Who agrees with a poster that people were "victimized" when they bought homes they could not afford?

Question

In other words, a couple making 90k decides to buy a 600k home were "victimized" into thinking they could afford it. I totally disagree with this. Your thoughts please.

(This is related to the "Fed bail out" post minutes ago)

Answer 1

I'm sure in some such cases, actual fraud was committed, where the agents writing the loans and making the sales outright lied about them.

For the most part, though, it was just the usual matter of folks buying at the top of a bubble market, thinking that it'd never stop going up, and sellers and lenders 'enabling' them in order to meet thier sales and proffit goals.

There's nothing wrong with letting all involved pay the price, and allowing the real estate market to experience a well-deserved correction. The resultant lower prices would, of course, let people who weren't so foolish as to buy beyond thier means at the top, actually buy within thier means, instead.

There is a lot of alarmist rhetoric about some involved parties being 'too big to allow to fail,' but, realistically, thier stocks are just going to take a beating, and they'll have to lay off thier huge dividends for a few quarters. Hardly something worth presenting the taxpayer with trillion dollar bill over.

Answer 2

There are many programs for "normal people" to assist in home ownership in California. Some have assistance with down payments, some have second loans that are not paid on until the property is either refinanced or sold. Counties and Cities have assistance programs, and Below Market Rate homes are required to be included in all new developments being built in the State. If you check salaries, they are almost always much higher in California, especially Northern California, than in other states. This is due to the high cost of housing, but the other costs to live in California are generally much less. Our weather is mild in most of the state, and air conditioning isn't needed in many places. People live outside at least 9 months a year, sometimes for 12 months, depending on where they live. Things are a trade-off. Most people like the environment of California versus other states and except for housing in some parts of the State, prefer living in California.

Answer 3

Victimized or not that is not even the question. The real issue is how does this market justifies the prize of a house worth 300K to be sold at 600K? If you know the real construction cost to build a decent house you would soon find out that most houses are overpriced.

Answer 4

Hey so the fed is bailing out investors for a bunch of bad loans. This sounds a lot like something else that happened when a Bush was in office. Is Neil Bush in the Mortgage Business?

Answer 5

It's not as simple as it seems. I'll give you my scenario: (BTW...we do not have financial issues)

1.5 yrs ago we bought our house with a reputable lender. 2 months later we get a letter from a different (no name) lender saying that they bought our mortgage. So I think ...ok, whatever. Payments are due on the 1st, and our accountant sends it out either the week before or the week after. On the 1st, I get a call from my new lender..."This is an attempt to collect a debt...". I'm like...EXCUUUSE ME!?!? They ask if my payment was mailed or if it's being made that day. I told her it was made (because it was sent out).

My point is...even though I am not in dire straights (now...LOL), I took a mortgage with a reputable company, that SOLD it to 1 of the "bad guys". I had no say in it. Anyway... refi is on my horizon.

Answer 6

g: Run silver and gold currency in parallel with the FEDERAL RESERVE NOTE. It would help solve many problems at once. it will help put the control of the economy back in the hands of the people, and control over the banks as well. What blows my mind is the local banks selling people's mortgages off to larger banks(such as Wells Fargo, Bank of America, Chase and the personal entity that signed it has no say over the matter because of the legal issues involved. That's crap. people don't even realize there was a time when they actually had the say and true power of how the banks operated. If they started screwing the ppl, The ppl in turn could have just cashed in all their silver and gold certificates leaving the banks holding their ***** in their hands.

Answer 7

The lending institutions are known to have loaned money to people without the proper credit checks or even proper documents proving the income of potential borrowers That would not be victimization but very, very poor business practice. These lending institutions either had very bad loan officers or very bad business practices.

EDIT: After reading more about it, a big reason for the sub-prime loans was to make it possible for low income people to be able to buy a home, but they charged them very high interest and extra points because of the risk factor. They must have known that many of these loans would end in foreclosure.

http://suzieqq.wordpress.com/2007/11/07/the-jig-is-up-for-fannie-mae-and-freddie-mac/

Answer 8

I squarely blame the people getting the bad mortgages.

THIS IS ONLY THE MOST IMPORTANT FINANCIAL DECISION YOU'LL EVER MAKE! Yet all too few of them did nothing to educate themselves about mortgages and lending.

In 2004 when I was buying my first home, I probably spent a good 6 to 8 hours researching the pros and cons of various mortgages, before I ever talked to a loan agent.

And sure enough, they offered me the ARMs, and I remember telling my loan officer "If fixed mortgages are at historic lows now, how the heck will I ever be able to afford this one after it adjusts above those historic lows."

Answer 9

I disagree as well that somehow people were victimized when they purchased homes which they could not afford. Those people were aware and knew in advance if they could or could not make their mortgage payments. Why in the world they feel that they are victims? Victims of what? Who victimized them? Real estate brokers, lenders...?

Answer 10

I disagree with this as well. The only problem is that being "victimized" is the in thing these days. No one is willing to take responsibility for their actions anymore. Whenever something bad happens it is always someone else's fault. I think we can thank lawyers for this.