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mortgage mess

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NutmegCT

NutmegCT

Great Pumpkin
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OK gang - I'm reading and seeing reports like this:

young couple is frantic and in foreclosure. can't pay their new monthly payment. bought their six bedroom 3 car garage house for $400K with no down payment. were told their monthly payment would be $2200.

now 6 months later, the "intro" interest rate has ended, their payment is over $4000/mo. Discover the value of the house is closer to $250,000.

did they get an attorney when they bought the house? no
did they read the mortgage agreement? no
did they know the low interest rate was only temporary? no

and to top it off, they had been living in a two bedroom apartment, earning $35,000/year. found an internet ad for "affordable new houses in desirable area".

drove out to take a look, mortgage broker said they could afford it (never even asked their income). they chose the house, a mcmansion on a tiny lot in a treeless tract of similar overpriced, oversized firetraps.

this is happening to thousands and thousands of people. what the heck happened to "due diligence"? did we make it so easy for people to have fun and "get it now", that getting into trouble became something you just giggle at and cry later?

yeesh.

Tom
 
Tom,
I am afraid some of this is the result of never being told they were wrong in grade school, getting awards for showing up, lack of personal finance course in education, and watching too many Vacation Home shows on TV. My son's senior year at USAFA he had to take a course in personal finance and make a budget for living on 1st Lt. salary before graduation. It is something that all students should have to do sometime in their education.
 
Our oldest had to take a course like that at the
Naval Academy.Great idea.

- Doug
 
Brooklands said:
Tom,
I am afraid some of this is the result of never being told they were wrong in grade school, getting awards for showing up, lack of personal finance course in education, and watching too many Vacation Home shows on TV.
Click to expand...

Dave - something tells me you're describing a *large* proportion of today's 20 and 30 year olds. Doesn't bode well for the future, I'm afraid.

Tom
 
Tom,
I think most of them grew up and avoided this problem, or maybe their families helped them with reality...but there are <u>some</u> who think Hollywood is reality.

But I remember when how worried my Dad's generation was about the Baby Boomers, and a few of us made it through okay.
 
I think we're seeing the chickens come home to roost right now.
 
How did they get a 400k mortgage on a 35k salary?

Actually forget it - at a rate of over 10% there's no need to ask.

The sad thing is that they'll probably get bailed out somehow using my tax money. I should be a little more feckless...

<edit> If you think this sounds bitter, you're right. I just did my taxes - and got screwed by the twin spectres of AMT and the marriage tax yet again.
 
I heard of an $8.00/hour worker being approved for a
loan on a $300,000 home.
These irresponsible companies will probably get bailed
out for their stupidity & greed.

- Doug
 
Even though it`s not right, I wouldn`t mind it so much if it was JUST the home owners getting bailed out! Having said that, It`s a shame that the preditory lenders will also somehow get bailed out. It is my opinion that preditory lenders should be left holding the bag on these A.R.M. loans! Further more anyone that even considers an A.R.M. loan needs to FULLY understand just EXACTLY what it is He/She is signing.
Preditory lenders will tell prespective buyers well ..... you can sign now and in four or five years you can refinance to a fixed rate. Thats all fine and dandy, but what normally happens is is in the course of the five years the borrowers credit is in such a mess that refinancing is impossible.
Our current admistration says that bailouts won`t bo on the tax payers nickle, so far so good! But what about the next administration?
B.T.W. Alana never fear, there is a bunch of us in your boat!
My wife and I have NO deductions and are over 100k in income
I can hardly wait!
Note to the I.R.S.: You could at least give me a kiss this time!
 
So far this thread is ok, and I'm letting it continue, but please do NOT get into politics...thanks.

Basil
 
AweMan said:
My wife and I have NO deductions and are over 100k in income
I can hardly wait!
Note to the I.R.S.: You could at least give me a kiss this time!
Click to expand...

I just had 43k in deductions disallowed thanks to the wonders of AMT. Nearly all the mortgage interest and property tax we pay, so it's not like it's anything exotic.

You can imagine how happy that made me.

Getting married costs me 12k a year in additional taxes over us both filing seperately. Worse decision I ever made. No penalty my a$$. I HATE tax season...
 
Sorry Basil, I didn`t intend to take it in a political direction. But I guess I sorta did.
my Apoligies!
 
1/24th s(c)ale.
 
A sad state of affairs. Leaves us in further
economic disrepair. These loans have assisted
in fueling the economy to a falsehood and now it is
time to pay the fiddler.

I say brace yourselves for the worst....

Buy another British car now...before it's too late!

Oh, and refer back to the thread on lifts and buy
one of those too. Somebody's gotta fuel the
economy!
 
My concern (from here in Canada) is the spill over effect into our economy... I remember when this story broke last year and even then I had a funny feeling about it...

At least here in Canada our banks and mortgage brokers are a lot more careful in approvals of mortgages.
 
While everyone seems to blame the hapless, naive couple who were blissfully trying to live the American Dream for getting in over their heads, not much has been said of the culpability of the unethical bankers/lenders and mortgage brokers who happily led these unqualified borrowers down the garden path to their demise knowing full-well that default on the mortgage would be inevitable! Therein lies the crime and there lie the culprits who should have to foot the bill! Unfortunately the whole system seems to be so corrupted by greed that to make them pay would be devastating to the entire industry and ripple through the whole national economy and hence, we, the taxpayers will have to start bailing to keep the whole boat afloat! Funny how we can spend billions and billions overseas yet balk at helping our own!!
 
"Just like the real thing, only smaller."

/bcforum/images/%%GRAEMLIN_URL%%/jester.gif
 
I saw that show on TV that the original poster described.

I also saw an article on the local TV news here. A local couple with two small children, only he works, terrible credit history, two new SUVs in the driveway, nice furniture, salary about 1/3 of mine.....gets a variable rate mortgage for 100% of the house price and closing costs, for a house about the size and value of mine. Rate goes up, they can't make the payment, and claim it isn't their fault and the taxpayer should bail them out. My advice was get cheaper more fuel efficient cars, get a nice smaller house you can actually afford, get the wife a job, and stop spending money you don't have.
 
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