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- PorkTornado1102, on 11/02/2008, -9/+44In a related story, 4 out of 5 are not. Damn pessimists.
- inactive, on 11/02/2008, -16/+36- OMG HONEY LOOK AT THIS HOUSE IT IS BEAUTIFUL!
- BUT IT'S A BIT TOO EXPENSIVE, WHAT IF OUR PAYMENTS GO UP AND WE CAN'T MAKE THEM?
- THAT WON'T HAPPEN TO US!
- YOU'RE RIGHT WHAT COULD GO WRONG RIGHT?
Idiots had it coming. - AmusedToDeath, on 11/02/2008, -4/+23Wasn't it *their* responsibility to understand the terms of the mortgage before signing on the dotted line, I mean seriously, would you agree to ANY kind of loan, even one for 50 bucks much less hundreds of thousands of dollars, without first understanding what you were agreeing to?
- stonebear, on 11/01/2008, -3/+20And most of the variable interest rate mortgage bombs have not even gone off yet. 2009 - 2010 will be an interesting time for many families.
- PhilLesh69, on 11/02/2008, -0/+16If you can afford your payments, it doesn't matter what your house is worth at the moment.
Don't forget, the moment you drive a new car off the lot, you are already upside down on the loan. But that never seems to bother anyone since they need a car, and they don't plan on selling it shortly after buying it.
You need a home, you have a home. What it is worth right now doesn't mean anything. It only matters what it is worth when you go to sell it. Maybe you might be forced to hold onto your house a year or two more than you had planned, but in the end, as long as you can afford to sell it at the right time in the right market, you're going to either break even or make money.
Plus, even breaking even is actually still coming out ahead, when you consider that you weren't paying rent, instead. - Anth, on 11/02/2008, -1/+15As one of the people upside down in their house, I can tell you it sucks. I have a 30-yr fixed mortgage, I put 20% down (now all gone of course), and I did everything right except for buying at a bad time. I owe 295K, and my house is worth somewhere around 250K, from a purchase price of around 400K. I make more than enough to continue paying on my mortgage without any problems. I have money saved for a rainy day.
But its not a fun feeling knowing I'm trapped in my house. There is no way I could come up with the difference to get out from under this house, and come up with the 20% down for my next house. - PhilLesh69, on 11/02/2008, -3/+16Don't be so easily misled by the defenders of corporate greed.
A lot of people were told by mortgage brokers that they should take interest only and ARM mortgages because they would be able to refinance after a few years with a better rate after building a payment history and building up their credit.
And for those lucky enough to do so about a year or so ago, that was true. But then the credit market imploded, and even people with 700+ FICO scores are having trouble refinancing.
I know a few people who were about to buy into that lie about two years ago, and I told them there was already talk of a real estate bubble bursting, and they did some research and decided to buy a house they could afford, not a house the mortgage company promised them they could afford "some day when their equity helped them to pull money out of the home in order to pay for it." (which never made sense, anyway.) - spectral, on 11/02/2008, -3/+14I sincerely hope that anyone entering in to a contract that will last decades and deals with money in sums significantly greater than the amount of money they'll earn in 5 years (pre-tax) would read and understand the terms of that contract. If they were actively lied to about the contract terms, then I give some sympathy. If they didn't make an effort to understand the contract, or figured they'd flip the house or whatever then I have no sympathy.
- inactive, on 11/02/2008, -2/+13Honestly I don't feel sorry for these people.
How can someone making $75,000 look at a $400,000+ house and say "yeah, buying something like this is the responsible thing to do."
Most Americans still haven't learned to live within their means (a lesson apparently lost on the federal government, as well) - FlyingPhotog, on 11/02/2008, -9/+19Only a dumbass would sign their soul away for an adjustable rate mortgage.
- AmusedToDeath, on 11/02/2008, -0/+10Well, I guess my point was who benefits if millions more homes end up being defaulted on because of ARMs? The banks will end up owning lots of houses they can't sell, millions of people will have their credit trashed, and the economy will be in even worse shape than it is in now.
I understand perfectly well how ARMs work, but if they are going to cause loads of mortgages to default, isn't it prudent to try to take some drastic measures to prevent that? - inactive, on 11/02/2008, -4/+13I'm not underwater just yet but I am floating in a sea of crap.
- AmusedToDeath, on 11/02/2008, -1/+9There's no law that says the rates have to go up. Seems like the prudent thing for Congress to do would be to freeze existing rates or force banks to convert these loans to fixed rate mortgages - then promptly *outlaw* ARM loans.
- Rufunki, on 11/02/2008, -1/+9I've seen several people use their home has a ATM machine, funny they don't own the homes anymore though.
- meanfish, on 11/02/2008, -1/+8*sigh* this article has nothing to do with their ability to pay, only that they owe more than their house is worth. This is directly related to falling house prices, which is a result of a needed market correction and with time the prices will go back up with inflation.
In short, nothing to see here. - inactive, on 11/02/2008, -0/+7@AmusedToDeath, while I agree with personal responsibility, some of these loans were put out there in such a way that the suckers...er...ignorant...bought in and got housing they couldn't possibly afford, but it was presented in such a way that they believed they could.
- inactive, on 11/02/2008, -1/+8When you're about to make the biggest purchasing decision of your life, it might not be a bad idea to go to the library and read a book on how this works. Or maybe talk to friends and relatives who are known to know a thing or two about this and offer advice. Or maybe *read the fscking contract* before you sign it.
These McMansion owners should be allowed to sink. The bankers who have all of these loans defaulting should be allowed to sink. This is how the free market is supposed to work. Send a clear signal to consumers and lenders that they are on their own and should exercise due caution. - youareretarded, on 11/02/2008, -5/+11Yeah!!!
I'm glad I was one of the good people that bought what I could afford, it's a good thing my house is still worth what I paid for it.....oh that's right it's not!
And it looks like, even though I can afford my new rate, I get the shaft because my neighbors who bit off more than they could chew and don't have the option of refinancing and are facing foreclosure will be getting a break with their situation and they might possibly get their principal lowered!?
What the *****!!!
Why should I pay my mortgage? Because I can?
***** that! where is my hand out?
What are you going to do though?
I bought in 2003 for what it's worth. - insomniacal, on 11/02/2008, -2/+8Bring it on. The housing market was ridiculously inflated, and we all knew correction was coming. What goes up must come down. From April 2007: http://video.google.com/videoplay?docid=-275769979 ...
The easy money banks made available to buyers flooded the market and led to skyrocketing prices. What was an extra $20K or $30K? It wasn't like the bank wouldn't lend you the money. So buyers had less motivation to haggle down prices. They were putting contacts on houses that were above asking price, and waiving home inspections to boot!
No sympathy here -- the buyers brought this on themselves. - BotchaMcCoola, on 11/02/2008, -1/+7This is America. Surely it is not their fault.
- lambmj, on 11/02/2008, -0/+6It would be interesting to know what % of these homeowners refinanced with 'cash out' mortgages. My neighbors did. They owed nearly $400K on a house they bought for $200K before they were forced into foreclosure. Sorry but I'm not paying for that.
- inactive, on 11/02/2008, -0/+6Wrong.
In fact several stories about issues in England have been on the homepage. - PhilLesh69, on 11/02/2008, -1/+7Actually, I have 5 mortgages on 5 rental properties, in addition to the mortgage on my primary residence. I'm no speculator, I am a landlord.
The taxpayers are not paying for my "stupidity". In fact, I'm paying more taxes because of all the money I'm making owning rental properties, so I'm the one paying for YOUR stupidity.
Here's the run down on just one property I own:
I bought a house in DC for $500,000 in 2001 using a 7 year ARM with 20% down at 4.30%, and my payments were $3,140 a month. This property has a main two story 3 bedroom house and a 2 bedroom basement apartment. I rented the main house out for $3,200 a month, and the basement apartment for $1,500.
I refinanced it last year at 5.75% 30 years, when the house was worth $810,000, and now my monthly payment is $3,300, and I've since raised the rent to $3,400 for the house and $1,690 for the basement apartment.
***** YOU IGNORANT LEMMING WHO BELIEVES FOX NEWS. - unclebuck, on 11/02/2008, -0/+5Been there, done that. Being underwater really, really sucks. And it's scary too because you know if something comes up and you HAVE to sell your house for some reason (job loss, must relocate, etc), you're totally screwed because you don't have the money to cover the shortfall at closing.
Thank goodness my neck of the woods hasn't seen a housing deflation. I guess it's because we never had a bubble here. I was underwater on my house for about 4 years due to a really ***** up divorce settlement where I had to take out a massive 2nd mortgage to buy off the ex-wife. - MichiganJim, on 11/02/2008, -1/+6Mike,
Catch a clue dude - perhaps the guy is in California or a similar market. Do you have any idea what $400K buys in some markets? Try a 3 bedroom/2 bath - "fixer upper".
The problem is NOT just people overbuying - though that is certainly an issue. The problem is that the government forced prices up for several years by dumping unqualified buyers into the market and giving them 100% financing Fannie Mae loans under programs that were specifically designed by Clinton, Franklin Raines, Barney Frank, and others to put marginal credit risk people into homes.
The whole crisis was predicted - as was the need for a "bailout" in a NY Times article written in 1999!! Go to
http://query.nytimes.com/gst/fullpage.html?res=9C0 ... and read it for yourself!!! - inactive, on 11/02/2008, -0/+5So what?
Either you can afford the payments or you cant. Unless you were looking to flip the place, the current value of the home has no impact on if you can afford to live there. - Barackalypse, on 11/02/2008, -0/+5What matters is what percent of mortgages are late or in default, and that number is only around 9%:
"The Mortgage Bankers Association said Friday that more than 4 million American homeowners with a mortgage -- a record 9 percent -- were either behind on their payments or in foreclosure at the end of June."
http://biz.yahoo.com/ap/080905/home_foreclosures.h ... - PhilLesh69, on 11/02/2008, -0/+5boot20,
I had four 7 year ARMs that I refinanced before they reset. None of them reset to rates above 6.75% and I refinanced them to below 6% 30 year jumbos.
My fifth ARM was a 4.30% 7 year ARM that reset in July, when the 1 Year Treasury Index was 2.28%. The margin on my ARM was 3.0%, and if I had refinanced, I could have gotten 6.1 or maybe 5.75%, but I let it reset because the adjustable rate ended up being 5.28%. If for some reason the 1 Year Treasury Index starts going up anytime soon (it's at 1.91% right now), I may have to refinance, but right now, my rate is 4.91% and appears to keep going down. - PhilLesh69, on 11/02/2008, -3/+8There's no law, because these are contracts.
how can you "freeze" existing rates?
If you understood the economics of ARM loans, you would know that you agree to take a rather low initial interest rate because the bank is hoping that when the rate resets after 5 or 7 years, it will be much higher and they will make more money. It's a risk-benefit ratio.
Same with interest only loans. The bank is willing to let you pay only interest in the first few years hoping you will then end up paying more on a principle that has never been paid down, later on. You would take a loan like that hoping you would either sell or refinance before having to pay the principle and interest. - inactive, on 11/02/2008, -0/+5I have two things to say about your comment, PhilLesh69:
1)I'm glad you warned your friends, and that they were wise enough to follow your advise.
2)You HAVE to acknowledge that most people wouldn't have followed your advise. And, further, most people simply would fall squarely under the scenario that Karlitzor depicted.
We get too tangled in blaming "corporate greed". It's good to do so, since in fact there was a incredible amount of terrible, misleading, predatory financial advise given by lenders. But still none of it is enough to counter the wisdom of a careful person who doesn't live loose ends.
What I'm trying to say is, all the greed in the world could not explode without a field of morons ripe for the harvest season. If you exonerate them form blame, people who apologize for corporate greed could be just as easily justified. It takes two to tango. - xobarbarian, on 11/02/2008, -0/+5In a nice neighborhood, no plans of moving, & upside down on my mortgage. To the dumb asses who say, "You should have rented," or "you paid too much," STFU!!! Rents were high too, and in the last few years, you jerks are the exact same guys who said, "you're throwing money away by renting." In California, where I live, all of the houses were & still are overpriced. What the ***** was I supposed to do, move to Idaho?
- MichiganJim, on 11/02/2008, -3/+8No Problem - Just send the bill to Barney Frank and to Franklin Raines - WHAT - You don't know who Franklin Raines is? Well - you must be an Obama supporter who just watches the mainstream media. By God, they have done one helluva job covering for this guy - not so much to protect him mind you, but because exposing this ex-Clinton Cabinet member who took over Fannie Mae in 1999 - and expanding on the lowered down payment programs put in place by his predecessor - Jim Johnson - invented many of the "exotic" lower credit standard loan programs that fueled first the housing bubble (as millions of marginally qualified buyers were dumped into the market) and now the "bust" - as all those low or no down payment loans are dropped by people who previously could not even make their rent payments on time. Franklin Raines screwed this country on a scale that makes what Ken Lay at Enron did look like child's play. He was assisted inside the government by Barney Frank, Chris Dodd, and others, and ironically - he had help within Fannie Mae - from Barney Franks own gay lover who helped write many of the "exotic" loan programs.
Does all this seem too far fetched to be believed? Would a credible source change your mind? Google "NY TImes Fannie Mae" and the dates September 30, 1999, and September 11, 2003 - and read for yourself. Google "Barney Frank Lover Fannie Mae" and choose your source on that side of the story - there are hundreds of sources all confirming the same information.
Many of the people whose houses are now "underwater" were screwed by the government loading their neighborhoods with bad credit loans with no down payment. Now that millions of those loans have gone bad - resulting in the huge drop in property values - many people who did play by the rules are paying the price. Remember that when you see Obama, Frank, and Dodd plotting their next moves after the election. - BradMajors, on 11/02/2008, -0/+4Since the fed cut interest rates to 1% the adjustable rate mortgage holders will likely see cuts in their monthly payments.
- inactive, on 11/02/2008, -3/+7HI MY NAME IS PATTY AND I'M YOUR AGENT!
I'm going to speak really loudly and excited about whatever over-priced piece of cr@p house I try to shove down your throat! Did you notice my makeup and perfume? I put WAY too much on. It's my way of trying to cover up the 45 pounds I gained after I have birth to my kid. My husband then lost interest in me and now has sex with Thai hookers when he goes on business trips for his WIlly Lomanesque sales trips! Can I interest you in this split-level Colonial which has gone 500% in the past six months? The markets fueled by low interest, interest only loans which will entrap you like an 18th century negro south of the Mason Dixon Line- hi, I'm Patty! - skizzo, on 11/02/2008, -2/+6Nice thinking ... unless you chose a bad time to refinance...like now, and possibly, owed more than your properties are worth and you can't refinance...now you're screwed and left with two mortgages you can't afford. Now you aren't so smart are you...just like the millions of others who had that great idea and now are screwed and making the taxpayers pay for your stupidity!! ***** YOU SPECULATOR!
- vuke69, on 11/02/2008, -0/+4Beat me to it.
There actually are several situations where it is wise to get an ARM. If you are unsure if you're in one of those situations, guess what, YOU'RE NOT in one of those situations.
If you're pretty sure you are in one of those situations, ask your accountant. Don't have an accountant? Guess what, YOU'RE NOT in one of those situations.
However... If you are absolutely positive you are in one of those situations where an ARM makes sense, then chances are you've already done this a dozen times if you've done it once, so congratulations, go get an ARM.
For the other 98% of lendees, do some research, read the contract; in short, just do your due diligence on what is probably the biggest single purchase of your life. - youareretarded, on 11/02/2008, -0/+4You see, now how the hell is your average guy supposed to understand that Philesh69? How am I supposed to educate myself on something I don't know I don't know?
I originally signed up for an at 4.5% 5 year ARM that reset this year, I refinanced thinking it was the right thing to do and not once did I get any advice to the contrary, had I known that my rate would only top maybe 5.5% I would have just let it ride! - PhilLesh69, on 11/02/2008, -0/+4I paid $416,500 for a townhouse in 2002. My living room is 10x20, the entire house is 20 feet wide, maybe 60 feet long. It's like I'm living in a three story double wide.
But it is less than a 10 mile drive to the White House (my office is at 15th and H, practically spitting distance to the White House).
For 400k, you can barely buy a condo in the DC area.
What you think would be a "big" house for $400,000 would probably cost well over a million in this area.
Here's a "bungalow" for 1.5 million: http://www.sungazette.net/articles/2008/11/01/arli ...
Or this one for 1.7 million: http://www.sungazette.net/articles/2008/11/01/arli ... - PhilLesh69, on 11/02/2008, -0/+4maybe the media is using "under water" because it's a new concept to them.
But upside down is the common, long standing term for someone who owes more on something than that something is worth. - PhilLesh69, on 11/02/2008, -1/+4boot20, the terms of their ARM means that they will see that rate cut.
ARMs are based on a margin above the 1 Year Treasury Index.
If this were August of 2006, and your ARM with a 3% margin reset, you'd be paying 8.08% interest. However, the 1 Year Treasury Index in september was 1.91% That means with a 3% margin, your interest rate would be 4.91% - Osirus1156, on 11/02/2008, -0/+3I CAN SCREAM!
- Rufunki, on 11/02/2008, -2/+5Stay responsible and keep paying for your note. Orrr take advantage of how the US seems to be becoming, reward those that fail, and punish those that are responsible.
- cdominus, on 11/02/2008, -1/+4If you're not selling your house or planning to borrow against it (which is retarded in any case IMO), your house value doesn't really matter. Of course this would only affect people who can't live within their means and people in government with the same problem. Government is the worst as they only see lost revenue in lower property taxes for their pet projects and pretend they give a ***** about the idiots who over extended.
- geddon, on 11/02/2008, -0/+3More like thanks to the Two Branches of the Two Party System for keeping our country trapped in an endless blame game -- "It's their fault!" "No, it's their fault! Vote for us, we'll Change." "No, vote for us, we're Mavericks!" Madness, I say! Vote third Party!!!
- PhilLesh69, on 11/02/2008, -1/+4I refinanced 4 of my properties to be safe before I figured out that my ARM would actually reset to a lower rate than if I moved it into a 30 year jumbo, because of the lowest 1 Year Treasury Index rates since 2003
I'm pretty sure that my properties are not "speculator properties" since I've owned them all for anywhere from 4 years to 8 years. Speculators do not buy properties and hold them, they flip them. You are getting your talking points confused.
Considering the unemployment rate where I live is 3.0% and it is an almost completely recession proof area being that a large portion of our economy is funded by the taxpayers, and this being an election year and no matter who wins, there will be an administration change where thousands and thousands of people will be moving here from Arizona or Illinois who will need to buy or rent, plus all the congressmen and senators and their staffs, I will not lose value in my 5 rental properties.
I have lost about 12%, on average, from the peak values of my homes, but after 6 straight years of 20% increases in values year after year, I'm still doing great.
The townhouse I live in, which happens to be the cheapest property I own, I bought for $416,000 in 2002. The peak sale of a townhouse in my community was $730,000 about 14 months ago. The lowest asking price right now is $639,500, and the lowest sale price was $625,000.
Don't forget, DC is a unique market for both jobs and real estate. Never compare it to middle america. - youareretarded, on 11/02/2008, -1/+4Keep paying?
Why? Because of principal? You mean the same principals that got us into this mess?
I'd be the only one paying! - inactive, on 11/02/2008, -1/+4If you don't understand the terms of a contract, don't sign it.
- inactive, on 11/02/2008, -0/+3And to think I had to sit down and crunch numbers to decide if bumping my budget from $125K to $150K was the responsible thing to do.
$400K? Ouch.
Hopefully consumers will realize that they have to stop blaming the banks and the government and realize they just weren't being responsible with their money (don't know if you were or not, but generally this is a problem here). But here in America, it's always someone else's problem. The blame game is fun. When these turkeys say "I want the government to bail me out" what they are really saying is they want responsible consumers like me to bail them out. Smegging *what*?!? - peestandingup, on 11/02/2008, -0/+3Patty, I like your style.
- tsotha, on 11/02/2008, -0/+3The problem is the hardest hit states are "no recourse" states. So the homeowners can legally just walk away from their houses. If enough people do that we're in for another round of bailouts.
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