Comments on: Mortgage Meltdown 2007

By: Jo-Ann T. Nutini 70 Duffield Road Bristol RI 02809

Jo-Ann T. Nutini 70 Duffield Road Bristol RI 02809 — Sat, 29 Mar 2008 01:01:48 +0000

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!

By: Gabe Bremerton, WA

Gabe Bremerton, WA — Wed, 31 Oct 2007 23:37:58 +0000

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.

By: Marc Andersen, Raleigh, NC

Marc Andersen, Raleigh, NC — Sat, 06 Oct 2007 13:44:49 +0000

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.

By: Rose lane, Eugene, Oregon

Rose lane, Eugene, Oregon — Fri, 21 Sep 2007 05:40:14 +0000

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?

By: Noel Freedman WA

Noel Freedman WA — Thu, 20 Sep 2007 17:35:58 +0000

“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.

By: Scott Diederich, Laramie, WY

Scott Diederich, Laramie, WY — Wed, 12 Sep 2007 18:03:57 +0000

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.

By: John Reiber, Saginaw MI

John Reiber, Saginaw MI — Mon, 13 Aug 2007 19:22:34 +0000

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?

By: Edie, San Diego, CA

Edie, San Diego, CA — Mon, 13 Aug 2007 17:01:18 +0000

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.

By: John Doe, New York,NY

John Doe, New York,NY — Mon, 13 Aug 2007 11:43:19 +0000

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.

By: John Lee, Santa Clara, California

John Lee, Santa Clara, California — Mon, 13 Aug 2007 06:46:40 +0000

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.

By: BILL, Little Rock, AR

BILL, Little Rock, AR — Mon, 13 Aug 2007 05:13:35 +0000

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!

By: Tom Alston, Edgewater, New Jersey

Tom Alston, Edgewater, New Jersey — Mon, 13 Aug 2007 05:04:06 +0000

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.

By: David Brown, Pullman, WA

David Brown, Pullman, WA — Mon, 13 Aug 2007 01:50:47 +0000

“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.

By: Anonymous

Anonymous — Mon, 13 Aug 2007 01:29:52 +0000

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

By: Daryl G. Knoxville, TN

Daryl G. Knoxville, TN — Mon, 13 Aug 2007 01:18:34 +0000

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.

By: mike rowe, haverhill, ma

mike rowe, haverhill, ma — Mon, 13 Aug 2007 00:52:00 +0000

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.

By: Paul Irvine California

Paul Irvine California — Sun, 12 Aug 2007 22:16:04 +0000

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?

By: Lucas Braganca, Goa, India

Lucas Braganca, Goa, India — Sun, 12 Aug 2007 19:46:28 +0000

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.

By: Steve, Toms River, New Jersey

Steve, Toms River, New Jersey — Sun, 12 Aug 2007 14:48:46 +0000

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.

By: Alex, Stafford, Virginia

Alex, Stafford, Virginia — Fri, 10 Aug 2007 22:08:26 +0000

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.