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An interesting read this afternoon:  A post about an agent who does not sugar coat, gloss over, but knows the facts and is direct with her local market (which has lost 30% of value, overall.)

In a comment I read: " . . . there are no short sales [in a particular area] because people do not buy more than they can afford . . ."

 

Shhhhh . . . I have a little secret.  Promise not to tell??

 

MOST PEOPLE BOUGHT WITHIN THEIR BUDGET!

MOST PEOPLE DID NOT BUY MORE THAN THEY COULD AFFORD!

Through no fault of their own . . . they might have got STUCK with a home that they paid for FAIR & SQUARE, that WAS within their means, and now . . .

The cavaliar mention that "there are no short sales" here because people didn't buy more than they could afford . .. all I can say is . . . JUST WAIT!

It's called "trickle down property loss" (I made that up). It will affect your neighborhood, if it hasn't hit already!

Just wait.  And it the meantime . . . STOP IT!!

STOP BLAMING PEOPLE THAT 'BOUGHT MORE THAN THEY COULD AFFORD' --because in reality, they did not. 

I contend, and believe, the MAJORITY of people bought fair and square -- which is why their loans were manipulated.  The subprime stinker dog loans were slipped in and repackaged -- with the MARJORITY of good loans, from good buyers.

Hmmm . . . one Bad Apple ACTUALLY does spoil the whole bunch!

WHO THE HELL KNEW THAT THE HOUSING MARKET WAS GOING TO GET SUCKED INTO THE BLACK HOLE created by the Banksers?   Who KNEW THE VORTEX OF A FALTERING FINANCIAL FIASCO (I like alliteratives) would suck in homeowners??

STOP BLAMING PEOPLE who, last time I checked, BOUGHT A HOUSE THROUGH THE USE OF A REALTOR®

Did any of you say to your clients:  "Hmmmm . . . I think you're buying more house than you can afford" two years ago?

 

 

search Portland PropertiesEBA Portland ~~ 100% BUYER REPRESENTATION ~~ 100% of the Time

EBA Portland, LLC is an Exclusive Buyer Agency serving the Metro Portland real estate market since 1999. If you’re a Buyer in the Metro Portland area (including: Beaverton, Tigard, Hillsboro, Lake Oswego, Downtown Portland,) and contemplating a purchase, talk with a Buyer’s Agent . . . better yet, talk to an Exclusive Buyers Agent. Exclusive Buyers Agents do not work for listing brokerages or Sellers. An EBA’s fiduciary duty is: 100% BUYER REPRESENTATION . . . 100% of the Time.

 Carla Muss-Jacobs
503-810-7192
Carla@carlahomes.com 		         

BuyersAgentPortland.com

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191 Comments on "They Bought More Than They Could Afford"-- OH SURE . . . BLAME THE HOME OWNER

JUL
10
2010

Well said Carla!  It is so easy to play sideline Quarterback AFTER the fact! 
11:41pm • #1
Called Shot Master

I as the Realtor(R) do not tell my clients how much house they can afford.  When the client/buyer consults with a mortgage professional, they will determine how much they can afford.  I agree, stop blaming the homeowners.   It's not the homeowners' fault, it's not the Realtor(R)'s fault. No one could have predicted the outcome of the real estate downturn.
11:48pm • #2
JUL
11
2010
584,789 Points 69 Featured Posts Called Shot Master

Carla - Ok, now you can tell us how you REALLY feel!  LOL
12:03am • #3
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi Michael -- Exactly!

Hey Amanda . . . I believe the banksters did "predict" the outcome, which is why they shorted stocks, killed BearStearns & Lehmann Bros., etc.  I don't run in those circles.  But, there are those who could, and did predict the outcome of the real estate downturn.  They made, and are making, billions.

Hi Donne -- you know me!!  ;-)
12:05am • #4
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Can I just say, AMEN, Carla?! 

No, of course I can't!

Funny story but, my brother-in-law used to be in the mortgage industry--he did several transactions for me back in 'the day.'  He got out of the business in 2008 when, prior to the decline in our area, he 'saw it coming' and closed his office.  Anyway, about a year ago, he made this proclamation and I argued your point of view--he said, "Oh, you're telling me that you wouldn't have told someone that they couldn't afford a home back in 'the day'?"  I spoke four words--the names "Joe and Jane Doe" (real names, of course) and he said, "Oh, yeah, you did!  Well, you're the ONLY one who ever did this!" 

No, I'm not!  But, there were folks who COULD afford to buy the home that they bought, who I also recommended NOT to go all interest or ARMs but, they chose to anyway.  The manner in which they are being handled now is what needs to be 'adjusted' so that the minority of folks who have mortgages (those who DIDN'T buy above their means), can stay where they are and where they WANT to stay--keeping more Americans from losing their homes and the economy from further TANKING!
12:13am • #5
130,235 Points 2 Featured Posts

Nice post. right. 5 years ago I had a contract on a $850,000 home that turned out to have a buyer who was a sham. The loan company would not return my calls, and 2 days before papers were to be signed we figured out it was all bogus. The buyer was buying on speculation and could not afford it at all. What a high blood pressure disaster.
12:26am • #6
318,044 Points 35 Featured Posts Called Shot Master

Carla, enjoyed reading your post.  I've notice in your blogs you nail it right on fair and square! Thanks,
12:37am • #7
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi Debe -- there have been times when my client was approved for a lot more than they felt comfortable with paying per month on their mortgage.  I worked with their comfort levels.  If they didn't communicate that comfort level was, I always talked to them about their P.I.T.I., and worked from that angle.  If they were approved for $350,000 -- but really felt comfortable at $250,000 based in P.I.T.I., that's the price range we concentrated on.  I've always worked within the price range and comfort levels of my clients.  But I never told them "Hmmm . .. you're buying over your head" because I'm not in their pocket book, and I was working with adults.  My clients seemed to make very wise decisions, and bought properties that worked out for them.

Hey Bryan . . . sham, scams, and spam will always be there, unfortunately.   It's one thing if they simply can not finance a property.  I'm talking about folks that could afford, where great buyers and didn't have a crystal ball at the closing table. 

Hi Pamela -- fair and square, better than fair and imbalanced :-)
12:38am • #8
472,929 Points 4 Featured Posts Attended Rain Camp Called Shot Master

Great post and I agree with you that often there is too much blame. If people told the truth and got the loan, then yes, they could afford it at the time.

In my area, we don't have a lot of short sales because our clients have just historically been more conservative than the national norm. Very few put less than 20% down, most do 25% or more. More than half could easily qualify for higher loan amounts and/or higher price points but choose not to. They could afford a $1.2M home but have instead budgeted themselves for a $1M home and a $729,950 loan max.

 

 
1:11am • #9
133,189 Points 25 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Carla, Woman, you hit is out of the park with this post.  Can you imagine if I had told a consumer or an agent that the borrower was over reaching their limit what the fallout would be?  I don't have enough Excedrin for the conversation.

You said it all with "comfort".  One simple word.  Many people will qualify for much more than they are comfortable.  I do not try to sell them a bigger loan.  My job (as I see it) is to determine what they can do...not dictate what they should do.

I have blogged before about the fact the lenders did see the train coming down the tracks.  I don't believe anyone saw the combination of unemployment, declining value and collapse on WallStreet.  And, I honestly don't believe most people were buying because they wanted to fail.

But, sure as heck, if I had ever levied a judgment about the buyers qualifications, both the buyer and the agent would have found another mortgage person.
1:50am • #10
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MORE IMPORTANT, they bought what the loan officer said they were "QUALIFIED TO FINANCE."

The word isn't "afford".  It's "qualified". 

This "bought more than they could afford" is a not so subtle way of blaming the American home owner for the perfidy of the government officials that designed the guidelines and the banks who followed the guidelines (often with no choice), the agents who sold the homes (of course, we all knew when and by how much the property would lose it's equity and sold the homes anyway. 

Blame the home owner, the one with the fewest resources, with the most at stake and who will be last in line for recovery and for most, never recover. 

I've eliminated the word "afford" from my lexicon.

When I hear that nonsense from anyone on TV, I change the channel and mark that idiot so that I know not to watch or listen to them in the future. 

When I hear it from a politician, I get a note off to them asking them who's paying them??????

There's no end to this "afford" nonsense.  I refuse to be taken in.
7:00am • #11
109,714 Points 8 Featured Posts Called Shot Master

I followed your link from my blog post.  THANK YOU!
11:00am • #12
1,180,581 Points 134 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

I wish it were that simple.  I wish I can live in that person's mind and not see or know what I know.

Can you dig me a hole so I can go live in it?
12:17pm • #13
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi Michelle -- Let's hope the big employers of your area continue to employ!

Hey Deborah . . . I don't think anyone other than the top banksters really knew.  And we only found out, hindsight being 20/20, that the bankster cronies bet AGAINST the market.  Oh what a tangled web they wove.

Hi Lenn -- "qualified" vs. "afford" -- good point.  Yes, the loans had quidelines and borrowers were "qualified" for the dollar amount.  I hate to have my igorance show, but when you write: "the agents who sold the homes (of course, we all knew when and by how much the property would lose it's equity and sold the homes anyway" is that tongue-in-cheek?? 

Hey Jenna . . . :-)

Hi Renee -- WHAT??  You've not done that already.  I did about two years ago when Bear Sterns, Lehmann got killed, when AIG tanked, when . . . ;-)  I'll remodel my hole so I can invite people in.
12:58pm • #14
1,546,352 Points 417 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

HA!  When it comes to the myths perpetuated by the government and the Wall Street Gangs, my tongue is planted firmly in my cheek. 

Who was the first to know that the MBSs behind the bonds were worthless, the Wall Street Gants.  Who was the first to know that Fannie and Freddie were promulgating guidelines for the loans that the banks were pressured to make would fail and ripple through out economy, Fannie/Freddie/Wall Street Gangs. 

Make no mistake, the American home buyers were victims, innocent, untrained, inexperienced consumers.  If the American home owner KNEW that their home would lost all value and they would be unable to refinance those ARMs, Alt-As, etc. as promised DOES ANYONE SERIOUSLY THINK THEY'D HAVE TAKEN THOSE LOANS??

NO!!
1:34pm • #15
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Got ya Lenn!!  I thought as much, but the written word has a life of its own sometimes.  I'm glad you added to this post with your comments.  It's amazing how you can have your tongue planted firmly in cheek AND STILL BE ABLE TO SAY A MOUTHFUL!! :-)  It bears repeating:

"Make no mistake, the American home buyers were victims, innocent, untrained, inexperienced consumers.  If the American home owner KNEW that their home would lost all value and they would be unable to refinance those ARMs, Alt-As, etc. as promised DOES ANYONE SERIOUSLY THINK THEY'D HAVE TAKEN THOSE LOANS??

NO!!"

 

 
2:17pm • #16
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Read the cover of MONEY November 2008

  • When will stocks come back?  Not for the following: AIG, FANNIE MAE, FREDDIE MAC (Daddy), Bear Sterns, Lehman Bros, Countrywide, Washington Mutual, -- EVER
  • Can I still retire? NO!  Especially if your retirement portfolio, 401(k), etc. was managed by Bear Stearns, Lehman Bros.  Then . . . you lost ALL your retirement. 
  • What's next for home prices?  Next?   As in 2008-present . . . Even MONEYmagazine couldn't predict the vast foreclosures, short sales, strategic defaults, declined loan mods.  Read the article and there's not a word of this. 
  • Will my taxes shoot up?  Property taxes on the devalued homes are NOT coming down, let's just say. Don't know about taxes "shooting" up, but they sure as $H*T have been "eaten up" by:  bailouts, blunders, banksters.
  • Is my job safe?  Safe from being hit by an Astorid  -- YES!!
  • Can I count on my money fund?  You've STILL got a MONEY FUND?!?!?
2:36pm • #17
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Well, I agree you you and Debe, even if Debe cannot say  it, I will...AMEN and Lenn is also correct, they were qualified as long as they remembered that it would take about 41% of income to make the payments.

I completely agree with you when you mentioned: I contend, and believe, the MAJORITY of people bought fair and square" This mess will continue for a long time. Good post, i have been meaning to subscribe to your blog for awhile and will do so right after leaving this comment
2:47pm • #18
223,141 Points 2 Featured Posts Attended Rain Camp Called Shot Master

a Good thing to share with a buyer is:

 Just because you are approved to borrow $XXX,XXX does not mean you have to borrow the entire nut.  Rarely if ever is it a good idea for the avg home owner to max out
3:22pm • #19
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Carla:

I don't think it is for us to decide what people can "afford." They need to sit with a banker and go over their own budget, income and, most importantly, their comfort level. 

When my husband and I pre-approved for a loan the amount that they qualified us for was quite insane.  I would personally not sleep at night under that type of pressure.  However, it is not for me to say what someone else is comfortable with. We all have to make our own life decisions.

 
3:31pm • #20
550,941 Points 22 Featured Posts Outside Blog Called Shot Master

I agree with you Carla, that's an assine copout.  I never hit any buyer over the head or 'forced' them higher than their budget would allow - heck, the banks wouldn't let us go over any of their ratios.  Stop blaming & think of a solution - that's what Money's lead line should be!
3:33pm • #21

I think there is plenty of blame to go around in the mess we are in.
3:35pm • #22
231,081 Points 14 Featured Posts Attended Rain Camp Called Shot Master

It wasn't too long ago when we bought homes that were at the very edge of the envelope of what we could afford... Why not, it'll appreciate. I guess I'm by nature either conservative, prone to caution, or unwilling to take chances. I was raised in a time and family where to be free and clear of debt was your goal. My Grandfather and my Dad both paid for they're homes in full before retiring. Not because they were wealthy. They were prudent and went without some things to accomplish that goal. I will not.

Now it seems the unspoken message is, your paying for everything alright, but you'll never own it, so don't invest any more dollars than you absolutely have to. Just, use it until you lose it... That's a bitter pill...

 

 
3:39pm • #23
343,188 Points 13 Featured Posts

How about the people who bought in 2001 and had nice little mortgages, but when they saw prices rise, they ran out and pulled out massive amounts of equity to buy RVs, SUVs, swimming pools, vacations, etc? Then when the boom ended, now instead of a very manageable $140,000 note, they have one that is over 200k, even though their home is now worth what it was back in 2001. They got their profit out up-front. I see these people as being in a different category than the ones who bought when prices were high during the boom and, as Lenn points out, were told by the loan officers or mortgage brokers that they were "qualified" for an amount higher than they could handle if things went badly.
3:43pm • #24
399,439 Points 3 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

LOL I love your observation about is your job safe. Yes, safe from being hit by an asteroid. So true.
4:00pm • #25

 That's a very tedious, and incorrect accusation.

 Fact is, they bought what the bank told them they could afford.

 Period.
4:05pm • #26
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Carla, Well said. I wrote a post not too long ago titled "It's not that you overpaid for your home, it's that your home is no longer worth what you paid." And isn't that what has happened? With regard to affordability or being qualified, I have been consistently telling my buyer clients (for 24 years) that whatever number the lender gives you, shop well below that number. My own banker told me back in 1990 that my husband and I could afford a 200K home. That may have been true but I thought it was crazy and we spent $132K. I tell my buyers that today and probably will for the rest of my career. I haven't had one call in the last 2 years from an under water owner...hopefully that is not pure luck LOL
4:13pm • #27
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No re-blog Carla? Sometimes I like to repost bloggs that I really dig..yours is it today.

 
4:17pm • #28
272,946 Points 26 Featured Posts Outside Blog Called Shot Master

Most short sale sellers took a double whammy of income reduction and declining home values. Then they depleted their resources trying to keep the house payments up.
4:19pm • #29
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But you know what? In 2005 my husband and I purchased a home. Our second home. We planned to rent out our first home. We made approx. 80k a year teaching school at the time, plus some extra income from a little part-time business, plus add in the rent profits from the first house...We had perfect credit. We qualified for a loan of up to 380k. There was absolutely NO way we could afford a loan payment at that amount.

We were smart, (for a change), and purchased a house for 110k. This made both the mortgage guy and our then REALTOR frustrated. Why would be purchase such a low-priced home if we could qualify for much more? They both really pressured us to buy more...THANK GOD that we did not. But many people did go spend the max. they could qualify for. They couldn't afford the payments then, and now look at the mess they are in!
4:24pm • #30
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Good post and a redeeming perspective on the whole shebang.
4:28pm • #31
4 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Dave said it best.
4:29pm • #32
173,523 Points 15 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

As usual, fantastic blog Carla!  Afford vs. qualify is an important distinction here.  I bought in late 04 and was pressured by my mortgage person to go higher.  He just kind of mocked me for being so conservative.  My Realtor (I was a brand new one and worked with my old one to purchase), did not at all.  I gave her my budget and that was that.   But in the bubble days, there was pressure to spend more, originators always told you you could go higher and encouraged you to do so.  So glad that has ended.   I've worked with lots of people who could probably spend a million and bought 650k,  and I would never encourage them to do more nor do I hear lenders doing it either.  What they can afford, in their minds, is what they can afford, not what an originator tells them they can qualify for.
4:40pm • #33
390,979 Points 3 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Scary to think some-one else tells a buyer what they can afford or what they qualify for. Who came up with the numbers? Some actuarial in an office created a formula based on history-maybe, I honestly do not know. The fact that this percentage moves up and down is rather bothersome. 41% and now 31% why the difference and how can you blame a borrower when you keep moving the goal post.
4:59pm • #34
134,201 Points

I think Lyn said it best. Even after all this time we are still trying to figure out who gets the blame. Maybe, if some of of that effort went into formulating a solution, we might see the light at the end of the tunnel.
5:03pm • #35
105,414 Points 9 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

It's pathetic to hear people try and blame someone who is now losing their home. Even if it was their fault, and I'm inclined to believe that 9 times out of 10 it's NOT, adding insult to injury is just a waste of time.
5:15pm • #36
278,556 Points 15 Featured Posts

I grew up in a strict fundamentalist home so I have had enough judgment to last three lifetimes, so I will not get into that game either. Let's just figure out how to make it better. As Bob Dylan said in song, "there must be someway out of here, said the joker to the thief".
5:16pm • #37
Attended Rain Camp

 I was "approved" for $160k when I bought back in 2001, I just chuckled at the mortgage broker. I said, "I've already budgeted for a maximum of $110k". I bought for $107k. I try to share that with all buyers. I tell them that, "Only you know how much you can afford."
5:17pm • #38
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Or perhaps they just don't do a lot of short sales because values didn't drop 60% in their area while unemployment topped 13%. Hilariously naive, geocentric comment.
5:39pm • #39
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I agree with Mike and also laughed when a banker sat me down and said, "You are qualified to borrow much more."
If buyers did not buy more than they could afford what's the problem with making the payments? I used to teach at a University and would explain to students at all levels that just because they made it into college doesn't mean they belong there. It takes work to prove yourself every day. Just because you bought a home, doesn't mean you have the ability or motivation to remain a homeowner.
5:40pm • #40
271,665 Points 3 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

After reading many of the comments I agree that afford and qualified are going to be very different ideas.  Afford is subjective to the borrower, obviously if you can qualify for a higher loan amount and buy a house that is more amazing than you think you would ever have its very hard to turn down.
6:05pm • #41
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I don't disagree with the post, but I would like to see the numbers.  I find it difficult to explain away a large number of interest-only loans.  
6:09pm • #42

Carla,

I blame Freddie and Fannie in large part. This was wide scale fraud.
6:18pm • #43
1,226,934 Points 262 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Carla...

I'm old fashioned, and think that higher down payments are a must. However, there are some areas that have lost over 50% in value and those poor people are just stuck. I don't know that it's really anyones'a fault, but it is what it is and what it is is a HUGE problem.
6:22pm • #44

Great post.  Thank you for this blog.
6:26pm • #45
379,320 Points 49 Featured Posts Localism Sponsor Outside Blog Called Shot Master

About 4 years ago a Regional Director of Wells Fargo gave a pitch at one of our sales meetings. He said: "I can get anyone making $100K/year into a million dollar home".

An agent in my office asked: "isn't that irresponsible? Isn't that why there is a sub-prime problem?

He answered: "They probably can't afford it and probably shouldn't buy it - but we can get it for them"
6:51pm • #46
111,998 Points Attended Rain Camp

In my neck of the woods, we have lost soooo many jobs in the past 2-3 years and this is the reason for the vast majority of the short sales.  They did buy more house than they can afford - without a job.  It doesn't matter if they bought $60,000 or $600,000 - without a job/income either one is more than most people can afford. 
6:59pm • #47
Attended Rain Camp

Carla you make a great point. Thank you.
7:06pm • #48
Attended Rain Camp

I have to agree with John (#24).  While a lot of this debacle was not the fault of the borrowers, the ones that stick in my gut are the people who knowingly used the home as an ATM machine.  They took their money and fled (the country, for alot of them).  And the poor schmuck Americans get left holding the bag - AGAIN!  Ultimately, I don't know who is to blame, but we need to FIX IT!
7:07pm • #49
293,830 Points 49 Featured Posts Outside Blog

Mitchell's comment scares me to no end.  The very ones that are put in a position to lead and be responsible, look simply to make their quarterly reports very attractive.  Whatever happened to doing the right thing?

Thanks for the tought-provoking post and the lively conversation.
7:13pm • #50
438,074 Points 35 Featured Posts Outside Blog Called Shot Master

hi Carla....

There will be people who learn from this downturn....I mean really learn and then there will be those that are doomed to revisit this failure. If you talk to anyone who survived the depression and went through the two world wars, their gospel and behavior while awkward in the moment..... is the the truth. Now, we will have a story to tell...but will we be believed? In this land of plenty...it is time to save , slim down and make plans for your future.....starting right now

Thank you for your post
7:21pm • #51
212,308 Points 16 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

"trickle down property loss" I love it!  I think I am going to use TDPL from now on.
7:58pm • #52

Your post has given everyone pause for thought and has sparked some great comments.  The rules are changing and we must change with them. Potential homeowners need to understand all the potential costs and risks of home ownership.
8:08pm • #53
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I don't agree with Amanda's comment at the top. This is a team sport folks. Just because a loan officer approved your clients for a certain amount doesn't mean it's right or ethical for you as a realtor to put the blinders on and facilitate the madness. We can't blame now -- we've got to look for solutions and decide how we're going to do business in the future.

We've done almost no sub-prime business and have encouraged our clients who are trying to by too much to dial it back or find another realtor. We've lost business that way and I'm proud of it -- especially here in Arizona -- it was nuts at the peak. We've sold a lot in PDX over the years as well and none of the people that bought homes with us bought more than they could afford or had ugly loans either.

I also think each market is different. There were a lot and I mean a lot of folks in Arizona that bought too much house and they didn't get the raise they thought they would etc. Most of that has passed however, and we're getting into the folks that are pissed off because they don't have any equity. The barrier to walk away is less now because everybody is doing it. This will continue for years as a result of the collective eco-system....
8:35pm • #54
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Sorry, I just think that is a ridiculous statement. Not once did I really feel my buyers were buying outside their means. I guarantee you one thing, if their lender did, they probably wouldn't have financed the loan. The market was what it was. going up, up up. Not their fault the huge unprecedented drop in prices.
8:53pm • #55
193,909 Points 15 Featured Posts Attended Rain Camp Called Shot Master

Thank you and WELL PUT!  Thanks to Lenn as well for the nail on the head.

EVERY short sale I have been involved in resulted from the sellers either losing one or both incomes due to the economy or in one case HUGE unexpected medical bills that sucked the family's savings and impacted their ability to work.  I have yet to see a short sale due to someone "buying more than they could afford."  Some people may have bought at the top of the amount the lender told them they qualified for, but Scott's point above is well taken.  SOMEONE evaluated the buyer's finances and APPROVED them for that amount.  And at the time, they could "afford" qualiify for it.
9:10pm • #56
161,125 Points 1 Featured Post

There are some twenty million unemployed in the country. Of those, I bet at least a few million bought homes they could easily afford based on an income they had reasonable expectations of having in the future, but now are facing a difficult situation. I speak from experience.
9:36pm • #57
412,493 Points 1 Featured Post

Good read today Carla, I enjoyed it.   Right to the point, although, I do think people should be sensable and no that can't affort more then their budget will alow, but we are easily led sometimes. 

Patricia
9:50pm • #58
151,292 Points 3 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

You should add the President (at the time)  who believed in "deregulation" of the banks, mortgage specialists and the whole system that got sooo greedy, they "cut off their hands despite their feet"...  The people became a product of the unscruplous system left to "regulate themselves" and then run back to the people (Gov't) to bail them out...  It's a sad situation and many of those unscruplous businesses ran away with $$$ in their pocket to settle into other countries!  Hopefully, we did learn something and WILL BE REGULATED in the future years to come... ;>))
10:12pm • #60
546,529 Points 11 Featured Posts

It's amazing how the Monday morning armchair quaterbacks come out with exceptional insight that the rest of the world lacks.  I learned a long time ago when you point a finger at someone, there's three pointing right back at you!
11:40pm • #62
1,009,909 Points 36 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

I've talked with my client's about being house poor and about the idea of having a huge, great house and no money to spend.  I was taught to be against the option arms from the beginning as a general rule for most properties, most especially for primary residences.
11:54pm • #63
608,871 Points 26 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Carla, it's just yellow journalism at its best. Sheesh. Isn't it a story we've heard 100 times? I never push or did push people to buy above their comfort level. Frank and I could have afforded twice the house we bought, and I'm glad we resisted. Wouldn't want to have that payment right now.
11:58pm • #64
164,356 Points 6 Featured Posts Attended Rain Camp

Love your posts!!! There were a few who bit off more than they could chew, but what I'm finding most is people losing their jobs :-(  No paycheck, no money for paying the mortgage.
11:59pm • #65
JUL
12
2010
159,088 Points 2 Featured Posts Outside Blog Attended Rain Camp

On this subject, it doesn't matter what you opinion is...you are probably at least partly right. The reasons that our economy is in trouble - the world economy - are many and varied. The situation is complicated and defied simple explanation.

Except for one thing: GREED is very compelling!
12:25am • #66
1 Featured Post

Carla, love this post and I agree with Lenn's and Kristen's comments. Most of the people I know that have to short sale or have been foreclosed upon bought what they COULD afford at the time. This whole mess has left millions of people out of work and unable to find a way to support themselves and their families. I have seen hardworking individuals with once stellar credit who always lived within their means, reduced to agony and despair when they are left with no way to support themselves. They short sale or lose their home, file BK etc., when they are left with no other options. They would rather die then live with the shame and accusations - and by the way, some have.

What is it going to take for us to stop the blame game? How many more people need to be decimated for those so quick to point the finger of blame to realize it could just as easliy be them? While there were indeed some who did buy more than they could afford or used their home like an ATM with FULL knowledge of what they were doing-most did not.

Re-read Lenn's comments and then EDUCATE yourself on the true reason this has happened before you continue blaming the homeowner.

 
2:02am • #67
166,577 Points 1 Featured Post Outside Blog Attended Rain Camp Called Shot Master

Carla, it's a great discussion. If banks would be as strict as they are now couple years ago....A lot of people bought their houses thinking that real estate will always go up in price or at least keep the same value. They overestimated their own abilities thinking that if things will ever go bad, they can always sell their house and be covered.That didn't happen. The whole economy went down, their own situation got bad and houses values dropped down...I think we should have financial analyzes program or something like that in high school so kids will learn how to manage their finances and how to make right decisions.

I do not understand why somebody thinking that Realtors should be blamed for not telling people that they can't afford certain house. Client sets up their goals, Realtor helps to find the best house for the client. Realtor does not make decision to buy the house buyer does.
2:02am • #68

Carla, It was all about GREED..  GREEDY SELLERS (if so & so down the street got 350, I want 375), GREEDY BANKERS, GREEDY APPRAISERS, AND YES, GREEDY REALTORS, Myself included.  I bought 4 homes form 2004 to 2008, counting on a market comeback...hmmm..maybe by 2020, ya think?
Katherine Fillman
9:24am • #69
295,337 Points 5 Featured Posts Outside Blog

I completely agree with comment #2 and I think it bears repeating... and there are many great points made in the string of comments but this one speaks from my own heart... 

I as the Realtor(R) do not tell my clients how much house they can afford.  When the client/buyer consults with a mortgage professional, they will determine how much they can afford. 

Again,I as the Realtor(R) do not tell my clients how much house they can afford.  When the client/buyer consults with a mortgage professional, they will determine how much they can afford.  I agree, stop blaming the homeowners.   It's not the homeowners' fault, it's not the Realtor(R)'s fault. No one could have predicted the outcome of the real estate downturn. Amanda Nicodemus

And I might add, that we should be well past blame at this point, not that blaming anyone helped anything any way.  The best question we can all ask ourselves, whether homeowner, lender, real estate agent, etc., is "What have / can we learn from this". 
9:41am • #70

Excellent post that is right on the money!  Another factor that no one mentions is the fact the price for a gallon of gasoline almost tripled during this same period, blowing the average working person's budget to smithereens.

Right now, in my small rural town of 8,000, there is yet another Government subsidized housing project underway. 80 new homes are being built for low income workers. The local poultry processing plant is on cloud 9! If the occupants of the home earn more than what is allowed to be eligible, the tenant will not qualify, thus holding wages down in the area and creating a problem for local landlords who cannot compete against Government subsidized programs.

I wonder if the Government has considered buying up all the foreclosures, then turn right back around and rent them to the current residents with a Government subsidy.
Steve
9:48am • #71
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I respectfully disagree.  I have worked with many homeowners, and investors (or want to be investors) who thought they could "make it work".  I'll be getting a raise at work, we can refi with the equity..... along with a thousand other excuses to justify the amount of money they were spending.  AS the buyer broker, associate broker, REALTOR and the expert to my client, I advised buyers time and time again to not move forward with unconventional financing (especially when they had excellent credit).  I gave my buyers the comps and the market information needed to make an educated decision each time.  Usually greed won the battle over common sense. 

Noone stuck a gun to any of my buyers heads, at least while I was in the room, and made them buy more house than they could afford.  It's a hard nut to swallow in today's society- accountability!
10:16am • #72

I respectfully disagree as well.  I have to say that we have a lot of clients who bought their homes with interest only payments because they could not afford the fully amortized payment.  If you cannot afford the home at a fixed rate, then you cannot afford the home.  Having an interest only payment does not mean you can afford the home.

The truth is that most wanted a bigger, "nicer" home than the ones they were finding in the areas they could afford.  So, instead of saving for a bigger down payment (let's face it, the vast majority of people these days do not have savings and depend solely on credit to live), they chose to go with an interest only payment and then find themselves sinking when it flips.  *this does not include people who are losing their homes due to economic downturn and job loss, etc, who were fully affording their homes previously...*

Yes, I believe that the buyers are very much at fault for buying homes the cannot afford.  The banks are even more-so at fault for lending to people who they could easily see could not afford the home at a fixed rate, but only on an ARM or Interest Only loan.  They are both at fault.
10:22am • #73
304,092 Points 37 Featured Posts Attended Rain Camp Called Shot Master

Carla, I SO love your way with words. You say it like it is. America must stop blaming the victims and start blaming the perps.
10:23am • #74
227,409 Points Outside Blog

great article, brokers/bankers took the fall for this one, but I know darn well if I were to tell an agent that I should not do a loan for someone they would have gone done the street to the next guy.  Don't I have the right to make a living too.

 

Dave
10:23am • #75

Anytime someone qualifies for a loan with "Stated Income" and has a pulse, the blame lies within the Lending community and those who passed bills and guidelines to help procure these loans. I did not sell RE in those years I admit I was chickhen little and my mantra was "this is not a REAL MARKET don't buy"!!! SELL SELL SELL and rent it, will end! I was not caught up in the Realtor glut & greed and today ive well within my means. I have since ventured back in RE and want to help people who have found themselves upside down I refer loan mods, do hands on Short Sales and I even have a twinge of guilt profiting today in this market. I have volunteered for R.E.S.C.U.E a free help for homeowners non profit group here in So. Cal. I am trying to give back what I can to a community hit hard by the rape and plunder of family finances by the BANKS!

Quailifying for a home loan is still a big mystery to most wanta be home owners. And now with a swing in the opposite direction the only thing not asked for during a forensic loan underwriting is your DNA and a health certificate!!!

 

Keep it real!

 

Tere Rice Realtor* CSSN
DRE#01079287
CERTIFIED SHORT SALE NEGOTIATOR (CSSN)

100% Closer on Short Sales
Buyers And Sellers welcome
Please Check out my website to search for homes! www.temecularanchandhomes.com

Real Deal Properties
28581 Old Town Front St. #200
Temecula, Ca. 92690
951-693-0093
fx 951-253-9261
web site www.temecularanchandhomes.com
Tere Rice
10:25am • #76

Interesting post, how many Realtors would walk away knowing their clients were digging themselves into a hole , with payments they could not afford? I'm seeing the word greed, but seems like a cycle of greed to me.
10:25am • #77

How funny you are saying not to blame the homeowners but you are saying blame the bankers.  So, to clarify, it's only the bankers fault?  Ok, now we know that everything comes down to only one aspect of a very complicated system. 

Let me ask you, did you ever ask your clients if they knew what they were signing or try to get them into one of these affordable home loans?  Did you not and leave it up to the bankers?  Do you really care about your clients either way?  I don't know how anyone can blame the bankers, the realtors, the lawyers, or whoever and not look at themselves. 

It's a frustrating time I know that, but how does this post help?  No working together to get out this huh? 
thomas
10:26am • #78
1,008,071 Points 208 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Hi Carla!  Great discussion and I'm so glad this one got featured--congrats!  I would like to add to the few who commented (and one twice) that it is not our jobs as REALTORS to tell our clients whether or not they can or cannot afford to purchase a particular property--I disagree wholeheartedly.  It IS our job, just as you said, to review the PITI with them and educate them on the different lending programs available to them.  OF COURSE, the lender goes into more depth and detail with them but, I would not be doing my fiduciary duties if I didn't educate my clients to some degree on this topic.  Perhaps I'm acting as a mother-hen but, I was taught in both sales and broker classes that this IS my job.

As you said, this is NOT the homeowners' fault and for many who continue to play the blame-game, where is that getting us?  We need to pinpoint the problem and resolve it!  As long as we're blaming, nothing is getting done to solve the problems at hand.

And, I am voting for the Lenn Harley/Carla Muss-Jacobs ticket in November, 2012!
10:28am • #79
6 Featured Posts Outside Blog

I like this and whole-heartedly agree. I would add though that some in our industry (and in the mortgage industry) at times may have helped people think an ARM loan (prime not sub-prime) would be the best tool for them to save money. Those homeowners are able to withstand the 25-year amortization, and the current index plus margin they have. But they'll be watching the index and realizing that having an adjustment period every 6 months can be devastating if when rates do go up.

I don't see it as the homeowner buying more than they could afford. They thought they could have a lower payment and refinance to a fixed rate down the road but their home won't appraise since the 20% they put down is gone and even 110% LTV is out of the question. These are the future distressed properties.
10:28am • #80

Great Post! Well said!
10:34am • #81

Thanks for this. All my buyers are prequalified.  I look at their mortgage approval papers and get a letter of committment. How much further can I go.

The Real Estate Market here in Ontario goes up, comes down like a wave. We cannot guarantee the price. We just look at what's going on and market value.

I do not pressure anyone into buying. I inform and educate. If a home is overpriced (according to the market) I inform my buyers.  if they still want to purchase that home at the overly zealous price, then so be it. 

Betty Bart

Fine Homes in 905
Betty Bart
10:36am • #82
For me personally, I would totally ignore what a lender told me I could afford. When my husband and I bought our house - before I became an agent - we didn't ask the mortgage guy what we could afford - we knew ourselves, found a house in that range and went to the bank with that amount. That's just me.
10:40am • #83
105,134 Points

Funny, when we bought this house nearly 3 years ago, we were pre-approved for about double the price.  We knew what we could afford, even if the bank didn't, so we're still making our payments.  It's not always someone elses fault when things go bad. 
10:41am • #84

It never was the home buyers fault !  But the funny thing is the ones doing most of the blaming are the ones most responsible. It is the professionals responsibility to ensure they can afford the home Period But which one of them? the originator, The processor? The underwriter? the investers that bought the loan , the Banks that created the no income, no asset no job Programs (ninja) and others of comparable quality programs? or the Federal goverment that told the banks that everyone should have the American dream.. There are many that saw what was coming and they turned there backs in the name of BIG Big profits and bonuses and political contributions.

What i see as the most incrediable cover up and blame game is the Secure and fair enforcement mortgage lender act AKA the  SAFE Act. This is where mortgage Brokers and the agents that work for them register with the number stamped on their forehead and are monitored while everyone that works for any federally insured bank or credit union does not have to comply with the new rules.  So while the blame game continues to rome around the country those truly responsible for the mess are free to continue in a business as usual mannor.
Dale H
10:43am • #85
332,124 Points 20 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hey Carla - A lot of good stuff in this post. As always your posts always make for good conversation ; )

Nice job and congratulations on a well deserved feature!
10:44am • #86
106,170 Points 8 Featured Posts Localism Sponsor

Somehow we want to blame the government who placed Wall Street folks into regulatory positions, and who then altered guidelines for lending... but no bank MUST sell their loans to these institutions... they sell them in order to meet capitalization requirements, so that they can lend more than they could otherwise. And those same ex-banker regulators loosened the restrictions on how much reserves the banks needed to have... and failed to regulate the derivatives markets...

Somehow we want to blame the lenders who created untenable loan products based on a never ending appreciating real estate market, which all above seem to think no one was aware would somehow top out, after appreciating at astronomical rates and unheard of bidding wars on properties... nope, not a Realtor alive saw that this rate of expansion was ever going to end... no buyers of these properties ever thought that prices could not sustainably continue to rise at such rates...

Somehow we want to blame the Realtors who somehow never thought that property values would stabilize, but rather thought that values would continue to rise at rates of 10% or 15% per year (in some markets) against income levels remaining stagnant for years on end, housing becoming increasingly unaffordable (based on income compared to cost of housing) and buyers flipping properties in weeks without renovation and making 20% on their money... or buying solely for the appreciation, and tollerating cash flow deficits from rental properties just to gain the appreciation...

And most importantly, somehow we want NOT to blame the consumer, who bought propery with loans based almost entirely on their ability to refinance out of those loans in a couple of years, assuming never ending escalation of values, or who purchased houses with interest only loans, assuming their income would increase (when in fact purchasing power had not increased for the vast majority of Americans for some 30 years) to the point where they could pay down the loan with their increased income, or somehow refinance before their principle exceeded the value of the house.


Really, the installation of bankers as regulators was a bad Bush idea... the invention or propagation of adjustable rate mortgages, interest only mortgagse, Option ARMs, etc., the over leverage of banks, and lack of monitoring of the derivatives markets, saucy guidelines from Fannie and Freddie, and ebulient unfettered but scarcely sane optimism on the market from both professionals and consumers... all are to blame, or else, none are. That is my opinion.
10:44am • #87

We've said this all along! The majority of buyers that bought homes had a job,  hard and made payments for several months if not a few years before the downturn.

In our area there was a storm (Charlie) that reduced our housing supply so there were fewer homes and the prices escalated as well. This caused much of the under-water scenarios we're seeing now.

There's a little bit of blame to go around for everyone however the biggest culprits are S&P, Fitch and Moodys. They ranked these convoluted instruments into Class A and AAA with no historic records to base that on. They got rich and still are getting rich with hedging. They even bought Lender-Provided MIP on most of the loans through the defunct (I already forgot their name.) insurance giant. It's more complex than meets the eye but for the novice reader and dumbed down USA people stupid enough to vote for Obama, it's easy to create propaganda and a blame game strategy to protect the real crooks; the bankers and wall street.
Bill
10:46am • #88

I think there are a few sides to this problem.

1. Lenders did lend to buyers more money than they could afford with no or little down. They didn't look at debt to income ratios, and they lended too much money on homes that weren't worth the price they were lending for them.

2. Buyers: did they not look at the truth in lending papers at closing??? Did they honestly think they could make those outrageous payments for 30 years? We can't just blame this on those evil lenders. Buyers have to take some responsibility here - they knew what they were getting themselves into. It's all laid out for them: how much they will have to pay every month and what their rates are, and if/when those rates/payments will go up.

3. Trickle down. Because of #1 and #2, number 3 comes into play - people who have had homes that WERE affordable, who have owned them for years have lost their jobs as well and are losing their homes too. Not entirely because of #1 and #2, but both had a huge impact on the economy as a whole. The trickle downers are the ones I feel sorry for.

I really do think people got into the real estate "have to have the dream home" "Have to flip the house like I saw on tv" "have to be a real estate tycoon" frenzy and didn't think it through. Honestly, you could smell the crash coming a year before it happened - there was nowhere else to go but down. Those prices were astronomical for homes that weren't worth that money, and the average person just could not afford those homes but continued to buy them. And with those prices came several-thousand-dollar payments. And of course they had to have new furniture, new cars, and a trip to Hawaii as well because they "deserved it". Have they sold any of those "toys" in the garage to try to make those payments? No, most of them just took the toys, destroyed the homes they promised that they would pay the banks for, and walked away.

Then came those who could make their outrageous payments but saw that homes in their own neighborhoods were selling for less recently (short sales, foreclosed homes) and just up and let it go instead of just holding onto the homes they have and waiting for the market to come up again. This helped to flood the market as well. They bought high - it was their fault. Honestly I think they should have to make up the difference on short sales, and if they damaged or stole from the home on the way out the door they should have to pay for that as well. Time to take a little responsibility for our actions folks!

Honestly I think that greed and plain old not thinking came into play in this whole situation. And the trickle downers are suffering in addition because of it.
Tiffany
10:48am • #89
125,446 Points Attended Rain Camp

As a building contractor I can't agree with your premise...the no-doc loans were in-fact given to folks who knew they couldn't get a loan otherwise and their demise directly affected my life and bottom line...I build investment properties with my own resources and when I'm done I mortgage my capital back out...my bank was telling me 2 years ago they couldn't guarantee they would mortgage me out if I built any more of them so it put a halt to my personal financial plans...I'm building my first spec in over 3 years right now with a fair amount of confidence it will sell...if it doesn't, I think I can mortgage out now and rent it...so, I lost a few years of productivity due to banks lending money like drunken sailors and people who couldn't deny themselves instant gratification....frankly, I'm tired of the 'boom & bust' thing this country seems to repeat ad nauseum.
10:55am • #90
149,483 Points

Great blog Carla... although I do know of people who wanted the flash and parted with their cash for the over the top MCMANSION... Now they are in a world of hurt...
11:03am • #91
1 Featured Post

There is plenty of blame to go around and no one group of people can claim all of it. It was  a perfect storm.
11:08am • #92
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As a matter of fact...  I did tell several buyers they were buying more house than they could afford. 

I actually told up to 5 buyers that were qualified for a loan, that I could not work with them because I could see that they were going to make a decision that would not be pretty and I was not going to be the one to get blamed for that decision. 

I like sleeping at night. I like to put my head down on the pillow and fall asleep before my husband can even turn out the light.  I can do that because I have a clear conscience.

I counseled buyers about the difference of what they were qualified for and what they could pay each month towards a mortgage.  I asked them about their lifestyle.  Do they like to shop, go out to dinner, movies.  Do they have a boat, Harley etc.  I could tell by my interview that we needed to tread lightly.  If they were willing to listen to my advise then I knew they would be in a good situation.  If they would not listen to me, the professional, I let them go.
11:10am • #93
1 Featured Post

I have to agree with much of what Lenn said. It had nothing to do with what buyers could "afford" is was about what they could "qualify" for. But I have to disagree with you Carla, buyers did buy more than the could afford because they were told they qualified for more.

Yes, many buyers had a comfort level with the piti and stayed with in that. But how many buyers did you work with that said "well we didn't want to pay more than X but I really want this house?" Some were sold on sub prime loans. Some were sold on the idea of Adjustable Rate Mortages. Either way, this mess isn't about a group of buyers that bought more than they could afford or lenders that made risky loans.

The reality is there is plenty of blame to go around. Buyers, the mortgage industry, realtors, wall street, GSE's, but the number one group to blame.... is the politicians that created this mess to begin with! At the beginning of this boom, I was still a mortgage underwriter (I quit because I could see what was going on! I was quoted in 2003 on Inman News saying this very thing). It was obvious the market was going to crash. If I recall, I said this crash would be as bad if not worse then the S&L crisis of the 80's. My timing was off (I said it would hit in 18 months), but my description of the severity was spot on!

Congress was (really it was Maxine Waters & Barney Frank leading the march) fighting to make "homes more affordable". They believe everone "DESERVES" to own a home. Check them out in their own words http://www.youtube.com/watch?v=_MGT_cSi7Rs 

The problem is home ownership is not a right (see the constitution) its a privelage. Until we stop re-electing these life long politicians, put in term limits to stop the corruption and let the market naturally fix itself, we're all in for a long bumpy ride! Forget who bought and why, it's time to fix it!
11:11am • #94

Stop crying for the homeowner, like they had no responsibility in this!  There were plenty of homebuyers who were reading Missed Fortune and trying to cash in on the real estate market, which at the time was viewed as the next cash cow after the crash of the dot coms and the stock market.  The market was full of baby boomers dreading retirement because they hadn't done their homework, had never saved a dime, and now thought they could make up for their overspending and laziness by just buying a home and holding on to it for a while. 

As a mortgage broker,  I see people's spending habits.  Between 1990 and 1996 I can tell you that less than 5% of my clients any savings, and most had nearly 50% of their yearly income in consumer debt.  They were still trying to qualify for more than they could reasonably afford, because the conventional wisdom at the time was that they could build a nest egg on rising home prices.

The coming crash should have been obvious to anyone who looked at the history of the national median home price in the US. Between 1970 and 1999, prices increased roughly $11,000 every 5 years.  Prices skyrocketed by $89,000 between 1989 and 2004.  Students of financial markets know that whenever you see a spike that significant, something unnatural and dangerous is going on. 

What caused the spike?  Lots of factors.  Down payment assistance programs, 100% financing, community reinvestment requirements by the government which created loans for people who really shouldn't have been getting loans, greedy wall street people all created a buying atmosphere that created a run on real estate.  None of those factors by itself could have caused the spike in values, but the long and the short of it is that the American consumer paid way too much, and if they had done some homework, they might have made different decisions.  The crisis was caused one consumer at a time, and lots of those consumers were buying the most they could qualify for with one idea in mind...get the house, hold on to it for a couple of years, and cash in. 

This strategy worked for some people.  I know a young couple who left the Florida panhandle with over $250,000 in real estate profits after living there under 5 years.  Besides saving a ton of money on personal taxes, the husband earned almost as much in real estate profits as he did on his 9-5 job!  They lost a lot of those profits 3 years later when they got transferred by his job and had to sell the next home at a loss.  Bottom line is, a home is an investment.  We work hard for our money.  We should work hard at figuring out where to invest it.  The profits promised by the real estate market sounded too good to be true.  We all know that if it sounds too good to be true, it usually is.  And it was.  The consumers had the most to lose, they should have done the most homework. 

I am embarrassed to say that I actually looked at this graph, and my reaction was completley wrong.  Instead of thinking, "This is a crash waiting to happen!", I sent it to all my real estate agents and said, "Better help your first time buyers into a home while they can still afford it!", so while I see the error lots of homeowners made, I also understand that in the crazy, heady atmosphere of the "free money" mentality, it was an easy mistake to make.
May Smith
11:14am • #95

For the most part everyone played by the rules set forth to us by our leaders (Govt). Whos to blame?
11:16am • #96
111,385 Points 1 Featured Post Attended Rain Camp

Carla,

The consumer bought at what they qualified for or below that at their comfort level.  Who knew the economy was going to suffer a stroke and continue to hemorrhage?
11:18am • #97
116,642 Points Outside Blog

Amen, Debbie Charlotte, #79! As a professional Realtor it's essential that you secure all the financial information, sources of income, savings, expenses and future goals and objectives of a buyer prior to showing them properties that meet their financial circumstances.

Our primary goal is to help our clients or future clients, so when they are qualified to buy more than their circumstances allow. I refuse to be a party to a potential nightmare and have and continue to excuse myself when warranted. Did I lose business, absolutely?

Knowledge is powerful when used effectively, unfortunately, many buyers were ignorant or let their emotions override their financial reality and allowed others to persuade and convince them that increasing home equity would continue to increase regardless of their circumstances, so the more you bought the higher the return on equity.

The system will weed out the order takers and misfits, unfortunately, it took a huge event to separate the professionals from the misfits. Now, in November, we can choose to allow the politicians to continue their manipulation or vote OUT all who have served more than two terms regardless of party. To improve anything requires change and we should all start with the chumps in Congress.
11:23am • #98

May: Excellent post!!

And yes, if anyone looked at the history they had to know it was coming. I was surprised at how many didn't, and how many said I was crazy when I said it was coming. It's common sense, but then nobody seemed to be using common sense at the time.
Tiffany
11:24am • #99
Outside Blog

I am not sure about "bought more than can afford", it should be "lied more than can afford".

In the years of insanity, I advised many of my clients as such. Guess what, they came back since late 2008. So before recommending to your clients, ask yourself "will I buy this property at his income?". Don't just sell, sell, and sell.
11:27am • #100

So glad I saw & read your Blog today...

Nice to find Real Opinions/Discussion in a World of Blogs that so often seem to Repeat Talking Points or attempts to say whatever someone thinks Potential Leads may want to hear..

I will be sharing your Blog with others and am very glad to be able to say...Thanks and am looking forward to reading more of your take/opinions, reactions/responses

 
Dunes
11:32am • #101
112,000 Points 3 Featured Posts

Dear Carla:  WHO IS TO BLAME FOR THE DROP IN MARKET VALUE OF HOMES?

The new Dogma says...SOMEONE HAS TO BE PUNISHED FOR THE FINANCIAL MESS...let's punish homeowners who can no longer sell their homes and move on due to the "sunk" and "sinking" market value of same. 

The Major Banks, B of A, WF, etc.  Feel that the Homeowner should bear the responsibility for their decision to purchase a home that they can't afford now that 2 years have passed and the economy is in disaster mode.

But didn't those banks receive MASSIVE CAPITAL INJECTIONS? 

I think Homeowners should now receive MASSIVE CAPITAL INJECTIONS, too.
11:37am • #102
144,543 Points 1 Featured Post

Carla,

Great post- actually I did tell some clients that they were going to get in over their head...  Thankfully they listened and  appriciate my advice more than ever now;) 
11:38am • #103

Dunes, you don't think that the author of this article wasn't saying what potential clients wanted to hear? Hm... It sounds like a total sales article to me so potential clients would think, "Yeah, she understands." It was very advertisment based.
Karen
11:39am • #104
815,788 Points 7 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Many people over paid expecting the market to keep going up and up forever.  There were too many bad stated loans, negative equity loans, and short term loans (5 year etc).  No with the marker sucking eggs and people loosing jobs even people that thought they were being safe have been caught up in this situation. 
11:41am • #105

unless you can show some deception or misrepresentation, the buyers are certainly to blame.  charmaine, #93, you are not alone, i too advised many buyers that  they would need to find someone else to assist them in their financial suicide.  most were clearly lying on  their apps for financing and many had shady loan officers that were fabricating 1003's and some were fabricating employment claims with  the full cooperation of the buyers.

i remember telling a guy (college grad, business owner) who had bought an $850k home in carlsbad here that he could not afford the home.  he advised me that he had a 2.1% interest rate and implied that he was smarter than me for finding that loan that i clearly needed to learn about.   i actually did laugh at him and told him  that there was no 'secret mortgage market' that i was unaware of and that he had a neg/am loan that was going to bury him if he kept it up with his E-Z monthly payments, and that was if the market simply stayed level. like many of his neighbors, he has been foreclosed out.

to suggest that the buyers are blameless is to grant them no credit for being intelligent and to make them out as dullards that cannot be trusted to handle their own business.  the VAST majority of homeowners are not in distress and were smart enough to not engage in these ridiculous mania that had people cashing out their equity to spend and use.   some of those are hurting now have my sympathy but most are simply reaping what they sewed.
11:42am • #106
Hit Router

Most buyers were pursuing the American Dream...They just didn't realize it would turn into current Nightmare. Even though there are plenty of blame to go around, I don't think it's the agents' place to tell would be home buyers what they can and can not afford (we're not privy to all of their financial records/status.) It should be between the buyers and their mortgage lender. If the buyers have their pre-approval, agents will have to rely on that, unless they know intimate details of the buyers finances more than their lenders. Thanks for the post,
Lydia
11:52am • #107
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So we have what is the MOST important financial decision in someone's life and they are all being led by commissioned based sales people.  A buyer is committing to repay up to $500,000 or more (I'm in a market with a lower median home value) of their hard earned money and there is absolutely no one acting as a "FIDUCIARY" in the the buyer's corner.  NOBODY advising them on what is best FOR THEM!  Wall Street doesn't want it, the Banks and Mortgage Companies don't want it, the NAR may say they want it, but they don't.  The Financial community doesn't pay any attention to how big real estate is to someone's financial well being so they treat the house like it's a $5 fee that needs to be paid one time and doesn't deserve any of their time.

One recent study showed that middle and upper middle class Americans from 55-64 and 65-74 have an average of 68% of their wealth in their houses.  A house is a non-financial asset because in order to take money out of it you have to sell it (and find somewhere else to live) or you have to take a loan out against it which puts it at risk and will require payments (except reverse mortgages).  Seriously, 68% of your net worth is in a vehicle that you can't readily access.  Yet I didn't see anyone even talk about this part of it in the replies.  

Wouldn't they have been better off to buy a smaller house, invest the difference and have that part of their financial make up take up a much lower percentage of their net worth?  In my market the difference between a $150,000 house and a $250,000 house is about 800 sq feet, a 4th bedroom, a 3rd bathroom and a 3rd car garage.  But the difference in payment invested at 7% puts an additional $750,000 (or so) in their retirement portfolio- at age 70 there is a way to turn that into a GUARANTEED $45,000 a year income for life.  Aren't we talking about safety here?

If both homes appreciated at the same rate it takes almost an 8% appreciation rate for that $250,000 house to be enough higher in value that they could sell it and walk with enough money to walk with $750,000 (or so) and buy the same dang $150,000 SMALLER HOME because now they are wanting to downsize.  Does anyone think real estate appreciation will be close to 8% for the next 30 years?   Would that be the safe strategy?

What would this do to the real estate industry? If people bought a cheaper house means less commissions (both lender and real estate agent), if they stay in their home long term (or for life) then there are no more selling and buying commissions (well there would be a lot less), since we are assuming they are getting advice that serves THEIR INTERESTS the number of times they would refinance drops greatly.  If you have a couple (to several) hundred thousand dollars to access in emergencies you won't be refinancing to pull money out so mortgage transactions would be driven by rate. Hmm, a lower mortgage makes it more difficult to make the numbers on a refi work FOR THE CONSUMER so mortgage turnover slows drastically.  How is any of that good for the real estate industry?  Yet it is great for the consumer. 

As I read responses here, the real estate agents don't want the responsibility to be a financial fiduciary, though I have seen many in my career try to make is sound like they are.  I was in the mortgage industry for 19 years so I know that 99.9% of that industry could care less about what is best for the buyer.  The government, what a joke they are, they are mere puppets for the folks with the money (Wall Street, Banks, NAR, etc.) so if none of them want a Fiduciary relationship for the buyer then there will never be one (if they did have one it would have substantial holes in it for it to be about as effective as it is for the financial community.)

Until everyone, including the buyer, is on the same page to do what is best for the CLIENT we are prone for more problems going forward.  Just saying maybe we all should be acting more like a fiduciary and less like a salesperson.
11:56am • #108

Michael Ford: I agree. Great post!
Tiffany
12:00pm • #109

Greed and Irresponsibility led to this financial and housing meltdown.  Shocking!!!!  Buyers, Investors, Lending Institutions, Realtors and the Government all have their share of the blame.  Now the pieces have to be picked up and it will be years before things are turned around.
12:09pm • #110

My pre-qualification interview went something like this...

"With today's products and your credit, you can easily qualify for more mortgage than is prudent. So tell me, what have you budgeted for your purchase?  Let's work with that and go from there."

Unfortunately, some still got in trouble.

I agree with your premise that homeowners shouldn't shoulder the blame but for different reasons.  This entire debacle was caused by control fraud.  Little people like homeowners/buyers and even originators and realtors can do nothing about control fraud. Only regulators, at the highest level, can and they were and still are derelict in their responsibilities.

More than any other factor, control fraud was the driving force behind us entering Great Depression II. I encourage all to familiarize yourselves with what control fraud is.  Here is great read on it authored by William K. Black. 

As for the specific mechanics behind the control fraud, here is an excellent article by Charles Hugh Smith.
Former Originator
12:17pm • #111

I MIGHT HAVE MORE HOME THAN I CAN AFFORD...NOW THAT MY WIFE AND I HAVE LOST OUR JOBS.....

WERE THAT THE LINE V/S JUST "MORE THAN THEY COULD AFFORD", IT MIGHT BE CLOSER TO THE TRUTH.

NONE OF OUR CLIENTS ARE IN THAT "MORE THAN THEY CAN AFFORD MODE", BUT MANY PEOPLE IN MICHIGAN ARE...REMEMBER WE WERE THE FIRST STATE TO BE IN RECESSION/DEPRESSION.

AND THE AUTOMOTIVE SECTOR IS BACK, MAKING A PROFIT , PAYING THE MONEY BACK OR HAVE ALREADY....AND BEATING THE PANTS OFF ASIA AUTOS.

 
12:21pm • #112

Greed did lead to this situation. But! As far as prices go, the market needed to level itself out! It swung too far and needed to come back. It may be years before the market gets as out of control as it was before, but I think after the short sales and foreclosures start to sell, we might possibly get leveled out a bit. Prices went higher in this past market than in any market in history - it was a runaway and people jumped on the bandwagon to be a part of it and own the mcmansions, drive the fancy cars, get the plastic surgery (I heard a lot of stories about people taking money out for plastic surgery and vacations), etc. It was a full-fledged runaway credit-fest and they were not stopping to remember that they were not rich movie stars with money to spare. Must have granite countertops, hardwood floors, new cabinets, gourmet kitchens (when nobody was even cooking dinner - going out to eat instead), glamour baths, etc. So yes, there was greed, but I don't blame those who were selling this stuff. I blame the idiots who were buying this stuff with money they DID NOT HAVE.

Homes appreciated too quickly and people EXPECTED a financial gain of 40% or more in a short amount of time. In the past, homes would appreciate maybe 10-20% over YEARS, not in a couple of months. Buyers had to have a down payment - not an easy thing to accomplish, but if a buyer was able to save money they learned how to be responsible with their money and not just credit out until they were up to their eyebrows in debt. Now sellers are still expecting a gain and it's just not there and they are crying the blues. There is/was no guarantee that they would make thousands of dollars just because they bought a home, and made a few payments then put it up for sale. They were delusional, watching too many television shows that mislead them and they didn't bother to actually learn how real estate works. Nobody was thinking for themselves (or thinking at all), just following the crowd.

Bottom line: those buyers saw IN WRITING what they were in for when they signed those papers and they had the choice to make. No lender, realtor or government official made that decision for them. It's like going to a car lot, jewelry store, clothing store, etc and buying a car, ring, etc that you simply cannot afford. The salespeople are there to help you buy it and that does NOT make them crooks! People forget that and want to blame it on the people selling the item. YOU have to decide whether you want to take that expense on, not them. And again, the facts are printed out in writing and if you're only thinking about how fun it will be to own the expensive home and do the "look at me" dance like everyone was doing and not at the fact that you will actually have to PAY for this stuff then who's to blame? It's pretty obvious.
Kaya
12:25pm • #113

I just have to say everyone here must have been the Realtors I missed.

 

When I told Realtors in the boom that the client really could not afford 300K (although there were programs they could get) most of the Realtors advised their clients to go elsewhere for the mortgage.  That is one of the many reasons so many Pay Option Arms were written in Florida.

Left the mortgage industry in 2008 (as home prices far exceeded median income) in my market and could not be happier.

Please do not pretend Realtors did not push buyers to higher priced homes to earn larger commissions.  There is blame to go around, from buyers, mortgage brokers, bankers, banks, hedge funds and Realtors.  All are too blame and most are all suffering fro it.
DJ
12:28pm • #114
328,898 Points 4 Featured Posts

It's always somebody's fault. Ot it's raining today, or too hot, or whatever. Look in the mirror!

Ty
12:34pm • #115
122,123 Points 1 Featured Post Attended Rain Camp

Guess I sidewith basics. In the '70s, you had to meet28/38 percent to qualify after putting 20% down. It was the government and the banks making it too easy, that made people make poor decisions, i.e. zero down payment ... crazy.
12:34pm • #116

No home buyer should have a payment higher than what they could afford working a minimum wage job - meaning save up enough for a down payment and buy within your means to keep that payment low enough that should disaster arise, you can make that payment with even the simplest of jobs. This means buying a REAL starter home first, gaining equity, eventually selling, and moving up - over YEARS, not months! Keep that payment low! make sure you can make that payment no matter what kind of job you have. Buyers didn't do that.

We had $300,000 CASH to buy a home with and could have easily qualified for a $600,000 home and really bought a fancy home. Do you know what we did? Put $200,000 down on a $300,000 home and kept the rest in savings. The home isn't perfect but it's home and it's affordable. This can be done on any scale. If you don't have a down payment large enough to keep that payment low, KEEP SAVING until you do, THEN buy.
Mark L
12:38pm • #117
160,513 Points 3 Featured Posts

Tere #76- I don't see the stated income loans being the problem in my area. I was a stated income loan, still had to put 30% down and have never been late on a house payment. Stated loans were one of the few options available for self employed people. Depending on whose numbers you read- at least in my area- 15%-20%+ unemployment had a little something to do with the foreclosures.
12:43pm • #118

I won't show a house until after my clients have been prequaled.   I then ask them what monthly payment (piti) they are comfortable with and we go from there.   I hate arms and will tell my clients this is not a good loan.  You don't know what will happen in 3-5 years so you are banking your future on a crap shoot.   I also tell them you know your home should never be an albatross around your neck you need to go out and have pizza and date night too.   Most listen a few don't they are so set on keeping up with their friends they get in over their head.   The bottom line is we can give them our advise 20x a day they choose wheather or not to take it. 

Carla love the post.  It really got everyone talking.
12:47pm • #119
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Good post and mostly true- There are some of us who did in fact tell potential clients that they could not afford to buy. In fact I sat with a friend who got sucked up in the frenzy as she phoned a local broker (who surprisingly- or not) got his broker's license because he was an attorney. Seems he and his LO wife 'loaned' my broke friends the money for the EMD and submitted an offer on a $485K house for a couple who earned less than $55K per year!

There were also, however, a LOT of homeowners who bought affordable homes with affordable loans and then screwed it all up by making their home their own little ATM and got sucked into all the creative loans with payments that NEVER made sense; and certainly didn't make sense for an eventual payoff with an amortized payment for the increasingly high amounts they owed. A bad situation all around that we will ALL now feel the damage from..
12:50pm • #120

In response to your rhetorical question, "Did any of you say to your clients:  "Hmmmm . . . I think you're buying more house than you can afford" two years ago?", my answer is YES!  Anybody with eyes to see and experience in the financial markets could see the subprime debacle happening.  I believe the question we should be asking ourselves is this: "Why did I believe such madness could ever lead to anything good?"  Barney Frank and Chris Dodd caused this mess with their politics, and the Bush AND Obama administrations looked the other way (the K-Street corruption).  Stop blaming the bankers.  Realtors with any sense could have foreseen the crisis we have today...had we (corporately) only been not so greedy as to look the other way while unsuspecting borrowers were sucked into the black hole of unaffordable debt.  So in answer to your question, my answer is "yes."  I did counsel friends, neighbors and clients NOT to take the bait and get trapped in a losing venture.  And today, they are grateful clients-for-life. 
Tim James - Prudential California Realty La Jolla, CA
12:52pm • #121
111,329 Points Outside Blog

It is fascinating to read the posts and comments today and compare them to the ones of 2 years ago. Two years ago the chorus of "blame the homebuyers" was overwhelming.

Now, not so much. Most of the chorus is singing "it is the fault of the -- pick one: banksters, govenment, loan originators, Realtors, AIG, Bear Sterns, Merrill Lynch, Greece, Portugal, etc -- The homebuyer is more and more often being given a pass, which IMHO is justified. 

Greed is still getting some play, although only a few of the comments are directed at the homesellers who got out at the top. For them greed paid off.

Again I repeat, if we would use the word "ambition" instead of "greed" we might get a whole new sense of the situation.

Remember the turtle analogy? "A turtle can only move forward if his neck is out!"  Many of us became turtles in an attempt to improve our retirement prospects.

BTW: if commenters would identify the geographic area they work in, it might help to undertand their point of view.
12:54pm • #122

Prior to the "Great American Attitude Adjustment" we are currently gowing through, adjustable rate mortgages were a great way to go over the past 20+ years, as they always went down rather than up. Home ownership was a good bet as they had always increased in value. The Government wanted everyone to have a "chance" at the American dream.

The fact is that millions of Americans work very hard for little pay. They can try as hard as they want but with raising children, saving for college, paying medical bills & insurance, will never be able to save 30% for a down payment. This was a chance for many many families to get into a home with very little down. The vast majority of those people are still in their homes and are still making their payments.

We must not assume everyone is in default. The majority are current. Everyone has a different story.

The problem now is the Fix.  Selling homes out from under people in a time of economic depression and massive job loss is not the answer!  People who have good jobs will, of course disagree, until their job goes south.
Steve
1:01pm • #123

Hi Carla!

You have really hit on a subject that opens lots of opinions!  For some of us that have been in this business for over 30 years, we remember back into the Clinton era when all we heard was "everyone needs to experience the American dream of owning a home", and that's when we started to see all kinds of "programs" being offered to buyers. It was almost like cards - you just pick one and we'll make it fit!  Everybody was busy for the next few years, and everyone got paid - the Realtor, lender, appraiser and then on to the secondary market!  What a happy go lucky time as lots of new Realtors came on board to make their fortune in real estate!

Well, as we know, things always change, and seems the industry saw it coming, but the government programs kept grinding out new programs. We had so many that special education was offered to learn how to make more sales! 

The rest is history!  We'll get through this, and maybe, with a new respect for a bit more advice to the buyers that "do" want more than they can comfortably afford!  We'll also weed out the agents that are afraid to ask more financial questions before putting folks "at risk" when buying a home and spending the most money in their whole life! ( course I realize some cars cost more than some homes )  I just had to weigh in on this subject!  I really liked your post!
Audrey Schaible
1:02pm • #124
143,024 Points 3 Featured Posts Outside Blog Attended Rain Camp

There is a huge difference between allowed and able, or qualified and able. 

The buyer needs to write the check each month, they need to know what they can reasonably pay for each month.  This is not me saying it is the buyers responsibility soley, nor should it be the loan officers, or the Realtors.  A frank discussion of what things cost, what they want, and what the market costs and will allow needs to be had to make sure the buyer is able to get the best house possible for them.  In that sentence "best" is not meant to be largest, newest, or otherwise.
1:16pm • #125
195,682 Points 7 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

If the economy was still steaming along we would not be having this conversation.  People could afford what they bought for the most part, now they have reduced incomes or no income.  I can't tell you the realtors, appraisers and people in our industry who are self employed and really hurting that, yes, now cannot afford the home they are in.  Don't really think this is their fault!!!
1:17pm • #126

Hindsight is 20/20.....Now homeowners are short selling or walking away just like big business. When Big Business hits financial straits, they asked for help and received it.  Now Joe and Jane Public need help, they are told to help themselves.  Because it's their fault for buying to much house?  Where does the blame fall? 
Kevin Dimmel
1:19pm • #127

Sorry Carla but I don't agree 100%.  I agree with Jon.  I sat in many appointments over the years with buyers wanting to purchase a home where the monthly payment was higher than their monthly income.  Sometimes it is just simple math.  Income vs out-go.  Yes, there were some dirtbag lenders out there who were greedy but there were also some buyers that were equally as greedy.  They wanted to live outside of their means and were hoping that the market would keep going up 50% a year.  I think we all have the responsibility to do our due diligence regarding financial matters.
1:23pm • #128
2 Featured Posts

I have to agree with Donna #70 "The best question we can all ask ourselves, whether homeowner, lender, real estate agent, etc., is "What have / can we learn from this". Every situation is different and you can't blanket the whole problem with one answer anyway.  We all individually know how we handled ourselves to get to this point.  It is a great responsibility we bear as real estate agents and that's also why I wish it took a little more to get into this industry...but that's a whole other post.
1:28pm • #129

A very good post that lets us all really think.  What do we really believe?  Was it different where I live? Speaking as a citizen I would love to blame it on the Clinton Era.  Speaking as a Realtor what were we supposed to do? Market is Market...right.  I think we all saw the greed, especially cheap houses, in our area ugly modular, going up and someone making an absurd amount of money off of someone just because they needed a house to live in.  I still felt like I was on a run away train.  Made me also feel I was a great sales agent.  Now I have to go back to the basics of 10+ years ago and go get the business. 
2:03pm • #130
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I remember falling in love with a house I had listed back in 2004 - to the point where I actually contacted my loan officer to see if I could afford it.  The payment was TREMENDOUS in my eyes - but I still qualified for it.  Luckily, I had enough sense (read that DIScomfort!) to back off and stay in my modest little home...or else today I could be one of those losing their home due to the downturn in the economy! 

I found most folks that I have had contact with who are in short sale or foreclosure situations are either going through a divorce or have lost a job.  I've only run across a few that took every penny of equity out for trips, toys and upgrades...thankfully.

I also like to have the "You don't want to be house poor" discussion when meeting with buyers!

Thanks, Carla!
2:06pm • #131

Wow Carla, I'm shocked at your response.  Isn't it the lenders job to make sure that the buyers do NOT live outside their means.  Wasn't that the whole idea of getting loan approval?  Those stated loans sure came in handy for lenders didn't they?  I had to help a couple short sale their home because the lender not only got them a stated loan but got them into an option arm.  Told them they could afford it and then had the nerve to refi them with another option arm.  Yeah it's all the homeowners fault.  How dare those homeowners not trust those wonderful lenders that were out there making tons of money off these loans.  And where are those lenders now?  AND all I'm hearing again is we have stated loans again.  Yeah it's the home owners. 
Jane
2:07pm • #132

Correction, my comment was to Monica at Keller Williams.  Sorry Carla....
Jane
2:10pm • #133

Well now we're in it, what are we going to do to get out of it? We cannot rely on the president or the government to do this - we need to find a way to get rolling along again. ALL OF US! But how? I'm willing to do my part as soon as I can think of what that part is. :)

I think that everyone was way out of control with spending, and not just on homes. With EVERYTHING! Children were spoiled beyond belief with every toy, item, wardrobe, etc. Grown ups were spoiling themselves with toys and trips and everything, using cash and credit to get them. Did ANY of it make them happy? NO! It made them want more stuff! Gimme gimme gimme! Did they enjoy those homes? not really, they decorated the heck out of them and showed them off and wanted MORE! In-home movie theaters, gourmet kitchens, master baths and bedrooms to die for, landscaping like you see in magazines, charge charge charge. Happiness? nope. Connection with those they cared for? nope. It was all about show and greed and money.

Honestly I don't blame realtors or lenders - well lenders are reaping what they sowed because they lent to people who couldn't pay and now they are stuck with product all over the place. But buyers please stop and think about this: did you really think you could afford what you purchased? Did you think that it would never catch up with you? I think they got all wrapped up in the excitement and just didn't stop to think.

NOW people are getting back to things that TRULY matter in life. They are putting away their egos and admitting they aren't rich to their friends and families. They are spending time doing things that matter. Cable, HBO, Showtime - gone. Shopping - no. Massive home improvement projects - not happening. This stuff hurts people's businesses and jobs. But before, it was a runaway train on the credit spending spree. Not trying to get religion involved, but I think God (the universe, whomever) is trying to show us how far we had swayed from what matters most in life and now is trying to get us back there. I think the sooner we get back there the sooner we'll get back to what is considered "normal" (remember normal? Before all of this hot market bad market stuff?).

Back to my original question: Now what do we do? We focus on the good stuff, look toward the future, stop blaming everyone else for our problems, and make a plan to get back on track. It won't last forever, and we need to stop focusing on the ditch we're all in and focus on how we want things to be. I don't think anyone (even lenders) want it to be the way it was in the early to mid 2000's.  Remember to focus on the good stuff.
Maver
2:29pm • #134
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Here we go .  .

Hi Russell . . . and we agree with you!  Thank you for the subscription too!!

Hey David -- I will say that almost all, if not all, of my past clients were quite prudent in their home purchases.  Most were approved for a lot more than what they wanted to purchase. 

Hi Claudette . . . all I can talk about is my first hand accounts with my clients.  But, I do believe that the majority of home buyers bought fair and square.  Of course, the spec purchases in some parts of the nation didn't help things much.

Hey Lyn -- We harken back to Lenn's words, which are "qualified by the bank" 

Hi Michael . . . the blame is at the top of this pyramid scheme.  Pull back the bed sheets and you'll find who was sleeping with whom.

Hey Rene -- money is manipulated.  In the early years, houses were priced "affordably" but interest rates were double digits.  Then interest rates dropped, but housing prices rose.  Hmmmm . . .

Hi John . . . I had a neighbor that had three mortgages.  Back in the early part of 2000.  They pulled money out for home improvements, had solicitiations for 125% of value for sharks -- which they bought hook line and . . . SINKER!  But, who loaned them that?  Just say "NO"  (right!)

Hey Lorraine or Loretta -- I just love that Money cover.  It's so "sensational" isn't it!

Hi Bob . . . for the majority of homeowners who did everything correct, buying with their means, we still are witnesses their decline in home values.  Again, the "trickle down property loss"

Hi Barb -- your post title says it all!  I know Ohio is hit pretty hard.  Check out:  The Banksters are Smoking . . . HAMP!  You have some good Congressmen in Ohio!!

Hey Lane . . . oops!  Re-blog is turned on now!

Hi Dave -- in a nushell!

Hey Amy . . . I practice Exclusive Buyer Agency, and "in the best interests" of my client stands firm.  I never got into my clients' pocket book wanting them to spend more.

Hi Carol -- follow the money  . . . at the TOP.  Not the bottom.

Hey Lane . . . yes he did!

Hi Coral -- Lenn made a fantastic commentary with that, didn't she!!  There were a lot of fast talkers, weren't they?!?

Hey Corinne . . . interest rates were double digits when prices on homes were "affordable" -- if they didn't get you one way, they'd get you the other.

Hi Terry -- part of the solution is to "figure" out how the maniuplation / con was played out, and carried forward.  Then with this knowledge, it's quite powerful. 

Hey Rob . . .  life happens, doesn't it.  I've known several families that dissolved their marriage, which put them in a hardship.  And the true life scenarios play out for millions of Americans.  And I agree, many people love to point the finger.

Hi Joe -- LOVE that song, and "businessmen, they drink my wine" -- meaning that the fruits of our labor are being guzzled up! 

Hey Mike . . . after I bought my home in 2005, I had Quicken Loan rep call me constantly trying to get me to re-fi and pull money out.  I didn't NOT want to.  Told them that over and over again.  Calls kept coming in.  And for a lot, they were enticed, sadly.  And I LOVE how you practice real estate BTW!!

Hi Brian -- which is why I coined "trickle down property loss" . . . maybe they are hit badly now.  But, if things get worse, they'll be shorting too!

Hey Robert . . . we live in an "immediate" society.  There is no concept of future.  Even our government spends like there's no tomorrow!

Hi Morgan -- if all the pieces are in place, and jobs are retained, and value of the property holds steady, it can be a good move.  I know a lot of buyers who purchased their "dream" home and realized they would be living in it for many, many years.

Hey Lawrence . . . we aren't taught to look into the future and the "what ifs" . . . interest only, for some, made sense because they were spoon fed into thinking that values always rise.

Hi Terry -- it was the CON of the century. 

Hey Richard -- the blame is on the regulators, the banksters who were sleeping with the regulators (SEC), and those bad boys at the top.  When people TRIED to tell them, and there were a few town cryers, they were either FIRED from their position, blackballed, and/or both.  When the hearings began in 2004, and I've watched excertps, you should hear what they (Congress) was being told.  The lies, the cons -- there are plenty who are to blame and their names should be recorded as the ones that bilked our nation, and conned the world.

Hi Mitchell -- you're welcome

Hey Rhonda . . . yes, it doesn't matter "how much" of a house it was . . . all things being equal.

Hi Harj -- you're welcome.

Hey Kathy . . . I agree that there are, and will be bottom feeders.  The TOP FEEDERS are the vampire zombies that sucked the neck of our nation.  Don't fool yourself.  This was direct manipulation.  A criminal is a criminal is a criminal.  Those that violated RICO, etc., were handed a "Get Out of Jail Free" card.  And this is how Americans get left holding the bag. 

Hi Maggie -- I'll tell you this, the Lobbyists who pimped their "loan" packages made a hell of a lot more money in real estate then I ever will!

Hey Richie . . . The Great Depression business model was used.  What we need to learn is this: when an economy runs smoothly, clean and honestly -- there is still plenty of money to be made.  When the economy is run on a fraud and a con . . . it's just dirty money.  Plain and simple.  No good ever comes of that.

Hi Richard -- Glad you liked that one!

Hey Anonymous . . . yes, the comments made have rounded this out nicely.  When I sat in escrow and the escrow officer says to the buyers "Now this states that your note can be sold," we never questioned this at all.  Sold??  On the secondary market . . . and how the maniuplation takes hold.  Disclsoure of just HOW and to WHOM the note was packaged is the key.  And that, they never bothered to mention.

Hi Dean and Sonia -- with all things, each played a part.  The lenders I worked with, all except for one snake, were very good with borrowers.  There were those that didn't care, and pushed.  One of the issues is that when someone wanted to buy, and prices were what they were, they paid.  I still contend most bought fair and square.  The "trickle down property loss" is now affecting US all.

Hey Scott . . . when the proverbial $h1t hit the fan, the values dropped.  The majority who bought fair and square are the victims.

Hi Krinsten -- YES, thanks LENN!!  And then toss into the mix, the speculators who WANTED this to happen, and bet it would!!  Absolutely criminal.

Hey Dave . . . all of us are affected.  More than others.  And it's not fair for the finger point at the home owners AT ALL.  The "finger" should be pointed at the top!  There were some pretty high power players that did this.  They go on with impunity!  That's the real crime.  They got away with it!!

Hi Patricia -- in writing these types of posts, I don't enjoy it at all.  And we are all easiloy led, sometimes!  Well stated.  And, we are still being misled. 

Hey Marie . . . you added that.  The housing market is the largest market by far.  Easily to maniuplate -- and the proof is in the pudding!

Hi Chris -- that's a quote my Mother take me, don't be so callous at point the finger at someone!  But, the finger I point is the middle one, and that's to all the nice folks that run this sinking ship.  What they did to US Americans is the saddest and most tragic thing I have witnessed.  Ever!

Hey Christine . . . my Father didn't talk much to me about life in general.  Although he was a PhD and taught Political Economist at Loyola Marymount. I do recall him mentioing it's not a good idea to have a house noose around your neck.  He lived modestly, and within his means. 

Hi Tamara -- at the time, I think people were not contemplating the mouthful.  At least those in positions of power weren't sending up any cause for concern.  NOTE TO SELF:  Love many, trust few, always paddle your own canoe.

Hey John . . . the greed was at the top.  And that greed did compel.  The situation isn't complicated.  If I showed you a glass of water, and asked you to explain it, you would tell me it was a glass of water.  If you asked the Chemist, or Physicist what it was, they'd go into the complicated H2O, blah, blah, blah -- 2 H2O (l) is in equilibrium with H3O+ (aq) + OH- (aq) "Water is primarily a liquid under standard conditions, which is not predicted from its relationship to other analogous hydrides of the oxygen family in the periodic table, which are gases such as hydrogen sulfide. Also the elements surrounding oxygen in the periodic table, nitrogen, fluorine, phosphorus, sulfur and chlorine, all combine with hydrogen to produce gases under standard conditions. The reason that water forms a liquid is that oxygen is more electronegative than all of these elements with the exception of fluorine. Oxygen attracts electrons much more strongly than hydrogen, resulting in a net positive charge on the hydrogen atoms, and a net negative charge on the oxygen atom. The presence of a charge on each of these atoms gives each water molecule a net dipole moment. Electrical attraction between water molecules due to this dipole pulls individual molecules closer together, making it more difficult to separate the molecules and therefore raising the boiling point. This attraction is known as hydrogen bonding. The molecules of water are constantly moving in relation to each other, and the hydrogen bonds are continually breaking and reforming at timescales faster than 200 femtoseconds.[6] However, this bond is strong enough to create many of the peculiar properties of water described in this article, such as the those that make it integral to life. Water can be described as a polar liquid that slightly dissociates disproportionately into the hydronium ion (H3O+(aq)) and an associated hydroxide ion (OH-(aq))." (WIKIPEDIA)

To me and you -- it's only water.

Now, to the brainiacs on Wall St., the financial geniuses (did I spell that right?) who brought us this wonderful meltdown, have them EXPLAIN what happened . . . NOW -- it's complicated.  Because you've asked them to explain the tangle web they wove.

It's WATER!!  Don't allow them to bury you in the details. 

They used home owners as tools.  They used the home owners property, and their rights to that property, to be sold and auctioned off on the chopping blocks of . . . bonds, MBS, hedge funds, derivaties.  They did this without explaining to ANY CONSUMER how that MIGHT -- just MIGHT affect them (us) if their evil genius plot contaminated the waters of that well.

What the chemist/physicist can do is baffle you with the EXPLANTION OF WATER.  It's still: WATER

What the financial brainiacs did -- on Wall St., in the Halls of Congress, in the Senate -- was create their blueprint of manipulation, and made if complicated.   Our Government DIDN'T HELP!

What I understand is this:  The American homeowner had their rights to property so manipulated that the WATERS were poisoined.  And now we are drowning in it.

The HAMP,  the loan mods, TARP, were tossed out, and only a FEW -- just like on the sinking ship Titanic -- were able to survive.   Those in "steerage" . . . well, you saw what happened to them. 

I wish I was a political cartoonist.  I'd be penning the TITANIC -- the ship built and "billed" as UNSINKABLE.  The life vests that were supposed to be there, were not.  The life boats that were supposed to be there, were not.  The FAT CATS of Wall St., and our Government elect/elite would be saved, watching from the distance as the TITANIC sinks.

It's not complicated.  It all depends on who you ask.  Ask the homeowner . . . and they tell you they're underwater.  Ask the brainiacs . . . and it's all a formula designed to profit them, and the investors. 

 

 

 
3:15pm • #136
130,954 Points 10 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

WOW! Great post Carla! And so much good commentary to boot! Yep, I was one that questioned a few of my clients whether they could safely and comfortably make the stretch to the payment level they were committing to a few years back.

It always makes for a great discussion, and your clients will know you really care about them, and not just another sale. But even one or two of those clients who wisely stayed at the more comfortable lower payment (rather than the one they were "qualified" for) have had some real struggles as the economy or life situation has changed. They made fairly "good" financial decisions, and still got stuck in some bad circumstances!

Unfortunately "QUALIFIED" only factors in a buyers' past credit, and present income capacities--it doesn't speak to how a person handles things when a hardship situation arises in the future. Some people were able to handle the changes that came their way, and others had a much more difficult time doing so.

While not everyone is a "victim" of the economy, some ARE, and we need to be careful how we judge!
3:25pm • #137

Below is a link to very on point  NY Times article on this subject, titled "Biggest Defaulters on Mortgages Are the Rich"

Hopefully it will serve to pu to rest that urban legend that a handful of sub-prime borrowers tanked the economy along wit those who used their homes as ATM machines.

Sub-prime only accounted for 9% of all mortgages up to 2004, and up to 21% in 2006. It was the insane planned leveraging of those mortgages, as well as the other 80% that is the root cause of the meltdown...along with Wall Street using the mortgage market as THEIR own ATM machine..to the tune of trillions.

The sub-prime and equity using buyers? Not even a mere drop in the bucket of the tsunami that has left the country mired in economic despair, as WS rolls merrily along, planning to hire, still earning billions on OUR tax dollars.

  http://www.nytimes.com/2010/07/09/business/economy/09rich.html

Lorraine Hutton
Lorraine Hutton
4:06pm • #138

This one certainly hit a nerve! I am attaching a link for those who are serious about really understanding how this whole situation came down.  I am certain there are people who have commented here that have watched this documentary but I have a feeling there are many who have not.  Before anyone goes any further, I would suggest you follow this link http://www.cnbc.com/id/28892719/ and watch and learn.

When Adjustable Rate Loans first appeared as a viable financing option they caused a  great deal of concern and confusion.  With three months worth of training and a Lotus  123 spreadsheet our agents were taught how to do a "Worse Case Analysis" which compared as many ARM loan products as the buyers wanted.  Our agents were required to provide the buyers with a spreadsheet which simply spelled out what would happen when the various loans with differing starter rates, swings, etc hit their high water marks.  We spelled it out and the buyers loved it.  They knew what their payments would be if they opted for a particularly attractive starter rate that had a quicker adjustment compared to a higher starter rate with slower adjustments. 

We got involved in financing and the buyers and loan officers loved it.  Let's get back to being involved, let's  make sure we understand the pros and cons of various loan products. Let's make sure we can explain these to buyers and sellers.  Let's be prepared to walk away from transactions. 

While we are at it, how about we all agree that we recommend that all buyers use 10% of their gross income as a fixed expense.  That's right let's agree to make a mininum of 10% in savings a long term obligation that buyers must account for in their ratios or reduce their gross qualifying income  by 10%. This would allocate "a savings obligation".  We can call it the REALTORS gift of responsibility. 

Many of you have already acknowledged that the qualifying ratios often paint an unrealistic picture for many buyers.  Let's start painting a realistic picture.  What impact will "The REALTORS gift of responsibility, have on sales price?   What will sellers say when they discover we are not pushing buyers to their limits in order to sell a listed property?  How much courage do we have?

Check out this CNBC Special, House of Cards, http://www.cnbc.com/id/28892719/ then let's see who we blame but also ask yourself who can you point to for the fix? We have to regain a realistic relationship between income and sales price, not just the ability to get someone to loan money.

 Mike Byrne, Chase home Loans hit the nail by saying, "I think there is plenty of blame to go around in the mess we are in."  AMEN...
4:06pm • #139
180,842 Points Localism Sponsor Called Shot Master

I'm going against the grain here...I did have buyers 2 years ago that I wanted to shake and say ' are you crazy?'...THEIR mortgage guy (no longer in biz) told them they could afford $xxx which was way over what I'd been showing them...They bought in the mortgage guys estimate of 'what they could afford'...I have an appointment later this week to list the house...They're almost 3 payments behind and have no money...I want to say "I told you so" but I won't...They're going back into renting...It's a shame.
4:31pm • #140

If you wouldn't sell them the house, the agent down the street would have ...
Steve
4:53pm • #141
Outside Blog

Very good post Karla!  The buyers, in most cases made their decisions depending on advice from their experts and then made the best decisions that they could.  Was there greed involved by some buyers?  Of course there is always a few that live that way, but the vast majority of buyers who were trying to make the best decision for themselves and their families.

I do mostly listings, the person though who more often than not who was NOT looking out for the best interests of the buyer was the Real Estate Agent who was also the Mortgage Broker!   I can't count how many times that as i sat through a closing thinking that this was a forclosure waiting to happen.

These agents forgot their fiduciary duty and were concerned only to get the bigest commission on the loan from the front and back end pluss the real estate commission, that the buyere became the tool to get those dollars. 

I can't understand why an agent was allowed to wear those two hats. The client for the real estate agents was suppose to be the buyer, the client for the Loan Officer activities was the lender, each had diametrically opposite goals and in that instance the consumer lost out.

Again, it wasn't the buyer who made the bad choice it was the agent/loan officer who wasn't protecting the buyer and from which bad choices/loans occured.  I wonder why the attorneys haven't caught on to that yet.
5:10pm • #142
Outside Blog

Carla:  I'm sorry for mis-spelling your name on my previous post, again, excellent post on your part.
5:15pm • #143
550,873 Points 7 Featured Posts Called Shot Master

Carla,

What an excellent post...It is amazing how the blame gets passed around.  Now who is to blame?
5:47pm • #144

Buyers to blame?

If the Buyers would have ran the numbers/math on some of the special mortgage programs before they signed the paperwork.    Blame Buyers..

The media, brokers, and bankers telling buyers that homes will never drop in price and will increase ever year they live in the home. And by the way you can refinance in a couple years.  Blame the industry..

Banks, Government, Wallstreet, and economy. Making the loan process so easy that if your breathing you could get a home loan, supporting banks with gov backed programs and pushing that ever american should own a home maybe 2, Packaging and selling mortgages on wallstreet to make quick returns. The downturn--end of cheap credit, high gas prices, and lost jobs I could go on and on.   Blame the system..

It was the storm that hit everything and everybody. Should buyers, industry, and the system take personal responsibility?    Yes

Now lets move forward and let the past become something we don't repeat.

 

 

 
6:16pm • #145
Outside Blog Attended Rain Camp

Hi Karla,

Well, I am from Florida and I know a lot of buyers that bought more than they could chew...they have this vision of must have...

Bedrooms aren't big enought, yard is not big enough, closets are not big enough, kitchen is not big enough...

How big does "big enough" need to be?

Eve in Orlando
7:11pm • #146
672,536 Points 69 Featured Posts Outside Blog Attended Rain Camp

Holy smokes, are there a lot of comments here. You bring up an interesting point. I think that every area will be hit by some short sales when people have to sell and the market is down. What other option will those folks have--even if they are 'responsible'. (I'm not even going to get into the fact that responsible people cannot help it if their company where they have worked for 27 years goes bankrupt or if a child gets cancer and they need to sacrifice everything in order to save a life. That's another story.
8:00pm • #147
2 Featured Posts

Wow, a post where I have an issue with most every line.

People bought more than they could afford, I have heard more than a few admit they bought more because of teaser rates and the expectation that they would make 20k, 50k, or more in a year.

I can drive down the street and show you the homes where they sucked every penny of paper equity out, in some cases multiple times during the bubble.  They used their home as an ATM to buy cars, cruises, etc.

I discouraged my clients from doing piggy-back loans and adjustables.  I would tell them that they could not control rates and that they should be careful that they could go up at a time that they might not be able to refinance.  If someone had offered that caution to my mail carrier, he might not have lost his home when his teaser rate went up to above market but because his value fell he could refinance to a fixed rate.  Why did he do this because he was told don't worry, you can refinance in a couple of years or sell it a walk away with a big chunk of money.

I actually did caution more than one buyer to lower their buying range.  One of my customers actually reduced their initial price point by more than 80k.  Why? For the same reason I told my lender on my own refi I was not taking equity out after the addition was done.  I told them in November 2005 that I wasn't touching any of the 80k in paper equity because half or more of it was going to disappear in the next 2 to 3 years.  At this point it is nearly all gone.

Denial is the only reason no one saw this coming.  My fellow agents in the office, my former broker, and my lender all thought I was from some other world.  I was the new guy with a newly printed license who didn't have a clue.  I said you need to quit trying to set new price points with every listing.  And when inventory started to rise I was cautious with listing prices.  Lost a lot of listings during that period.  But the ones I did get I was able to sell.

Well 5 years later, those fellow agents are out of business, the former broker rented out his office and now works from home, and that former newbie now is the leading agent in the area.  But I am working twice as hard hoping to ride out this mess.

We all brought this meltdown on ourselves.  Buyers, Sellers, lenders, appraisers and yes, even REALTORs 
8:22pm • #148

How many families do you know that have had job layoffs or are self-employed and are not making the income that they were when they purchased in the hay day.  I know I'm not making near what I was in 2005 and my husband is in construction.  Need more be said?  We are staying in our home, which is upside down, however, many, many families are not so lucky.  Self rightousness will not solve the problem.  No one went into the American Dream expecting the nightmare of uprooting their children and not knowing where there next meal will come from.

Whose fault is it?  Who cares?  As professionals, it is our obligation to help families make the right decision, right now.  They are afraid and our focus should be on them.  We need to help clean up this mess, one foreclosure, one short sale, one modification at a time.  Whatever it takes, even if it's extra work for us.  We owe it to our customers...
Carol Tunis
8:27pm • #149

If we can give money to the banks and GM, we can sure make the banks help out the consumers who have been devistated by this economy.
8:31pm • #150
249,358 Points 6 Featured Posts

Call me crazy but I believe, regardless of how much the bank tells them they can borrow, if people:

  • buy a home with a 35 year amortization (so in other words they plan on paying it off well into their 70's) cause the numbers don't work any other way
  • have very little money for a downpayment
  • depend on the idea that their home won't go down in value
  • assume that their mortgage rates will not go up and never bother to calculate what their payments might look like with even a couple of points increase in their rate

Then yes, they are buying a home they can't afford.

If they don't understand how mortgages work, then they should read up on the subject before taking on such a huge amount of debt. I'm not talking here about people who can't read who got suckered into the big American Dream by scam artists. I'm talking about average adults with at least a high school education.

If they took on the grown up responsibility of buying a home, then they also took on the responsibility of finding out what they were getting into, independently of any sales pressure from banks, mortgage brokers or real estate agents who all stood to profit from their actions.
9:11pm • #151

Rick Fifer #148, and Karla #146:   Both of you are among the very, very few honest and realistic respondents to this thread.  THANK YOU

Re post person Carla:  to use your own words:  Hmmm . . . one Bad Apple ACTUALLY does spoil the whole bunch!

... And many of your colleagues went along for the east commission ride, saying to 'get in now or be priced out forever'.  One bad Realtor CAN ALSO spoil the bunch, kill credibility.  Including the riduculous ads plastered all over TeeVee by the NAR.  Remember Suzanne anyone???  How about the 'building long term wealth' clasic??  

Yes, and tell me NOW you people were not misleading anyone.  

 

http://www.youtube.com/watch?v=gc4BhpGnXCk

http://www.youtube.com/watch?v=Ubsd-tWYmZw

 

 

 
Jack S.
9:13pm • #152

Carla,

I disagree with you based on common sense. Don't people understand that you can't let your dreams exceed your finances.  Pogo the cartoon character said if really clear  I found the enemy and he is me

When I was selling Real Estate in the 1960's it was cut and dried you qualified a buyer befrore you showed them any houses.  You must have 20% down and you had to list all the payments you were making. We pulled a credit report to validate the buyers statements.  If their income did not justify the price of the house they were interested in we told them so.  Your spending limit could not be more than 28% of your income.  I had many people getting  angry at me because i would not submit an offer.  The banks loan person would not even talk to them until they  qualified for the loan. It was really hard to find listings because people did not move around much.  Suburbia and two cars in the garage was just begining to become in style. most people lived in the same house until their children graduated from high school. If they were smart in my generation if they are living in houses that are free and clear now.

Even in the 1980's thwe situation was the same until  double digit inflation dropped down to a resonable interest rate. Then all hell broke loose and people jumped into greed and what happened a recession.  Did we learn from that crash in real estate prices. I do not think so. When we recovered in the late 90's the Dot Com crash slowed it down.  But it roared back in 2002.  When I was buying investor houses I did not talkl to a Realtor until after I got the loan tied down.  Does something seem off in the in line of business here.????  Many times I only talked to builders representitiive and set up financing with out even qualifying me as long as I had the $5,000 to secure the contract. 

The problen started when greed set in and inverstors started buying most of the new pre construction houses  I am not sure what the percetages in California was. in Nevada 72% of the new homes were sold to investors who took title when the house was finished and flipped it imediatly.  In Florida it was 62% and Arizona it was 6o %.  I am sure it was much lower it was in states that did not have big buillding boom.  I was buying houses on stated incime which I did not have hopping that I would be able to flip the next house to pay for the one that was coming to being finished.  It worked well until 2007.  I saw the crash coming and sold everything including my own residence. I ended up $80,000 in credit card debt because I used them to make paymens.   I know many others people who did the same thing.  Who bought the houses I was selling?  young people with no common sense thinking this boom was going to continue.  Who was selling these houses?? Real Estate brokers and their agents. Were they qualify these buyers?  No. Did they realy care that these people were going over their heads in debt.?  I dom not think so.

It was the same thing I was doing if you could breathe and sign the papers you got the loan.   Did the loan brokers care?  I don't think so.  in fact did naybody care from the wall street banker down to the realtors.?  Maybe a few. If we had followed the rules of 40 years ago this would not have happened.

Yes I agree that home buyers who had their heads in the sand were the victims of themselves rfor not using common sense. Everything is out orf control. we have the three car garage so we store all our big people toys and we have to drive the latest SUV even though it will never use four wheel drive. 

It is not just real estate it is everyting.  In the 50's and 60's they called it keeping up with the Jones.  In those days we could because the dollar was worth a dollar. I could live on my wifes income in 1965 and use mine for investment.   Now the dollare is worth about 20 cents if that much and the cost of living is gone up over 10 to 15 times what it was in the 60s

I am now recovering my lost capital with Foreclosure purchases

What is my opinion.?  I was surprised it took 72 comments before Renee finally started calling a spade a spade. In the next 50 comment only 10 people recognozed the truth Thanks Renee, Angela, Thomas , Debe, Dales, John, May and Kimo for see in the truth. I do not have repeat what you said.

When Real Estate brokers take responsibility for mis directing the victims we can see the truth.

  Another Pogo quote  I found the  enemy and he is me.

 

Art  Martin Foreclosure Solutions

mailforart@gmail.com

 

 

 
Art Martin
9:28pm • #153

Bottom line...Buyers did not put a gun to loan officer's head and say "give me a mortgage!" allot of these loan officers are now working flipping burgers...good riddance...why some are not in jail is beyond me!!!
11:26pm • #154
124,530 Points 1 Featured Post Outside Blog Called Shot Master

Wow - from all the comments, you created quite a stir! 

There are so many factors that contributed to todays downfall in the real estate market.  There is plenty of blame to go around.  I do believe we have greedy home buyers, greedy home sellers, greedy lenders, greedy appraisers, greedy stockbrokers selling mortgage backed securities, greedy ......  You get the point!
11:30pm • #155

This whole idea (myth) that the homeowner is to blame for the catastrophe we are going through is a talking point that comes mainly from one news network in this country.  I think we all know which network that is. They started the rumor that the CRA was to blame for the crisis.  It takes real cowardice to blame this disaster on the poor (especially when the CRA was passed to protect those who had already been victimized by big banks) when in reality it was the fault of the guys who stood to make not billions, but trillions if the market failed. In fact, they started the rumors that the market was going to fail to make sure that they would get their payoff from these Credit Default Swaps.  It's akin to buying a fire policy on a house and then pouring gas all over it and lighting a match.  Except nobody got punished for this case of arson.

The REAL culprit is deregulation, as a few have alluded to here.  Those who pushed the whole idea that govt is the enemy and that the market works better when govt is gotten rid of, are to blame.  For years they have been calling anyone who disagrees (the true conservatives among us, the moderates) with them 'communists' or 'socialists' for daring to mention that without govt regulation, corporate America would rape the consumer and wreak havoc on the economy. Well, they finally got their dream and this is where we have ended up, just where liberals said we would if we allowed those nuts to run amok, and indeed they have.

Anyone who knows how to get the info will discover that CRA lenders were much more conservative in their underwriting and most of their portfolios are still performing.

So don't be fooled by those fake news shows who spout the talking points of the party who got us all into this mess.  The current President is trying to clean up this mess but is still getting the blame from those who created the very same mess in the first place.  Even Al Qaeda could never have done as much damage as these people have done to this country.   It was wise that we stopped listening to them after the disaster that 8 years of them being in control brought us, and it's wrong to start listening to them again.
Jay Schmidt
11:55pm • #156
JUL
13
2010
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

@Jan -- nope, I don't get the point.  Not yours anyway.  I do not blame the homeower who took out a loan that was manipulated on Wall St., sold off by the trillions in MBS, making quite a few very rich men on the backs of foreclosures.  When a family has to move out of their home due to foreclosure on a mortgage that out of their control the moment they inked it, they are not in the mix as far as blame goes.  Your area is pretty hard hit, isn't it?  How many properties did you sell to "greedy" homebuyers.  How many listings did you take from "greedy" sellers?!?  You get the point!
12:10am • #157
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

@ Jack S. -- Hmmm . . . when you "quote" me do it in the form that doesn't mix apples and oranges.  I was referring to bad loans being mixed with prime paper.  You want to toss in ALL real estate agents and say they spoiled it?!?  If you spend any time on Active Rain, you'd know that there are some very fine agents.  Last time I checked, we're NOT MORTGAGES -- which is what I was referring to.  Get the difference?  You obviously don't get how the banksters played us all.  Now, according to you, real estate agents are the ones that caused the mortgage meltdown?!?  HA HA HA HA HA HA HA 

My post wasn't about NAR, and I've not expressed my angst with them on this post.  So please don't read my mind, or try to figure me out.  You don't know me.  So please keep that in mind when you talk about the pointless generalizations.
12:17am • #159

Amen! Stop blaming the homeowners. I'm not saying anything new when I say that the people looked at homes based on a price range they were pre-approved for, their offers were accepted, the loans when through and the homes appraised at where they needed to be to get the loans, etc. And markets that are typically conversative probably have not been hit as hard but those are also the markets that don't draw investors and typicallys appreciate at a very low rate. The dynamic markets are the ones that have been hit the hardest. We push homeownership as the American dream and when people buy, they are looking at it as an investment they can live in and a way to get out of paying someone else's mortage. I live in Scottsdale, Arizona and myself am doing a short sale on my home and while I am not proud of it, I am no longer going to beat myself up over it.
1:18am • #161

Good post Carla.  Times were a lot different then and lending practices were too.
1:20am • #162

Good post Carla.  Times were a lot different then and lending practices were too.
1:20am • #163
506,662 Points 1 Featured Post Outside Blog Attended Rain Camp Called Shot Master

There are a lot of real estate agents who can say with a clear conscience that they did not work with buyers who bought ill-advisedly.

But, for many, that says a lot more about the qualtiy of their clientele than it necessarily does about their role and advice.

Unfortunately, some agents were often (working in some parts of their towns?) with a clientele that was, let's say, right at the margin.

And there were some mortagage companies that were specializing in selling that marginal cleintele on sub-prime loan products.

Those marginal buyers were adding the coal to the fire.  That is, they were adding that tiny sliver of marginal demand that was taking inventories below normal and forcing prices through the roof.

It's those agents and those loan officers who were at the bottom rung of this mess.  They made out like the bandits they were. They were egged on by the political establishment in both parties over two administrations.

Fortunately, a lot of them are gone.

EVERYBODY IN THIS INDUSTRY AT THE TIME PROFITED BY THE BOOM THEIR ACTIVITIES CREATED.  Without them, a lot of people would have made a lot less money.

So I don't think anybody's conscience should be clear.

But the real thieves were the banksters at the top of this evil pyramid.  They made out better.  They had the clearer view.  They are the most culpable.  Many of them belong in jail.

But we have bailed them out.  We have made possible their bonuses.

And we ought to be mad as Hale.

 

 

 

 
1:20am • #164
180,842 Points Localism Sponsor Called Shot Master

One of the biggest problems is buyers thinking of their home purchase as an investment like an IRA etc...Wrong idea to start with...Enjoy the day.
1:30am • #165
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

AS I WROTE IN MY ORIGINAL POST:

WHO THE HELL KNEW THAT THE HOUSING MARKET WAS GOING TO GET SUCKED INTO THE BLACK HOLE created by the Banksers? 

 Who KNEW THE VORTEX OF A FALTERING FINANCIAL FIASCO (I like alliteratives) would suck in homeowners??

What VORTEX?

What Financial Fiasco?

It's the homeowners fault?!?  Those that bought a home fair and square??

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

SEC -- didn't regulate.

  • AIG -- As Lehman Brothers (the largest bankruptcy in U.S. History) suffered a catastrophic decline in share price, investors began comparing the types of securities held by AIG and Lehman, and found that AIG had valued its Alt-A and sub-prime mortgage-backed securities at 1.7 to 2 times the values used by Lehman which weakened investors' confidence in AIG. . . .  In the meantime,  New York regulators allowed AIG to borrow $20 billion from its subsidiaries  READ ABOUT THE GREAT AND MIGHTY AIG

Hmmm AIG LIED and inflated the portfolio values?!?  You don't say.  And because they lied . . .

 

  • AIG was required to post additional collateral with many creditors and counter-parties, touching off controversy when over $100 billion was paid out to major global financial institutions that had previously received  TARP  money. While this money was legally owed to the banks by AIG (under agreements made via credit default swaps  purchased from AIG by the institutions), a number of Congressmen and media members expressed outrage that taxpayer money was going to these banks through AIG In January, 2010, a document known as "Schedule A - List of Derivative Transactions" was released to the public, against the wishes of the  New York Fed. 

    Had AIG been allowed to fail in a controlled manner through bankruptcy, bondholders and derivative counterparties (major banks) would have suffered significant losses, limiting the amount of taxpayer funds directly used. Fed Chairman Ben Bernanke argued: "If a federal agency had [appropriate authority] on September 16 [2008], they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now." The "situation" to which he is referring is that the claims of bondholders and counterparties were paid at 100 cents on the dollar by taxpayers, without giving taxpayers the rights to the future profits of these institutions. In other words, the benefits went to the banks while the taxpayers suffered the costs.

IndyMac -- "The primary causes of IndyMac's failure were largely associated with its business strategy of originating and securitizing Atl-A loans on a large scale. This strategy resulted in rapid growth and a high concentration of risky assets. From its inception as a savings association in 2000, IndyMac grew to the seventh largest savings and loan and ninth largest originator of mortgage loans in the United States. During 2006, IndyMac originated over $90 billion of mortgages.

IndyMac's aggressive growth strategy, use of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the California and Florida markets, and heavy reliance on costly funds borrowed from the Federal Home Loan Bank (FHLB) and from brokered deposits, led to its demise when the mortgage market declined in 2007.

IndyMac often made loans without verification of the borrower's income or assets, and to borrowers with poor credit histories. Appraisals obtained by IndyMac on underlying collateral were often questionable as well. As an Alt-A lender, IndyMac's business model was to offer loan products to fit the borrower's needs, using an extensive array of risky option-adjustable-rate-mortgages (option ARMs), subprime loans, 80/20 loans, and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments. The thrift remained profitable only as long as it was able to sell those loans in the secondary mortgage market."  INDY MAC aks OneWest Bank

  • Washington Mutual, Inc., was a saving bank holding company and the former owner of Washing Mutual Bank, which was the United States' largest saving and loan association until it became the largest bank failure in U.S. history.  WASHINGTON MUTUAL RIP

Paulson head of Goldman Sachs -- then appointed to run the Treasury.  Of course, he could open up the TAX PAYER'S POCKET BOOK TO help out his "colleagues" that SCREWED UP!

Bank of America -- stopped doing subprimes in early 2000's but bought Countrywide's toxic puke

  • Barney Frank "I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They're not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward." Barney Frank on CNBC on July 14, 2008

FANNIE MAE / FREDDIE MAC (Daddy) -- now OTC, trading at $0.23/share and a negative $-0.05/share a few days ago.

Lehman Bros DOA "On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. The filing marked the largest bankruptcy in U.S. history LEHMAN BROS

Bear Stearns DOA  The collapse of the company was a prelude to the risk management meltdown of the Wall Street investment bank industry in September 2008, and the subsequent global financial crisis and recession. In January 2010, JPMorgan discontinued use of the Bear Stearns name  THE RISE AND FALL OF BEAR STERNS

CIT Group, Inc. is a large American commercial and consumer finance company, founded in 1908. The company filed for Chapter 11 bankruptcy in 2009.  

ETC., ETC., ETC.

  • Largest Bankruptcy filing in US History - Lehman Brothers
  • Largest bank failing in US history - Washignton Mutual
  • AIG stock dropped 60% in one day 9/16/08 - 4th quarter '08 posted a $61.7 Billion LOSS -- Greasted posted loss ever for any corporation.

The Teapot Dome scandal and the Great Depression ain't got nothing on this little . . . hmmm . . . little SNAFU. 

  • Exotic Derivatives
  • Hedge Funds
  • Mortgage Back Securities
  • Stock "Puts"
  • Naked short selling
  • Interest Rate Swaps
  • LIBOR
  • Credit default swaps
  • Naked credit default swaps
  • Fixed-for-fixed swap -- different currencies
  • Fixed-for fixed swap -- same currency
  • Swap rate
  • Interest rate cap and floor
  • Strike Price
  • European put options
  • Basic fixed income derivative hedging
  • DERIVATIVES: 
  1. OPTIONS: 
  2. SWAPS:
  3. Forwards & Future:
  4. Other derivatives: real estate derivatives

Hey GENUISES -- Those that want to BLAME THE HOME OWNER / THE BORROWER . . . decipher this:  A number of other variations are possible (fixed-for-fixed rate swap), although far less common. Mostly tweaks are made to ensure that a bond is hedged "perfectly", so that all the interest payments received are exactly offset by the swap. This can lead to swaps where principal is paid on one or more legs, rather than just interest (for example to hedge a coupon strip), or where the balance of the swap is automatically adjusted to match that of a prepaying bond (such as RMBS Residential mortgage-back security).

But, hey, it was the greedy home buyers.  Those bastards!  The bought a home on the open market, and the minute the ink dried the mortgage morphed into an "investment vehicle" . . . churned up into the ABOVE . . . until the banksters broke the bank. 

But, hey.  Those homeowners.  YUP, they did it to themselves.  They MASSED together and did this collective HUMP to themselves.  HA HA HA HA HA

  • WHO THE HELL KNEW THAT THE HOUSING MARKET WAS GOING TO GET SUCKED INTO THE BLACK HOLE created by the Banksers? 

     Who KNEW THE VORTEX OF A FALTERING FINANCIAL FIASCO (I like alliteratives) would suck in homeowners??

The trickle down propery loss . . .
1:31am • #166
196,832 Points 6 Featured Posts Called Shot Master

What a great post, Carla!! 

Thanks for posting.
1:42am • #167
982,599 Points 81 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Carla,

No one answer here, of course. There were those who were buying simply because hyped agents promised to sell their properties before even closing at good profit.

But so many people did everything right under the circumstances that were there at that time, and circumstances changed later, and crisis was not something they were really considering.

Who did?

They were not planning on losing a ob and not being able to secure a similar job, or any job.

And who did?

Very good blog post, thank you
1:53am • #168
1,018,579 Points 25 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Great post Carla, I love your passion. . .your point is valid and well taken.
6:20am • #170
848,852 Points 153 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Many people were rise and bought a home with a payment they were  comfortable with...not the one they could afford. We see a small amount of that in MI. Most bought, then lost jobs...the rest is history.

Yes, I told a few people this over the years in 05,06. But, did they listen....???? No, they found a lender who qualified them regardless. My conscience is clear.

 
7:42am • #171

I believe you are correct, most people bought within their means.  I tired of hearing exactly that: "people bought more than they could afford" but I'm also tired of hearing "mortgage ARMs are at fault", "the subprime market is at fault", "100% loans are at fault" - I'm sure there are more. ARMs for example: if adjusted in the past few years were adjusting down in rate not up. 

The fact of the matter is that it was a "perfect storm" in the financial and real estate markets.  No ONE thing created this mess.  The buyer with a 740 credit score who put 10-20% down would still be "upside-down" in my part of the country and if he/she were transfered, downsized, etc. they would be facing a short sale or foreclosure situation. 

Thanks for your post
9:09am • #172
110,700 Points

I find a great deal of arrogance from those who have maintained good credit towrd those who have gone through hardships.  There is no understanding of how one little incident (health, temporary layoff, hours cutback, injury, family problem, lawsuit, etc) can snowball into economic catastrophe.  Most in financial difficulties are not bad people or even stupid.  I'm happy for those who have survived the times but wish they had more empathy.
10:20am • #173

Many people get the idea that when they buy a home, it is theirs, when in fact they are just "glorified rent to owners".  The bank owns the home until the mortgage says "Paid in full", even if they faithfully made their mortgage payments for the past 29 years of a 30 year mortgage, and fall upon hard time and miss a few payments.
Steve
10:55am • #174

Carla,

Great Post.  NOW how do you put the horse back in the barn?

 
10:56am • #175
145,611 Points 10 Featured Posts Attended Rain Camp

The only ones who told the homeowner what they could afford were the Lenders----they did the appraisals, they made the loans, they created the progams and Underwriting made the final decisions. Mortgage brokers and real estate agents were just the messengers. Agents had absolutely nothing to do with prequalifying a client for the amount of monthly mortgage payment they could afford.

For decades, Buyers bought only what Lenders approved them for. So why don't we put the blame where it belongs: on Lenders and a depreciating real estate market?
11:56am • #176
1,114,857 Points 71 Featured Posts Outside Blog Hit Router Attended Rain Camp Called Shot Master

I completely agree that people didn't buy outside their means or their debt to income ratios would not have been approved in the first place. Instead, they may have chosen bad loan products like an ARM which after a few years, put them outside their comfort level, but still within an approved budget by the lender.

Too many people are crying, but no one cries when their car loses value as soon as they drive it off the lot!
12:19pm • #177

Did any of you ever in your careers say to any of your clients, "now may not be a good time to buy?"  If not, you should probably accept some of the blame.
bob
12:36pm • #178

Another reason we are seeing so many Foreclosures is that the Loan Modification or Refi application process is not working!  I have personally gone through a loan modification application, Making Homes Affordable, with a past client and it is a nightmare! 

They filled out the entire loan mod application on the internet, and when they did the electronic signature, it came up as an error and said "she did not qualify for a modification".  She tried calling the phone number on the info screen and after 30 days has not receive a response from them and her application is coming up as expired.

I am seeing that the majority of people seeking help to stay in their homes are getting the "run around" and don't make the help they need before it is to late ....

Maybe we as Real Estate agents should look into all the ways to help our clients find a solution to what may be a temporary setback.
Steve
1:09pm • #179
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

@bob -- oh sure.  We could predict what Wall St. was doing.  Could you?  Read my comment #166.  You figure out how Wall St. manipulates each and every mortgage.  Then get back to me.
1:36pm • #180

Where was everyone during the boom noting the impending meltdown and housing bubble?  http://activerain.com/blogsview/42987/subprime-meltdown-
2:17pm • #183
589,597 Points 2 Featured Posts Attended Rain Camp Called Shot Master

And who do you think wrote the loan program saying whom they will or will not approve?  Who said, sure, we will look at stated income,..
3:53pm • #186
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

@ Ave in Florida . . . #146 -- my name isn't Karla.  Hmmmm . . . and I'm sure when buyers came into your Buyers Broker in Florida you told them NO!!  Because from reading your comment you seem to be blaming your buyers who wanted a bigger property.  I'm sure you never sold a property to a client that wanted the bigger kitchen, the bigger family room and retained your BUYERS BROKER in FLORIDA for representation on that purchase.  If you did sell them a property, and on now on my blog bitching about your buyers -- SHAME ON YOU!!   The word hyypocrite comes to mind. 
5:05pm • #187
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

@#151 the Staging "Diva" Debra Gould . . .

Okay!!!  YOU'RE CRAZY!

Hey GENUISES -- Those that want to BLAME THE HOME OWNER / THE BORROWER . . . decipher this:  A number of other variations are possible (fixed-for-fixed rate swap), although far less common. Mostly tweaks are made to ensure that a bond is hedged "perfectly", so that all the interest payments received are exactly offset by the swap. This can lead to swaps where principal is paid on one or more legs, rather than just interest (for example to hedge a coupon strip), or where the balance of the swap is automatically adjusted to match that of a prepaying bond (such as RMBS Residential mortgage-back security).

But, hey, it was the greedy home buyers.  Those bastards!  The bought a home on the open market, and the minute the ink dried the mortgage morphed into an "investment vehicle" . . . churned up into the ABOVE . . . until the banksters broke the bank. 

But, hey.  Those homeowners.  YUP, they did it to themselves.  They MASSED together and did this collective HUMP to themselves.  HA HA HA HA HA

Now, go move another couch and chair around the living room . . . looks tacky!

 
5:15pm • #188
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

@#99 Tiffany

Well, you missed your opporunity of a LIFETIME!!  WOW -- you knew "IT" was coming . . . but you didn't do anything about "IT"?? 

You didn't write what "IT" was going to do to the market?  To homeowners?  If you did, please link.

You knew that "IT" was going to hit the fan, and you didn't write exposés???  You didn't warn people about HOW "IT" WAS GOING TO HAPPEN?

Because saying you knew "IT" was going to happen, but not defining what the word "IT" stands for . . . what "IT"???  The crash?  The meltdown?  And then be specific with "IT" . . . no one likes generalizations.

A good reporter covers the basics:  Who, What, Why, When, How, Where.

And let's be candid here and realistic.  Unless you were working those BIG BUCK back room deals on Wall Street . . . You actually had no clue what "it" was.  Do you know how derivatives work?  How about naked short selling?  How about stock puts? 

Do you know what a hedge fund is?  Do you know what institutional lending is?  Do you know what a Soverign Debt is?  Do you know what a mortgage backed security is?  Ever hear of a default credit swap? 

Because those are among the true "ITS" that caused this financial crisis. 

Talk is cheap Tiffany.  I was interviewed by a "Time" correspondent who was doing a story on the "Bubble" several years ago -- and remember boys and girls, it was a "bubble" -- NO ONE EVEN CALLED IT A MELTDOWN -- until it happened.  The "Time" reporter asked me what was going to cause the bubble to break.  I told him "The lenders."  And I'm a very smart person.  When he asked HOW were they going to burst the bubble . . . I couldn't expound further.  Because I didn't know.

And you didn't either Tiffany.  We all knew about "IT" -- any idiot with a TV could have repeated the talking heads on the nightly news.  They didn't explain HOW the "bubble" was going to be pricked either.   

The one fact that no lay-person could predict . . . was this:  where the PIN was going to come from to prick that "bubble"?

But now we know: The pricks are all from Wall St.

And you "knew" all that?  Because when you write I knew "IT" coming --you knew how mortgages would be bundled and pimped out?!?  You knew about the March 2008 and Sept. 2008 manipulation on Wall St. that killed Bear Stearns and Lehman Bros.  You knew AIG was going to post the biggest loss EVER of a corporation in 4th quarter 2008?  Etc., etc.

As I said, you missed your calling.  Because if you could have documented, and 'pin pointed' just how this was going to take place, you'd be making quite a bit of money as a financial forecaster/analyst. 
5:27pm • #189

Why was my previous post deleted?  I think it was #182.

All I did was respond to Carla.  I guess points that don't say, "yes, you are right" get deleted.  Pretty lame.

Ok, I'll join in, real estate agents are great.  You are always correct.  You deserve no blame for anything.  Is that the correct way to follow this herd?
Bob
6:21pm • #190

You're famous

http://patrick.net/forum/?p=457116
2Good
6:25pm • #191
Outside Blog Attended Rain Camp

Hi again Carla or Karla,

You bet I sold the "not big enough" buyers a house and I would do it again.  My job as an EBA (exclusive buyers agent) is to get them them the best buy for the money, help them sort out their best options, negotiate in their best interest and then let them make their own decision.

I am not their financial advisor. 

Eve or Ave or Eva in Orlando post #146
7:11pm • #192

Now we have Carla the Wall Street Insider.  You can really quote facts. Did your inside knowledge save you from IT  I knew what IT was in 2006 becauase I had insider knowlwdge. I saw it coming and i jumped ship in 2007 and sold every at the open as they say in the stock market when you know it is going to crash. I told all my friends to do the same but most did not listen and they lost everything.  Same thing happened in he  1987 Crash and the 200 crash. Do we ever listen?

I dom't own any real estate now. every thing is in tangible assets that are appreciateing niot crashing.  If you knew what IT was you could change your horses on the run and nor lose a step.  Successful investors have to ride the path that is going up not down. I am renting now waiting for the bottom.  It may be a few years but i can wait and put my money in tax liens, gold and silver..  Tax liens pay a guarnteed 15% to 40% on your invested funds.

The law of attrraction works in both directions.  Thae advantage of people and someone will com along and advantqge of you buyers broker of Florida.  It is called Karma

Bob I commented on your post and it was it was posted but was  deleted too. Maybe the powers that be do not want to hear the truth or tske responsibility that they are part of the problem.

Art martin mailforart@gmail,com

Foreclosure Solutions
Art Martin
8:25pm • #194
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hey Art . . . What did you have for dinner tonight?  Double scotches??

By the way, who really gives a SHIT about what you did?   Seriously!  This post wasn't written to have readers marvel at your amazing ability to dribble.  Probably all over yourself right about now.

If this post could talk -- there would be a resounding WHO CARES after reading your, seemingly, soused tale.

NO ONE CARES ABOUT YOUR LIFE SAGA, Art.  I hate to break it to you.  But really no one cares about what you did in 2007.    

This post was about home owners who are struggling now, and it's not a sounding board for people to deride the majority of home owners and base their self-worth on the misery of others. 

But, go ahead and pat yourself on the back -- while others are going through foreclosures, dealing with stalled short sales, etc

You had "insider" knowledge, and you only saved your own ass?!?  Gee, what a nice fellow.  If you were really smart you wouldn't have pulled out so soon -- but, I guess you finish early, hey Art?  

Yeah, and Wall St. is holding it's bated breath -- waiting for you and your money.  All the vasts amounts you're amassing right now in your apartment.  Wall St. CAN NOT WAIT until YOU -- ART MARTIN -- "DECIDE" to start investing again.  Oh happy day when that occurs.

BTW are you drinking alcohol while commenting?  The spelling errors are ATROCIOUS.  Much of what you write makes no sense and is self-absorbant {sip, sip} Alcoholics do that a lot.  They get really liquored up and then they spew.  Just sayin'
9:40pm • #195

Please, no more Art!!!!
11:11pm • #197
JUL
14
2010
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi Manny -- I AGREE!  NO MORE ART!  That guy is annoying.  Like a pesky little gnat.
12:34am • #199

Thanks for defending the little guy Carla, and telling it like it is.  You've given us some good information here and I appreciate that.

  As someone who has worked in lending for over 20 years, I know that when we made these loans to people, we did it in good faith.  They were short term solutions and the plan was to refi them into a permanent loan after a couple years.  The lower rate going in would be a real benefit to them and after that period we would put them in a permanent solution.

This happens in the commercial world all the time.   Most loans are 3-5 years and that's a hard deadline.  This is the reason so many commercial properties are going to short sale nowadays.  The financing sources just aren't there today.  

Little did we know back then that the wolves on Wall St. were about to demolish our financial system with their toxic derivative investments. (Credit default swaps)  If our govt was doing their job back then, those investment instruments would have been deemed illegal because of the inherent risk.  

But that's what ya get when ya elect a cowboy from Connecticut who believes the 'free market' will police itself.

As far as Art's knowledge of the markets impending crash, I don't know what's worse, betting against the market with credit default swaps, or selling an investment you know is about to go off a cliff to an unsuspecting buyer for top dollar.   
8:39pm • #201
427,829 Points 32 Featured Posts Outside Blog

Wow, this thing really sparked a lot of conversation didn't it my friend? There are far too many people who are hurting today through no fault of their own for sure.
9:08pm • #202
JUL
17
2010
144,559 Points 1 Featured Post

What a great post and lots of interesting comments.  Who to blame, there are bad apples in every bunch. I am just concerned about helping the homeowner get out of this mess.
8:53am • #203
687,910 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi Jay -- thanks for the comment, and interetesting points to ponder in closing.  What's worse?  The price tag was always going to be paid by the US taxpayers -- that they knew!  My latest slogan:  "Too big to fail, too big to jail . . . too big to bail!" 

Hi JL . . . There's a lot of Americans who have been dealt a bad hand by the Card Sharks!

Hi Kari -- ABSOLUTELY!!  Concern for helping the homeonwer is paramount!!  Good point! 

 

 
1:29pm • #204
JUL
20
2010
Outside Blog

I can definitely tell you that home buyers are way more cautious and buying below, sometimes way below what they are approved for than 3 to 5 years ago.  I think buyers are more conservative now because of what is going on in the housing market. 
7:21pm • #205

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Carla Muss-Jacobs - Exclusive Buyers Agent Portland | Portland Real Estate |

Portland, OR

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503-810-7192 | BuyersAgentPortland.com

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