The following is a list of personal responsibility and accountability questions that are a wake up call to many: 

Do you have 6 months of expenses saved?

Are you debt free, including the mortgage?

If you have a mortgage, did you have a 20% down payment?

Is the mortgage a 15 yr. conventional fixed rate mortgage, and when adding in taxes and insurance, it does not exceed 25% of your NET income?

Do you use credit cards or do you wait until you have saved the cash for the purchase?

Is your retirement account being fully funded?

Is your kid's college education being fully funded?

Are you giving 10% to a charitable organization?

These questions should be a requirement for all adults of age to incur consumer debt, including student loans and mortgages.  

 

 

would have to say no to lots of those questions!   We bring in about $4000 a mth and that is not enough to do all those things.  I don't count the homestay money and that is what is going to fund our emergency fund etc.

have 17yrs left on the mortgage.     I think it greatly depends where you live. Housing, gas etc is high here. our renewed mortgage with taxes is about $1625 a mth.  It would cost us the same basically to rent.

We do put some money away for retirement. a little but it adds up.  will start an educational fund for the kids. education isn't as expensive here and kids don't normally go away to college unless they are in a small town.  They are going to put some effort towards college etc. save, scholarships etc. so they will appreciate it more.

I would say I would advise my kids to get student loans, without a penny in their pocket, to greatly increase earning potential.  I would certainly not expect a 17 or 18 year old to have savings beyond what they are going to throw in towards tuition, housing, books.   I remember starting college with a foot locker of clothes, a jug of laundry soap, some pots and pans, dishes, and $100 in the bank for food for the semester.  I ended up a twice weekly plasma seller, it was on the iron range in MN, no jobs. I would go from the plasma center to the coop or grocery store. 

I would also agree with Ariana, this wouldn't be a bail-out, it will be renogiating loans.  This is good for all of us.   I've done no doc loans, very necessary if you have your own business or you are paid in cash.  When you sign your application, you are certifying that all the info is true.  The borrower has the responsibilty to not lie, not the mortgage lender!  The underwriter will certify some info, it is up to the borrower to know what the loan amount is and decide if they can afford it.  I would say everyone knows what their income is, and knows what they can afford.  It is in everyone's interest to get rid of adjustable rate loans that might lead to foreclosure, it is in everyone's interest to have every single house in the neighborhood occupied.  This won't be taking money from your pocket to pay someone's monthly payment. It is a good idea, not one that is taking from taxpayers and giving to very low income people, it will primarily help taxpayers continue to pay taxes, if that makes it easier to accept.  Ariana, would you agree with this?

latenightleader:

Ariana, would you agree with this?

I would agree.  Underwriting has to make the best decision they can given the documents provided by the borrower.  The borrower is responsible for looking over the loan documents, and if their income is misquoted or something of that nature, they need to have it corrected.  If they don't and sign that dotted line well...congratulations, Mr./Mrs. Borrower, you have commited mortgage fraud.   A lot of people might not realize this, but its the truth.  The borrower is supposed to be held more accountable than the loan officer, because they are signing a legal agreement that states everything in the application and final paperwork is correct to the best of their knowledge. It even says where you sign that lying on the documents is mortgage fraud.

The housing market is in an influx of foreclosures and a lack of buyers due to tightening of credit.  This effects many areas.  Not only do vacant homes bring down property values for other owners the do several other things - make way for pests like termites and the like to take route in your area; entice squatters, some of which are taking place in illegal activites like running meth labs which comes with its own set of problems - leaching chemicals that will poison the walls and soil surrounding the home and can endanger other children; leave the animal shelters overrun with animals to the point now that there are no-kill shelters euthanizing to make room. 

The banks are afraid to lend money to practically anyone at the moment.  Its a buyers market, but buyers can't get a loan, even ones who are qualified. If you think they're skittsh now, imagine what would happen if the federally funded banks that buy most of the mortgages in the country went under?  These banks were created to help pull us out of the Depression, so if they fail will that help further catapult us into at least a full-blown Recession?

I also firmly believe that for every borrower who may have been duped, there's another who knew exactly what they were doing.  People were cashing in on the housing boom by refinancing every year and taking the cash out of their equity.  They took ARMs because they knew in another year they were just going to refinance again before the low introductory rate became adjustable.  Now the bottom has fallen out of the market, and they're stuck in a payment they can't afford and now way to refinance.  And believe me when I say these are not subprime borrowers.  I'm talking about people with 750+ credit scores and well-paying jobs.  The banks lent money to people who met good qualifications and are getting burned, because of lenders who lent irresponsibly to subprime borrowers.

Yes, it stinks that our tax dollars have to go towards bailing these people out.  But, the government has an obligation to Freddie & Fannie just like they do to the Dept. of Defense and any other government agency.

latenightleader:

I've done no doc loans, very necessary if you have your own business or you are paid in cash.  When you sign your application, you are certifying that all the info is true.  The borrower has the responsibilty to not lie, not the mortgage lender!

Unfortunately my friend and her husband weren't so honest. It was the first in a series of things they did to get this home that is now in foreclosure. During every step of the process, they told themselves and others that it must be God's will, otherwise it wouldn't be going through. I've known this person since 6th grade and we've been through a lot together. I was extremely dubious about their choice when they first got started but hoped for the best for them. Recently when I found out the "dirty details" I was extremely disappointed again because she worked in the mortgage industry herself at one time.

latenightleader:

I would say everyone knows what their income is, and knows what they can afford. 

They prayed for abundance hoping God would honor their prayers. They didn't give any thought about their part of the contractual agreement. They were given a hard sell and desperately wanted out of Southern California. They were the perfect customers that lending predator's love.

arianasilver:

Yes, it stinks that our tax dollars have to go towards bailing these people out.  But, the government has an obligation to Freddie & Fannie just like they do to the Dept. of Defense and any other government agency.

 And thats why our govn't is starting to look a lot more like socialism than capitolism. 

 

frugal_alaskan:

 And thats why our govn't is starting to look a lot more like socialism than capitolism. 

Fair enough.  But if the president hadn't created Fannie Mae who can say how much longer The Depression would have lasted?

We bought our house while interest rates were GREAT!   We had people laughing at us because we chose to pay extra for a FIXED interest rate.  "You could get a house X sq. ft. bigger for the same price!!  How foolish!!".  We stood firm and payed 2% more on our interest.  We weren't in our house long enough to get the new smell out when the variable interest rates started rising again.  

 I would love to see some of these housing figures to see how many of those in foreclosure thought as our "friends" did -- catching the variable interest rate at the low end of its cycle and getting choked as it went up.  It would be my guess that buyer greed played more of a part in this than anything else with the runner up being the lack of the buyer educating him/herself about the process.

We just renewed our mortage and went fixed 5.15% because we knew rates were going up and they did. our mortage person said other people would get 5.65 for the lowest.   variable was 4.25% but we knew that we wouldn't be up to watching rates and locking in at the right time.

they changed the rules here. no 40 yr mortages, max 35 plus no 0 down mortages anymore. you have to have the min 5% downpayment.   makes sense since people should save up for that.

<<We bought our house while interest rates were GREAT!   We had people laughing at us because we chose to pay extra for a FIXED interest rate.  "You could get a house X sq. ft. bigger for the same price!!  How foolish!!".  We stood firm and payed 2% more on our interest.  We weren't in our house long enough to get the new smell out when the variable interest rates started rising again. >>

You were very smart to do that!  I have been in the mortgage lending field for over 20 years.  Adjustable rate mortgages have been around as long as I can remember and this is the first time that I can recall them being the problem they are today. Rest assured though....getting a 0 down loan is impossible now and getting a no doc loan is almost impossible too unless you have at least 30% to put down and you had best "walk on water" credit wise.

Now though, in all reality an adjustable rate loan isn't necessarily a bad thing. It's a bad thing when folks go out and buy much more house then they can comfortably afford. When anyone has ever asked my opinion on an adjustable rate loan I always tell them to be sure they can make those payments comfortably should the interest rate rise to the max (6% over the start rate). If they can do that, then you can build up equity much faster than you can on a convential fixed rate loan. If you have an adjustable rate loan and you pay just $50 to $100 more per month toward your principle while the rate is low, then you would be amazed and how quickly it comes down. The more you pay towards the principle this month means that more of your next month's payment will go to principle versus the interest. Today though, the start rate on an adjustable rate isn't a whole lot less than a fixed rate.