Ah, "but isn't that the way the world works?" some will say...
But instead being taken advantage of with silly little things like that 'undercoating package' when you buy a new car, or an 'extended warranty' at Best Buy on that iPod, now the stupid people are making REALLY stupid financial decisions, involving hundreds of thousands of dollars, not understanding that if it sounds too good to be true, well, guess what, it is too good to be true.
"$500,000 mortgage for only $500 a month!!!"
Yeah, right. Next time, read the fine print. This time, just get it over with already, get foreclosed on, file for bankruptcy, your financial life is over for seven years, Mr. Toxic Mortgage Bag Holder. Then all will hopefully we well again. Just read the fine print next time.
Trapped Homeowners With New Exotic Loans Aren't Always Aware Of the Risk Involved
Most consumers have only themselves to blame because they are not doing enough research on the mortgage market as it has grown increasingly complex, said Christopher Cruise, who trains mortgage brokers at major lending companies.
"The American consumer's ignorance of mortgage procedures in the past hurt them a little," he said. "What's different now is that it'll hurt them a lot. The stakes are a lot higher."
The new mortgage products have fueled record profits for the lending industry in recent years. Brokers can generate tens of thousands of dollars in additional fees, beyond what they earn on traditional mortgages, by placing borrowers in these loans, Cruise said.
"We're not confident buyers are getting all the information they need," he said. "They don't understand the toxic environment."
January 15, 2007
Toxic mortgages - stupid people being taken advantage of by greedy people
Subscribe to:
Post Comments (Atom)
22 comments:
The bubble turned everything upsidedown to include homeowners. Old school FIXED & only the uber rich (keep the assets in high interest inventments & pay the minimum option payment until 31 Dec & then pay up the loan to thus get maximum return and still get mort. interest deductions) or uber rich in waiting (medical doctors still in residency but by the time the loan ballooned they would have a high cash flow) qualified for these exotic loans.
But because the have low up front payments they could dupe the uninformed joe sixpack. But Joe sixpack does not have a big pay jump in the offing and nor does he have enough cash flow to maximize with these products, they are just completely unsuitable for joe sixpack period. The mortgage brokers know this but do not give a damn, its not their problem. All the know is that if they sell the exotic loan over the plain vanilla one they get more money from the bank.
The bank does not care because they are just going to pack up these loans and sell them to investors way before the blow up and suck down joe sixpack.
Joe sixpack can't avoid the iceberg because he does not have the cash to make the pre-payment penalty.
Its the perfect storm caused by a lack of accountability, personal responsibility and greed all coming together greased by the housing bubble. The perfect storm is still out to see but will be hitting shore soon. We have no idea how bad it will be, but for the individual joe sixpacks it will be tragic. If its of a significant enough scale on wall street it could be painful for the greater economy. Ironically the parties that instigated the entire dilemma, mortgage brokers & banks, are completely off the hook unless the feds step in and to something to punish them. So far all the feds are doing is passing guidlines and regulations to curtail these practices from occuring again in the future, but the hounds of hell are already unleashed so we'll just have to hold tight and see if the markets can respond to this in a way the minimizes the pain.
No mortgage payments for 12 months!
And someone wants a patent for that idea. Did the guy who gave out free pizzas as a deal closer get a patent too?
http://www.rismedia.com/wp/2007-01-07/california-company-announces-no-mortgage-payment-for-12-months/
RISMEDIA, Jan. 8, 2007-How does "No Mortgage Payment for One Year" sound? Mortgage Payment Deferral, Inc., in Roseville, California has just released a patent pending mortgage program that allows homeowners to defer anywhere from 3 to 36 months of their mortgage payments. The new program is called 12 Month Deferral or 12MoDef. What's more, this new product can be applied to ANY type of refinancing loan.
Boy this place has turned into a home depot...echoes of lost souls.
In a country with big income disparities, there are big education disparities too, nowadays most population is not educated enough to know how to calculate a percentage on a number, let alone the intricacies of today's real estate and mortgage markets. Conspiracy to devaluate education public and private so to keep people poor and stupid? On the other hand, which percentage educated people, with college grad degrees are savvy in finances such as mortgages, credit cards, retirement accounts, insurances, etct? On the other hand (if you ar an octopus, you get 8 hands or feet), how many first year college students have not been targeted and fallen prey to credit card industry solicitation and have already more debt than they may be able to handle throughout their lifetime?
Keith,
You bring up a funny point with the mention of "undercoating." Although you don't hear it as much now at finance time in auto dealerships as you did in the past, it used to be hilarious to respond to the finance guy with "that's funny, the guy that appraised my trade-in didn't ask if it had undercoating or scotchguard when he set a price on it," as it was being pitched to you. That typically caused them to turn green around the gills, and shutup immediately.
That said, are all these builder options such as granite counter tops going to matter on the way down the tubes? Or will price simply be king?
"Joe Sixpack"?
And you are..Montgomery Chardonnay?
Do you realize what a popmpous ass you sound like when you talk like that?
borka send me an email, got something for you
RE: Anonymous said...
"Joe Sixpack"?
And you are..Montgomery Chardonnay?
Do you realize what a popmpous [sic] ass you sound like when you talk like that?
Do you realize that you are a pompous a$$? becuase you're misguided perception and commentary has done nothing to contribute to this forum.
For the record I am a born and bread Joe sixpack and damn proud of it. I often find that those who level such uninformed allegations against others are simply trying to deflect attention from the main issue.
The issue is that alot of good hard working honest people, those who are embodied in the term Joe sixpack, are being exploited by the REIC and we are all going to have to pay for it in a couple of years, if not sooner.
Please get your head out of your 4th point of contact and debate the issues and stop attacking the messenger.
PS - I developed a taste for German Reislings when I was stationed in Europe defending your freedom which you're currently squandering.
Just remember...the only thing that matters is the monthly payment. (Your probably wondering why I'm not running the country)
WOW a solider. To paraphrase John Kerry, guess you didn't study very hard.
As for "point" that "Joe" is being hurt by the big bad evil REIC. Is that your point, that Joe was hoodwinked into buying a home? OK I can buy that, but then what does it say about the intelligence level of Joe Sixpack nation of which you are a proud member?
------------------------------
PS - I developed a taste for German Reislings when I was stationed in Europe defending your freedom which you're currently squandering.
You've zeroed in on only the visible part of the iceberg. The real story is who has been willing to buy those mortgages and why? And what happens when they become unwilling to do so any longer? The sad saps who who be foreclosed upon are only the start.
I just visited the sites for the "mortgage payment deferral" program. I can't understand it. Anyone know what they're talking about?
I say hit em with all the credit they'll take. They'll do anything for status and lifestyle and then pop. Maggots.
I'm a clean up man. Been waiting fifteen years for this bust.
It's not seven years for bankruptcy anymore. There are radio ads touting 100% mortgage loans for people one year out of bankruptcy or foreclosure. Casey Serin should just file for bankruptcy and start his new flipping venture in spring of 2008.
Its a matter of uneven levels of sophistication and not a direct correlation to intelligence per se.
Joe sixpack is just too honest, trusting and unassuming and not realizing the middlemen are purely out to exploit them. Its not the good old days where your local bank is a pillar of the community. Suitability was insured by community, both are now gone.
We are simply creating another full employment program for lawyers to clean up this mess and also from now on to proof all documents, explain all the clauses and negotiate the toxic one's out and/or explain them in plain language to joe sixpack. Thus serving as an expensive check to the lies the agents and mortgage brokers will spew about the contracts because they know everything verbal is irrelevant, what matters in our courts is what is in writing.
All the hoops to closing were designed to close off all the frauds that use to occur in the past when land was transferred. Now its not the parties but the middlemen that need to have additional legal checks put against them.
Not all Joe Six Packs were hoodwinked by the criminal elements of the REIC, but we will all have to pay for the bailout of the speculators and subprime debtors who defaulted or cheated the system with the aid of Realtors, mortgage brokers, appraisers and other REIC vultures.
Doesn't Willie Lee Howard know how rich he is now?? Housing NEVER goes down!
"Subprime" loans are available to people who have bad credit, though they charge interest rates 2 to 3 percent higher than the rates charged to borrowers with good credit.
--------
That's INSANE!
2-3 pnt higher? Geez, no wonder the exotic loans took off. How could people with bad credit afford it anyway??!!
The rate is fixed, but only for 10 years. Sugarman said Howard appears to have qualified for it with a "NINA" loan, a "no-income, no assets" loan that required minimal income documentation.
----------
NINA, eh? Is that what all the Mexican nationals apply for?
ES OK!
The new program is called 12 Month Deferral or 12MoDef.
Isn't that a rap group??
"$500,000 mortgage for only $500 a month!!!"
That sounds high, I only want $20 a month. That's all I can afford cos I dont ahve a job. Just add the $500 to my appreciation. OK, cool.
Cool.
Cow_tipping.
Post a Comment