Borrowers and Lenders Beware

I seem to recall back in the Eighties that banks wrote off hundreds of millions of dollars owed by countries like Mexico, Peru and others, attempts were made to re-negotiate the loans but in the end they were written off. My question is that if banks can charge loans off off against earnings for foreign banks and corporatons whay can't they at least write off portions of mortgages for our own people who have tried but can't meet their obligations.....Jim

As far as I can tell, this is a really complicated problem. For years economic academic scholars, wall street pontificates, and real estate experts have been claiming that prices would continue to rise. Believing this was going to continue wasn't really stupid, just short sighted. In addition, a large percentage of so called liar loans were really fraudulent and sold to people who really didn't know better.

Attempts were made at the state and local levels to curtail this activity, but federal regulatory agencies sued to remove all restrictions. In addition, those people in the government in charge of insuring the health of our financial markets were asleep at the switch and didn't see that this entire mess was going to explode as soon as the economy showed any signs of slowing down.

I am not an economist, nor am I in government and yet I realized this was coming in mid 2004. I would like to know where in the world was our government when the problem was created?

Cleaning this mess up is going to be even more complicated than the causes. Please give up on the simplistic blame games, there is enough to go around. What do we do about the real people who are really suffering as a consequence?

My husband has been dealing with anger management issues ever since we were forced to live in my parents used motorhome. He generally does not mean what he says. I'm very sorry and sad to see him singled out in this way.

Tight control on the banksters being able to thrust upon us arbitrary credit card interest rates is needed. Payments arrive to their offices one day late gives them the right to push rates from 3.99% to 15.99%. That is outright gouging(usury) and it's immoral. I believe an uprising will soon come upon the banking industry.

It is widely known that a large portion (over 50%) of the foreclosures were discovered to have some sort of fraud on their mortgage application. Instead of bailing out these deadbeats maybe the responsible people should get a class action suit together and sue all the other people that created this ridiculously inflated market.

Housing prices are so out of touch with incomes the market needs to correct itself. If the government keeps intervening it's only going to force more people to believe that these extremely high prices are normal and soon we'll all be leveraged to the point of bankruptcy just to have the basics of the american dream...

I have a new proposal, instead of a bailout how about the government creates a fund to give more money to the responsible people that have been waiting to buy a house or bought less of a house because they were realistic...lets reward those people!!!

Excellent comment below by MR PASADENA. His view informed by reality is among those our policy makers must consider, if they want to do right by us all, a big "if".

Someone on this post think those of us that does not want govenment intervention to help homeowners are heartless and that people are just trying to get ahead. Yes, I was trying to get ahead. I was trying to buy a bigger house for my daughter and wife to live in. I saved and saved for years thinking that I needed a 20 percent down payment and enough income to purchase a $600K home. That was suppose to be a move up in our life after years of savings. But then it hit me that $600K was nothing in the area I was looking at. Little did I know that people were purchasing homes with zero down and paying option ARMs. No, I don't have any sympathy for those who got over their heads. I spent countless night asking why making over $100K a year cannot buy a decent house for my family to live in. Those who want to maintain this Ponzi scheme is heartless. Why should someone live in a house I should be living in simply because they were reckless and I was not? Now you want a govenment bailout with my tax dollars to give you a home. Why don't the government give me 3 million dollar home that I cannot afford to buy but want? Should I go out and get a 3 million dollar mortgage, declare bankrupcy, and have the judge modify the mortgage to $400K so I can afford to continue to live in a 3 million dollar home I never should have in the first place? This comment is only for those who live in a place they cannot afford. What about the investor who thinks that as soon as they buy a house, they should turn around and resell it for another $200K? That was what I was seeing in some listings. Should they be bailed out. And as for children in the family. Shame on the parents! They got themselve into the mess. I had nothing to do with it. I have a daughter and I make sure she has a roof over her head and don't over extend my financial abilities. Go back and rent if that is all you can afford. Tax payers like me who were careful with our money and was squeezed out should not buy you a house just so you don't have to face the shame of a forecloser. I had to face the shame that I could not buy a bigger house for my daughter because I wasn't willing to be a mortgage slave!!!!!!

As a person with experience in this ARM fiasco let me say that I purchased a home with a 2-1 loan in order to buy in at an introductory rate in a new home development. I planned to re-finance at a 30 yr. fixed rate but no bank would give a loan in the time I had left as I was self employed (I own and operate a semi tractor-trailer) and they kept saying they wanted more profit-loss statements due to the unstable fuel market.
In time I sold the house in order to avoid a huge interest increase, but did so at a loss in the home's value due to the collapsing market. It almost seemed that banks knew this was coming and hoped to either see if I could continue to pay higher interest rates or force me into foreclosure if I could not. Shortly after I sold the home and at about the time that the ARM had been due to adjust up 2 full points, two banks offered me the loan I wanted, but by that time the house had been sold for 3 months.
That was about a year before any of the sub-prime mess became public knowledge. I did not "buy beyond my means". I had put a $40,000.00 down payment on a $165,000.00 home and owed only $125,000.00. My income is $50,000.00/yr. after tax. The short version of this is that when I tried very hard to re-fi there were no fixed rate mortgages available in my market, and none became available until mortgage lenders began to see the cliff they were about to run over. Now someone else owns my former home. I hope they can afford to keep it. Meanwhile I rent and so no longer pay property taxes in contribution to the community tax base. I'll buy a home again soon, but never again will I touch an ARM. The last person who offered me one got laughed at and hung up on.

When I went to look at the model homes I would laugh at the prices. I would tell my husband we can't afford this, that is because I didn't know about all these special home buying programs. I bought my house 20 percent down no bills not even a car note and I had to purchase it with an income to cost ratio. Okay the old fashioned way. I knew from the old fashioned way what I was told I could afford with my pay and it was pretty close to 1,000 for every 100,000 or somewhere around there. I knew I couldn't even afford a 250,000 house in California no less. 450,000 was like a million dollars that would have been 4,500 a month to my way of thinking. I guess I was right because without using the formula of the past which worked well, that is why this problem exsist now. There would have no over building either and there would still be starter homes. Becha people long for the good ole days now.

Please, if you lose your home to foreclosure, you are not out on the street. You go back to renting. I rent. I don't live on the street. I didn't have to lose a home to become a renter, I just am a renter, and others can be too, despite having been homeowners. Perhaps with the ranks of renters swelling we can get congress to stop the silly mortgage interest deduction.

What is wrong with all these people on here who are just SO annoyed with our government helping out its homeowners? There are families with children who are about to be put on the street! Where is your compassion? Sure people jumped at the chance to own their own home when rates where low and home values were rising. Isn't that what we as Americans all strive for, building up equity and becoming financially successful in life? Stop blaming people for just wanting to get ahead and to put roofs over their heads. The heartlessness of some of the readers on here just totally amazes me.

Forget my last comment. My husband IS correct with what he says..........

Free Markets should be left to correct themselves. Free markets ideally should be free of government interventions such as legislation that weakens the bankruptcy laws. Our President, Congress and Senate also receive bribes, oops, I mean campaign contributions from the banking industry and have disregarded over site of predatory lending practices. If morality and over site is to be left out of free market equation then the Government needs to apologize to those hard working tobacco and crack dealers for their enterprising efforts and let them get on with their business.

I am sorry for my husband's hurtful words. He has not been well lately.

We know only too well the pain of foreclosure.

I am glad that poor woman received help. Sadly, the same cannot be said for us.

The Government shouldn't do anything about this so-called mortgage crisis. I'm not in crisis mode, cause I didn't overextend myself. I think that all parties involved deserve what they get. Spending every dollar of your income on an investment that doubles as your home is laughably irresponsible. For once, I'm on the side of the Party of Personal Responsibility.