Huckleberry, I believe it’s a conscious decision on the part of the borrower to sign up for the following loan programs:
Interest-only loan; 30 due in 5 (or 7) loan; ARM w/neg-am (and pay min [non-amortized] rate); borrow the down payment; 125 LTV; pay several pts. up front; pay voluminous garbage charges and pay HOA(s), MR, street bonds, etc.
I think homebuyers got so caught up in erroneously thinking that a particular property was going to afford them a “lifestyle” they never had that they got mesmerized in the homebuying process. Their judgment was clouded because they didn’t want to even consider properties where they could actually live comfortably.
As for repeat cash-out refinancers and those who took out 2nds, 3rds and HELOCs, my experience has been that these owners don’t give a rat’s a** how much they are being charged or what happens to them or their home, they just want CASH ASAP. They have absolutely no regard for the future payments. These are conscious decisions to expose themselves to foreclosure.
Even if there is a severe language barrier with one or all the buyers, a doc-signing notary or lending professional at closing explains everything to them, taking at least 45 minutes and answering their questions in their language.
I don’t buy into the concept that buyers (and refinancers) were “victims.”
I don’t think banks should pay foreclosure victims any money at all. Most of these “victims” have already been squatting many months before it is time to move out. They have AMPLE notice to move before the sheriff’s comes in to evict them and sit their stuff outside. The TV networks portray a “poor foreclosure victim-mentality” for human-interest purposes. Sorry, I just don’t buy it.
