The Subsidizing of Bad Judgment
Posted: Wednesday, March 04, 2009
by Ray Wilkinson
Kids Water Shoes
People are upset about the stimulus and bank rescue plans, saying that they don't think it's right that they have to fund the overzealous pursuit of greed by corporate America. The fact is that most of these banks and financial institutions have gotten into trouble because of the losses they are taking on loans they never should have made. The same people, however, are cheering the news that the government is looking into subsidizing bad mortgage loans before they go into delinquency. The funny thing is, at the heart of it, the same root cause is to blame and it is not corporate greed. It is the greed of the American buying public.
Yes, there are those out there who were taken advantage of by unscrupulous and fraudulent agents and lenders. Yes, there are otherwise responsible and hard working people who have fallen into difficult times despite their best efforts at prevention. These people do need, and deserve, our help and protection. However, I would be shocked, based on my experience, if this was more than a minority of the current and pending foreclosures and delinquencies. The media has told many biased and slanted sob stories, but if you ask questions and look between the lines, the real story is all too clear. There are not as many true victims as the media would have you believe.
The only reason for bailing these irresponsible home owners out is that the results of their actions devalues the homes of their responsible neighbors d ue to the fire sale prices a lender will sell for to get the home off their books. However, the market downturn is going to be painful, period, and people need to just stay put for a while. We can get rid of the deadwood and when the housing market comes back, it could come back on stronger and more stable footing. If homeowners stay put for the next 2-3 years, they will see the benefits of the upswing and not be in the hole.
If it is wrong to enable irresponsible behavior, then it is wrong- end of story. It does not matter whether the culprit is a corporation, organization, or individual. You cannot "save" one group while condemning the others. It is up to ALL of us to display responsible behavior and to take reasonable actions to safeguard our individual and collective future.
-Laura Bramble
http://www.politicalsimpleton.com/RED_MENACE.html
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Top-level comments on this article: (4 total)I couldn't agree more...
When are people going to look at what they NEED instead of what they want? What are they teaching their children?
I'm sorry, I have to completely disagree with your assumptions here. The vast majority of people don't understand the complexities of mortgages enough to make good decisions. When a loan officer/mortgage broker approves their mortgage, they believe that means they can somehow afford it.I am not an uneducated consumer. I bought a house well within my budget range in the fall of 2000. Almost immediately after purchase, we began to be bombarded with calls, mail and email from mortgage brokers insisting that the best financial decision was to refinance our home with them. All insisted that there were no upfront costs... not ONE of them ever disclosed that the costs would instead be rolled back into my new loan. All of them insisted that the escrow on my account could be lowered. Eventually, after 9/11, we were indeed convinced to refinance and it was a horrible experience. They lied about the closing costs, they lied about the payment amount by underestimating our escrow, they lied about the number of payments (long story there). In short, one of the most reputable mortgage brokerages in the country at the time - LIED ABOUT EVERYTHING, just to get us to sign off on the note. When I asked questions on closing day about what I thought were inconsistencies in the paperwork, they lied again and told me I just didn't understand what I was looking at and there wasn't anything to worry about. We were fortunate that our mortgage was sold to Wells Fargo within 2 months and they helped us get everything on track. I could be one of those statistics...I am not the only one with a story like this. I had friends who DID lose their house and have to file bankruptcy. One of the biggest factors was an unscrupulous mortgage broker who lied about their payment amount by underfunding their escrow. By the time it was discovered, it was a year later and their mortgage was already in the hands of another company.Don't tell me that it's a small percentage of people who were genuinely ripped off - I know too many people who were flat out lied to...The vast majority of people don't understand the complexities of mortgages enough to make good decisions.------------------------------------------------------------------------------------------------------------------Than they deserve to get screwd! Who in their right mind would sign their life away without knowing the facts? Stupid people that who!!! If your friends didn't understand than they should got a friend, co-worker or lawyer to help them. I'm sorry, I'm calling BULL SH*T on that. No excuse for stupidity but yet somehow I'm picking up the tab. Go figure.
I am sorry you had a negative experience with your refinance, however, it was the loan officer, not the lender, who took advantage of you. The fact that they cold called you should have been your first tip off- the good, reputable loan officers do business primarily by referral and do not have to cold call anyone. They do a lot of business because they treat people right and Realtors and their previous clients who have done business with them recommend them to their family, friends, and clients. Like any big transaction or service, a person should always ask around for a loan officer who others have used and had a good experience with.I am in the metro Atlanta area, a very busy area for real estate. I can't say that there were no loan officers who were liars or frauds, because there were. However, being a Realtor who was active in the industry and who networked extensively for 6 years, as well as a loan officer for an additional 2, I can tell you that those types of loan officers were few and far between. In addition, the Realtors and other loan officers knew exactly who they were and word traveled fast. Most of the offenders were niche market lenders dealing with niche market real estate agents who had clients they encouraged to stay within the niche in order to avoid getting taken advantage of by "outsiders".You are painting a very broad picture with a very small brush. Before you trash the members of an industry, you should get to know situations other than those of your and your friends. At this point in time, the vast majority of people who were treated fairly are not making a big deal out of their situation because they are not going to get sympathy or government dollars for it.
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