Thursday, July 10, 2008

Housing/Mortgage Rant

*Warning* The following is an extremely opinionated post coming against people who borrowed too much money for a house they couldn't afford. If you are one of them, you might not want to read since it might piss you off.

You have been warned.

I am gonna pull an Astin and probably have multiple postings today. But as I was reading some articles online, I saw shit like this that really pisses me off. Go read about this woman who loses her home. This article makes it seem like it was the big bad mortgage company qualifying her for a loan she never shoulda gotten, ultimately leading to her demise.

The basic idea behind this article was that she saved up to eventually purchase a house in New York and was able to put together a $4,100 monthly mortgage. When it bumped up to $4,400 based on the terms of the loan that SHE SIGNED (a whopping three hundred fuckin dollars), she could no longer afford it so her and her whole family walked out. Awwwwwwwwwwwwww poor old lady. (I'm sorry, are you sensing my sarcasm here?)

And the government is talking about bailing out Freddie Mac and Fannie Mae because they have all these mortgage portfolios where the collateral is no longer worth the loan and people like the above article can't afford payments? I mean jesus fuckin christ. Here, take more of my tax money. Go help the irresponsible, stupid, nonthinking idiots who decided to buy something they couldn't afford and now the responsible, hard working individuals have to help pay to bail them out? Such a load of bullshit.

The article makes it seem like we're supposed to feel sorry for this clown who now can't live with her whole family. Well, maybe she never shoulda bought a house like that in NY. I mean... it is New York... one of the most expensive cities in the country. The article goes on to talk about how the people who "loses" their home usually have no place to go. Well, maybe they shoulda thought of that when they bought the house.

Now don't get me wrong. It's one thing if certain extenuating circumstances causes you to not be able to meet the income requirements that you took for granted. Injury, death of the bread winner, job layoff, etc etc. There are things that, though one can argue you should be prepared for, I think are extraordinary enough that being bailed out is not a bad thing. But when you still have your job intact but your payment increases because, I mean, that is the term of the loan that you signed, well, you have no pity from me. I work hard for my money, I save and am careful with my finances (though my "careful" these days means losing money in the stock market) and so I have zero pity for those that are careless, got in way over their heads, and now are walking away from their debts.

And then I see an article about how retail stores are benefiting from the new "tax rebate" check that the GREAT AWESOME PRESIDENT (who thank god will be gone in a few more months) sent to everyone... maybe THAT's the problem. You get a $600 check (or whatever it is... I don't know cuz I didn't get it) and all of a sudden, you run to walmart or target and spend it? Jesus. Some people never learn.


cmitch said...

LOL - for some reason it bugs the hell out of me also. There are so many ppl that borrowed more than they could afford at rates that were going to go up.

My Dad relayed a story that he saw on TV a couple of months ago - This poor family was about to lose their house b/c they had an ARM. They purchased a house that was a lot more than they could afford and when the ARM went up they couldn't keep up. The story was trying to make you feel very sorry for them. The kicker is, it was a $600k house that they put $10k down on. Yep $10k - someone let them borrow $590k on a $600k house. They never owned the house - they rented it.

Mike Maloney said...

I bought a grill for our new condo with my check, whoot!

Also, a $4,000 monthly mortgage payment? Yikes.

People are morons, what can you do? I think it's pretty damn easy to figure out how much of a monthly payment you can afford, and then proceed with looking for houses/condos in that price range, but clearly not everyone seems to be that capable.

It's funny though, my parents never taught me financial responsibility (If anything they were prime examples of how to not be financially responsible), so I had a tough go of it in college when I learned the hard way. But it's not a difficult concept to grasp, and there's no reason for any grown adult to not be able to keep track of their money.

But, that's what our government loves to do, bail out people when they screw up.

Astin said...

Talk about pulling an Astin. Didn't I put up a post about this a while back? I know I've at least written some lengthy comments, and had many arguments with people.

100% with you on this. It's one thing if a tragedy strikes, but when your rate increases by 1/2 a percent and you can't afford it any more, then you have nobody to blame but yourself. Laziness, lies, and lack of research and responsibility are the biggest causes for this meltdown. NOBODY should be paying $4k a month for a mortgage, they should be buying a less expensive home or renting and saving until they can afford a real downpayment. This 0%, 5%, 10% bullshit drives me nuts, and sub-prime mortgages were idiotic ideas from the start.

Julius_Goat said...

No doubt, people made horrible decisions this decade and are paying the price. When I finance for my home, I was approved for an amount that made me laugh. It was for about 5x more than price of the house. When I asked about that, I was told that this was the amount I could borrow if I wanted to spend 90% of my current income on only the juice -- and that this was a live deal! It was available to me!

Needless to say, I borrowed the max., went to Vegas, and put it all on red.


That said, I don't think you can say that the mortgage crisis was caused only by bad individual decisions, the idiocy went all the way up the chain. In other words, let's not lay 100% of the blame on the people at the bottom of the food chain (though obviously, they are culpable parties).

This American Life does a fantastic job of showing how this mess happened on all levels. An absolute must of a listen:

Mary said...

I'm with you 100% too. And like Mike, my parents never taught me to be financially responsible, I had to learn on my own. And one of those lessons is not to purchase beyond my means.

A couple of things that piss me off by the whole housing/mortgage debacle is that it greatly inflated the housing market here in NY (no way am I paying $800k for a studio apartment in my neighborhood) as well as (well, one of a number of factors) brought down the stock market. Scary how much value my investments have lost.

Poker Brian said...

Completely understand your post Alan.

Yes people were idiots, putting 0-5% down on a house with an ARM was the stupidest thing anyone could do.

As always, there are 2 sides to every story and the flip side of idiot consumers are the sheister mortgage companies. Don't tell for me one second you believe Countrywide and all those other companies that folded didnt forsee something like this happening. You give millions of people ARMs and practically no money down then you are surprised that people can't make payments when the rates adjust? That sounds like Mission Accomplished to me ;)

I think its even made worse by websites that are teaching these people on the proper way to mail your keys to the bank and ride off into the sunset before you are forced out...

I sympathize with people because I listen to these kinds of sob stories everyday about life insurance. Different venue, but same thing. Agents mis-represented what they were selling and now they have no coverage at age 85 when they most likely wont get insured again.

Caveat Emptor.

Poker Brian said...
This comment has been removed by the author.
Poker Brian said...

oh and I did spend my tax rebate at Foxwoods. I figure what better way to stimulate the economy then by giving it to the Pequot Indians.


WillWonka said...

Of course I agree with everyone.

What gets me is that I save and invest and now have less to show for it. At least the people that spent instead of saved have a new car, boat or something.

Sometimes it seems that fiscal responsibility doesn't pay. Of course, in the long run, it will; but at current moment, it stinks.

Anonymous said...

Yes for the most part the homeowners are to blame for biting off more than they could chew.

But you also have to look at the Lenders who were Doling out these mortages without doing the Proper checks. Also the Predatory Lenders who were happy to give people mortages that they wouldn't be able to pay after a few years.

All the Blame does not lie with the homeowners. There is plenty to go around.

so just keep that in mind.


tilt away said...

I agree so much with the post - except I'm one of the poor saps that got an ARM, just about 5 years ago. But the rate was so goooooott I couldn't pass it up. 4.5% for 5 years. Now I want to refinance, but the problem is that the fixed rate is in the 6.2% range, while the ARM will adjust currently to 5.125%. Damn, I don't know what to do, go to a fixed and suck up the 1% difference or let it ride for another year. Just glad I didn't over buy for my house 5 years ago. My broker sent me a statment that I could get a loan up to $500,000K. I was given one piece of advice - DON'T GET MARRIED TO YOUR HOUSE - in other words, if you don't want to work for a bank (i.e. mortgage lender) for the rest of your life, stay within your means, and if you have two incomes, be prepared for one to not work if you have kids.

I must also thank the President for my rebate - 2 kids and a wife means $1,800 in my pocket. And I'm going to be a true patriot by spending the money, and not paying off debt (which will not help the economy). Hello family vacation to Myrtle Beach.

BTW, if you need to know when the Presidency ends, check this out: