[roybean]

Banks, U.S. near deal on subprime mortgages;
Plan is to extend lower, introductory rates on loans before they reset.


Banks, U.S. near deal on mortgages - Mortgage mess - MSNBC.com

[Hedwig]

I don't like it. People need to learn to read contracts and be responsible for their actions. Why should they basically get "bailed out" when people who have been responsible are not?

Let them learn their lesson. The economy will recover.

[cwae12]

Amen, Hedwig!!!!

[neil5623]

Two ways of looking at this mess:

There are a number of reasons that a person may take a ARM loan. Things happen and they need to cash-out refinance for one. A plethora of things can happen between then and the rate hike making it difficult to meet the new payment. Some times the initial rate in ARMs is substantially higher than the prime rate. If the lender can afford to give the loan at the initial rate, then they should be willing to forego the increase if it means they don't have to go through foreclosure.

On the other hand, when people are foreclosed on and forced out, they usually do all kinds of things to the property. As a Licensed Real Estate Inspector, I have seen some horrible things done to foreclosed houses. When the new owner comes along, they are forced to spend $$$ on repairs, thus helping out remodeling companies and home improvement stores.

Just a thought.

[drivel]

Originally Posted by Hedwig

I don't like it. People need to learn to read contracts and be responsible for their actions. Why should they basically get "bailed out" when people who have been responsible are not?

Let them learn their lesson. The economy will recover.

Careful hedwig, that kind of thinking can get you tossed off a site like this.

[jlynn]

While I hear what you are saying Heddy, at least it is not a tax dollar bailout. Make the mortgage companies pay for their loose lending tactics.

[Hedwig]

Originally Posted by drivel

Careful hedwig, that kind of thinking can get you tossed off a site like this.

I don't think so. This isn't that other site that censors things.

I'm tired of bailing everyone else out. I didn't see anyone anxious to help me when my ex left and dumped a heap of debt on me.

And I don't see anyone offering me a reward for paying it off, or for having a mortgage that is well below my home's value, or for getting a fixed rate instead of interest-only (which would save me money in the short term).

[Hedwig]

Originally Posted by jlynn

While I hear what you are saying Heddy, at least it is not a tax dollar bailout. Make the mortgage companies pay for their loose lending tactics.

The original talk was of the government bailing people out. There was pressure on Congress to give help to those who were being foreclosed on. Even if the government forces the lenders to extend rates I don't think it's right.

If there's no government aid and the lenders decide that extending the rate is the right thing to do, fine. I have no problem with that. It's the free market at work, which is how it should be.

[roybean]

This all I have been reading lately; not intentionally. I mean they keep saying that foreclosures are rampant.

[Hedwig]

Well, that's because everyone pushed loans that had intro terms, knowing damned well that they couldn't afford the normal payments when the time came for the intro rate to run out. When I refinanced the last time they tried to push me into an interest-only because it would lower my payments (yea, for now, and I get used to having more money).

I was only refinancing to get lower rates. I told the broker if he couldn't write me a 30-year fixed, there were plenty of people who would. He did it. I'm sure his commission was lower, and he wasn't looking at another refi in a few years.

[roybean]

Originally Posted by Hedwig

Well, that's because everyone pushed loans that had intro terms, knowing damned well that they couldn't afford the normal payments when the time came for the intro rate to run out. When I refinanced the last time they tried to push me into an interest-only because it would lower my payments (yea, for now, and I get used to having more money).

I was only refinancing to get lower rates. I told the broker if he couldn't write me a 30-year fixed, there were plenty of people who would. He did it. I'm sure his commission was lower, and he wasn't looking at another refi in a few years.

I have been studying real estate and I read about that interest only stuff. Why do they even offer that? To make a quick buck?

[Hedwig]

Yes, I think that's the main reason. See, for some reason they thought the market would stay up even when everyone realized they couldn't afford the house. They figured people would get raises or new jobs and have more money. They figured they'd refinance the loans, thereby getting commission again.

It's like churning in investments--make you believe there's something better than what you have, so you have to sell one and buy another. They get more commission.

That's why I say let the industry deal with it themselves. They knew what they were doing.

[jlynn]

Originally Posted by roybean

I have been studying real estate and I read about that interest only stuff. Why do they even offer that? To make a quick buck?

I always thought those loans were for people that assumed values would continue appreciating, and anticipating selling their house after a few years.

[roybean]

Originally Posted by jlynn

I always thought those loans were for people that assumed values would continue appreciating, and anticipating selling their house after a few years.

I don't much yet, but I read that too. However, I also read that you should never take an interest only deal even if you think you're going to sell in a few years because anything could happen. The only way I see an interest only deal being a good thing is for someone who is in the real estate business, owns a lot, and is able to sit on it for a long time, but an average working person shouldn't go for arms and interest only IMHO.

[roybean]

Originally Posted by Hedwig

Yes, I think that's the main reason. See, for some reason they thought the market would stay up even when everyone realized they couldn't afford the house. They figured people would get raises or new jobs and have more money. They figured they'd refinance the loans, thereby getting commission again.

It's like churning in investments--make you believe there's something better than what you have, so you have to sell one and buy another. They get more commission.

That's why I say let the industry deal with it themselves. They knew what they were doing.

Well, it's not really the subprime borrowers. It's the real estate business and shaky lending practices.

[Hedwig]

But--one of the objectives was more commission. Look at my example. I've lived in this house over 20 years. I don't plan to move soon. I was pushed hard to take an interest-only loan, when anyone who knows anything about the economy and how interest rates work would know that rates were going back up, and I should be locking in a fixed.

Until I threatened to go someplace else, the broker was acting like he couldn't get me a decent deal on a fixed.

It's all about money. I was nowhere near subprime, nor was I going to sell the house by the time the intro rate was up. That was acknowledged going in.

[roybean]

It's a done deal! Don't know how much good it'll do, but
Bush administration reaches mortgage deal - Mortgage mess - MSNBC.com

[roybean]

Foreclosure solutions won't be easy



Foreclosure solutions won't be easy - Mortgage mess - MSNBC.com

[Hedwig]

No they won't, but they will still be better off if Congress stays out of it and lets the market set the terms. When the lenders figure out that it's more profitable to keep lower rates, they'll find ways to do it.