What is Digg?219 Comments
- inactive, on 04/16/2008, -9/+35i love how people blame this situation on the poor for borrowing outside of their means when it was the banks borrowing outside of THEIR means that allowed them to give these sub-prime loans in the first place
- mcquitty, on 04/16/2008, -2/+24Let's face facts.
1. Many people bought houses beyond their means.
2. Many people bought a house, then used 110% mortgages to get more out of their house and pay down credit card debt.
2a. Of those, many then ran up the credit card debt, causing even more financial hardship.
3. Many bought a house (hello, 30 year note) on a variable rate in the hopes the rate would stay the same forever. That's greed, fixed mortgages are at a higher rate but FIXED for the life of the loan.
4. Many people had no business buying a house to begin with.
5. Some mortgage companies may have misled customers, but the customer always had the option of saying no.
6. Some are flippers. I saw a special on a couple that, according to ABC news, "Did everything right". But all their friends were buying condos and flipping them and making money. So, they did the same. Only the downturn caught them. They bought two condos and when it came time to close, the market tanked and they are making payments on something they can't afford. In the stock market, it is called a bubble generated on margin (cheap credit) and when the market corrects, it hurts.
In the interest of full disclosure:
1. I have bought three in my life.
2. I have had one ARM mortgage.
3. The others were fixed.
4. I have inlaws who are part of the problem. Bought a house, took a second mortgage to pay down credit card debt, ran up the credit card debt.
Here's their situation...
House value $380,000
House mortgages: $430,000
Cars: $3,000 (almost paid off one, payment of $800/mo, other one is 12 years old and paid for)
Motorcycle: $35,000 (yes, $35,000. Even with all their debt, they bought a motorcycle worth more than their car)
Here's the kicker....
Credit Card Debt: Nearing $100,000.
He makes a little over $100,000 a year. They cannot live within their means. He complains of the debt, then spends $500 on motorcycle leather pants. He has a $200/month Starbuck habit.
They spend more than they make every month.
So, who is the problem? Is it the consumer or lender?
In the end, the lender is holding the property that is not nearly what they paid for it. The mortgage company holds the property until the note is paid off. If they make bad investments, they are holding bag. The american people should not be bailing out mortgage companies, just as the american people shouldn't be bailing out the people who have spent well beyond their means.
It is fashionable to blame the companies, people should be looking out for themselves. If you bought a house to flip it and you got burned, who cares? No one cried for the investors who lost billions on the stock market in 2000 and 2001. And if you bought a house to live in it, you have 30 or 15 years on your mortgage. In most cases, that house will appreciate over time if you take care of it. Being upside down in a house only matters if you plan on getting out of it today. - dbcoder, on 04/16/2008, -4/+26Half of my feels sorry for these people who are loosing their homes, but the other half of me wants to head in a "I-told-you-so" direction. Variable rate loans, while they may have low interest rates when you sign up, are liable to change, and this is made clear. Investing in a home isn't a short term fling, and one can't expect that the market will remain stable over the years that you pay your loan back.
These people didn't plan ahead and are reaping the consequences. I'm not at the age where I'm dealing with mortgages, but I've seen the implications of this situation. Luckily my parents are savvy with investments and aren't affected by this ordeal.
It is tragic to see people loose their homes, but hopefully this won't end without a lesson being learned: don't live beyond your means.
Perhaps we should stop living on credit. A novel idea. - loggia, on 04/16/2008, -7/+28As I have written before: Is this the fault of 20 or so major financial institutions that have billions of dollars, hundreds of thousands of employees, decades of experience in finance, massive amounts of statistical data and computer models on loans and defaults, market experts and lavishly rewarded CEOs...
Or a guy named Bud who never had a mortgage before and had crappy credit?
Hmm.... who should we blame??? - devaspark, on 04/16/2008, -3/+18It's fault on both sides. The banks for encouraging these subprime loans and the people for not doing their homework before they buy a house. It takes two to tango.
- adidos, on 04/16/2008, -0/+14I was evicted last month by the bank because my scum-bag landlord wasn't making his mortgage payments. He collected my rent for 10 months, and didn't pay a dime to the bank. The news always reports on the people who couldn't pay their mortgage, but always neglects to mention the tenants who get thrown on the street.
- skinnyskittles, on 04/16/2008, -0/+13we blame the government for constantly bailing out the banks and giving them no incentive to conduct business properly
- minoss, on 04/16/2008, -4/+17Both, how hard is to ***** understand you don't buy ***** you cannot afford.
- inactive, on 04/16/2008, -0/+13Dude down the road lost his house. paid 200K 15 years ago.... borrowed it up to 650K.... couldn't make the nut. Left a wood splitter and a massive pile of cut oak rounds/large limb sections. Am I vermin for setting my sights on that already? Talked to the broker. They're gonna sell for less than 600K. This one guy is in charge of 80 foreclosed properties. They "de-junk" them and sell them cheap. Lot more gonna be commin'
- nborisov11, on 04/16/2008, -5/+18And this is only beginning!
- inactive, on 04/16/2008, -1/+13This is disgusting. Why won't people wake up and realize it's all done on purpose? The conspiracy theorists were yelling mortgage crisis 4 years ago.
- Tweekster, on 04/16/2008, -4/+15no you are simply a moron
- mal1964, on 04/16/2008, -0/+11My father and I with friends built my house in 1982 I was 18 years old. Total cost around 30,000 I took a loan for 11,000 and I paid that off years ago. My house is probably worth between 250,000 to 300,000, Not that much money now a days.But I couldn't be happier when i think about all that's going on with housing problems these days
- SEGA4life, on 04/16/2008, -0/+10
We tried to buy a house through out Florida several times a couple years back, but time after time we got outbid by greedy investors that just wanted to make a quick profit from buying the house and sell it for twice as much or tried because they would get a "Interest only Mortgage" that for 5 years they would just pay the interest and not worry about the actual house payment.
Well it's 5 years later and guess what, the Greed for most made them foreclose because they didn't want to sell the house lower, and at the same time didn't want to pay the bank. (Hence: The houseing boost).
And the people that thought they were getting a house at a deal for $400,000 because of the low interest rate and the Bank is telling them "Don't worry, you can afford it look at this RATE!!! ", didn't do math and understand that no matter what your interest rate is you will still end up paying WAY more then $400,000 for the house. Not to mention that house they bought was $195,000 when I wanted it but got outbid.
People go on and on about "O..well...it was appraised for that much it's an investment"
ya "was" is the key word. - centran, on 04/16/2008, -2/+12Come on oil prices... get up there already!
I am tired of waiting around for the depression to hit. Lets just get this damn thing out of the way already.
What else we waiting for? Housing market collapsing and then high oil prices... I think that should be enough.
On second thought, hold off oil prices. Let me open a bar and then you can sky rocket. - inactive, on 04/16/2008, -2/+12buried because linkin park sux
- devaspark, on 04/16/2008, -0/+10You had me til bankrupt. They don't want you to go bankrupt, they want you to keep paying, to dedicate a part of your continual income to their profits.
They care about good credit because it lowers the risk that you will default on what you owe them. - jcobol, on 04/16/2008, -0/+9"Perhaps we should stop living on credit. A novel idea."
How does one buy a property without credit? For most people, that isn't an option. Even with credit, for many people that isn't an option. - inactive, on 04/16/2008, -4/+13its true, but i was under the impression that credit scores were in place to prevent stuff like this from happening at all, because as you can see, it DOES affect all of us
- Tweekster, on 04/16/2008, -0/+8not likely, get ready for the days of 20% down and an 850 credit score
- adidos, on 04/16/2008, -0/+8I don't have the money for a lawyer...if I front up the money for a lawyer and win, the landlord most likely won't pay anyways (bankruptcy?)
It's easier for me to just bitch about it on digg...and then urinate in every corner of the house before I move out - mikedoth, on 04/16/2008, -0/+8Good, I will finally be able to afford one... heh.
- willsani, on 04/16/2008, -0/+8Sorry to hear that...
- mcquitty, on 04/16/2008, -0/+8From what I also understand, laws were changed to encourage banks to loan money to poeple who were questionable credit risks.
- loggia, on 04/16/2008, -2/+9"Blame is for God and small children." - Dalton Trumbo
- Dewhead, on 04/16/2008, -0/+7Actually, the start of all of this was a government program called the Community Reinvestment Act which required that banks make subprime loans to borrowers with shaky credit in order to revitalize areas and give everyone the American dream of home ownership.
Heres a good non-partisan article that outlines what happened. The more government tries to help the worse it gets. So I am very wary of any government intervention no matter how well intended.
http://www.investopedia.com/articles/07/subprime-o ... - inactive, on 04/16/2008, -0/+7Yeah, and all of these a$$hats that bought homes they could not afford are moving into my apartment complex. This place is packed. And what this means is my apartment management company will most likely raise the rent when my lease is due in June. This'll be the second time in a row that they've raised the rent. Because of these idiots, I might have to move out of my nice apartment into something older and more affordable. I refuse to pay just under $2K/month for a 2 bedroom apartment. That is simply highway robbery. I really do hate Americans and their greed.
- mcquitty, on 04/16/2008, -0/+7It's a mix. In Las Vegas, the majority are flippers.
- IronDonut, on 04/16/2008, -0/+7I was. No one listened. Everyone thought I was an idiot for paying my house down and not stepping up into a bigger house...
- archer75, on 04/16/2008, -1/+8If people weren't so stupid there wouldn't be so many foreclosures. Don't sign anything without reading the terms.
- devaspark, on 04/16/2008, -2/+9Wrong. They make money with good credit. Low profit maybe but consistent.
- Buzzbean, on 04/16/2008, -0/+6There are three types of people to blame for the housing "crisis", in this order, from least blame to most blame:
1. The government for requiring mortgage lenders to lend to people based on race and income who were greater risks.
2. Mortgage lenders for loaning money to those who couldn't afford the payments and some who lied to the borrowers. Those who lied in order to get the business should go to jail.
3. The home buyers who borrowed more than they could afford, got ARMs they wouldn't be able to afford once the rate reset and especially those who borrowed against their home equity once the prices started skyrocketing. Nothing is ever free. Many people were taking vacations and buying things they could never have otherwise afforded and now they have to pay it back.
4. The worst of the bunch is the speculators. No matter what the market, houses, oil, tech stocks, baseball cards, collectible coins, tulips (look it up) or whatever else you can think of where the price is based on demand, once the prices in the market start moving up at a rate a little faster than typical, speculators move it and drive the price through the roof. Those who were interested in the market and traded through the years are suddenly priced out. Then you get more and more people who are greedy, wanting to make a quick buck. Eventually, the prices get so high, people just can't afford them any more and the prices plummet.
Every one of those markets listed above, I've witnessed, except the tulips. That was before my time. I was involved in trading them before the speculators came around. The prices shot up and everyone was interested. Reading the trade magazines of the time for both baseball cards and collectible coins, the true collectors were praying for the day when the speculators got tired of them so they could get back to what they did for fun. Of course, the bottom dropped out and everything went back to normal, eventually.
Yes people will lose money and possibly lose their house. It sucks for the market if you bought at the high point but that's how markets go. Better luck next time. Me? I bought near the high point in the housing market but I bought in an area that didn't have near the spike in prices that you see on the coasts. I can afford my mortgage and I like my neighborhood. Life is good. Now I'm buying up all the stocks that everyone wants to get rid of. Once the speculators turn back to the market in about ten years, I'll sell out and retire rich. - centran, on 04/16/2008, -0/+6Don't you worry about the dollar. When the depression hits we will drag most of the world down with us where they will be at least in a recession. That should even things out ;)
If the USA goes down... we are taking people down with us! The best part about it is that that fall won't seem that far because we lowered everyone else. muwhahahaaa! - inactive, on 04/16/2008, -4/+10That's what happens when a person takes a loan larger than they can pay back. No sympathy from me.
Both the loaning institutions and the fools for taking loans they can't pay back are equally to blame. Too bad, so sad.
A bail-out is out of the question....live and learn. - inactive, on 04/16/2008, -3/+9good ol capitalism, pushing the boundaries of whats ethical just to make a buck.
- countrygirl31, on 04/16/2008, -0/+63 years ago we bought a house. (30yr fixed) during the process they tried to push us to do an interest only loan. They outlined it quickly and explained that we really wouldn't be making payments for a few years down the road and we could afford more of a home. I told the bank. I want the house I picked because it is within my range. He insisted that a $750,000 was in my range. I said DO THE MATH, if my husband and I make $130k a year the payments would be well over $4000. He kept saying NO! they would be much, much less with interest only. I then said so in a few years I would be paying $4k for a payment and I couldn't afford it because we would not be making enough in 3-4 years to cover that. I told them, I am happy with the 228k home, my payments would be 1500 a month, that is within my range. My husband and I were getting mad and my husband said we dint need to buy a house right now if it is going to be difficult to give us a 30yr fixed loan. We walked out with our 30yr, fixed, good interest rate, and happy.
These are salesmen. They are to sell you more debt BECAUSE the saleman gets his cut. I am sure the same think happened to many homeowners and they agreed with the banker, took the loan because they thought that they could not qualify for anything else.
I do feel bad for buyers that got tricked into buying. BUT they really didn't have to buy right that moment either. Stand your ground and get what you want. That "saleman" will loose your business. I am sure a very large percentage of these people qualified for a normal loan with a normal interest rate. It is predatory lending. When verbally someone says You must take this or you get nothing OR your only option is. You have plenty of options, walk out the door! - rdoger6424, on 04/16/2008, -1/+7it's not even the banks. the whole system was *****-up.
People who bought houses beyond their means were enticed by shady subprime brokers who then packaged that shady mortgage into a handy investment bundle that could be bought by people around the world. - 55mph, on 04/16/2008, -0/+6You ask for a lot of maturity from a country full of children. They voted in George Bush twice. The Fed and the banks knew exactly what they were doing when they enticed the marginal customer in to the market.
- inactive, on 04/16/2008, -0/+6what kind of ***** have you been listening to ? Rush Limpbaugh?
- aliengoods, on 04/16/2008, -0/+6That's just the tip of the iceberg. Wait until crime in the areas with a high number of foreclosures jumps.
- saintamour, on 04/16/2008, -0/+6magic?
- dbcoder, on 04/16/2008, -0/+5Well, perhaps it's a blanket statement for what I truly mean: stop buying everything on credit, and when you do, do so responsibly.
Make sure you can meet your contract, and if you can't, find an alternative. I know that's an easy thing for me to say, and some people may not have any alternatives, but when you violate this principle you end up in situations like this. - siszam, on 04/16/2008, -3/+8See people. Henmans attitude the same attitude the elite have for everyone else. I didn't know Barbara Bush has a Digg account.
- Mohonri, on 04/16/2008, -0/+5There's a difference between "living on credit" and "purchasing a house with credit". The problem is that people started using credit cards to buy more than they could afford, and then they extended that thinking to real estate as well.
- Tweekster, on 04/16/2008, -4/+9I love how trashy most of them are. The funny part is that not many people are trashing the house, that was simply how they lived.
- nullvector, on 04/16/2008, -1/+6This is simply the fault of borrowers.
YOU SHOULDN'T BUY SOMETHING YOU CANT AFFORD!
I'm not a financial pro, but I can see that wages on the whole haven't gone up much in the last 10 years, but housing costs have tripled or quadrupled. The simple multiplier of average salary vs average housing cost plainly shows that it is harder and harder to "afford" a house....yet people are buying houses that are $300k+, while making 40k a year before taxes. Its pure greed and idiocy.
"Buying" doesnt make sense. Add taxes, maintenance, insurance, and HOA fees to your mortgage, and that monthly payment is out of control.
What really gets me is those people who buy a house as an "investment". A house is a liability...not an asset!
Unless you plan on living there until you pay off the house, you're really not gaining anything on those who are renting. Even people who buy a house, and then sell it for a profit are the ones who tend to "upsize", rather than taking the profit, and investing it.
Its finance 101. You dont buy what you can't reasonably afford. - Dewhead, on 04/16/2008, -0/+5Olfster,
Mortgage companies were required by the community reinvestment act to specifically target minorities and lower income areas so it was the government that required them to do this so it would rather hypocitical of them to critisize the companies for doing what was required of them, wouldn't it? - mcquitty, on 04/16/2008, -2/+7They lose money on people with bad credit. Think about it. Credit is based upon two principals. Risk and time.
Let me ask you a question. You have two acquaintances. Bob, from a reputable source, borrows money from time to time. He pays it back on time or before he says he will.
Joe, also from a reputable source, borrows money all the time. He is always short of cash. He might pay people back, but it takes more time than he said. Sometimes, he forgets, sometimes he has no cash. Sometimes, he doesn't pay people back.
They come to you asking for a loan.
Who are you going to loan money to? Bob or Joe?
If you loan money to Bob, are you willing to accept him paying $110 for $100 borrowed? It's a respectable 10% return.
How about Joe? Are you going to loan him money? And if you are, your risk is greater. Will you want to be rewarded for the risk?
Or, would you simply not loan money to Bob or Joe? Or simply not talk money to Joe?
That, my friends, is credit. The reputable source would be the credit rating agencies. You are the person trying to help someone out, but need to be compensated for risk and the time value of money. - Tweekster, on 04/16/2008, -2/+7This is going to be badnews for digg. If the homes get foreclosed on, that means the average digger will have to move out of the basement
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