The Real Cause of Sub Prime Mortgage “Crisis”
Once again, government isn’t the solution. Government is the problem.
Justin does a great job of explaining the way things work in America these days.
So, for those of you who are still trying to catch up, this is how things work in America. The government decides something in the economy isn’t “fair”. The government then enacts some sort of legislation to fix the problem. This legislation causes a new, much worse problem. The government blames capitalism and calls for more of the same bad legislation to fix things.
I really wanted to take more than that excerpt. The paragraph that follows what I lifted, is of equal importance. Please read the whole thing.
Personally, I am glad that more people were able to get loans and that interest rates were low. People were given an opportunity. Some didn’t do so well with the opportunity, but I still think it is good that they got the opportunity.
Cross posted at kingstonsprings-realestate.com, and fairviewtennesseerealestate.net.
I left a comment there…
There’s good points made here, but you can’t exculpate the person(s) who sat down and signed the papers and took on a loan structured in a way that they could never repay. I too resent the government’s bailouts, but my question is: Where was Government (or even other financial thinkers who could predict the consequences of these mortgages) during the time when so many were made? Why didn’t people have access to better information? Were Realtors (who are supposed to help new home owners) not telling these new buyers the full ramifications of subprime loans?
I certainly didn’t fall in the subprime trap. I refinanced my home years ago to take advantage of the lower rates, but did so using a fixed rate and changed to a 15-year loan. Now, I’m smelling like a rose, and will own my home quicker to boot.
Thinking people can overcome obvious future problems, if they only would.
Government wanted these loans made, because they wanted everybody to own a home. In the future, maybe they should run public awareness campaigns. But the fact that these people were given a chance is not a bad thing.
I guess you are talking about Adjustable Rate Mortgages. But regardless, it is not the duty of the Realtor to play mortgage lender, or attorney, or any number of things that they are not licensed to do. In fact, it is clearly a no no. Many of these loans were not done when the house was bought anyway.
Yep, good old fashioned predatory lending. Yet another thing “the market” is a huge fan of.
Of course, you’re probably going to tell me that there’s nothing the least bit predatory about super-low “teaser” rates.
Question: To how many of your clients did you recommend ARMs with low teasers?
We cross-commented, apparently. Let me rephrase the question: If you were in a position to do so, would you recommend an ARM with a low teaser to anyone? If so, who?
You say that these people were “given a chance,” but I say they were sold a bill of goods. As I’ve said before, I don’t hold them blameless in that equation, but it’s silly to suggest that the lenders were merely “offering opportunities” without trying to take advantage of anyone.
No never. The only time to consider an ARM in a time like this with low rates, is if you plan on moving within the next five years, but even then I think you should stay away from them because you never really know what you are going to do. But like I said, the “getting the money” part is done between the buyer and the mortgage lender. We refer people if they don’t know of anyone, and of course we are not going to refer anybody to someone shady. But the structure of their loan and all is totally done between them and the company they are dealing with. The lender might give us updates, assuming we know them and referred them the business, but we are not really involved in that process. The same goes for legal advice. We can’t give it without a law license.
About regulation, I totally support regulation of the mortgage industry. They don’t self regulate like a lot of other businesses do, not a continuing education requirement, a code of ethics or anything like that. As a result, the state should step in and do something. Public awareness campaigns, like I said, are also a good idea.
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