Senator Dodd and Los Angeles Councilman Alarcon - BAILOUT BUDDIES?!?!?
I told you it was only a matter of time until the politicians started talking BAILOUT for people that bit off more than they could chew. They can’t have it both ways (or can they). They can’t have 70% ‘home ownership’ (more like home mortgageship) on one hand, and then use taxpayer money to say that nobody loses a house on the other. The thing is, 70% of the population probably shouldn’t be owning a house, and certainly not at the prices that many of them paid. The coming ‘foreclosure boom’ is going to realign the home ownership percentages to more realistic levels and realign housing prices to levels that reflect incomes.
Creative financing, no risk assessment, and loose credit created this monster…risk assessment, tighter credit, and traditional financing (fixed rate loans paying principal) will rein it back in. If the mortgage industry and the secondary market didn’t discard risk assessment the past 5-6 years to get these ‘high risk’ people loans, they would NOT be defaulting today.
If the homeowner isn’t responsible for being able to make the payments they agreed to make, then who is? Seems that many politicians see it as the taxpayers problem. Senator Dodd feels that:
“Americans should not lose their homes, through no fault of their own.” - Senator Christopher Dodd
Apparently, biting off more than one can chew is no longer an individual problem, it is society’s problem. Who knew that the ‘leaders’ of our country were so against personal responsibility. Aside from the capital gains tax, ’society’ didn’t really benefit from the massive property appreciation, so why should society have to foot the bill for the ‘bad investments’ that were made.
Sadly, it isn’t just politicians on the national level that are screaming BAILOUT! Seems that Los Angeles City Councilman Richard Ararcon wants CITY, STATE, and FEDERAL funds to bailout CITY homeowners that cannot afford their mortgages!! Read it here if you don’t believe me. Let me rephrase that for you: some local politician wants local, state, and national tax dollars to help the people in HIS area that cannot meet the mortgage obligations they undertook as individuals. But wait…it gets better!
Warning that the region is embroiled in a foreclosure upheaval, Alarcon said he’s also considering asking lawmakers to declare a state of emergency to direct state and federal money to counseling and loans for people about to lose their homes.
WOW…a “state of emergency”. I thought hurricanes, earthquakes, or other natural disasters that were outside human control constituted national disasters. Not a bunch of people that were looking to ‘hit it big’ buying overpriced LA County real estate with mortgages they couldn’t afford.
“We’re in a crisis. We don’t need bureaucrats who are going to sit on their thumbs and not get things done. Who do we go to in federal government to ask for emergency assistance to help solve this crisis?” Alarcon asked city housing officials Tuesday during an emergency hearing on foreclosures.
Just to make sure I didn’t miss anything, I looked up the US Constitution again, and I saw NOTHING about the federal government stepping in and providing ‘emergency assistance’ to people that made poor mortgage decisions. If I missed something, would somebody please point it out to me.
“It seems to me we’d better kick the federal government in the butt to get into action to help us solve the problem, and I don’t think we’re doing any kicking now.”
I think we better kick a several thousand home owners in the butt…not the taxpayers! They either need to learn from this experience by filing BK and going through that process, or pick up a 2nd, 3rd, or 4th job to fulfill their financial mortgage obligations. I know there are some people that had things happen out of their control (accidents, deaths, etc.) but for the people that were looking for “No Money Down Real Estate Riches”, welcome to ‘investing’. You take risks…and you reap the rewards, or suffer the consequences (until politicians step in…or at least that is the way it appears).
Now, that said, since Councilman Alarcon wants EVERYBODY in the country to pay for just the people in ‘his city’ that cannot afford their mortgages, I think that even people outside of ‘his’ district should let him know how you feel. Here is his e-mail address: Councilmember.alarcon@lacity.org. After all, he wants YOU to pay for his constituents mistakes!
Finally, I don’t know how much good it will do, but I have been informed of on online petition that is against any mortgage bailout. Here is the link if you do NOT want a government bailout of homeowners that are going into foreclosure: NO BAILOUT PETITION.
Remember, if the bailout starts, it is going to get ugly. Instead of working a little bit harder when things get tough, more people will fold and take the bailout. Let’s not forget that we still have ‘two more shoes to drop’ so to speak, so this is just the beginning of things getting ugly. You better think real hard if ‘bailout’ is the way you want to go.
Stay tuned…
SoCalMtgGuy
August 22nd, 2007 22:00
Here’s a petition against bailout if anyone’s interested….
Found on appraisers’ forum - we’re against it too
http://www.petitiononline.com/bailout/petition.html
Doreen in FL
August 22nd, 2007 22:10
Same petition as in the post.
Either sign the petition, or sign higher 1040’s (tax form) as the government gets money from ONE place….the taxpayers!
Stay tuned…
SoCalMtgGuy
August 22nd, 2007 23:09
Panda Bear says that it looks like a great time to buy a panda home with a NegAm if I’ll get bailed out. More money for bamboo!
August 23rd, 2007 10:26
Yeah, I saw that it was the same after I put it in. I don’t have skill you have to turn words into link behind, lol. Thanks for that - I thought maybe we’d found something before you did - not likely, you’re Good SoCal!
Doreen
August 23rd, 2007 11:17
I know there are some people that had things happen out of their control (accidents, deaths, etc.)…
Which is one of the reasons that we have bankrupcy. People who have a negative net worth and NO realistic chance of paying their debts should be able to get bankrupcy protection.
August 23rd, 2007 12:17
When the USSR disolved, did all of their politcos come to California for a second career?
August 23rd, 2007 12:26
I totally agree with you SoCal….no bailout. I signed it and I will soon be backwards on my property due to values falling everywhere. This government bailout talk is just crazy, no one had a gun to their head when they signed the docs for a loan that could blow up on them. I know lots of people who say if there properties go upside down, they would walk, and not due to inability to make the payments, just because no one wants to own something they are negative on.
August 23rd, 2007 12:36
Whoever was the original poster can suck it.
Not everyone in foreclosure were looking to get rich. In fact a poll of people facing foreclosure would be insightful. Loans were available because of low interest rates and creative mortgages. Rates have risen, and the market turned thus foreclosures.
I moved to CA and had saved some money. I would have bought whether the market was hot or flat. I bought a condo for $395k, now comps are $340-350k, it sucks. on top of that I have a neg am IO mortgage. my principal and interest rate has risen…1st was 316k, and is now 333k. interest started in the 5s and is now %7.625
I have good credit, and have never missed a payment, but if the government were handing out counseling I would gladly take it. This has been the most stressful year of my life. Deciding whether to sell at a large loss or holding has been another stress. Both are tough roads to go down.
Reading these biased blogs over the last couple of months had me convinced selling was the best option. sit on the sidelines, and repay $75k+ in losses. But you know what? I have become a fan of the value in a guarantee. If I sell tomorrow, I am guaranteed a loss.
If I stick it out with negative cash flow…I have a roommate that pays rent…and now my gf just moved in giving more rent, tax breaks, and think long term, I’d like to take the chance that my condo would stabilize or recover to purchase price.
While I bought at the peak of the market here, I don’t think I can justify selling now.
any thoughts?
August 23rd, 2007 12:43
I agree with you mdman about not selling right now. I bought my house in 2003 one 3/1 arm full doc with indymac. Not a IO thank god, but my start rate was 3% and this year was the 1st adjustment and my rate doubled, now it is at 6% which isn’t bad but who knows what will happen next year. I am getting negative now and I keep thinking I should try to sell but then I know I will be at a loss, so I plan on just staying in my home and see what happens, I work as a mortgage loan processor and have been in this business since 1986 and I have never seen anything like this before. It is pretty scary. I agree with you that people need some kind of education on what loans are out there and on buying a home, most of the loan reps I processed for could not even explain ARM loans themselves much less a neg. am loan. Hang in there!
August 23rd, 2007 13:51
mdman,
Maybe they weren’t looking to get rich, but they bit off more than they could chew.
You probably aren’t going to like what I am saying, but that is why I started doing this blog, so people would THINK about what they were doing, before they did it.
What do rising interest rates have to do with anything? If interest rates were at ALL TIME HISTORICAL LOWS, don’t you think that would be the time to get a ‘fixed rate’ loan and lock in that low rate? I would want an ARM loan when rates are at all time highs, not lows. That way when the rates got lower, my payments would as well…not the other way around. Rates can’t get much lower than 3-4%, but they can get much higher as evidenced by the 17-20% rates seen decades ago.
How come very few people put in ANY research before spending $395,000 dollars?? You are going to work (conservatively) 40 hours per week, 50 weeks a year, for at least a few years until you sell the place…or much longer if you ‘pay it off’. Wouldn’t it be worth doing some research (2-5 hours) on google or elsewhere to LEARN about the largest purchase you have made so far in your life, that has a 30-year payment plan???
How come ‘nobody’ was asking for counseling when they were ‘up’ 50-100k??
Buying a home is not an ‘impulse purchase’ (or shouldn’t be anyway) like buying some candy or a magazine in the check-out line.
I would ask why you took the neg-am I/O loan? Was it that ‘low’ payment that you could ‘afford’ that ’sold’ you on the place? What does a 400k condo rent for in your area? What are the taxes and HOA on that condo? I rent a 400-500k condo and I know what it would cost to ‘own’ the same unit. I would be looking at 700-800 per month in just taxes/hoa if I bought it…and the difference between that and what I pay in rent wouldn’t touch anywhere CLOSE to the mortgage on property in that price range.
You obviously couldn’t afford your home, or you would have used something other than a neg-am loan. I’m guessing your payments were in the 1100-1300 range on the neg-am loan.
Let’s just assume you got a 100% 1-loan, 30 year fixed at 6%. Your payments would be $2,368.22 plus taxes and hoa on a $395k purchase price. That easily puts you close to $3000 per month for a fixed rate loan on that condo (using conservative rates). I know what you can rent for $3000 here in San Diego. I have friends renting a 2 bed/2 bath condo on a 20th+ floor in a building that looks into PetCo park…and they paying about $2700-2800 a month. I’m guessing the value of that condo is quite a bit more than $395k.
Two other things you said:
- “I would have bought whether the market was hot or flat.”
Again, shows no sign of doing any research.
- “I have become a fan of the value in a guarantee.”
I have no idea what guarantees you are talking about. There are no guarantees with real estate or any other investment.
I guess I could say there was a third thing you said, and that was telling the original poster (I assume that is me) to suck it and about these ‘biased bloggers’. That is fine. Fight me with logic, not put downs. Show me the bias in the numbers I have been posting here for 2 years.
Many people have told me that my blog saved them tens of thousands of dollars or saved their marriage/family. I know it sucks to be upside down and with a mortgage you have no control over…again, that is why I started this site 2 years ago!! To try an help people from falling into the same ‘trap’ you did.
I have no doubt that you have good credit, pay your bills, and just wanted a place to live…but you bought a house that you thought was a ‘good buy’ at the time. Now you have to deal with the repercussions of your actions. Learn from it…and don’t make the same mistake again.
Let me know if I can help…
SoCalMtgGuy
August 23rd, 2007 14:27
SoCalMtgGuy,
to answer some of your questions.
I relied on and put my trust in my parents heavily in buying my condo. They are real esatate ivestors/mangers in Chicago. What I think was a hinderence in approaching a purchase was relying on my parents whose mindset was geared for downside risk. While they were aware of California boom-bust scenarios, they are used to steadier appreciation in the Midwest. They were sticker schocked by the prices out here in CA, as was I. I can honestly say that I didn’t a market analysis. We relied on the market at it’s present state (i.e. only looked at the 2BR comps). In becoming more AWARE, I have googled “huosing bubble”, and read posts from people in January 2005 (6 months before I bought), that already saw a problem with the market..i.e. to many ARMS, disconnect from fundamentals (affordability), etc. Looking back, I would like to think that I would have seen those posts, or a blog like yours if it existed, but I didn’t. I was in the dark. and frankly I was not even that aware of how long the rise in appreciation had been going. I do remember the realtor saying “we’ve had 20% appreciation for the last couple of years, etc.” I remember plugging 395k in to a calculator and saying, hey I’d be happy with half that. 10% on 395k sort of justifies unaffordability.
As to the loan itself. My mom says I didn’t qualify for a fixed interest only. The neg am loan was a matter of what I could afford. She also pleads innocence on the fast hat mortgage rates went up…thus my ARM adjusted. I left it up to them to set me up in a good loan. This was my first home.
I have rented the other bedroom out the entire time I have been there. I first rented it for $500 to a clsoe friend (at a break, because he couldn’t aford more). then to another for $600. I just got a new roommate and am renting at $700, though she has a dog and a cat. most other people looking couldn’t do more than $625. As a whole unit it could rent maybe for $1400 partially furnished. it’s tough when a unit across the way rents for $1200 (I presume those owners aren’t as fucked as I am, and have owned for some time). frankly I think the rents are low for the region. The Santa Maria poster can atest to that.
more later
mdman
August 23rd, 2007 14:34
*****Correction****
read this version
*****************
SoCalMtgGuy,
to answer some of your questions.
I relied on and put my trust in my parents heavily in buying my condo. They are real estate investors/mangers in Chicago. What I think was a hindrance in approaching a purchase was relying on my parents whose mindset was NOT geared for downside risk. While they were aware of California boom-bust scenarios, they are used to steadier appreciation in the Midwest. They were sticker shocked by the prices out here in CA, as was I. I can honestly say that I didn’t a market analysis. We relied on the market at it’s present state (i.e. only looked at the 2BR comps). In becoming more AWARE, I have googled “housing bubble”, and read posts from people in January 2005 (6 months before I bought), that already saw a problem with the market..i.e. to many ARMS, disconnect from fundamentals (affordability), etc. Looking back, I would like to think that I would have seen those posts, or a blog like yours if it existed, but I didn’t. I was in the dark. and frankly I was not even that aware of how long the rise in appreciation had been going. I do remember the realtor saying “we’ve had 20% appreciation for the last couple of years, etc.” I remember plugging 395k in to a calculator and saying, hey I’d be happy with half that. 10% on 395k sort of justifies an unaffordable condo. On top of that was future earnings and increasing the rent. I have been able to increase rent, but the later has been slow. I might transfer within my company in the next 5 months, or change companies to a higher salary. This helps to afford my mortgage. I know it doesn’t justify negative cash flow, but that is the situation.
As to the loan itself. My mom says I didn’t qualify for a fixed interest only. The neg am loan was a matter of what I could afford. She also pleads innocence on the fast hat mortgage rates went up…thus my ARM adjusted. I left it up to them to set me up in a good loan. This was my first home.
I have rented the other bedroom out the entire time I have been there. I first rented it for $500 to a close friend (at a break, because he couldn’t afford more). then to another for $600. I just got a new roommate and am renting at $700, though she has a dog and a cat. most other people looking couldn’t do more than $625. As a whole unit it could rent maybe for $1400 partially furnished. it’s tough when a unit across the way rents for $1200 (I presume those owners aren’t as fucked as I am, and have owned for some time). frankly I think the rents are low for the region. The Santa Maria poster can attest to that.
I am looking at a refi…rates came down a little this week. I still might need to borrow more from my parents to cover the payments…but I really believe I am going to get a higher paying job in the short term, etc. I already have leads outside of the company, etc.
more later
mdman
August 23rd, 2007 14:41
I should add that I live in Grover Beach.
http://maps.yahoo.com/#mvt=m&q1=grover%20beach,ca&trf=0&lon=-120.334625&lat=34.888184&mag=9
The area is beautiful, and many people come here on vacation or to retire. I am neither. the local economy for jobs is limiting. I am looking to get a job with PG&E one of the largest employers in San Luis Obispo county…and more stable than my current job. I am on a contract that is due to end at the end of this year (defense contractor)
August 23rd, 2007 15:11
I have to say SoCal make a hell of alot of sense. When I got my 3% arm I did a full doc loan and I was able to qualify for a fixed rate (I know, I know, dumbass) but I chose an arm because I was going from my nice little condo payment to a much bigger house payment so I wanted to start low. Thankfully I do have a very good arm loan and it can only increase (worst case) to 8%. I’m more concernced with property values continuing to fall which we all know they will especially in California. mdman, what is alitte shocking in your case is that your parents told you you did not qualify for a fixed rate IO so I can’t beleive they put you in a neg am loan, everyone of my friends who asked for advice on loans I would tell them, stay away from the neg. am’s, I wouldn’t recommend those to anyone. Put the guilt trip on your parents, maybe you can get some sympathy money out of them! LOL (jusk joking)
August 23rd, 2007 15:16
mdman
“As to the loan itself. My mom says I didn’t qualify for a fixed interest only. The neg am loan was a matter of what I could afford. She also pleads innocence on the fast hat mortgage rates went up…thus my ARM adjusted. I left it up to them to set me up in a good loan. This was my first home.”
That is the problem with this whole mess. Instead of finding a place you could afford (which in CA can be ‘impossible’ because of the disconnected situation here) or renting (what I have done), you used a ‘creative’ loan that s-t-r-e-t-c-h-e-d your dollar so that you could ‘afford’ a place in the short term.
Whatever happened to being patient and renting until you have the money for a larger down payment, or the higher income necessary to afford the home?
If you can only afford the payment that is going negative every month (neg-am) then you cannot afford the place!!! Your parents did you a real disservice this time around. Putting you in a neg-am loan, and then pleading ignorance that rates went up is amazing to me.
What is the lowest that rates can be? 0.0% What are some of the highest rates we have seen? 16.8% back in 1981. Where does 3-5% fall in that range? Is there more room to go down or up?
The media was saying that rates were at 40 year lows!! So what is the obvious direction that rates are headed? UP, would be my guess…especially over a period of years. I’m not trying to time rates on a monthly basis, I’m just going to look at long term trends if I am getting an ARM mortgage.
Either way, I don’t like hearing situations like yours. Yeah, you made some mistakes, but the loose credit in the hands of irresponsible people pushed prices to bubble levels. It was 5-6 years of nothing but fun and glory…well guess what, the harder the party, the worse the hangover.
That said, what are rents like in that area? I assume they are less than your mortgage…and could easily be covered by 3 people with much less stress. Might be worth trying to negotiate a short sale. Paying 24000 a year in interest only payments plus taxes and hoa’s is a lot of money…I bet you could rent for a lot less.
Also…if you only have an interest only payment…you are just renting from the bank and the government (I/O and taxes). I would rather rent from a landlord for half the cost of renting from the bank and the government.
Thanks for reading my blog…and best of luck to you.
SoCalMtgGuy
August 23rd, 2007 15:17
“As to the loan itself. My mom says I didn’t qualify for a fixed interest only. The neg am loan was a matter of what I could afford.”
Ouch. I’m assuming you are still on neg am then? If so, why are you hanging onto the condo? As I understand it, you aren’t actually paying for the condo, and are only going deeper in debt.
August 23rd, 2007 15:52
I would like to express sympathy for mdman, but I have none. I was penciling out places in 2002/2003 and it didn’t make sense to buy. So guess what? I didn’t buy and have a nice fat retirement account, no debt, and have had some fairly nice vacations because of it.
As to the rents for your region, I pay $700 to split a 2 bedroom by the beach in Pacific Beach. This is right in the middle of pretty much everything in San Diego. (Including the high paying jobs.) SLO is mostly a tourism economy without a lot of high paying jobs. Why would rents be equal to or higher than San Diego?
August 23rd, 2007 16:20
mdman, how is your relationship with your parents now?
August 23rd, 2007 18:34
SoCal — glad to see you’re “reinvigorated” and posting such lively stuff.
There was a clueless soul, albeit with good intentions, who posted on HBB today that he thought housing prices will tank by 90%. While you and I and most of the regulars here and there would become rich beyond imagination should such occur, he probably didn’t think about the rent vs. buy equation and the gummint’s assumed intention to prevent, at any cost, another Great Depression. I quite happily will take the 50-60% house-price haircut that is overdue — and coming soon to a “theater” (old wartime folks will relate to that more quickly) near you.
August 23rd, 2007 18:49
Chip,
I enjoy posting when I can add value and things are happening. For a while there, everybody was jumping on the ‘housing bubble’ bandwagon, but there wasn’t much going on.
NOW we have major lenders talking BK and lots of things are happening. Not to mention the politicians stepping up the pandering as an election is just around the corner.
I will get VERY LOUD if we get close to any BAILOUT for people that made bad decisions…and it IS that simple.
Let others know that I should have new content up every week or so now. Just keep checking back!
Stay tuned…
SoCalMtgGuy
August 23rd, 2007 18:58
Hi,
I thought I would start a petition. I never thought it would grow to almost 1000 names in less than 3 days. It really is picking up steam. Please sign it as it only takes about 20 seconds. I don’t know what kind of effect it will have, but I do believe in strength in number. Please pass it on to others via blogs, forums, and emails. Yes! We can make a difference.
Thanks for posting SoCalMtgGuy!
August 23rd, 2007 20:48
mdman says:
“Whoever was the original poster can suck it…any thoughts?”
_____
Yeah here’s a few thoughts:
Better break out the knee pads and get ready to start sucking because it looks like you’re about to bite the big one.
And while you’re at it, get that Dunkin Donuts apron ready along with your Starbucks hat because you’re going to need two incomes to support your bad housing habit!
Who do you think you are with your bailout attitude? This isn’t fricken’ communist Russia where it’s “from each according to his ability to each according to his need.”
I played by the rules and lived modestly where I could afford to live and was punished for years as the rats lived large in their McMansions they really couldn’t afford.
The chickens are coming home to roost. And it’s high time to break out your Big Bird outfit and get ready to swing a “90% Going Out of Business Sale” for a living!
What arrogance…
August 24th, 2007 05:10
Hope to see you follow through with your plans to post more often, SCMG.
I have some sympathy for mdman relying on his parents advice. While I also admire his willingness to stick things out, I would guess that the probability of prices dropping significantly more makes selling now a better choice.
Count me among the long term renters (more than fifteen years now). We now rent a very nice three bedroom house (furnished) for about $1800 a month. I had trouble for a while convincing my wife (”real estate always goes up,” “renting is the same as throwing money away”) that buying during the past few years did not make any sense. We have saved hard, and invested well, and we can now afford to pay cash for any home we could possibly want. We will probably end up building a custom home couple of years - maybe earlier if we see the right piece of land (but I think that land prices have a long way to fall, too).
August 24th, 2007 05:35
SoCalMtgGuy,
you wrote: Now, that said, since Councilman Alarcon wants EVERYBODY in the country to pay for just the people in ‘his city’ that cannot afford their mortgages.
I am angry and bitter at this. It reminds me about hundreds of millions Indonesians in 1998 (and up till now), innocent of unscrupulous private investments financed by Wall Street, who *had to pay all the debt* when these junk investment melt down in the Asian crisis.
Who twisted our government’s hand and forced it to pay with public money? IMF and the World Bank out of Wall Street pressure.
Free market capitalism my foot!!
I hope all decent, law abiding Americans out here now understand what happened in some distant countries when Wall Street flex its muscle and RESIST Wall Street’s demand to bailout sub-prime mortgages.
August 24th, 2007 09:38
SoCal-
Thank you for all the wonderful information/advice over the last couple of years. I purchased a home in San Diego with a friend of mine about four years ago, and we refinanced about two years ago to a neg-am and took out most of our equity.
We noticed that we were losing quite a bit of money recently, though, and when the pre-payment penalty expired we decided to act, and just two days ago signed the final paperwork on a 30 year fixed/10 yr IO. I can’t tell you what a feeling it is to actually know what our monthly payment is and will be (it goes up in ten years time, but to a reasonable, fixed level).
We didn’t get in to Flip and make money, but I will not deny that I think of the home as an investment. But if you compare real estate (in normal times) to say, a money market account returning 5%, you’ll probably be better off investing your money in such an account than a house.
For me (I work as a glass artist in addition to my mortgage paying side jobs), it’s the chance to have your work studio and home combined into one payment, and live in one of the greatest areas in the nation, so it’s a no brainer. I couldn’t rent a house and throw up a 20 foot shed, fuck with the plumbing on my own terms, etc.
It’s funny, though, that I got into the situation, not knowing anything about how our original loan and the refinanced loan worked. I still don’t understand, I know only that I lost money, but at least now I know what our loan is and what it will be. Fixed, damnit.
August 24th, 2007 12:02
I have a suggestion for a future post. As much as I’ve seen about FICO scores, I still don’t have a feel for what someone with a subprime score is typically like. From what I’ve gathered, someone with a 620 probably was late on a lot of bills, maybe something in collections a couple years back.
Could you give the typical profile os someone with 700,650, 600?
August 24th, 2007 15:43
SoCal,
Your comment about interest rates being at historic lows hit the nail on the head. When rates are this low you should be financing with a 30 year fixed, not all these free wheeling ARM’s, IO’s etc. If you have to use those loan products when rates are this low, you proabably can’t afford the house!!
I guess my biggest worry is that the Federal reserve has essentially painted itself into a corner by lowering interest rates (once again), and the entire economy will suffer for it in ways we haven’t seen since the 1930’s.
My family has worked hard at saving for the future and getting ahead. I would like to hear someone (maybe Bernanke or Greenspan) suggest that we need interest rate INCREASES to inspire savings and fiscal responsibility–ie give people a reason to save. I think a lot of people have no interest in building up savings because there isn’t much reward for it when savings accounts only pay .15%. (I know there are ways for getting much better returns, but many don’t) Of course personality traits of discipline and sacrifice are hard to come by these days as well. People will reap their just rewards for ignorance.
Great work with all your posts and comments!!!
August 24th, 2007 19:38
I’d like to second the thoughts Joe had. To start off his post by inviting SoCalMtgGuy to “suck it” touched a nerve with me. SoCal, you handled with quite a bit of class. I know why I keep coming back.
People choosing ARMs at a time when interest rates were at all time lows makes my jaw hit the floor. The gift of a lifetime (literally) was being presented, and it was squandered. Sad
Well, off to a few other “biased” blogs to learn all I can.
“Life’s hard, but it’s harder if you’re stupid.”
August 24th, 2007 20:47
http://thegreatloanblog.blogspot.com
Where did the punch bowl go?
August 25th, 2007 08:40
In the spirirt of democracy and a good saturday round table discussion, what is your view on the proposed bailout plans that the presidential candidates have been discussing?
http://thegreatloanblog.blogspot.com/
August 25th, 2007 09:40
SoCal,
Very informative site. I appreciate the stories/comments being shared.
However, I can’t help but notice at the very top of the page Ads by Google: House Payments Fall Again/310,000 Mortgage For 999/mo. Seen on O.Winfrey. Refinance Now!
Am I missing something here? In light of what is being presented on your site, aren’t Ads such as this counter-productive to ‘what it is you are trying to accomplish’?
Seems odd to me.
James,
Burbank, CA.
August 25th, 2007 12:30
James,
The google ads are all ‘keyword’ driven. If I were talking about birds, you would get ‘bird’ related ads.
If I didn’t have the ads on the site, I probably wouldn’t keep the site up. I don’t make much money off the ads, but it does help cover the costs of hosting/running/maintaining the site.
If I could rely just on donations alone, that would be nice, but it is not realistic.
Most people that are reading my blog are not going to be swayed by those ads anyway. If anything it just adds to the blogs credibility by giving examples that ‘anybody can get a loan’ and all of the crazy mortgages that are available.
Thanks for reading my blog.
Stay tuned…
SoCalMtgGuy
August 26th, 2007 07:07
What is amazing is that grown responsible rational adults- hey, they bought homes worth $700,000 to $200,000 dollars, which requires a professional carreer salary at least of a $100,000 combined income, not someone basically flipping hamburgers or collecting alumimun cans - act as second graders playing the game monopoly buying everything with the roll of the dice using play money in different colors, when they start to lose flip the board over (bailouts) to end the game.
August 26th, 2007 11:35
Everyone, please follow SoCals lead & keep it friendly. mdman certainly has a right to be upset about his tough spot in life at this time. Also, it’s not like parents WANT to put a kid in the toilet. Take it from me, Mother guilt is the WORST of all guilt. So his folks Saw what Most people “saw” EVEN those in Mortgages. MOST did NOT know about MBSs & so on.
I did not, even after being an appraiser since 1980… I was Here when the RTC was formed to bail out the other problem. The people over 40 when all this New stuff started No Doubt thought there was a New kind of mechanism to Avoid disaster. Kids were another issue, “shielded” from responsibility by the plastic & cellphones, toys they’ve Always known. Our folks told us about the GD and we want to give them more. Call it emotional child-rearing fallout of generations…
We’d Seen the late 80’s thing. NOT that it’s the same. That was a couple of areas and Different issues. But we all Assumed that Govt AND banking had Learned. We all Still thought the Bank would NOT lend more than you could repay. There WERE ARMs before the bubble, but the Payment kept you Posted as it went UP with the rate…. It was Insanity not to Fix a problem so it couldn’t happen again. In our eyes, the gov’t Helps the people, not rips them off! My dad’s generation would Never have done that…. They Volunteered to go to Japan, Europe and so on. We believed in Tom Jefferson, Geo Washington & the whole historical freedom thing. Along with the “American Dream”.
My own MB misled me by saying, “oh, No, you’ll get a Statement so you can pay the extra” But everyone was predicting low rates for LONG time. I bit - with Equity and NOT zero down. Now the taxes & insurance in FL are killing me, After a refi to fixed rate but I Can hang on and I Don’t see losing over half the value - And I bought in 93 and 2003 respectively.
The “old” home, I would have sold in 2004-05, Except for an evil liar-ex ripping me off & two leins (one by him - another tenant’s dogs bit pool guy - Unforeseeable) He took advantage of that lein & I loaned him from my equity - big mistake, then when he’d got all he could, he added a divorce lein before I got power back from Wilma, AND while my business was on it’s back from liars I would not work for as an appraiser.
Then as things tumbled I was Stuck in the 2nd house (original home) and the hostage divorce… Now it’s gonna be an ALF so that it can pay the taxes & full nut AND stay in the family with the equity I have. Each situation is different.
Here’s something I found on an appraiser’s forum.
There was a run on Countrywide’s bank. The problem with a bank failure, it produces contagion. Banks not in trouble become the next problem.
Here is a good article on Countrywide: Inside the Countrywide Lending Spree http://www.nytimes.com/2007/08/26/business/yourmoney/26country.html?_r=1&th&emc=th&oref=slogin
Quote:
AMONG Countrywide’s operations are a bank, overseen by the Office of Thrift Supervision; a broker-dealer that trades United States government securities and sells mortgage-backed securities; a mortgage servicing arm; a real estate closing services company; an insurance company; and three special-purpose vehicles that issue short-term commercial paper backed by Countrywide mortgages.
Quote:
As of June 30, almost one in four subprime loans that Countrywide services was delinquent, up from 15 percent in the same period last year, according to company filings.
Quote:
Regulatory filings show that, as of last year, 45 percent of Countrywide’s loans carried adjustable rates — the kind of loans that are set to reprice this fall and later, and which are causing so much anxiety among borrowers and investors alike. Countrywide has a huge presence in California: 46 percent of the loans it holds on its books were made there, and 28 percent of the loans it services are there.
Countrywide packages most of its loans into securities pools that it sells to investors.
Quote:
As recently as July 27, Countrywide’s product list showed that it would lend $500,000 to a borrower rated C-minus, the second-riskiest grade. As long as the loan represented no more than 70 percent of the underlying property’s value, Countrywide would lend to a borrower even if the person had a credit score as low as 500.
Quote:
One reason these loans were so lucrative for Countrywide is that investors who bought securities backed by the mortgages were willing to pay more for loans with prepayment penalties and those whose interest rates were going to reset at higher levels. Investors ponied up because pools of subprime loans were likely to generate a larger cash flow than prime loans that carried lower fixed rates.
August 27th, 2007 09:57
Joe Jacari says:
“Who do you think you are with your bailout attitude? This isn’t fricken’ communist Russia where it’s “from each according to his ability to each according to his need.””
Like everyone else, including SoCalMtgGuy, you seem to be under the false impression that a “Bailout” is for guys like mdman or other would-be welfare queens. Or as SoCalMtgGuy puts it: “[a]…BAILOUT for people that bit off more than they could chew.”
Nothing could be farther from the truth. There IS a bailout, it’s already happening, it comes out of the pockets of all of us, and it is for more than you could ever comprehend. SoCalMtgGuy has fallen prey to a “divide and conquer” strategy that seeks to pit each of us have-nothings against the other. This keeps our focus off of the real thieves. It always works, and I doubt that our fortunes will be much different this go round either.
This “bailout”, be it in the form of a politicians proposal, or something even more nefarious DOES NOT bailout those poor suckers that got cought up in this free-for-all, in reality it bails out the mega $Billion finance houses, International corporations, European Banks, The House of Saud, and the like.
If/when the taxpayers give $1 to mdman, in reality that “transfer” will go directly to the loan organization servicing that mortgage (otherwise mdman will spend it on some other trinket). Therefore saving the ISSUER of the loan who gets to collect INTEREST (profit)…not mdman.
It gets worse, (some may argue this so-called country you don’t think is the USSR, surpassed that benchmark a long time ago.):
You do realize the Federal reserve “gets” its money to “take major actions” by creating it out of thin air?
“When the Federal Reserve writes a check, it is creating money . . . The Federal Reserve is a total moneymaking machine. It can issue money or checks. And it never has a problem making its checks good because it can obtain the $5 and $10 bills necessary to cover its check simply by asking the Treasury Department’s Bureau of Printing and Engraving to print them.”
2 weeks ago, the “Fed” bought MBS’s (called an “operation” to put “liquidity” into the “market”) with money IT did not have on it’s balance sheets, thus “manufacturing” money out of thin air. In theory, these same institutions who sold the MBS (to the tune of $37 Billion on ONE day) to the Fed are suppose to buy them back with interest in 15 days. Hasn’t happened yet. It [the Fed] has the legal right to make such moves, again a legacy from the post depression days. But what happens here is two things; the money supply gets diluted making my (and everyone else’s) hard earned dollar less valuable, and the moneychangers (and their commissions) do not get punished for pimping worthless MBS paper.
As a matter of fact they get rewarded. Rewarded by our government, and by extension us taxpayers who are too stupid and lazy to understand the worlds richest people (not poor slobs like mdman) are getting our BAILOUT money. Again, its not on the table for discussion like Hillary’s plan, this $37 Billion welfare check gets cut and mailed on demand. It already happened. So mdman is correct to say he deserves a government handout…hell, if its good enough for Wall Streets biggest investment houses, then it should be damn good enough for mdman.
I guess as long as we can watch American idol and blame this problem on each other, we deserve the massive recession that is coming our way.
August 27th, 2007 10:05
Why is it that Socal and the vast majority of commenters here are horrified at the thought of a bailout for people sucked into bad loans by predatory lenders, many of those lenders and brokers, having made a mint off the backs of the “suckers”, are now out of the biz, primed and ready with their ill gotten gains to buy up real estate on the ultra-cheap when prices drop though the floor?
Yet I haven’t heard a peep over the vast quantities of tax payer cash injected into the banks worldwide to loosen up the “credit crunch” and to prop up the wealthy who designed and own the various equities that have led to this mess in the first place. It seems people don’t have a problem with the rich being massively bailed out by tax payer cash, so they can maintain their mansion and exotic car driven lifestyle. Yet so many of you scream blue bloody murder at the thought that people who actually work for a living and pay the bulk of taxes, who in many cases were conned into terrible loans, and who now face the possibility of bankruptcy, and homelessness are some how less deserving than the wealthy predators that are the prime cause of this mess in the first place. Do people really expect someone who works at a low paying office job, or at a fast food outlet to have the financial knowledge to understand they are being conned by a broker and the bank they are borrowing the money from? Most Americans couldn’t find Haiti on a map without Google fer christsakes.
The heartlessness and the gloating toward people who were trying to earn a decent living and to provide themselves a comfortable home is disgusting. It’s only all the worse that the wealthy are in line to get away like bandits. You people need to wake up.
August 27th, 2007 11:41
wondering…
I don’t think homeowners OR wall street should be bailed out. They bought the mortgages as investments and quit doing their ‘risk assessment’ of the borrowers. If the borrowers default, the borrower, and the ‘investor’ who bought it should suffer the consequences of their actions.
I know that the massive scale of this will impact other areas of the economy…but it was fine when the ‘boom’ helped the economy, so you have to take your ‘lumps’ as well.
You obviously haven’t been reading my blog for very long…or you would know the point of this site was to EDUCATE people on the mortgages out there and to not become a ‘casualty of this housing bubble’.
You said: Do people really expect someone who works at a low paying office job, or at a fast food outlet to have the financial knowledge to understand they are being conned by a broker and the bank they are borrowing the money from?
COME ON!!! Don’t tell me that somebody working a 30-40k job doesn’t know that they can’t afford a 500-600k home. They didn’t have to take the stated income loans to get the mortgages. They didn’t have to sign by their ‘obviously higher than what I am making’ incomes. And I’m sick of the ‘I didn’t know what I was doing’ defense by these people. If you can’t find Haiti on a map, or do the research figure it out, then maybe you aren’t responsible or smart enough to own a home.
If people just did some BASIC MATH, they would see they couldn’t afford the houses they were buying. But since so many other people ‘got away’ with I/O or other loans to make their ‘equity gains’ they figured they should do it too. People ran with the herd and are going to get burned. That is why this is a bubble…and will last much longer than the stock bubble.
I have done the math here for about 2 years and tried to show multiple times that this market doesn’t make sense. But patience, and renting haven’t been too fashionable the past 5-6 years.
I am a renter, and I did not get ‘rich’ by ANY stretch of the imagination from my time in the mortgage industry.
I have nothing against earning a decent living and wanting to own a home. BUT, take some personal responsibility for your purchase and do some research if you don’t know what you are doing. With freedom comes responsibility…but nobody wants that part of the equation anymore.
Same goes for Wall Street and the guys that were making 10’s to hundreds of millions of dollars per year. You made the loans, now they are tanking, YOU take your lumps. Not the taxpayers burden to bail people out.
Let me ask you this: why should the taxpayers bailout homeowners? because their ‘intentions’ were good? Come on, there will never be enough money to bail out all the bad investments that people will make in this country. That also sets a dangerous precedent if guvment is there to ‘help’ every time an investment goes south.
Stay tuned…
SoCalMtgGuy
August 27th, 2007 11:58
Dogma,
I know what is going on, and it ticks me off that those CEOs, hedge fund managers, and wall street big shots made their millions and millions of dollars, then they run to the governemnt with their big donations for a ‘bailout’.
Don’t think I don’t know that is happening. I knew that would happen years ago.
The thing is, the best thing I can do to help, is to try and educate people to not ‘fall pray’ to these mortgages. I can’t change government, or wall street. But if 1000’s of homeowners don’t become ’slaves’ to these guys through large mortgages they cannot afford, the big guys don’t make their money.
Sadly, the ’sheep’ of America make it all too easy for these people to do it. They ‘buy into’ the ‘get rich with real estate’ stuff that is thrown out there. They see that lots of rich people got there in real estate…so they will do the same.
So yes, I get what is happening, and I wish the government would stay HANDS OFF wall street, and the homeowners. If that means bad economic times, so be it. Maybe it will teach us a lesson that we won’t soon forget. Funny how I/O loans were very popular in the 1920’s right before the Great Depression. I know a recession would be painful, but this country needs to get back to ‘producing’ things instead of just ‘trading’ and hedging things.
Stay tuned…
SoCalMtgGuy
August 27th, 2007 19:50
Bailing out homeowners would make far more economic sense than bailing out the millionaires and billionaires, and it could be structured differently than a simply a money give away, it could be simply a fixed low interest loan with payments the individuals can afford. Overtime they’d pay the money back.
What’s more the money would stay in the US economy instead of being moved off-shore. Moreover, if that is combined with punishment for predatory lenders and brokers who sold people on terrible loans, you’d be teaching people a lesson. Inducing mass poverty on the scale of the Great Depression would be catastrophic for the majority of the middle class, and the wealthy would yet again benefit, because they’d be able to buy up assets at insanely bargain prices.
The American economy has never grown faster than during the command and control economy of WW2. That economy continued well into the ’50s, and the American standard of living rose faster than at any time in history before or since. Some decent regulation, and spending some of that tax money on something (just about anything) other than overpriced military hardware and the corporate friends of Dick Cheney would go a long way to cutting that growing income gap between the super rich and everyone else.
People shouldn’t have to rely on a blog to avoid falling prey to bad mortgages (yes you’ve been doing a great job, but it’s like throwing a pebble in the ocean, as you yourself have witnessed, as some of your readers, despite your warnings, were still considering potentially overextending themselves not so long ago). Laws, like those against murder, exist for a reason. What’s been going on is really just fraud, and it should have been illegal.
August 27th, 2007 20:07
wondering,
People shouldn’t have to rely on a blog, but they should be able to grab a calculator, do some math, and figure out what they can afford. There are a million mortgage calculators on the internet as well.
There are so many ‘wrongs’ that went into this situation, that is why people have to think for themselves. I know that is hard for most people, but following the herd usually ends badly in most situations.
Lots of people ‘knew’ they were pushing it, but they couldn’t stand missing the ‘easy’ real estate riches, or fear of being ‘priced out forever’. Yes it took some time to work it’s way through the system, but those who were patient and didn’t rush into anything will be glad they didn’t overextend themselves. You cannot have that large of a disconnect from the fundamentals for that long without repercussions.
Again, the thing was a mess. But the government needs to keep their hands off. No bailout for wall street, OR the homeowners. It is going to be ugly…but it is not the taxpayers responsibility…
SoCalMtgGuy
August 27th, 2007 20:25
Wondering…
You bring up some good points, but welcome to the United States, home of the “Free” right? This is a country founded and exists on capitalism, remember? Free in all ‘markets’ to make decisions both good and bad. If those decisions generate wealth, congratulations… your one of the few who gets to be persecuted by the less-wealthy. If your decisions take you to living in the streets, your one with the many who failed at the capitalism game, and get taken advantage of by the very ones you wish you could be. Who are we as tax payers to pass judgment and give graciousne$$ to bad decision makers in our free society?
When I say “you,” I’m not speaking of you directly but about everyone who is involved in this mess. I absolutely agree with you… If after investigation, tried and found guilty… all of those who participated in fraud getting wealthy should by all means get the book thrown at them. We are a nation governed by laws and you must play the capitalism game all within the law.
Tom
August 27th, 2007 21:54
So Wondering, I test drove a Lexus 430SC ($65,000) over the weekend and I figure if I can come up with $1000 a month and you kick in $200, I can get this car. I live in LA and in LA you have to have a car. Without a car, you can’t get to work, get to the store to buy groceries and all that.
So, you’re asking yourself, “Why should I help this person buy a very expensive car?” Same thing I ask myself when the subject of a bailout comes up. I understand that people wanted a better place to live (at least the more sympathic FBs), buy why should I have to pay for it?
I mean, that Lexus is a hell of a lot nicer than the Honda I drive. And will probably hold its value better than a home at this point.
So, you wanna kick in $200 a month of your hard earned money so I can drive the car of my dreams?
August 28th, 2007 09:32
TresSher, tell me is there a difference between a Lexus 430SC and a home? Shelter is a fairly basic necessity is it not? I mean you could possibly claim that a cardboard box is shelter, provided it doesn’t rain, and most people could probably afford a box without a bank loan. But you’re going to have a rather hard time staying healthy without proper sanitation, or even an address. Hell, most job applications require you to have an address and a phone number don’t they?
Most people invest in a home, not to get rich, but as a place to live, and as a reasonably safe place to put their money, as historically real estate generally appreciates in value. As this blog has shown, even barely decent places to live in many cities were terribly expensive due to real estate speculation. Your crass comparison with the Lexus has nothing to do with the reality of home ownership, or even what a bailout would realistically entail.
I would gladly see $200 a month of my money go into a program that prevented thousands of the working poor from losing their homes to predatory mortgages. Particularly if that money came out of the thousands of per capita tax dollars that go to feeding the military war machine, so the executives of military companies can pay themselves insane levels of renumeration which they use to fill their 5 car garages with… forget a cheap-ass Lexus… Bentleys or Rolls.
August 28th, 2007 17:46
Okay, Wondering - you’re not getting the point. I’m willing to bet that most of these people who were victims of predatory lenders were living in decent places before they decided to trade up - say Honda territory. No luxuries, basic living space. Like your basic car. They were living in something they could afford.
Then they were tempted by a shiney new house - say like a Lexus 430 SC. And just like a car salesman will sell you on the monthly payment - they were sold on the monthly payment for the new house. And did they ask themselves the question, “What if something goes wrong and I can’t make the payment?” Bet they didn’t. They just saw the shiney new house and wanted it. Just like I saw the shiney new car and would really like to own it.
So, if you are so concerned about people in foreclosure, you can look up NODs, interview a few of them, and make one of them an offer to cure their mortgage and help with the monthly payments so they can continue living in their house. That way your money will go 100% to solving someone’s problem.
I’m willing to bet however, that you’ll be hard pressed to find someone who you think truely deserves your handout.
August 28th, 2007 18:04
“Whatever happened to being patient and renting until you have the money for a larger down payment, or the higher income necessary to afford the home?”
I tried that, and thought I was ready to roll in 2004. Suddenly didn’t have enough, so I continued saving, and the price continued receding further out of reach.
I could see where people would give in and take a suicide loan…I’m glad I didn’t, but it was a really tough decision to stick to at that time.
A lot of normal people bought normal houses for ridiculous prices, but at the time it was happening, it looked like the right thing to do.
August 28th, 2007 21:12
If something really goes wrong for just about anyone they aren’t going to be able to make the payments on any debt they owe. The difference with what has gone on in the mortgage industry is that an awful lot of con-artists sold people a fraudulent bill of goods. When you are bombarded by false advertising and false promises and a housing market that seems to just be appreciating the allure of hope can be overwhelming, especially for families that finally think they can earn themselves a home. The predators to advantage of this. The working poor are not only more deserving of help, it would be far better for the economy to help them over helping the rich or letting things crash.
August 29th, 2007 04:59
Bailout? For whom?
An FHA-like program to allow the former FBs to buy homes at LOWER PRICES with SMALLER, CONFORMING LOANS after their prior loans had been written off and housing affordability restored through foreclosure and auction is something I could support.
Any bailout prior to mass foreclosure and auction at lower prices is a bailout for investors and hedge fund traders, not borrowers. THAT IS WHY IT IS BEING CONSIDERED.
Keeping FBs in overpriced houses with unaffordable loans is keeping them FBs. Having the government borrow money to take over some of the cost is making us all FBs as well.
August 29th, 2007 09:20
I was thinking of something more along the lines of requiring the writing off of the fraudulent loans (or buying them up extremely cheaply by the government, and cheaply is the key here as lending institutions must be punished for what they’ve done), and then renegotiating sane loans at sane housing prices.
My concern over auctions at lower prices is that the people who will buy up the properties on the cheap will be the wealthy who made a mint off the fraudulent equities, but then got out of the market at the right time, and now are sitting on loads of cash.
Of course, realistically none of that is going to happen. It’s looking like the government will try to bail out the rich, but that the economy will still enter a severe recession as people begin to default en mass. The hardest hit will be the poor and the middle class, while the wealthy will gobble up assets like gangbusters.
August 29th, 2007 15:27
We don’t want the government holding mortgages and the like. That is communism.
Helping out people who live in a modest house within their means is one thing, helping out homeowners who are living in homes that cost way more than two or three hundred thousand is another. Most of the guilty ones knew exactly what they were doing and thought housing prices never drop… until they did.
The tide went out and we now know who was swimming naked. Should we throw them a life raft? They aren’t drowning. Are their heads above water? Maybe, maybe not.
August 29th, 2007 15:43
*****************
Update from mdman..now calling myself MDman
*****************
Thank you all for the posts regarding my situation. I’ll try to address specific quotes later.
My parents are willing to pay for the cost of a refi, but not for any buy-down (1-2 points). That’s something. but to the lady who mentioned Mother’s guilt….I really have never heard my mother offer much sympathy…I suppose it’s because I speak to my dad over the phone mostly about ht refi. He says that they love me, and that I’ll make it through this.
as far as affordability, I think my mom was highly optimistic on future salary earnings…though not really happening right now.( might have to transfer to San Jose/Sunnyvale within th company to get any promotions…my contract is winding down and money is tight.)
My dad wants me to go ahead with a mortgage broker quoting 6% for a 5yr fix IO (also a 10 yr fix IO at 6.5%). I keep telling him, I am not interested in such a short term…but affordability is always a factor.
also talked to coutrywide about refi, and due to LVR, wanted to tack on PMI which I don’t pay now…..WTF
August 29th, 2007 16:51
*********
Update from MDman
*********
below is the latest from a mortgage broker. They have low fees, and good rates. I hope no bait and switch is going to happen. I am still waiting on Countrwide local office (called lady, and she’ll get back in next couple of days…wtf, I faxed her all my info at least a week ago).
The details of the loan application is filled in for a 10/1 ARM I/O. What is the “1″ in “10/1″? I believed that this was fixed at 6.5% for 10 years, then adjustable.
please lend me advice?
”
Hello,
Attached are the loan documents we have been speaking about regarding the refinance you are looking into with Trilogy Mortgage. This loan is for a 10 Year Fixed Interest Only Mortgage at 6.5%, Fee’s $2,500, no points, no prepayment penalty and Trilogy Mortgage can finish your loan within 20 days or less. All I need from you to lock in your rate is the Borrowers Authorization form signed and faxed back to 714.685.8701. Please let me know if you have any questions at this time that I can answer for you.
Also, the other programs that you are interested in; on a 30 Year Fixed Mortgage the rate is 6.25% the payment $2074 would be Principle & Interest. On the 10 Year Fixed Interest Only at 6% with the 2 point buy-down ($6740) the payment would be $1685. Let me know which program best fits your needs so we can start the loan process.
I will also need this information from you & your husband to submit your loan to my Underwriter is:
- Copy of both your Drivers License & Social Security Card
- Copy of your Mortgage Statement
- Copy of your Home Owners Insurance Dec Page
- Copy of both your two most recent pay check stubs
- Copy of both your two most recent W-2 forms
I do look forward to earning your business.
Thank you,
Peter Mendia
Mortgage Planner
Trilogy Mortgage
Toll-Free: 800.939.4177 ext: 20
Direct: 714.685.0230
Fax: 714.685.8701
pmendia@trilogyhomemortgage.com
www.trilogyhomemortgage.com
“
August 30th, 2007 10:30
All Dodd’s talk seems like the good ol’ empty political rhetoric that’s coming out these days. Has anyone asked where the government is going to find the money to bail out the FBs? With a $9 trillion national debt that keeps growing and growing it doesn’t seem like they can do much of anything short of raising taxes. Thoughts?
August 30th, 2007 15:45
MDman,
The details of the loan application is filled in for a 10/1 ARM I/O. What is the “1″ in “10/1″? I believed that this was fixed at 6.5% for 10 years, then adjustable.
A 10/1 ARM means the rate stays fixed for 10 years, then adjusts once a year after it. I would ask the LO (please don’t call us mortgage planners, most couldn’t tell you how an ARM works to save their life, I once overheard an LO talking to a borrower about a subprime 2/28 ARM, she assured him the rate would never go above 6%) what your index and margin is. The LO should give you an ARM disclosure telling you upfront about the margin and index used. The index is what your reset rate is based on. This changes. If you have a conforming loan (Fannie Mae quality), your index will be either the 1 year US treasury bill or the 1 year LIBOR. The margin is added to the index. Assuming you have a conforming mortgage loan, the margin is usually 2.25% for the LIBOR, around 2.75% (give or take an 1/8) for the 1 Yr T-bill.
I am pretty sure the rate for a 30 year fix at 0 points would be the same as a 10/1 rate, and better than any IO loan. With an IO loan, you are just putting off paying back the principal. It may give you flexibility and that’s it. If you have a chance to pay down principal do it sooner rather than later. Remember, you do have to pay the loan back at some point. Make sure the LO gives you disclosures, if he or she screws you, this will be their out in that they properly notified you. Ask him/her to clarify anything you don’t understand.
Good luck to you.
August 30th, 2007 20:44
“We don’t want the government holding mortgages and the like. That is communism.”
Heh, you don’t really know what communism entails do you. What do you call giving money away to the rich? Is that communism too? My concern has as much to do with self-interest as wanting to help people. If things deteriorate drastically economically, the majority of people who actually pay tax, as opposed to the rich who off-shore most of their money, will be the most affected. You and me. It snowballs. Pumping money to the rich may slow it down a bit, but it doesn’t help the economy where it would do the most benefit, specifically in the pockets of regular tax payers who would spend that money locally rather than squirrel it away in the Cayman Islands.
August 31st, 2007 03:40
Not that Bush can really do much beyond cheerleading for a bailout, but depressing none the less:
http://online.wsj.com/article/SB118851742988914064.html?mod=googlenews_wsj
Makes me sort of want to stop working.
August 31st, 2007 06:03
Wondering,
I don’t understand what you’re saying at all. Why is it just to take the money of responsible poor and middle class people and give it to irresponsible poor and middle class people?
If you like paying for other people’s stupidity no one is going to stop you, but I don’t see why you should demand that we pay for it.
August 31st, 2007 12:51
Joe it’s a lot easier to fix a crack in a dam, than it is to try and shovel some sand in the raging torrent after the dam bursts. You’re going to be paying for other people’s greed and stupidity whether you like it or not. The question is whether the amount is going to be relatively small and controlled, or huge and chaotic. If markets are allowed to collapse, all hell will break loose, and the hardest hit financially will be the poor and middle class.
Frankly, I think we’re well past the point of no return, but the fall can be mollified with judicious economic policy, and more than a large helping of government intervention. Otherwise people can kiss their asset values good bye.
August 31st, 2007 14:33
Wondering,
I don’t think this situation will completely destroy the economy. I recognize it as a possibility, but I think it has a small probability. If I did think that people everywhere would be starving in the streets because of this, I might be inclined to agree with you.
October 9th, 2007 07:31
Realtors, loan officers, banks were counting on default, only someone with
severe judgement difficulties couldn’t see the scam that was unfolding.
In this typical ponzi scheme run up, money was being made hand over fist,
and was pumping up the economy.
What goes up must come down, therefore
as SoCalMgmt says you don’t punish the kings you punish the poor bastard
who get’s left holding the bag, so to speak. The Fed is owned by the Street,
gangsters are taken care of before the average working man,
Just another chapter in a book about how the US is seeking a lower profile as a Debtor Nation.
January 16th, 2008 23:30
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