Fannie Mae & Freddie Mac - the big bailout?

[Lyrical]

Originally Posted by Simas

Because they were con'd into it. Thats the point others are making at least.

Funny, I don't see too many people arguing that the Truth in Lending Act was violated. It is a page that has to be in the contract. If they were conned into it, the page laying out their terms (price over time of maturity and interest rate) would be missing. If this happened en masse, then I would agree.

More often than not (again, I worked for a company that owned a bank), the people that scream they got screwed and the terms sucked didn't read the contract. It would clearly say on a one-pager that the payment would shoot up after six months, and also give the payment value.

Have you guys ever taken out a loan on a car or a house? Its in there.

[Soriak]

Originally Posted by Arbitrary

The uglier mortgages have a legitimate purpose. They are for people who have bad credit but are still considered good risks. The idea is that you pay for a year or two on your current loan and then refinance that away into a standard loan with some better terms once your credit is better.

I don't think that really is a legitimate purpose. They could just as well put money aside in a savings account for those two years and then buy it with the better credit. Nobody can't wait a little while longer before buying, if they have trouble with the rent they can't pay mortgage + repairs either.

[Simas]

Not con'd in an illegal sense, perhaps con wasnt the right word.

They were aggresively sold the items, without the law being violated. Thats why rational people that can do addition and subtraction still fucked up. Snake oil and all that.

[Mist]

The Fannie Mae/Freddie Mac thing isn't about the borrowers at all. It's all about the lenders.

These two companies have a total of 5 trillion dollars in loans leveraged and only 80 billion in liquid reserves. That's FUCKING INSANITY, and 110% their fault. I don't even know how that's legal.

[Lyrical]

Originally Posted by Simas

Not con'd in an illegal sense, perhaps con wasnt the right word.

They were aggresively sold the items, without the law being violated. Thats why rational people that can do addition and subtraction still fucked up. Snake oil and all that.

Which is why we are taught that in a transaction, the only thing that matters is what is written down. At least, some of this are taught this by our parents as we grow up.

[Lyrical]

P.S. I am done wasting my Saturday afternoon arguing about Economics, Finance and banking systems. Its time to power up the 360.

[DisgruntledOrangatang]

Originally Posted by Lyrical

Which is why we are taught that in a transaction, the only thing that matters is what is written down. At least, some of this are taught this by our parents as we grow up.

Which is why I posted exactly what I said. Not everyone is as knowledgable as you and you can't expect them to be. And yes there is a lot you can do that isn't illegal. C'mon you must know how red tape is so easily manipulated right? A burrowerer could have a questions about whats written and then lender could use one of many tactics (bait and switch, word usage, etc) to make it sound more positive or less risky than it is. And despite what you'd like not everyone is a robot so personalities and emotions DO matter. Because every human has one, so when two interact, it can cause things to occur that wouldn't if we were robots. People are trained to act and take advantage of this fact. And you say sure the lenders are doign what is most rewarded to them and it wasn't illegal, but that doesn't change the fact that its outright wrong and ludicrous. It just wasn't scrutinized to a proper extent (as usual with shit) until it breaks down or becomes a problem.

[GrobbeeTrull2.0]

Originally Posted by Mist

The Fannie Mae/Freddie Mac thing isn't about the borrowers at all. It's all about the lenders.

These two companies have a total of 5 trillion dollars in loans leveraged and only 80 billion in liquid reserves. That's FUCKING INSANITY, and 110% their fault. I don't even know how that's legal.

This is what I was getting at but wasn't able to articulate. Lyrical - your explanations, please?

[Faille]

Is there anything worse then trying to argue with some high and mightty, holier then thou, I made it through so everyone should person?

I seriously don't see how you can say that MILLIONS of people that this is happening to are more to blame then the hundreds, or thousands, or institutions that were part of the same situation. That Millions of people have made a stupid mistake and deserve what they get, but the institutions that not just sat back and watched them make that mistake but did all they could to push them towards it are some how off the hook.

Originally Posted by Lyrical

lol wut

There is a legislation in place called the Truth in Lending Act. It requires a one page agreement that clearly states the payment, the rate, along with any changes to that payment over the course of the loan. This is there for our protection.

It clearly states what is going to happen. If someone can't read through their agreement where it clearly states the change in payment, its on them. Budgeting (addition and subtraction) along with reading comprehension are things we learn in elementary school. Maybe if people can't do things like this, then they shouldn't be allowed to buy a house. Maybe we should have some sort of SAT for people before they can make an offer on a house.

And if bankers are violating the Truth in Lending Act, that is a felony under federal law. They should be prosecuted under the fullest extent of the law. And the bank should be responsible 100% for the loan loss.

We know that this isn't happening because no bank would be allowed to make loans without putting this one-pager in the contract papers. Its that serious an offense.

Pretty much what you said that I bolded. If it was individuals, or thousands of people making this mistake, some small percentage of the total, then I would agree that you have a point. But when it's on the scale that it is, then it's clearly something large and more serious then just millions of separate people all making the biggest mistake of their lives at roughly the same time.

[Hachima]

Who wants to bet that Lyrical is one of these guys that write the bad loans? He is just trying to make himself feel better about screwing people over =)

[kedwyn]

Before you even sit down with a lender you have to be looking for houses. These people knew exactly what they were buying before they even sat down and how much it cost.

So don't act like the fucking bank started dangling this property that was twice the price all of a sudden. These people went out looking for a loan because they found the house and price they wanted already.

Consumers fault first, bankers fault second for making so many bad loans. Ultimately its your own responsibility to buy what you can afford unless you dumb asses want the government balancing your check book for you.

[Arbitrary]

Originally Posted by kedwyn

So don't act like the fucking bank started dangling this property that was twice the price all of a sudden. These people went out looking for a loan because they found the house and price they wanted already.

That is only partially true. There was a deluge of television commercials for years advertising loans for people with bad credit, no credit, and no money down.

[Faille]

Originally Posted by kedwyn

Before you even sit down with a lender you have to be looking for houses. These people knew exactly what they were buying before they even sat down and how much it cost.

So don't act like the fucking bank started dangling this property that was twice the price all of a sudden. These people went out looking for a loan because they found the house and price they wanted already.

Consumers fault first, bankers fault second for making so many bad loans. Ultimately its your own responsibility to buy what you can afford unless you dumb asses want the government balancing your check book for you.

How common is pre approval in the US? I know here in Australia it was becoming very common, and almost all lenders were advirtising and pushing this, to get approval for a certain dollar amount and then find the house. So it was people saying they need to more or need a new home, then going to the bank to say they are buying a home how much could they lend... you know the rest.

Yes, the people should know better, and they probably didn't really need the new house, but the banks still happily say, sure you can borrow way more then you can afford and buy the best house you can find.

[kedwyn]

Originally Posted by Arbitrary

That is only partially true. There was a deluge of television commercials for years advertising loans for people with bad credit, no credit, and no money down.

So you are going to go out and buy a more expensive house when you already can't make payments on time because the TV tells you too?

[Arbitrary]

Originally Posted by kedwyn

So you are going to go out and buy a more expensive house when you already can't make payments on time because the TV tells you too?

You made a strange leap somewhere. I don't really know how you got there.

Example A - You grew up poor and never have owned a home. A television ad says that even you can buy a house and live the American dream despite not having any savings or credit history.

Example B - You fucked your credit royally years ago and no one would touch you with a ten foot clown pole. A television ad proclaims that even you can own a home despite declaring bankruptcy six times.

Both of those people wouldn't look to buy a house prior to knowing from television that lenders were throwing money at everyone who could scribble an X on a piece of paper.