I almost entirely agree with you about the subprime mortgage bust. There's only one situation where I do feel sorry for the "victims" of predatory lenders. Here in the Twin Cities we have two huge immigrant populations, Hmong (from Laos and Vietnam) and Somalians. Most of them, especially the Hmong, lived in refugee camps for years or decades before they came to the US. Immigration laws are such that they open up a certain number of slots and then it's like, "Hey, you're moving to Minnesota in a month!" So they have very little time to learn about the way things are. They just get a few hours of English class and then when they get here, if they're lucky, some community group will show them how the supermarket works
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I still think that everyone has the choice to not commit themselves to obligations they don't understand, but okay, I can muster up some sympathy for people in the situation you describe.
And I definitely advocate harsh punishment for the predatory lenders who were lying to poor blacks and other minorities by telling them that subprime mortgages were the only mortgages they qualified for. Losing their businesses to bankruptcy wasn't good enough for them - they need some jail.
Yeah, like I said, for the most part I agree. There was some sob story in Newsweek recently about a military family who had lost their home because the dad was getting combat pay in Iraq and they also had some deal where their interest rate wouldn't go up while he was overseas. And he came home and lost his combat pay and lost the interest rate freeze, and there went the house. Sad and all, but just because you're poor doesn't mean you have to be stupid and can't figure out what you're getting into
( ... )
I think the perfect solution for the military family is for George W. Bush to personally pay the man's mortgage. Then everyone's happy. (Or at least everyone who's not an evil bastard is happy.)
I do think that there is some blame to be placed on predatory lenders, and there are a shitton of them out there. They *do* prey on low income people, minorities, or people who just don't have terrific credit. I think most of them should join ol' Joe Francis in the slammer for awhile.
However, bottom line ... yes, people should have the common sense not to commit to something that a) they don't fully understand or b) seems to good to be true, since it probably is.
I think a lot of folks are so incredibly grateful to have this "friend" at the bank who is telling them they're going to make their dreams come true and that they're there for them, they lose total track of reality.
After reading the fine print of some of these subprime mortgage products, I'm completely amazed that they're even legal. They make 50-year and "interest-only" mortgages look downright sensible.
Giving people a mortgage where the interest INCREASES every month until they're forced to refinance a much higher balance at three times the monthly payment is just asking for trouble. I relish seeing these lenders go bankrupt. (Not that bankruptcy has any serious consequences these days, but whatevs.)
I honestly don't see what's in it for the lender to sign someone up when they pretty much know, beyond a shadow of a doubt, that this customer IS going to default on their loan; there's no way they can NOT. Then the lender, aside from whatever paltry amount of payments they actually got out of the customer, has the expense of the manpower it takes to try and collect, process the foreclosure, sell the property, continue collecting on unpaid balances, etc etc etc.
More and more it's not the lender who signs people up for a mortgage. It's a broker, who then sells the mortgage to a lender. My mortgage was sold to a different lender almost immediately after I acquired it. Made no difference to me because none of the terms changed.
The unregulated nature of this line of business, coupled with greed, resulted in brokers stretching the limits of viability in terms of the mortgage products they offered. Those brokerages are the ones going bankrupt, and they completely deserve it. I wouldn't be surprised to see governmental regulation after this too, since as usual, people demonstrated they need Big Brother to help them not be stupid.
Oh, and under absolutely any circumstances should any tax money be allocated to bail people out. The banks perhaps should be forced to work with these people in a reasonable manner, but in no way should they be absolved of their debt.
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And I definitely advocate harsh punishment for the predatory lenders who were lying to poor blacks and other minorities by telling them that subprime mortgages were the only mortgages they qualified for. Losing their businesses to bankruptcy wasn't good enough for them - they need some jail.
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I think the perfect solution for the military family is for George W. Bush to personally pay the man's mortgage. Then everyone's happy. (Or at least everyone who's not an evil bastard is happy.)
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I do think that there is some blame to be placed on predatory lenders, and there are a shitton of them out there. They *do* prey on low income people, minorities, or people who just don't have terrific credit. I think most of them should join ol' Joe Francis in the slammer for awhile.
However, bottom line ... yes, people should have the common sense not to commit to something that a) they don't fully understand or b) seems to good to be true, since it probably is.
I think a lot of folks are so incredibly grateful to have this "friend" at the bank who is telling them they're going to make their dreams come true and that they're there for them, they lose total track of reality.
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Giving people a mortgage where the interest INCREASES every month until they're forced to refinance a much higher balance at three times the monthly payment is just asking for trouble. I relish seeing these lenders go bankrupt. (Not that bankruptcy has any serious consequences these days, but whatevs.)
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The unregulated nature of this line of business, coupled with greed, resulted in brokers stretching the limits of viability in terms of the mortgage products they offered. Those brokerages are the ones going bankrupt, and they completely deserve it. I wouldn't be surprised to see governmental regulation after this too, since as usual, people demonstrated they need Big Brother to help them not be stupid.
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I'm adding home ownership to my list of things people should have to take a class about before they do it. Right behind marriage.
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