On 10/15/11 17:47 , Don Kirkman wrote:
On Mon, 10 Oct 2011 23:04:46 -0700, John
wrote:



The rest of what you had to say, bad decisions, paying too much for a
home, etc. ... well ya', that is covered in "Life 101." If you missed
that class, problems will keep arising until you do take that class! ...
don't make those bad decisions, don't pay too much for over valued
property, don't buy what you can't afford, etc.

You ignore the people who were *told* they could afford the houses
they bought. People with a duty to be diligent--brokers, financiers,
investment houses, all assured them that they deserved a good house
and by heck they could afford one because they were given them a real
bargain.

Basically, it comes down to common sense, if you can't afford the house,
don't buy it... yet ...

But if you're assured that you can afford it, who is the real culprit
here?


When I bought my last house, I carefully constructed the budget. When
I got to the financing stage, every carrier I spoke with pushed like mad
to get me to take a non-traditional mortgage for far more than I'd
considered, with variable interest, balloon payments, and 'creative'
structures, all based on the assumption that 1) I'd be selling the
property at a substantial profit within 5 years and 2) incomes always rise.

I resisted, and stayed with a 30 year fixed at the interest that I'd
shopped around for. And was told that rate was no longer available, so
the non-traditional was my only option.

They sold it hard. "You should buy the maximum amount of house you
can possibly afford, and you can afford this." "You're upwardly mobile,
you'll be selling to upgrade before the interest rates increase and make
a bundle in the process." "You won't be in the house by the time the
balloon comes due." Even going so far as to tell me that at my age, a
traditional 30 year fixed would simply not be available. But that a 15
year ARM was a virtual certainty to be approved, at nearly 50% more than
I'd planned to borrow.

I eventually found the mortgage I wanted, at the rate I wanted, and
when things collapsed in the housing market, and the economy slowed, I
had both equity and a payment I could manage. But it was a fight to the
death to get a lender to agree to the traditional mortgage.

Few go into this kind of transaction with a fierce determination to
do things his own way. Most I've encountered would be quickly swayed by
both the temptation of more house than they thought they could afford,
or the enticing finance opportunity when so reassured by the lending
agency that the risk is small, and the benefits so great.

Now, I'm not, by a long shot, opposed to creative financing. I've
been quite creative in financing my businesses. And a couple of really
nice cars. But only in the short term, and only for small, manageable
amounts of money. Specifically, so I'd be prepared as economic fortunes
change.

So, though I'm hardly one of those 'invade Wall Street' protest
types, who blames all ills in the universe of Man on the banking system,
I can say that I've seen first hand some of the more underhanded, and
manipulative behaviours that have led a lot of folk down a very
turbulent river.

So, yes: Who is the culprit, indeed.

p