Mortgage Mess: Is Relief in Sight?

charlesw3: I haven't fed into anything without it being completely thought out. The government didn't promote anything through inaction - they did what good government does - they stayed the hell out of the way. If they had stepped in during the housing boom they would have been crucified - and rightly so.

While the government has an interest in preventing downturns they also realize that the market is its own master. The tools given to the Federal Reserve via prime rate adjustments are like turning a battleship with an Evinrude - works, but it takes time and that maneuverability is largely to protect from inflation only - not step in and regulate a financial sector over which they have no (and have never had) control. To blame the government for this mess is moronic at least and irresponsible at worst.

Personal responsibility is the only issue here. To suggest anything different is typical liberal obfuscation.

Besides, if you believe these foreclosures in your neighborhood should be ameliorated they why don???t you and your neighbors get together and help them out. After all ??? you all are the only ones who will gain ??? not the rest of us whose tax dollars will be used for the rescue.

Fork it out of your own paychecks if you really believe the crap you spew on here.

???or do your precious seven habits only work with everyone else???s money?

Why is it that only people who can show they don't need credit can get credit? Following that same thought, why is it that the people who are most affected not helped first in this situation? The critieria as I understand it states you must be current on your mortgage payments and your rate is anticipated to go up in the future. ARE YOU KIDDING ME?!? What about the people whose rate has already gone up, they are months behind, and already have a foreclosure letter in hand getting put at the front of the line!! Why should the Bush Administration get kudos for helping people who don't need it yet?!?

What can we say.. Learn more about money!!

I believe Bush's plan will work for some people. Because yes there are some people that if there interest rate increased they would not be able to afford there payment. I think Bush has proposed a great plan in helping these kinds of people, which are living paycheck to paycheck and of course can't afford a higher payment. Bush is right in saying that he is not "bailing people out". The government shouldn't have to bail people out, they are the ones that took on a mortgage that they knew they probably could not afford. Also it is the fault of lendors who provide subprime mortgages to people who cannot afford them. Lendors lure people in with low intro rates then the rates jump in 6 months or a year. I believe that is a bad lending practice and they are just doing it to make money, but actually they are going to lose money in the end because they are going to have to foreclose on them anyway because they can't afford their increased payments. Like the previous writer stated, people should do their research before buying a home, and learn how an ARM loan works before they get one. Hopefully, now a days everyone knows that ARM stands for "ADJUSTABLE RATE", SO GEEH THINK ABOUT IT FIRST!!!

Dead on, Missstaceyg. There is no agency relationship with a mortgage broker. They do not have to act in your best interests and are not fiduciaries. At your own risk...

All this "but my broker said..." or " "my lender promised..." just makes me crazy! Since when do you believe everything you are told? When dealing with hundred of thousands of dollars, it is just plain common sense to do some fact-checking and see if the promises can be backed up. A bit of research would have shown borrowers that all that has gone wrong was a distinct possiblity, and that there are no guarantees in real estate. No sure-thing refi, no sure-thing home price increase. You put all your eggs in a basket full of holes, holes that you didn't bother to check for first. No sympathy here.

Is it too trite to drag out "If it's too good to be true - it probably is." and "You can't cheat an honest man." My guess is that most of these "sub-prime" borrowers were presented with the chance to move into a house they knew they really couldn't afford and jumped on it. The story of not really understanding what they were signing doesn't work as an excuse - if you don't understand it, don't sign it. If no one signs up for some arcane mortgage product, eventually the bankers will translate it into something people can understand - if it is something that, properly understood, is to the borrower's advantage. This pleading of ignorance as to the consequences of what one signed seems to be an abrogation of adulthood - an endless quest for the "do-overs" of childhood. I found myself in a similar situation, but was able to sell the house at a profit and get out from under a mortgage I should have never signed in the first place. It is the governments role to ensure that you have freedom of choice, not to protect you from the consequences of choosing poorly.

Why does everyone accuse people of whining? Have you ever gotten a 10k doctors bill because your teenage step daughter has become suicidal. The man with the young family, please be sure you do your best to keep your family whole, because kids of divorced parents really get screwed up. I own my mistakes, and try to make up for them. Still never late on payments yet, I just see things looking grim for myself and feel for those that have really tried and didn't succeed. I don't however feel sorry for those that have 250-400k loans and went way over their means. I personally thought I was within my means, bought into a loan option to buy me some more time and foresee that this is going to bite me hard to the point where I may lose it all. But I have other options as mentioned before I do my own house construction and will most likely tap into that experience this next year if possible. So I will work my two jobs 60-80hrs /week and pick up something else. Is it suppose to be this way though? I don't recall growing up seeing other families having to do this.

Many layers of problems in this issue: Brokers more concerned with their own income than doing what is right (see also stock brokers, auto brokers, etc...). People more concerned with living beyond their means than conserving what they have. And worst of all, continue the trend of looking for someone else to blame for our own bad decisions. Responsibility has to start somewhere. If people can prove they were wronged by illegal activites on behalf of a broker, that's what the courts and judges are there to decide. Bail outs send the wrong message to absolutely everyone in the chain. Instead of learning, the problem will simply repeat.

As a real estate and litigation attorney who has conducted thousands of settlements and represented borrowers against lenders in foreclosure proceedings, I think I am as qualified as most to write on this topic. I take serious issue with the representation that people did not know what they were getting into. Anyone sitting at a closing table with me and anyone like me with a bit of professional ethics knew good and well what the terms were, because for any product other than a fixed rate note, at least 3 separate disclosure statements were presented to them with the following, verbatim introduction "Once again, the lender is telling you that this is an adjustable rate mortage, which adjusts on ______________, with a new rate of ____________, as calculated by ___________, which will adjust thereafter on _________________." Put simply, I don't want you suing me later, claiming I didn't tell you what you were getting into.

Further, each and every borrower on a refinance has a federally mandated right of recission. In english, this means you take all these documents home and you have three calendar business days before the loan becomes legal. What bothers me is that each side of this discussion is at fault. The lenders, the secondary market, the derivative market, the mortgage insurers (next to go down) the realtors who sold houses to people that would never have traditionally qualifed and the rate quoters (I mean mortgage brokers), who have on average the same ability that my dogs have to read a rate sheet.

Granted, people were victimized and I represent some on my litigation side. But my well educated guess is that many is not most and just like the tech stock boom, the greedy latecomers are now getting killed along with those who had no business buying in the first place. You didn't have to buy that house, just like you didn't have to drive a car on lease for $880 a month. Now, however, the last refinance is no longer an option. Get ready for different days as I told one client, who specd a house for 1.3 million with a no down loan 18 months ago. The house is worth 960k today, and I don't see anyone buying it for Christmas.

I'm sympathetic to peole who bought houses they couldn't afford with unreasonable mortgage terms. I'm even more sympathetic to people who didn't buy houses they couldn't afford, and don't expect somebody else to fix their problems. I'm not saying care at all for the banks and mortgage companies that gave loans to people who couldn't afford the houses they were buying, and I hope lots of bank executives who made these stupid loans will lose their jobs and homes in the process. Foreclosure will be a good lesson for everyone.

Granted, thereare many folks across this country who've been manipulated by the brokerage houses who claim to have your best interest at heart. But if you really think about it, it's not the consumer's fault, it's not the mortgage broker's fault (ultimately, I'll get to that in a minute) and it's not the government's fault. The sole purpose of going through a financila institution is to BORROW money to buy goods or property. The lender wants to know exactly what the collateral will be to lend this money. If the loan is a mortgage, obviously the property is going to be the collateral for the loan. The lender (defined by their own guidelines of lending and depending upon the loan amount) contacts an appraiser to complete an appraisal assignment on the property. This is the main purpose of ordering an appraisal.. so the lender knows exactly what they're loaning money for in the first place. The loan will not "go through" regardless of begging and pleading, unless te property has the value to sustain the loan. By coincidence, the first appraiser completes the assignment and the opinion of value within this report is well below the loan possibilities. This causes the [predatory] lender to refuse payment of fees to the appraiser because the appraiser didn't "play ball" and make the numbers work. The [predatory] lender then orders another report from a different appraiser who is (disgustingly) a "ball player" and appraises the property for an unjustifiable and rediculously high value and the loan soars through with lightening speed. Here's the part that gets tricky... how does one pay back a loan for a, let's say, $200k property when in all honesty, they're actually living in a $150k property? The "ball player" appraisers are a HUGE part of this problem, whether it's realized or not. Without them, there would be considerably less of a problem. After all, the loan can't be completed without his or her feeble-minded and deceitful practices.