When will everyone realize that poor people with bad credit should not buy homes?

Question

A large percentage of the subprime borrowers should never have even tried to buy the houses they are in and the sooner they all loose them to foreclosure the better off the economy wil be. Agreed?

Mortgage Loan Officer 15 years

Where do you people get your data??
The percentage of all loans in foreclosure right now is less than 1.5%, and the number of delinquent loans still stands at less than 5.25%.

http://www.axcessnews.com/index.php/articles/show/id/12279

To: Tomk

I work for a mortgage company that DID NOT get involved in all of those stupid high-risk subprime loans... We do just fine helping normal people buy homes that they can afford with sensible government backed programs like FHA and VA.

We are doing just fine right now.

If it is too difficult for you to fill out a few forms, pay your bills on time, and prove your income, you probably should look for an apartment.

Best of luck to you.

No, I am not a moron with no common sense. I am just someone who has witnessed first hand the sequence of events in this industry over the last 15 years.

True, people can lose their jobs due to a variety of reasons beyond their control. It has been happening since the beginning of time. That is not the problem now. It has and will happen, even in the best of times.

The problems (some of them at least) are, easy money for unqualified borowers and speculative buying based on absurdly overestimated rates of appreciation.

People are not losing money because their homes are going down in value, the value was never there.

As difficult as it may be for some, the correction is nessecary. Just as tech stocks in the '90's were overpriced, housing in the '00's, in some markets, is overpriced.

Ever hear of the Dutch Tulip Mania of the 1630's?

Answer 1

Agreed.

There was once a day and age when "subprime borrowers" were called "renters." But the growing sense of entitlement and greed in our country has led to the current mortgage and housing crisis we're facing. I'll be surprised if the "recession" doesn't get closer to a "depression" before it's all over.

I agree that the economy needs to get through with correcting itself. But that will take a while and won't be pretty. We probably need a government bailout, but that's only going to reenforce the stupid decisions that were made to get us here. That's a better alternative than depression, though.

Answer 2

You are taking a slightly incorrect fact and making a false question.

It is true that many people with poor credit used the so called "no doc" or "liar loans" to buy properties that were far too expensive than they could afford.

It doesn't mean that "poor people with bad credit" shouldn't buy a house. In fact a large percentage of the borrowers having trouble are in the $100K+ income range. Their problem is they bought $700,000 homes which they couldn't afford. What it really means is that people with their specific income and credit should buy what they can within the limits of their budget and ability to pay.

As far as the current homes, many of these people can avoid foreclosure if they work with investment counselors, real estate investors (as partners) or the lending banks themselves to find solutions.

That said, about 10% of the SUBPRIME loans in question involved people who have no way to pay a normal mortgage payment for the properties they bought. The sooner they get out of the situation, by selling, doing a deed-in-lieu of foreclosure, foreclosure or bankruptcy, the better.

Answer 3

I think that everyone has the right to own their own home. Predatory lending is the biggest issue right now. They were getting people into homes with a "teaser" rate, then 3 years or so down the road, these rates were resetting, contributing to the high foreclosure rate. There are people on the west coast who have 2 six-figure incomes who are being foreclosed on right now. We haven't even seen the peak of this yet because not all of these loans have reset. People just need to read the fine print on what they're signing instead of just signing something to get into a home. You really sound very cynical and negative. Do you really think that an increase in the foreclosure rate is going to do anything positive for the economy? It's not. It's going to cause home values to decrease and rent prices to increase. I'm not real sure what your information source is but you should really verify the information that you receive before you deem it reliable.

Answer 4

There is lots of $ to be made by offering a high risk loan only to plan on foreclosing on the property in the near future. The lender will acquire the down payment, the closing costs imposed, late fees for the mortgage if it lasts a short period of time. Here's the good part...the lender will get the property back and it likely would have increased in value over time. It's just like a rent to own 17" color TV for $29 mo for 36 mos. That is something VP Chaney would call a no-brainer. Anyway, the people that tried to buy the homes at least gave it a shot and tried to pursue a dream. That is called character and drive, and it take an adult to be mature enough to take a risk that may just work in their favor. What are you doing thinking about other peoples business anyway. You worry about yourself if you must. Also, that scenario would not affect "the economy ". In your context the "economy" is non existent. Your question really takes the cake as far as relevance goes.

Answer 5

The sooner you learn to spell lose instead of loose the better off you will be!

Sorry, pet peeve of mine ... along with people that have no idea what they are talking about!

FACT ALERT!

Depending on location, 10% to 23% of those subprime loans will default and go into foreclosure.

MATH ALERT

77% to 90% of those subrpime loans will, and are in fact, being paid on time.


COMMON SENSE ALERT

Giving people that otherwise would not have had a chance to own property was risky, but overall worth it. In the grand scheme of things this is a necessary correction in a market that was out of control. The foreclosures and dropping property values as a result, correct the unsubstantiated appreciation of property that was ridiculous. Market value can never be what no one can afford; in the past “market value” was an oxymoron unto itself.

Darwinian REAL Estate 101 … PRICELESS!

Answer 6

Sorry but you are incorrect, yes there are about 23% of the sub prime mortgages are going into default or are at least 60 days over, but 20% of the prime are either in or expected to go in 60 days late, or foreclosure.

Answer 7

ummm homelessness is not good for economy. The sooner shady lenders are reingned in the better off we will be. And if the price gouching in energy could be controled then maybe fewer people would be in such dire straits because aside from the obvious cost of fuel for cars and heating nearly eveything costs more cause of shipping. Instead of attacking poor people loking for a piece of the pie go after the fat cats that are shoving that pie down their faces

Answer 8

Yeah particular that could desire to be why Circuit city basically went bust and CompUSA pulled out of a million/2 the country, and doubtless they have long previous bust by ability of now too, i don't be attentive to. Yeah it extremely is through fact their sales have been so great, that's it. That could desire to describe why automobile sellers have unsold autos everywhere and a few nut is offering purchase one get one unfastened on new trucks. and there is homes around the line and down the block that have been foreclosed on and and up on the industry for about six months and a 300 and sixty 5 days and a a million/2, respectively, that i've got not at all considered all and sundry take a seem at. save your head buried up there as long as you may i assume.

Answer 9

I would suggest you revisit your facts and verify the information before you use it. 77 to 90 % of subprime loans are being paid on time.

Answer 10

Even if the numbers are not bad, it is still bad for the community. If they can't afford the house, they CAN'T afford to properly maintain the house and its value. They will drive the neighborhood value down.........