To prevent more foreclosures, unreasonable and "balloon" rates need to be looked at as well as the 30%+ on credit cards. The whole screw the consumer rates really need a much closer look. Defaulting is often caused because the rates went sky high and those in trouble were forced into bankruptcy often on purpose. A friend just defaulted . He had paid back the amount borrowed plus more and found thanks to a ballon he now owed more than he orginally borrowed. He like I though he was signing the fixed rate mortgage orginally presented to him only to find out later it was a balloon.

I wonder how many thought they were signing fixed rate mortgages and found the had really signed balloons?

Originally posted by crimvelvet
I wonder how many thought they were signing fixed rate mortgages and found the had really signed balloons?

Those are not mutually exclusive. A loan can be a fixed interest rate for a specific time length with payments not totaling the loan amount. The balance is then due at term end.

The contract would have clearly stated the requirements for the payments. If it actually didn't, that would be a different story. If the payments look too good to be true then guess what....

ALERT!!!!!!!!!!!!!!!!!!!!!!!!!!

I can not believe my thread is one year old today!!!!!!!!!!!!!!!!!!!!!!

It seems like yesterday

Hindsight is 20-20, but this crisis was created out of stupidity and greed. If they want to help the borrowers and lenders, they can do so by getting gas and food costs back to normal. Instead of giving tax breaks to companies already making windfall profits, give those breaks to Joe Taxpayer so that he can afford his home. Lenders bit themselves by approving people who were not qualified to borrow in the first place.

I nearly jumped on that wagon, but I know what I can and cannot afford. It is far easier for me to rent and let my landlord cover the taxes, most of the maintenance and water bills. I will also not be financially scarred when I leave this dwelling.

Too many people think short term. "Fast food America" is one of the major sins we are creating against ourselves and it is starting to show.

Originally posted by wheresthetruth
I nearly jumped on that wagon, but I know what I can and cannot afford. It is far easier for me to rent and let my landlord cover the taxes, most of the maintenance and water bills. I will also not be financially scarred when I leave this dwelling.

Too many people think short term. "Fast food America" is one of the major sins we are creating against ourselves and it is starting to show.

Wise words. But let's remember for every person who knew they couldn't afford it, there were quite a few more who figured if the bank said they could (by giving approval of the loan), that they could. Many are just not educated enough to see beyond that.

That being said, the banks were not being regulated and they have to be taken to task for this, unfortunately they are getting bailouts instead, with the trickle down now into all other industries with any lobbying power sticking their hands out right now.

Should we bail out the homeowners? NO. Did we? Hardly, oh we got the bill, but how many people do you know tht are benefiting from it? I'm in Real Estate/Property Management and I'm just not seeing it. Meanwhile what I am seeing is more and more potential bailouts for Corporate America coming down the pike.

It simply has to stop.

If the bill gives the government the authority to buy any mortgage paper from any bank that offers to sell it then it can be used to decrease the principal of a loan. Lets say that a bank sells a performing mortgage for 60 cents on the dollar to the government. They can turn around and offer it back to the homeowner at 70 cents on the dollar and still make money. The loss of the bank would be the homeowner's and the government's gain. This has the same effect as lowering the rate to keep the homeowner in the home. Nice way to transfer wall street losses to main street and the government make money!!!