I'm not sure what the point of saying there are sleazy people out there has to do with anything.
There was straight up fraud going on. If there is fraud going on at a massive scale, I'm not sure what good asking questions is going to do... It's not just predatory lending. It's a mix of this with banks/corporations committing crimes.
But great for you that you dealt with people who may have dealt with you on the up and up Rock.
If there are specific "tricks" or clauses put in mortgages that are not addressed above and could lead to foreclosure I'd like to learn what they are.
I don't know if this qualifies as a trick, but I'll relate the story of a close friend here:
Bought his house in 2006 in Queens, NY in an area experiencing booming property values, with a mortgage that was set to adjust in 3 years. The lender assured him that taking the ARM mortgage was the best way to get his foot in the door as a home-owner, and that he could re-fi the mortgage for a standard non-adjusting rate mortgage in a year or two. Fast-forward to 2008 when my man tries to actually do his re-fi. The new bank, Chase (since the original mortgage had been bought and sold several times in the intervening time) goes out of their way to prevent him from refinancing his loan. First the bank claimed to have not received the paperwork he had sent in months prior, forcing him to re-start the extremely difficult process from scratch. The second time he applied, the bank kept telling him that his application was pending but due to the overwhelming number of cases it was backed up, just keep checking in with them, which he did weekly. After many months of this foot dragging he makes his weekly call to the bank and is told that the case had been closed. Supposedly the bank had asked him for more paperwork and didn't receive it from him, so they closed it due to lack of response from the applicant. He had been in contact with this bank weekly, yet the person who had talked to every week was the one who informed hm that the case was closed, and his only recourse would be to re-start the whole process a third time. By this time the ARM was almost up and his monthly payment was about to triple to an amount he could never have afforded, but never planned for and was assured he would never have to cover either.
In the end he was forced to short sell the house, and he actually ended up relatively lucky in that the bank forgave him the almost 200K difference between his mortgage and the actual selling price of the home. He still lost his entire savings ans is struggling like hell now to take care of his family, and he hasn't even lost his job. Yet.
I forgot to mention that one of the helpful pieces of advice the bank gave him was to declare personal bankruptcy to make the case for his re-fi look better as a hardship situation. Then they deliberately fucked him over so they wouldn't have to actually re-finance. Now he has ruined credit to go along with losing his home and savings. It's fucking savage, if you search Google there are message boards full of people with the same stories about Chase and their tactics.
There are real criminals here. Greedy people can be criminals, but not all greed is a crime. This was.
There are plenty of grounds for legal action. Contrary to the Obama/Geithner position, this is a target rich environment. And some of the violations were persistent and deliberate enough that they might well raise to the level of being criminal. This is a mere illustrative tally:
1. Violation of REMIC (real estate mortgage conduit) rules, which are IRS provisions which allow mortgage backed securities to be treated as pass-through entities. As we???ve indicated, the violations were clear cut and are easily documented. Moreover, when the senior enforcement officer in the IRS was alerted last year, she was keenly interested. But the word that came back was the the question had gone to the White House, and the answer was to nix going after these violations: ???We are not going to use tax as a tool of policy.??? So this is not a case of creative use of ???loopholes,??? this is prima facie evidence of an Administration policy of protecting the banks.
2. Consumer fraud under HAMP. Catherine Masto of Nevada has already delineated this case in her second amended complaint against numerous Bank of America entities (in fact, the evidently clueless President could find a raft of other litigation ideas in her filing). All the servicers engaged in similar egregious conduct.
3. Securities fraud by mortgage trustees and serivcers. While the statute of limitations for securities fraud for the sale of toxic mortgage securities in the runup to the crisis has now passed, securitization trustees and servicers are making false certifications in periodic SEC filings. In layperson terms, the trustee certifies that everything is kosher with the trust assets. As readers well know, in many cases the custodians do not have the notes or they were not conveyed to the trust as stipulated in the pooling and servicing agreement (as in they were not properly endorsed through the chain of title).
Now of course, pursuing this sort of litigation would blow up the mortgage industrial complex. But it represents a powerful weapon to bring unrepentant bankers to heel.
4. Widespread risk management failures as Sarbanes-Oxley violations. As we???ve discussed, Sarbox provides a fairly low risk path to criminal prosecutions. And we believe the SEC has been incorrectly deterred by an adverse ruling in the early stages of its case against Angelo Mozilo. In that case, the judge (with no explanation of his ruling) barred the SEC from claiming SEC violations (which this case did) and double dipping by adding a Sarbox charge (securities fraud statutes parallel Sarbox language; indeed, that was one of the complaints re Sarbox, that many of its provisions were already represented in existing law). That???s far more significant than it appears. As we argued in an earlier post, the language in Section 302 (civil violations) tracks the language in Section 906 (criminal violations). A win on a Section 302 case would thus set up what would appear to be a slam dunk criminal case.
But Sarbox also contains language not present in existing securities statutes that would allow for criminal prosecution for exactly the sort of behavior that caused the crisis, namely, inadequate risk management (we discuss at length in ECONNED how risk management is kept politically weak by design and serves too often as a fig leaf for management). As we noted earlier:
But great for you that you dealt with people who may have dealt with you on the up and up Rock.
I'm not sure if the folks I dealt with were "on the up and up" or not....I just made sure I knew what I was getting in to and wouldn't have signed my name until those six, basically common sense questions, were answered in writing.
Buying a home is the biggest expenditure most people make......if you do so without having any clue as to what you are getting in to I think you're foolish....and setting yourself up for trouble.
If you spend even one hour of your time at the local public library researching buying a home the issue of variable rate or ARM loans will be one of the first things you'll read about.
If the consensus is that spending an hour to learn what questions to ask is an unreasonable thing to expect folks to do then I guess my opinion is in the minority.....and I'm cool with that.
But I'd bet my last dollar that JP wouldn't sign a mortgage without knowing if it had a variable interest rate or not.
And if any crime is committed by a bank/lender I want them prosecuted to the fullest.
In the examples given by JP I don't believe a crime was committed.
In the examples given by JP I don't believe a crime was committed.
I never said a crime was committed.
You don't have to be a criminal to be a scumbag. Deception, misinformation, obfuscation... are not necessarily crimes.
A crime doesn't have to have been committed in order to say that an industry needs reforming. That some crimes were committed makes it all the more necessary. My cases may or may not have been crimes, but they both point to fucked up situations that deserve attention and reform.
Your tax dollars subsidize these garbage loans. You need to stop blaming the people that are merely trying to live an average life and start blaming the government that knowingly sets them up for financial ruin with your money.
Shit doesn't have to be criminal to be unconscionable. Get real.
It's crazy when there are so many different areas of buying a home that you can be taken advantage of. If I was buying another home I would totally be going in with the idea that everyone you are doing business with are looking to fuck you over and ask a million questions. So I agree with Rock, ask questions.
But seriously Rock, you know damn well it's not just about asking questions. It doesn't help when someone is lying to you. If very smart people are getting taken advantage of, can you imagine seniors, people who don't speak english as their first language, etc?
Here is one example of just one type of fraud going on with a massive scale. The fucked up thing was it took a women who's house was getting foreclosed on, who had a background in fraud and trained FBI agents. Not the police or government to figure out criminal actions were going on.
This 60 minutes episode blew my mind. How they were able to get away with this is CRAZY.
I'm not defending any bank.....I don't trust anyone with my money besides myself.....and if crimes have been committed we need to prosecute the offenders..
What I'm suggesting is that there are some very simple and common sense ways to protect yourself and this is something you can do immediately without the passing of any laws or the reform of any industry.
I'm not going to hold my breath until the day we have legislation that outlaws scumbags and guarantees that people who want to sell you something are 100% honest and up front with the buyer.
Protect yourself...it's really not that hard to do if an idiot like me has figured it out....and that's what I'm sharing here.
As someone in this thread who worked in the Mortgage industry stated earlier..."we're dealing with human nature" on both sides of the equation....and you can't legislate morality.
I'm not defending any bank.....I don't trust anyone with my money besides myself.....and if crimes have been committed we need to prosecute the offenders..
What I'm suggesting is that there are some very simple and common sense ways to protect yourself and this is something you can do immediately without the passing of any laws or the reform of any industry.
you can't legislate morality.
This is bullshit.
HarveyCanal"a distraction from my main thesis." 13,234 Posts
Deposit $40,000 at a bank and you'll be lucky to earn 3% interest...and that's on cold hard cash.
Borrow $40,000 from a bank and you'll likley be paying 12-15% interest or even more...and that's on imaginary money that has been already flipped x number of times with x number of people paying interest upon each increment.
Shit is fucked up. Good for you that you are smart enough to see through it. But that doesn't mean we shouldn't change the system for, and protect, those of us who aren't quite as sharp.
I don't consider those six simple things I stated as something you need to be particularly "smart" to do....nor do I consider myself any "smarter" than the next guy. Your friend in example #1 would have avoided his problem by asking those six questions.....if he didn't even ask those obviious one's he went in to the deal totally blind and can only blame himself....buyer beware.
I'm not going to get into the back and forth, but he thought he was refinancing at a certain rate. He believed he understood what that rate was. He did not understand that it was going to change, nor was he informed of that tidbit of info.
While I feel badly for your friend, I just don't understand this.
As far as I know, it is required by law to provide an Amortization Schedule when offering a mortgage as part of the Standard Mortgage Disclosure. This is a schedule that tells you your monthly payments for the life of the mortgage, and what percentage is allocated to your principle vs. interest. If his rate was going up, it would be easily seen here. This is not a complicated document and is easily read by anybody who knows basic math.
Maybe it's not required in every state, but it was in MA when I signed there.
I can't profess to know what was in the documents, as I didn't see them. We're close, but not that close.
I know that consumer protections vary from state to state. Massachusetts has strong ones. I tried googling around but honestly I'm short on time and a little out of my depth.
I think what pisses me off about it is that this is a house that was fully affordable, within his means, etc... and only because he signed on to this refinancing deal did his interest rate balloon and put him at risk. Just by reading the news, I know this has happened countless times over, across this country.
I don't see how anyone could, with a straight face and clear conscience, say "well, tough shit. He should've read the contract." The government has subsidized the rapid growth in home ownership since the 50s... the government has actively encouraged American citizens to buy homes... and these predatory lenders are not operating in a vacuum, but with government support. The government needs to regulate the industry. Plain and simple. That is a plank of these protests and I think it's totally valid.
These agencies targeted ethnic minorities and lower-income homeowners. It's disgusting.
If there are specific "tricks" or clauses put in mortgages that are not addressed above and could lead to foreclosure I'd like to learn what they are.
I don't know if this qualifies as a trick, but I'll relate the story of a close friend here:
Bought his house in 2006 in Queens, NY in an area experiencing booming property values, with a mortgage that was set to adjust in 3 years. The lender assured him that taking the ARM mortgage was the best way to get his foot in the door as a home-owner, and that he could re-fi the mortgage for a standard non-adjusting rate mortgage in a year or two. Fast-forward to 2008 when my man tries to actually do his re-fi. The new bank, Chase (since the original mortgage had been bought and sold several times in the intervening time) goes out of their way to prevent him from refinancing his loan. First the bank claimed to have not received the paperwork he had sent in months prior, forcing him to re-start the extremely difficult process from scratch. The second time he applied, the bank kept telling him that his application was pending but due to the overwhelming number of cases it was backed up, just keep checking in with them, which he did weekly. After many months of this foot dragging he makes his weekly call to the bank and is told that the case had been closed. Supposedly the bank had asked him for more paperwork and didn't receive it from him, so they closed it due to lack of response from the applicant. He had been in contact with this bank weekly, yet the person who had talked to every week was the one who informed hm that the case was closed, and his only recourse would be to re-start the whole process a third time. By this time the ARM was almost up and his monthly payment was about to triple to an amount he could never have afforded, but never planned for and was assured he would never have to cover either.
In the end he was forced to short sell the house, and he actually ended up relatively lucky in that the bank forgave him the almost 200K difference between his mortgage and the actual selling price of the home. He still lost his entire savings ans is struggling like hell now to take care of his family, and he hasn't even lost his job. Yet.
He should have stayed in the house until they forced him out, rent free. It might have taken years. Some might say that's morally wrong, but I think it's perfectly okay under such circumstances.
He did for a little while, but he has young kids to think of too. If not he probably would have been in there until they dragged him out by force. He loved that house.
I think what pisses me off about it is that this is a house that was fully affordable, within his means, etc... and only because he signed on to this refinancing deal did his interest rate balloon and put him at risk. Just by reading the news, I know this has happened countless times over, across this country.
.
This is the same thing that is so disgusting about my friend's situation. He could have started off with a fixed rate mortgage that was a higher but still affordable monthly payment, but the lender told him that the ARM would save him money month-to-month in the short run and then he could just get the fixed rate later on. Not disclosing that the lender made more money on ARM's, or that the mortgage would be sold to another bank that would be much harder to re-finance with. Had he gotten honest advice in the beginning he would still have his house.
Rock how many times does it need to be spelled out for you? Securitizing a vulnerable mortgage and selling it is a crime. Being raped while wearing a short skirt is not.
Rock how many times does it need to be spelled out for you? Securitizing a vulnerable mortgage and selling it is a crime. Being raped while wearing a short skirt is not.
SMH...Oh, in that case don't even bother to do any due dilligence or research before buying a home....don't take any/all the precautions and advice provided to protect you free of charge....that guide I posted...pure bullshit, ignore it totally.
Just face the fact that if you buy a home you WILL be screwed and there's not a damn thing you can do about it.
How many times do I need to state in this thread that criminals should be prosecuted.
Just how many of the roughly 2.8 million homes forclosed on last year were the result of a lender committing a crime?
SMH...Oh, in that case don't even bother to do any due dilligence or research before buying a home....don't take any/all the precautions and advice provided to protect you free of charge....that guide I posted...pure bullshit, ignore it totally.
Just face the fact that if you buy a home you WILL be screwed and there's not a damn thing you can do about it.
How many times do I need to state in this thread that criminals should be prosecuted.
Just how many of the roughly 2.8 million homes forclosed on last year were the result of a lender committing a crime?
Be honest. You know I don't think that.
We don't know how many because the DOJ hasn't investigated. That is a main purpose of these protests. We can both prosecute and raise consumer awareness. These protests are about prosecution.
Some of those foreclosures were the result of people biting off more than they could chew and the lender enabling them.
Some of them were a result of the borrower having no idea what they were getting into and not making the effort to understand.
Some were the result of people not caring about what they were getting into but knew they just wanted a house and the banks enabled them even though they knew/thought it wasn't going to turn out well.
Some were people who knew and understood what an ARM was and gambled that either A) they would be able to afford a higher payment in the future ...or...B) The value of their house would go up just like they had seen others do over the last 10 years.
Some people relied on the banker/lender to be upfornt and honest with them and in reality they were not looking out for the borrowers best interest.
Some people lost their job due to a reeling economy and didn't have Mortgage Unemployment Insurance.
Some banks / lenders lied, cheated, manipulated and likely committed a crime against the borrowers and they should be prosecuted.
I'm just suggesting that all of the above except for the last one could have been greatly minimized by some simple and easy to understand due dilligence....if someone disagrees with this we'll just have to agree to disagree.
Every major city has a public library, free and/or sliding scale legal advice and free/affordable classes on buying a home.
I also think all public High Schools should be required to teach classes on personal finance and home ownership.
If I read this correctly, the majority of mortgage frauds are not "predatory lending", but people obtaining mortgages through fraudulent means, i.e., it's the bank getting ripped off, not the person taking the loan.
Or at least, most of the fraud being investigated by the FBI falls under this category.
As far as I know, it is required by law to provide an Amortization Schedule when offering a mortgage as part of the Standard Mortgage Disclosure. This is a schedule that tells you your monthly payments for the life of the mortgage, and what percentage is allocated to your principle vs. interest. If his rate was going up, it would be easily seen here. This is not a complicated document and is easily read by anybody who knows basic math.
Maybe it's not required in every state, but it was in MA when I signed there.
The reason it is called fraud is because the letter or spirit of the law was not followed.
Not everyone can afford a lawyer to look over a mortgage. I know, I know. Who do they think they are taking out a mortgage then. Well, surely we can agree that predatory lending exists. We can also agree that peoples' desires to own a home may lead to them making decisions they wouldn't or shouldn't make. Maybe we disagree about whether the lenders have any cupalbility in preying on these desires and gaming the system by making the mortgages so complex. I think they have some, maybe you dont.
I've purchased a few houses and have never had a lawyer look over the mortgage.....but I did make sure I had the answers, in writing, to some very simple questions.
1) What is the value of the home according to an independent appraiser and based on previous and neighborhood sales prices. All free public info.
2) How much is my down payment?
3) What will my monthly payment be over the course of the 30 year loan.
4) What are my property taxes and the history of those taxes increasing.
5) What is my interest rate and how much interest will I pay over the course of the mortgage.
6) What kind of insurance is available for me to purchase in case of death, illness, etc.
Then decide if I can afford it and sign my name to a contract which states I understand and will be responsible to live up to the contract with the penalty of foreclosure if I don't.
Sure, there are a few other important clauses/issues but those six should cover most of what caused 2.8 million forclosures last year in the U.S. and I don't think these are very complicated or difficult to deal with.
1, 2, 3 and 5 are covered in standard mortgage disclosures. So is 4 as far as current taxes go, but I'm not sure how or why a banker could answer the part about the history of tax increases. 6 is an option with some banks but not all.
I'm not sure what any of this really has to do with all of those foreclosures. I'd bet the vast majority of foreclosures are caused by job loss, not by any other factor. Then there are the people who walked away once they realized their house was now worth a fraction of what was owed on it - and that's not something an appraisal is proof against.
When I was buying my home appraisals were not free. Our appraiser was provided by the mortgage broker.
Otherwise a good list of questions.
Another question we asked and had answered honestly was about penalties for paying the loan off early.
As people have pointed out, there are vulnerable people out there, and unscrupulous people who will take advantage of them.
When the geniuses on Wall Street came up with the idea of securitizing mortgages the demands for mortgages sky rocketed.
Mortgage brokers, and eventually banks, went from only loaning to people who were good risks to targeting people who were bad risks for loans.
This had a number of predictable effects. Inflated housing prices and defaults.
The thing about people who are bad risks is that they are likely less savvy than you or I when it comes to loans, contracts and good decisions.
So when the banker, in the three piece suit says, "you are just the kind of borrower we are looking for", "we have looked over your income statements you will have no trouble affording this" some people will make bad decisions.
I'm just suggesting that all of the above except for the last one could have been greatly minimized by some simple and easy to understand due dilligence....if someone disagrees with this we'll just have to agree to disagree.
Every major city has a public library, free and/or sliding scale legal advice and free/affordable classes on buying a home.
just so I'm clear, your position is: if a crime can be proven in the case of individuals, they should be prosecuted, but additional regulation or legislation of the real estate and financial industries is not necessary; as a taxpayer, you do not have a problem with the way the government has spent your money with respect to its various housing agencies and programs. People just need to hit the library, take some classes, or find a free lawyer so they can make better decisions. Am I misstating your argument?
If I read this correctly, the majority of mortgage frauds are not "predatory lending", but people obtaining mortgages through fraudulent means, i.e., it's the bank getting ripped off, not the person taking the loan.
Or at least, most of the fraud being investigated by the FBI falls under this category.
No. "Those who commit mortgage fraud for profit are often industry insiders using their specialized knowledge or authority to commit or facilitate the fraud. Current investigations and widespread reporting indicate a high percentage of mortgage fraud involves collusion by industry insiders, such as appraisers, mortgage brokers, attorneys, loan originators, and other professionals engaged in the industry. "
But these people are working primarily to defraud the bank, not the borrower:
"Although there are many different types of schemes, mortgage fraud can be summarized as a form of bank robbery where the bank is not even aware it has been robbed until months or years later."
Comments
There was straight up fraud going on. If there is fraud going on at a massive scale, I'm not sure what good asking questions is going to do... It's not just predatory lending. It's a mix of this with banks/corporations committing crimes.
But great for you that you dealt with people who may have dealt with you on the up and up Rock.
I don't know if this qualifies as a trick, but I'll relate the story of a close friend here:
Bought his house in 2006 in Queens, NY in an area experiencing booming property values, with a mortgage that was set to adjust in 3 years. The lender assured him that taking the ARM mortgage was the best way to get his foot in the door as a home-owner, and that he could re-fi the mortgage for a standard non-adjusting rate mortgage in a year or two. Fast-forward to 2008 when my man tries to actually do his re-fi. The new bank, Chase (since the original mortgage had been bought and sold several times in the intervening time) goes out of their way to prevent him from refinancing his loan. First the bank claimed to have not received the paperwork he had sent in months prior, forcing him to re-start the extremely difficult process from scratch. The second time he applied, the bank kept telling him that his application was pending but due to the overwhelming number of cases it was backed up, just keep checking in with them, which he did weekly. After many months of this foot dragging he makes his weekly call to the bank and is told that the case had been closed. Supposedly the bank had asked him for more paperwork and didn't receive it from him, so they closed it due to lack of response from the applicant. He had been in contact with this bank weekly, yet the person who had talked to every week was the one who informed hm that the case was closed, and his only recourse would be to re-start the whole process a third time. By this time the ARM was almost up and his monthly payment was about to triple to an amount he could never have afforded, but never planned for and was assured he would never have to cover either.
In the end he was forced to short sell the house, and he actually ended up relatively lucky in that the bank forgave him the almost 200K difference between his mortgage and the actual selling price of the home. He still lost his entire savings ans is struggling like hell now to take care of his family, and he hasn't even lost his job. Yet.
link
I'm not sure if the folks I dealt with were "on the up and up" or not....I just made sure I knew what I was getting in to and wouldn't have signed my name until those six, basically common sense questions, were answered in writing.
Buying a home is the biggest expenditure most people make......if you do so without having any clue as to what you are getting in to I think you're foolish....and setting yourself up for trouble.
If you spend even one hour of your time at the local public library researching buying a home the issue of variable rate or ARM loans will be one of the first things you'll read about.
If the consensus is that spending an hour to learn what questions to ask is an unreasonable thing to expect folks to do then I guess my opinion is in the minority.....and I'm cool with that.
But I'd bet my last dollar that JP wouldn't sign a mortgage without knowing if it had a variable interest rate or not.
And if any crime is committed by a bank/lender I want them prosecuted to the fullest.
In the examples given by JP I don't believe a crime was committed.
I never said a crime was committed.
You don't have to be a criminal to be a scumbag. Deception, misinformation, obfuscation... are not necessarily crimes.
A crime doesn't have to have been committed in order to say that an industry needs reforming. That some crimes were committed makes it all the more necessary. My cases may or may not have been crimes, but they both point to fucked up situations that deserve attention and reform.
Your tax dollars subsidize these garbage loans. You need to stop blaming the people that are merely trying to live an average life and start blaming the government that knowingly sets them up for financial ruin with your money.
Shit doesn't have to be criminal to be unconscionable. Get real.
But seriously Rock, you know damn well it's not just about asking questions. It doesn't help when someone is lying to you. If very smart people are getting taken advantage of, can you imagine seniors, people who don't speak english as their first language, etc?
Here is one example of just one type of fraud going on with a massive scale. The fucked up thing was it took a women who's house was getting foreclosed on, who had a background in fraud and trained FBI agents. Not the police or government to figure out criminal actions were going on.
This 60 minutes episode blew my mind. How they were able to get away with this is CRAZY.
What I'm suggesting is that there are some very simple and common sense ways to protect yourself and this is something you can do immediately without the passing of any laws or the reform of any industry.
I'm not going to hold my breath until the day we have legislation that outlaws scumbags and guarantees that people who want to sell you something are 100% honest and up front with the buyer.
Protect yourself...it's really not that hard to do if an idiot like me has figured it out....and that's what I'm sharing here.
As someone in this thread who worked in the Mortgage industry stated earlier..."we're dealing with human nature" on both sides of the equation....and you can't legislate morality.
This is bullshit.
Borrow $40,000 from a bank and you'll likley be paying 12-15% interest or even more...and that's on imaginary money that has been already flipped x number of times with x number of people paying interest upon each increment.
Such an inequality should not be legal.
While I feel badly for your friend, I just don't understand this.
As far as I know, it is required by law to provide an Amortization Schedule when offering a mortgage as part of the Standard Mortgage Disclosure. This is a schedule that tells you your monthly payments for the life of the mortgage, and what percentage is allocated to your principle vs. interest. If his rate was going up, it would be easily seen here. This is not a complicated document and is easily read by anybody who knows basic math.
Maybe it's not required in every state, but it was in MA when I signed there.
I know that consumer protections vary from state to state. Massachusetts has strong ones. I tried googling around but honestly I'm short on time and a little out of my depth.
I think what pisses me off about it is that this is a house that was fully affordable, within his means, etc... and only because he signed on to this refinancing deal did his interest rate balloon and put him at risk. Just by reading the news, I know this has happened countless times over, across this country.
I don't see how anyone could, with a straight face and clear conscience, say "well, tough shit. He should've read the contract." The government has subsidized the rapid growth in home ownership since the 50s... the government has actively encouraged American citizens to buy homes... and these predatory lenders are not operating in a vacuum, but with government support. The government needs to regulate the industry. Plain and simple. That is a plank of these protests and I think it's totally valid.
These agencies targeted ethnic minorities and lower-income homeowners. It's disgusting.
He did for a little while, but he has young kids to think of too. If not he probably would have been in there until they dragged him out by force. He loved that house.
This is the same thing that is so disgusting about my friend's situation. He could have started off with a fixed rate mortgage that was a higher but still affordable monthly payment, but the lender told him that the ARM would save him money month-to-month in the short run and then he could just get the fixed rate later on. Not disclosing that the lender made more money on ARM's, or that the mortgage would be sold to another bank that would be much harder to re-finance with. Had he gotten honest advice in the beginning he would still have his house.
Who was saying this?
Rock how many times does it need to be spelled out for you? Securitizing a vulnerable mortgage and selling it is a crime. Being raped while wearing a short skirt is not.
I don't know any bank up here giving 3% on $40 G's. More like anywhere between 1 and 1.5%.
3-4% back in the late 90's when interest rates were much higher.
SMH...Oh, in that case don't even bother to do any due dilligence or research before buying a home....don't take any/all the precautions and advice provided to protect you free of charge....that guide I posted...pure bullshit, ignore it totally.
Just face the fact that if you buy a home you WILL be screwed and there's not a damn thing you can do about it.
How many times do I need to state in this thread that criminals should be prosecuted.
Just how many of the roughly 2.8 million homes forclosed on last year were the result of a lender committing a crime?
Be honest. You know I don't think that.
We don't know how many because the DOJ hasn't investigated. That is a main purpose of these protests. We can both prosecute and raise consumer awareness. These protests are about prosecution.
Let's be realistic and honest.
Some of those foreclosures were the result of people biting off more than they could chew and the lender enabling them.
Some of them were a result of the borrower having no idea what they were getting into and not making the effort to understand.
Some were the result of people not caring about what they were getting into but knew they just wanted a house and the banks enabled them even though they knew/thought it wasn't going to turn out well.
Some were people who knew and understood what an ARM was and gambled that either A) they would be able to afford a higher payment in the future ...or...B) The value of their house would go up just like they had seen others do over the last 10 years.
Some people relied on the banker/lender to be upfornt and honest with them and in reality they were not looking out for the borrowers best interest.
Some people lost their job due to a reeling economy and didn't have Mortgage Unemployment Insurance.
Some banks / lenders lied, cheated, manipulated and likely committed a crime against the borrowers and they should be prosecuted.
I'm just suggesting that all of the above except for the last one could have been greatly minimized by some simple and easy to understand due dilligence....if someone disagrees with this we'll just have to agree to disagree.
Every major city has a public library, free and/or sliding scale legal advice and free/affordable classes on buying a home.
I also think all public High Schools should be required to teach classes on personal finance and home ownership.
If I read this correctly, the majority of mortgage frauds are not "predatory lending", but people obtaining mortgages through fraudulent means, i.e., it's the bank getting ripped off, not the person taking the loan.
Or at least, most of the fraud being investigated by the FBI falls under this category.
cosine
I think in dollar terms the largest numbers of defaults are developers walking away from investments.
The second largest, I am guessing, is people who decided to walk away from underwater mortgages they could afford.
People losing their homes because of mortgage fraud or lose of job type things would be the smallest group.
Mortgage default is not what caused the crisis that lead to the bailout.
The reason it is called fraud is because the letter or spirit of the law was not followed.
When I was buying my home appraisals were not free. Our appraiser was provided by the mortgage broker.
Otherwise a good list of questions.
Another question we asked and had answered honestly was about penalties for paying the loan off early.
As people have pointed out, there are vulnerable people out there, and unscrupulous people who will take advantage of them.
When the geniuses on Wall Street came up with the idea of securitizing mortgages the demands for mortgages sky rocketed.
Mortgage brokers, and eventually banks, went from only loaning to people who were good risks to targeting people who were bad risks for loans.
This had a number of predictable effects. Inflated housing prices and defaults.
The thing about people who are bad risks is that they are likely less savvy than you or I when it comes to loans, contracts and good decisions.
So when the banker, in the three piece suit says, "you are just the kind of borrower we are looking for", "we have looked over your income statements you will have no trouble affording this" some people will make bad decisions.
Personally, I choose not to blame the victim.
A variable rate that is tied to the prime rate goes up and down with the prime rate.
There are many other kinds. My was tied to the LIBOR or something like that. It doesn't even have to be tied to anything, just goes up.
just so I'm clear, your position is: if a crime can be proven in the case of individuals, they should be prosecuted, but additional regulation or legislation of the real estate and financial industries is not necessary; as a taxpayer, you do not have a problem with the way the government has spent your money with respect to its various housing agencies and programs. People just need to hit the library, take some classes, or find a free lawyer so they can make better decisions. Am I misstating your argument?
But these people are working primarily to defraud the bank, not the borrower:
"Although there are many different types of schemes, mortgage fraud can be summarized as a form of bank robbery where the bank is not even aware it has been robbed until months or years later."