OT: Subprime mortgages

matthewk · Post by **matthewk** » Wed Mar 14, 2007 2:00 pm

http://money.cnn.com/2007/03/14/magazin ... 2007031413

Am I supposed to feel sorry for these people? I think both sides are to blame, but I put more of it on the customer than the lender. Does either side really think deals like these are going to work out well most of the time?

To the people in the story: The whole reason you are getting a subprime loan is because you are a credit risk. So why would you think buying a $300,000 home with no money down is a good financial decision? Not only that, they need 2 seperate loans to finance the house. That's another elephant in the room.

This country has way too many people that think that they are entitled to everything; the big, new fancy home, the H2, the 60" HDTV, etc... it's sickening. It's an epidemic in this country. Just wait until their credit cards start filling up and interest starts going higher than the original purchase. I suppose then these people will just start claiming bankruptcy and get an almost free pass to start all over again.

dbdynsty25 · Post by **dbdynsty25** » Wed Mar 14, 2007 3:04 pm

I would like to know how an assistant manager at a drug store can afford a 300,000 dollar mortgage. Seems like logic would take over at that point...knowing that some shady business is happening to get you in that house.

TCrouch · Post by **TCrouch** » Wed Mar 14, 2007 3:10 pm

I did just that. Bought a house 2 years ago for $282,000 on no money down with the exact loan type they're talking about.

It's going to close on my sale later this week for $460,000. Made almost 200 grand sitting on my ass with one of those "high risk" loans for 2 years. I'll take it.

So not every client doing it is a complete idiot with no financial clue like you make us sound...

peabody · Post by **peabody** » Wed Mar 14, 2007 3:13 pm

Home ownership in this country is getting much tougher, especially for first time home buyers. I bought my home in 1998 for about $88,000. I could now sell it for somewhere between $240,000 and $250,000. That's almost 3 times what I originally paid for it. Another problem we're having (at least in the Orlando area) is that there is there has become a shortage of apartments. This has driven the cost of renting up which making harder to save for a new home. If I were buying a new home for the first time today having a wife and 14 month old son, I think we would struggle.

As for the people in the story, no I don't think they were very smart to get two loans for a total of $300,000. I hope I'm never desperate or wanton enough to put myself in a situation like that. But I have no love for lending agencies who mass mail credit card pre-approvals and continually ask me if I want a home equity loan or line of credit. These places are more than happy to put you in debt so you can pay mostly interest for the rest of your life. And they're more than happy to take advantage of the less than intelligent.

To contradict myself, people definitely need to educate themselves before making these purchases. People sometimes don't realize all the other costs associated with home ownership such as taxes, home owners association fees, insurance, utilities and regular maintenance. People see the mortgage payment without realizing there could be many hundreds of dollars per month in other payments that have to be made.

dbdynsty25 · Post by **dbdynsty25** » Wed Mar 14, 2007 3:17 pm

TCrouch wrote:I did just that. Bought a house 2 years ago for $282,000 on no money down with the exact loan type they're talking about.

It's going to close on my sale later this week for $460,000. Made almost 200 grand sitting on my ass with one of those "high risk" loans for 2 years. I'll take it.

So not every client doing it is a complete idiot with no financial clue like you make us sound...

There is a huge difference in your situation though Terry. One, I assume you make a pretty good living (not as a drug store assistant manager) and two, you live in California...where the housing market continues to level off now, but it didn't start doing that until last summer...so you had a good 18 months of growth. Your risk was much less.

TCrouch · Post by **TCrouch** » Wed Mar 14, 2007 3:20 pm

Definitely. It was a calculated risk...the market was still skyrocketing and I knew for damn sure that I wouldn't be making a payment that was 3 grand a month in a couple of years. So I put it up on the market 6 months ago and got set into a deal that would close right after the 2 year anniversary to avoid capital gains and all that crap.

I just tend to dislike generalizations anyway, but when I AM wrapped up in the generalization about a wide range of people, it just got under my skin a bit, I guess. Doesn't matter, I won't give it a second thought by tomorrow

dbdynsty25 · Post by **dbdynsty25** » Wed Mar 14, 2007 3:25 pm

TCrouch wrote:Definitely. It was a calculated risk...the market was still skyrocketing and I knew for damn sure that I wouldn't be making a payment that was 3 grand a month in a couple of years.

Calculated risks are where the money is at...you can't make a bunch of money if you don't risk something. The family in that story risk a whole hellova lot, you...not so much. So, good work. Gotta love when the plan shakes out exactly how you pictured it.

matthewk · Post by **matthewk** » Wed Mar 14, 2007 3:33 pm

TCrouch wrote:I did just that. Bought a house 2 years ago for $282,000 on no money down with the exact loan type they're talking about.

It's going to close on my sale later this week for $460,000. Made almost 200 grand sitting on my ass with one of those "high risk" loans for 2 years. I'll take it.

So not every client doing it is a complete idiot with no financial clue like you make us sound...

The difference with you is that logic, house prices, and CA cannot be used in the same sentence.

WillHunting · Post by **WillHunting** » Wed Mar 14, 2007 3:44 pm

Try NYC.... it is even worse.

matthewk · Post by **matthewk** » Wed Mar 14, 2007 4:28 pm

TCrouch wrote:I just tend to dislike generalizations anyway, but when I AM wrapped up in the generalization about a wide range of people, it just got under my skin a bit, I guess. Doesn't matter, I won't give it a second thought by tomorrow

Where did I make a generalization that included your situation? I used terms like "most", "to the people in the story", and "too many". I never said EVERY person who does this is an idiot. I do believe that for a lot of people, these are a bad idea and will lead to trouble.

If I lived in an area like CA, I might have done the same thing you did. We almost did something similar here, but the market had been up for too long, and looked ready to turn (which it did only a few months later).

Take your $200,000 and by a thicker skin.

TCrouch · Post by **TCrouch** » Wed Mar 14, 2007 4:43 pm

Your entire statement is a generalization. You talk about "people who buy a $300,000 home with no money down think it is a sound financial decision", then follow it up with "this country has way too many people that think they are entitled to everything".

The whole damned thing is a generalization. You can't realize that, and don't like being called on it and tell me to buy a thicker skin, how bout you just shut the f*ck up in the first place? Or maybe you can post some more of your condescending opinions about why society is so messed up and you're so far above it all due to your brilliant planning and higher intellect? I don't get most of the crap you spew on here, but this was the only one that compelled me to reply.

Post by **Jared** » Wed Mar 14, 2007 4:45 pm

This can't go anywhere good...so it's getting the quick lock.