Mortgage Mess: Is Relief in Sight?

Those whiners that first borrowed money they could not repay then spent it on increasing their consumerism will get no sympathy from me! How many of the comments are exactly that? Lots! I also have no sympathy for someone that waded though a mortgage closing with the hundreds of documents only to now say, I was misled. Boo Hoo. Its time to put on your big boy shorts and pay for your own mistakes! I believe that the government has no business increasing my tax burden by supporting your bailout. Yes houses got expensive, so I bought one I could afford. You? I have kept my 9 year old vehicle and will do so for a few more years as long as its reliable. You? I researched mortgages to get the best deal, I have paid my bills on time and worked hard to get and keep a good job. You? So now that you are losing your home and your credit I see that the youth of America will have a chance to buy homes at lower prices that we saw a few years ago. GREAT!!! Interst rates seem to be coming down and this will assist those with truly clean hands.

Its not unfail to the lender to expect you to follow through on the contract. If you cannot then you deserve what you get.

I am having a hard time understanding how even the most naive of borrowers/homeowners could not have foreseen this happening...what do you mean who knew? My work colleagues, friends, and acquaintances are not Wall Street geniuses, yet we could see long ago that this is what would happen when all the time ran out on these initial loan terms..This is a tough one, on both sides of the issue, but really, don't cry about how no one could have known...the lenders knew from the beginning that this mess was not only possible, but probable. The financial corporations are the modern embodiment of Charles Dickens' depiction of the evils of Industrialization in his Victorian novels. .

I'm a real estate broker, and this situation fries me to no end. When a borrower signs their loan documents, they sign a federally required Truth-in-Lending statement that tells them the amount of every payment they will ever make for the duration of the loan. If a borrower makes $5,000 a month, and in two years he's going to being making $5,000 mortgage payments, I have to seriously question this person's intelligence or sanity. The lenders are not innocent in this. They know the borrower's income, and if they're making 100% subprime loans (meaning less than desirable terms because the borrower has so-so or bad credit) to these people. The credit report PROVES that these people have bad financial judgment, so you give them a 100% loan and they risk nothing? The lenders deserve what they get. You don't have to understand the LIBOR or the fine print to know you can't make a house payment that is 100% of your income.

OK, so the government is going to help the idiots that took out an ARM.
What about those of us smart enough not to go ARM, what do we get, nothing!
So once again the government is supporting the idiots and doing nothing to help the people wise enough to get a fixed rate mortgage.
Heck, I would have taken an ARM if I knew the government was going to fix the rate for an extra 5 years!
It's very unfair in my mind, I can barely make my loan payment, it would have been nice to pay the lower ARM payment these last 2 years.

I know that it may sound simplistic, but haven't these people getting these crazy cheap loans ever heard of the phrase "there's no such thing as a free lunch"? You can't take years of ridiculously low mortgage payments and then cry-baby when the rate goes up and you lose your house. Shame on you for being so materialistic and spoiled if you think anybody owes you a "bail out". I would rather see my neighbors LOSE their home than see myself punished for their stupidity. Nobody is rewarding me for making the good decision to get a reasonable fix-rate loan. I've done it three times already in my thirty-six plus years of life and each it requires me to get less house than I would otherwise be able to afford. But that's the point, isn't it? People want more than they can afford ... and they want everyone else to understand and help them out of the hole they dug. Forget it. Lose your house, get an apartment, and get on with your life. Learn a lesson from this experience and buy a house again someday when you can put 20% down to avoid PMI and get a reasonable fix-rate loan. It's the only way to guarantee that you won't need to be bailed out.

Measures like this NEVER work because they directly contradict the market. Banks have known for many years that when bad loans start piling up, the ONLY thing to do is start cutting losses. Take the property, sell it for what it will bring and write off the balance. People are going to lose their homes but it makes no sense to try to delay that inevitable result by simply freezing interest rates. One of the earlier commenters is right - EVERY detail of these loans was disclosed but the borrowers weren't paying attention. As tio the idea of "absurdly well educated" people not understanding the mortgage, THAT is absured itself. What "well educated" person is signing a mortgage he or she doesn't understand? Maybe "educated" but far from smart.

I feel no sympathy for the people in dire straits, they need to learn how to live comfortably within a budget. Nothing in the constitution gives every individual the right to squander every penny they have or plan on having on frivolous junk. Credit card debt is running rampant along with car loans specifically S.U.V. cars. Learn to live within your means, keeping up with the jonses got you and the jonses into this mess why is it my obligation as a taxpayer to help out the millions of fools trying to get rich quick living beyond their means?

Three years ago I looked at what I could afford monthly, looked at rates on 30 yr fixed mortgages and figured out how much house I could afford and bought it. While we are throwing money at idiots and investment bankers (synonymous?) would someone in Washington send me a check so I can upgrade? I now found that I need a garage and another bedroom. Could you also send me a check for the money I lost on my investment in CMGI stock 5 years ago? Thank you.

I pay my mortgage a 30 year fixed. I could have gotten an ARM , but new the risks. One area that isnt being addressed is mortgage brokers many times they will present the loan that gives the broker the best deal - Bush and the republicans have not regulated this slimy bunch of characters - yes their are good brokers out there but there are more than enough slimebags as well. Many brokers have criminal records (Such as convicted felons) and there are no laws that govern their licensing or background checks. Be aware greed is what primarily motivates the large banks such as Citibank who have been aware of this for years but manage to turn a blind eye. Those executives are never held accountable - just look at the Enron mess that Citibank and other institutions help create - those companies are fined and the thieves that run them are awarded with obscene parting packages. If the government steps in to help the funds that are used should go against the borrowers future social security benefits (charge interest as well) and the lending organizations executives should be forced to take a 90% pay and benefits cut. I bought within my means they should have as well.

If you signed the doucument, pay the bill.
However, this should also apply to the governments mismanagement of Social Security and Military spending. Can we throw them in jail for being worse than the average citizen...all of them.

THE LARGER POINT IS THAT MANY OF THESE BORROWERS ARE NOT (AND NEVER WERW) QUALIFIED TO OWN A HOME TO BEGIN WITH. WHERE DOES IT SAY THAT EVERYONE SHOULD, MUST, HAS THE RIGHT..TO OWN A HOME? PART OF THE PROBLEM IS THE GOVERNMENT LOOKS THE OTHER WAY WHILE THESE MORTGAGE COMPANIES MAKE LOANS THAT CANNOT BE PAID BACK, UNLESS THE MARKET CONTINUALLY APPRECIATES. WHY ARE THE LOAN CONSULTANTS (A EUPHEMISM FOR SALESMAN) NOT LICENCED, WHILE REALTORS AND APPRAISERS ARE? IT'S A JOKE....AND EVENTUALLY THE TAXPAYERS (THE ONES WHO WORK HARD EVERYDAY, AND STRUGGLE TO LIVE WITHIN THEIR MEANS) WILL PAY FOR IT AGAIN, IF THE POLITICIANS GER INVOLVED.
tyler1

There is nothing fundamentally wrong with a 0 down mortgage if you can afford to pay the payments, same with an interest only loan if you believe that the market will increase before you are ready to move. However, I do think there is something wrong with a loan that allows you to pay a low payment because it is actually adding the additional funds to your loan balance, and running at a teaser rate that not only will adjust after one year, but can then adjust every month. Several mortgage companies tried to sell me this type of loan, but when you look at the pure numbers, it is never a good idea to increase the debt on your house month over month. The lessons I have learned in 14 years of buying and selling homes as I have relocated around the country - only buy what you can afford, take an adjustable rate mortgage of 3 or 5 or 7 years if you truly believe that you will move before the loan adjusts and the rate is actually cheaper, interest only loans only work in an increasing market, and never sign anything that you don't completely understand - remember there is no such thing as a stupid question. If all would follow these simple truths, we wouldn't be in the position we are now. By the way - can we outlaw those "option" mortgages that allow the principal balance to go up every month? I really believe those are a big part of the problem.

Comment: Reading the already posted comments to this excellent atricle, I am struck by the apparent facts stated in their various statements and content, even though many of the facts often appear to be in conflict from one commentator to another. One aspect that has not been adequately emphasized is the skill and manipulating influence brought to bear by the commissioned mortgage sales people. I can tell you from second hand experience through my children that the picture painted by these sales persons and the idealistic numbers they quickly pull out of their hand calculaors are not designed to paint a sober factual picture of the future. Yes, it is true that the prospective customers need to be skepitical and have had it all checked out with a non-profiting financial counselor before making a move. To a great extent they have made their bed and now have to lie in it or more to the point probably will loose it entirely while having to continue to pay for it. But does it benefit the US economy and its people to allow this wide spread economic disaster to proceed without effective governmental action? Would it destroy the mortgage industry to take action that would allow the owners to pay at least the interest at a reasonable interest rate so they can continue to maintain their home till the economy picks up or natural income increases allow them to again return to regular mortgage payments? Of course some will still fail and that is unfortunate. The current Bush changes seem too little to help the vast majority that we are told are in trouble. With housing prices so down, foreclosures can only hurt both the owners and the mortgage lenders.

What I can't stand is that nobody is saying "don't be a dummy with your finances". People need to learn. If it drags our entire economy into the gutter at least, hopefully, we'll learn our lesson. Banks, lenders and consumers will all idiots in this story. I'm sure a few people aren't deserving what their getting, but for the most part responsible people have seen this coming for years.

Does anyone really think in 5 years those who qualify for this freeze will be able to afford an increase then any more than they are now? This is very short-sighted thinking by the govt (no surprise). The A in ARM stands for Adjustable. Even people who did NO research should be able to figure that one out. Let the market self-adjust. Let the author's house value go down. If he put it on the market today, no one is purchasing at these prices anyway. If he is looking for resale, he is better off letting the prices come down to a sellable level.

Is there anyone out there who can helpus! We have an ARM loan, we are paying the 1% minimun payment for our loan every month. We can afford the 1% minimun payment but some of interest added to our principal. It eats a lot of our principal! Please help how the Bush Administration can help us, with his new proposal. Thanks

I have no problem with people wanting to own a house, I personally don???t want to see foreclosure signs in my neighborhood but I know that the longer this drags out the worse it will be. And therefore do not want government getting involved more than having a centralized call number to help direct people who are too worried or ashamed to call their lender. But let???s face the facts even if they were still renting their rental rate might go up and depending on how the rental agreement was written it could go up substantially. I have friends that have had to move because the rent went up past what they could or were willing to afford. The only issue is this includes home ownership part consumable part investment (so be careful about the investment).