Rewarding Bad Behavior and Stupidity = Bailout

[kewp]

So stop paying your mortgage until you get your bailout.

Seems simple enough to me.

Now us renters, we *really* have it tough.

[Ren]

I know our government is bloated, corrupt, and inept, but I can’t imagine even them doing this without some kind of collateral/repayment. In other words, it will be 20 years before these idiots see any equity. Maybe they’ll have a much lower payment than the responsible people next door, but they’ll essentially be renting from the government.

At least I hope so.

We can also pray that people who blatantly lied on their original loan application are immediately disqualified. I doubt that will happen, but I can dream.

[Ren]

I know our government is bloated, corrupt, and inept, but I can’t imagine even them doing this without some kind of collateral/repayment. In other words, it will be 20 years before these idiots see any equity. Maybe they’ll have a much lower payment than the responsible people next door, but they’ll essentially be renting from the government.

At least I hope so.

We can also pray that people who blatantly lied on their original loan application are immediately disqualified. I doubt that will happen, but I can dream.

[Ren]

I know our government is bloated, corrupt, and inept, but I can’t imagine even them doing this without some kind of collateral/repayment. In other words, it will be 20 years before these idiots see any equity. Maybe they’ll have a much lower payment than the responsible people next door, but they’ll essentially be renting from the government.

At least I hope so.

We can also pray that people who blatantly lied on their original loan application are immediately disqualified. I doubt that will happen, but I can dream.

[Ren]

I know our government is bloated, corrupt, and inept, but I can’t imagine even them doing this without some kind of collateral/repayment. In other words, it will be 20 years before these idiots see any equity. Maybe they’ll have a much lower payment than the responsible people next door, but they’ll essentially be renting from the government.

At least I hope so.

We can also pray that people who blatantly lied on their original loan application are immediately disqualified. I doubt that will happen, but I can dream.

[Ren]

I know our government is bloated, corrupt, and inept, but I can’t imagine even them doing this without some kind of collateral/repayment. In other words, it will be 20 years before these idiots see any equity. Maybe they’ll have a much lower payment than the responsible people next door, but they’ll essentially be renting from the government.

At least I hope so.

We can also pray that people who blatantly lied on their original loan application are immediately disqualified. I doubt that will happen, but I can dream.

[cooperthedog]

[quote=23109VC]true – life is not fair. but one would hope that someone in gov’t, would stand up and say “hey, you know what – if you took out a loan on a $750,000 house, lied bout your income and claimed you made $300k/year when in reality you made about $50k – and now you can’t afford the house b/c your teaser rate is up and the neg am arm has reset – TOUGH $HIT”

I’ve heard a few people hint at personal responsibility, but they all fall back on how we have to keep people in their homes, and how we have to punish these horrible predatory lenders…

predatory lending? i’m sure a lot of lenders put guns to people’s heads and told them they had to sign the dotted line… you know what – if someone is dumb enough to buy stuff they can’t afford b/c they “wanted” to belive the BS they got fed by teh lenders – they deserve what they get.
[/quote]

Why would the bank need to put a gun to their head when they’re *offering* a 125% negatively amortizing 1yr ARM with payments half their rent, and the cash back to buy a new car?

If you have any doubts, your realtor will tell you how RE only goes up (with the NAR propaganda to prove it), the builder will throw in granite countertops if you buy today (and will conveniently provide a banker to “streamline” your loan). Your broker will assure you that stated-income isn’t lying, “everyone is doing it!”. What about the ARM, aren’t those risky, you ask… Not according to the Fed chairman, in fact you’d be a fool not to get an ARM…

You have to realize that the bailouts are NOT designed to save the poor homeowners, they’re designed to save the banks and overall financial system.

In the decades before the bubble, foreclosures spread misery to plenty of unfortunate people who weren’t overextended, but lost their homes to job loss, medical bills, etc. Do you recall any major gov’t programs to help them? No, because the lenders could sell the property to recoup the principal. Now that the lenders are on the hook, homeowners need rescuing!

Sure, there are alot of people who did not show personal responsibility and bought tons of crap they couldn’t afford, but “poor” people have always wanted more, especially the opportunity to buy a house. If the bank gives them the oppportunity, they’re going to take it. Add to that all the first time buyers suckered into purchasing at the top & the use of HELOC’s as free money.

Both parties are culpable, and I would argue that the banks, who ostensibly make it there business to manage risk, should take the most blame.

For instance, what would you do in this situation:

Let’s say you owned a late model luxury car worth ~30k. You put an ad in the paper, listing the car at 33k. and three people responded. The first offers 30k in cash. The second is willing to offer full price, but can only put down 15k in cash, and asks that you to carry the note for 3 years @ 6%, s/he is gainfully employed with good credit. The third is a teenager, who just has to have your “dope ride”. s/he is working at the burger barn part-time and has saved almost $500 over the summer! s/he can afford $100 per month as a payment.

Do you;
A) Take the 30k cash and run.
B) Take half the value in cash, and get a 10% premium, plus interest from the guy who has some skin in the game.
C) Sell it to the teenager for 35k, with a 5k cash rebate (to get a phat stereo system), plus 3k in fees which will be rolled into the loan. Write up your genius 125% ltv, teaser loan (interest only, neg-am, spread over 50 years). Using the teenagers stated income from burger barn – 120k/yr and 550 FICO score. To really make qualifying E-Z, offer no payments for the first 3 months, then a low $99 for the next year. Include fine print that the loan will reset thereafter at a 12% subprime rate and corresponding $500/mo payment. Sit back and watch the dough roll in, confident in knowing that you can always repossess the car to recoup your money in case of an unlikely default.

[cooperthedog]

[quote=23109VC]true – life is not fair. but one would hope that someone in gov’t, would stand up and say “hey, you know what – if you took out a loan on a $750,000 house, lied bout your income and claimed you made $300k/year when in reality you made about $50k – and now you can’t afford the house b/c your teaser rate is up and the neg am arm has reset – TOUGH $HIT”

I’ve heard a few people hint at personal responsibility, but they all fall back on how we have to keep people in their homes, and how we have to punish these horrible predatory lenders…

predatory lending? i’m sure a lot of lenders put guns to people’s heads and told them they had to sign the dotted line… you know what – if someone is dumb enough to buy stuff they can’t afford b/c they “wanted” to belive the BS they got fed by teh lenders – they deserve what they get.
[/quote]

Why would the bank need to put a gun to their head when they’re *offering* a 125% negatively amortizing 1yr ARM with payments half their rent, and the cash back to buy a new car?

If you have any doubts, your realtor will tell you how RE only goes up (with the NAR propaganda to prove it), the builder will throw in granite countertops if you buy today (and will conveniently provide a banker to “streamline” your loan). Your broker will assure you that stated-income isn’t lying, “everyone is doing it!”. What about the ARM, aren’t those risky, you ask… Not according to the Fed chairman, in fact you’d be a fool not to get an ARM…

You have to realize that the bailouts are NOT designed to save the poor homeowners, they’re designed to save the banks and overall financial system.

In the decades before the bubble, foreclosures spread misery to plenty of unfortunate people who weren’t overextended, but lost their homes to job loss, medical bills, etc. Do you recall any major gov’t programs to help them? No, because the lenders could sell the property to recoup the principal. Now that the lenders are on the hook, homeowners need rescuing!

Sure, there are alot of people who did not show personal responsibility and bought tons of crap they couldn’t afford, but “poor” people have always wanted more, especially the opportunity to buy a house. If the bank gives them the oppportunity, they’re going to take it. Add to that all the first time buyers suckered into purchasing at the top & the use of HELOC’s as free money.

Both parties are culpable, and I would argue that the banks, who ostensibly make it there business to manage risk, should take the most blame.

For instance, what would you do in this situation:

Let’s say you owned a late model luxury car worth ~30k. You put an ad in the paper, listing the car at 33k. and three people responded. The first offers 30k in cash. The second is willing to offer full price, but can only put down 15k in cash, and asks that you to carry the note for 3 years @ 6%, s/he is gainfully employed with good credit. The third is a teenager, who just has to have your “dope ride”. s/he is working at the burger barn part-time and has saved almost $500 over the summer! s/he can afford $100 per month as a payment.

Do you;
A) Take the 30k cash and run.
B) Take half the value in cash, and get a 10% premium, plus interest from the guy who has some skin in the game.
C) Sell it to the teenager for 35k, with a 5k cash rebate (to get a phat stereo system), plus 3k in fees which will be rolled into the loan. Write up your genius 125% ltv, teaser loan (interest only, neg-am, spread over 50 years). Using the teenagers stated income from burger barn – 120k/yr and 550 FICO score. To really make qualifying E-Z, offer no payments for the first 3 months, then a low $99 for the next year. Include fine print that the loan will reset thereafter at a 12% subprime rate and corresponding $500/mo payment. Sit back and watch the dough roll in, confident in knowing that you can always repossess the car to recoup your money in case of an unlikely default.

[cooperthedog]

[quote=23109VC]true – life is not fair. but one would hope that someone in gov’t, would stand up and say “hey, you know what – if you took out a loan on a $750,000 house, lied bout your income and claimed you made $300k/year when in reality you made about $50k – and now you can’t afford the house b/c your teaser rate is up and the neg am arm has reset – TOUGH $HIT”

I’ve heard a few people hint at personal responsibility, but they all fall back on how we have to keep people in their homes, and how we have to punish these horrible predatory lenders…

predatory lending? i’m sure a lot of lenders put guns to people’s heads and told them they had to sign the dotted line… you know what – if someone is dumb enough to buy stuff they can’t afford b/c they “wanted” to belive the BS they got fed by teh lenders – they deserve what they get.
[/quote]

Why would the bank need to put a gun to their head when they’re *offering* a 125% negatively amortizing 1yr ARM with payments half their rent, and the cash back to buy a new car?

If you have any doubts, your realtor will tell you how RE only goes up (with the NAR propaganda to prove it), the builder will throw in granite countertops if you buy today (and will conveniently provide a banker to “streamline” your loan). Your broker will assure you that stated-income isn’t lying, “everyone is doing it!”. What about the ARM, aren’t those risky, you ask… Not according to the Fed chairman, in fact you’d be a fool not to get an ARM…

You have to realize that the bailouts are NOT designed to save the poor homeowners, they’re designed to save the banks and overall financial system.

In the decades before the bubble, foreclosures spread misery to plenty of unfortunate people who weren’t overextended, but lost their homes to job loss, medical bills, etc. Do you recall any major gov’t programs to help them? No, because the lenders could sell the property to recoup the principal. Now that the lenders are on the hook, homeowners need rescuing!

Sure, there are alot of people who did not show personal responsibility and bought tons of crap they couldn’t afford, but “poor” people have always wanted more, especially the opportunity to buy a house. If the bank gives them the oppportunity, they’re going to take it. Add to that all the first time buyers suckered into purchasing at the top & the use of HELOC’s as free money.

Both parties are culpable, and I would argue that the banks, who ostensibly make it there business to manage risk, should take the most blame.

For instance, what would you do in this situation:

Let’s say you owned a late model luxury car worth ~30k. You put an ad in the paper, listing the car at 33k. and three people responded. The first offers 30k in cash. The second is willing to offer full price, but can only put down 15k in cash, and asks that you to carry the note for 3 years @ 6%, s/he is gainfully employed with good credit. The third is a teenager, who just has to have your “dope ride”. s/he is working at the burger barn part-time and has saved almost $500 over the summer! s/he can afford $100 per month as a payment.

Do you;
A) Take the 30k cash and run.
B) Take half the value in cash, and get a 10% premium, plus interest from the guy who has some skin in the game.
C) Sell it to the teenager for 35k, with a 5k cash rebate (to get a phat stereo system), plus 3k in fees which will be rolled into the loan. Write up your genius 125% ltv, teaser loan (interest only, neg-am, spread over 50 years). Using the teenagers stated income from burger barn – 120k/yr and 550 FICO score. To really make qualifying E-Z, offer no payments for the first 3 months, then a low $99 for the next year. Include fine print that the loan will reset thereafter at a 12% subprime rate and corresponding $500/mo payment. Sit back and watch the dough roll in, confident in knowing that you can always repossess the car to recoup your money in case of an unlikely default.

[cooperthedog]

[quote=23109VC]true – life is not fair. but one would hope that someone in gov’t, would stand up and say “hey, you know what – if you took out a loan on a $750,000 house, lied bout your income and claimed you made $300k/year when in reality you made about $50k – and now you can’t afford the house b/c your teaser rate is up and the neg am arm has reset – TOUGH $HIT”

I’ve heard a few people hint at personal responsibility, but they all fall back on how we have to keep people in their homes, and how we have to punish these horrible predatory lenders…

predatory lending? i’m sure a lot of lenders put guns to people’s heads and told them they had to sign the dotted line… you know what – if someone is dumb enough to buy stuff they can’t afford b/c they “wanted” to belive the BS they got fed by teh lenders – they deserve what they get.
[/quote]

Why would the bank need to put a gun to their head when they’re *offering* a 125% negatively amortizing 1yr ARM with payments half their rent, and the cash back to buy a new car?

If you have any doubts, your realtor will tell you how RE only goes up (with the NAR propaganda to prove it), the builder will throw in granite countertops if you buy today (and will conveniently provide a banker to “streamline” your loan). Your broker will assure you that stated-income isn’t lying, “everyone is doing it!”. What about the ARM, aren’t those risky, you ask… Not according to the Fed chairman, in fact you’d be a fool not to get an ARM…

You have to realize that the bailouts are NOT designed to save the poor homeowners, they’re designed to save the banks and overall financial system.

In the decades before the bubble, foreclosures spread misery to plenty of unfortunate people who weren’t overextended, but lost their homes to job loss, medical bills, etc. Do you recall any major gov’t programs to help them? No, because the lenders could sell the property to recoup the principal. Now that the lenders are on the hook, homeowners need rescuing!

Sure, there are alot of people who did not show personal responsibility and bought tons of crap they couldn’t afford, but “poor” people have always wanted more, especially the opportunity to buy a house. If the bank gives them the oppportunity, they’re going to take it. Add to that all the first time buyers suckered into purchasing at the top & the use of HELOC’s as free money.

Both parties are culpable, and I would argue that the banks, who ostensibly make it there business to manage risk, should take the most blame.

For instance, what would you do in this situation:

Let’s say you owned a late model luxury car worth ~30k. You put an ad in the paper, listing the car at 33k. and three people responded. The first offers 30k in cash. The second is willing to offer full price, but can only put down 15k in cash, and asks that you to carry the note for 3 years @ 6%, s/he is gainfully employed with good credit. The third is a teenager, who just has to have your “dope ride”. s/he is working at the burger barn part-time and has saved almost $500 over the summer! s/he can afford $100 per month as a payment.

Do you;
A) Take the 30k cash and run.
B) Take half the value in cash, and get a 10% premium, plus interest from the guy who has some skin in the game.
C) Sell it to the teenager for 35k, with a 5k cash rebate (to get a phat stereo system), plus 3k in fees which will be rolled into the loan. Write up your genius 125% ltv, teaser loan (interest only, neg-am, spread over 50 years). Using the teenagers stated income from burger barn – 120k/yr and 550 FICO score. To really make qualifying E-Z, offer no payments for the first 3 months, then a low $99 for the next year. Include fine print that the loan will reset thereafter at a 12% subprime rate and corresponding $500/mo payment. Sit back and watch the dough roll in, confident in knowing that you can always repossess the car to recoup your money in case of an unlikely default.

[cooperthedog]

[quote=23109VC]true – life is not fair. but one would hope that someone in gov’t, would stand up and say “hey, you know what – if you took out a loan on a $750,000 house, lied bout your income and claimed you made $300k/year when in reality you made about $50k – and now you can’t afford the house b/c your teaser rate is up and the neg am arm has reset – TOUGH $HIT”

I’ve heard a few people hint at personal responsibility, but they all fall back on how we have to keep people in their homes, and how we have to punish these horrible predatory lenders…

predatory lending? i’m sure a lot of lenders put guns to people’s heads and told them they had to sign the dotted line… you know what – if someone is dumb enough to buy stuff they can’t afford b/c they “wanted” to belive the BS they got fed by teh lenders – they deserve what they get.
[/quote]

Why would the bank need to put a gun to their head when they’re *offering* a 125% negatively amortizing 1yr ARM with payments half their rent, and the cash back to buy a new car?

If you have any doubts, your realtor will tell you how RE only goes up (with the NAR propaganda to prove it), the builder will throw in granite countertops if you buy today (and will conveniently provide a banker to “streamline” your loan). Your broker will assure you that stated-income isn’t lying, “everyone is doing it!”. What about the ARM, aren’t those risky, you ask… Not according to the Fed chairman, in fact you’d be a fool not to get an ARM…

You have to realize that the bailouts are NOT designed to save the poor homeowners, they’re designed to save the banks and overall financial system.

In the decades before the bubble, foreclosures spread misery to plenty of unfortunate people who weren’t overextended, but lost their homes to job loss, medical bills, etc. Do you recall any major gov’t programs to help them? No, because the lenders could sell the property to recoup the principal. Now that the lenders are on the hook, homeowners need rescuing!

Sure, there are alot of people who did not show personal responsibility and bought tons of crap they couldn’t afford, but “poor” people have always wanted more, especially the opportunity to buy a house. If the bank gives them the oppportunity, they’re going to take it. Add to that all the first time buyers suckered into purchasing at the top & the use of HELOC’s as free money.

Both parties are culpable, and I would argue that the banks, who ostensibly make it there business to manage risk, should take the most blame.

For instance, what would you do in this situation:

Let’s say you owned a late model luxury car worth ~30k. You put an ad in the paper, listing the car at 33k. and three people responded. The first offers 30k in cash. The second is willing to offer full price, but can only put down 15k in cash, and asks that you to carry the note for 3 years @ 6%, s/he is gainfully employed with good credit. The third is a teenager, who just has to have your “dope ride”. s/he is working at the burger barn part-time and has saved almost $500 over the summer! s/he can afford $100 per month as a payment.

Do you;
A) Take the 30k cash and run.
B) Take half the value in cash, and get a 10% premium, plus interest from the guy who has some skin in the game.
C) Sell it to the teenager for 35k, with a 5k cash rebate (to get a phat stereo system), plus 3k in fees which will be rolled into the loan. Write up your genius 125% ltv, teaser loan (interest only, neg-am, spread over 50 years). Using the teenagers stated income from burger barn – 120k/yr and 550 FICO score. To really make qualifying E-Z, offer no payments for the first 3 months, then a low $99 for the next year. Include fine print that the loan will reset thereafter at a 12% subprime rate and corresponding $500/mo payment. Sit back and watch the dough roll in, confident in knowing that you can always repossess the car to recoup your money in case of an unlikely default.

[ucodegen]

@DaCounselor

And what is better for me, I ask? Is is better to have my neighbor and his family stay in the home pursuant to a mod, or would I rather he go into foreclosure with the house ultimately sitting empty and waiting to become an REO fire sale comp-killer. Again, not really a close call as to which is better for me.

You are assuming that the re-assessment on the neighbor’s house does not affect the comps.. but it will indirectly set the ‘new price’. The new price will be based on affordable income whether people are kept in their house and we create a moral hazard by doing so or allow the market to adjust and have people who really can afford the house. Do you want someone who can barely afford the house kept in the house, but because they can barely afford it, let the house get run down? Or do you want to go through the foreclosure and have the price drop a bit.. but the people coming in can really afford and maintain the property?

To the question previously.. in order
A, B, C .. but C only if I really have to. If I have to repossess the car, it will probably not look anything like what I sold it as. The springs will probably be cut to lower it, suspension arms bent because the car rides just off the jounce stops, bottom scraped up because of suspension bottoming out, interior cut up to get the crazy boom boxes/speaker assemblies put in, engine trashed because they didn’t bother to make sure oil and coolant levels maintained… etc. There may also be several dents if it didn’t get wrecked.

[ucodegen]

@DaCounselor

And what is better for me, I ask? Is is better to have my neighbor and his family stay in the home pursuant to a mod, or would I rather he go into foreclosure with the house ultimately sitting empty and waiting to become an REO fire sale comp-killer. Again, not really a close call as to which is better for me.

You are assuming that the re-assessment on the neighbor’s house does not affect the comps.. but it will indirectly set the ‘new price’. The new price will be based on affordable income whether people are kept in their house and we create a moral hazard by doing so or allow the market to adjust and have people who really can afford the house. Do you want someone who can barely afford the house kept in the house, but because they can barely afford it, let the house get run down? Or do you want to go through the foreclosure and have the price drop a bit.. but the people coming in can really afford and maintain the property?

To the question previously.. in order
A, B, C .. but C only if I really have to. If I have to repossess the car, it will probably not look anything like what I sold it as. The springs will probably be cut to lower it, suspension arms bent because the car rides just off the jounce stops, bottom scraped up because of suspension bottoming out, interior cut up to get the crazy boom boxes/speaker assemblies put in, engine trashed because they didn’t bother to make sure oil and coolant levels maintained… etc. There may also be several dents if it didn’t get wrecked.

[ucodegen]

@DaCounselor

And what is better for me, I ask? Is is better to have my neighbor and his family stay in the home pursuant to a mod, or would I rather he go into foreclosure with the house ultimately sitting empty and waiting to become an REO fire sale comp-killer. Again, not really a close call as to which is better for me.

You are assuming that the re-assessment on the neighbor’s house does not affect the comps.. but it will indirectly set the ‘new price’. The new price will be based on affordable income whether people are kept in their house and we create a moral hazard by doing so or allow the market to adjust and have people who really can afford the house. Do you want someone who can barely afford the house kept in the house, but because they can barely afford it, let the house get run down? Or do you want to go through the foreclosure and have the price drop a bit.. but the people coming in can really afford and maintain the property?

To the question previously.. in order
A, B, C .. but C only if I really have to. If I have to repossess the car, it will probably not look anything like what I sold it as. The springs will probably be cut to lower it, suspension arms bent because the car rides just off the jounce stops, bottom scraped up because of suspension bottoming out, interior cut up to get the crazy boom boxes/speaker assemblies put in, engine trashed because they didn’t bother to make sure oil and coolant levels maintained… etc. There may also be several dents if it didn’t get wrecked.

[ucodegen]

@DaCounselor

And what is better for me, I ask? Is is better to have my neighbor and his family stay in the home pursuant to a mod, or would I rather he go into foreclosure with the house ultimately sitting empty and waiting to become an REO fire sale comp-killer. Again, not really a close call as to which is better for me.

You are assuming that the re-assessment on the neighbor’s house does not affect the comps.. but it will indirectly set the ‘new price’. The new price will be based on affordable income whether people are kept in their house and we create a moral hazard by doing so or allow the market to adjust and have people who really can afford the house. Do you want someone who can barely afford the house kept in the house, but because they can barely afford it, let the house get run down? Or do you want to go through the foreclosure and have the price drop a bit.. but the people coming in can really afford and maintain the property?

To the question previously.. in order
A, B, C .. but C only if I really have to. If I have to repossess the car, it will probably not look anything like what I sold it as. The springs will probably be cut to lower it, suspension arms bent because the car rides just off the jounce stops, bottom scraped up because of suspension bottoming out, interior cut up to get the crazy boom boxes/speaker assemblies put in, engine trashed because they didn’t bother to make sure oil and coolant levels maintained… etc. There may also be several dents if it didn’t get wrecked.

[Author]

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