The sub-prime mess - in its simplest terms.

[Davemcc]

May be NSFW.
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1
Navigate at lower left corner.

 

[stratman]

This should be sent to banks and mortgage brokers/loaners in the US, it should be required reading before any numbnuts buys a house, they should be made to sign it and take it home and frame it.

 

[Davemcc]

This should be sent to banks and mortage brokers/loaners in the US, it should be required reading before any numbnuts buys a house, they should be made to sign it and take it home and frame it.

That sure sounds like an endorsement.

 

[stratman]

I live in zone 0, the heart of the meltdown and I saw the things that led to this mess, so I'm a bit gung-ho on the matter. Greed got us into this. And we haven't scratched the surface yet, BUT there is a silver lining, the market will bounce back, sooner or later.

 

[rnatalli]

LOL, that was a fun read...

 

[rnatalli]

I live in zone 0, the heart of the meltdown and I saw the things that led to this mess, so I'm a bit gung-ho on the matter. Greed got us into this. And we haven't scratched the surface yet, BUT there is a silver lining, the market will bounce back, sooner or later.

Yup... Greed and now fear. The two biggest enemies of a good market. The good news is that subprime is a small piece of the mortgage industry and GDP as a whole. It's taking a toll on the economy, but the media makes it seem worst than it really is. The solution is simple:

-Freeze monthly payments and interest rates. If people were able to pay their monthly payments before this mess, then leave the amounts the same. The banks are still making money, people are paying, investors feel secure, etc...

I pay my mortgage on time and always have so I don't like that people will get a lower rate for being irresponsible; however, this is better than the alternative which makes things even worst. Some hard-liners would say let people lose their homes, banks lose money, and let the free market work it out. But this will take a long time and all will suffer for it so intervention is needed. But banks are greedy and are pushing for a government bail out which will cost everyone in tax dollars. People are idiots, banks are greedy, and round and round we go.

 

[jinjuku]

I hope this actually pays off for me since the wife and I are now in the market for a house. We have killer FICO (790+) and 10-20% down.

I wonder how much haggling power we will have? I was thinking of finding 4 properties with the same features and let them duke it out... I know that it seems prickish' but I want the most for my money and I am not the one that got into a hot mess that I couldn't afford or made the loan.

Does anyone know if it is a Bank Owned/REO property that they will negotiate the price?

 

[rnatalli]

I wonder how much haggling power we will have? I was thinking of finding 4 properties with the same features and let them duke it out... I know that it seems prickish' but I want the most for my money and I am not the one that got into a hot mess that I couldn't afford or made the loan.

In short, tons of haggling power as you have credit, down-payment, and a large supply of stuff to choose from. There's a good chance prices will fall lower and the Fed will reduce rates again. When that happens, there will be a lag time before all actions being taken will start making a positive effect and that's the ideal point to jump in.

 

[stratman]

An excellent FICO, 20% down will give you plenty of haggling room with banks. Homesellers? That depends, if you're buying from a developer that needs to move inventory, you're in luck, you have lots of leeway and the real estate crunch makes it easier to get "freebies" or reduced price upgrades, if you're buying pre-owned there it gets a bit skittish. It will depend on several factors, such as, how motivated is the seller, condition of property, location, and such factors. Either way it's always a buyer's market when people come in with the right qualifications AND realistic expectations of what they can afford in housing.

 

[Mort Corey]

Here's another take on what first got the ball rolling.
http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm

Mort

 

[jinjuku]

An excellent FICO, 20% down will give you plenty of haggling room with banks. Homesellers? That depends, if you're buying from a developer that needs to move inventory, you're in luck, you have lots of leeway and the real estate crunch makes it easier to get "freebies" or reduced price upgrades, if you're buying pre-owned there it gets a bit skittish. It will depend on several factors, such as, how motivated is the seller, condition of property, location, and such factors. Either way it's always a buyer's market when people come in with the right qualifications AND realistic expectations of what they can afford in housing.

Any advise on how to haggle with the banks/mortgage brokers? Does Lending Tree really get you the best offer? Can you take the best offer and counter offer to the lenders? Let say I get a fixed 30 year at 6.25% (is this a good rate?) could I send out a reply saying first lender to knock of 1/4 of a % gets me to sign the dotted line or do they tell me to go away?

 

[stratman]

Any advise on how to haggle with the banks/mortgage brokers? Does Lending Tree really get you the best offer? Can you take the best offer and counter offer to the lenders? Let say I get a fixed 30 year at 6.25% (is this a good rate?) could I send out a reply saying first lender to knock of 1/4 of a % gets me to sign the dotted line or do they tell me to go away?

You can do better than 6.25 @ 30 years today, my wife says that Lending Tree is not bad, you can try them (too bad you're not down here, she uses Northstar, they give great rates, but their local only), her friend Lori actually got a good rate from Lending Tree, she also says you can haggle your rate.

 

[Buckeye_Nut]

There will always be irresponsible borrowers who get in over their heads.


Government involvement in this mess is another example of ignorant BS that should never EVER happen!!!

Idiots who get in over their heads should be held personally responsible...nothing more...nothing less. Gov't intervention is insane.............

 

[Brett A]

There will always be irresponsible borrowers who get in over their heads.

When my wife and I were shopping for a mortgage three years ago, one storefront mortgage company was willing to give us a mortgage 25% bigger than we were willing to budget. When we mused about how we could possibly afford it, they said we "could eat cold cereal" for 30 years.
Suffice to say, we didn't go with them.
I am happy that we ended up with our local bank who gave us a good rate on a 30 year fixed.
The most amazing thing is that in one hundred years, our bank has never bundled and sold a single mortgage.

 

[rnatalli]

Stay away from Lending Tree unless you want daily phone calls and tons of credit inquiries on your credit report. Stick with big, reliable lenders especially now.

 

[stratman]

Stay away from Lending Tree unless you want daily phone calls and tons of credit inquiries on your credit report. Stick with big, reliable lenders especially now.

Ok, so don't try Lending Tree.

 

[chadnliz]

I love the folks who scream foul by taking a mortgage they cant afford and deep down should have known that.......nobody ever mentions that these folks ASKED for a mortgage. The people I really have no sympathy for were this influx of "Flippers" who bought cheap tried to put as little as possible into property and sold high and now have a couple or several houses nobody wants, it reminds me of the 80's when every idiot was a stock broker till the .com bubble busted. We just bought a new house a few months ago in the middle of one of the worst areas for forcloser (northeast Ohio) so we did save a bit but far to many home owners were hanging on to inflated values of 2 years ago not willing to understand the market has changed, those houses are still for sale...some over 12 months now. We bought a house listed for $150,000, payed $132,000 and was appraised for $145,000 but we payed cash so that was a big bargaining chip. The owners had two offers of around $125,000 but both wanted them to pay the closing cost's which would decrease there take around $4000 additional. In the end everyone walked away happy and those folks are driving all around America in their huge RV.......what a cool way to retire!

 

[Alamar]

Personally I think that if a person signed up for a loan they KNEW that they didn't have a hope of repaying that we just let them loose the house. One way or another we have to teach people that they should rely on themselves and not the government to bail them out of trouble.

As for the people that want to help the others out by freezing loans I think they are "enablers" and while their heart is in the right place [and in the short term their head may be the right place] their head is not in the right place for the long term.

As for the "greed" aspect I cetainly see greed in the people trying to get more house than they should be able to get but I don't buy bank's greed as the sole factor of the reason that they made so many loans. I wouldn't be surprised [I have no documenation to support the theory] that a good number of loans were being done to keep regulators or other groups off their back so they could otherwise continue to operate as normal. After all if a bank is greedy then why loan $ to someone they expect couldn't pay it back anyway .... I don't see greed as the sole motivator behind this.

Either way I'd rather we have some short-term problems and hopefully we can start weaning people off of the idea [long term] that they should run to the government to help them out when they do something STUPID.

 

[stratman]

Personally I think that if a person signed up for a loan they KNEW that they didn't have a hope of repaying that we just let them loose the house. One way or another we have to teach people that they should rely on themselves and not the government to bail them out of trouble.

As for the people that want to help the others out by freezing loans I think they are "enablers" and while their heart is in the right place [and in the short term their head may be the right place] their head is not in the right place for the long term.

As for the "greed" aspect I cetainly see greed in the people trying to get more house than they should be able to get but I don't buy bank's greed as the sole factor of the reason that they made so many loans. I wouldn't be surprised [I have no documenation to support the theory] that a good number of loans were being done to keep regulators or other groups off their back so they could otherwise continue to operate as normal. After all if a bank is greedy then why loan $ to someone they expect couldn't pay it back anyway .... I don't see greed as the sole motivator behind this.

Either way I'd rather we have some short-term problems and hopefully we can start weaning people off of the idea [long term] that they should run to the government to help them out when they do something STUPID.

Well it just wasn't banks not doing due dilligence, but (I know some around here don't like me to say it) there were other components in the machine that didn't do their job, such as mortgage brokers and lenders, a not so funny comedy of "errors" led to where we are now. Greed encompassed the whole spectrum of the industry from lenders, brokers, developers, real state firms and finally those that were misinformed. I think you're giving the masses too much credit, the average person on the street doesn't know/care about real state/mortgages as they don't deal with it on a daily basis, to them it's only important once or twice in their lifetimes.

 

[annunaki]

In short, tons of haggling power as you have credit, down-payment, and a large supply of stuff to choose from. There's a good chance prices will fall lower and the Fed will reduce rates again. When that happens, there will be a lag time before all actions being taken will start making a positive effect and that's the ideal point to jump in.

The fed cutting rates does not affect mortgage rates like most people think. The fed rate is typically for short term interest loans such as those based upon the prime interest rate. It does affect things to a degree but it tends to be quite small.

Mortgage rates are based primarily off of the 10yr. and 30 yr. treasury bonds.