We blame the big guys why not the one who knows he cannot afford a house

@suspenseful (40316)
Canada
February 19, 2009 9:25am CST
I was reading on one of the financial sites, and most of the time it talks about how the big banks gave loans to those who could not pay and how now the people of the States will have to lower their standard of living because you all have to pay. And then I thought, why were these people who are now in foreclosure able to get mortgages and loans in the first place? (I am discounting those who at that time would have been able to pay but because they were laid off, or there was a critical illness, they were no longer able to.) Now when we first bought our house, the credit union went all through our finances, wanted to know if I planned to have children, would keep on working, etc. because we did not have that much. Luckily we had enough down payment, so we were able to get it and we paid biweekly and that made it easier and now our house is paid for =we went through at least three houses, and would be living a better house now if it were not for family emergencies, etc. And we are working middle class. So I was wondering how come someone who is lower working class or a laborer get approved for a mortgage, unless he won the lottery or he had a rich uncle who left him some money? Yet these people got their loans approved and I do not think they got it through Habitat Humanity and were using sweat equity for the down payment. Yet these same people who should not have gotten approved in the first place and where the banks and finance companies were blackmailed and threatened to give them approval for loans, these same people want to get the money from the stimulus and complain that they will be out on the street. Should they have not just kept renting and taken extra jobs, saved, etc. and done without like most of us had to do instead of living beyond their means? Most here have saved money, at least, we did.
3 people like this
15 responses
@laglen (19782)
• United States
19 Feb 09
I agree and I think this goes to personal responsibility. If you can't afford a $200,000 home, don't get one! I am not in my dream house, but I do have a house. Once I pay this off, sell it and move up! If things happen like illness, lay off etc, most mortgage companies WANT to help!
3 people like this
@mommaj (22891)
• United States
19 Feb 09
Define mortgage companies wanting to help. All they offered was a one time break to put one payment at the end of the loan and then they offered to twice the monthly mortgage payments. Yep, they helped. Unfortunately with no one hiring we had to let our home go.
3 people like this
@suspenseful (40316)
• Canada
22 Feb 09
When we bought our house, they told us we could afford a better one, and then when we ask them about paying more and not getting penalized, then we learned about the bi weekly mortgage and how we could pay more and not get penalized. The trouble is with family emergencies, it still took us almost thirty years.
@Lakota12 (42684)
• United States
19 Feb 09
I dont understand it either how they got loans for homes if they didnt have good jobs or several on the loan to make the payment!. They went thru us with a fine tooth comb and we had to pay off any debt we had at the time!. to get the loan. The one thing that makes me mad the payment goes up every year! and isnt staying here it is surp[ose to be when we got the loan they said it wouldnt got up but it has and says cause taxes and Ins. has gone up. well of course they went up last jue I know this but they didnt change payments to a bigger one till all this crap happened on wall street. Am sure the poeple bought the house because they made the money then! now they are being punished for loosing jobs or downsizing. No way can I see that a person can work more than one job here as unemployment stand around 10% here . 100 or more poeple show up for 3 job openings!
2 people like this
@suspenseful (40316)
• Canada
20 Feb 09
When we bought our house, we paid mostly interest and we decided to take out bi weekly payments instead of one monthly payment so we gout an extra one or two payments in. Soon more and more of the money went to the principal, but some people think that the money goes on the principal first, and they overextend themselves. So when they have to sell the house, they lose out.
@Lakota12 (42684)
• United States
21 Feb 09
yup thats the way it is but with us we cant make that extra payment on pricipal. So we are sort of stuck. When we sold the other house here to move into this one we sold it for alittle more than what we bought it for for the prices had gone up. And all we had paid on that one went into this one. Heck this last year over 11,000$ went into interest boy if it went to the principal we would get it pais off alot sooner but I know that wont happen lol
1 person likes this
@suspenseful (40316)
• Canada
21 Feb 09
My husband talked about moving, and our sons said they will not fix up our house unless we move - but am not going to. We went through the last recession and when interest rates were eighteen percent. I would not be surprised that what is going down in the States happens up here.
@dragon54u (31636)
• United States
19 Feb 09
The real estate industry in this country has campaigned for years to get people to think that they should own a house no matter their financial circumstances. They've even begun the constant use of the word "home" to replace "property" or "house". There are not more townhouses, they are townhomes. No more apartments, they are apartment homes. They have brainwashed the willing and with unscrupulous lenders have made us a nation of foreclosures. I'm not blaming them entirely, the buyers believe all these campaigns because they want to. They lie about their income and lenders have creative financing to let them buy "homes". We are not encouraged to save here, our economy is based on consumption and debt which is a recipe for disaster. But to answer your question, people should know they can't afford a house and should save up. But as you see from how our economy has been run, they don't save but spend everything they have and then some. We need to change the nation's attitude and I think that is being slowly accomplished.
2 people like this
@mommaj (22891)
• United States
19 Feb 09
The banks know how much money people make, you have to show them your paycheck stubs and they go through your work history. It was the banks fault because we have a nation that depends on others for answers. We expect business to know their business. When banks look the other way because they are getting rich by selling loans then there is a problem. That's what happened. Now it needs to be fixed and giving banks money is not the answer. Even when people lie about their income the banks are supposed to have paperwork in black and white from employers and they even have tax papers from previous years. If the consumer gave that information how could it possibly be the consumer's fault. It's just like getting married. You have all the information about the other person then you get married. If something goes wrong you say you didn't know and get divorced. That's what the banks are doing by taking all the information and not being honest with it.
3 people like this
@dragon54u (31636)
• United States
19 Feb 09
There were a LOT of mortgage companies that would accept paystubs from people that weren't an accurate reflection of their income--and they knew it! They wanted to make the loan because they don't keep the loans, they sell them to holding companies who then service the loans. That's why we had "liar loans", or so that's what I hear. When I bought my house in 2007 I almost felt like a criminal, they checked me out so thoroughly. This was when the market was falling so quickly and companies were getting so nervous. Before that I don't think they were so careful.
2 people like this
@suspenseful (40316)
• Canada
19 Feb 09
We bought our first house back in the 1970s and we had to go through the wringer before they approved our loan and my husband had a good job, only he was a boiler maker so was considered working class. But then again we lived in Canada, where we were encouraged to save.
2 people like this
• United States
19 Feb 09
I know. People and businesses that were irresponsible are now demanding we change our lifestyles to help them out. It makes me sick. What started this mess are banks that lended to people with adjustable rate loans. The people were approved for the starting payments but not for the adjustments. THe banks did not bother to see if hte people would be able to pay once the payments went up. As for the people, well they know how much they make a month. yes they can afford the payments now....but what about in the future when they adjust? They should have considered that BEFORE they signed on the dotted line. But they were excited about buying a house and did not think about it. They thought about today and said I will worry about it once it comes time for it to adjust. Banks were also lending to people who did not have a down payment or bad credit. Not good. But the banks were looking at the huge interest rates they could charge those people and not wether or not the people were going to be able to pay it back. Another bad business decision. As for the poeple who have lost their jobs and now loosing their houses. I feel sorry for them I really do. But I was always taught that you keep 6 months worth of your montly bills in a savings account. That way if anything happened you could pay your bills for a while until you found another job. People lived pay check to pay check. Spent every dime they had and did not save for a rainy day. Now it biting all of us in the butt. We are all paying for all their bad decisions.
2 people like this
@mommaj (22891)
• United States
19 Feb 09
If their the ones loosing their homes how is that effecting you? The banking industry didn't cause the recession. The recession caused the foreclosures. At least it did for me. I ran a trucking business and the gas prices shut me down among other things. My husband got laid off and couldn't find a job for about a year. We had three properties we were trying to sale. We went through are savings in a little over a year and a half. That was about $50,000. Now our home is in foreclosure, neither of us can get a decent job because of our credit, and the houses that we tried to sell went to foreclosures to because no one would pay what was owed on them. So I'm sorry you feel you are paying for my mistakes but I've had to pay for Bush's mistakes which started a lot of this. I'll explain. I was paying the minimum amount on my credit card when my husband lost his job. Bush decided the credit card companies needed to charge 1 to 2% of the balance plus the interest rates. My interest rate was 3%. My credit score was a 720. The balance on my credit cards was high enough to make my payment out of reach with my husband off work. Our interest rate then went from 3% to 30%. Had Bush never passed that we might have been okay for a little longer. That ate up our savings too. If we ever make enough money to just manage to pay for daily bills like rent,electric,food, we plan on saving money again. We had it once we can do it again! Then I can complain about how much money I spend in taxes again!
2 people like this
• United States
19 Feb 09
It is effecting me because my tax dollars are paying for this bail out. Not to mention our increasing national debt. Who is going to pay for these bail outs? All of us. The housing bubble caused this. Foreclosures have been skyrocketing for a couple of years now. Once those mortgages started adjusting....people started loosing their homes.
1 person likes this
@suspenseful (40316)
• Canada
20 Feb 09
I can see in the future that the day you get your pension will not be when you are 65, but when you are 70, and maybe 72. There are some people who will have to keep on working until the day they die, just like in the bad old days.
@spalladino (17925)
• United States
19 Feb 09
The problem that many people are facing now are due to what is called sub-prime loans...loans that start out with a very low interest rate (so the monthly payment is reasonable) but the rate is adjustable according to the Prime interest rates. It's called an ARM...Adjustable Rate Mortgage...and you are essentially betting that the interest rate will go down instead of going up. What happened was that interest rates increased so these mortages increased...many of them by several hundred dollars a month. Home values also fell so folks weren't able to sell the property. In addition, with such a glut of unsold properties on the market, the value of their home fell so some folks now owe more than their house is worth. Unscrupulous lenders advertized heavily on tv, offering loans to just about anyone with a job and many folks were fooled due to inexperience, a lack of information about exactly what they were setting themselves up for and plain old greed. First time homebuyer programs that could put you into a house with no money down also added to the problem. I'm no stranger to these tactics. When I wanted to buy my first home I applied for pre-qualification of a mortgage at my bank. I was divorced with children and the loan officer I worked with talked to me about several economic factors and gave me the option of an ARM or a 30 year fixed. I chose the fixed rate and was pre-qualified for less than had I taken the ARM but I didn't trust that. I was working with two buyer's agents in two different areas because I was unsure about where I wanted to live and the agent in my former home town constantly emailed me photos and descriptions of houses that were almost double what I had been approved for. He told me not to worry, that I could get a mortgage through Countrywide...an ARM...but again, don't worry because interest rates will likely continue to fall. I used common sense and patience, bought a house for less than I was pre-qualified for from the other agent and ended up selling it for a huge profit when we moved to Florida almost five years ago. When we bought the property we now own, my husband and I followed the same logic even though we were again offered large ARMs. It amazes me when I see these sad stories on the news about this poor single mother or that sad family who are losing the house they bought for $800k, which is now worth $600k, but they can't sell and they can't afford the latest increase in their mortgage payment. It's not entirely the fault of the sub-prime lenders. People need to use common sense and many times they don't.
2 people like this
@dlr297 (5418)
• United States
19 Feb 09
People are losing their homes to Foreclosure right now because they have lost their jobs, and can not pay the mortgages right now. I am just lucky that we already own our home or we would be in the same situation, My husband has been out of work since October, He has worked steady for the last 35 years, and we have always paid our bills. we are almost at the end of our savings, and when that happens we are going to be fighting to keep the lights on. I am just thankful that our home is paid for and that is not a worry that we have.
2 people like this
@suspenseful (40316)
• Canada
19 Feb 09
I did mention that this is not about people losing their jobs and getting laid up, that this is about people who should not have been buying a house unless of course they went to Habitat of Humanity and agreed to help put the roof on someone else's house being built, or did the drywalling or something like that.
1 person likes this
• United States
19 Feb 09
My mom and I have been talking about this very subject for the last couple of days. Sure the economy is in dire straits, but each individual has to take responsibility or their own finances. A lot of people out there get a mortgage that is not fixed. One moment the monthly payment is $700 and the next it can be $1000. Individual buyers are responsible for this. You need to get a fixed monthly payment, and if you don't that is your fault not the economy. I see a lot of people falling into this. And just the other day a young girl and her boyfriend bought a rather pricey house (for them). How they ever got the downpayment, I will never know but surely they have a 30 year mortgage, and they don't make much. She said to him, "It is all ours!!!" I thought, she has a lot to learn. It is not yours until you pay for it...all of it. And then you better make sure you can pay the taxes,etc. I think some people believe the world owes them something so when they lose their home, it is President Bush's fault and the economy.
1 person likes this
@mommaj (22891)
• United States
19 Feb 09
That's so funny. That's the way I looked at people too! You're right it's no one's fault except for the person that got placed in that situation. Shame on them. I bet they'll learn there lesson! Especially if they have to move just to find a job!
2 people like this
• United States
19 Feb 09
We think this way because we are conservative.
1 person likes this
@suspenseful (40316)
• Canada
21 Feb 09
Same here with me, it is also that we are also cheapskates and stingy.
@irishidid (8730)
• United States
19 Feb 09
A couple years back I went through the process of being pre-approved for a fixed home loan. I told them fixed and would not accept anything else. They told me how much of a loan I would qualify for and I had to send them all financial papers for myself and those of my daughter. My credit rating is good, not perfect but not good enough for the mortgage companies. Since that time I have paid off debts and have worked on bringing my credit score up. When I'm ready, I'll work to be pre-qualified again and if they deny me again, I'll continue to work on it. I doubt if most of these people could even get a Habitat for Humanity home. I believe one has to make around $20,000 per year to qualify. I looked into it myself, but in my area they are only building in crime ridden areas. Figures.
1 person likes this
@suspenseful (40316)
• Canada
21 Feb 09
When we first got our house, my husband was only making a little more then $20,000 a year, but that was back in the 70s and we had a large enough downpayment to put on it. It does make me wonder how those other people were able to get mortgages. Maybe it was those who scream loud enough get it.
@mscott (1924)
• United States
19 Feb 09
The democrats forced banks into giving loans to everyone even those who could never afford to pay them off. Then they didn't just go out and get a simple house, many people went out and bought way beyond their means. Now the rest of us who bought within our means and made all our payments are going to have to help pay for the houses these others can't afford, but they will get to keep them. It makes me frustrated that the people who did the right thing are the ones getting screwed.
1 person likes this
@suspenseful (40316)
• Canada
19 Feb 09
That really sucks. I live in Canada, and with the stimulus package, I do not know if they will get some of the money from our government, but if they do, we will have to pay taxes for those people who should not have bought houses. And now you have a Democratic President, House, and Senate. And I suppose they are going to blame it all on the former administration instead of on themselves.
@sharra1 (6342)
• Australia
20 Feb 09
At the time the loan was offered these people could afford the loan. The financial people that I saw on tv said that the broker was the one who was at fault. He sold loans to people knowing that they would not be able to pay the loan in the long term. The catch was a hidden interest rate rise at the 10 year mark. It was this interest rate rise that forced them all to default as they could not afford the new rate. That was when the defaults started and I am told there are a lot more loans that will hit the 10 year mark this year and they will face the same interest rate crisis. People do not always see the hidden fine print. The broker did not care as he made his commission and he was not going to be the one in trouble when the loan went into trouble. So in my view it is these greedy brokers who were to blame.
• United States
20 Feb 09
my perents lost there house to and now they are renting a home thats a two bedroom because they could'nt get a loan for a house
1 person likes this
@Kowgirl (3491)
• United States
19 Feb 09
In Florida as well as in other states we have a way to get the downpayment from our county or state which does not have to be paid back. The way they determin what your payment will be is from your income at that time. A friend was approved but she turned it down because there was no way she could make the payment because they do NOT take into account her other bills. Sure you can afford to make a $900 a month payment if you don't have home insurance, electric, water, food ,clothing car payments, credit card payments and other financial obligations but they don't even consider that. That's where the people go wrong. They think they can afford the payments because that's what they were told. Then there are some who had to take a cut in their income or somehow the spouse lost their job. It has been pushed on us to reach for the "American Dream" of ownership but 8 out of 10 can not afford it. Some will try to get it even if they have to lie about their income. Then suffer later. Right now the investors who buy houses at a very reduced price are the ones who will come out on top. I look at the "bail-out" the same as bailing someone out of jail...money lost.
1 person likes this
@ch88ss (2270)
• United States
19 Feb 09
I totally agree with you on this. When we purchased our first home, we had a small price and the home we found was a total fixer upper too because that was all we could afford. Yet, I hear other people who purchased a bigger, newer, and more expensive homes than we did. And It was also very obvious that my income alone was more than what this family was earning. Plus they barely have any formal education. Yet they were approved for adjustable rate without large deposit. While we saved for years to have enough for a deposit. Then after several months, most end up losing their homes anyways because they could not afford it anymore after the adjustable rate period good days are over. I even heard stories, where it was obvious the person could not afford the mortgage but expected that she was going to live rent free for at least 12 months – 24 months while she gets evicted. So for 2 years a single mother lived in a million dollar home and never paid rent. She was delinquent by the 3rd month mortgage already. She only deposited 3 thousand dollars. The unfair part, when they lost their homes, it went into foreclosure causing home prices to plummet too. Which in turn affects the serious working family like us. We also middle income working, but seriously we live like low income family because we cannot dine out, or take any trips. Even a trip to the amusement park is too costly for us. yet these families after birthday parties almost every weekend. Since we purchased our home, we have not had a birthday party for our kids. Now these are the same group who are shouting for help, and getting help. Seriously they did not care from the begininning if their credit will be screwed. I on the other hand, was afraid to even lose a library book fear of being reported to the credit bureau and mess my near perfect credit score. So I continue to work long hours, save, save and watch as my investment (our home prices) plummet and lose the equity that was once there too. I want to build a second unit on my property but no equity left. Life is so unfair.
1 person likes this
@lilnono (228)
• United States
19 Feb 09
I think there is something fishy about all this media coverage about so called predatory lenders. At the time when all these easy loans we're supposedly being given out i couldn't even get a home improvement loan to fix my roof. I was working and getting rental income and my credit was good. I don't understand why they would turn down a young person with a job and good credit and then turn around and give a loan to an old person who has no way of increasing their income. I think what happened is there were a few lenders who were getting over by giving loans to people who couldn't afford them they could get all the down payment money and the payments for the first few years then foreclose on the house and sell it to somebody else quickly. That way they could keep making money on the same house. When there were only a few banks doing this it was no big deal but when a lot of them started doing it there were too many foreclosures for them to be able to sell them quickly anymore. the situation does piss me off I mean it's like people can't think for themselves. A bank tells you to take out a loan and you just take it knowing you can't afford it. I don't understand why anybody would do that. The reason i couldn't get a small home improvement loan was because the bank didn't like my house not because they didn't like my job or my credit. If I had had a big house in the suburbs they probably would have loaned me twice what i was asking for just to get the house and resell it. I think the lesson to be learned from this situation is. There is no such thing as easy money. anytime you depend on a non productive scheme to earn a living it you could be the one who ends up left holdng the bag.
1 person likes this
@maximax8 (28558)
• United Kingdom
21 Mar 09
My friend and her husband lied on the mortgage application. She said she worked for her dad's dry cleaning business but she didn't really. They got a large mortgage and a few years later they sold their house. Then they got an even larger mortgage and bought a very large house. In the past banks gave to people that might not be ideal. Some of them had their house repossessed. Nowadays it is more difficult to get a mortgage. I live in a small house and don't have a mortgage. If I want to live in a bigger house I will need to get a mortgage. My toddler son is disabled and he will need a ground floor bedroom and bathroom in the future. Sadly bungalows are quite expensive.