2 million families on the verge of losing homes

[Big]

CNN reports due to subprime loans.

One woman said she was told only at closing the fixed interest rate loan didn't go through at the bank and they were stuck with an adjustable interest loan. Then, her lawyer told her its OK because she could just refinance in 2 years.

Now her payments jumped by $700/month and she says: "She might as well had gone to the mob to get a loan".

[Flop the Nuts]

It must be someone else's fault. It can't be the fault of the person who signed the loan, and bought a house that was too expensive.

[matclone]

It's called unequal bargaining power and unethical tactics. As Big tells the story, the woman was taken in by the old bait and switch. And the comparison the mob is right on point. In the old days, we used to call these people loan sharks, or worse. Today, they merely have nice sounding corporate names.

[Flop the Nuts]

It's called not educating yourself prior to making the biggest financial transaction of your life, and then blaming others when you can't make the payment.

I wasn't aware that people in the US had to buy houses. I have many friends in California that don't own homes, because they are too expensive. Don't people rent apartments and houses here?

[matclone]

They're marketed to, and pressured into buying houses. The reasons they can't afford them are perfectly illustrated by Big's account, jump in interest rate or balloon. They're sold on the idea (by the marketers) this won't happen, or their equity will increase to cover it when it didn't.

Have you ever bought a home? Did you really understand all those documents you signed?

This issue is not strictly about blaming one party or the other. Yes home buyers have some responsibility, but that doesn't mean any sort of shady practice is hunky dory cause the buyer should no better.

[Flop the Nuts]

Yes, I have bought a home, and I completely understand the schedule of payments, if nothing else. I recently looked into some of the exotic re-financing options available, and I rejected them because of the unacceptable risk.

You and Big were the ones doing the blaming, comparing the loan makers to the mob and loan sharks. I'm merely stating that people should be held responsible for their actions, a notion that appears to be disappearing in today's "everyone is a victim" climate.

[matclone]

It's called unequal bargaining power and unethical tactics.

Do they exist, or not? If I (a mature adult) convince your teenage son to buy my piece of junk car at twice it's actual value, are you going to tell me he's responsible for the bad deal? That's what you're arguing. Give me a break.

[lkwdsteve]

"I'm merely stating that people should be held responsible for their actions"

No you are not. At least, not all people will be held responsible. Con men get to skate in you're view. They can lie (clearly the case above), cheat, and steal with no consequences?

[Flop the Nuts]

matclone said:

It's called unequal bargaining power and unethical tactics.

Do they exist, or not? If I (a mature adult) convince your teenage son to buy my piece of junk car at twice it's actual value, are you going to tell me he's responsible for the bad deal? That's what you're arguing. Give me a break.

If your teenager pays twice what he should for a car, then yes it is his fault.

But, we're not talking about your babe in the woods teenager, are we? We're talking about adults, responsible for their own actions.

[Flop the Nuts]

lkwdsteve said:

"I'm merely stating that people should be held responsible for their actions"

No you are not. At least, not all people will be held responsible. Con men get to skate in you're view. They can lie (clearly the case above), cheat, and steal with no consequences?

Cases where a "con man" did something clearly illegal should be handled on an individual basis, and the "con man" should be prosecuted. For the most part, people signed these exotic loan papers with no concern the risk of rising interest rates. So, they deserve what they got, or are about to get.

[Big]

I agree that people deserve to suffer for having greediness overcome sense of logic and risk. I just don't agree with a system that preys on people's greediness.

[bonniej2]

I think that another problem is that the good old fashioned community bank where you could get sound advice does not exist much anymore. Everything is just a branch of a bigger bank somewhere else. A lot of older people who grew up in a community where things were much more black and white are especially at risk.

[lkwdsteve]

"Cases where a "con man" did something clearly illegal"

In other words ethics doesn't count. Your answer is that the con men do get to skate for lying and stealing.

Read Bonnie's post. When she says older folks are at risk, I believe it.

Also Matclone's point about usury is a good one. You haven't addressed that. Why have so many societies throughout history condemned usury? Is it because they knew how vulnerable folks could be a times, at moments of weakness.

You then completely ignore the costs to society. In 2006 Cuyahoga County (Cleveland Ohio's County) had 13,610 foreclosures. That is not a misprint. It represents a 24.5 percent increase from 2005's already staggering number. Ohio overall had a 17.5 percent increase. Much of it due to subprime lending practices.

It's all well and good to talk about personal responsibility but with forclosures at epidemic proportions that kind of talk quite misses the boat. Something must be done. People can't sell their homes (overvalued UNSCRUPULOUSLY by lenders' agents in some cases) and the housing market has nose-dived anyway.

NOT GOOD.

[Flop the Nuts]

Steve, it takes two parties to formalize a contract. You can blame the lender all you want, but unless they've done something illegal, the issue of "preying" on someone is irrelevant.

If they've done something illegal, then lock 'em up. If not, then the people who signed the contract need to live with their actions.

I'm not ignoring the costs to society, I am pointing the finger at the morons who believed that they could get something for nothing, i.e., the borrowers. What's your solution to the "costs to society" issue? Bail them out? Out here in Cali, I've resisted the urge to move into the 3,000 sq ft home with a $1.5 mil mortgage, because it's too much of a stretch. I watched a lot of people with fairly low incomes (for California) happily move into those homes, thinking that the bill would never come due. It's coming due.

I may move into one of their homes, soon.

[lkwdsteve]

The foreclosures are plaguing the inner city, not the wealthy areas (well, there are some there too). Solution? There is no easy solution for the inner city problems. It should be illegal to inflate property values for mortagaging purposes(in fact I think it is). But it flies under the radar of enforcement because it's found out too late. At least it's being talked about and reported. The state and county have task forces to help homeowners that are in default arrange revised terms. But it's not enough. They were only able to assist in 600 cases last year because that's all they could get to (about 1 in 20 that were filed). So you have empty houses owned by foreign financial entities, in some cases, adding to those already boarded up.

"the issue of "preying" on someone is irrelevant."

It isn't to me. At the turn of the century certain bussinesses preyed on their employees (railroads come to mind). Unions preyed on their employees. The government had to step in, since all was legal until they did.

I guess we agree to disagree.