Foreclosure Point/Counterpoint

[ASUG8]

[quote="AZGrizFan

Or, perhaps people should consider the impact of NOT paying their mortgages en-masse.

Trust me, it ain't pretty. [/quote]

We closed on a refi/construction loan in November for an addition we're starting this week. It took from August to November for Wells Fargo (who has had our mortgage on our last 3 houses) to get all the paperwork completed. We have strong credit scores, low debt, and would be considered pretty low default risk IMO but it was still like getting a proctology exam. They should always be this thorough instead of the "rubber stamp" period we went through, painful as it is. I'll sound like an ass for saying this, but here goes - owning a home may be the American dream, but that doesn't necessarily mean that everybody should be able to obtain that dream - people need to be objective about whether they can pull it off financially over the longer term, and banks/credit unions need to be vigilant in the qualification/risk assessment of applicants. The wife and I are lucky to be in a spot to be homeowners, but we're also very cognizant of overextending ourselves and generally try to be smart about saving and spending (we have the highest household income we've ever had and live in the smallest house we've ever had). Seems to me that everybody got lulled into the charms of easy credit and keeping up with the neighbors in spite of taking stock of their own personal situations. Fault abounds everywhere for the credit crisis.

[Appaholic]

Agree. Buyer & lender beware. Just another example of trickle down economics IMO. In this case, the ability to calculate risk/reward with no regard to ethics has basically trickled down to Average Joe from Corporate America. Do I blame the Mortgage Lenders/Banks for this phenomenom? No, nor do I feel sorry for them either. Just another example of eroding morality in business practices from Vendor & consumer. Consumers have now seen that the worst that can happen in most cases is 10 yrs bad credit, which is more than corp america suffers when they default on an obligation, but survivable nonetheless. Perhaps banks should lead by example before trying to shame people into paying bad mortgages...or disqualify them during the PreQual process.

Or, perhaps people should consider the impact of NOT paying their mortgages en-masse.

Trust me, it ain't pretty.

Agree...especially for the bankers...once people have nothing to lose & if I was a banker with plenty, I'd be nervous....it's give & take, AZ, & the have's (business with political ties) have been taking from have not's (average citizens) at a greater rate...not saying it's right, but the banks don't hold all the cards in this argument. Yes, it would be catastrophic for all, ESPECIALLY THE BANKERS, who aren't used to doing without....

[Appaholic]

[quote="AZGrizFan]

Or, perhaps people should consider the impact of NOT paying their mortgages en-masse.

Trust me, it ain't pretty.

We closed on a refi/construction loan in November for an addition we're starting this week. It took from August to November for Wells Fargo (who has had our mortgage on our last 3 houses) to get all the paperwork completed. We have strong credit scores, low debt, and would be considered pretty low default risk IMO but it was still like getting a proctology exam. They should always be this thorough instead of the "rubber stamp" period we went through, painful as it is. I'll sound like an ass for saying this, but here goes - owning a home may be the American dream, but that doesn't necessarily mean that everybody should be able to obtain that dream - people need to be objective about whether they can pull it off financially over the longer term, and banks/credit unions need to be vigilant in the qualification/risk assessment of applicants. The wife and I are lucky to be in a spot to be homeowners, but we're also very cognizant of overextending ourselves and generally try to be smart about saving and spending (we have the highest household income we've ever had and live in the smallest house we've ever had). Seems to me that everybody got lulled into the charms of easy credit and keeping up with the neighbors in spite of taking stock of their own personal situations. Fault abounds everywhere for the credit crisis.[/quote][/quote]

Nailed it...it wasn't the consumer touting ther dream of homeownership, but the lenders looking to make a buck...both sides are reaping what they sowed....

[AZGrizFan]

Or, perhaps people should consider the impact of NOT paying their mortgages en-masse.

Trust me, it ain't pretty.

Agree...especially for the bankers...once people have nothing to lose & if I was a banker with plenty, I'd be nervous....it's give & take, AZ, & the have's (business with political ties) have been taking from have not's (average citizens) at a greater rate...not saying it's right, but the banks don't hold all the cards in this argument. Yes, it would be catastrophic for all, ESPECIALLY THE BANKERS, who aren't used to doing without....

It's not about "doing without", Appa. I'll try to explain it with a numbers example: Here in AZ, we've seen an approximate 50% reduction in home values. So, when a borrower walks away (for WHATEVER reason), the bank/credit union is left with a 50% loss, plus cost to foreclose/repair/list/sell/etc. Again, using my CU as an example where on a GOOD month we make $200,000....all it takes is ONE HOME A MONTH and suddenly we're not profitable. Throw in people walking away from cars, credit card debt, etc., etc., etc and you get the shit storm that I inherited 13 months ago. $26,000,000 in losses and still counting.

I'll keep yelling this from the mountaintops until my voice is gone: There has been a paradigm shift in people's view of their credit score. You wanna know why lenders are still tight with their money? You wanna know why it takes somebody like ASU8 4 months to get approved? Because for the most part, lenders used the same basic system for the past 30 years to determine a person's "credit-worthiness" and that system got blown to hell in a handbasket about 18 months ago and nobody knows what the fuck to do right now. Used to be if you had a FICO over 700 you were GOLD. Now, FICO's of 780-833 are turning in cars, houses, etc., and walking away in droves from debt they can EASILY repay because they feel it's their RIGHT. And because of actions like these the financial sector is teetering on the brink of collapse---complete collapse that even our benevolent government won't be able to prop up.

When we (as Americans) have that little regard for the implications of our actions, we're fucking doomed---Americans have an entitlement mentality like none I've ever seen. I hear commercials on the radio about how "you have a RIGHT to file bankruptcy" and you have a "RIGHT to have your credit card debt erased" during the "bail-out era". Never mind that YOU ran up that debt. Never mind that you bought every fucking toy under the sun, took those expensive vacations, etc., etc., etc. It's the LENDERS FAULT that you have no personal accountability. THAT'S the mentality of this country right now. A complete lack of personal accountability combined with an entitlement mentality that will ruin the country.

I will add that I recognize that many, many businesses were getting rich during these times (Goldman Sachs comes to mind), but two wrongs don't make a right, people. In the long run, we'd have been much better off letting the slimy ones fail, pick up the pieces, and moved forward. Instead we created an entire country-wide mindset that bailouts are a given (personal AND business) and we've fucked the country.

Unfortunately, I think the ship has long since sailed, and it's a one-way journey. I'm stocking up on canned food, ammo, gasoline and bottled water. It's gonna get bumpy.

[ASUG8]

AZ, I just don't understand why someone who attempts to cultivate a solid FICO would do something stupid like walk away from outstanding debt knowing that it will wreck any future attempts to acquire either secured or unsecured debt. I mean, the rules haven't changed to your point, and if I walk away from a car loan, get my credit card balances negotiated down, or default on a mortgage my FICO gets reamed and I can't acquire any additional credit to buy more toys or necessities. It takes years to get a good credit score, but only a month or two to negate years of solid credit behavior. Maybe I'm not smart enough to play the game, but I figure if I borrow the money it's mine to repay.

[houndawg]

Agree. Buyer & lender beware. Just another example of trickle down economics IMO. In this case, the ability to calculate risk/reward with no regard to ethics has basically trickled down to Average Joe from Corporate America. Do I blame the Mortgage Lenders/Banks for this phenomenom? No, nor do I feel sorry for them either. Just another example of eroding morality in business practices from Vendor & consumer. Consumers have now seen that the worst that can happen in most cases is 10 yrs bad credit, which is more than corp america suffers when they default on an obligation, but survivable nonetheless. Perhaps banks should lead by example before trying to shame people into paying bad mortgages...or disqualify them during the PreQual process.

Or, perhaps people should consider the impact of NOT paying their mortgages en-masse.

Trust me, it ain't pretty.

It wasn't consumers who changed the rules to the game, Z. Hell, I can remember the days when switching companies for a job would cause a raised eyebrow. That was back when "company loyalty" was a two-way street.

[AZGrizFan]

AZ, I just don't understand why someone who attempts to cultivate a solid FICO would do something stupid like walk away from outstanding debt knowing that it will wreck any future attempts to acquire either secured or unsecured debt. I mean, the rules haven't changed to your point, and if I walk away from a car loan, get my credit card balances negotiated down, or default on a mortgage my FICO gets reamed and I can't acquire any additional credit to buy more toys or necessities. It takes years to get a good credit score, but only a month or two to negate years of solid credit behavior. Maybe I'm not smart enough to play the game, but I figure if I borrow the money it's mine to repay.

8, I don't either.....but it's happening at never-before-seen rates. People see their same house for sale down the street at 60-70% of what they owe on theirs. They go get a mortgage, claim they'll be renting theirs, then walk away from it as soon as the other home closes. When gas was $4/gallon people with 800+ FICO's would go buy a Corolla, then turn in the keys to their Hummer when they weren't even late on their payment. If I had a dollar for every time I heard "yeah, I know, it'll drop my FICO by 100 points, but I'll still be above 650/680/700 etc"...I had a FICO in the 760 range for YEARS...hit a bump in the road about 2 years ago (for about a 3-month period)....my FICO STILL hasn't recovered (around 670 now, was as low as 610)...and I have NEVER not made a payment, never had any debt negotiated down, never turned in a car or a home. I've paid everything I signed my name too.

I guess (like houndawg) we're old fashioned in that regard....actually having personal accountability.

What a novel concept.

[AZGrizFan]

Or, perhaps people should consider the impact of NOT paying their mortgages en-masse.

Trust me, it ain't pretty.

It wasn't consumers who changed the rules to the game, Z. Hell, I can remember the days when switching companies for a job would cause a raised eyebrow. That was back when "company loyalty" was a two-way street.

That doesn't change the fact that if you agree to pay something, you should pay it...no?

[blueballs]

AZ, I just don't understand why someone who attempts to cultivate a solid FICO would do something stupid like walk away from outstanding debt knowing that it will wreck any future attempts to acquire either secured or unsecured debt. I mean, the rules haven't changed to your point, and if I walk away from a car loan, get my credit card balances negotiated down, or default on a mortgage my FICO gets reamed and I can't acquire any additional credit to buy more toys or necessities. It takes years to get a good credit score, but only a month or two to negate years of solid credit behavior. Maybe I'm not smart enough to play the game, but I figure if I borrow the money it's mine to repay.

8, I don't either.....but it's happening at never-before-seen rates. People see their same house for sale down the street at 60-70% of what they owe on theirs. They go get a mortgage, claim they'll be renting theirs, then walk away from it as soon as the other home closes. When gas was $4/gallon people with 800+ FICO's would go buy a Corolla, then turn in the keys to their Hummer when they weren't even late on their payment. If I had a dollar for every time I heard "yeah, I know, it'll drop my FICO by 100 points, but I'll still be above 650/680/700 etc"...I had a FICO in the 760 range for YEARS...hit a bump in the road about 2 years ago (for about a 3-month period)....my FICO STILL hasn't recovered (around 670 now, was as low as 610)...and I have NEVER not made a payment, never had any debt negotiated down, never turned in a car or a home. I've paid everything I signed my name too.

I guess (like houndawg) we're old fashioned in that regard....actually having personal accountability.

What a novel concept.

This is called "buy and bail," and HUD and the secondary markets really dropped the hammer on this in August 2008.

Now, to be able to convert a primary residence to a rental property and consider the projected income, the buyer must obtain an appraisal demonstrating at least 30% equity, show 6 months PITI reserves on both houses, a one year lease, and a cancelled deposit check from the prospective tenant.

Of course this doesn't stop the person who can qualify with both payments from walking, but if the underwriters even think there is a chance of "Buy and Bail" they are all over the file.

[houndawg]

It wasn't consumers who changed the rules to the game, Z. Hell, I can remember the days when switching companies for a job would cause a raised eyebrow. That was back when "company loyalty" was a two-way street.

That doesn't change the fact that if you agree to pay something, you should pay it...no?

Well, that's how I roll, but I guess I'm just a hidebound old conservative.

I don't agree with those who walk away just because the deal doesn't look as good as it used to, but I can understand why people feel that way when there is no accountability for those above a certain socio-economic level. Start filling the jails with these Wall Street socktuckers, and I might start to believe in the system again.

Our answer up on Houndawg Hill to this situation has been to accelerate mortgage payments (under four years left), pay off credit cards (one left with a balance under 3k), and pay cash for everything. We're making our durable goods purchases now while the money is still worth something, and from here on out it is cash only and the bank (not the CUs) can kiss my lily-white ass. I hope they all die in the gutter of tertiary syphillis.

[AZGrizFan]

That doesn't change the fact that if you agree to pay something, you should pay it...no?

Well, that's how I roll, but I guess I'm just a hidebound old conservative.

I don't agree with those who walk away just because the deal doesn't look as good as it used to, but I can understand why people feel that way when there is no accountability for those above a certain socio-economic level. Start filling the jails with these Wall Street socktuckers, and I might start to believe in the system again.

Our answer up on Houndawg Hill to this situation has been to accelerate mortgage payments (under four years left), pay off credit cards (one left with a balance under 3k), and pay cash for everything. We're making our durable goods purchases now while the money is still worth something, and from here on out it is cash only and the bank (not the CUs) can kiss my lily-white ass. I hope they all die in the gutter of tertiary syphillis.

Agreed 100%.

[Appaholic]

Agree...especially for the bankers...once people have nothing to lose & if I was a banker with plenty, I'd be nervous....it's give & take, AZ, & the have's (business with political ties) have been taking from have not's (average citizens) at a greater rate...not saying it's right, but the banks don't hold all the cards in this argument. Yes, it would be catastrophic for all, ESPECIALLY THE BANKERS, who aren't used to doing without....

It's not about "doing without", Appa. I'll try to explain it with a numbers example: Here in AZ, we've seen an approximate 50% reduction in home values. So, when a borrower walks away (for WHATEVER reason), the bank/credit union is left with a 50% loss, plus cost to foreclose/repair/list/sell/etc. Again, using my CU as an example where on a GOOD month we make $200,000....all it takes is ONE HOME A MONTH and suddenly we're not profitable. Throw in people walking away from cars, credit card debt, etc., etc., etc and you get the shit storm that I inherited 13 months ago. $26,000,000 in losses and still counting.

I'll keep yelling this from the mountaintops until my voice is gone: There has been a paradigm shift in people's view of their credit score. You wanna know why lenders are still tight with their money? You wanna know why it takes somebody like ASU8 4 months to get approved? Because for the most part, lenders used the same basic system for the past 30 years to determine a person's "credit-worthiness" and that system got blown to hell in a handbasket about 18 months ago and nobody knows what the fuck to do right now. Used to be if you had a FICO over 700 you were GOLD. Now, FICO's of 780-833 are turning in cars, houses, etc., and walking away in droves from debt they can EASILY repay because they feel it's their RIGHT. And because of actions like these the financial sector is teetering on the brink of collapse---complete collapse that even our benevolent government won't be able to prop up.

When we (as Americans) have that little regard for the implications of our actions, we're fucking doomed---Americans have an entitlement mentality like none I've ever seen. I hear commercials on the radio about how "you have a RIGHT to file bankruptcy" and you have a "RIGHT to have your credit card debt erased" during the "bail-out era". Never mind that YOU ran up that debt. Never mind that you bought every fucking toy under the sun, took those expensive vacations, etc., etc., etc. It's the LENDERS FAULT that you have no personal accountability. THAT'S the mentality of this country right now. A complete lack of personal accountability combined with an entitlement mentality that will ruin the country.

I will add that I recognize that many, many businesses were getting rich during these times (Goldman Sachs comes to mind), but two wrongs don't make a right, people. In the long run, we'd have been much better off letting the slimy ones fail, pick up the pieces, and moved forward. Instead we created an entire country-wide mindset that bailouts are a given (personal AND business) and we've fucked the country.

Unfortunately, I think the ship has long since sailed, and it's a one-way journey. I'm stocking up on canned food, ammo, gasoline and bottled water. It's gonna get bumpy.

AZ, I'm not disagreeing with you, I'm just stating what I consider is obvious - the only thing new about this phenomenom is who is doing it to whom. It doesn't make it right, but bankers / big business should have considered this breakdown as a possible outcome of their actions back when they were doing it with no accountability to the American public. I think Houndawg sums my feelings the best:

I don't agree with those who walk away just because the deal doesn't look as good as it used to, but I can understand why people feel that way when there is no accountability for those above a certain socio-economic level. Start filling the jails with these Wall Street socktuckers, and I might start to believe in the system again.

When the "system" allows big business to walk away from their obligations while suffering no repurcusions, is it a shock when that mentality is transferred to the public left to pick up the pieces in the past? Is a bank eating a bad loan any less tragic than GM being allowed to walk away from lawsuits by filing bankruptcy while being bailed out by the American public? Especially when the bank was the one providing all of the capitol that fueled this housing bubble (the homebuyers weren't paying cash for these houses & driving up the costs)? IMO, America's sense of entitlement comes straight from the top....the lobbyists aren't lobbying for Joe Avg America, they're lobbying for industry.

[Ibanez]

So can I just walk away from college loans too? That'd be sweeeeeeeeeeet!

Maybe I can get the government to pay them off for me since Affirmative Action disenfranchises me and my immigrant ancestors (Scotch-Irish Catholics) were mistreated upon thier arrival.

[AZGrizFan]

When the "system" allows big business to walk away from their obligations while suffering no repurcusions, is it a shock when that mentality is transferred to the public left to pick up the pieces in the past? Is a bank eating a bad loan any less tragic than GM being allowed to walk away from lawsuits by filing bankruptcy while being bailed out by the American public? Especially when the bank was the one providing all of the capitol that fueled this housing bubble (the homebuyers weren't paying cash for these houses & driving up the costs)? IMO, America's sense of entitlement comes straight from the top....the lobbyists aren't lobbying for Joe Avg America, they're lobbying for industry.

Agreed. And it's why I've been against the bailouts from the beginning. ALL of them, including the bank bailouts.

[houndawg]

It's not about "doing without", Appa. I'll try to explain it with a numbers example: Here in AZ, we've seen an approximate 50% reduction in home values. So, when a borrower walks away (for WHATEVER reason), the bank/credit union is left with a 50% loss, plus cost to foreclose/repair/list/sell/etc. Again, using my CU as an example where on a GOOD month we make $200,000....all it takes is ONE HOME A MONTH and suddenly we're not profitable. Throw in people walking away from cars, credit card debt, etc., etc., etc and you get the **** storm that I inherited 13 months ago. $26,000,000 in losses and still counting.

I'll keep yelling this from the mountaintops until my voice is gone: There has been a paradigm shift in people's view of their credit score. You wanna know why lenders are still tight with their money? You wanna know why it takes somebody like ASU8 4 months to get approved? Because for the most part, lenders used the same basic system for the past 30 years to determine a person's "credit-worthiness" and that system got blown to hell in a handbasket about 18 months ago and nobody knows what the **** to do right now. Used to be if you had a FICO over 700 you were GOLD. Now, FICO's of 780-833 are turning in cars, houses, etc., and walking away in droves from debt they can EASILY repay because they feel it's their RIGHT. And because of actions like these the financial sector is teetering on the brink of collapse---complete collapse that even our benevolent government won't be able to prop up.

When we (as Americans) have that little regard for the implications of our actions, we're **** doomed---Americans have an entitlement mentality like none I've ever seen. I hear commercials on the radio about how "you have a RIGHT to file bankruptcy" and you have a "RIGHT to have your credit card debt erased" during the "bail-out era". Never mind that YOU ran up that debt. Never mind that you bought every **** toy under the sun, took those expensive vacations, etc., etc., etc. It's the LENDERS FAULT that you have no personal accountability. THAT'S the mentality of this country right now. A complete lack of personal accountability combined with an entitlement mentality that will ruin the country.

I will add that I recognize that many, many businesses were getting rich during these times (Goldman Sachs comes to mind), but two wrongs don't make a right, people. In the long run, we'd have been much better off letting the slimy ones fail, pick up the pieces, and moved forward. Instead we created an entire country-wide mindset that bailouts are a given (personal AND business) and we've **** the country.

Unfortunately, I think the ship has long since sailed, and it's a one-way journey. I'm stocking up on canned food, ammo, gasoline and bottled water. It's gonna get bumpy.

AZ, I'm not disagreeing with you, I'm just stating what I consider is obvious - the only thing new about this phenomenom is who is doing it to whom. It doesn't make it right, but bankers / big business should have considered this breakdown as a possible outcome of their actions back when they were doing it with no accountability to the American public. I think Houndawg sums my feelings the best:

I don't agree with those who walk away just because the deal doesn't look as good as it used to, but I can understand why people feel that way when there is no accountability for those above a certain socio-economic level. Start filling the jails with these Wall Street socktuckers, and I might start to believe in the system again.

When the "system" allows big business to walk away from their obligations while suffering no repurcusions, is it a shock when that mentality is transferred to the public left to pick up the pieces in the past? Is a bank eating a bad loan any less tragic than GM being allowed to walk away from lawsuits by filing bankruptcy while being bailed out by the American public? Especially when the bank was the one providing all of the capitol that fueled this housing bubble (the homebuyers weren't paying cash for these houses & driving up the costs)? IMO, America's sense of entitlement comes straight from the top....the lobbyists aren't lobbying for Joe Avg America, they're lobbying for industry.

And to crush the last glimmer of hope, SCOTUS now says corporations can now give as much as they want to campaigns. Game over, we lose. I hope somebody kneecaps that piece of shit Chief Justice.

[Ibanez]

When it comes to credit rating, I understand the necessity. Having worked in Real Estate as a lender, I completely understand it. I also understand, the need to reform it. If yo umake one mistake, your credit can drop so much in a month, but it'll take 2 years to recover? That algorithims used are twisted. Things happen. Hell, I had a 680 before I almost went bankrupt. Now, 4 years later and having paid off 90% of the debt, why am I still in the 550 area? In fact, the new debt I've taken on, is always paid on time and i've never been late since since 2006. I made the debt and in no way complain about paying it back, it's my job, but My credit rating should increase at a greater pace when It is shown that I am a trustworthy borrower. Good people, that hit a bump and recover, should not have to suffer because they missed one payment, 7 years ago or went 4 months without paying the bills....

And since Obama and Congress are looking to "reign in" the financial industry, I think it is only appropriate to regulate and make some changes with credit reports. I make enough and would love to buy my house.

[D1B]

Agree...especially for the bankers...once people have nothing to lose & if I was a banker with plenty, I'd be nervous....it's give & take, AZ, & the have's (business with political ties) have been taking from have not's (average citizens) at a greater rate...not saying it's right, but the banks don't hold all the cards in this argument. Yes, it would be catastrophic for all, ESPECIALLY THE BANKERS, who aren't used to doing without....

It's not about "doing without", Appa. I'll try to explain it with a numbers example: Here in AZ, we've seen an approximate 50% reduction in home values. So, when a borrower walks away (for WHATEVER reason), the bank/credit union is left with a 50% loss, plus cost to foreclose/repair/list/sell/etc. Again, using my CU as an example where on a GOOD month we make $200,000....all it takes is ONE HOME A MONTH and suddenly we're not profitable. Throw in people walking away from cars, credit card debt, etc., etc., etc and you get the shit storm that I inherited 13 months ago. $26,000,000 in losses and still counting.

I'll keep yelling this from the mountaintops until my voice is gone: There has been a paradigm shift in people's view of their credit score. You wanna know why lenders are still tight with their money? You wanna know why it takes somebody like ASU8 4 months to get approved? Because for the most part, lenders used the same basic system for the past 30 years to determine a person's "credit-worthiness" and that system got blown to hell in a handbasket about 18 months ago and nobody knows what the fuck to do right now. Used to be if you had a FICO over 700 you were GOLD. Now, FICO's of 780-833 are turning in cars, houses, etc., and walking away in droves from debt they can EASILY repay because they feel it's their RIGHT. And because of actions like these the financial sector is teetering on the brink of collapse---complete collapse that even our benevolent government won't be able to prop up.

When we (as Americans) have that little regard for the implications of our actions, we're fucking doomed---Americans have an entitlement mentality like none I've ever seen. I hear commercials on the radio about how "you have a RIGHT to file bankruptcy" and you have a "RIGHT to have your credit card debt erased" during the "bail-out era". Never mind that YOU ran up that debt. Never mind that you bought every fucking toy under the sun, took those expensive vacations, etc., etc., etc. It's the LENDERS FAULT that you have no personal accountability. THAT'S the mentality of this country right now. A complete lack of personal accountability combined with an entitlement mentality that will ruin the country.

I will add that I recognize that many, many businesses were getting rich during these times (Goldman Sachs comes to mind), but two wrongs don't make a right, people. In the long run, we'd have been much better off letting the slimy ones fail, pick up the pieces, and moved forward. Instead we created an entire country-wide mindset that bailouts are a given (personal AND business) and we've fucked the country.

Unfortunately, I think the ship has long since sailed, and it's a one-way journey. I'm stocking up on canned food, ammo, gasoline and bottled water. It's gonna get bumpy.

[Ibanez]

Agree...especially for the bankers...once people have nothing to lose & if I was a banker with plenty, I'd be nervous....it's give & take, AZ, & the have's (business with political ties) have been taking from have not's (average citizens) at a greater rate...not saying it's right, but the banks don't hold all the cards in this argument. Yes, it would be catastrophic for all, ESPECIALLY THE BANKERS, who aren't used to doing without....

It's not about "doing without", Appa. I'll try to explain it with a numbers example: Here in AZ, we've seen an approximate 50% reduction in home values. So, when a borrower walks away (for WHATEVER reason), the bank/credit union is left with a 50% loss, plus cost to foreclose/repair/list/sell/etc. Again, using my CU as an example where on a GOOD month we make $200,000....all it takes is ONE HOME A MONTH and suddenly we're not profitable. Throw in people walking away from cars, credit card debt, etc., etc., etc and you get the shit storm that I inherited 13 months ago. $26,000,000 in losses and still counting.

I'll keep yelling this from the mountaintops until my voice is gone: There has been a paradigm shift in people's view of their credit score. You wanna know why lenders are still tight with their money? You wanna know why it takes somebody like ASU8 4 months to get approved? Because for the most part, lenders used the same basic system for the past 30 years to determine a person's "credit-worthiness" and that system got blown to hell in a handbasket about 18 months ago and nobody knows what the fuck to do right now. Used to be if you had a FICO over 700 you were GOLD. Now, FICO's of 780-833 are turning in cars, houses, etc., and walking away in droves from debt they can EASILY repay because they feel it's their RIGHT. And because of actions like these the financial sector is teetering on the brink of collapse---complete collapse that even our benevolent government won't be able to prop up.

When we (as Americans) have that little regard for the implications of our actions, we're fucking doomed---Americans have an entitlement mentality like none I've ever seen. I hear commercials on the radio about how "you have a RIGHT to file bankruptcy" and you have a "RIGHT to have your credit card debt erased" during the "bail-out era". Never mind that YOU ran up that debt. Never mind that you bought every fucking toy under the sun, took those expensive vacations, etc., etc., etc. It's the LENDERS FAULT that you have no personal accountability. THAT'S the mentality of this country right now. A complete lack of personal accountability combined with an entitlement mentality that will ruin the country.

I will add that I recognize that many, many businesses were getting rich during these times (Goldman Sachs comes to mind), but two wrongs don't make a right, people. In the long run, we'd have been much better off letting the slimy ones fail, pick up the pieces, and moved forward. Instead we created an entire country-wide mindset that bailouts are a given (personal AND business) and we've fucked the country.

Unfortunately, I think the ship has long since sailed, and it's a one-way journey. I'm stocking up on canned food, ammo, gasoline and bottled water. It's gonna get bumpy.

Well said. The lack of responsibilty and the feeling of entitlement is profound on a level that is nauseating.

[Ibanez]

The first is to go back to the old sensible rules for financial instruments like mortgages and car loans. Require borrowers to put 10% or 20% down when they take out a loan or mortgage.

This would enable those who’ve have had bad credit in the past to get loans because a credit score wouldn’t be necessary. More importantly it would encourage savings because people would have to save money if they wanted to buy a home or car. One of the main reasons Americans don’t save any more is that they don’t need to save for down payments.

Requiring a down payment would also shut out the most questionable and irresponsible borrowers. Mandatory down payments would also lower the price of housing because realtors and sellers would be forced to lower home prices to realistic levels that average people could afford. People wouldn’t be able to jack up home prices with the expectation that buyers would be able to get a mortgage to pay ridiculous prices.

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Interesting piece.

[Appaholic]

Requiring a down payment would also shut out the most questionable and irresponsible borrowers. Mandatory down payments would also lower the price of housing because realtors and sellers would be forced to lower home prices to realistic levels that average people could afford. People wouldn’t be able to jack up home prices with the expectation that buyers would be able to get a mortgage to pay ridiculous prices.
http://www.allvoices.com/contributed-ne ... g-industry

Bingo!

[blueballs]

Ther biggest obstacle to homeownership, especially among minorities, is down payment and cash to close requirements. While HUD has demonstrated the dramatic difference between default rates on loans with zero down payment and 3%, then 5% down, and also on 6% seller contribution vs 3% or no seller contribution, there is no data on a national level tying dramatically better loan peformance to larger down payments than 5%.

HUD's data also shows a tremendous increase in defaults when the credit score is below 580, but buyers with scores above 620 typically demonstrate ability and willingness to repay under normal underwriting guidelines to the point that credit scores aren't the most reliable indicator of loan performance once you go over 620.

Down payment less than 3%, seller contributions of more than 3%, and credit scores under 580 suffer by far the greatest default rates on a national scale.

Most loans being done today require a 620 minimum score. All loans are "full doc" and appraiser independence is the rule on all loan programs except USDA.

The problem with real estate developed when both Wall Street and the public began to view what had always been considered a long term asset (real estate and mortgages) as a short term asset capable of generating short term profit.

If anybody wants to PM me I will send a power point presentation that I got from an attorney who is a lobbyist to the Federal Reserve that is incredible in its documentation and explanation of what happened on a macro scale.

[YoUDeeMan]

If anybody wants to PM me I will send a power point presentation that I got from an attorney who is a lobbyist to the Federal Reserve that is incredible in its documentation and explanation of what happened on a macro scale.

Thanks blueballs....I'll take you up on that offer. Please check your PMs.

[blueballs]

If anybody wants to PM me I will send a power point presentation that I got from an attorney who is a lobbyist to the Federal Reserve that is incredible in its documentation and explanation of what happened on a macro scale.

Thanks blueballs....I'll take you up on that offer. Please check your PMs.

Your firewall wouldn't let the e-mail through I just sent... it was kicked back.

[AZGrizFan]

If anybody wants to PM me I will send a power point presentation that I got from an attorney who is a lobbyist to the Federal Reserve that is incredible in its documentation and explanation of what happened on a macro scale.

Thanks blueballs....I'll take you up on that offer. Please check your PMs.

blueballs, that wouldn't be the stick-figure CMO power point would it?

[AZGrizFan]

And to crush the last glimmer of hope, SCOTUS now says corporations can now give as much as they want to campaigns. Game over, we lose. I hope somebody kneecaps that piece of shit Chief Justice.

Yep. You're spot on here, dawg. This was the final nail in the coffin. We lose.