Credit Meltdown
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From: Ventura, California, USA
Originally Posted by kadeshpa,Sep 29 2008, 01:39 PM
In a way, they did thus the coined phrase "predatory lending".
"You'll have a fixed rate of 3.5% for 3 years. Then it may go up significantally, but the market is rising so most likely things won't change much, or if they do the interest rate will be close to now and you can sell for a large profit so there is nothing to worry about."
Really is that any different than going to a car dealership and they guy saying," I can get you into this for a payment of 250/month. Just sit in it, drive it, smell the fresh leather, listen to the CD.
So the excuse is that the weak minded got taken. It's still their fault. I'm not saying the lenders are angles, but come on.
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From: Lost in the mountains
Originally Posted by S2020,Sep 29 2008, 01:46 PM
I wouldn't say the borrowers are stupid.
If you have no money, bad credit rating, no means to pay any loan back, and some schmuck will loan you $500K for signing your name.
If you get lucky, wait 2 years and sell the house for $300K profit. Or refinance and get $100K out of the house you don't own. If you get unlucky, in a couple of years you lose the house you don't own to foreclosure and ended up exactly where you started.
Upside - Getting $100K for free & potentially making $300K.
Downside - nothing.
wouldn't you do it if you were in their shoes?
If you have no money, bad credit rating, no means to pay any loan back, and some schmuck will loan you $500K for signing your name.
If you get lucky, wait 2 years and sell the house for $300K profit. Or refinance and get $100K out of the house you don't own. If you get unlucky, in a couple of years you lose the house you don't own to foreclosure and ended up exactly where you started.
Upside - Getting $100K for free & potentially making $300K.
Downside - nothing.
wouldn't you do it if you were in their shoes?
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From: Ventura, California, USA
Originally Posted by KeithMajkasays,Sep 29 2008, 01:58 PM
No....because im not stupid. That being said, im not stupid enough to get myself in that crunch to begin with so I guess I cant really relate.
I guess those of us with self respect or morals or ethics need not apply.
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From: Oh kwa tan zen wan
Originally Posted by s2000raj,Sep 29 2008, 04:48 PM
I wonder what part of this still excuses the borrower:
"You'll have a fixed rate of 3.5% for 3 years. Then it may go up significantally, but the market is rising so most likely things won't change much, or if they do the interest rate will be close to now and you can sell for a large profit so there is nothing to worry about."
Really is that any different than going to a car dealership and they guy saying," I can get you into this for a payment of 250/month. Just sit in it, drive it, smell the fresh leather, listen to the CD.
So the excuse is that the weak minded got taken. It's still their fault. I'm not saying the lenders are angles, but come on.
"You'll have a fixed rate of 3.5% for 3 years. Then it may go up significantally, but the market is rising so most likely things won't change much, or if they do the interest rate will be close to now and you can sell for a large profit so there is nothing to worry about."
Really is that any different than going to a car dealership and they guy saying," I can get you into this for a payment of 250/month. Just sit in it, drive it, smell the fresh leather, listen to the CD.
So the excuse is that the weak minded got taken. It's still their fault. I'm not saying the lenders are angles, but come on.
Predatory lenders will just move on to the next wave while the idiots that overbought will become a ward of the state.
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You keep forgetting the quasi-governmental status of Fannie and Freddie. The govt gives them the qualifying guidelines and they must follow them.
Now as to the "B" loans, they are called B loans for a reason, they are BAD loans for BAD people. Good people get regular loans. I have absolutely no sympathy for the B lenders. They went into the transaction knowing they were dealing with BAD people. I think it is poetic justice that AIG one of the prime holders of B loans has had to take a B loan out to save themselves.
Predatory lending is another issue altogether. It is practice of "unfair or deceptive practices by lenders who seek to make legitimate loans to consumers but who seek to take advantage of the consumer."
The most common example of predatory lending is a Home Equity loan. Whether they entice the person into making (another) HEL or whether the person just can't help themselves and feel they simply have to have the equity built up on the home they secure multiple loans over a period of time and therefore accrue multiple sets of closing costs. This eats into their equity.
This practice is most common in states that allow Home Equity Lines of Credit and allow LTVs of up to 125% of value. Note that the LTV of a HEL is set by the state, not be the individual consumer. In Texas HELs are limited to 80% of value and therefore you rarely see this type of event happening.
Predatory lending practices are rare. Stupid people attempting to get loans on things they cannot afford are unfortunately common. Note see size of cars in the Projects and Apartment complexes.
Now as to the "B" loans, they are called B loans for a reason, they are BAD loans for BAD people. Good people get regular loans. I have absolutely no sympathy for the B lenders. They went into the transaction knowing they were dealing with BAD people. I think it is poetic justice that AIG one of the prime holders of B loans has had to take a B loan out to save themselves.
Predatory lending is another issue altogether. It is practice of "unfair or deceptive practices by lenders who seek to make legitimate loans to consumers but who seek to take advantage of the consumer."
The most common example of predatory lending is a Home Equity loan. Whether they entice the person into making (another) HEL or whether the person just can't help themselves and feel they simply have to have the equity built up on the home they secure multiple loans over a period of time and therefore accrue multiple sets of closing costs. This eats into their equity.
This practice is most common in states that allow Home Equity Lines of Credit and allow LTVs of up to 125% of value. Note that the LTV of a HEL is set by the state, not be the individual consumer. In Texas HELs are limited to 80% of value and therefore you rarely see this type of event happening.
Predatory lending practices are rare. Stupid people attempting to get loans on things they cannot afford are unfortunately common. Note see size of cars in the Projects and Apartment complexes.
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From: Wylie, TX
Originally Posted by Incubus,Sep 29 2008, 05:40 PM
Haha, Wachovia commercials are still on TV.
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From: Ventura, California, USA
Originally Posted by mxt_77,Sep 30 2008, 08:32 AM
They just built a new branch near my house. It's not even opened yet. I guess they might as well take down that shiny Wachovia sign and replace it with a Citibank one.
I'd wait to put up a bailout bank of America sign...
or a bailout bank of Saudi Arabia sign....
