Esay Loans. Fat City.

[dhalltoyo]

America just got fat. Fat on lending practices.

The mindset of most that I have met is typified by a line from The Doors, "We want the world and we want it now!"

We are convenience-oriented society. Folks will go into a 7-11 and pay $2.09 for a 2 liter when they could have gone to a grocery store across the street and purchased the same item for $1.09.

"Oh no, I am not going to plan my purchases to save money. I am not going to wait 2 minutes longer in a checkout lane. I will not be inconvenienced." And these instant gratification attitudes have great bearing on the mortgage failures across this nation.

In 2000 I was a mortgage broker at the largest independent mortgage bank in Ohio. I can't tell you the number of times I counseled borrowers regarding their debt-to-income ratio. They would respond, "Can you get us the loan?" I would advise that it would be in their best interest to wait until it would possible for them to have a larger down payment.

Re-fi's to take out cash were even worse! Home owners wanted to take lavish vacations, build swimming pools, buy expensive cars, motorcycles and boats by borrowing against the equity in their homes.

We even offered 125 loans. A guy purchased a $300,000 home with ZERO money down plus an additional 25% over the appraised value of that home. I asked him if he understood that he was now borrowing an additional $75,000 at an accelerated interest rate. The 100% finance rate was 8%, but the additional 25% was at 10.75%. He responded, "We want to furnish the home nicely before we move in."

"We want the world and we want it now!"

The branch manager would get involved and assured them that a loan would be possible. Yes, the bank was irresponsible, but just because someone can get you a loan does not indicate that you have to accept the money.

There is personal responsibility. You can say no.

I can get a dozen credit cards with a $10,000 limit and run up everyone of them to the maximum. Does that mean that I should do so?

Bailing out those who refused to restrict their hunger for good and services, that they really could not afford, will never correct the problem.

You can not loose 100lbs of excess body fat in one day, It takes time. It takes discipline.

Maybe we should blame 7-11 for a lack of personal responsibilty.

 

[tmbm]

David, I'm glad you were one of the ethical Mortgage Brokers, but not all were. When I was looking to buy around that time I was told several things that as I look back now I am so thankful for my stuborness. I was told that I qualified for a loan that was about double what I wanted. When I said no, they tried pressuring with the tactic of "let me show you how you can afford more". An example - you will now net more each year because you can deduct your intrest and property tax. They also were including in my income, SSI that my boys were getting due to the death of their father, they were teens and that income wasn't going to last forever, besides it was for their needs not me wanting to upgrade my lifestyle. Then they said well we can get you more house by using a variable rate starting at this low rate. Again I said no, I didn't want that high of a house payment years down the road...they said but don't you expect to get raises. I said I hope to get raises, but I don't expect to. The pressure was high, I was stubborn and knew what I wanted and stuck to it, but I can see how well they sugar coat it to make people believe they can afford these houses that are totally out of their range. That being said, the ones who bought into these horrible loan programs should of used their heads more...if you make $40k a year, no way I can live in a neighborhood that others are make $400k a year...just common sense, something we as society seem to have lost.