subprime-mortgage meltdown; Is the default due to morgage companies or the borrower?

[sunrise]

I think some people completely skipped a few steps and only heard what they wanted to hear from lenders. Oh, and I work for one of the biggest banks in the country so I've seen first hand what people were willing to do to get the loan they want.

Bingo! most people just heard a monthly payment value of x vs y and chose the cheapest one.

sunrise

Do not forget about those 110 to 125% of the home value loans! One could buy a fixer upper and include all of the cost for repairs all rolled into one loan or include all of your outstanding debt in your home mortgage.

[myjohnson]

Oh, and I work for one of the biggest banks

That does explain a lot.

[Kiovo]

That does explain a lot.

Ha, coming from the lawyer The only reason I mentioned I work for a bank is to show I see both sides of the story. I still stand where I stand because I did the responsible thing and got a fixed rate and brought a house within my means.

It goes back to the saying- if it's too good to be true, then it probably is.

[Darbex]

Honestly I think you are seeing only one side of the story by both of your and your husbands comments. And working for the bank depending on your capacity with that institution you should have seen some of the practices used by the banks. I have banker friends that are/were in senior management positions and they tell me a lot of stories about what some of the largest banks in the country were doing. This is why I have a more overall view that the issue wasnt just the people but all three. I do not believe that you have to put down x% of the value to prove your worth in paying. I personally set our mortgage to be 100% fixed because I knew that the interest rates that I was getting on the note was so low and that I could invest the money I had at a rate much better than the decrease in interest rates and payments would save me. But not everyone knows this and you will not read this information in a mortgage contract.

[Kiovo]

I do not believe that you have to put down x% of the value to prove your worth in paying. I personally set our mortgage to be 100% fixed because I knew that the interest rates that I was getting on the note was so low and that I could invest the money I had at a rate much better than the decrease in interest rates and payments would save me. But not everyone knows this and you will not read this information in a mortgage contract.

Okay so how did you come across that information? Did you research it, someone told you? My main point is people did not do enough researching and basic thinking before they signed for their loan. I know what the banks were doing, the bank I was working for when this whole mess was going on was one of the hardest hit banks. People wanted to get approve for loans no matter what the cost. Did the bankers tell them what they wanted to hear in order to get their bonuses? Yes, they did. These sub-prime loans and ARMs were given out to adults. I would sincerely hope most adults know how to read, do basic math, and have a little common sense. At the end of the day blame who you want to blame, but no one put a gun to your head and said, sign these papers or I'm gonna shoot you. (I'm not saying you literally) People were not honest with themselves and relied on mortgage brokers and loan officers to tell them what they could and couldn't afford.

[jeebus]

Honestly I think you are seeing only one side of the story by both of your and your husbands comments.

No, I think I see all sides:

1. smart consumers who got fixed loans but didn't lose their jobs,
2. smart consumers who got fixed loans but did lose their jobs because of the recession,
3. ignorant consumers that got ARM's and foreclosed when it indexed, helping cause the recession that created the #2 consumer above that I list,
4. the banking industry's gamble with high risk loans and all that it encompasses from derivative traders to commission based loan officers to politicians that found ways to profit no matter the outcome.

Which side is it you feel we're (I'm) missing? To me the only victims here are those in the #2 group. Granted, there are a select few in the #3 category that were truly swindled. However, for us to all agree that the majority of the #3 group are victims is to admit that as a majority we Americans are too irresponsible to be left to our own devices, and DO need complete oversight of the government in our daily lives to keep total anarchy from happening - i.e. we need socialism. I don't believe that. That's what the current administration would have you believe though.

Instead, I believe that we became a nation of individuals who traded our sense of ethics for that of entitlement. Cable tv and the internet have brainwashed this country into thinking that you must have all there is to own in life immediately, and that there is no more need to earn it. Why is it that most shows are now about people being famous, just for being famous? We became a country that went from 90% good and 10% services to the exact opposite. What is it we really produce anymore, besides produce, livestock, specific tech-based equipment, and cars?

I see the effects of this EVERY day when I make emergency calls to people's homes. I've seen so many that have chosen to live in a 300 dollar a month roach infested, ultra high violent crime apartment complex, yet will have a 50+ inch flat screen tvs, XBOX360 or PS3, smart phones for the whole family, AT&T U-Verse, among other luxuries. I won't even get into the subject of vehicles as that has become the number one status symbol for adults in this nation, proven by everyone's desire to drive a luxury import coupe/sedan, or brand new four door pick-up - ALL with 20" chrome rims, leather seats, and custom stereos to boot. These are the same people that when ARM's came around and the advertisement was that token line you used to hear from a used car salesman of: "No Job? No credit? Bad Credit? No Problem!" they lined right up not once having the inner-fortitude to question whether they were ready to own a home.

Now.. The banking industry. Are the evil? Sure. But couldn't we make any free market business out to make a profit if we wanted to find a scape-goat bad enough? Instead of the banking industry, which did have its cheats and crooks, I would rather look to who gave the banking industry the green light to start in the first place: the Clinton Administration in 1999. When the Bush Administration tried to reign in Fannie Mae in 2003, who was there to stop it? Ultra liberal Democrat Barney Frank.

I personally set our mortgage to be 100% fixed because I knew that the interest rates that I was getting on the note was so low and that I could invest the money I had at a rate much better than the decrease in interest rates and payments would save me. But not everyone knows this and you will not read this information in a mortgage contract.

But not everyone needs to know this. All that anyone financing a home needs to know is how much the total monthly payment after insurance and taxes will be. That's easy to estimate with a home sale price, taxes for that area, insurance quote, and a fixed APR. It is not the job of the lender to hold the buyers hand to figure these things out no more than it would be the responsibility of a gun store teaching someone how to load, fire, clean a weapon - or a car dealer teaching someone how to change any of the wearable parts on a new car when they purchase it. Its up to the buyer to seek this information. And whatever happened to "buyer beware"!?

This comes down to (the lack of) personal responsibility. Had we needed our hand held at any point in our nation before this, we would have been at an even greater jeopardy of failure.

[myjohnson]

100% consumer's fault.

The government might of started the snowball but ultimately the borrowers' are the ones that took out the loans - the banks cashed in, I don't fault them for that.

That's seems one sided.

I list it as follows:

1. The government - The government is charged with protecting Americans and helping promote our society and they failed.
2. Banks - The banks got to greedy although I think it was created by the government but their greed was still too much even for a staunch capitalist like me.
3. Consumers - The American people should have paid more attention but as I stated many were lied to by the banks and government

Me and Darbex been saying this whole time that everyone took part in what's happening.

[Kiovo]

Me and Darbex been saying this whole time that everyone took part in what's happening.

The question sunrise asked and the topic of the thread was "Is the default due to mortgage companies or the borrower?" And I am saying it's ultimately the borrowers' fault, but that's just my personal opinion.

[ImaGuyGeek]

I ultimately agree that it's the consumers fault. I just can't bring myself to make excuses for people's stupidity. Too many people gambled, lied or were just plain stupid and they got bitten in the A$$.

I also can't make excuses for people who convinced themselves that the next 15/30 years were going to be all sunshine and lollipops rather than being realistic and planning for a rainy day. Even if you're not gaming the system, you will have bad times. Everyone needs to be responsible for themselves and have a back up plan. Save for the bad times, know what unemployment will pay, have health insurance. If you don't have enough money to live income free for 6 months, that should be your #1 priority. Not getting your nails done or buying a new system for your car or the latest game console.

[Kiovo]

I ultimately agree that it's the consumers fault. I just can't bring myself to make excuses for people's stupidity. Too many people gambled, lied or were just plain stupid and they got bitten in the A$$.

I also can't make excuses for people who convinced themselves that the next 15/30 years were going to be all sunshine and lollipops rather than being realistic and planning for a rainy day. Even if you're not gaming the system, you will have bad times. Everyone needs to be responsible for themselves and have a back up plan. Save for the bad times, know what unemployment will pay, have health insurance. If you don't have enough money to live income free for 6 months, that should be your #1 priority. Not getting your nails done or buying a new system for your car or the latest game console.

+1
what he said

[Darbex]

I am getting off this topic because its not getting through and I will never convince you otherwise. You two are applying some anecdotal evidence to the whole thing. I am not saying consumers werent at fault. If you look, I said they were at fault but what I protest to in your arguements is the fact that you all make it seem like the banks were not at fault or minimally at fault and that the government had no dog in this fight. To me those are factually incorrect they all had in my opinion equal share of the blame. In my opinion if you ask people in finance, accounting, and lawyers (who are not just money grabbing) what happened you will get the real story.

[Kiovo]

I'm just going to have to agree to disagree with you on this subject!

I am getting off this topic because its not getting through and I will never convince you otherwise. You two are applying some anecdotal evidence to the whole thing. I am not saying consumers werent at fault. If you look, I said they were at fault but what I protest to in your arguements is the fact that you all make it seem like the banks were not at fault or minimally at fault and that the government had no dog in this fight. To me those are factually incorrect they all had in my opinion equal share of the blame. In my opinion if you ask people in finance, accounting, and lawyers (who are not just money grabbing) what happened you will get the real story.

The question sunrise asked and the topic of the thread was "Is the default due to mortgage companies or the borrower?" And I am saying it's ultimately the borrowers' fault, but that's just my personal opinion.

We just have different point of views on the topic. I'm not trying to sway any votes, I'm just stating my opinion to the question that was asked.

[ImaGuyGeek]

I am getting off this topic because its not getting through and I will never convince you otherwise. You two are applying some anecdotal evidence to the whole thing. I am not saying consumers werent at fault. If you look, I said they were at fault but what I protest to in your arguements is the fact that you all make it seem like the banks were not at fault or minimally at fault and that the government had no dog in this fight. To me those are factually incorrect they all had in my opinion equal share of the blame. In my opinion if you ask people in finance, accounting, and lawyers (who are not just money grabbing) what happened you will get the real story.

I'm with you to some extent Darbex.

The Government said hey, here's a gun and gave it to the Banks.
The banks said hey, thanks for the gun, lets load it and see if anyone pulls the trigger.
The consumers eagerly snatched up that gun and pulled the trigger without thinking twice. The bullet went straight into their head then hit us innocent bystanders.

They were all irresponsible but at the end of the day, the consumers pulled the trigger.

[jeebus]

I'm with you to some extent Darbex.

The Government said hey, here's a gun and gave it to the Banks.
The banks said hey, thanks for the gun, lets load it and see if anyone pulls the trigger.
The consumers eagerly snatched up that gun and pulled the trigger without thinking twice. The bullet went straight into their head then hit us innocent bystanders.

They were all irresponsible but at the end of the day, the consumers pulled the trigger.

Yup. This would be no different than blaming gun makers for the murder rate.