Irvine Housing Blog

...And thank you stupid for the link to the thoughtful piece on wealth transfer to the super rich at the expense of the middle class.

I fear I cant empathize with any parties to this fiasco. The FBs are to blame for failing simple subtraction. Check - mortgage = nothing to eat. No problem Hon, itll all work out. Realturd “it’l always go up and you can refinance and take out the equity for a Hawaii vacation. Appraisor, $1.2 mil? no problem. Banker “hes a ninja but its no problem if he defaults we will have sold it on by then”. Wall streeter “I know its crap but I get $28 mil commission when I package it, why should I worry, I didnt originate this stuff, Moody says it AAA so I dont have any responsibility here”. Retirement fund manager “its a solid security backed by Wall Street and reinsured, its perfect for your retirement fund”. Reinsurance manager “of course we dont have funds to cover it, we only cover stuff that doesnt go under, send us the premium, dont call if you want security, were overextended.” Propping up any party to this mess is criminal stupidity. The Romans solution was to sew these sort of people into a sack with a snake, a rat and a fighting cock and drop the thing off a bridge into the Tiber. Its a custom that should be reinstated. Instead of that there will be a solution that involves subsidy to at the very least the richest of these people. The small timer who walks? its his only rational recourse and at worst only the equal of the other parties failings.

I double posted on purpose to reiterate what I was saying. I’m not sorry and would do it again.

LOL

IAM INTERESTED IN THE RESPONSES TO THI SHORT SALE QUESTION TOO!

Wow! What a lot to digest!
I think we can all agree there is more than enough blame to go around. Lots of people got caught-up in the maelstrom and yes, greed, and made stupid decisions. Unfortunately there were no shortage of facilitators to this madness.

Many have made concise and impassioned pleas to the morality of this mess but to my thinking, “lawyerliz” has made the clearest distinction; this is more about principles than morality. We can go down the rat-hole arguing morality but in the end, morality is often an intensely personal codified belief. Principles can be very personal too but they’re often less wrapped in spirituality. Ultimately one has to live with one’s decisions, mistakes and actions. If you can look yourself in the mirror and face your loved ones and your community with a clear conscience then perhaps you made the right choice.  Let’s not also forget that history tends to warp whatever “the right thing to do” might be. We should be so fortunate to know the difference.

As was previously suggested, karma can take a while to work out but it frequently does and it’s not always in our lifetime. Bad behavior calls for bad consequences. Alternatively, Middle-Eastern wisdom has a saying ... we can fix the blame or we can fix the problem. Clearly fixing the blame might serve as some cautionary lesson but in the end, it’s a fools errand. Sadly even the wisdom of Solomon couldn’t solve this mess. I submit (and it’s been suggested previously many, many times) that the only fair and perhaps wise action is to simply let the chips fall where they may and let the system work out it’s ills and shake off it’s parasites. All other solutions are either unfair, inequitable or delay the inevitable and prolong the pain. 

I empathize with those poor families that will lose their homes because they were swept-up in this tidal wave. Other than the death of a child or parent, I cannot imagine anything more traumatic.  But like a death in the family, time marches on and life continues.  We adapt and get on with it.

I wish you all a wonderful Holidays with your loved ones and a prosperous new year!

IR, do you know the lyrics is wrong, but I like it.

It should have been “the road is so long”, your version “the world is so wrong” hits the tone of the video.  I like it and I agree with it.

Wow, well fiat system or not, I am glad I can borrow money to pay off something I can live in and eventually fully pay off.  Sorry, but everyone that stretched themselves are the ones to blame and are scheizers for walking away and should never be able to borrow money agian.

OK, I guess we finally jumped the shark with this one.

Yep, we are social animals, and will always balance in Darwinian/game theory fashion, benefits of practicing morality vs. benefits of being a free rider.  If everyone were free riders, there would be no society.

And I’m really tired of believers thinking non-believers are automatically immoral.

Gotcha beat:  16 years--college and kindergarden.

Banks typically lose incredible amounts of money on foreclosures.

Also, in Florida at least, if someone bids more at the sale than the amount owed, the borrower gets that extra money, not the bank.
If nobody outbids the bank, and the bank sells for money, well the bank wins.  But that seldom happens.

For $300 a month, they must have their children going two days a week or maybe part-time five days a week, although that seems really cheap to me.  We pay $440/month for T/TH full days.

“There are cheaper choices”

What, pray tell, is a cheaper choice for childcare than $300/month?  Your typical trained ape would cost that much to feed.

Perhaps it’s all about people being perceived as members of your group.  If the mortgage lending had been more like the microlending in the 3rd world (ex. say 5 people who all know each other in a village can borrow from the $100 pool, but only 1 person at a time ... then there is social pressue and moral obligation for whoever took out the $100 to pay it back and pay it back in a timely way).

When people perceive the disembodied bank money to be there ... the social and moral obligations are a lot harder to feel.  Which is why I brought up the kids in Norway example to remind everyone where the money ultimately comes from.

Thanks, interesting link.

Well, there’s some truth to that.  But if you are stuck with your employer’s 401K plan, or some municpal financial overseerer, who maybe weren’t really paying attention ... just what are you supposed to do about that?

Personally, I think the whole concept of morals comes from the concept of there being a higher power. IMO, if you do not believe in God (or some other deity) then you have no reason to foster any morals.

-------------------------------------

Maestro,

I think that there are strong social pressures do develop morality outside of a belief in God.  Society tends to reject people that are immoral (for example, murderers, or that guy in the office that always takes the last cup of coffee but never makes any more).

I consider myself to be a very moral person, despite also being an Atheist.  I also consider my Christian minister uncle to be an immoral A-hole.

There was an interesting article in the NYT last March that talks about morality in primates.

http://www.nytimes.com/2007/03/20/science/20moral.html?pagewanted=all

I think there are a few points we need to consider.

We cannot hope on the morality of the mortgage salesman to provide a reasonable—if not best possible offering to the mark, er I mean home purchaser. We have years of used car salesmen experience that shows us people will do nearly anything not illegal (and sometimes that too) to separate a willing buyer from their money.

We must have clear concise and simply readable language that protects the purchaser. Think of the last time you rented a car. Did you read all that dense language on the contract? I suspect most of us don’t. We trust that nothing will go wrong and that nothing too onerous is included. Usually we are lucky reinforcing this belief.

When we suggest that purchasers are fools for buying a poor loan they could have avoided we are being simplistic and forgetting human nature. If you are at the closing and the train is rolling—you have moving trucks showing up Tuesday and the mortgage salesman says, “Gee Jerry, I couldn’t get you that 6% loan like I promised. This POS has a 8 1/2% loan, but don’t worry you can refinance in 6 months and I’ll get you out. This is the best I could do.” Well, what does Jerry do? He thinks he’s moving in a few days and he’s over a barrel. He figures well, it’s only 6 months, that’ll cost me a few extra thousand but it’s worth it.
It’s very facile and unfair to suggest our buyer should get up and walk away. That’s very difficult to do and the sales weasels know this.

Remember, we are a little bit (some a lot) more educated about this process than the average bear, and I know the pressure I would feel to knuckle under to the stupid terms and close on the house.

It is absolutely insane that we have no controls against this drunken orgy by the mortgage and financial companies trying to make every possible nickel at the expense of a stable market, reasonable values, and safe (payable) loans.

Well, that’s my .06 cents worth......

Wake up people. Moral? Let me see…

So, the government comes and declares a piece of paper to be the money, and then prints those at essentially no cost. It also gives a monopoly on loans to lenders, who are free to make even more money out of thin air.
Thus, I just want to establish the fact that no, nobody worked hard for this money, nobody had skipped on their ice-cream to save it up.

Then the government also establishes an inflationary reality, where everyone is forced to compete with government’s inflation (further printing), or the value of that little that he saves and earns will be stolen by the government through the inflation. The government insists on paper being the legal tender, forcing anyone out of currency and into “investments”. Just wanted to establish the fact that we have no choice, by governmental decree, we have to “invest”, or see our earned money diminish in value.

So, we invest. We buy the house at the market rates and market conditions prevailing at the time. Did we lie on the loan? Like we had a choice. You say theres always a choice? You mean a sucker’s choice, of course? A choice to be honest and surrender your earned and saved money for confiscation through inflation because the government doesn’t want us to lie? Of course it doesn’t. Any robber will tell you, they want you to be truthful when they are asking you where you hide your gold. So, should we be truthful with robbers who tote guns? Is that what moral is all about?
Just wanted to establish that we had no choice, our earned and saved money would be confiscated proportionally to the amount of truth in our answers.

Now, the pyramid is crumbling. The banks are bailed out left and right. They receive special infusions of credit, lest their CEOs fail to make payments on their real estate holdings. Poor get bailed out by that same government just as well, through the destruction of their contractual obligations.
Just wanted to show how moral the rest of the market is.

And here you are with your pitiful mortgage. You wonder if a short sale is moral? Are you an idiot? You want to know if defaulting on printed money that was fake, is fake, and will be fake is moral? All the while taking the loan was never your choice (except for the sucker’s choice), lying about it wasn’t your choice either. And while everybody else who has any sort of connection to the government receives huge bailouts, anybody but you? [IDIOT, Late Latin meaning “uneducated or ignorant person.” (Wikipedia)] So, if you are not ignorant, and educated enough to know that everything around you is fake and fiat, then how in the world can you possibly call defaulting on your mortgage immoral? How can you be at fault for having no choice in the matter, being robbed in the process, and all the while causing no real harm to anyone?

Lastly, only for those with better than average mental abilities. How long would a fiat system last if there were no idiots filling it to the brim, and everyone was promptly defaulting on all his debts? Huh? So, who is really Immoral here?

Well said

Premise:

All parties are moral to begin with.  Lenders want to lend to make money.  Buyers want to buy to make money as well.  A third group, stood on the sidelines.  Stars are aligned.

Fact:

Credit crisis.  Foreclosures.  Banks losing money.  Buyers hopelessly holding onto rising debt and declining asset value.  Error in judgement by both parties?  No, both parties are screwing each other from the beginning.

Now, people who play the game gets hurt.  People who don’t play the game gets hurt too - as can be shown by the value of their declining portfolio, the falling dollar, rising inflation, etc… Stars are drifting apart.

Conclusion:

All parties are immoral in the end, even the people who stood on the sidelines.  Which group is more despised?  There is none.  We are all angry.  Interesting to note that it is the 3rd group that will begin its assault on the market when the dust settles.

“It’s some retiree’s pension, or some school kid in northern Norway who’s school can’t afford worksheets or the photocopier bill next year…”

Hmm, so the homeowners who fooled themselves into believing they could really afford buying a half million + property were irresponsible, but the retiree who believed he could have a risk free investment and huge return rates at the same time was reasonable? Sry, but this looks like a clear case of double standards to me. It were those greedy investors who pushed the mortgage companies into seeking more and more borrowers, even totally unqualified ones, at conditions that were unsustainable from the start. With a little bit of attention to the housing market, those who put their money into mortgage papers should have been aware that the bubble had to burst sooner or later. If they really wanted to secure their savings, they should have bought treasuries and do with the lower ROI of those bonds. But they wanted to have their cake and eat it, and so they were not at all better than those harebrainbed housebuyers. No reason to shed to crocodile tears for them.

“Fools are made to be taken, it’s the essence of capitalism”

I don’t agree but at this point we’ll simply have to agree to disagree. You should be aware that I don’t think you’re arguing from the moral high ground at this point, though, particularly because you seem to think it applies to homebuyers but not to lenders.

Parents of the debtor for not teaching them how to read and think properly.

High school econ teacher and math teacher for not teaching them finance either.

Newspapers for publishing constant RE fanfare stories.

The lady at Fantasic Sams that kept telling everyone how she bought a big house and it keeps going up in value.

So Economist, you think these morons checked multiple lenders and all of them simultaneously defrauded them and quoted them loan rates higher than what they could qualify for?!  It’s a free friggin’ market economy… You really think that these lenders would quote out artificially high rates, especially if they were aware that they were competing with other lenders for the business?  No, they would have tried to earn the business by beating out the other lenders by offering the best rates they could.

If anyone got stuck with mortgage rates higher than they should have it was because they either didn’t shop rates with multiple sources or couldn’t get anyone else to lend to them.  If it was the latter, then the rates aren’t artificially high because whatever source that loaned the money was the only available supplier and whatever rate they offered made the market.  They had a choice, pay the rate or don’t buy.  If it was the former, i.e. these borrowers didn’t shop for the best deal with multiple sources, it’s on them for not doing their due diligence. 

Maybe these are the same fools that walk on to the car lot and pay sticker while the rest of us just sit at our desk and call around to the fleet managers to get thousands below that?… No matter what, they made a choice to buy.  Someone quoted them a rate, maybe it was too high but they were the fools that allowed a situation to occur whereby they were in a mortgage with inflated rates.  Shop around, don’t buy - they had choices and options.  Fools are made to be taken, it’s the essence of capitalism.  If they didn’t have the skills or knowledge to properly execute the transaction just keep renting.  I missed out on Brain Surgery 101 in college and as a consequence, my expertise in that area is quite limited.  Because of that, I make sure not to wander into any operating rooms and start sawing open people’s heads.  Very prudent of me wouldn’t you agree?

Anyone can open a newspaper or google interest rates on the internet to find out what the going rate is on a loan. Yes, it requires some homework. Yes, it requires some thought. But buying property is a large financial transaction. The onus is on the buyer to understand what they are doing. Why is it that people will search the internet and go to five stores to find out which is the best LCD TV and who has the best price, but don’t (or won’t) check with different lenders to see their options? I haven’t a clue.

Really interesting, data based link that pertains to this discussion

The Over-Consumption Myth
and Other Tales of Economics, Law and Morality
http://www.yale.edu/law/leo/052005/papers/Warren.pdf

ipoplaya, one recent estimate of subprime buyers found 55% of them qualified for non-subprime mortgages. You think they wanted to pay more points and higher interest? They were taken in by unscrupulous lenders who just didn’t bother to tell them about better loans.

There’s a lot of people in this world who can’t analyze the NPV of a complicated financial transaction. They don’t deserve to be taken at every opportunity because they can’t hack college-level accounting and then forced to live in debt slavery for most of their working lives.

Personally, I think the whole concept of morals comes from the concept of there being a higher power.  IMO, if you do not believe in God (or some other deity) then you have no reason to foster any morals. 

If humans evolved than we are just an intelligent life form no different or more special than any other living thing.  How does the concept of “self-awareness” and “the greater good” evolve?  I find it very peculiar that the same people who demand the abolishment of God from all public places are the same people who demand human rights.  Also, the same people in our government who practice capitilist elitism (the social version of Darwin’s survival of the fittest) are same people who belong to the religious right.

Since nobody knows nothing, I’d say business transactions are devoid of a moral compass and should not require one.

I agree.  Unless you are a licensed financial advisor, you shouldn’t be giving advice.  I am actually regulated in that aspect at my bank.  I am technically not allowed to give financial advice to people over the phone.

I think you are mistaken Law_student to say that contracts are made to walk away from.  They are made so people can knowingly make agreements. Even the best of legal systems would be unable to handle all the contract cases that would arise, if contracts were not based upon principle that each side will complete it obligations thereunder.  This is where the concept of a “man’s word is his bond” arises.  Who would want to live in a society where failure to perform contracts were the norm, e.g. I order and pay for something on-line, but the seller decides not to perform.  What security and comfort would exist in that society.

The loan companies have performed in making the loans.  It is immoral for borrowers to overbuy and then simply walk away.  Who pays for that, but the rest of us through higher interest rates or additional fees.  There is no free lunch.  Someone always pays, and in business those costs are forwarded and spread out to other customers. 

Unfortunately, we as a society have so condemned “blaming the victim,” that even where the person’s condition is their own fault, it somehow seems improper to say “you made the stupid choice - live with it.”

Under CA law, most mortgages used to purchase a residence (called “purchase money mortgages”, firsts, seconds, it doesn’t matter) are non-recourse.  Non-recourse means that the borrower is not personally liable, the only collateral is the property itself. 

This non-recourse law isn’t waivable, and since it applies in most instances, essentially all residential purchase money mortgage contracts in CA implicitly integrate this term.  This means the availability of credit, the interest rates charged, and the origination fees all reflect this term and the risks involved.  The lender, not the borrower, has assumed the risk of loss should the collateral be insufficient.

Therefore because a borrower never agreed to be personally liable, there is absolutely no moral dilemma.  I did not read all of the replies, but many see such a borrower as immoral.  But this is incorrect - you are creating an obligation for the borrower for which they never agreed.  They never “promised to pay” - they promised to either pay or forfeit the collateral. 

Note that though there is some gray area, this law generally does not apply to refis - a borrower loses the non-recourse protection by refinancing.  However, even in this situation, the bank must judicially foreclose (a more complex process than a trustee sale) in order to seek recourse from the borrower for any deficiency.

Catholic school.  ;-D

I should know.  I spent seven years in one.

Sure, there is justice.  There is even poetic justice.

Contracts are, by definition, amoral.

Dishonestly is immoral, in most situations.
Murder, theft, rape and fraud are immoral.

Why should it matter why someone walks away from a contract?
That is why the contract exists.

Is there justice law student?  Does justice have anything to do with morality?  Sometimes, there actually is justice, and sometimes it is actually despensed by a judge.  Altho most of them are idiots.

Choices and options Liz, choices and options.  Those borrowers all wanted something and maybe they elected use dishonesty to get it.  They didn’t have to buy something.  No one was forcing them to do it.  That’s their problem.  Doesn’t matter who told them what.  What matters is what is written on paper and what got signed… If they were dumb enough to obligate themselves in such a large transaction based on a lie or because Fred the mortgage said prices always go up, they deserve whatever pain is coming to them.

I remember the first time my son realized that I bluff at Scrabble.  He was shocked.  You would have thought I had purposefully run over a kitten.

I explained that bluffing is part of the game.  And since I know a lot of weird words nobody is ever sure. . .

Being able to bluff is good in Court too!

Oh, TonyE.

Am I rotten because I am a boomer, or rotten because I went to a catholic girls school Or, am a rotten because I am a lawyer.

I guess I am just plain rotten.

And to go back a little farther, the parents of the WWII generaltion were a bunch of flapping drinkers and drinking flappers and all that sex and booze caused the great depression.

The tax relief for “walkers and short sellers” is absolutely not a done deal.  Don’t hang your that on that one, either. 

By the time the bill(s) get to Bush, if they ever do, they will be so watered down that they will benefit about .001% of the distressed home"owners". (kind of like the 5 year freeze plan.)

Morality is much slipper thing than most people would admit.

What fascinates me is the difference in the morality applied to corporations and to private individuals (and even that distinction gets tough sometimes).

For instance, a company wants to make their bottom line look better.  To do so they need to fire some of their workforce and bring in cheaper labor to replace them.  Is this moral?

I hear phrases such as “it’s only business” tossed casually about and I wonder what that is supposed to mean.  Is it like a financial version of “All’s fair in love and war”?  It’s a contractual thing it’s not a moral issue?  So are all contracts, by definition, immoral?

And then, to discuss IR’s example, who is the person “walking away”?  Is it someone of limited means who invested poorly and without proper consideration in a home they could not afford?  Is a real estate speculator walking away from an investment gone south?  Is it the homeowner that intentionally over-extended themselves with multiple loans knowing that the worst that could happen was a kick in FICO?

What is the consistent moral standard that applies in all of those situations because, viewed generally, they’re all the same.

This isn’t a plea for moral relativism.  Not in the least.  What it is is to say that this isn’t simple and what might be viewed as moral and reasonable for one party might be morally bankrupt and reprehensible for another.  And all of this is just one reason why a “general” bail out is a terrible idea.  It is one strong argument, I think, for a more localized and involved lender system.

With all due respect, both the borrowers and the lenders lied, and they lied a lot.

I would here about it when the couldn’t make their payments and this lying has been going on for forever.

Sometimes the mtg brokers told the borrowers to lie.

Just recently, one of my clients got a good rate on a refi of a house he built on spec.  The employee of the lender, NOT a broker, but an in-house employee, told him to lie and say he was going to live there.

There is no moral issue.
This is a contract between a large financial institution and a person.

The lender makes a decision based on risk and profit.
They require collateral for the money they lend.
If the payments are not made, they have a right to end the contract and take the collateral.
If they choose to take a bigger risk for higher profit by lending more money than a house is worth, that is their well planned and calculated choice.  If the market drops, that was part of their risk calculation.

The person makes a decision also based on risk and profit.
They choose to buy rather than rent - a good decision in most markets.
If they choose to not make the payments or if something happens where they cannot make the payments, then they must give up the collateral.

This is a business deal. 
Foreclosure is a legal business decision based on the contract.
Bankruptcy is also a legal business decision.
Morality has nothing to do with it.

Over at Calculated Risk, Tanta is talking about the Congress approving cramdown legislation for certain categories of folk, including those who got ARMs over 2000.

By the way, she’s for the cramdowns.

The issue does become more complex when a family is involved. If I make a mistake that I alone am paying the price for, I would probably be more willing to endure hardship in the name of morality. When my children suffer for my sense of morality, at what point does it become pride and ego to punish them for my mistake?

The MSM is already coming out with the “poor me” family stories with housing. I think that was why the post about the HELOC abusers in Turtle Ridge caught national attention. There is an abusive flip-side to all of those “poor me” stories.

Well, this statement presupposes the idea that walking away from an underwater loan is prima-facie immoral. That is by no means a given, and I would argue is in fact mistaken.

If one makes a business deal with party B who has access to deep legal and economic expertise and thus every reason to know exactly what that deal entails, I think it behooves the people that are seemingly arguing that one’s moral obligations to party B go beyond what is formally legally required to articulate why they believe that is the case. As it stands, the banks made the loans with full knowledge that the lender has the ability to walk away if they go underwater. Therefore, there is nothing immoral about doing so.

(Now, if one of the parties didn’t fully understand what the hell they were getting into when they signed the deal, one could make an argument that it’s immoral for the other party to take advantage of provisions that favor them. But this is clearly not the case here.)

It follows that there are *no* moral obligations from borrower to bank above and beyond what is stipulated in a duly-agreed contract and the governing law. However, there are moral obligations to one’s family, which trump not just the supposed moral obligations to the bank, but also, in this particular case, any societal stigma attached to bailing on an underwater loan.

I love playing poker.

But never against Catholic Girls.

They are simply too good for me. 

Particularly never try to bluff a woman who went to Catholic School run by nuns.  They can bluff their way like no protestant could ever hope and they are tough. 

We should have such women running the CIA, IRS, FDIC, FBI and DMV. 

Keep some typical WASP running the State Dept and open up the rest.  ( Although I think Condolezza Rice is doing an outstanding job).

But keep those “catholic girls” where they can control the “boys” and we’re set. 

WAIT!  I’m a boy!!!

skek-->Which leads to my third point. You act as though the borrowers were forced to accept the loan that the lender “chose” for them. Borrowers aren’t helpless. Borrowers can’t ask questions? Get a second opinion? Borrowers can’t eyeball the bold font, all-caps disclosure that says the loan amount will reset in two years and ask, do you have anything fixed? Borrowers can’t employ high school economics and compare APRs and basic loan terms to determine what is in their best intersts? And if they can’t, perhaps they shouldn’t be buying a $500k asset.

Isnt it obvious that the answer is NOOOOOO. borrowers werent asking, eyeballing anything, and dude what do you mean by economics? why should they have done any of the above, did you forget HOUSE PRICES ALWAYS GO UP :mrgreen:

“In many cases the borrowers were actively lied to (”you can refi”, “RE always goes up”, “no hidden fees”, etc.) and lacked the skills to figure out what was going on”

That is bollocks… I’m sure it happened, but what you are talking about is true fraud and that did NOT cause this bubble. 

The vast majority of FBs had an accurate GFE, got all the disclosures, and had more than enough information about rates and resets in their docs to make an informed decision.  They chose ARMs vs. fixed-rate mortgage because they wanted to buy or buy bigger/nicer.  They could afford the purchase at the time and figured buying was a way to build some equity when the market kept skyrocketing.  ARMs are a gamble and for many it is now backfiring.  They had options and they made choices.

Hey, I thought that’s the way all Stated Income Loans were before Wall Street showed up with their crack and their Kool Aid?

Put 25% down for Stated Income, put 20% for “regular” loans and if you put 10% down you’d better not mind paying PMI.

So, lessee here, your house is $350,000 so that’s $70,000 down—not too tough for those of us with an alarm clock set to go off in 2 years.

What, Oh wait, you think the house is worth $1,000,000. Now that would be a problem...........

Tax policy tends to be a zero-sum game; there are winners & losers in every change.  Consistency is preferred so as to allow planning based on reasonable expectations.

Removing taxation from debt forgiveness will encourage borrowers to walk away.  It will exacerbate the housing downturn (something government presumably does not want to do).

Oh no… from a Catholic Boy ( all boy’s school...)

Catholic girls
With a tiny little mustache
Catholic girls
Do you know how they go?
Catholic girls
In the rectory basement
Father rileys a fairy
But it dont bother mary
Catholic girls
At the cyo
Catholic girls
Do you know how they go?
Catholic girls
There can be no replacement
How do they go, after the show? ..

All the way
Thats the way they go
Every day
And none of their mamas ever seem to know
Hip-hip-hooray
For all the class they show
Theres nothing like a catholic girl
At the cyo
When they learn..

OK.  I’ll stop right here because this is a family forum… but this is one of Zappa’s finest and most fun songs.  It’s in Joe’s Garage.

And yes.. it’s shaped like a Telefunken UB47… with leather.  ;-D

Wow, more posts here than ever before.  Very well posted everyone.

I have closed thousands of loans and I will tell you the vast majority of borrowers are bumbling idiots.  I closed neg am mtges by the fistful in the early to mid 80s.  Those people would have signed if I had handed them a piece of paper that said, in the borrower’s native language, if necessary,

THIS IS A STUPID LOAN.  YOU SHOULD NOT MAKE THIS LOAN.  THIS LOAN WILL RUIN YOUR CREDIT.  YOU ARE ALMOST CERTAINLY CRAZY TO SIGN THESE PAPERS.

ABANDON HOPE ALL YE WHO ENTER HERE.

Further disclosures will do nothing, except raise the cost of business for title companies and lawyers who close loans.

Tovarich… I have this here five year plan that will fix everything.

First we gotta get Komissar Jerry Brown back in SaKramento.

Then we get Feinstein and Boxer to do some paper pushing in their Washington Politburo. 

Finally Maxine Waters will go on TV and place the race card saying that ALL of these defrauded homeowners have at least 1/16th blood in some ethnic group (you choose: black, white, yellow, brown, red, blue, green) and therefore they are VICTIMS.

Get it?  They are all victims and the deserve, NAY we owe them to keep them living in their McMansions and their Bimmers.... and yes… those in Victorville should keep their F250s, garage full of Honda Quads and stainless steel BBQs.

Yes sir.. they are VICTIMS and those of us who did not partake of the ponzi schema are really all male WASP ( regardless of whether ethnically we may be black, blue, male, female....).  According to Ms. Waters “race card policy” only male WASPs would be financially responsible so we must all be male WASPs “inside”.

Dude, I’m moving to Brazil.  I won’t wear a bikini bottom ( re: Bart Simpson!!!) but I sure could watch a few chicks while I drink a single malt on the rocks and puff on a RyJ SE Robusto.

Oh, absolutely. It’s one of the big tools of collection agencies. Agencies will also threaten to call neighbors and relatives for additional leverage. Now lenders often don’t have much contact after the loan but I’m sure they use the same techniques when the opportunity comes up.

If she’s getting multiple offers on the properties she’s selling, why does she keep bothering you?  Clearly there are enough buyers out there to start a bidding war on all of her overpriced listings, so why does she need to bring in another?

Nope, nobody would be asking the question if prices were going up.
Suppose the owner of a large lot found a diamond mine there, would he share with the lender?  Hell, no.  And if it were in foreclosure, he’d just get an invester, pay off the mtg and mine the diamonds.  And I, for one, would not think it immoral.

There was a move toward equity sharing some time ago, but it seems to have gone away.

IrvineRenter said: “I owe my family better than that.”

Personally I think this statement conveys an attitude that is regrettable. If people were not so entrenched into stopping their own empathy at the limits of the family unit, we would live in a better society.

People who would never think twice about doing something immoral for their own self-interest will suddenly find all their moral principles disappear when “the family” is involved. I believe ultimately everybody acts for their own, more or less selfish, self-interest but invoking the family is always a convenient excuse to makes things look more appealing (sorry IR, I’m not ranting specifically on you, you probably just blurted this out subconsciously).

I’m sure many “heartbreaking” stories of FB’s & their families will come out. Let’s not forget the fact they have a family or not doesn’t make them a better or worse person, and they should not be expected to act with a different set of moreal standards due to having a family.

Good analogy TonyE.

So the hard-working, debt-paying, and financially responsible parents of the kids in your school get to have increases in their tuition next year because an FB can’t read the fine print and handle their mortgage reset?  That is a perfect little microcosm of the bailout plan.  The people who made a bad choice and bought too much house at the wrong time get rewarded, i.e. they get to keep their children in preschool for free, while the those that are doing it right get to subsidize that bad choice in some form or fashion…

Personally, I’d say to parents in that situation it’s either pay the full freight or we’ll find another parent who will.  Just pull out the old waiting list and call the parents of little Johnny who has been waiting to get in.  Maybe little Johnny’s parents continued renting when it was smart to do and can afford to pay their fair share.  An ARM reset should not be a financial hardship.  It was disclosed when they bought, if their house value was declining and they weren’t going to be able to handle the reset with a refi, they should have sold long ago and hooked up with IAC.  Losing a job maybe, getting injured and being unable to work, okay I get that.  Knowingly living above your means should never qualify as a hardship…

This is the perspective of a parent that sends their kid to a small church-based preschool in Irvine.  Our tuitiion went up 10% last year and probably will go up again next year.  If I learned that my increases were in part due to the decision to subsidize people like this, I’d be looking for a different school.  You don’t reward bad behavior or bad choices made by the kids at school so why do so for the parents?

Actually you’re mixing apples and oranges.

The example of the car and the house are COLLATERIZED right?  Since they are supposed to be supported by an asset the terms are cheaper.

Credit cards, OTOH, are personal loans with no collateral, hence they are based strictly on your credit history.  And as such they are more expensive since there is more risk.

After all, a car can be repossessed and a house doesn’t move around too much.

So there is a grain of truth in there that the bank takes some risk. After all, cars are depreciating assets and the banks used them as collateral.  If you don’t pay a car loan and it gets repossessed will the bank go after you should the value of the car be less than the loan (ie: underwater?). ???

In many cases the borrowers were actively lied to ("you can refi”, “RE always goes up”, “no hidden fees”, etc.) and lacked the skills to figure out what was going on. They were defrauded. Are you saying fraud victims shouldn’t be compensated because they should have figured it out? It’s a rare fraud that *cannot* be figured out in advance if the potential victim puts in enough effort.

In any case - do you really think people should be condemned to a lifetime of debt slavery (which would often be the case) for one mistake?

From the viewpoint of society, it was the lender’s actions that made this possible. There have always been lots and lots of people who wanted to buy nice houses objectively beyond their means. There have not been lots of people willing to loan them money at 95%+ LTV IO to do it. The more the borrowers are squeezed, the less the lenders will lose, and the more likely it is this will happen again.

Why?  So I get screwed again?

If you’re gonna do this then it should only apply to contracts signed as of today.

It pisses me off to no end that the terms of contracts (laws) get changed all the time when it comes to Real Estate mortgages.

Hell no.  I have a nice 30 year loan.  I have invested my money reasonable ( no CMOs, CDOs ).  I did not participate in the RE bubble by selling my house and going 100LTV on a McMansion in TRidge like many around me.... so why should I play penance to salvage them?

The hell with this.  I’m sick and tired of “tax neutrality”.  The Gov. should figure out how to pay their “plan” without hitting in the pocket those of us who did not participate in the latest Ponzi Scheme.

Besides… in the mess of the dot.com I sold all of my stock and he IRS and California took me to the cleaners into the six figures.  I figure I have already paid enough and I will not tolerate any burden to help these clowns.

It’s bad enough that the dollar has been devalued and that my best investment is the 70 loonies sitting in my desk.

In fact, putting all those people in bad loans was a bad business decision.  Trouble is the people who got the bonuses, spent the bonuses.  Mozilla will probably eventually do the perp walk, maybe together with others.

As others have posted, brokers and realtors who didn’t know how to deal with a great deal of money are now the ones in big trouble, so as a matter of fact, making all that money left them worse off, not better off.

Karma does take a while to work out, but it does often happen.

I agree completely.

All the financials are trying to squeeze as many dollars out of the mortgage as they can before they become the home owner.

The government is more the willing to help twist arms, what is going to happen in Cali when property tax revinues tumble 30%? As long as the house is owned, the taxes acrue with interest and will somehow have to be paid before the title is transfere.

Yes, people were idiots and bought to much house, but they were also swept up in the greed and easy money pronouncements by the entire RE industry.

Let the banks eat crow, ultimately they made the loans. They have no problem soaking me every chance they can get.

No.

MAX LTV AND CLTV at Indymac just reduced to 75% for all stated income jumbo loans.  Yikes!  A large percentage (I’d say more than 60%) of all jumbo loans are stated income.

This means if you want to purchase a home for 750K and you need to utilize stated income for whatever reason, you’ll need to put down $187,500.

HA!  good luck with that!!!

Took the words out of my fingertips.

Why should we subsidize someone who is not managing an income that is far above poverty?

Poor kid, but I’m sure there are some single parents living in the subsidized apartments in San Marcos that deserve the free ride.

also i agree with the responses there is no fiduciary duty on the part of lenders to offer the lowest rates so i stand corrected. were they just practicing good ole capitalism?  if so, mozilla and other lenders practiced mighty scummy and immoral capitalism.

Disability insurance is definitely part of a sound financial plan.  But the loss of of medical coverage could be the determining factor.  This could happen due to an accident or job loss.

Sure, if both husband and wife work with good benefits then this diminishes that risk ( THERE… that’s another reason why both parents in a marriage will work… to ensure no loss of medical coverage) but you still have to deal with that.

I think that life is a gamble of sorts to begin with.  The difference is that gambling when the odds are against you is nuts.

It’s the difference between poker -where you make your luck- and the craps table.

When you play poker you are in control of the situation and you can manage the risks.  When you play craps you have no idea what the hell is gonna happen.

WWII generation—the greatest generation.

Baby Boomers—rotting this country from the inside out and mortgaging our future to finance their selfish whims.

Post-1965 generation—we got our work cut out for us.

OK, maybe there’s a little generalization and exaggeration in that.  A little.

If you intend to not pay from the very beginning, it’s probably mens rea, and a felony.  Any criminal lawyers out there.

Most people make payments long after it makes economic sense to do so.

Disability insurance runs out after a year or 2, and usually you can’t afford to pay to completely replace your income.

The system can keep going with defaults for death divorce and disability, but probably can’t with wholesale walking.  We are in for a very bad future people.

I propose a principle.  If everybody did it and that would cause the system to crash, nobody, or as few as possible should be allowed to do it.

Anybody else have a principle for good behavior to propose?
Anybody?  Anybody?  Ferris?  Anybody???

Aww, he’s just pulling our leg(s).  There are responsible people and idiots in every age group.  People born before 1965 are the ones running the future of the people born after 1965 into the ground by being selfish with respect to social security and medicare.  Very responsible.  And what about the environment?  They’re handing over a polluted planet to their children.  Don’t forget botox and breast enhancement either.  And the list goes on.