Insurance Agent Forum

[healthagent]

National news last night, foreclosure rate on sub-prime AND prime loans are nearing a record rate. Interesting article: SignOnSanDiego.com > News > Metro -- County foreclosures leap higher

"DataQuick Information Systems reported yesterday that during the first half of 2007, San Diego County had 2,896 foreclosures compared with 445 during the first half of 2006, a 551 percent increase."

Now, this story highlights the "who's fault is it" question: Ryan Grothe thought he was making the right decision when he moved his family into a two-bedroom condo he purchased in Rancho Peñasquitos in late 2005. Their one-bedroom apartment had become cramped, and he wanted a roomier place for their daughter, now 2 years old.
A year and a half after moving into their new home, the Grothes are renting again, unable to make the nearly $3,000 monthly payment on their $370,000 loan and are facing foreclosure.

Also saddled with two car payments and his wife's student loan, Grothe worried that he would have a tough time finding a place to rent as his credit rating worsened. He works as a security officer at two jobs, and his wife is a registered nurse.


Points:



*The mortgage company bears some responsibility for what I consider "predatory lending" which is this case was approving someone living in a one bedroom apartment for a $3,000 a month mortgage payment when it's taking him 2 jobs to make ends meet. Obviously his rent was nowhere close to $3,000 a month.




*What are Americans thinking when a security guard and nurse are taking on a $3,000 mortgage? Is it just being a homeowner just for the sake of being a homeowner?




The result of all this is now people with good credit are finding it harder to obtain loans.

[Alsky]

Great post John... To add to the hardships of the American family...

1)Credit Card companies doubling the minimum and charging interest rates people used to do time for charging...

2)Bankruptcy laws that are so tight, whats the point...

3) Homestead protection being circumvented by the new law the fed has approved that limits protection in the states that have this law on the books for the 1st 3 years.

4) A client told me that when she fell behind, the credit companies now use automatic dialers that were calling her number 30 times a day...

5) Mortgage companies that lended money to anyone with a pulse and usually at rates they had to know the nurses and security guards of the world would not be able to afford.

6) Complications with people that cant qualify for health care that either fall on the shoulders of the system or die because they cannot afford the treatment.

7) And if I call one more f****** company for service and get Haji who calls himself Joe, I going punch a wall or something... :-)

8) And lets not forget having to read the labels of everything we buy to make sure it does not come from China or some other friggin former enemy of ours... Can't brush my teeth or feed my dog without reading the damned label.

9) Thanks Mr. President... voted for you twice... 2nd term sure has been a let down.

Hey, why not outsource the Presidency... now theres an idea!

[healthagent]

Some stuff should just be illegal. Some credit card companies can change your interest rate if your credit score drops even if you're making timely payments! There are horrible predatory lenders who deal with "B paper" - in some of those mortgage contracts if you miss one payment your interest goes through the ceiling that that $1,500 mortgage you can't pay is not $2,500.

Foreclosures are now happening faster and fewer companies are willing to negotiate because there's easy money in the secondary foreclosure market. They can dump off the loan in days so why work with the client?

Want to buy a house?

*The mortgage is not more than one week's net, not gross, pay.

*One year of liquid savings

*If it's a first house, look for one that gives you some instant equity. You might want one in a good area that needs modest repairs. Put in $5,000 and some sweat equity and you could have $20,000 or more in instant equity. Stay away from brand new homes being sold for top dollar. You cannot sell and make a dime for 2 to 3 years and possibly not even then.

[midwestbroker]

I am going to have to play the devils advocate on this one.

If you have 3 jobs (between the 2 people), a kid, 2 car payments, and a student loan, what they heck are they buying a condo for $3,000 a month for?

Sure, the mortgage company bares some blame for allowing the loan, but the couple signed off on it.

I think everyone should research before they make a large purchase like a house, but they just call some lender, get a payment that sounds good, and then sign away. People spend more time researching their next car purchase then home loans.

Owning a home is a nice feeling, but paying your bills is a far better feeling.

[salpro22]

Originally Posted by midwestbroker

I am going to have to play the devils advocate on this one.

If you have 3 jobs (between the 2 people), a kid, 2 car payments, and a student loan, what they heck are they buying a condo for $3,000 a month for?

Sure, the mortgage company bares some blame for allowing the loan, but the couple signed off on it.

I think everyone should research before they make a large purchase like a house, but they just call some lender, get a payment that sounds good, and then sign away. People spend more time researching their next car purchase then home loans.

Owning a home is a nice feeling, but paying your bills is a far better feeling.

Great post midwest. I agree that people have to take responsibility for making stupid decisions by agreeing to buy a house they cannot afford without obtaining a 5/1 ARM, converted into a 150 year IO loan options that appear to be cropping up (jokingly).

[healthagent]

Stupid is as stupid does.

[Alsky]

ARM's have always been a joke and a bit of a trap for those who do not plan ahead... if you are only going to live in a home 1-3 years, then flip it or buy up, then this may be the only reasonable reason in my opinion to purchase real estate with an ARM.

Obviously, with the historical low rates available before the real estate bubble burst, if a buyer needed to use an ARM to qualify, they probably should have been looking at the rental pages instead. These are the buyers using every bit of their or family income not realizing that owning a home costs much more than just the mortgage payment.

I think the beef on this thread originally is about the predatory lending practices of some of these banks and of course Buyer Beware and Buyer Responsibility all come into play.

Sometimes that small writing is hard to read without a good attorney to do it for you. I wonder how many of these first time buyers didn't really realize what they were getting into to.

[healthagent]

Over the past years people I've known have become screwed when something major in the house breaks like the water heater, AC, roofing and plumbing problems, etc....People live check to check with meager savings and now the roof is leaking. I have three people I know who every time they turn around it's yet another issue with the house. Two of them have tapped out the equity to pay for the repairs. Someone close to me is in pre-foreclosure. Just sell the house? It's up for sale - along with the other thousand available in that area except his needs repairs and he doesn't have the money. He tapped out his equity years ago for debt consolidation.

People talk about real estate being an investment. It is....for some people. Some people make it work, live in a home for years, sell it and make thousands and upgrade to a nicer home. It destroys the lives of others. If you're money tight, renting a nice house and the heat pump dies in February then great...call your landlord.

[GreenSky]

Much of the problem is with the Feds (as usual). If a bank loses too much, the feds step in and keep that bank afloat with low interest loans, bailout money, etc. Banks no longer have to be responsible for their own stupidity.

When we had the Savings and Loan crisis caused by defaults on loans 20 or more years ago, the feds stepped in. THAT'S OUR MONEY FOLKS!

It's time that the government got out of all our business. If a bank makes bad loans, then the bank suffers. As a depositor, I can choose to only put my money in a bank that offers safe loans so my money is safe. If I want to get higher interest, I can take the risk.

Over the past 80-100 years, our government has decided that people cannot be responsible to make their own decisions. Guess that fat slob Michael Moore has a subject for his next work of fiction.

Rick

[healthagent]

It's damned if you do and damned if you don't. If banks have to eat their mistakes then only the cream of the crop 750 beacon scores and up would get loans and the "American dream" would be a lifetime unattainable dream for most people. For every credit risk that defaults an overwhelming majority don't.

No one bails out car loan companies and I can assure you if that if you have a pulse and a job you can get a car. We got people financed coming off their second BK and people with 450 beacon scores. Yes, the interest is 25% compounded hourly but you get a car. Once you tighten up on car loans you kill the lower middle class and "working poor" and now they don't have transportation.

Car loan companies just understand that a small percentage are gonna get repoed and they're gonna lose money selling the car at auction.

[midwestbroker]

Great point Green. It is easy to make questionable loans when you have big brother there holding your hand.

Sure, if the government got out people would have to rent longer and actually save their money (as the should be doing) before they buy a house.

People have this odd idea about rights. It is my right to own a home. It is my right to drive a car. It is my right to have a LCD TV. Your rights are limited to your abilites, including finances. No one, not lenders or the government should stand in your way, nor should they bail you out.

[healthagent]

Actually, if you're go broke renting is more brutal then homeownership. If your house payment is due on Aug. 1st and you don't remit it you won't even get a letter probably until mid month. They won't get nasty until a full month past due and you're not looking at foreclosure in most cases until 90 days past due. Even then some lenders are willing to negotiate by adding in a few extra hundred to get current or even tacking on the past due payment on the back on the loan.

Now you're renting and it's due on Aug 1st. On the 5th you'll receive a call from your landlord or management company. It's a short call; you have or don't have rent. If it's a management company, like an apartment complex they'll file for eviction on the 6th - you'll be in court on the 10th and packing your crap on the 11th. A private landlord might give you a few more days, but can file and have you evicted in a week.

[salpro22]

Your rights are limited to your abilites, including finances. No one, not lenders or the government should stand in your way, nor should they bail you out

Great line.

[healthagent]

No system ever put in place will change the laws of nature; survival of the fittest. If you're a security guard working two jobs and think you can handle a $3,000 a month mortgage it's just more proof that Darwin was right.

[midwestbroker]

Thanks Sal. I am great on paper, but talk to me on the phone and I am all over the place!

Survival of the fittest unless you have a great lawyer.