where this money comes from?? Is it sitting in a vault in the Feds basement? No, its made out of nothing. I find it difficult to understand how the Fed won’t reduce the overnight rate because they are worried about influation…but didn’t bat an eye when it comes to flooding $38 billion into the economy to “ease” the worries of investors. Millions of people are losing their homes, but we can’t have those investors lose their worry. For anyone who is worried about another depression…dont. It wont happen. Higher taxes? Again wont happen. But rest assured, we’ll all pick up the cost in the form a hidden tax, called inflation. This is fractional reserve banking at its absolute worst. Free market? What a joke.

The government should NOT bail out the banks. They enacted legally to provide unethical loans and they should reap what they sow.

Who would’ve thought that we could sustain the obscene cost of homes when the real wage is declining? I’m not feeling too sorry for anyone. As a country, how did we not know this?

Also, the federal government really needs to stop penalizing people for having bad credit in a horrible economy. They really need to loosen up on the bankruptcy laws.
It’s been bad in the last 6-7 years.

At the end of this bubble I think most of the people will be better of. More affordable homes. Less percentage of income will be spent on housing so increased consumer spending. Fed reserve should stay away from this. It is Alan Greenspan who got us into this mess.

There is no way to stop this financial meltdown. The American economy is so far over extended that 75% of all loans would have to be wiped out before it would make a real difference. The economy will not stop at recession as that infers some form of stability, no it will fall much further than that. The Fed can and will continue to shift numbers from point to point but that will not stave off the collapse for long.

The smart people will dump all financial responsibilities as quickly as possible so as to recover quicker than the masses and then have the ability to take advantage of later economic conditions. There will be a lot of money to be made after the economy makes it’s way through this collapse but it will be made only by those who had the foresight to see that all economies collapse and rebuild.

It is NOT the government’s responsibility to rescue consumers who were duped into investing foolishly. This country was founded in part on the principle that the “buyer beware.” Government should not be viewed as insurance for consumer ignorance.

The mortgage crisis will no doubt trigger a recession, Bernake and the others are only stating that it will not due to the overwhelming volume of international investors who are pulling out of the stock market. With gas prices up, the mortgage meltdown and the war going on at the sametime, there will be a recession that will last a few year. The whole econmy is overvalued and everything must correct itself. I do not think the government should bail out borrowers who got these sub-prime loans, for the simple fact that you cannot always asked to be saved after it doesnt work out to your advantage. Suck it up, and learn to make better financial decisions.

The government should not need to bail out the irresponsible people. The lending industry has built a house of cards in the past five years. Borrowers have overextended themselves and need to prepare for a life lesson. When you enter into a contract, you should probably read and understand the terms you are agreeing to. This house of cards was built on greed, and now it is time to repay those ugly loans. It will be very interesting to see what 2008 brings.

NALB – No Adult Left Behind – ought to be our country’s motto. The issues about mortgage problems and too many real estate properties unsold is a deeper, more troubling issue. There’s a huge group of 20 something aged folks who are not buying houses and are uneducated on credit pitfalls. They are still living with their parents because a large number of them did not go to college and are not making enough money to carry mortgages. Those who do buy houses without proper counseling end up in foreclosure. Add to that the predatory system and the big 3 credit bureaus who are unrelenting if not vigorously tracked. Except for the sacrifice of other family members if able, these young folks have no way out and no way ahead.

There should be no bailout of any kind. No bailout for wall street or others. Home prices got out of control and need a serious correction,it is about time. At this price levels majority of Americans can not afford to purchase a home. Sorry, if it is time to sell, than go ahead and rent. The goverment did not bail me out when the market crashed in 2000.
Why should we bail out wall street, they never bail me out when I make a bad bet in the market, they laugh all the way to the bank!!!!

In my mind, having the government bail out borrowers who bought homes they couldn’t afford is no different than expecting the government to reimburse me the next time I lose money in Vegas. What about the concept of people taking a responsibility for their own actions? I’m guessing that the majority of homeowners currently at risk of defaulting on their mortgages lied about their income and assets to get the loan and knew they couldn’t afford the payments but expected to get rich from home price appreciation.

Don’t use my tax dollars (and those of others who are financially responsible and live beneath their means) to reward people for their irresponsible (and in many cases unethical) actions.

The government’s role should be to make sure the banks have access to enough credit to stay solvent. They should NOT be buying mortgage backed securities just so Countrywide and other mortgage brokers can stay in business. If the mortgage industry had done its job of evaluating creditworthiness of borrowers and the assets they’re borrowing against, we wouldn’t be in this mess. If the result is a painful decline in home prices, then that will be the best medicine for an industry that’s full of amateurs.

If a mortgage broker is in trouble because they can’t assess risk, they should be allowed to fail.

I do not think the government should provide a bail out on these mortgages.

I love all the people here saying “the fools made bad choices” or “I made good choices no bailout” or ” the correction needs to happen” .

If foreclosures rise to the levels economists are predicting, property values will fall.

So, say for example, you have 10% less ownership and 10% less property value.

I’m sure your state will just accept a lower property tax total…yep won’t affect you at all…

Oh…wait…

The number of homeowners that will be impacted by the subprime lending fiasco will be tremendous. It’s not just low-income people who bought more house than they can afford, as a former mortgage broker, I watched several individuals with good credit get approved for homes in over inflated markets. So we are going to see convential mortgage foreclosures heading up. The impact will trickle in many areas of the country.

The American economy is a house of cards built upon debt. The reason for the great expansion since the 1930s has been debt. First lenders would only lend to good risk customers with good colateral. Then when those guys where up to there neck in debt lenders looked for other poor souls to trap. Now everyone is up to their ears in dept and we wonder why the economy is in trouble.

As a mortgage broker that has refused to put anyone into an ARM for my entire career, I’m sickened by the way a lot of people feel about my profession. Should all 50 states be mandated by a code of ethics for a job such as mine, YES! I watch young kids come and go in this industry, and they all come in thinking about making a lot of money on commissions that are either kept by the lender, or paid out to a person that originated the loan in the first place. But, every day, I see more bad press about my profession. The media needs to calm down. They are creating a lot of hype that is built on circumstance. Will I personally write a loan that someone can’t afford, NO. Will I refinance someone if it doesn’t help the financial state of their being, NO. I am so good at my job, not a single client has ever lost their home due to forclosure. Why? I follow up with every client I’ve done a loan for every two months. I’ve done this for 12 years. I spent more on postage last year than the rest of my firm combined.

Now, I’m not a republican and I’m not a democrat. But ladies and gentlemen, what we are seeing in the people’s market is trickle down Bush-anomics. We outsourced our jobs to other countries so that stocks would sky rocket. Then the former workers of factories can’t find jobs. I’m in Michigan, the place where the economy and joblessness is the worst in the country. 7.2% unemployment, but every fast food joint is hiring. So, why aren’t the auto workers taking a lower paying job? Pride. Isn’t that one of the seven deadly sins?

I have a friend that got forclosed on last year. She called Ameriquest directly and was put into an ARM. She never kept track of when her rate was going to adjust. She never called me for help when it did. She just stopped paying her mortgage, and then became upset when she lost her home and almost $32000 in equity. But, she has an apartment now, and filed chapter 7 bankruptcy to whipe out her debt that she aquired, but has a perfectly healthy 24 year old son still living at home that doesn’t work. And with her tax return this year, she got a big plasma tv. Personal accountability folks. If people weren’t so afraid to ask for help before it was too late, we wouldn’t have all these foreclosures. If people didn’t buy things they really didn’t need, they wouldn’t be in these situations. If people didn’t coddle their children at the age of 20 as if they were still 5, they might be able to afford their payments. If you are in an ARM, know when you are adjusting, and call a broker to help you get out of it. Don’t call your lender, they want you to pay the higher interest rate. They don’t really care if you default on your loan, as they will sell the house to someone else. It may take them a little while, but they already bought it once, when you signed the papers. Start getting smart America.

If gov’t can bail out Airline Industries, Chrysler etc.. why not the mortgage industry? In a global econony it affects every one who owns a retirement account except those who keep hard currency and not invest on stocks / mutual funds / bonds.

If the gov’t does intervene, aren’t the
persons that are prudent, responsible
tax payers that make their mtg. payments on time be rewarded with even
larger dividends than the ones that are
crying now?

There should no be a bailout by the Govt. Houses are artificially high all over the world. The unravelling of the pain is better now than later, otherwise the future is even bleaker for the next generation.

The funny and stupid thing is people have used Home Line of Equity to buy all sorts of things…cars, iPods, vacations, Plasma TVs etc,. I gut feeling is..the next hit will be credit card issuers.

The market needs to correct and flush out excess! It will be good for economy in the futre!

The government should help people who was forced or mislead into this predatory loan. My rate is about to reset and I can’t sell my vacation home in FL. Foreclosure hurts everyone, not just me and the lender!

The government should NOT bail out borrowers. It is really puzzling why in the world, you want to purchase a home if you can not afford with your income. It is unfair to others who play by rules and common sense! It is payback time folks!

We are rapidly heading for a situation that will make the 1929 crash seem to be a minor correction! This time small & large corporations, banks, investment firms, and countries will become completely insolvent! Even people like Bill Gates and Warren Buffet will have problems finding enough cash to buy a loaf of bread.

The mortgage industry is on a meltdown. Why? Consumers who neither fully read and understand their contract before they sign, or bad lenders going after a quick buck at the consumers expense. The mortgage industry is bleeding bad right now and all of the loans I see advertised on the internet and radio are option arms, the loans that cause this bleeding.

When things were looking up, nobody wanted tight government regulation. Now that the situation turned sour, some of the self-made victims are asking for a bailout at the expense of everyone else. Since we can’t take money from those who had profitted from the housing boom, the only fair way out is to let the stuckees deal with the mess themselves. Lessons will never be learned if there is no pain.

It’s not the government’s job to bail out people who willingly took out an ARM based on an exaggerated appraisal. Too many Americans choose not to live within their means and refuse to take responsibility for their actions. Blame the lenders all you want for giving loans to people who they knew could not afford it when interest rates rose, but the homeowner signed on the dotted line. Because of the appraisals in the sub-prime market, real estate prices have gotten almost unaffordable high. It’s about time the market levels off and people learn to spend what they earn. If you go to the car dealership and you make a 100 dollars a month and they say it’s 200 dollars a month, you can’t afford it, bottom line. If you want it that bad go get a second job or find another source of income. Take responsibility for your actions and quit crying for someone to bail you out.

The events surrounding the subprime market have been predicted for over a year now. We’ve been warned over and over but why only now are we concerned? Why should we be surprised by this “Correction” in the mortgage business? Predatory and STUPID lending practices are to blame for sure. Yes borrowers are to blame also for falling for these loans but why in Gods name were these loans allowed into the marketplace to begin with?
Who gives a half million dollar loan to someone making only $50,000 a year and ask them to pay interest only? Its stupidity on a massive scale.
Cant we regulate the bank lending practices for the sake of our economy? Sure we can but our government turns a blind eye so that a select few on Wall Street would make a killing in the mean time.
This entire fiasco fallout is whats better known as Poetic Justice. Greed at its worst is finally getting what it deserves…an amputation. The only government involvment we need is strategically placed regulation.

Forget about the government bailing out the bad loans. The real concern is the effect it’s having on funding for qualified applicants.
This isn’t just bad consumer loans. It’s already been reported to effect not only sub-prime loans.
The pendulum swung too far towards giving away money, now it will swing too far in the other direction.
I feel sorry for anyone who is retired or looking to retire soon. The market will take the brunt of this.
It’s going to be a bumpy ride as the world decides to make the USA (consumer, businesses, and government) pay it’s bills.

Absolutely it will trigger a recession. Too many people who couldn’t afford a house got one.

An article on this site said:

“According to Goldstein, though, as long as employment stays strong and workers’ earnings grow substantially (4 percent annually, according to him), confidence – and spending – will remain high and the economy will chug along.

“Consumers can continue to stay resilient in the face of lower stock and home prices,” he said. “Not only is the economy strong enough to survive the crisis, it’s strong enough to quiet it.”

I DISAGREE. Homeowners have started saving on necessities like food just to pay the interest on their loans. When will you understand? When homeowners begin giving up on life?

“Quite often, subprime borrowers are often turned away from traditional lenders due to their low credit ratings or other factors that suggest they have a REASONABLE CHANCE OF DEFAULTING on the debt repayment.” This is a quote from Investopedia, A Forbes Media Company, explaining subprime loans (I added the emphasis regarding the “defaults”). This is proof that LENDERS knew they were loaning to borrowers who probably could not pay. Subprime loans targeting bad risk borrowers, were created by the lending industry, not by the borrowers. I know several people who were convinced they could handle a subprime loan. They were told, by the loan agent, not to worry about the huge increase in monthly payments after the first year, because the economy is getting better and their incomes would probably go up. If not they could refinance. Guess what, their incomes didn’t go up, and know one would refinance them, so they took ownership of the situation and sold their homes at the begining of the year. If borrowers should not be bailed out, neither should lenders! Yet lenders/banks are being bailed out with the injection of tens of billions of dollars (this will backfire in the form of lower value dollar and inflation, check the history it’s been doe before). The Market should correct, it’s about time, you can’t run an economy on credit, cheap credit or not, it’ll come crashing down eventually. But, why is it always the little guy that suffers? Remember, the corporate world created the lending environment, not the little guy. If you bailout the big guys, you better bailout the little guys too!

Maybe the government shouldn’t help out the helpless that, yes, wanted to live the American Dream (just like everyone running the government) and buy a home to raise a family. But why protect these mortgage lenders that are lending money to people like me. I am young single mother with bad credit (from being young and stupid but now grown up and trying to repair the damage I have caused myself) and a low income, who is sick of spending all my earnings paying other people’s mortgages and debts when I can be paying my own.

I was approved for a loan I clearly could not afford on my income alone and I DID NOT SIGN ANY FALSE FINANCIAL STATEMENTS! Lucky I was smart enough to sell before it was too late.

Lets stop bashing these people who want more and bash these mortgage companies and corporations that keep us “small” people down. Why not lower rates and let these already rich companies take a loss for a while or even experience bankruptcy.

This government has no problem helping out every other country why not help out our own!

The bottom line is Mortgage Brokers are (for the most part) unregulated. They get a quickie license, find a bank (source) to provide them with funds and off they go ! When you give a person the means to “do the wrong thing”, provide little supervision AND allow them to make ridiculous amounts of money preying on the less fortunate and less knowledgable… what did you expectto happen.

The subprime mortgage and credit crunch problems are all the buzz, but no one is commenting on the individual reasons for these problems. There ought to not be any predatory subprime mortages to start with. Also, part of the credit crunch began when credit card companies started targeting college age students who could not manage credit cards wisely. Then companies like MBNA sell their unpaid balances to lawyer firms who want exorbitant fees, meaning the student isn’t going to pay them. And last but not least, the big 3 credit bureaus keep this information forever and the 20 something aged folks can not get a decent mortgage. Stop the predatory system and mortgages will be fair again.

Life is short. I want a home. Just a little 1100SF condo around where I live is well over 200k. So yes I am going to over extend my finances to get something. Its the lenders fault. If they would have said no to financing the rising prices of homes, homes would still be great prices. Interest rates were down. Well houses should have stayed down too and more good hardworking people could have purchased the american dream and there would still be a demand. If everyone would have been ” tight wads” there would be no growth in the economy. The people on here saying that the gov. stepping in would be a slap in the face to the hardworking savers are probably people who purchased before the boom or had something thrown in there lap. If everyone did the right thing with there money, no one would have new cars or a nice place to live except for those who make allot of money. I am single and make around 100k and can barely get by paying for everything. Thats good money and I still cant afford the average home around here which is in the 400k range. Oh wait thats right after I live at home with my mom until I am older and save the 80k or 20% needed I can move into one. I dont get it.

The mortgage lenders can correct this problem. The government is right by staying out. I think that companies like offerangel.com will be the first pioneers for consumers since the government usually overcorrects the problem. Banks and lenders will close with new laws and restrictions. Not only should the government stay out of the foreclosure mess but mortgage lenders should be looking for new alternatives to prevent this from happening. Otherwise the only fix is for new laws and standards, yikes!

These sub prime borrowers had no business getting into properties that they could not afford. Some folks were trying to leverage these loans to make a fast buck. Now we are talking about a bailout? The whole over valued housing market is completely crazy. Everyone forgot about the cost and just looked at the monthly payment to get the numbers “to work”.

No Bailout. For all of you that haven’t noticed, the bailout was never intended to help borrowers, they will still have to pay back 100% of what they owe. It is intended to help lenders/investors to get their’s. I don’t understand why so many posters are worried about losing “their” home. You put low or no money down. It’s not “your” home anyway. If you owe more on it than it is worth, just mail in the keys and walk away. That makes it the lender’s problem, not your problem. In 7 years you’ll be out of credit purgatory, the housing market will have bottomed and you get another shot at home ownership. In the meantime you rent, build good credit and save a bunch of $$ towards a 20+% down payment since renting is currently a lot cheaper than owning.
Now that’s good advice

The government<-(LOL) should stay out of the mortgage crisis bailout business for the most part. The only thing that they might make sense is some sort of reorganization program to re-finance ARMs to flat rate loans at market or slightly below market rates to help stave off rampant foreclosures.

In the future, apraisers should apraise homes for thier true value and not what the lender wishes to dole out for it. This practice is totally irresponsible on both parties part and is a big player in the artificial inflation of home values. It is pure greed and it is catching up with the lenders. What goes around comes around.

What are foreclosed homeowners actually losing when they lose their homes?

Are they losing a place to live? No. In most parts of the country you can rent an equivalent home for MUCH less than the monthly carry costs of home ownership.

Are they losing equity? No. If they had any equity they could just sell and there wouldn’t be any foreclosure. These are folks that bought with nothing down or pulled equity out of their homes and spent it.

Banks and investors are losing money BIG TIME. But given all of the money they made during the crazy bubble runup, driving home prices to absurdly unaffordable levels, I don’t feel one ounce of pity for these folks.

LOANS ARE NOT “BAD”. The people that sell them without fully disclosing the pitfalls and the borrowers who are too lazy to read up are “bad”. It’s like saying guns kill people…I have yet to see a gun kill a person without a person pulling the trigger.

No Government Bailout. The Fed should stay pat!!!!

Not only do we NEED a correction because prices are out of control but we also NEED govt to stay out of creating laws that dictate what kinds of loans we can take out. We just had a bill pass in Illinois that would REQUIRE counseling to take out a mortgage loan.. and it will cost $300??? Which HUD approved org is benefiting from this? Stop making “anti predatory” lending laws. Mortgage lenders need to self correct and start implementing a plan to better show borrowers what they are getting. If people really understood their loan and originators were presenting loans that were right for their financial situations then the mess wouldn’t be so big! ARM’s, state income and pre-payment penalties are not hazardous. The loan officer that doesn’t disclose this information is.

I can tell you this. I work in the lending field, and over the last week, stated loan, lite-doc loans, LTV’s, and expanded programs have been cut and most removed. Sure, there were lenders out there that did stated wage-earner loans that were riskier. But these loans were always leveraged against credit history. Lenders were taking much risk, but the door has swung too far the other way. Example given, you can have perfect credit, be in business for self, and not get a loan now. Why, because the lender is going to use the bottom line income after necessary business deductions that were used to operate their company. This is what the “stated” loans were put in place for the most part. Long story short, 20% of American’s workers are in business for self, 80% of Americans work for a company which is considered a “small business”, which constitutes 100 employees or less. My point is these are all interlinked. If business owners can’t get financing, or are an adjustable loan, etc. they can’t get qualified now in most situations with tightened lender guidelines. All I am saying is that I believe this is very profound and will have a severe impact on the economy is the near future. I just hope the “think tanks” or whomever, come up with something.

The Hedge Funds, big Investment Banks and the like never cried when they were making big dollars off the subprime loans. Now let them take their medicine like the regular Joe. The FED needs to stay out and let the market find its place.

The FED needs to stay out of this mess. They already did enough damage when Greenspan lower the rate to 1% and initiated this bubble. Greedy lenders and over extended irresponsible borrowers will have to exit the market, no bail out for the fiscally insane. Let them lay in the bed THEY made. Eventually housing prices will come back down to earth so that people living within their means can afford a home with at least 20% down. If any action should be taken by the legislature it should be to require at minimum 20% down for borrowers with excellent credit, 30% down for borrowers with good credit so that this greed fest can’t repeat in the future.

And what about the people whose pensions are affected by all this? Should they be punished as well? And what about all of the collateral damage which is starting to occur that is affecting the prime-lending mortage companies, the homebuilders, the companies who supply the homebuilders, and so on? It’s all very well to say “The hole is in your side of the boat” but when the boat sinks it’s going to take you along with it.

Greenspan did the right thing then and saved the world economy by lowering the interest rates significantly after 9/11. The cheap money kept the economy going. Now that the interest rates are normalising the economy is suffering. For the right reason, Greenspan delayed the after effect of 9/11. The only difference is….the problem now will be like a slow poison. The government should not bail out lenders as people need to learn nothing (housing, stock market etc.)can keep going higher for ever. The forces of economics do prevail sooner or later and after some torture the economy normalizes in a healthy way which is good for the long term.

I think that all this worry about the “Mortgage Meltdown” and a “Subprime Contagion ” is way overblown. It’s the sky that I’m worried about.

The Government should not bail out the foreclosures. More of our tax money going into the pockets of those who were underqualified to get these mortgages in the first place!! I have been in the mortgage industry for over 30 years and blame this huge crisis on greedy loan officers; greedy realtors; greedy appraisers; and lying buyers. I do know that some people could have been duped into or pressured into an ARM, but how about those buyers that claimed higher incomes with very low credit scores. I have lost many loans to this greedy bunch I named above, but at least I know I did not contribute to this huge crisis. The sub-prime sector of the mortgage industry should be sued and jailed. It is the sub-prime sector that has caused most of this crisis and have given good loan officers a bad name. My advice to anyone getting a mortgage is to stick with a major bank!!!! I still say the “20% of the people do 80% of the work and do it well”

If the fed lowers the rate, 100% of americans have to deal with inflation rocketing up. The dollar will tank, and electronics will spike, energy will spike, and food is already spiking. What’s worse, it won’t save anybody’s home. People who are getting foreclosed on with one of the lowest unemployment rates we’ve seen in some time aren’t going to be saved by a lower fed rate. The banks aren’t going to lower mortgage rates with defaults spiking, anyway.

If they leave the rate alone, or raise it, which is what they SHOULD do, the liquidity works its way out of the markets and eventually the credit bubble stops wreaking havoc through malinvestment.

People aren’t losing their homes to unemployment, they’re losing their homes because they took on debts they couldn’t service using a house as collateral.

I’m tired of people crying for the government to fix their problems. If you got yourself into a mortgage you can’t handle, it is you’re own fault. Stop blaming the lenders. Take responsibility. Why should the tax payers fix your problem? I pay my mortgage on time, and when i bought my house, i made sure i could afford it! This is what is wrong with out country…boo hoo..i can’t pay my bills, someone fix it for me!! BS!!!!
Why should the responsible, hard working people of this country continue to pay for the irresponsible ones? I’m getting sick of it! What ever happened to self respect?

I didn’t hear anyone talking about the realtor’s role in the subprime lending debacle. The U.S. is oversaturated with realtors and some of them try to get people into homes, regardless of their ability to pay back. And so many of us are living hand-to-mouth in a volatile job market. People lose jobs; people get sick. The PayDay check cashers should be closed down and put in jail. It’s not just the lenders.

the government should only get involved when a real crisis occurs. We’re not even close to that yet. Intervening now would just delay a bigger correction later. The more interesting problem is with the other financial institutions such as credit cards, insurance, pensions, etc. who hold all sorts of risky securities and assets. When no one will buy the riskiest part of collateralized tranches, there will be tremendous credit consolidation. I wonder how many people are paying their mortgages with credit card debt? There’s a lot more risky stuff out there and the government can’t bail everyone out.

Why should the government step in and help those that did not do proper planning of their long-term finances. I am 29 and just bought my first home in the Washington DC area. I have 2 mortgages which allowed me to put zero down, yet I knew that I needed to lock in these loans at a reasonable rate. Yes, a 3 or 5 year ARM would have allowed me to pay approximately $500 less per month, but at the end of the term, who is to say that I could afford it. I worked hard to get my education, get a good job, and to maintain a high credit score. It would be a slap in the face to me and many other hard-working Americans for the government to step in and give a free pass to those that did not have the finacial knowledge to sign onto a mortgage in the first place.

Yes the recession is coming. Consumer consumption which was driving the economy was based on tapping the value of the home with those mortgage instruments. Since that is no longer an option due to declining values then we see increases in revolving debt to keep the lifestyle going. Once the mortgage payment adjusts and gas keeps going up and then have to pay the new charges on credit cards (which we have seen a spike in the consumer credit reports) there is nothing left to spend on new goods. The ecoonomy will slow and the layoffs will come. Bankrupticies and more foreclosures will follow.The Fed will have to step in and start lowering rates.

On a separate note how does one ever trust the Rating applied to a MBS offering ever agin? These agencies that provided the ratings for the MBS market products had no oversight and were not even close as an indicator of risk. There ratings seem to work in a stable to inclining value market but when the values got hit their poor modeling of risk was seen by the tremendous number of downgrades. No different from the manufactured home downgrades and reassessmnet a couple of years back. We need to change the rating process regarding declining values (for the underlying collateral) and those worst case assumptions should be reviewed by non-vested oversight authority before being offered for securitization.

If I gave a AAA rating for brakes in a specific car and then those brakes started failing across the globe and millions were killed, I lower my rating. So what do you think the next time you go to buy a car and see my AAA rating on the brakes if no change in oversight?Just a thought.

Private Equity, Hedge Funds and Wall Street would obviusly have an appetite for any instruments that were paying at or higher than the rated risk level. But who would buy if the risk levels were accurately graded and rated for the declining value market there would have been little to no liquidity injected into this market.

With irresponsible comments from Coutrywide CEO and others, the housing markets continue to take it on the chin. I believe this is the result of irresponsible borrowing and lending. Greed prompted many in real estate to take advantage of low rates and housing boom, to cash in in the frenzy. Now, we’re all paying the price. Those who didn’t use restrain making or originating home mortgages deserve to fail and go bust..! If some consumers or banks lose money, homes, etc. too bad..! You get what you deserve..! Stop belly-aching about decisions YOU made and expect the government to bail you out.

People just don’t get it, do they?

The problems we face right now are NOT predatory lending…they are ‘affordable’ housing lending problems. Take this foolish statement:

Rep. Betty McCollum, D-Minn. said while Minnesota has one of the highest home-ownership rates in the nation, subprime loans have been used to take away opportunities for many families. That’s due to a lack of regulation, she said.

How are subprime loans taking away opportunities? These are the loans that have empowered people with less than perfect credit profiles to obtain a house! It’s up to the homeowner to decide if he/she has the means to afford a place. Underwriters of mortgages just look at statistically-based guidelines.

In the past 3-5 years, 1st time homeowners have flooded the market because of easy financing. This is not because lenders, brokers, investors or banks have preyed on them. These borrowers have chosen to make bad financial decisions. This equates to purchasing a new car using a credit card. What exactly did these homeowners do?

-They bought homes at inflated prices speculating that the home value would continue to surge.
-Purchased long-term housing with short term financing i.e. ARM loans, Neg Am
-Refinanced up to 100% of their house market value
-Overspent on everything, then refinanced it on their house.

The people that are losing their house because of ARMS aren’t victims, they are merely reaping what they sow. When you purchase a car using a credit card, do you not expect negative repercussions?

My hope is that the government doesn’t use MY money to pay for homes for people that made poor decisions. All the lenders did was make money available…so why not shut down Credit Card providers first? There is no reason for the government to use my hard earned tax dollars to pay for other’s foolish decisions.

It is not the role of the government to step in and help those who are financial fools. Like many have already said, nobody forced these people to take these loans. They were caught up in the hype and thought the market would only bring them more equity. I remember having this argument with people during the boom. They said the market would keep climbing for years to come. It was the same mentality that people had about the stock market in 1999. Hardworking people, and people that have researched and made wise choices should NOT have to bail out the fools.

Fed needs to lower the interest rate to 4% to avoid a disaster. Let’s get the money printer running like mad!

Greed should be punished. Government should let the market work its way out. The housing price has been inflated due to excessive greed. It is time for the housing price to come back to earth so people with median income can afford a house. In Califorina, the housing price has to drop 50% to bring price and income back to balance.

This is not the time to give in to the wimpy Wall Street bankers. This was all brought on by a combination of lender stupidity and consumer ignorance in refinances. Add in the Republican way of stimulating economy with unrealistically low interest rates.

Now is the time to correct this mess and reward people who have saved and lived within their means. The Federal Reserve needs to stay out of this mess and let it correcct itself.

A note to all the ‘take financial responsibity types,’:

It’s all well-and-good to wag the finger at the ‘greedy, dishonest’ borrowers out there who wanted to finally own a piece of the American Dream.

What happens when this situation unravels and YOUR business is affected, YOUR neighborhood begins to lose it’s property value, YOUR job is cut because all these things are connected?

It is NOT a finger-pointing situation. This is a problem that needs intervention in order to AVOID a larger, Great Depression-style banking and finanical collapse. That worst-case scenario has played out before, so DON’T say that it can’t happen again- It can.

I am not suggesting a government bailout. I AM suggesting court-ordered remedies, including enforced lender forebearance programs (i.e., government programs that formerly over-eager lenders MUST participate in to mediate the effects of their predatory lending practices during the past 8 years). If 2 million families are forced out of their homes during the next 2 years, it will NOT be healthy for the economy at large, and ALL of us will pay.

Think about your self-interest before you throw the baby out with the bath-water!

Hey, I ALREADY lost my home in foreclosure due to personal stupidity/overborrowing. Amazingly, I borrowed a mortgage substantially LESS than the bank wanted to lend and still when my job got outsourced to India I just couldn’t recover quickly enough. Life goes on, you live and learn, and I’m rebuilding my life on a much better foundation. I don’t see any guarantees in the Constitution to a house or protection from my/the bank’s stupidity. The world is changing and we all get to adapt–including the U.S. gov’t and the Fed–whether we like it or not. Why do we keep assuming that the entity that largely caused this problem (by ridiculously low interest rates) can now do good? It’s like a doctor prescribing poison that makes you sick, and we keep going back to that same doctor (the feds) as if their earlier stupidity never happened?

What should the government do? Well, I recently read statistics that showed that the number of households with mortgages is ~30 of total households. The government, should do what is best for the 70%+ who made prudent financial decisions. A bailout of the irresponsible folks who decided to speculate or who could not see that a 50K salary does not enable one to purchase a 450K home would be an unconscionable action.

Government’s function is not to handhold and coddle.

I think it’s possible that the subprime mess could trigger a recession but it has to spread into something that will affect consumer spending. People still have access to credit just not as easily or as cheaply. The economy can weather changing credit conditions, especially if the job market remains stable. The governments role is trickier since it cannot turn it’s back on lenders and consumers. I think what the Fed needs to do is wait it out and see what comes. I think investors are in panic mode and that it will pass. The market has to be allowed to suffer loss. The record runups in housing and stocks were unsustainable and needed to be corrected.

A few thoughts:

1) just like the gas/oil industry any “possible” disruption is passed on immediatly to the consumer. Even if “fears” don’t turn out to be reality we pay the balance in the meantime
2) Jumbo applicants are punished for no real reason. I bet if you looked hard borrowers in NY/CA in the higher jumbo’s are LESS likely to default than the 2nd tier markets. High incomes/highly educated borrowers are not those defaulting. Those people defaulting are the people that overextended on stagnant incomes who “reached” for houses they can’t afford.
3) This is mostly hot air. I live in Northern CA and can tell yuo house prices have merely settled. With little or no inventory in the Bay Area supply and demand will always rule.
4) the Fed DOES NOT need to bail people out. That, my friends, would be bad for everyone. Let the markets dictate what happens. A rate cut now and the panic will ensue.

I have read some posts here that our blaming the homeowners who tapped into their equity to buy things with a “gotta have it mentatlity.” My husband and I refinanced our a home a few times and I was able to stay at home with our two sons.We told our last lender we DID NOT want an ARM and it was done anyways.Yes-we did sign the dotted line.I will take partial accountability for my actions.However,there was ALOT of greed to go around from lenders,to brokers and now my husband and I are going to loose our home.We have tried to do everything by right but the mortgage company who holds the loan has rejected all offers and has not cooperated with our real estate agent.People can cast stones and pass judgement and throw the books at us folks and say we deserve what happened to us.However,until you walk some miles on the road we have been on,maybe you would not feel this way.Why is this happening to so many folks?It is not an isolated incident and its going to get worse before it gets better!

I’m sorry, but this market needs this correction. Too much liquidity has entered the market, so drying it up now would bring the balance back to the market. And anyways, it will prod people to tighten their lending standards and we’ll have a stronger more viable mortgage market in the future.

Cheap credit disappeared long ago and like everything else, you certainly couldn’t bank on home prices continuing to increase over time (what goes up eventually goes down). With users tapping into home equity and cheap credit accessible to many, the economy certainly got an adrenaline shot that has kept it churning. Is it really any surprise that the day would come when home prices were so inflated and that mortage rates would go up (along with interest rates as a whole)? While the implications of what is happening won’t be known for a long time, the markets are over-reacting. Just as the American consumer has borne the brunt of $3 gas, we’ll work our way through this turmoil (as we did with Enron and MCI and all the other corporate scandals). Get a grip!

The government needs to stay out. The government should not bail out people who took a sub-prime loan because they could not afford a down payment or did not have the income to qualify for a reqular loan. If the borrower was being financially conservative the borrower would have not taken the loan. If the lender mislead the borrower then the borrower should sue the lender. The government should not use our tax dollars to bail out people that do not take ownership of their own financial sitations.

The government needs to step in and STOP the foreclosures. They need to help we THE AMERICAN CITIZENS ! I have worked all my life (Legal Assistant), finally got my American Dream at the age of 48 and now I lost my job (like many others)and I am being pushed around like a rag doll from employment agencies. So I have a two-fold situation (no job and probably no townhome soon) and I know I am not the only one. WAKE UP folks, we are in a serious crisis and need help.

the mortgage problems is a problem between the lender and the borrower, and anyone directly involved in the borrowing / lending process. It is not the responsibility of the government to force a responsible citizen to bail out an irresponsible or greedy one. Bottom line: a lot of borrowers knowingly and willingly signed fraudulent mortgage applications because they felt they could make a huge profit. Now they are paying the price of that fraud and want someone else to pay for their error in judgement. And the fact is, these homebuyers aren’t actually losing “their” home … until its paid for, the ultimate owner is the lender – the fact is many of the home buyers going into default really have lost nothing – they put nothing down – paid a mortgage payment instead of rent – and now the house is going back to who REALLY paid for it …..

There should be no bailout of any kind. Housing prices need to get back to realistic levels, and our tax dollars should not have to support those who failed to properly understand how ARMs work or who overrached and bought houses when they clearly had no business doing so until they were financially prepared to make a standard down payment. Let the market correct itself.

The government should ABSOLUTELY NOT do a darn thing about people who are “about to lose their homes.” Many of those people exercised pure greed and a “gotta have it now” mentality when it came to purchasing a house the they had no business buying in the first place due to the simple fact that they simply could not afford it without “creative” financing. Nobody MADE them sign on that dotted line! It was a CHOICE! If they failed to think through the possible outcome — that’s THEIR problem — not everyone else in America’s problem.

To use tax money (for a bailout) paid into the system by hard working and “honest” Americans that DIDN’T rush out and lie on their loan applications about stated income and assets and DIDN’T buy more house than they could afford — would be a huge disservice to them.

The government and the federal reserve should stay away from the market.
They are jus creating more inflation inyecting all this liquidity, so they are punishing the savers and people who were conservative financially speaking.
This is a bail out not for the borrowers but for the lenders. The borrowers will still have to pay their mortgages back, but the lenders, the banks are getting liquidity from the Federal Reserve againts their mortgage backed securities.
This is awful, be aware of higher inflation when August’s figures are known.

This situation is primarily a problem created by the mortgage industry as a whole.

Unqualified/Underqualified Brokers selling products that were not fit for the consumer’s situation. Add to it that there was little oversight on the lending process (over valued real estate for example), No Doc / Low Doc loans, … And add to this mortgage fraud which is rampant.

There is a cascading effect and as the liquidity of the market dries up, there will be additional harships for those who’s pocket books are stretched.

A recession? Maybe. It would be short lived and there will be a large gap between the middle class and those that do have.

The implications of this credit crunch are going to be tremendous. Forget about all the people that were buying homes with $0 down and stated income. Just think about all the people already in homes with adjustable rate mortgages that now won’t be able to refinance as they can’t verify enough income to qualify. Combine that with dropping values, higher rates on their adjustables and you have a recipe for disaster. I believe this lack of available funds for loan amounts above $417k will cause turmoil and accelerate foreclosures and values in high cost regions of the country.

The housing market will get worse, being in the mortgage business I’m seeing the lender’s dropping like flie and the ones that are left are so tight on credit it is hard to get someone a loan. The goverment needs to step in and help these people before they loose their homes

It’s time for the government to step in and put in place something to help people who are about to lose their homes due to bad loans. A simple plan would be a government backed loan at a market rate (6%-7%) for 30-40yrs this would include people with all types of credit. The person could only use this on their main home and only once in a life time. So if you go out and get into a bad loan again you’re on your own.
This is just an idea but it is a great starting point for the government to prove it still works for the people and not big business.

Houses are supposed to be priced at three times a family’s annual income. Real estate agents, mortgage brokers, and developers all got greedy. There is no guarantee of profits with the stock market. Why should the fed bail them out? Why did the fed keep interest rates so low to begin with?

Yes it will trigger a recession and the government should do NOTHING.

Greed motivated this situation we are in, greed from flippers, greed from lenders, greed from real estate agents & appraisers, greed from consumers.

We had a false economy and false housing boom. Remove all those people that should have never gotten loans to begin with (that is millions and millions) and you would not have seen barely a jump in housing prices over the last 7 years and we wouldn’t be in this situation. But now, we have condos and housing in DC EASILY overvalued by 50% or more due to flippers and investors. The same holds true in Miami, Arizona, California.

People wake up. You cannot have an economy based on flipping housing. You cannot have gains like this EVER. Just look at a normal chart of inflation and gains and its slow. We are 250% ABOVE the mean.

This society today feels they are entitled to anything. We have a society that “we’ll deal with it later” as a mentality and we have a society that lives off credit. All of these need to go away.

The FED and GOV cannot intervene. They are partly responsible for this along with the lenders and real estate groups and mortgage companies. If they intervene then you are going to keep housing at a false price. Everything needs to come back to earth and return to normal pricing. Nothing else went up in this time like cars, food, etc. I’m sorry DC, NOVA but housing here is about to take a fall, the government jobs don’t matter because the same things happened in the 80s and 90s in DC also.

Unfortunately, it’s a hard lesson for millions but the simple one is this.

“There is no such thing as easy money.”

The government should be involved to provide stability (like the FED intervention recently) and soft-landings. They should not bailout consumers who are too stupid to understand interest rates and mortgage lenders who don’t understand what credit worthiness is.

I think the subprime problem will become bigger than it needs to be. The press is completely focused on what is wrong not the fact that mortgtages for the average consumner have not changed and there is plenty of liquidity in that market. People are being frighted out of the market when they should be taking advantage of the buyers market.

Its just not the subprime loans, but also the “Alt-A” loans. Loans with good to excellent credit but didnt mean agency guidelines (A paper) for some reason.

Strong chance will cause a recession, even if Fed does a rate cut as the rate cut wont solve the liquidity crunch for mortgages.

Dont know how govt can help, except to mandate all short term subprime ARMs can be converted to fixed rate 30yr loans free of charge. There is something like 1 trillion worth of subprime ARMS due to adjust in the next year.

If a borrower cannot refiance out of the loan, they are more than likely to walk away from the debt, further hurting the lender and house values.

It’s been affecting me for quite awhile, because all these idiots were out buying houses they couldn’t afford and pushing the prices out of reach. I’m quite happy to see them get their desserts, while I just wait for the home I want to live in for the rest of my days.