Gross: Bush needs to rescue homeowners

[Misfire]

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Where's my "reward" for not buying a house I couldn't afford?

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[Felix_Nietzsche]

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You're right, it is Gross. Where's my "reward" for not buying a house I couldn't afford?

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Exactly.....bailing out either of these nitwits is D-U-M-B.
The loaners deserve to get nailed for making stupid loans. The people that borrowed the money lose a down payment and move onto apartments.... Life goes on. The govt is NOT a big piggy bank for bailing people out.

Jeez! Bankers never learn. They make screw-ups like these every decade....

[bobman0330]

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You're right, it is Gross. Where's my "reward" for not buying a house I couldn't afford?

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Exactly.....bailing out either of these nitwits is D-U-M-B.
The loaners deserve to get nailed for making stupid loans. The people that borrowed the money lose a down payment and move onto apartments.... Life goes on. The govt is NOT a big piggy bank for bailing people out.

Jeez! Bankers never learn. They make screw-ups like these every decade....

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Bankers have learned very well that they'll get bailed out if there are any serious problems.

[lehighguy]

Exactely how the hell did people get swindled. Believe me, I've gotten outwitted by a salesmen before, on like $50 purchases. But a [censored] six figure house. Don't you think people have a responsibility to figure our what the hell they are doing before they get into these things.

Let me offer an alternative narrative. People wanted houses, they are irresponsible people who don't consider the future, they decided to make a bad choice knowing the possible consequences.

[whiskeytown]

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Exactely how the hell did people get swindled. Believe me, I've gotten outwitted by a salesmen before, on like $50 purchases. But a [censored] six figure house. Don't you think people have a responsibility to figure our what the hell they are doing before they get into these things.

Let me offer an alternative narrative. People wanted houses, they are irresponsible people who don't consider the future, they decided to make a bad choice knowing the possible consequences.

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Lenders also participated by

a) not fully outling the terms of loans within the 40 page contracts to sign, effectively withholding information from buyers like how their rates will increase, how some loans don't take out insurance/taxes for escrow, etc - shouldn't this be considered fraudlent practice and the contract voided?

b) - Responsibility of lenders not to take out loans on high-risk applicants - in some cases they didn't verify income cause they didn't care - as soon as it's cleared they sold the loan and moved on - is there a responsibility here? However, they could immediately sell off the loan to hedge funds, get their fees, and move on signing up more people.

My point is it's NOT just the buyer's fault - both the lenders and the bankers deserve an equal share of the credit for what in some cases is being looked at as predatory business practices, and to suggest that homeowners be left in the lurch while a billion dollar bailout is prepared for the bankers is ridiculous.

surprisingly, not everyone who purchases a house is fluent in the legalese of most Mortgage contracts which run how many hundreds of pages - they depend upon the scruples of their lenders/agents to inform them of what the hundreds of pages mean and that their lenders aren't withholding additional costs/fees and interest information.

To make a blanket statement saying it's all the homeowner's fault is ignorant. To suggest a solution without dealing with the business practices of subprime lenders or the banker's willingness to purchase high-risk loans with the assurance of a govt. bailout is not going to resolve the problem.

at least with assistance to homeowners, the effects will trickle up - that with some better regulation of the lending industry will help everyone - but I wouldn't count on the Federal Govt to do either - most of this will have to be done at the state level since nothing useful on this will ever be driven from the Federal do-nothings except maybe bailing out their banker friends.

RB

[chezlaw]

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You're right, it is Gross. Where's my "reward" for not buying a house I couldn't afford?

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there is no reward, buying a house you can't afford is a very low risk gamble. The more you can't afford it the more its a good idea to do it.

chez

[Metric]

At what point did letting people live with their major life decisions turn into "kicking a million Americans out of their homes?"

[kidpokeher]

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Lenders also participated by

a) not fully outling the terms of loans within the 40 page contracts to sign, effectively withholding information from buyers like how their rates will increase, how some loans don't take out insurance/taxes for escrow, etc - shouldn't this be considered fraudlent practice and the contract voided?

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If this is, in fact, the case then you may have a point. I would like to see some evidence however as I have yet to see any real estate contract where the terms were too difficult to figure out. Most of the important info (i.e. when your rates go up) are right there on the front.

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b) - Responsibility of lenders not to take out loans on high-risk applicants - in some cases they didn't verify income cause they didn't care - as soon as it's cleared they sold the loan and moved on - is there a responsibility here? However, they could immediately sell off the loan to hedge funds, get their fees, and move on signing up more people.

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Then it's the hedge funds that suffer. I used to work for a reinsurance company. All of our business came from primary insurers and we wrote business based on the quality of information that came from the primaries. If we started getting bad info we dumped them. We didn't call the government.

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to suggest that homeowners be left in the lurch while a billion dollar bailout is prepared for the bankers is ridiculous.

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I suggest neither.

[Kurn, son of Mogh]

Great quote I heard on the news this morning, but I didn't hear who said it.

"Both the lenders and the buyers went to the same party and got drunk on credit."

The Fed kept interest rates artificially low for too low. Lenders kept mortgage rates too low and pumped the refi market to prop up sagging balance sheets and the public bought it hook line and sinker. Everybody was hoping things would return to the highs of the mid-late 90's, which was a paper boom fueled by massive overspending on tech start-ups by a strangely wild VC community.

Much of that period was smoke and mirrors. Paper profits in the equity markets and a fake budget surplus in DC. The only thing that surprises me is that its taken this long for the house of cards to tumble.

[morphball]

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if we don't bail out the homeowners, we'll be bailing out the hedge fund owners and guys who have bought up all the loans - it's what politicans do.

either way we're gonna take it up the ass - It would be better for the economy and housing situation by helping out folks channeled into bad business loans instead of the [censored] who bought up/precipated the bad loans looking for a govt. bailout.

Corporate welfare is no better, and neither is kicking a million Americans out of their homes.

RB

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I keep hearing the word "tricked" used. Did these borrowers sign contracts? Have the contracts been violated?

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Federal consumer law allows consumers to rescind mortgages when the real costs of the loan were not disclosed. Off the top of my head, you have a few years to do this and you are entitled to have all financing charges returned.

Dishonest loan brokers? This right of rescission is pretty onerous, so mortgage companies are 99.9% honest because of this risk. The problem is that borrowers made faulty assumptions left and right in a fit of "irrational exhuberance"