More help advocated to combat foreclosures
By LARRY P. VELLEQUETTE
BLADE STAFF WRITER
http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20070918/NEWS08/70...
When Sue Simpkins tells the story of how she almost lost the family home, her anger isn't directed at the catastrophic stroke that afflicted her father. Instead, her ire is aimed squarely at "the predatory lender profiting off our misfortune."
Are there people who - for no fault of their own, deserving of public action? Then, if that's the case, does gov't. get involved?
What's getting out of control about this predatory lending business is the rhetoric. I'm not going to deny that there are some scams out there but overall I don't think it's so wide spread that it involves more regulation and laws.
Most of these people willingly signed a contract that had an adjustable rate mortgage. It isn't the job of the bank to make sure that they fully understand what they are getting into.
When I purchased my house at 23 years old, I was single and new little about real estate. So what did I do? You guessed it RESEARCH! I went down to the library and got books (many of them audio books) on purchasing property, maintaining it, lending practices, land lording etc. Moreover, I took a first time home buyers course at the Catholic Diocese for nothing.
As a result, when the bank offered me an ARM for a house that in the good times I could afford but in the bad times would have broke me, I declined and found a cheaper piece of property. It didn't take a genius or news junky to notice that interest rates where at all time lows, meaning that they only had one place to go...up.
Finally, when I went to closing I took an attorney with me for $200. A small amount of money compared to the cost of a foreclosure.
A little more due-diligence on the part of many of these homebuyers could have saved them (and now apparently all of us) a lot of trouble.
Matt Holdridge
The Toledo Tattler
...relevant to the discussion:
"One thorn of experience is worth a whole wilderness of warning." -- James Russell Lowell
"Experience is a hard teacher because she gives the test first, the lesson afterwards." -- Vernon Saunders Law
"Learning from experience is a faculty almost never practiced." -- Barbara Tuchman
"Failure is instructive. The person who really thinks learns quite as much from his failures as from his successes." -- John Dewey
"Education is when you read the fine print. Experience is what you get if you don't." -- Pete Seeger
"Life is a succession of lessons, which must be lived to be understood." -- Ralph Waldo Emerson
"Education is a progressive discovery of our own ignorance." -- Will Durant
My concern is that having the government come in and 'take care' of the problems these individuals have with their mortgages has the potential to make them comfortable in their ignorance...
The property is still there. The people who lived in the property had a roof over their head (which they would have needed whether they rented or purchased). They just lost the "good deal" they might have gotten if the interest rate had stayed low. The company that made the loan still has the property. If the company can't afford to maintain the property they should sell it for a lesser price.
Funny how the all the mortgage are looking for a government bail out of the mess they created. Corporations and right wingers like to privative profit, but love to socialize loss.
Absurd...
Matt Holdridge
The Toledo Tattler
Bullshit.
I'm sorry that these people have hit hard times, but no one twisted their arm and forced them to take out Adjustible Rate Mortgages and/or buy pricer homes than they could truly afford.
As Matt said, when I bought my house, I did a little research and used a little common sense...insisted on a fixed rate.
While I recognize that anyone's circumstances can change (job loss, illness, etc.), that doesn't mean that my tax dollars need to be used to bail out countless people who made a poor choice when purchasing/refinancing their home.
Banks may have been trying to tempt all of us to jump on the adjustible rate bandwagon but NO ONE was forced to take them up on the offer.
The very phrase "preditory lending" is bullshit. Mortgage loan brokers are not responsible for this mess. Neither brokers nor banks ever underwrote mortgage paper unless it can be sold on the secondary market. Most loand are bought and sold within days of closing and the process is invisible to the mortagee.
Who / what is responsible? ? ? The collective idiocy of the consumers is primarilly responsible. Is McDonalds responsible as a preditory feeder if some fool chooses to consume 5 Big Mac's a day? I say no, but I'll wager that many people disagree.
I took and ARM once that adjusted once, 3 years after I got the funding. I made sure there were no pre-payment penalties and paid-off the loan within 36 months of signing the note. I'm no smarter than the next guy, but made damn sure I knew what I was committing to. I have no sympathy for anyone who isn't sensible enough to investigate and understand all the terms and conditions of what is likely the largest financial commitment they will ever make in their lives.
Big Jim
Northern Rock shares higher but some depositors still pulling out
LONDON: Prime Minister Gordon Brown insisted the British economy remained strong Tuesday, as worried depositors again lined up to withdraw money from troubled mortgage lender Northern Rock.
He acknowledged the bank appeared to have been hit by the global credit squeeze sparked by U.S. banks granting house loans to Americans with poor credit histories.
"This is a set of financial problems that have happened in America, spread to Germany and Europe and now we are seeing some instances of that in Northern Rock in the United Kingdom," Brown said.
http://www.iht.com/articles/ap/2007/09/18/business/EU-FIN-COM-Britain-No...
http://toledoohioneighborhoodconcerns.com/blog
Can I claim misfortune and get the government to cover my rent payments for a while? Or, am I just a fucking scumbag renter, and therefore have nowhere near the rights of a beloved homedebtor?
I saw this taxpayer-bailout of flippers coming a mile away. The Great American Housing Crash is still proceeding and the more the government tries to "correct" it, the longer or deeper the crash will occur. Japan's housing crash of the early 1990s took at least 12 years to collapse, since they opted to carry bad loans under the aegis of government, instead of facing the fact of bankruptcy and loss. The more the US government tries to support farcically high home prices, the more the 5 years of crash will extend. What the Fed's done so far in the last 6 months will extend the crash by at least 2 years. That means the bottom will happen in 2012 to 2014 (varying across the nation), instead of 2010 to 2012.
Americans now are so loathsomely stupid about finance that it's very frustrating to watch. Naturally, GuestZero gets very mean when presented with too much stupidity by too many people. Hence: Keep hoping, flipfucks! Those $90K homes now being advertised in Toledo are really only worth $50K to $60K and I'm going to really enjoy watching your squirming economic agony while you figure it out. Deny it all the way to the bottom all you want, but you're still headed for the bottom.
..not me - they would have benefitted from the risk if the outcome had been profits - they need to suffer from the risk with the current outcome being a loss.
On September 5, 2007, Federal Housing Commissioner Brian Montgomery presented the outline of President Bush
GZ I agree with the last part of your comment partially.
Fixing up homes and flipping them for profit can be both a stable form of income and a nobel enterprise. The problem is so many people started doing it with little knowledge that they overextended themselves.
I have a friend who bought a home. Did 80% of the renovation himself. And sold the home for a large profit. His profit was so large because his out of pocket expenses for renovation were considerably less than people who hired contractors for all the work.
Now my friend bought a home that was in a nice neighborhood but was a depressed property.
The problem with many new flippers is they buy depressed homes in depresssed areas, put money into them, and try to sell them for large profits but the home still isn't worth the money they put into it because the area isn't worth anything.
Likewise there are flippers who bought foreclosed homes only to find out there was a second mortgage that hadn't yet foreclosed. So they have essentially bought nothing, the lender still can live in the home and they then deal with a squatting situation.
The lesson from the housing market crash is to do your homework, don't make any uninformed deals, and never ever overextend yourself.
MikeyA
I agree. Companies who were irresponsible in lending practices should be held to task just as the lender who was irresponsible in accepting too much debt.
MikeyA
"The problem with many new flippers is they buy depressed homes in depresssed areas, put money into them, and try to sell them for large profits but the home still isn't worth the money they put into it because the area isn't worth anything."
Correct. And who strongly enabled that sort of thing? BANKS -- and their vassals, MORTGAGE COMPANIES. The credit spigot was turned on fully, and all these folks (largely stupid fucks who don't understand economics) thought they'd pull in dotcom profits by flipping homes.
The TFP was still playing up the myth that home prices increase no matter what, by using the term "real estate investor" over and over. Most of these so-called investors are just stupid flippers and now that the market is diving, they're floppers of the highest order.
Reconditioning property is one thing. As you noted, what these people are doing is wholly another thing. Homes in depressed areas are cheap and should remain so. If they don't, then they only drive out the poor and working poor, and create a lot of economic churn and pain that must be resolved eventually. Toledo is going to see a lot more crime, for instance. Anyone with any sense should be installing security lighting to protect their homes from what's coming.
I agree.
The worst part about the whole crisis is too many foreign markets (namely African countries) put large investments into the mortgage companies who were buying these overinflated mortgages. The result of that is our housing boom and bubble is now affecting global markets.
This is a problem is in the past ten years if there was an American financial crisis we could always turn to the foreign markets to invest in as a way of getting through it. This recent situation has damaged the foreign market for investors who never dreamed of investing heavily into real estate.
MikeyA