Should We Consider Outlawing Adjustable Rate Mortgages & Foreclosures?

Originally posted by Flatfish

Originally posted by syrinx high priest
reply to post by Flatfish

 

so if I stop making payments I can't be kicked out ? I get to stay in my home forever after closing on my no money down mortgage without making one payment ?

I hate to defend the bank, but if they don't get paid, they fail and we have to save up $500,000 in cash to buy a home

I am for regulating the derivatives industry tho, they are the definition of "toxic"

When a mechanic fixes someone's car and they're unable to pay, he doesn't get to repossess their car. When a contractor does a re-modeling job on a house and doesn't get paid, he doesn't get to repossess the house. Why should a bank be any different?

Furthermore, I never said you could live there for free, unless it was due to uncontrollable circumstances like those described in the news segment that I mentioned in the OP. If you were employed, I believe that they could attach a designated portion of your wages in lieu of payment. This also creates an incentive for the homeowner to manage the debt or sell the house and repay the bank, but they are not thrown into the streets.

you can't be serious with your mechanics examples. now you are advocating the bank to be able to garnish wages ?

this is just a very confused misguided idea

reply to post by syrinx high priest


I wouldn't allow the lender to garnish all of a person's wages, that too would have to be limited to a percentage of their wage until such time as they were current in their loan payments and/or sold the house and repaid the loan entirely. But I have to say, I'd rather have them take some of my money than to throw me into the streets.

reply to post by Flatfish

That is a preposition you should post on "we the people".

Originally posted by syrinx high priest

Originally posted by Flatfish

Originally posted by syrinx high priest
reply to post by Flatfish

 

so if I stop making payments I can't be kicked out ? I get to stay in my home forever after closing on my no money down mortgage without making one payment ?

I hate to defend the bank, but if they don't get paid, they fail and we have to save up $500,000 in cash to buy a home

I am for regulating the derivatives industry tho, they are the definition of "toxic"

When a mechanic fixes someone's car and they're unable to pay, he doesn't get to repossess their car. When a contractor does a re-modeling job on a house and doesn't get paid, he doesn't get to repossess the house. Why should a bank be any different?

Furthermore, I never said you could live there for free, unless it was due to uncontrollable circumstances like those described in the news segment that I mentioned in the OP. If you were employed, I believe that they could attach a designated portion of your wages in lieu of payment. This also creates an incentive for the homeowner to manage the debt or sell the house and repay the bank, but they are not thrown into the streets.

you can't be serious with your mechanics examples. now you are advocating the bank to be able to garnish wages ?

this is just a very confused misguided idea

Actually the mechanic can apply a "mechanic's lien" against the car.
Same with the contractor. "Contractor's lien".

Originally posted by watcher3339

The defacto reason that mechanics and contractors don't get to take possession of the property in question is because another party already *owns* it. In the case of foreclosure it is the actual *owner* of the property simply reclaiming it for failure of the tenant to pay.

Oh really? I think that most people who have mortgages are considered to be the "homeowner" and the lender is listed as the "lien holder." If someone gets hurt on your property, guess who's homeowner policy gets sued? I'll give you a clue, it's not the bank's. Furthermore, I own my home outright and a contractor can't repossess it, even if he did more work than the original home was worth. The best he can do is to establish a lien on my property. So again, tell me why banks should be any different.

Originally posted by timmhaines
reply to post by Flatfish

 

That is a preposition you should post on "we the people".

What is "we the people?" Is it a forum or what?
second line.

In the past when a predator was about, perhaps killing livestock or heaven forbid a member of your family what did people do? They hunted down and killed the predator thus eliminating the threat to their way of life. Why should predatory lenders be any different. We should have let them fail.Why feed the predator who preys on us?

Originally posted by Flatfish

Originally posted by watcher3339

The defacto reason that mechanics and contractors don't get to take possession of the property in question is because another party already *owns* it. In the case of foreclosure it is the actual *owner* of the property simply reclaiming it for failure of the tenant to pay.

Oh really? I think that most people who have mortgages are considered to be the "homeowner" and the lender is listed as the "lien holder." If someone gets hurt on your property, guess who's homeowner policy gets sued? I'll give you a clue, it's not the bank's. Furthermore, I own my home outright and a contractor can't repossess it, even if he did more work than the original home was worth. The best he can do is to establish a lien on my property. So again, tell me why banks should be any different.

Look, you are trying to make an argument where there just isn't one to be had. "Homeowner" is a term that joined the lexicon but evyerone knows that if you havn't paid off your mortgage you don't actually own the home. It's that simple. The cultural agreement is that the "homeowner" is responsible for maintenance of the home. The bank in you example is the actual owner of the home. The legal agreement that the "homeowner" signed agreed to the terms that if they did not pay the lender then the lender retains full rights to take possession. Are you against the rule of law? Get over it. Nobody is required to take out a mortgage. They can be renters for a lifetime if it works for them. They can also save and buy a property outright. I am tired of all this nonsense where everybody wants to renege on their obligations. Americans are becoming a bunch of free loading whiners. People need to grow up already. And that includes dealing with the life choices and agreements into which they freely entered.

You know what's sad? Mr. Greenspan, when he still had Bernanke's job, said something very interesting in one of those weekly talks about the economy. He said, of all things, that Fixed rate mortgages should be gotten rid of in favor of Adjustable Rate Mortgages. In hindsight, he probably knew that the system would crash and burn like it has and maybe he thought if everyone was switched to an APR, the banks could make up any losses by gouging the consumer before it all spiraled out of control. I think he felt that Fixed rate mortgages weren't keeping up with the current state of market economics at the time.

As soon as he said this, I knew this guy was a shill, and tuned him out ever since and that dud Bernanke too.

They can't tax the American people 90% to fund the global military empire needed to keep us a world contender.

So they created that scheme as a way to generate revenue to fund the military industrial complex.



It's sad when humans don't have a right to live upon the dirt they were born on.

Borrow, beg, and steal all you can and go to another country. $20,000 will get you a mansion in other countries.

Try the Philippines. They have better healthcare. There's no reason for you to stay in America....when you can't afford to have a roof over your head in your own country.

Try other countries. You'll find they value human life and productivity better.

reply to post by Flatfish


actualy if you dont pay a contractor they can put a lien against your house not quite reposession but it makes it a whole helluva lot harder to sell so it is almost the same thing,as for the sick part i think a clause of illness or medical act of god or what ever you want to term it would be a nice provision to have in documents for mortages etc dobut they will do it as i think i read on ats the other day that newzeland isnt offering "act of god" insurance to churches any more so ya never know whats gonna even be around for coverage these days

reply to post by watcher3339


Then what's the matter with fixed rate mortgages? You know, simple loans with simple unchanging interest rates where everybody knows what they're getting. This isn't about people reneging on their loans, this is about banks reneging on their promise to be honest lenders. Adjustable rate mortgages are nothing more than a clever trap where banks are allowed to rob the common man of any and all equity he may have in his home, that's why it takes a lawyer to understand one and at times, even they are left scratching their heads.

You don't by any chance "flip" houses for a living do you?

Originally posted by KilrathiLG
reply to post by Flatfish

 

actualy if you dont pay a contractor they can put a lien against your house not quite reposession but it makes it a whole helluva lot harder to sell so it is almost the same thing,as for the sick part i think a clause of illness or medical act of god or what ever you want to term it would be a nice provision to have in documents for mortages etc dobut they will do it as i think i read on ats the other day that newzeland isnt offering "act of god" insurance to churches any more so ya never know whats gonna even be around for coverage these days

Actually, having a lien on your property does not make it harder to sell, it only insures that the lien holders get paid before the home owner gets his. Just like trading in a car that's not paid off in order to purchase a new one, it happens every day.

reply to post by Flatfish

When a mechanic fixes someone's car and they're unable to pay, he doesn't get to repossess their car. When a contractor does a re-modeling job on a house and doesn't get paid, he doesn't get to repossess the house. Why should a bank be any different?

A mechanic generally will not need to "repossess" an automobile for unpaid debt because the mechanic will have the automobile in his, or her, garage, or shop. The mechanic is not obligated to hand over the vehicle until they have been paid for their goods and services.

The smart contractor remodeling a house will have commanded the money for the job up front. Certainly a contractor will not use their own capital to purchase the products necessary for remodeling, and if the client doesn't have money for that, then the contractor has no reason to begin remodeling.

I don't know what planet you live on, but down here on planet earth, mechanics don't have to just suck it up whenever a dead beat has scammed them into fixing their car, nor does a contractor have to bend over and pull down his, or her, pants to every person who thinks it is perfectly fine to defraud a contractor and have the remodel their house with no intention of paying for the work.

Originally posted by Flatfish
reply to post by watcher3339

 

Then what's the matter with fixed rate mortgages? You know, simple loans with simple unchanging interest rates where everybody knows what they're getting. This isn't about people reneging on their loans, this is about banks reneging on their promise to be honest lenders. Adjustable rate mortgages are nothing more than a clever trap where banks are allowed to rob the common man of any and all equity he may have in his home, that's why it takes a lawyer to understand one and at times, even they are left scratching their heads.

You don't by any chance "flip" houses for a living do you?

I don't flip houses for a living, but congratulations on attempting (even though you failed) to pigeon hole someone just because they don't agree with you!
I never said that there was anything wrong with fixed rate mortgages. I stated that people need to take responsibility for their choices and pay what they contractually agreed to pay (that is true whether the mortgage is fixed or adjustable). People agreed to the terms of the loan and now they need to deal with it. Many people bit off more than they could chew. They moved into homes that the couldn't really afford so they took the no/low downpayment and the low adjustable rate mortgage. If they had actually been able to afford the house they likely would have taken the fixed rate.
They gambled that home values would continue to rise which would allow them to refinance at a fixed rate later on. Most of the people who got in trouble with an ARM knew at closing that would never be able to afford the monthly payments when the ARM reset. They just didn't think that they would have to keep the same mortgage, they fully expected their gamble to pay off which would have given them a greater equity stake in the home and allow them to refinance into a fixed rate down the road. Home prices fell. The homes were now not eligible for refinancing as they were underwater. I don't say that the people that did that are bad people but they took a chance, a gamble, and they lost. You wouldn't have heard any complaints if home values had continued to go up. Instead they would talk about how they got the house for song, or "it was a steal". WHenever there is a gamble involved somebody wins and somebody loses. That's the way it goes.
I understand that some of these people may not have fully understood what they were doing. While that is ultimately on them I do think that a real financial literacy course could be added to the curriculum of our public schools.
None of this changes the fact that the money came from the lender and was secured by the property. Until such time as the loan is paid the bank retains rights to the property. I am sorry that you don't like it. But that is the way it is and there isn't anything wrong or dishonest about it.
If you were loaning out money you would want some security too wouldn't you?

I'm sorry, but we live in the land of personal responsibility.

If you took an adjustable rate mortgage (which I did) then you should probably read what you are signing. Anyone with any level of education should know that no one is going to give you hundreds of thousands of dollars (or even tens of thousands for that matter) without putting serious safeguards in place for the lender.

Banning Adjustable Rate mortgages will not make stupid people smart and it won't prevent tragedy from happening to good people.

All it will do is make you feel better. Awesome work.

Peace
KJ

Good thread here, we live in Canada so I don't know if the rules are similar but here goes nothing.
I agree that variable rates are crap because a fixed rate lets you know just what you will be paying monthly or whatever till the loan is paid off.
I think the Home Equity Loans should have been and should be now limited to 30 % of your current home's value and no more than that.
I have a hard time understanding why people borrow against their home, If you are doing that just for a new granite top counter and stainless steel appliances you are living a dream.
Actually a nightmare is what it is, we paid our home off many years ago and any updates we do are cash or no update.
While we were paying off our home we never ever and I mean ever ate out at a restaurant. Maybe takeout once in awhile but with our own beverages at home.
Regards, Iwinder

reply to post by watcher3339


I didn't mean to pigeon hole anyone, I just thought that maybe I was stepping on your toes. I sincerely apologize if I offended you..

I guess, my point is that these ARMs are in fact "traps" created by financial institutions. Surely you don't think that prospective home owners came up with this ARM idea and convinced the banks to go along, in fact it was the other way around. It was the predatory lenders that led the prospective buyers into thinking that they could refinance at a later date or sell the house entirely. It was the bank's way of creating loans to get people into homes that they could never realistically afford. I believe you're right in that these people probably knew, at least in their hearts, that they could not afford these homes but the banks, along with freddie and fannie, convinced them otherwise knowing full well that they could not. The banks knew the loans were bad from the beginning and that's why they insured the loans with AIG. Once insured, it was easy to obtain AAA rating, repackage the loans and sell them to the next unsuspecting investor as derivatives and mortgage backed securities. Looks to me like it was "heads I win, tails you lose" as far as the bankers were concerned.

Furthermore, I never advocated that the banks not be able to collect on their loans, only that they shouldn't be allowed to throw someone out of their home to do it. If they knew that a bad loan would result in them having to wait for the house to sell in order to collect, they would make a much better effort at insuring that the loans they make are good and that the buyers are worthy.

nevermind




.

I got an ARM mortgage after I divorced my husband and he signed a quit claim.

That bank saw me coming. ARM stands for Adjust Rear Mentality, because all it ends up doing, is screwing you in the end!