Part III - I don't feel sorry for the subprime lenders that went out of business, as they set the housing market up on a CRASH COURSE!

By
Services for Real Estate Pros with Pacific Servicing

I am sure most of you have read the controversial Part I and Part II Of this blog post, if not, you can easily source back part I in my blog history, and part II in Tom Bashe's blog post. 90% of the comments were for the most part in agreeance, and about 10% just didn't grasp the ethical issues, or just plain disagreed with the posts. That is the beauty of a blog, not everyone has to agree!

Now to Part III, and to WHY I DONT FEEL SORRY for the (mostly) subprime lenders that went out of business:

  1. I DON'T FEEL SORRY FOR YOU because you played (in my opinion) the largest part in destroying our economy.
  2. I DON'T FEEL SORRY FOR YOU because you allowed a gardener, making $2000 a month, to "State" $10,000, and then chose NOT to verify what he made (Liar Loans), and proceeded to give him a $400,000 mortgage that he NEVER could afford from the first place
  3. I DON'T FEEL SORRY FOR YOU because you preyed on the buyers with low credit scores, and shaky credit, offering them "Stated AKA Liar Loans" where they pretty much could fog a mirror and get a $400,000 mortgage! You also pushed Option arm loans, dangling a low $1500 MINIMUM PAYMENT OUT and not giving them FULL VERBAL DISCLOSURE on when it would recast, on what the "difference in payment" did to their loan amount, etc.
  4. I DON'T FEEL SORRY FOR YOU because you should have taken then time to really look at the borrower, their job, and honestly, should have made them prove their income. I strongly believe when you implemented a "Stated Loan" program you set the housing market up on a crash course!
  5. I DON'T FEEL SORRY FOR YOU because you basically promoted ZERO ACCOUNTABILITY to the general consumer, and hard working homeowners. You made home loans so easy to get, buyers often didn't fully think through their decision to borrow $400,000, as they had "no skin" in the game.

To sum it up, I think lenders were a HUGE PROBLEM. They promoted ZERO accountability, by making loans just a few signatures away, with their " NO DOC " " STATED LIAR LOANS ". They set the housing market up on a major crash course, and I strongly whole heartedly believe if they had not created the "Stated Liar Loan" we would not be in this situation today

Most homes sold during the upswing were financed with stated subprime loans. The buyers put nothing down, therefore had no reason to really think the purchase through. They also saw the market falsely going up due to these loans being so readily available, so they assumed if they ever were in trouble they could sell for a large profit.

This all falls back on my original post. If I came off harsh to anyone I apologize. I only meant to call light to the people who fail to understand that two wrongs don't make a right. Trashing your home does not help anyone, A non arms length short sale is FRAUD, and pulling out an equity line with no intent of paying it back (HAVE SEEN 1st HAND) is NOT OK

But, ultimately if these darn subprime lenders hadn't made financing so readily available to pretty much anyone who could fog a mirror, I don't believe our housing market would have EVER gotten to the point its at today, which is a big mess, with millions losing their homes to foreclosure, and millions losing their entire life savings and nest eggs just trying to get by, as the economy crashed, jobs were lost, and we had one of the worst recessions on record.

I hope the banks learn from their mistakes, and work to NEVER repeat them!

Goodnight,

stated

Posted by

 

 

Ryan Case - Partner

Pacific Servicing, LLC

Ryan@PacificServicing.com

(800) 313-9050 - Office

(951) 760-3170 - Mobile

(951) 501-2926 - Fax

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Topic:
ActiveRain Community
Location:
California Riverside County
Groups:
Mortgages
ETHICS and the REALTOR
Investors
California Dream Team
Foreclosures, and the future of our market.
Tags:
recession
economy
stated income loans
subprime lenders

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Rainer
86,448
Debbie Atwood
Century 21 Real Estate Center Everett, WA - Everett, WA
Real Estate Broker

Well Ryan I agree with this post too.  Is part iv going to address the loan mods and how they are lying to the homeowners and squeezing every last dollar out of them with no intention of giving them a fair loan mod?  

Sep 16, 2010 06:02 PM #1
Rainer
30,892
Ryan Case
Pacific Servicing - Temecula, CA

I absolutely can make that part IV. :) I do agree that they shouldn't accept payments on loan mods, then go back on their word, and foreclose on the home.

The whole system right now is a joke!

Sep 16, 2010 06:09 PM #2
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Ryan, good point on LIAR Loans.  You are right, these lenders knew more than anyone else what they were doing.  During the subprime lending spree, homeowners were told the magic word, don't worry, you'll be able to "refinance."  It was all a joke then, and we're paying for it now.

Trashing a home is just plain wrong.  I've never understood why a homeowner would do that.  My doubt is is it the homeowner who is really trashing out the homes because I've got some funky stories to tell about field services!

Thanks for the posts, they've been intriguing and provocative.

Sep 16, 2010 06:22 PM #3
Rainmaker
1,043,908
Bob & Leilani Souza
Souza Realty 916.408.5500 - Roseville, CA
Greater Sacramento Area Homes, Land & Investments

Ryan, the government also "pushed" these lenders to make these ridiculous loans, some of which were packaged with A-paper loans and sold under the false pretense of being "safe" investments. I do feel sorry for those investors...they were victims of this housing market crash.

There is so much fraud going on in every aspect of real estate nowadays, it's disgustingly unreal. I could go on my own rant about REPEAT SQUATTERS right now!

Leilani

Sep 16, 2010 07:33 PM #4
Rainer
23,789
David Robinson
Lloyd Cullen Real Estate - Murrieta, CA
Call Now (877) 828-0710

These lenders were definitely part of the problem. The liar loans helped ruin our economy!

Sep 17, 2010 03:22 AM #5
Ambassador
1,509,132
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

I agree with you to a large extent HOWEVER the amount of cash out purchases resulting in foreclosure (double edged sword!)

Oct 06, 2010 11:43 AM #6
Rainer
30,892
Ryan Case
Pacific Servicing - Temecula, CA

Renee - So True

Oct 06, 2010 11:47 AM #7
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Rainer
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Ryan Case

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