I could have easily fallen into the adjustable rate, and interest only mortgage scams

[NNN0LHI]

All it would have taken was a sharpie Realtor who prayed upon all the misconceptions I had been programed to believe through the years.

Like property values never go down. Yea, right. I would have believed that easily because that is all I knew.

Or a house is your best investment so you might as well go big and get the big returns when you sell it. Uh, huh.

All the Realtor would have had to have done was shown me some big beautiful roomy house that I knew in my heart that I couldn't really afford or need and they could have sold it to me. All they would have had to have said to me was don't worry about financing, we can work that out and I would have said lets go for it.

I think we are all susceptible to this stuff.

Don

[Bluebear]

1. Of course, Don. These people who snoot that people were "stupid" & don't deserve a hand

Would that everybody could be so sophisticated as they are.

[NMDemDist2]

2. sadly that is exactly what happened to the young woman who bought my PHX home

I often wonder about how she's doing.....

[Greyhound]

3. The day I meet a realtor that says "this is not a great time to buy", (s)he will

have my business for life.

[Gman]

4. I have an ARM

it's on my parent's house that I bought. I bought out my brother and sister and only needed to finance 2/3 of the appraised value which 10 years ago was $85,000. So I had 1/3 equity already built in. I now only owe something like $45 - $48K and houses in the neighborhood are going for almost 3 times that. And, with the current low interest rates, my payment on an 1800 sq ft house is lower than rent on an efficiency apartment.

ARM's can work, but you have to have had significant money up front or some other way of putting equity into the house. If you overloaded yourself to begin with and bought more than you can afford with an overpriced house, you were screwed once you signed the papers.

[OwnedByFerrets]

5. Not all were susceptable, but I do have compassion for

those single home owners who were LURED into these scams. Speculators, not so much.

[SoCalDem]

6. We bought two houses in a sellers' market and sold both in a buyers' market

Got wiped out twice. we know how the "market works" sometimes..

I asked 30-year FIXED?? about 10 times, and would not sign until it was on the FRONT page of the documents and initialed & dated by the doc people and the mortagge people:)

[CoffeeCat]

7. When we sat down to buy our house...

...we told the broker, that we wanted a conventional, fixed rate mortgage.

She looked at us, like we had three heads.

"Are you sure???? I can decrease your monthly payment by half. Let's do an
adjustable, and you can re-fi if the rates go up. You can't lose."

We persisted.

"Are you sure??? How about an interest-only loan. You could get his house
for like $900 a month."

"No thanks, we said, "We're trying to keep our debt low because we're still
paying off student loans."

"We could combine your mortgage AND your student loans into one payment, and
do an adjustable, interest-only--and your payments would be half of what they
are now! Think of the extra money you'll be saving every month!"

"No."

After about 20 minutes of this, she had to leave and FIND the paperwork for a conventional
loan. She had no idea where it was, because she had sold so much creative financing. She
struggled through the paperwork--not even knowing how to do it!

After this, my husband and I didn't say a word as we walked to the car, and we both sat in
the car--speechless. I turned to my husband and said (and this was three years ago), "Our
economy is so screwed. This is not sustainable and so many people are going to lose their houses."

It's a crime, a disgusting, blatant crime--that this was allowed to go on for so long.

[varelse]

17. TwoAmericas - so many of your replies

*need* to be "thread starters" it's not even funny. Once again, I want to recommend a reply, but instead will rec the thread it's in, instead (no offense to the OP who also has a great point).

[dansolo]

22. And the Truth in Lending for ARMSs are really whacked

After the fixed period, they use the minimum possible APR rate to calculate the remaining monthly payments. I couldn't believe that was even legal.

[demnan]

8. I got an ARM when I bought my condo in 2004

It was the only way I could get a mortgage as a single woman first time home owner in a hot market like Northern VA. Sexism still exists in the mortgage market. With my income as a male I would have done better. My small two bedroom condo went for 155K and I put in some credit card debt and it went to 160K.

A year later I refinanced to get a fixed rate mortgage for 170K. I read about this coming bubble back then, I knew and braced myself for this. I had to get another job and this one paid low so it saved me.

Then I got contract work now making more per hour and got myself a better dependable car. I'm so glad I refinanced when I did because I knew that I didn't want an ARM. I had a very good mortgage person who told me at the time to refinance in 2 years, but I refinanced the first year. THat's what saved me at least so far.

[EFerrari]

9. There's always a few people who do what they can get away with

but most of us just do what we need to do to make life possible. I agree with you. It would have been pretty easy to believe these horrible people whose job it was to sell what home buyers couldn't afford. Much, much too easy.

[wryter2000]

10. I defy anyone to admit honestly that they understood all the paperwork

My brother asked a realtor once if he could take the paperwork home and read it before signing. The realtor told him he'd lose the opportunity to buy if he did.

I signed dozens of documents and only had the brief descriptions from the realtor and the money guy to go on. They could have been lying through their noses, and I would never have known.

Anyone who claims they understood everything they signed when they bought their house is either a realtor or LYING.

[WorseBeforeBetter]

11. My thoughts on this are going to be unpopular...

but I'm going to say them anyway.

Common sense dictates that: 1) you live within your means; 2) you offer a reasonable down payment; 3) you do not use your home as an ATM; 4) you do not assume property values always go up; and 5) if you assume the risk of an ARM, be prepared to lose your home if you cannot afford the payments as the rate adjusts upward (you agreed to those terms when signing on the dotted line).

And before anyone jumps on me re #1, I understand that emergencies happen, but that's an entirely different can of worms. I'm talking about those up to their eyeballs in debt because they have to have the latest and greatest.

Or, this: As my employee-owned company was going public, many coworkers took out HUGE home equity loans with ARMs to buy stock. The IPO wasn't a huge success and the housing market in that particular region has dropped about 20%. Are we to bail those folks out if they risk losing their homes?

I was offered an ARM when buying my first condo, but went with a 6% fixed because I was AFRAID of ARMs. I was also offered a huge home equity loan as the market soared, but told my bank to reduce it by half. (The money I used was to upgrade a 55-year old kitchen and bathroom, which helped with re-sale.) I disagree that "we are all susceptible to this stuff."

I have sympathy for those who sincerely did not understand loan terms, etc. and those who fell prey to unscrupulous lenders. But for those who understood and assumed the risk, I say TOUGH. I play by the rules and should not have to bail them out.

And what worries me most is whether anyone will have learned anything from this bailout or continue with risky, unsound decisions.

[NNN0LHI]

12. I requested and received fixed rate loans for the two houses I have purchased too

But I was never worked over like some of these people were by predatory lenders either?

Were you?

If you had been lied to by some shyster who said you only qualified for an ARM, take it or leave it, would you have walked away if you didn't know any better?

Don

[WorseBeforeBetter]

13. I would have walked away, but again, I'm not a financial risk-taker.

I actually ended an engagement over this--my ex wanted to buy a huge McMansion with crazy financing. It scared the hell out of me. My solution was to buy a much smaller home or just rent until the market tanked, which it did. That wasn't his solution.

I understand your points re predatory lending and agree. But I also think there is plenty of blame to go around, including flippers and speculators (as someone mentioned above). I lived in an area in which 100 people showed up for an Open House, with contracts being written with no inspections required. It just spiraled out of control, and here we are now...

[NNN0LHI]

14. I was not addressing flippers and speculators here at all

They are businessmen/women who gambled and lost. They knew and understood the risks too. But first time home buyers usually just go by the current rules that are presented to them. They really don't have much choice because this is something we do so infrequently we really can't understand and appreciate all the workings and ramifications. We just get advice and hope the person giving it is not selling us down the river.

Sometimes we do get sold down the river.

Don

[Madrone]

16. I'm sorry, but I'm a "no time" homebuyer - and for a reason.

When I make 30-35k / year I can't AFFORD a house that's almost 300k. I can't AFFORD a house that's 200k. I can't even afford a house that's only 100k. And I'm no elite genius. It's COMMON SENSE. I've told a number of Realtors over the last 8 years that I would love to own but can't afford it. They all told me I COULD - that I could easily buy a house. I never inquired further because I KNEW it was bullshit on it's face!

I never would have entered into such an agreement because there's no WAY I can afford 100/200/300k for a house! PERIOD.

[WorseBeforeBetter]

18. I'm just frustrated beyond belief over this bailout...

because there are SO many factors involved that are not being addressed. Yes, "all the workings and ramifications."

[HillbillyBob]

15. My first home was a balloon, I was 19

My partner and I sat down with the paper work and realized that it was.
We cornered the realty company and they outright lied to us.
Another friend had bought from the same people,
We told her what we found out and that so long as we kept up the payments
we could refi thru another company, well she was 4 hours late on her payment
but no problem.
The next month she came home and had been evicted, this joker had backed a truck
up and took the house away, it was not a trailer. It was a small victorian.
He sold the land to someone else.
We had our own problems, both of us got laid off. Since we only had 3 months in the property we took out a complaint, with our friend that lost her place with the state realty agency.
Showing the papers we had been required to sign, we lost our 3 months and down, but he went to jail.
When we started looking for this place we looked for a foreclosure, but first got
approval for a mortgage and got a place for half of what we were approved for,
we insisted on a fixed, use my partners VA benefit, we did refi after a year to get lower rate.
We have seen this economy mess from way back , we studied history, we saw W would steal
the election in 2000 and that we would be at war. We studied fascist in american history.
I am sorry to say we were right one everything. Look for this election to be stolen for
McIsane , and we will have to fight our own armed troops or die trying.
It is not just the economy it is our very country we will have to fight for.
Look at the 20s30s and 40s and what banks and corporate families held the reins, they helped hitler big time. Now it is time to brace ourselves and take back our country or die trying.
My family has lived in the US since the French and Indian wars. history repeats and
those corporates that helped hitler now want to install New World Order here and
world wide. like then they started by crippling the economy, this is a short version.
I do not have space to go into it all but Chase , JP Morgan, and The National City bank (citibank) all helped the nazis finance and Prescot Bush with Averell Hariman, David Rockefeller, Ford, Irenee Dupont(chairman of GM) ran banks , trading houses, and industrial pants for the nazis..thing the cat has changed his stripes?

[sandnsea]

19. Or this 1,000 sq ft for $199,000

http://www.rwre.com/idx/search.php?f=dtl&mlsid=rmls&officeid=5trh01&mlno=8066323&class=DETACHD

I don't think people in some parts of the country understand what it's like to be looking at homelessness as housing prices and rent skyrockets. You either buy and set your monthly payment, or have nowhere to live.

[rucky]

20. Yep.

People count on professionals to give them sound advice, and you leave yourself vulnerable because they're knowledgable about things unfamiliar to you. You wouldn't represent yourself in court - you get an attorney and trust them to represent you. You don't tell your mechanic how to fix your car - you trust they're doing it right and not screwing you over because you don't know how to fix it yourself.

The blame goes squarely on the Mortgage Loan Officers & Brokers that sign people into bad loans.

[4lbs]

21. My father told me to never, ever, get an ARM, unless you have the ability to pay it off in 5 years.

Things may go well for the first several years, and your payments may even be lower than a traditional fixed-rate. However, if the economy ever tanks, and/or the lender begins having problems, then you are screwed. The first thing they'll do is try to increase your monthly payment, using whatever reason they can legally get away with. Even a simple thing as your home value dropping even 1% will give them reason to increase your monthly payment significantly.