I heard on the news last night that President Bush signed the housing bailout bill. I am not understanding how this works. Do these people get to keep their homes for free like a gift or is it just a refinance locked in loan with low interest rates and the government pays off the past due interest.......or worse? What are the fleas going to do when the dog dies ? Tom :cboy:
Mortgage Bailout ?
- Thread starter kerley
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backhoeboogie
Well-known member
If they couldn't pay the bill and got forclosed on, how can they pay it now? What about all of those folks who were foreclosed on previously through the years? Is this a new trend? Is it now okay to bite off more than you can chew?
The bank made bad loans or else the people had income changes. It isn't right for everyone else to bear the burden. Stockholders should send the bank CEO packing and take the loss
The bank made bad loans or else the people had income changes. It isn't right for everyone else to bear the burden. Stockholders should send the bank CEO packing and take the loss
I think that the feds are at least partially to blame for this mess as the push to get people into their own homes has increased for the last several years.
Now, before you start throwing bricks, I also feel even more strongly that there are several other things at play here. Having bought several houses, I know that they always try to qualify you for some rediculous mortgage that you have no business taking on. Houses have gotten larger and larger and more expensive. People, average people, think they are entitled to a three thousand square foot plus " McMansion" with all the bells and whistles. To finance them, they all got ARMS, and suprise suprise, rates went up.
I don't know about you all, but when I was a kid, houses were smaller. Even new houses, geez, 2400 sq ft was huge back then. That's about the size of my house, and it's all I want to keep clean. But people turn their noses up and say that's too small. A lot of folks are simply n ot willing to live within their means.
I think that ARMS should be illegal. And I don't like the idea of refinancing, either. You couldn't refi in Texas until relatively recently and I know folks that have done it several times.
It's good if you are getting better interest, but honestly, we did refi once, for the rate, and they were shocked that we wanted to put the money back toward the principle. Kinda like when you go to get a new car and want to pay cash or finance for three years instead of seven.
Things go in cycles. I think that houses will get smaller again. I think that the word "starter home" may reenter some vocabularies. Prices will, and have, come down. It's gonna be rough before it gets better.
I haven't read up on the mortgage thing, but I will. I am sure it bails out banks more than consumers.
In the meanwhile, the next couple of years will be an excellent time to buy a McMansion for cheap. Foreclosures are great if you can get in on one.
Now, before you start throwing bricks, I also feel even more strongly that there are several other things at play here. Having bought several houses, I know that they always try to qualify you for some rediculous mortgage that you have no business taking on. Houses have gotten larger and larger and more expensive. People, average people, think they are entitled to a three thousand square foot plus " McMansion" with all the bells and whistles. To finance them, they all got ARMS, and suprise suprise, rates went up.
I don't know about you all, but when I was a kid, houses were smaller. Even new houses, geez, 2400 sq ft was huge back then. That's about the size of my house, and it's all I want to keep clean. But people turn their noses up and say that's too small. A lot of folks are simply n ot willing to live within their means.
I think that ARMS should be illegal. And I don't like the idea of refinancing, either. You couldn't refi in Texas until relatively recently and I know folks that have done it several times.
It's good if you are getting better interest, but honestly, we did refi once, for the rate, and they were shocked that we wanted to put the money back toward the principle. Kinda like when you go to get a new car and want to pay cash or finance for three years instead of seven.
Things go in cycles. I think that houses will get smaller again. I think that the word "starter home" may reenter some vocabularies. Prices will, and have, come down. It's gonna be rough before it gets better.
I haven't read up on the mortgage thing, but I will. I am sure it bails out banks more than consumers.
In the meanwhile, the next couple of years will be an excellent time to buy a McMansion for cheap. Foreclosures are great if you can get in on one.
Lammie":3o0w7m45 said:
Most commercial banks that do not run a secondary market mortgage operation MUST use adjustable rate mortgages. Commercial bank lending and mortgage companies are two totally different animals. Banks must use their money on deposit to loan and make money on. Mortgage companies use the bond market to create a margin on their loans to make money, not to mention their fees.
It is not good business for a commercial bank to make a 30 year fixed rate mortgage at say 6%. If a bank's cost of funds, (the rate paid on deposits) jumps to 3.5%, there is very little margin. Rrates seem to change very fast, at least recently, and a bank must manage the margin to maintain a steady income.
It is how the ARM is structured as to wether or not is should be used. Alot of the borrowers whose ARM adjusted up didn't read the paperwork thoroughly, and the mortgage companies sure didn't tell them about it. They base the rate off of an index, and then increase the margin ABOVE that index after a period of 1-3 years. This is where people's interest rate and payments went through the roof. Instead of paying 7.5% and $900/month, all of a sudden they were paying 11.5% and $1287/month. (That is based on a $130,000 loan, 30 year amo.) That is where a lot of people got hurt, trying to shell out an extra 350-400 a month for their mortgage payment.
Alot of commercial banks, at least in my experience, do not use this method on their ARMs. More so, if the index is 6%, and the bank places a 1% margin on top of that, that is what it is for the life of the loan. For instance, the initial rate will be 7%, and may vary from year to year, but the MARGIN will never be more than 1%. So only the index can change the rate, not the margin above the index.
I agree, some ARMs should be illegal the way they are structured, but they are also not avoidable by everyone. Hope that is all clear.
Just a little info from the "inside".
kerley
Well-known member
I am in total agreement with backhoe. I have never had or ask anyone to pay my mortgage. If you can't pay yours, sorry for you. Being homeless would be a terrible thing. Our own government is killing the hard working tax payer, with overspending and poor decisions. Tom :cboy:
backhoeboogie":7iwgypuu said:
How true, maybe hold yourself accountable?? What a thought. The banks and mortgage companies that made those risky loans, or loans with adjustable rates that went wacky on people should reap what they sew. If that means a few of them going under, why should we have to bail them out? You make sound loans that people can afford, and don't try to gimic them. It is all pretty ridiculous, and being a lender from an institution that didn't make those types of loans, it is appaulling. I just wonder how much additional regulation all lenders will now have because of a few lenders taking advantage of people.
TexasBred
Well-known member
Gotta go along with Bandit and Boogie on this....good explaination on the ARM's Bandit....but...a lot of these loans actually began with negative ammortization and then when you throw in that adjustment to reality to Sh1t hit the fan...
I understand a lot of automobile leasing companies are looking at the same thing happening. They can get some dummy into a Caddy or a Lincoln for $319 a month which won't even cover the cost of the dealer floor plan interest and the customer drives the wheels of it and when the lease is up the dealer eats his big loss but gets a ragged out car back if he wants it...In reality the customer couldn't qualify for a decent used car loan. The same for these borrowers as well as extremely inflated prices on properties...you'll see the California market take a huge tumble while their working on getting their real estate values more realistic.
I understand a lot of automobile leasing companies are looking at the same thing happening. They can get some dummy into a Caddy or a Lincoln for $319 a month which won't even cover the cost of the dealer floor plan interest and the customer drives the wheels of it and when the lease is up the dealer eats his big loss but gets a ragged out car back if he wants it...In reality the customer couldn't qualify for a decent used car loan. The same for these borrowers as well as extremely inflated prices on properties...you'll see the California market take a huge tumble while their working on getting their real estate values more realistic.
TexasBred":341v9uum said:
Didn't mention those. The ads you hear for $250,000 mortgage for $599/mo are ridiculous. It may be $599 for one year, and then jump to something like $1950. Yeah, that realistic.
Bandit, I didn't mean to imply that all banks were using risky lending practices. I am really talking about the Ditechs and Countrywides of this world. They just encouraged people to go deeper and deeper into dept on houses and refinancing. You are right, too, that people don't really read what they are signing and end up with loans that are going to be hard to repay in rough ecomonic times. It was like no one really wanted to know what they were getting into and it was easy to lead them to financial slaughter.
It is hard for me to feel sorry for someone like that. It reminds me of the savings and loan collapse in the eighties.
It is hard for me to feel sorry for someone like that. It reminds me of the savings and loan collapse in the eighties.
TexasBred
Well-known member
Lammie, the S&L fiasco was much different. It really didn't involve that many individual borrowers and single family houses. Most involved a handful of bigtime crooks, commerical and multi-family properties and pure greed. Properties would change hands a dozen times within a few days and with each transaction the supposed "Fair Market Value" of the property would double. Then the "crook" in one S&L would sell off participating interest on those inflated loans to often innocent S&L's with more money available than they could lend out locally. Once the big crooks started falling the dominoes fell all the way to the small local S&L who had made what he thought was a good honest investment for the company....one day your local S&L was very strong and profitable..the next day "insolvent". Most of the crooks got light sentences "if any" and thousands of good folks on the local level had to look for jobs.
TB, I meant in the way we allowed it to happen right under our noses. My parents had a friend who was a bank examiner back in the eighties and he told my parents it was about to happen. The price of condos shot up like the price of houses did in the past few years. People were rushing to invest in them only to get stuck with something they could not afford and could not unload. Remember those condos along I 30 at Lake Ray Hubbard? Did those ever get finished? I don't get out there. Really, I hate driving in Dallas and it takes a pretty darned compelling reason to get me to do it.
TexasBred
Well-known member
Lammie":1jaigqm4 said:
Strange you would mention the I-30 condo's....we had a couple million sunk in those things...No many were never finished....torn down I think...Remember reading about the wedding of Danny Faulkner's daughter...2 page write up in Dallas paper...everyone in the wedding party got Rolex watches....a real elaborate affair...Faulker was a small time paint contractor who became an overnight multi-millionaire in that crap. Don't know if he ever served a day in jail or had to pay back a penny.
I luv herfrds
Well-known member
Too many people who are living paycheck to paycheck then buying a house that is over priced and having no economic understanding.
Kept hearing some of the people interviewed talking about how much their payments went up.
What about those paying the interest only and nothing on the principle? They do that for a few years then they have to make up the principle later with an increase in payments. :???: What are they thinking? Oh yeah they are not.
A pretty sad situation. So many of these people are destroying their credit and now expect to get bailed out of their own mess. Personal responsibilty comes to mind.
Where is the money to bail out these banks going to come from?
Kept hearing some of the people interviewed talking about how much their payments went up.
What about those paying the interest only and nothing on the principle? They do that for a few years then they have to make up the principle later with an increase in payments. :???: What are they thinking? Oh yeah they are not.
A pretty sad situation. So many of these people are destroying their credit and now expect to get bailed out of their own mess. Personal responsibilty comes to mind.
Where is the money to bail out these banks going to come from?
1982vett
Well-known member
I luv herfrds":3qz3b93q said:
Congress is just going to write another I. O. U. like they always do.
newrancher
Well-known member
Just take a look around, in front of every single one of these Mcmansions is 2 brand new vehicles, 1 a luxury suv for wifey to drive the kids to shcool in because they dont want junior and missy to have to ride the bus, and 2 a 4wheel drive extended cab pickup so hubby can pull his brand new bass boat. aww the price of gas went up and now the budget is tight. Lets not forget that junior and missy both HAVE to have cellphones and designer clothes and shoes so they dont look out of place in Willow Heights. Oh yeah, we must have a computer for each room so we can email each other when supper is ready. Put it on the card. Makes me sick. If someone doesnt read their contract and this happens, who is to blame? Why should I have to pay their bills, I have my own. When I bought this place the real estate agent tried to slip it in the contract that I would be paying her a commission instead of splitting it with the other agent and I called her on it Because I READ the contract.
TREY-L
Well-known member
With the government printing and spending "our" money at the rate that it currently is, how on earth is this country going to stay out of a recession? Looking out into the global economy, the dollar has been losing ground for some time now and it is getting worse. The airlines, the rebate checks, and now the banking sector, and all this on top of the war effort.......the writing on the wall is not looking good. 
TheBullLady
Well-known member
I have to stand up for the Realtors in this mess, although I know for a fact there are agents that were willing to "overlook" some very shady dealings in mortgage brokering. But let's face it.. your job as a consumer, whether you're buying a bicycle or a mansion, is to: 1) Do your homework! With the internet it's pretty easy to spend some time comparing prices. 2) Find a hard working, diligent, and honest Realtor that is working for YOU. If you make your wants and needs clear, there's no reason why they can't find exactly what you're looking for, at the price you want to pay. But be realistic! Make sure what you want is actually attainable! I can't tell you how many times I've had customers call and ask for 500 acres of good pasture for $800 an acre. 10 years ago maybe, but long gone by now. 3) Find your OWN mortgage broker! Don't ask a Realtor to find you one.. ask for suggestions or get a list, and then go and talk to them all yourself. I rarely / never get involved in financing with my clients. That's THEIR business, not mine. All I need to know is that you can get a loan. 4) Read EVERYTHING, ask QUESTIONS, and don't let anyone change anything a day before the closing, and accept it! That was a big thing prior to this mess.. and to not stop the proceedings immediately until everything was worked out is just insane to me.
TheBullLady":1yixl56u said:
That was precisely why I fired my realtor last summer. After I turned down the one offer, (Which I am thankful I did because we are on at least three gas pools at the moment, although royalties have not started coming in yet
), he didn't show the house again, and neither did anyone else. I think it's hard to find a realtor these days who will be the seller's agent and not the buyers. The realtor I had said he was our agent, but I think that in reality, he was interested in moving the house and getting his commission, and attempted to bully me into selling. I learned a lesson. Neighbor has his place on the market again. I will be interested in seeing whether or not he sells this time and for what price. He's not selling his mineral rights, either, unless he gets the going rate for them I don't think he'll sell this time, either. I would be nice to see something moving around here. It will be at least spring until I am ready to go on the market again. We still continue to make improvements on this place, in t he meanwhile. Steve's salary guarantee runs out end of this quarter and he'll either have to renegotiate or move on. One never knows and I hate not knowing.TheBullLady":3945lv9u said:
Trouble I had when I had this place on the market was finding a seller's agent. They all want to rep for buyers. I thought I had hired one until I turned down an offer, and he tried to bully me into taking it. I am glad I didn't and went with my gut on the mineral rights. He just wanted his commission in a soft market, and after I rejected the offer, no one came to look at the house after that. I fired him. Told him to get his sign and his lock box and take it down the road. I will not feel pressured or bullied into selling.
