Banks are crying all over the globe because of the losses they are experiencing with mortgage delinquencies and defaults.   All the major banks had monetary interest in sub prime loans and are now crying rivers of tears.  Do we feel their loss?  We shouldn't.  Banks made historic profits in 2004 and 2005 with mortgage loans.  Although the sub prime loans were in all price ranges, the majority of clients were the "bread and butter" borrowers just trying to get their piece of the American Dream.   And the banks decided the guidelines. Most of the loans were 2 year adjustables that have or will adjust up to around 6 points or more than when they got into the loan!  Did they really think that any borrower would be able to afford that kind of jump in a mortgage payment once the loan adjusts?  What about the "option arms" or negative amortization that add the difference in payments back to the principal balance? With the low fake interest rates, (come on, 1 %?) the adjustments are now well into the 7% to 8% range and eroding home owners equity. It is time the banks stop crying and step up to help some of the borrowers that they help put into these appalling loans.

 

 
Posted by Diane Gerdes on 03/27/2007 11:24 AM   Comments (3)  
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3 Comments on Cry Me A.....Economic Update

MAR
27
2007
18 Featured Posts
I agree. I don't have much sympathy for the banks either. As the saying goes, " You reap what you sow". They should have known better.
11:49am • #1
183,829 Points 47 Featured Posts Outside Blog
Diane...I don't feel sorry for the banks and their investors.  Let a borrower in with no money down and marginal credit to begin with and what do they expect?  I was raised, as many of us were to save our money and keep our credit good.  This instilled pride and when we purchased something we were proud of our accomplishment.  When borrowers refuse to save money for a down payment and neglect their credit and can still buy a home it infuriates me.  The first thing most of these borrowers do is go out and buy expensive toys just because they can.  They want these toys because mom and dad have them and they don't want wait for them.  The day they can't make their payments they walk away from their home...why?  Because they don't have anything invested in it!  I won't cry any tears for these banks dear...the handwriting was on the wall.
11:52am • #2
4 Featured Posts
The sad part is the federal government will end up bailing them out.
1:39pm • #3


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