Batting for both sides?

[Beefer]

Re: Batting for both sides?

Lets take it a step further, and say that the Mayor sees that a lot of people have lost a lot of money. "Well, that's not very fair" says the mayor, and sends all of the people who loaned the kids the money a check.

But how's the city gonna pay for that? "I know," says the mayor, "we'll garnish the allowances of ALL of the neighborhood kids!"

If the government was able to re-coup the money spent to save these 'poor souls' from those people they saved, I'd be ok with it. But since they can't, why should all of us bail out all of them. Let the banks and the individuals who chose to loan and buy the properties take the hit. My hard earned money is for me and my family, and bad enough we have to pay taxes that fund programs that we may not use, or don't agree with, along with those we do use/agree with. There should be an Income Tax re-payment of money spent to bail them out, but we all know that won't happen.

Let the banks show less profit, and the knuckleheads that bought what they couldn't afford pay what they AGREED to pay. I agree that the real estate industry can be as ethical as the used car market (no offense to anyone personally in either industry), but if people chose to remain uneducated, it is and should be their problem, not mine and yours.

 

[SgtMaj]

Re: Batting for both sides?

If you have money in the bank and if it is FDIC insured then you don't loss your money. FDIC insures your money up to $100,000.

Not to be a fly in the ointment, but the FDIC is also broke now... I don't know what that means for people needing to make a claim though. May mean having to wait to get reimbursed or not getting reimbursed altogether.

 

[SgtMaj]

Re: Batting for both sides?

Anyway, I wasn't calling them deadbeats either. I was just saying that failure/inability wasn't a cause of the economic problems we're having, it was an effect. It wasn't that everybody just decided not to pay their debts. They were too ignorant to make good financial decisions. They based their choices on what their real-estate agents and bankers were telling them: "You can afford it, just get an ARM, it's REALLY unlikely that it will go up, the economy is just great! Sign here please!"

Well, when their mortgage rates skyrocketed, they had no choice but to default on their mortgages...

The 2nd and 3rd mortgages were just pathetic. Again, it was stupidity on BOTH sides. And everybody loses.

Having been through something similar, let me just say, that even though the FED interest rate didn't increase, when the fixed rate period ended, they still skyrocketed the rate on us, and we had never been late on a single payment. We simply refinanced for a fixed rate loan, like we had planned on doing from the beginning though, and were ok (plus we don't own a very expensive house, so even at 10% instead of 5%, it only increased the payments by a couple hundred bucks).

Anyway, when we went to refi again for an even lower interest rate (because the rates had fallen about 1 whole point since the last time we had refinanced)... Countrywide took our loan application fee, then tried to use that as leverage to try to force us back into an ARM. Then after we walked away from that deal, they sold our personal information to various other sources (including SSN's, loan numbers, etc.). Criminal charges were brought against the specific employees who did that, and we're just waiting on the outcome of the criminal case (as well as to see if our identities have been stolen) to file civil suits.

 

[achris]

Re: Batting for both sides?

... The Realtors job was not to qualify a client on what they can afford, it is to show them houses in their price range and negotiate the deal. ....

BS!!! When I was looking for a house to buy the agents (whom I had told what my price range was) were all trying there level best to get me into a house that was more than I could afford. I have the smarts to know what I could afford and didn't let them intimidate me into something I didn't want or knew I couldn't afford.

Many home buyers I have spoken to over the years tell the same story... Unfortunately some allow themselves to be bullied...

And I am not letting the lending institutes off the hook here either... It's a huge game to them. With our lives as the betting chips!

Chris..........

 

[SgtMaj]

Re: Batting for both sides?

I have to say, my realtor was really good. She only showed us one house that was more expensive, and that was only because we had asked her to, so we could get an idea of what the extra money would buy... and even that house we could have aforded the payments on, but was beyond what we wanted.

 

[avenger79]

Re: Batting for both sides?

Funny... you are way off the mark here. First of all, homes put money in the wallets of way more people than banks and Realtors; how about the timber companies, builders, shipping companies, contractors, home improvement stores, and everyone they employ. Homes are big business and contribute tons to the economy (hence the housing crisis causing an economic downturn). Also if people didn't make poor finical decisions a home should be a great investment.

I concur. I was over simplifying it to not include houses being built remodeled etc.
I was simply talking about the people walking around talking their friends into going in on a house so they can flip it and make the big cash cow. Aint happening. The realtor loves it for the commission, the banker loves it for the interest and the friends usually end up in court after realizing they had neither the skill, time, or money to rehab a house and then actaully sell it for profit. I've seen this more then a couple times.
The problem with people thinking they've made money comes when they take the selling price minus the purchase price and call the rest profit. Not quite. They have to add in taxes, interest, updates and repairs. Most people unless they've lived in their house for many years don't make much.
I went through it line by line with a friend of mine. Broke his heart when he got to the bottom of the page. His 35K profit turned into a 10K driveway, 5K trees, 5K yard. 2K painting, then we added the interest and taxes, oh yeah they repaved his road as well. 20K for that bad boy. I've known a few people who actually come out ahead but most are lucky to break even.
I bought mine as a place that I enjoy and when I sell it I'll get some of my money back like a savings account but not profit. Unless I'm one of the lucky few.

 

[SpeedJunkie]

Re: Batting for both sides?

BS!!! When I was looking for a house to buy the agents (whom I had told what my price range was) were all trying there level best to get me into a house that was more than I could afford. I have the smarts to know what I could afford and didn't let them intimidate me into something I didn't want or knew I couldn't afford.

Many home buyers I have spoken to over the years tell the same story... Unfortunately some allow themselves to be bullied...

And I am not letting the lending institutes off the hook here either... It's a huge game to them. With our lives as the betting chips!

Chris..........

I can not speak for what all Realtors do, however most I know don't try to push into something you can not afford, it is usually people not liking what is available in their price range and wanting to see "nicer" places.

As I said, the Realtor doesn't qualify for what you can afford, the bank does. If the loan goes through and you accept the terms that is between you and the bank.

I concur. I was over simplifying it to not include houses being built remodeled etc.
I was simply talking about the people walking around talking their friends into going in on a house so they can flip it and make the big cash cow. Aint happening. The realtor loves it for the commission, the banker loves it for the interest and the friends usually end up in court after realizing they had neither the skill, time, or money to rehab a house and then actaully sell it for profit. I've seen this more then a couple times.
The problem with people thinking they've made money comes when they take the selling price minus the purchase price and call the rest profit. Not quite. They have to add in taxes, interest, updates and repairs. Most people unless they've lived in their house for many years don't make much.
I went through it line by line with a friend of mine. Broke his heart when he got to the bottom of the page. His 35K profit turned into a 10K driveway, 5K trees, 5K yard. 2K painting, then we added the interest and taxes, oh yeah they repaved his road as well. 20K for that bad boy. I've known a few people who actually come out ahead but most are lucky to break even.
I bought mine as a place that I enjoy and when I sell it I'll get some of my money back like a savings account but not profit. Unless I'm one of the lucky few.

So you were speaking about short term profit. You have to know what you are doing to make money on the short term, people are unrealistic about what can be done and the price it cost.

Hell, the house I am living in now I bought in April for 60k under what it is worth (this isn't a luxury house where 60k is a small percentage of the price, I paid 200k even and it is worth 260k). Granted I don't plan to flip or sell in the short term. I will rent it out before I do that unless me and the lady pick up and move to an island to start a bed & breakfast.

 

[Beefer]

Re: Batting for both sides?

I can not speak for what all Realtors do, however most I know don't try to push into something you can not afford, it is usually people not liking what is available in their price range and wanting to see "nicer" places.

As I said, the Realtor doesn't qualify for what you can afford, the bank does. If the loan goes through and you accept the terms that is between you and the bank.

.....(insert grumble icon here)...

As a home inspector during the RE market boom, and having been involved in over 5,000 real estate transactions, I was witness to an incredible amount of agents explaining to buyers how they can afford this (overpriced) home by simply moving numbers around, 'creative financing' (thanks Carlton Sheets), and other less than desirable tactics. Agents are looking out for their bottom line, as most of us do, but way to many people jumped on the "I want to be a real estate agent" bandwagon during the height of things. Really brought the bottom-feeding bunch out.

Yes, as a home inspector I profited nicely, but I had little to do with what house was being bought. In almost all instances, I pointed out deficiencies in the home that either a) saved the buyer money (as much as $100k in 3 instances) in repairs that they would have had to take care of; b) reduced the selling price of the house (greatest reduction was +/-$45,000). There were 3 times I confronted the buyer asking for re-assurance that they knew the financial aspect of what they doing. Two didn't, and walked. Did I step outside of my position? Maybe. I felt and still feel, that I did what was best for my clients. I have killed a few deals intentionally (see above about RE agents being creative when they should have been looking out for the client), but all was in presentation of the facts, not twisting of them.

When a starter home is selling for $300/sq ft, something is wrong.... If a buyer doesn't realize that (I don't care what comps were), that's their problem, no matter who profits from their ignorance.

 

[SpeedJunkie]

Re: Batting for both sides?

.....(insert grumble icon here)...

As a home inspector during the RE market boom, and having been involved in over 5,000 real estate transactions, I was witness to an incredible amount of agents explaining to buyers how they can afford this (overpriced) home by simply moving numbers around, 'creative financing' (thanks Carlton Sheets), and other less than desirable tactics. Agents are looking out for their bottom line, as most of us do, but way to many people jumped on the "I want to be a real estate agent" bandwagon during the height of things. Really brought the bottom-feeding bunch out.

Yes, as a home inspector I profited nicely, but I had little to do with what house was being bought. In almost all instances, I pointed out deficiencies in the home that either a) saved the buyer money (as much as $100k in 3 instances) in repairs that they would have had to take care of; b) reduced the selling price of the house (greatest reduction was +/-$45,000). There were 3 times I confronted the buyer asking for re-assurance that they knew the financial aspect of what they doing. Two didn't, and walked. Did I step outside of my position? Maybe. I felt and still feel, that I did what was best for my clients. I have killed a few deals intentionally (see above about RE agents being creative when they should have been looking out for the client), but all was in presentation of the facts, not twisting of them.

When a starter home is selling for $300/sq ft, something is wrong.... If a buyer doesn't realize that (I don't care what comps were), that's their problem, no matter who profits from their ignorance.

I can accept that; as I said most I know, maybe I know the non-bottom feeders who have been doing it for years and see value in repeat customers and referrals and will go out of their way to ensure you are getting the best representation possible.

I don't know because I never spoke to an agent about my loans or how I was going to get my money, just as I don't speak to car salesmen or boat salesmen about my loan. I go in and I say this is my range, what can you do. If they don't listen to my requirements I find someone who will. You can't pass the buck but so far, in the end everyone who bought a house agreed to the terms.

 

[Uraijit]

Re: Batting for both sides?

I concur. I was over simplifying it to not include houses being built remodeled etc.
I was simply talking about the people walking around talking their friends into going in on a house so they can flip it and make the big cash cow. Aint happening. The realtor loves it for the commission, the banker loves it for the interest and the friends usually end up in court after realizing they had neither the skill, time, or money to rehab a house and then actaully sell it for profit. I've seen this more then a couple times.
The problem with people thinking they've made money comes when they take the selling price minus the purchase price and call the rest profit. Not quite. They have to add in taxes, interest, updates and repairs. Most people unless they've lived in their house for many years don't make much.
I went through it line by line with a friend of mine. Broke his heart when he got to the bottom of the page. His 35K profit turned into a 10K driveway, 5K trees, 5K yard. 2K painting, then we added the interest and taxes, oh yeah they repaved his road as well. 20K for that bad boy. I've known a few people who actually come out ahead but most are lucky to break even.
I bought mine as a place that I enjoy and when I sell it I'll get some of my money back like a savings account but not profit. Unless I'm one of the lucky few.

Did you make sure to credit him for all of the payments that WOULD HAVE gone to rent, on a comparable house?

If you're gonna do a cost/benefit, you gotta do the whole thing...

Anyway, we've pretty much established that this was caused by poor lending practices...

But lets, for a min. pretend that it was the MAYOR who forced you to lend to those kids in the first place!

Is it still the lender's fault?

http://article.nationalreview.com/?q=M2QwNDhkZTg2OGYzZjkzM2E2NDEwM2U5OGVkNTc0YzU=&w=MA==

 

[achris]

Re: Batting for both sides?

Did you make sure to credit him for all of the payments that WOULD HAVE gone to rent, on a comparable house?

If you're gonna do a cost/benefit, you gotta do the whole thing...

Anyway, we've pretty much established that this was caused by poor lending practices...

But lets, for a min. pretend that it was the MAYOR who forced you to lend to those kids in the first place!

Is it still the lender's fault?

http://article.nationalreview.com/?q=M2QwNDhkZTg2OGYzZjkzM2E2NDEwM2U5OGVkNTc0YzU=&w=MA==

I like the article... I think the truth is somewhere between that and the 'Wall Street Fat Cat' syndrome...

It does all come down to one single fact though... People who couldn't afford a mortgage getting/being given one. Whose fault is that? Well, we could say the lender for not properly qualifying them, or the borrower for having a false sense of their own abilities to pay off debt, or we could even go all the way back to the education system for not teaching students about the real world. Regardless of who's a fault, lets hope the mess is cleaned up quickly and someone, somewhere learns something and does something so this can never happen again.

Chris..........

 

[Uraijit]

Re: Batting for both sides?

Yes, lets hope like hell!

Unfortunately, in my gut, I don't think we're going to just be walking out of this one... Hard, hard, hard times ahead.

 

[SpeedJunkie]

Re: Batting for both sides?

I like the article... I think the truth is somewhere between that and the 'Wall Street Fat Cat' syndrome...

It does all come down to one single fact though... People who couldn't afford a mortgage getting/being given one. Whose fault is that? Well, we could say the lender for not properly qualifying them, or the borrower for having a false sense of their own abilities to pay off debt, or we could even go all the way back to the education system for not teaching students about the real world. Regardless of who's a fault, lets hope the mess is cleaned up quickly and someone, somewhere learns something and does something so this can never happen again.

Chris..........

I agree with your statements. We need more education about real world finance. I don't know that the banks will make the same mistake again, however with big brother bailing them out what lesson did they learn? (Other than they can line their pockets and have the tax payers pay for their mistakes)