Amazingly, these comedians did this bit back in 2007.  Makes you sick to know this financial hide-the-sausage game has been going on for so long and nobody got worked up about it until now.

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Free markets are one thing, but when you know that the system is being gamed, that's when you have to step in with reform and oversight.  As is the case with all of these things, lot's of factors come into play.  Forcing banks to make bad loans pretty much forced then to come up with the "ingenuity" to still make a profit.

No matter what your view is, the video is funny.

Quote:


Can someone...anyone... please explain to me how "YOU" "ME" or "US" can do that?

The average person trying to hold on to their job, raise their kids decently, put food on the table and find gas money to get to work...hasn't got squat to say about changing any of this inequity.  We just get to sit and watch these thieves take billions of our tax money.

BTW...this is a legitmate question I'm asking.  Someone "splain" it to me.

BarbaraD wrote on Sep 28^th, 2008 at 10:03am:

OH MY!


But, it's true.......we- who didn't naively take a loan we could not afford are the ones who will bail out those who did.
BTW, these people who are upside down in their mortgages are not guilty of taking avantage of a generous lender....they were NAIVE! The Mortgage Broker told them what they could  in afford monthly payments and the buyers, listening to the expert, believed this to be true!
Expert says Borrower can afford $1500 per mo........
                 Buyer says                    OK!
Kids in sports, taking music classes, car needs work, diapers are expensive......these things are not taken into consideration-buyer is set up with a budget that is already stretched.  The Broker doesn't care! The consumer, being the naive one, buys at the top of his comfort zone, rather than tell his Realtor he knows that is unrealistic, and he'd like to look at houses slightly under that.......
THAT's how it works when the Realtor sits down with the buyer....

In my opinion, the Owners and CEOs should all be placed in the stockades. Every potential homeowner should have to do more than simply fog a mirror in order to get a mortgage, and our Govt should NOT be bailing out the banks-they should be bailing out the naive homebuyers, and making them attend a series of Economics classes prior to bailing them out.
GREED  is at the bottom of this!! WA MU is failed........the CEO has been in position for 3 weeks! 3 WEEKS! In his contract, it states he will have a 10 MILLION dollar severance package! Did he drive that bus into the wall? We will never know........

Oh, one more thing.......almost across the board, our parents scrimped and saved till they had 20% down before they could buy a house. Fully aware of the fact that prices have skyrocketed, FHA created(over 30 yrs ago), a 97% loan that they were comfortable guaranteeing. NOW, we are going back to just that-and it's a good thing!
I think I'll go turn on the morning news.......let's see what today has wrought.........
Pretty disgusted cathi

Cathi_Pierce wrote on Sep 28^th, 2008 at 10:30am:

Don't forget the cost of electric, sewer/water, insurance, maintainence, heating...  Many, and I mean MANY, do not figure these monthly costs into their budget when wanting to purchase a home.  I'll admit we were guilty of it in the past as we were young and didn't understand, but fortunately we understand it now.  Hard lessons tend to do that.

Who is going to get stuck with all the property taxes to the local towns and cities on all this bad paper.....Us?

Although there has been alot of poorly written loans, not all the mess is due to that alone.  In many (not all, but many) cases the loans were written at levels the family COULD afford "at the time".  However, due to lay offs, down sizing, and thin employment markets, people are taking jobs at far less than they were previously making, if they can find work at all.  They simply don't have the same income they used to to pay the mortgage.

They didn't nievely take on these loans.  The job market simply isn't what it was 40-50 years ago.  It's seldom anymore that people work for the same company all their lives.   Companies ARE laying off people who have been with them for eons just to cut the payroll numbers because they can toss the work on to another person who is collecting half that salary. 

Oh I'm well aware of that Mel.    The new Windsor Apartment Living community with it's own pool, and fitness and entertainment center off Hoover and HH is another example. 

Trouble is, they are 1-2 bedroom units and I can assure you, the price range is not something I'd ever be able to afford.

I remember when too...  Ahhhh the good old days...

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One of the major problems with most of the loans that are failing is not the job market, but the loans that started out with an "introductory" rate that went up in about five years to where it should have been to begin with, but the buyers could not qualify at that rate.  The rational was that they would refinance at that time and get another good rate, but the rates started going up.  We had been at record lows for several years, but the mortgage people were still selling ARMs to unsophisticated buyers who were gambling that prices would continue to go up so that they could refinance and continue to be able to cover the payments.  Real economics is not being taught in our schools now days and people don't understand how money works.

The biggest problem with the situation though is that banks were not allowed to pass on some of the loans due to the "Community Reinvestment Act" pushed by the Clinton administration.  This Act required banks to make loans to "underserved" sectors of the communities they served.  There was a good reason those areas were underserved.  They were not economically viable.  However, "community organizers" claimed racial discrimination was the issue, and banks dared not turn down a loan or face draconian fines from the Federal Government.  ACORN was one of the biggest organizations pushing these institutions to make bad loans.

I am by no means excusing the fraud that occurred within some of the financial institutions and by the CEOs like the one at WA MU.  In his defense however, WA MU was on the brink when he was brought in.  He just had the sense to make sure his back side was covered if he couldn't make it survive.  I might have done the same thing if I was in his shoes, but I doubt I would have had the cajones to ask for that much!

Jerry

There are different situations countrywide. As a rule, in Oregon, buyers KNOW what their budgets will support a a monthly pymt. When we lived in CA, people (buyers) asked their agents to push the envelope. Yes, there are some more conservative Californians, and some less conservative Oregonians, but, Oregon is NOT in the tank like CA.
Realtors need to listen and counsel their buyers. They are the ones who must suggest these extras as a regular and necessary addition to a buyer's budget,. Mel is right, with all utilities going up, this has to be added to the equation.
Personally, I think ALL first-time homebuyers should be responsible for taking a finance class prior to closing escrow.......
BTW-Barb......I am a Realtor.........none of my buyers get off without some kind of lecture....based on their needs......and, somehow, regardless of WHAT the Mortgage Broker told my buyers they could swing, they have always bought INSIDE their comfort  zone......know how I know?? For 16 yrs(my career in this business) NONE of my clients have lost a home yet! Am I proud?? YOUBETCHA! I have some pretty savvy clients!!!
That said, Callico and Monty are right....these intro, 2/3/5 yr introductory loan.or how bout the interest only for an intro period loan, have been put out there by the lenders.. mortgage brokers pick them up as a new product...."MORE HOUSE FOR LESS $$".........
but they fail to open a discussion about the risk..can you say Negative Amortization?? OKOK>.that term is now illegal, but the practice, till the sky began to fall, was NOT defunct....just renamed.....Teaser Rate, Texas Mortgage, Equity Builder, Principle Deferral....sound innocuous, don't they? They all mean, one day you WILL pay the piper, and it's gonna cost you more THEN, than it would at the inception of your loan! If there is a lesson to be learned by consumers across the board, it's GO BACK TO THE BASICS! Appreciate what you have, work hard to own a home(and bring your own hard -earned 20% down as well), save what you can, drive a 10 yr old car if you must.......and put some money in a pillow for a rainy day......

I also feel like the Maytag Repairman, and I wish this whole thing would GO THE HELL AWAY!!

Bored and lonely Cathi (caused by greed and avarice)