You know, it can be argued both ways… Victim/Non Victim. Bottom line is A LOT of people got hurt here, and A LOT of people were duped and A LOT of people just did what they had to do to secure a piece of land with their name on it and hoped the home would still appreciate so they could refinance into something better when the time came.
Some people DID lie about their income (some people grossly lied, some people just padded it a little). What matters is that the EXPERTS (CEO’s) should have seen this coming. It was CEO’s who created these lousy loan programs and touted them to the hilt, and did all they could to suck people in. The Brokers may have had some liability, however, if they hadnt done what the banks encouraged them to do, they would have gone out of business because the next broker down the road would be getting all the business.
Consumers ALL AROUND got screwed and tempted and it was by the Leader of the Mortgage industry (Countrywide to name one). It was one big mess, domino effect. Now Americans have lost their investments and their credit ratings.
I am personally one who bought honestly and didnt have any money down, but bought in a hurry before the prices went up any further. I had to choose between short selling my house and starting from scratch again- and just bending over and taking it up the tail pipe that I GOT duped out of my investment. My best friend put down $200K… and because of the Lenders reckless lending habits, she has lost it ALL.
Its a pretty rotten feeling, no matter whose fault it is by the time the courts figure it all out. We all got screwed if you ask me, even those that lied- most of them did it under duress and out of desperation. There are some downright non victims but not in most cases.
If they want to refinance they can refinance. This is just people who made bad decisions looking for someone to bail them out. I say let them take their lumps and the people who saved and planned and can actually afford a house can step in and finally buy one.
These aren’t people who had no jobs and bought a McMansion. These are people who tried to lower payments on existing loans. I could have papered the entire state of Texas, Ca, and Florida with all the ‘offers’ I received in the mail. Plus all the phone calls?
There are a lot of elderly people who refinanced what little they had left in their mortgage to a ‘lower payment’ that ballooned up in a year. PLUS an early payment penalty that made it impossible for them to refinance.
People who qualified for standared loans were bascially pushed into these subprime because it paid the brokers better. The brokers told these buyers that these loans were all that was available to them.
These people were convinced by an expert (who should be held accountable) that this was the best move for them.
You’re an expert. If you talked a homeowner into cancelling an HO policy to move them to a more expensive policy that paid less benefits because your commission was higher, who’s E&O insurance would be paying out?
Not everyone caught in an ARM is an $8 an hour worker trying to buy a $500K home.
No, but everyone caught in a toxic mortgage is someone who didn’t read their closing documents. It’s all right there, whether lenders and brokers disguised it as something else or not (and if they did, I am NOT excusing their legal liability in doing so but that does NOT NOT NOT excuse the borrower from making payments). I read every page of my 150 pages of closing documents. Took 6 hours for me to close but I knew EVERY term of the loan that was made to me – EVERY SINGLE TERM. No reason why anyone else can’t do the same and no pity from me if they didn’t.
I’ll assume you’re not a senior citizen. We deal with a large number of them in our personal lines department. They believe that reading/explaining is what we get paid for. A lot of them are actually incapable of reading the contracts and understanding them. And I know that if we fail to do our job properly, WE are going to be the ones to ‘make it right’. Why should mortgage brokers be any different?
I hope your parents never become the victim of a scam. They won’t get any help from you.
And even when you read the ‘fine print’ the translation can be ‘slanted’ to misrepresent what it really says.
I have no sympathy or desire to help someone making minimum wage that took on a $500K home. I do, however, feel that brokers have some responsiblity for the average person trying to do the right thing that got scammed by them.
I agree with Dawn – not all the homeowners who now find themselves in this mess are paupers trying to live in mansions. The loan underwriters brought this on themselves. Not everyone is able to understand the legal-babble in these documents, especially if a greedy broker is jamming it down their throats. And guess who is AGAIN going to have to pay to BAIL OUT the LENDERS? You are! I am! Just like the S&L mess !
HOW RIGHT YOU WERE! THE RICH GOT RICHER THE POOR GOT POORER & THE MIDDLE CLASS HAS ALL BUT DISAPPEARED! TAKE A LOOK BACK…BANKS SHOULD SUFFER FOR THIER ACTIONS JUST LIKE THE BORROWERS ARE SUFFERING NOW!! SHAME ON OUR GOVERNMENT FOR ITS LOUSY CONSUMER PROTECTION LAWS. SHAME ON THOSE WHO BLAME THE VICTIM & SHAME ON US FOR NOT TAKING A STANCE AGAINST CORPORATE GREED AND FRAUD! TAXPAYERS’MONEY BAILED OUT THE BANKS. A BETTER USE WOULD HAVE BEEN TO HAVE THE GOVERNMENT REFINANCE THE LOANS AT THE HISTORICAL LOW RATES. THAT WOULD HAVE BEEN A WIN WIN SITUATION: BANKS WOULD HAVE GOTTEN THEIR MONEY AND HOMEOWNERS WOULD HAVE RECEIVED AFFORDABLE PAYMENTS. NO ONE SHOULD HAVE GOTTEN A FREE RIDE.
The people who have been true victims are the ones that are going to lose.
The ones that knew what they were doing are going to find a way to get the Gov’t to pay their mortgage, or go back to where they were with the idea that ‘it was great while it lasted’.
The people who brought this mess to us are going to point at the people THEY put on the streets and complain that the road to their mansion neighborhood is declining in value.
And, of course, the multi-million bonus guys are probably out of the country already.
My parents contract with an attorney in large scale, large money transactions such as home purchases. They do not use the victim mentality to try and squirm their way out of contracts. Everyone is not a victim of someone. There are very few TRUE victims. I’m very sorry but the bottom line is if you cannot understand the terms of your contract you do 1 of 2 things – hire an attorney (or other person with a fiduciary responsibility to you such as accountant etc) to interpret for you or you DO NOT PROCEED WITH THE TRANSACTION.
About one thing you are correct, my parents would not get help from me as a victim of a scam – they know better than to get into that trouble in the first place. It is YOUR OWN FAULT if you believed the sales pitch that some used house salesman with no fiduciary responsibility to you told you about a transaction. TAKE RESPONSIBILITY FOR YOUR OWN LIFE AND QUIT LOOKING TO BLAME OTHERS FOR YOUR PROBLEMS!
Most of the people who were hurt were working people, like ourselves. I know of a couple who lost their home and the mortgage company put them in the street with their 3 small children. Now, their credit is so poor, they can’t even rent an apartment. Right now, they are living with different relatives just to try to make it.
Everyone wants their small piece of the “American Dream”. It is just unfortunate that some companies took advantage of this and left some truly honest people homeless, with extremely poor credit and with no easy, short term way out.
I am an escrow officer in Florida and witnessed closing after closing of very un professional mortgage professionals explain to their clients, not to worry about the terms they would be refinancing in a year. That year of course is long gone and I am sure the majority of these folks are losing their homes. These are everyday workers that trust in the “professionals” giving them advice. I applaud caveat for reading his documents I wonder if that wasn’t the 6 hour closing I had a few years ago. It actually is not neccessary, as lenders are suppose to have the documents available to you 24 hours in advance. That is the regulation, but again how many folks know that? I guess not many.That is why the title companies are usually given the fault, when it si actually the lender that decides when documents are given. I can only say ask questions, call around and if in doubt ask the title company, or attorney, they can usually give you where to turn to, but always ask before you sign.
WASHINGTON (CNN) — The biggest change in the nation’s banking system since the Great Depression became law Friday, when President Bill Clinton signed a measure overhauling federal rules governing the way financial institutions operate.
“This legislation is truly historic and it indicates what can happen when Republicans and Democrats work together in a spirit of genuine cooperation,” Clinton said at a White House signing ceremony. The event brought together the president and several Republican members of Congress who have been among Clinton’s sternest critics — a sign of the bipartisan support that eventually developed for the package.
Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial “supermarkets” selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years.
I have a fixed rate 6.25% mortgage and a few years ago I received an offer from Countrywide in the mail and called them on it. They were going to lower my rate to 6.15 and I only had to pay roughly 5,000 in fees for this great deal! There needs to be some sort of standardization in the mortgage industry so that you can compare loans. There are so many different ways to structure the loans and fees that its next to impossible to tell what you’re really getting.
Everyone had a hand in this mess…EVERYONE! Executives and “Professional investors” dreamed up these risky loan programs so that they could beef up their bottom line and satisfy the insatiable appetite of hedge fund/pension managers, securities brokers, and let’s not forget the greedy individual investor. The logic went that “property values will ALWAYS increase! After all God isn’t making any more land.” And while the “supply/demand” angel is rooted in logic but cheep financing threw a monkey wrench into the equation.
With cheep financing more people than ever before could afford to buy a house. As those buyers flowed into the market the supply of properties became scares, pushing up values. Furth more, cheep financing made it possible for people to buy more house than they otherwise could have. As a result loan amounts got bigger. But there were some people shut out of the market because they could not get financing due to a troubled credit history, lack of employment or otherwise. To keep the market rising and satisfy the demand of these “risky” borrowers a “subprime” market was created. And if you were an executive or securities investor this “subprime” market was great because the perceived risk of these borrowers translated into higher interest rates, which would ultimately lead to higher returns. The risk involved in the “higher returns” was diminished by rating agencies that gave these risky securities an “AAA” rating. This made the sale of these securities easy and further pushed up demand. As the demand increased loan underwriters were under pressure to produce more loans. In order to produce more loans they needed to loosen the underwriting guideline. As underwriting guidelines were loosened more buyers entered the real estate market adding to the momentum of appreciation.
It was all coming up roses! Values continued to increase, buyers continued to enter the market and builders were ramping up production.
UNTIL….The bottom fell out. As rates began to climb and adjustable loans began to reset borrowers that had homes began to struggle to make payments and because financing was becoming more expensive less buyers entered the market and those that did could not afford to purchase as much house as they once could. At this point the trend began to reverse. The borrowers that were struggling to make payments found themselves unable to sell or refinance due to declining values leaving foreclosure as the only exit strategy. Buyers were now having a more difficult time securing more expensive financing and sometimes decides to wait for prices to come down or exited the market all together. This caused inventories to build which accelerated the decline.
So while many people overstated income or otherwise committed fraud to secure financing in my opinion it is the executives and security brokers that drove the housing market into oblivion. Ultimately, causing investors to loose money, home owners to loose their homes and the American public to loose confidence in the financial system and the economy at large. The whole process was driven by GREED; pure unadulterated greed.
Yeah well if the scumball gave me the 150 pages of the agreement to read before the closing maybe I would not have this problem. You had your chance I did’nt, and I even tried to rescind on the closing day because I found out about Radon in the home and forged paper work after I signed and after the pressure to go to closing on a sunday without a lawyer, maybe I would not even try to get rid of this scam. There are millions of people who got the shaft from all the greedy investers and mortgage companys and banks who gave these mortgages counting on the government bailouts and collecting three times the value of the loan and then trying to take the home away from people and acting like the poor lenders are the victim.
The real problem is the lenders did not lend any money because it was the borrower that suplied the funding by pledging his labor
through the negotiable instrument.
The only real source and value is ones labor.
You know, it can be argued both ways… Victim/Non Victim. Bottom line is A LOT of people got hurt here, and A LOT of people were duped and A LOT of people just did what they had to do to secure a piece of land with their name on it and hoped the home would still appreciate so they could refinance into something better when the time came.
Some people DID lie about their income (some people grossly lied, some people just padded it a little). What matters is that the EXPERTS (CEO’s) should have seen this coming. It was CEO’s who created these lousy loan programs and touted them to the hilt, and did all they could to suck people in. The Brokers may have had some liability, however, if they hadnt done what the banks encouraged them to do, they would have gone out of business because the next broker down the road would be getting all the business.
Consumers ALL AROUND got screwed and tempted and it was by the Leader of the Mortgage industry (Countrywide to name one). It was one big mess, domino effect. Now Americans have lost their investments and their credit ratings.
I am personally one who bought honestly and didnt have any money down, but bought in a hurry before the prices went up any further. I had to choose between short selling my house and starting from scratch again- and just bending over and taking it up the tail pipe that I GOT duped out of my investment. My best friend put down $200K… and because of the Lenders reckless lending habits, she has lost it ALL.
Its a pretty rotten feeling, no matter whose fault it is by the time the courts figure it all out. We all got screwed if you ask me, even those that lied- most of them did it under duress and out of desperation. There are some downright non victims but not in most cases.
If they want to refinance they can refinance. This is just people who made bad decisions looking for someone to bail them out. I say let them take their lumps and the people who saved and planned and can actually afford a house can step in and finally buy one.
So basically this Wisconsin couple did not read the fine print of their mortgage deal.
But if their loan WAS a 5 -year fixed-rate deal, then surely they have every right to sue? And Chevy Chase doesn’t have a leg to stand on.
I have never driven a “high-interest investment vehicle.” I wonder if they come with diesel engines?
These aren’t people who had no jobs and bought a McMansion. These are people who tried to lower payments on existing loans. I could have papered the entire state of Texas, Ca, and Florida with all the ‘offers’ I received in the mail. Plus all the phone calls?
There are a lot of elderly people who refinanced what little they had left in their mortgage to a ‘lower payment’ that ballooned up in a year. PLUS an early payment penalty that made it impossible for them to refinance.
People who qualified for standared loans were bascially pushed into these subprime because it paid the brokers better. The brokers told these buyers that these loans were all that was available to them.
These people were convinced by an expert (who should be held accountable) that this was the best move for them.
You’re an expert. If you talked a homeowner into cancelling an HO policy to move them to a more expensive policy that paid less benefits because your commission was higher, who’s E&O insurance would be paying out?
Not everyone caught in an ARM is an $8 an hour worker trying to buy a $500K home.
No, but everyone caught in a toxic mortgage is someone who didn’t read their closing documents. It’s all right there, whether lenders and brokers disguised it as something else or not (and if they did, I am NOT excusing their legal liability in doing so but that does NOT NOT NOT excuse the borrower from making payments). I read every page of my 150 pages of closing documents. Took 6 hours for me to close but I knew EVERY term of the loan that was made to me – EVERY SINGLE TERM. No reason why anyone else can’t do the same and no pity from me if they didn’t.
I’ll assume you’re not a senior citizen. We deal with a large number of them in our personal lines department. They believe that reading/explaining is what we get paid for. A lot of them are actually incapable of reading the contracts and understanding them. And I know that if we fail to do our job properly, WE are going to be the ones to ‘make it right’. Why should mortgage brokers be any different?
I hope your parents never become the victim of a scam. They won’t get any help from you.
And even when you read the ‘fine print’ the translation can be ‘slanted’ to misrepresent what it really says.
I have no sympathy or desire to help someone making minimum wage that took on a $500K home. I do, however, feel that brokers have some responsiblity for the average person trying to do the right thing that got scammed by them.
I agree with Dawn – not all the homeowners who now find themselves in this mess are paupers trying to live in mansions. The loan underwriters brought this on themselves. Not everyone is able to understand the legal-babble in these documents, especially if a greedy broker is jamming it down their throats. And guess who is AGAIN going to have to pay to BAIL OUT the LENDERS? You are! I am! Just like the S&L mess !
HOW RIGHT YOU WERE! THE RICH GOT RICHER THE POOR GOT POORER & THE MIDDLE CLASS HAS ALL BUT DISAPPEARED! TAKE A LOOK BACK…BANKS SHOULD SUFFER FOR THIER ACTIONS JUST LIKE THE BORROWERS ARE SUFFERING NOW!! SHAME ON OUR GOVERNMENT FOR ITS LOUSY CONSUMER PROTECTION LAWS. SHAME ON THOSE WHO BLAME THE VICTIM & SHAME ON US FOR NOT TAKING A STANCE AGAINST CORPORATE GREED AND FRAUD! TAXPAYERS’MONEY BAILED OUT THE BANKS. A BETTER USE WOULD HAVE BEEN TO HAVE THE GOVERNMENT REFINANCE THE LOANS AT THE HISTORICAL LOW RATES. THAT WOULD HAVE BEEN A WIN WIN SITUATION: BANKS WOULD HAVE GOTTEN THEIR MONEY AND HOMEOWNERS WOULD HAVE RECEIVED AFFORDABLE PAYMENTS. NO ONE SHOULD HAVE GOTTEN A FREE RIDE.
The people who have been true victims are the ones that are going to lose.
The ones that knew what they were doing are going to find a way to get the Gov’t to pay their mortgage, or go back to where they were with the idea that ‘it was great while it lasted’.
The people who brought this mess to us are going to point at the people THEY put on the streets and complain that the road to their mansion neighborhood is declining in value.
And, of course, the multi-million bonus guys are probably out of the country already.
Okay, so if the borrowers rescind the loan, what happens? They get out from under the terms, and the bank gets its money back?
The borrowers don’t just get to keep the loaned funds!
My parents contract with an attorney in large scale, large money transactions such as home purchases. They do not use the victim mentality to try and squirm their way out of contracts. Everyone is not a victim of someone. There are very few TRUE victims. I’m very sorry but the bottom line is if you cannot understand the terms of your contract you do 1 of 2 things – hire an attorney (or other person with a fiduciary responsibility to you such as accountant etc) to interpret for you or you DO NOT PROCEED WITH THE TRANSACTION.
About one thing you are correct, my parents would not get help from me as a victim of a scam – they know better than to get into that trouble in the first place. It is YOUR OWN FAULT if you believed the sales pitch that some used house salesman with no fiduciary responsibility to you told you about a transaction. TAKE RESPONSIBILITY FOR YOUR OWN LIFE AND QUIT LOOKING TO BLAME OTHERS FOR YOUR PROBLEMS!
A lawsuit may be what the couple needs, but a class action suit is just the lawyer trying to make big bucks.
Terrie B,
Thank you for your eloquent explanation.
Most of the people who were hurt were working people, like ourselves. I know of a couple who lost their home and the mortgage company put them in the street with their 3 small children. Now, their credit is so poor, they can’t even rent an apartment. Right now, they are living with different relatives just to try to make it.
Everyone wants their small piece of the “American Dream”. It is just unfortunate that some companies took advantage of this and left some truly honest people homeless, with extremely poor credit and with no easy, short term way out.
I am an escrow officer in Florida and witnessed closing after closing of very un professional mortgage professionals explain to their clients, not to worry about the terms they would be refinancing in a year. That year of course is long gone and I am sure the majority of these folks are losing their homes. These are everyday workers that trust in the “professionals” giving them advice. I applaud caveat for reading his documents I wonder if that wasn’t the 6 hour closing I had a few years ago. It actually is not neccessary, as lenders are suppose to have the documents available to you 24 hours in advance. That is the regulation, but again how many folks know that? I guess not many.That is why the title companies are usually given the fault, when it si actually the lender that decides when documents are given. I can only say ask questions, call around and if in doubt ask the title company, or attorney, they can usually give you where to turn to, but always ask before you sign.
Clinton signs banking overhaul measure
November 12, 1999
WASHINGTON (CNN) — The biggest change in the nation’s banking system since the Great Depression became law Friday, when President Bill Clinton signed a measure overhauling federal rules governing the way financial institutions operate.
“This legislation is truly historic and it indicates what can happen when Republicans and Democrats work together in a spirit of genuine cooperation,” Clinton said at a White House signing ceremony. The event brought together the president and several Republican members of Congress who have been among Clinton’s sternest critics — a sign of the bipartisan support that eventually developed for the package.
Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial “supermarkets” selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years.
I have a fixed rate 6.25% mortgage and a few years ago I received an offer from Countrywide in the mail and called them on it. They were going to lower my rate to 6.15 and I only had to pay roughly 5,000 in fees for this great deal! There needs to be some sort of standardization in the mortgage industry so that you can compare loans. There are so many different ways to structure the loans and fees that its next to impossible to tell what you’re really getting.
Everyone had a hand in this mess…EVERYONE! Executives and “Professional investors” dreamed up these risky loan programs so that they could beef up their bottom line and satisfy the insatiable appetite of hedge fund/pension managers, securities brokers, and let’s not forget the greedy individual investor. The logic went that “property values will ALWAYS increase! After all God isn’t making any more land.” And while the “supply/demand” angel is rooted in logic but cheep financing threw a monkey wrench into the equation.
With cheep financing more people than ever before could afford to buy a house. As those buyers flowed into the market the supply of properties became scares, pushing up values. Furth more, cheep financing made it possible for people to buy more house than they otherwise could have. As a result loan amounts got bigger. But there were some people shut out of the market because they could not get financing due to a troubled credit history, lack of employment or otherwise. To keep the market rising and satisfy the demand of these “risky” borrowers a “subprime” market was created. And if you were an executive or securities investor this “subprime” market was great because the perceived risk of these borrowers translated into higher interest rates, which would ultimately lead to higher returns. The risk involved in the “higher returns” was diminished by rating agencies that gave these risky securities an “AAA” rating. This made the sale of these securities easy and further pushed up demand. As the demand increased loan underwriters were under pressure to produce more loans. In order to produce more loans they needed to loosen the underwriting guideline. As underwriting guidelines were loosened more buyers entered the real estate market adding to the momentum of appreciation.
It was all coming up roses! Values continued to increase, buyers continued to enter the market and builders were ramping up production.
UNTIL….The bottom fell out. As rates began to climb and adjustable loans began to reset borrowers that had homes began to struggle to make payments and because financing was becoming more expensive less buyers entered the market and those that did could not afford to purchase as much house as they once could. At this point the trend began to reverse. The borrowers that were struggling to make payments found themselves unable to sell or refinance due to declining values leaving foreclosure as the only exit strategy. Buyers were now having a more difficult time securing more expensive financing and sometimes decides to wait for prices to come down or exited the market all together. This caused inventories to build which accelerated the decline.
So while many people overstated income or otherwise committed fraud to secure financing in my opinion it is the executives and security brokers that drove the housing market into oblivion. Ultimately, causing investors to loose money, home owners to loose their homes and the American public to loose confidence in the financial system and the economy at large. The whole process was driven by GREED; pure unadulterated greed.
Yeah well if the scumball gave me the 150 pages of the agreement to read before the closing maybe I would not have this problem. You had your chance I did’nt, and I even tried to rescind on the closing day because I found out about Radon in the home and forged paper work after I signed and after the pressure to go to closing on a sunday without a lawyer, maybe I would not even try to get rid of this scam. There are millions of people who got the shaft from all the greedy investers and mortgage companys and banks who gave these mortgages counting on the government bailouts and collecting three times the value of the loan and then trying to take the home away from people and acting like the poor lenders are the victim.
The real problem is the lenders did not lend any money because it was the borrower that suplied the funding by pledging his labor
through the negotiable instrument.
The only real source and value is ones labor.