Posted: 3/1/2012 2:10:51 PM
Originally Posted by Nut_Flopper:
While the "loan officers, loan rating agents, sub prime lenders, sub prime buyers, banks, insurance corporations" were part of the problem they did not create it. They were enabled by the governments idea to allow people who couldn't afford a home obtain one.
Why does everybody have to own a home particularly if you can't afford it?
I have worked directly in the REO (Foreclosure) industry for 16 years and continue to do so. I am the guy who cleaned up the mess after the fact, I didn't have anything to do with loan generation or the foreclosure process. The files came to me once the foreclosure was completed to liquidate the assets. I have heard thousands of stories over the years.
The majority of the responsibility indeed lies with the government. The mortgage industry and the borrowers are second and equally to blame in my opinion, greed corrupted both sides. The mortgage industry was peddling crack (Free money) and the consumers sucked it up. But like I said the government is ultimately to blame for allowing it to happen.
They enabled the lenders to loan 125% LTV.
They allowed lenders to give consumers an 80% or 90% first mortgage and a 10-20% second for their down payment for 100% financing, buyers had no monetary risk in the game.
They allowed stated income, I heard stories of Walmart clerks "stating" on loan apps that they made $7500 per month and it was acceptable.
They allowed people to refi their credit card debt over and over while the market skyrocketed. People bought new cars, big screens whatever and rolled it all back into their mortgage again and again and again...
People were signing loan docs not reading a damn thing about what they were getting themselves into other than I am buying a house and not contributing a dollar out of my pocket. It's the biggest purchase of your life you may want to know what you are getting yourself into.
Also let me just say that the government is even more involved now and continuing to darn up the mortgage and real estate industry. They are hurting way more than they are helping.
Lenders are afraid to lend.
REO inventory is just sitting rotting allowing the borrowers to in essence squat in the homes
Lenders are donating foreclosures to different non profits which again some are set up as scams to exploit.
The idea of potentially renting out foreclosed inventory is a terrible idea. The banks and/or the government would not be able to manage this effectively and too much liability would result in a ton of litigation for them.
Actually, a really good post. And for the most part, spot on.
Couple of comments, though. Foreclosures are one of the worst artificial manipulators of the housing market. I fully support any measure that can reduce this number, while not allowing a mortgagee to stop paying a mortgage. If the percentage rate of mortgages can be reduced so as to prevent a foreclosure but still require a normal payment, there is no reason this should not happen, considering the bailout the banks received.