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Dienne
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pde wrote: <quoted text>
....can't even refinance out of their ARMs because they own more on the house than its worth. I would be willing to bet that nine out of ten new home buyers (and probably a lot of repeat buyers) have no idea there could even be a situation in which they couldn't refinance because they owe more than the house is worth. As I've said before, I'm reasonably well educated, but even I have a hard time getting my head around that concept. When pushing ARM loans, the brokers and lenders sing you this song and dance about how you can always refinance if, yada, yada. They never tell you you might NOT be able to refinance if, yada, yada. Sure, it's somewhere buried deep in the fine print, but many homebuyers aren't even understanding the big print, let alone the fine print. If cigarette and alcohol companies can be required to tell consumers about potential hazards in big bold letters, I think mortgage lenders should be equally required to tell consumers in plain language about potential hazards.
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pde
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Dienne wrote: <quoted text>
I would be willing to bet that nine out of ten new home buyers (and probably a lot of repeat buyers) have no idea there could even be a situation in which they couldn't refinance because they owe more than the house is worth. As I've said before, I'm reasonably well educated, but even I have a hard time getting my head around that concept. When pushing ARM loans, the brokers and lenders sing you this song and dance about how you can always refinance if, yada, yada. They never tell you you might NOT be able to refinance if, yada, yada. Sure, it's somewhere buried deep in the fine print, but many homebuyers aren't even understanding the big print, let alone the fine print. Maybe it was because of my parent's experiences with homes during the various cycles in the 1980s, but I have always been fairly aware of this risk. When we built, we looked around at what the homes like the one we were building were selling for in the area and set that as our "target" for our extras. When I later went and looked at the tax records for properties in our subdivision, it was pretty obvious who had taken the same course as we had, and who had not. The base prices on these houses were 375-398K when we built ... I have NO IDEA how people who built during the same 6 months we did managed to spend 650K+ on them (I think the highest that a home went for was 765K--and it wasn't even one of the biggest homes.) I just see managing to take a base price of 385K and pushing the total price up to 650K to be something that could be viewed as unreasonable and risky under any circumstances.(And unlike some of the nation-wide building chains like Ryland, "expected" things like air conditioning were included in the base price.)
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pde
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Dienne--I don't know if this will make you feel any better or just leave the taste of irony in your mouth ...
The people I know who are currently in the biggest trouble, all are IN the mortgage industry. They were the people selling these loans, writing these loans. Now they are in loans they can't refi out of because they are upsidedown, and they are "on leave" because there are no mortgages to sell or write.
They believed their own press. They believed that the bubble would never burst, that becoming upsidedown was a risk not even to be considered.
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Wow
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Dienne wrote: <quoted text>
I would be willing to bet that nine out of ten new home buyers (and probably a lot of repeat buyers) have no idea there could even be a situation in which they couldn't refinance because they owe more than the house is worth. As I've said before, I'm reasonably well educated, but even I have a hard time getting my head around that concept. When pushing ARM loans, the brokers and lenders sing you this song and dance about how you can always refinance if, yada, yada. They never tell you you might NOT be able to refinance if, yada, yada. Sure, it's somewhere buried deep in the fine print, but many homebuyers aren't even understanding the big print, let alone the fine print.
If cigarette and alcohol companies can be required to tell consumers about potential hazards in big bold letters, I think mortgage lenders should be equally required to tell consumers in plain language about potential hazards. I agree. Personally, I don't want to live in a world where only I, the consumer, has to be responsible, but no one else. YOur experience is similar to the one I had. Banks didn't even understand the instruments they were pushing. OUr trustworthy guy, Bob, told us the same thing when we were refinancing. Take out an ARM, the rates are going to drop again, refinance in the next year. Thank goodness we didn't do it. It's predicted that by this time next year, 1 in 4 home owners will owe more than their houses are worth. Then the banks will fail, then we have a lot more to worry about than a recession. I wonder if the same people on this site will be singing the same tune - how they are just too smart and responsible to be fooled by misinformation.
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John R
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jjrg7 wrote: When I was in my early 20s buying my first place, the (worst case scenario) terms of an adjustible rate mortgage scared me so much that I was more comfortable with a higher rate fixed. I don't understand how people cannot understand the terms of an adjustible rate loan. It wasn't rocket science. I probably could explain it to my forth grader. You just described my story...late 20s...rate was 8%..but the worst case of 12%+ scared me away. Over the years, I've refinanced several times down to a lower fixed rate. At one point, while considering a construction loan on the house, I met with a CW lender who was willing to give me hundreds of thousands more than I knew I could afford. I politely thanked them for thier time and walked away. Not a difficult thing to do.
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Dienne
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pde wrote: Dienne--I don't know if this will make you feel any better or just leave the taste of irony in your mouth ...
The people I know who are currently in the biggest trouble, all are IN the mortgage industry. They were the people selling these loans, writing these loans. Now they are in loans they can't refi out of because they are upsidedown, and they are "on leave" because there are no mortgages to sell or write.
They believed their own press. They believed that the bubble would never burst, that becoming upsidedown was a risk not even to be considered. I like the taste of irony - yum!
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CICEROKID
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RamRod wrote: Another big non-story.
I'm not the happiest mortgagee Countrywide has by any means and I'm struggling much like Mr. Bailey is.
HOWEVER, I knew what my wife was coercing me to sign and the consequences of a downturn in home values and/or the economy at large.
I was stupid enough to sign and am now suffering, mightily. Who's fault is this and who should be giving me a break?
Personal responsibility is a tough pill to swallow, but, be an adult about it and "don't make the sign, if you can't do the time". HEAR HEAR MY GOOD MAN YOU STOLE ALL MY THUNDER!
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Pete
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pde wrote: Dienne--I don't know if this will make you feel any better or just leave the taste of irony in your mouth ...
The people I know who are currently in the biggest trouble, all are IN the mortgage industry. They were the people selling these loans, writing these loans. Now they are in loans they can't refi out of because they are upsidedown, and they are "on leave" because there are no mortgages to sell or write.
They believed their own press. They believed that the bubble would never burst, that becoming upsidedown was a risk not even to be considered. These are the people who truly deserve to be foreclosed on. They certainly can't say they didn't understand the terms of their mortgage! I will enjoy hearing about them being evicted.
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asdfgh
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Hello pot meet kettle.
I would like to point out that understanding these contracts is a bit trickier than figuring out which button to press when you send an email. Perhaps Mr. Mozilo should think twice when he criticizes someone else for their stupidity.
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Bucky Pharcznack
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Could the fat cats shoot themselves in the foot with the same tool they been using to shoot their customers in the wallet, visa vie, the infamous computer? Good job Mozilo, you self serving JERK!
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Bob
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Big Tuna wrote: Bailey said he took out the adjustable-rate mortgage without realizing how it worked.
Gee, when the sheriff showed up at the door to toss his furniture in the street he found out how the mortgage worked. Sad but another example of not getting all the facts before signing on the bottom line. You, "Big" Tuna, never make mistakes. How arrogant you are!
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Mo Money
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Greed is a horrible thing to waste.
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Mike
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Hey, he's right.
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InsideDaWide
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Actually, anyone who is cocky enough to think that the "buyer should just know" and anyone naive enough to think that the buyer was "victimized" are BOTH wrong.
Coming from the almighty CW Sales Floor, the pitch to sub-prime borrowers was a "chance to get out of debt and utilize the equity in their homes to consolidate their credit debts and start fresh with a new loan." Now, every borrower that got IN over their heads with their bills were just told that an empty voice over the phone could make them skip next month's payment, payoff all their credit cards and even give them a check for 5 or 6 grand inside 3 weeks and all their eyes light up. The Loan Officer THEN explains that if they use the savings to make their payments on time, they COULD refinance in 12 months to a better rate. The borrowers move very fast through the loan process and since MOST regular loan officers can barely even read a HUD-1 closing statement at the table with their client, they feel the need to chit-chat about what a great savings they are about to get and what they will "buy" with their cash out...Once the loan is signed everyone goes their seperate ways...for a year.
Now, a shocking 89% of all sub-prime borrowers who were "put back on track" get a call 10-12 months later from the company's portfolio leads and SURPRISE! They still have crap credit and they have acquired new debt that they are not paying on time! So, before this pesky ARM adjusts, it is time to use more equity to refinance their debts AGAIN with another sub-prime loan which the customer greciously thanks the loan officer for.
This routine went on over and over again until the market crashed and/or Countrywide stopped doing sub-prime loans last year and NOW all the people that cannot do their ritual de la habitual refinance to erase their mistakes and save their houses for another year are screaming "fowl."
It is BOTH the lenders fault for being greedy and the borrowers fault for not being responsible all at once.
The deals I put together were no better than putting people in a busted Yugo that will die in a year just to re-sell them a busted Yugo when they come back in. Of course, Countrywide had this "corporate cult" mentality that had all of their AE's believing that while "Their buddies sat in a used car lot, they got to be professional financial guides and really help peopl while making sick money that no one thought was possible."
Hell, I remember at one point, if a young kid that just started got a huge commission check, the managers would "convince" them that they opened up the faucet that would not stop and that they should treat themselves to a nice car to look the part of success...of course the kid would roll in 2 weeks later with a BMW or Infiniti and now? They NEED to work 70 hours a week to make sure they hit that payment on the note.
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Commando
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Tina wrote: <quoted text>
I think a lot of people jumped and bought a house with an ARM instead of a fixed 5-6 years ago when interest rates were at historical lows. But that's the problem--it was a *historical* low, which in essence meant that eventually payments would have nowhere to go but upwards. Fixed rates were at a historical low also. I got 5.375 in Jan of 2004 on a 30 yr/fixed. I knew my broker from my purchase in '93 (at 7.25%) and am a CPA and did my homework on an ARM. Not worth my risk. a 4 point increase would eat up all the interest I would have saved. I do feel sorry for those who fell for car-salesman tactics and also think you shouldn't have to be a CPA to understand this material, but DAMM this is the most expensive item you will purchase in your life. GET SOME HELP!
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mklitt
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Funny to be called disgusting by the scum of the earth!
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CWstinks
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Still, A-lo is a prick, that is a fact. Stupid people borrowing from a greedy prick.
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Messy
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Insider wrote: Those castigating the borrower in this case are missing the point. Countrywide and other lenders like it MADE THEIR PROFITS off borrowers not not knowing the terms of their mortgage. Have you ever talked to one of these mortgage salespeople on the phone? They rush you thru choices, make wildly untrue and misleading statements and steer customers into the best product for the company (and the salespeoples' commission) all the while sounding like they are looking out for the customer. If you were stupid enough to sign your income away without reading the fine print, or if you were dumb enough to blindly agree with some moron in a call center, then what do you want from us? A tax financed bailout, perhaps? Forget it. For all the village idiots who decided that taking out a second mortgage so they could go on vacation, for all the dough heads that saw a low monthly payment and didn't read further, I have no sympathy AT ALL! We chose not to purchase a home until we were well into our thirties, because we knew that making a big down payment was the most effective way to make a mortgage. We waited until we had 30% of the home's value before we jumped. I suspect that people would take their responsibilities a whole lot more seriously if the minimum down payment was 20%, with no exceptions, no how, no way. I'm tired of all this whining. No one owes you a house. That is something you have to earn.
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Jim C
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Bored wrote: <quoted text>
Nonsense. You are not buying a Ronco Oven. You are refinancing your home. If you were trying to save money while blissfully ignoring the potential dangers then that is the chance you took.
The world is full of non-ethical companies. That doesn't excuse the stupid. Unethical business practices need to lawfully be prevented so future homeowners do not end up prey of greedy institutes. When HR 3609, HR 3915 and HR 3221 are passed there will be less of the greedy preying on the unsuspecting consumer.
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Jim C
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give me a break wrote: now my tax dollars will be probably go to helping people who bit off more than they could chew.
do a little research before signing on the dotted line. Do a little research before presuming the taxpayer will pay for homeowner rescue. No plans currently increase taxes or cost current taxpayers. Researching the loan specifics is a rational thing to do though.
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