Were You Duped Into A Sub Prime Teaser ARM and Do You Think The Govt. Should Bail You Out?

Question

Please indicate your political leaning.

What I meant by duped...is that you were enough of a dumb azz not to read the fine print or think about the future when rates would inevitably increase.

Answer 1

No. I think a lot of people are misinterpreting what is happening with this issue. There were a lot of people buying houses with ridiculous mortgages because what they were doing was speculating. They were house flippers. They purchased these homes with little or no money down and very low rates for the first few years because they figured they would sell it for a profit long before the rates went up. When the market cooled they could not sell the house. Now they are stuck being unable to sell it and unable to afford to keep it.

I cannot believe anyone who was purchasing a home for their family did not refinance an ARM when the rates started to go up. It was only people who had more house than they could afford that were not eligible to refinance at a fixed rate. This was primarily speculators.

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Answer 2

No... even when I was in financial difficulty and looked for ways to help out, I NEVER considered rearranging an ARM loan. It was way too risky.

For the other question... Yes, if the stats of people nearing to foreclosure is true then absolutely the government should o something. This has nothing to do with compassion or sympathy, this is all about economics. If 1million people (even half of that) foreclose on their homes in the next 12 months it would be devestating to the real estate market. We have to really think about the numbers here... this kind of disaster could bring a recession.

The government helps out corporations all the time (remember the airline industry being baile out several times since 9/11.... the oil companies ALL the time). Why can't they help the average consumer during a crisis? Even if it is their fault for signing the loan it would put off the possibility of a recession. Corporations make risky investments all the time and the government tries to bail them out if they see a potential of their decisions effecting the overall economy.

I am not a Rep or a Dem. I am moderate leaning to conservative.

Answer 3

I am conservative and no you should not be bailed out. Someone earlier said that they purchased a $400,000 home with a adjustable ARM and only made 40,000 per year.

In your situation, you should have 28% of your take home pay for your shelter. I ran a mortgage calculator to show what someone can afford on $40K per year. It is as follows:

Results
$198,000.00
Loan Amount

Principal and Interest $1,203.48
Monthly Real Estate Taxes $361.71
Monthly Hazard Insurance $33.68
Monthly Mortgage Insurance $87.12
Total Mortgage Payment $1,685.99

If your payment is over $1,686 you put yourself in a bad situation. So why should I as a taxpayer have to save your butt?

Stupidity is no reason for a bailout.

EDIT:

Cattledog - Your reasoning for a bail out of a homeowner vs. the airline industry is like comparing an apple to an orange. Not the same thing. After 911 the airlines still needed to continue to pay their bills, however the government grounded the flights and they could not operate. So that was needed in the national interest of the USA. You also forget that Eastern Airlines, Pan Am, and TWA all went bankrupt and the government did not bail them out.

Bailing out a homeowner is something completely different. The borrower should have known that they could not afford the house that they were purchasing. You do not have a right to live in a house you cannot afford.

Will this place more real estate on the market, sure. But that means that those of us with good credit will be able to pick up a house for a bargin.

Answer 4

No and maybe. If you fail mortgages, you fail the whole market. Not only Real Estate, but Tax revenues, Insurance, New construction, after market construction, just to name a few. So a free pass should not be okay, but some help to get these loans back line. The will benefit the lenders who will not go out of business (more unemployment), the government, and all the other businesses that depend on home ownership. There is a major dominoe effect to just letting them drown.

Answer 5

No and no.

The prime rate should be lowered to where it was when the administration decided to shut down the real estate boom, and lending companies with any brains will reduce the ARM payments. Give people a little time to adjust next time. Give the companies (already being bailed out) time to recover and shut down poor risk loans. Otherwise we will be paying this one off like we still are the Savings and Loan scandal, which has a projected final cost in the multi trillions.

Republican for 50 years. Not a neocon-bush-davidian.

Answer 6

No but the rates were tempting. I don't think there should be a government bailout. If you rolled the dice and lost that was the risk you took.

The banking industry is so over-regulated right now that there is no question that you knew the potential of rates going up. If you choose to ignore that then it is on the customer.

Answer 7

Ever stop to think why there was an acceptance of the sub prime loans when the outcome could have been projected. It was just another lousy form of Enron!

Answer 8

Did you know you were getting an adjustable rate mortgage? Lenders are required to tell you that your rate will change sometime down the road. It is your own fault if you didn't read the contract. The government is not responsible for fixing anyone's screw up.

Answer 9

No bail out. The safety net on stupid is already stretched to the limit.
Next time, do your homework. You make bad decisions? Too bad, so sad. I'm not paying for them.

Answer 10

no, no independent. I don't think they will bail anybody out - I think this is campaign talk.

I can see how it happened - those mortgage people are relentless when it comes to getting a commission. They should be forced to bail out the bad mortgages they sold.