Buy Your New House SOONER Rather Than Later

[ksinger]

Ksinger, what I read in that report doesn't suggest that lenders didn't tell borrowers that their ARM loan would go up or that after the i/o period, their rate would jump to prime +(pick a number). This appears to imply that most of the withholding from BORROWERS was related to fees, i.e. closing/doc, etc......FEES, not consequence of variable interest rates or ARMs. i don't know HOW that couldn't possibly be disclosed since it's all over the blessed paperwork at time of signature (or at least it was in my case).

The entire second paragraph you bolded (and in fact most of the report) doesn't have anything to do with duping consumers; it's about duping investor groups to offload the high risk loans. The duping came from the thinking that "if I end up with too much risk, I can just offload it to the next guy (investor)."

Well, that surely is not the entire report, which I have not read, it is only the conclusion section. I do find it hard to believe that if fraud was being perpetrated one direction to such a level, that it was not also being perpetrated to a great degree in the direction of the consumer. I do recall, (in the mess of stuff I've read over the last few years) that there was quite a bit of actual fraud in the direction of consumers, with actual paperwork fraud going on - like stuff NOT being in it, but I'd have to go way back and try to dig it up. (I used to save stuff like that that interested me, in text files for later reference. I need to get back in the habit.)

In any case, the point of me and others and that report, putting a special and larger part of the responsibility of the overall meltdown on the mortgage industry, was, as the report noted, "tone at the top matters", the fact that the lenders also knew what THEY were doing was wrong, and even had the foresight at the top where policy is made, that their lending practices were likely to blow up the entire market, and ruin their own companies, and they did it anyway. They didn't make a single mistake like an individual might do, they made the wrong choice millions of times over - as the report said, refusing to take into account human nature, and repeatedly indulging their own basest impulses. I just see everyone going on endlessly about the individual who made one bad choice, and no one even mentions the individuals at the top of these lending juggernauts, and their minions, who made millions of what they admitted they KNEW were fiscally irresponsible decisions every day for a decade - decisions that in turn allowed the human nature on the other side of the equation to go south - . And of course they skated, as they knew they would. Because the rules are different for the connected and the already rich.

 

[Missy]

IMO the more you put down and the less of a mortgage you take the better all around. For some reason when I said 25% that really hit a nerve but that is my opinion and I have every right to express it. {/quote]

I fully agree with you on this, Missy, BUT it's also important to expect that those who disagree with it also have every right (and may exercise it) to voice their dissent. That should be expected in an open discussion.

[I will say that when I said 25% down payment should be a requirement I didn't mean it as literally as I said ...I meant that it would be a good idea to put down 25% at least but I did not mean to say that if you cannot put 25% down but you are good in every other area financially to make a purchase that you shouldn't make that purchase. I never meant it as black and white as it came out. If you can easily make the monthly payments including insurances taxes etc then great but you cannot put 25% down put as much down as you can comfortably. I did not mean to make a blanket statement that it is 25% down or nothing but I did most definitely mean it when I said I think it is better to put down more than less. And I picked 25% down because that is the requirement here where I live and it has worked well for all these years- no one has ever defaulted on a loan in my building and it is not a small building.

Please don't make this personal. I assure you I have no desire to make it personal and I was not/am not attacking anyone. Let's keep this cordial and allow others points of views to be expressed. I, for one, am not trying to change anyone's mind but am just stating my points of view on this matter.
And that's all folks

It's good to know you didn't mean this as black and white because it did most assuredly come out that way, but I think what people most reacted to was the judgment that others who don't share your opinion are exhibiting financial irresponsiblity.

For what it's worth to you Missy, I don't feel these comments were personal to me and I didn't take them personally. I used my example as just that - an example to help illustrate the math, but I'd have felt just as passionately about my dissent even if I was sitting here as someone with no mortgage or someone who put 20% down. What stirred my pot was the implication that there's only one right way (regardless of which side I fell to) because to me, *that* is among the most dangerous thinking around....the suggestion that one size should fit all and anyone who doesn't drink the kool-aid is somehow irresponsible/ignorant/insert adjective here. I'm not trying to change anyone's mind either; just expressing my own points of view.

Actually, that's why I read threads like these. To learn from others and see what their points of views are. Sometimes I even change my mind, though in this case while I enjoyed the debate and agree not one size fits all (I definitely do not think one size fits all- cannot say this strongly enough despite how it came out here) I still believe one should be required to put more equity down when purchasing a home. But I enjoyed the debate and always am happy to hear other points of view.

Also, I am very glad to hear you are not taking anything I say personally because I promise you I did not mean to direct anything to any one person and was speaking in general terms only.

One of my favorite quotes is I may not agree with what you have to say but I will defend to my death your right to say it!!!!

 

[movie zombie]

i think that most here forget that we are not the norm: we research the details to death before buying a diamond, e-ring, color stone, etc.

most do NOT do this. they go to the b&m and accept what they are told.

why do you think they don't do the same when buying a car? or when buying a house?

of course they accepted the word of the mortgage broker/lender.

personal responsibility includes the individual responsibility of those lenders and brokers. it includes wall street and bankers. perhaps it is evidence after all that the trickle down theory works.

MoZo

 

[iLander]

i think that most here forget that we are not the norm: we research the details to death before buying a diamond, e-ring, color stone, etc.

most do NOT do this. they go to the b&m and accept what they are told.

why do you think they don't do the same when buying a car? or when buying a house?

of course they accepted the word of the mortgage broker/lender.

personal responsibility includes the individual responsibility of those lenders and brokers. it includes wall street and bankers. perhaps it is evidence after all that the trickle down theory works.

MoZo

I agree with this 100% Mozo.

We are not typical, here on PS.

 

[NewEnglandLady]

*Head explodes from trying to understand the logic*

I typed out a response as to why I don't get the concept of other people being responsible for your decisions, but it felt a lot like going in circles, so I deleted it. Then I typed up another response about the concept of "self interest", but it sounded sort of snarky and I'm trying to avoid that. So now I'm just going to shrug and say that sometimes discussions just lead back to the starting point.

 

[janinegirly]

*Head explodes from trying to understand the logic*

I typed out a response as to why I don't get the concept of other people being responsible for your decisions, but it felt a lot like going in circles, so I deleted it. Then I typed up another response about the concept of "self interest", but it sounded sort of snarky and I'm trying to avoid that. So now I'm just going to shrug and say that sometimes discussions just lead back to the starting point.

Right there with ya NEL. I typed out something as well and realized it was just repetitive. Seems so logical - ie banks are in the business of making money, mortgage brokers and any other salesmen are in the business of pushing sales, and YOU the individual are responsible for making decisions in YOUR interest and your family's interest and doing all necessary research/reading to protect that! Only atypical PS people get this? ...come on it is common adult sense 101! An open society means there is no BIG force who will tell you how to think or what to do and thank god for that. YOU are responsible for your choices, good and bad. It seems so obvious and crystal clear but logic is not a necessary component in some people's reasoning I suppose. So much easier to just find scapegoats and blame everyone else.

 

[JewelFreak]

personal responsibility includes the individual responsibility of those lenders and brokers. it includes wall street and bankers. perhaps it is evidence after all that the trickle down theory works.

MoZo

So, when I worked for Tiffany, somebody comes in to buy a piece of jewelry. By your logic, MoZo, it is my responsibility to tell her she can get a similar piece for less at another store; point out the flaws in manufacture that may lead to failure; show her why the stone isn't top notch; and make sure she understands that its price will set her back 6 months' income. Because if she only tries it on & doesn't ask any of the questions above, then decides in a year she doesn't like it, it's my responsibility for having sold it to her?

Nuh-uh. I've done the mortgage for every house DH & I have bought. Not one lender ever -- decades before the boom and during -- explained pros & cons of each product unless I asked specific questions. Just as a car salesman does not owe a buyer info that a certain model is prone to oil leakage, has upholstery that's impossible to clean, etc., neither is the mortgage seller. The car guy figures you've done your research or you're willing to risk making a mistake. He's absolutely right. Go informed or delay signing the dotted line till you are.

First somebody buys a house he can't afford, with a loan he can't afford, then he's angry somebody didn't stop him. See the trouble with this?

--- Laurie

 

[House Cat]

In 2007 my husband tried to get a home loan. The agent frowned at my husband's income, then said, "that's ok, we'll just double it on the application." (we weren't married at the time.) He walked out of there qualified for a $485,000 loan.

When he came home, we decided that if the mortgage agent had to double my husband's income in order to qualify him for the loan, then we couldn't afford the loan. This is simple logic. BUT, the mortgage agent made it seem easy peasy, as though this was normal practice and "no big deal." So I could see how people would buy into that thinking and move forward with buying a house anyway.

Sales people can be very slick, especially when the purchase is emotional. Buying a house isn't called "The American Dream" for nothing.

 

[Hera]

Maybe, the answer lies somewhere in the middle. On one hand, mortgage brokers and lenders are at fault for making bad decisions sound like good ones and people are responsible for their lack of due diligence.

I was going to purchase a property in 2005 and the mortgage brokers were really hot on adjustable rate mortgages telling me I would have low payments for a certain amount of time and when the rate went up, then I could see the property. They did fully disclose everything, but it just didn't make sense to me. There were so many variables and I am not a risky type of buyer. I went and did my research, inevitably learning a lot about the home buying process. If you just googled, "is there a real estate bubble" and "housing forecast," you could come up with a lot of information. Surely there were fanatics on both sides, but there was a general consensus from reliable sources that knew a lot more about the economy than I did.
For now, I think the best advice for buying a property is to look towards the worst case possible. Thinking about, "what happens if one of us loses our job" and "maybe we should buy a property we can stay in for 10-15 years should be some of the questions one should be pondering.

I think that for the future, there should be home buying classes that are mandatory, sort of like the student loan classes they make you take in college. I only went to one because I only had one loan, but I think a forced education would be best. That way people HAVE to make an educated decision. Certainly I wish people would do their research but lets face it, most people will not and will continue not to do so.

Eta: I also think they should look towards other factors in qualifying like rental payments as an indicator for credit worthiness.

 

[Allison D.]

*Head explodes from trying to understand the logic*

I typed out a response as to why I don't get the concept of other people being responsible for your decisions, but it felt a lot like going in circles, so I deleted it. Then I typed up another response about the concept of "self interest", but it sounded sort of snarky and I'm trying to avoid that. So now I'm just going to shrug and say that sometimes discussions just lead back to the starting point.

That's because it's not logical.

I'm truly waiting for the day the brokers get creative and play the same game....really I am. I can just hear it now:

"Well, we didn't KNOW that the buyer had no intention of paying the mortgage anyway. We didn't KNOW he just went into it hoping the house would increase in value by 25% within two months and that he only planned to flip it without making any payments. If we'd have KNOWN that, we surely wouldn't have offered him the loan. it's not OUR fault he didn't TELL us his intentions up front, so it's more his fault than ours."

Seriously.....if a lender loaned to someone without checking out his credit history (i.e. research/do his homework), would *anyone* be crying for the lender because his employee was green and not experienced enough to verify the buyer's credit history/income, etc? I can't believe so.

I firmly agree that both ends of the spectrum share responsibility, but the premise that the big bad industry is more at fault for not idiot-proofing their loans? Naaaaaaaaaaaah. There was plenty of high-jinks to go around on both sides of the equation.

 

[Allison D.]

Maybe, the answer lies somewhere in the middle. On one hand, mortgage brokers and lenders are at fault for making bad decisions sound like good ones and people are responsible for their lack of due diligence.

I was going to purchase a property in 2005 and the mortgage brokers were really hot on adjustable rate mortgages telling me I would have low payments for a certain amount of time and when the rate went up, then I could see the property. They did fully disclose everything, but it just didn't make sense to me. There were so many variables and I am not a risky type of buyer. I went and did my research, inevitably learning a lot about the home buying process. If you just googled, "is there a real estate bubble" and "housing forecast," you could come up with a lot of information. Surely there were fanatics on both sides, but there was a general consensus from reliable sources that knew a lot more about the economy than I did.
For now, I think the best advice for buying a property is to look towards the

This was precisely my contention earlier. I believe that the bulk of lenders (not the egregious unethical worst case examples) did fully disclose. Some tuned it out, others didn't get it, and some actually went and *gasp* took it on themselves to do their homework.

The argument that non-PSers are somehow lesser equipped to research doesn't really resonate for me. You don't have to become an expert at everything youself; you can HIRE experts to look out for you interests if you really don't have the inclination to do it all yourself. My friend's (now) fiance didn't want to learn about diamonds.....but he was smart enough to enlist someone else who DID know about them (me) and didn't have a conflict of interest.

 

[Dancing Fire]

can i sue my stock broker for my bad investments? yes,blame the whole world except the person in front of the mirror...

 

[Trekkie]

can i sue my stock broker for my bad investments? yes,blame the whole world except the person in front of the mirror...

Of course! I'll give you the name of my lawyer - I'm using him to sue McDonald's because I'm fat. He guarantees a HUGE settlement. All I have to do is sign here...

I'm sorry, but I believe in Darwinism.

If you're stupid enough to sign a loan you can't afford, you deserve to lose your house.

And no, the tax payer shouldn't have to pay for your studpidity either.

 

[ksinger]

It seems many here misunderstand MoZo, me, and others who point a damning finger at those making the loans. I don't think anyone here is giving a pass on stupidity. Yes, people who took out loans they could not afford were stupid, and sometimes just flat out venal. HOWEVER, what I don't get is why everyone is giving a big fat pass to the people selling loans that really, no one should have been buying. Loans that were - by the admission of those creating and selling them - likely to send THEM and OUR ECONOMY into the toilet. You know, people can rant all day about personal responsibility, but point me to one time in history when what amounts to a movement of people acting as a herd, has not taken the innocent along with it. Even if you want to lay this whole mess ONLY in the laps of people taking bad loans, the people who had the mandate and power to regulate our economy so that it doesn't take us all along with it when it crashes, did NOTHING. In any case, the people selling the loans knew quite well what they were selling: POISON. They apparently even coined an acronym for it: IBGYBG. I'll be gone, you'll be gone: we'll have OURS, when this whole thing blows up in their faces. Smirk. Much like the sentiments expressed by employees at Enron, as I recall.

If you defend these people selling this crap, then we really have to rethink a lot of things. Like pushers on the corner, why we think there should be seatbelts required in cars, or why anyone should feel bad when we and our children are poisoned by lead paint in toys, or we all die from e-coli laced foods. Or any regulation of anything, really. Hey, man buyer beware, right? And we have to stop complaining when we get to foot the bill for that lack of regulation, because like it or not, the consequences DO spill over. They always have, and they always will, our moaning notwithstanding. It truly is in our own best interest to have some reasonable regulation of what can be created and sold, especially in an area that can destroy our retirement funds, and crash our economy. I know many here think protecting stupid people from their own stupidity is not right, but what about protection ourselves from them, no matter which side of the equation they were on? Is this so hard?

Defense of THIS(below), is the stuff that makes MY head explode. Not from logic - because since when have humans every operated from there?, but a lack of application of knowledge of "likely" and "human nature". Given what was happening on the lendor side, the other side was LIKELY to happen, and we sat by and LET it happen. It was foreseen by many and could have been mitigated - the power was there, but the will was lacking, and we didn't do a thing. Too many people were raking in massive rewards. And they pretty much walked away with them, and we got left holding the bag. And even if you disagree with the bailout, the "wealth" in our portfolios and retirement funds, would have evaporated whether they let those entities fail or not. So we were still screwed. And again, we allowed it to happen.

...industry veterans inside the business also acknowledged that the rules of
the game were being changed. “Poison” was the word famously used by Countrywide’s
Mozilo to describe one of the loan products his firm was originating. “In all
my years in the business I have never seen a more toxic [product],” he wrote in an internal
email.

As early as September 2004,
Countrywide executives recognized that many of the loans they were originating
could result in “catastrophic consequences.” Less than a year later, they noted that
certain high-risk loans they were making could result not only in foreclosures but
also in “financial and reputational catastrophe” for the firm. But they did not stop.

And the report documents that major financial institutions ineffectively sampled
loans they were purchasing to package and sell to investors. They knew a significant
percentage of the sampled loans did not meet their own underwriting standards or
those of the originators. Nonetheless, they sold those securities to investors. The
Commission’s review of many prospectuses provided to investors found that this critical
information was not disclosed.

“I was a sales and marketing trainer in terms of helping people to know how to
sell these products to, in some cases, frankly unsophisticated and unsuspecting borrowers,”
he said. He taught them the new playbook: “You had no incentive whatsoever
to be concerned about the quality of the loan, whether it was suitable for the
borrower or whether the loan performed. In fact, you were in a way encouraged not
to worry about those macro issues.” He added, “I knew that the risk was being
shunted off. I knew that we could be writing crap. But in the end it was like a game of
musical chairs. Volume might go down but we were not going to be hurt.”
On Wall Street, where many of these loans were packaged into securities and sold
to investors around the globe, a new term was coined: IBGYBG, “I’ll be gone, you’ll
be gone.” It referred to deals that brought in big fees up front while risking much
larger losses in the future. And, for a long time, IBGYBG worked at every level.

Looking back on the years before the crisis, the economist Dean Baker said: “So
much of this was absolute public knowledge in the sense that we knew the number of
loans that were being issued with zero down. Now, do we suddenly think we have
that many more people—who are capable of taking on a loan with zero down who we
think are going to be able to pay that off—than was true 10, 15, 20 years ago? I mean,
what’s changed in the world? There were a lot of things that didn’t require any investigation
at all; these were totally available in the data.”

 

[Allison D.]

Ksinger, I can't speak for anyone else, but from my perspective, I don't feel as though I've misunderstood the situation at all and based on your comments above, I think it's you who is misunderstanding.

I am not giving the lenders a pass. I am not in denial that they were ALSO responsible for this. I am not laying the whole mess ONLY in the laps of the buyers, and I am not defending the people selling this crap. What I've consistently said is BOTH SIDES BEAR RESPONSIBILITY, but at the end of the day, the final decision is made by the *buyer*.

Let me say it again so there's no mistake: Both sides bear responsibility, and I don't think anyone's said otherwise. What I, NEL and several others have said is that while both sides are at fault, the buyer has the final vote. HE either takes the loan or doesn't. Unscruplous sellers/lenders are not a problem unique to real estate; they happen in all walks of life, and it's up to the consumer to understand the purchase he's making and do his diligence.

In no way does that condone shady sellers, shady lenders, or others who prey on consumers. In no way does it absolve them of responsibility for their part in the fray. But the notion that the sellers/lenders etc bear a responsibility to save consumers who buy under a cloud of ignorance because they shouldn't be expected to be smart enough to understand or learn about their impending purchase isn't one I can get on board with. It's not the seller/lender who makes the final buying decision, it's the *buyer*. HE has final veto power, and it's up to him to understand when/how to exercise it.

 

[Missy]

Ksinger, I can't speak for anyone else, but from my perspective, I don't feel as though I've misunderstood the situation at all and based on your comments above, I think it's you who is misunderstanding.

I am not giving the lenders a pass. I am not in denial that they were ALSO responsible for this. I am not laying the whole mess ONLY in the laps of the buyers, and I am not defending the people selling this crap. What I've consistently said is BOTH SIDES BEAR RESPONSIBILITY, but at the end of the day, the final decision is made by the *buyer*.

Let me say it again so there's no mistake: Both sides bear responsibility, and I don't think anyone's said otherwise. What I, NEL and several others have said is that while both sides are at fault, the buyer has the final vote. HE either takes the loan or doesn't. Unscruplous sellers/lenders are not a problem unique to real estate; they happen in all walks of life, and it's up to the consumer to understand the purchase he's making and do his diligence.

In no way does that condone shady sellers, shady lenders, or others who prey on consumers. In no way does it absolve them of responsibility for their part in the fray. But the notion that the sellers/lenders etc bear a responsibility to save consumers who buy under a cloud of ignorance because they shouldn't be expected to be smart enough to understand or learn about their impending purchase isn't one I can get on board with. It's not the seller/lender who makes the final buying decision, it's the *buyer*. HE has final veto power, and it's up to him to understand when/how to exercise it.

I agree with this 100% Allison.

 

[janinegirly]

Ksinger, I can't speak for anyone else, but from my perspective, I don't feel as though I've misunderstood the situation at all and based on your comments above, I think it's you who is misunderstanding.

I am not giving the lenders a pass. I am not in denial that they were ALSO responsible for this. I am not laying the whole mess ONLY in the laps of the buyers, and I am not defending the people selling this crap. What I've consistently said is BOTH SIDES BEAR RESPONSIBILITY, but at the end of the day, the final decision is made by the *buyer*.

Let me say it again so there's no mistake: Both sides bear responsibility, and I don't think anyone's said otherwise. What I, NEL and several others have said is that while both sides are at fault, the buyer has the final vote. HE either takes the loan or doesn't. Unscruplous sellers/lenders are not a problem unique to real estate; they happen in all walks of life, and it's up to the consumer to understand the purchase he's making and do his diligence.

In no way does that condone shady sellers, shady lenders, or others who prey on consumers. In no way does it absolve them of responsibility for their part in the fray. But the notion that the sellers/lenders etc bear a responsibility to save consumers who buy under a cloud of ignorance because they shouldn't be expected to be smart enough to understand or learn about their impending purchase isn't one I can get on board with. It's not the seller/lender who makes the final buying decision, it's the *buyer*. HE has final veto power, and it's up to him to understand when/how to exercise it.

I agree with this 100% Allison.

As do I. No one is saying there aren't shady mortgage brokers, sleazy dealers etc., and ridiuculous no doc loans which were part of the problem -quite the contrary. But ultimate responsibility lies with the consumer/borrower for the decision they make on their future (knowing their own means or lack of). You can't just badmouth industries you resent to avoid facing the fact that some borrowers chose to go for what looked like the quick route to $ or a bigger house (i.e. got greedy), just like that shady broker did. Let's also not forget Freddie Mac and Fannie Mac's roles as well.

 

[movie zombie]

[quote="JewelFreak|1299702716|2868330So, when I worked for Tiffany, somebody comes in to buy a piece of jewelry. By your logic, MoZo, it is my responsibility to tell her she can get a similar piece for less at another store; point out the flaws in manufacture that may lead to failure; show her why the stone isn't top notch; and make sure she understands that its price will set her back 6 months' income. Because if she only tries it on & doesn't ask any of the questions above, then decides in a year she doesn't like it, it's my responsibility for having sold it to her? --- Laurie[/quote]

in this particular instance, you are talking apples and oranges. jewerly sales are not real estate contract transactions governed by law. when you worked for Tiffany, you did not have a fiduciary obligation under the law as does the mortgage broker, banker/lender, real estate agent. additionally, under california law one as a seller must disclose to the buyer all flaws. these rules/laws are in place because of abuses by those in the industry in the past.

re fiduciary responsiblity/obligation:

http://legal-dictionary.thefreedictionary.com/Fiduciary+obligation

and a must read from their own industry guide:
http://mortgagefiduciaries.com/2008/06/fiduciary-duties-for-mortgage-brokers-and-los/

plain and simple, the industry was out of control according to their own guidelines.

re seller disclosures by law:
http://www.weblocator.com/attorney/ca/law/c22.html

"Seller Disclosures
When a seller signs a standard purchase agreement, he or she is required to disclose certain known problems and hazards to the buyer. In most cases, the seller must provide the buyer with a Real Estate Transfer Disclosure Statement, which supplements the information provided in the purchase agreement. This statement must disclose all known structural defects, as well as problems with or information about the heating, plumbing, mechanical, and electrical systems. The seller also must include potential problems of which he or she is aware such as easements, environmental hazards, landfills, flooding, zoning violations, or noise problems. It is also the duty of the seller's agent to conduct a visual inspection of the home and report all facts that materially affect the value or desirability of the property. These disclosures, while required, are not part of the contract between the buyer and the seller and are not warranties by the seller. Just because problems are listed on this statement does not mean that the seller must repair the problems, but the buyer may request repairs or a price break because of the problems. "

and
http://www.wrightrealtors.com/seller_advisory.htm

'3. Death and Other Disclosures.
Many buyers consider death on real property to be a material fact in the purchase of property. In some situations, it is advisable to disclose that a death occurred or the manner of death. However, California Civil Code Section 1710.2 provides that you have no disclosure duty "where the death has occurred more than three years prior to the date the transferee offers to purchase, lease, or rent the real property, or [regardless of the date of occurrence] that an occupant of that property was afflicted with, or died from, Human T-Lymphotropic Virus Type III/Lymphadenopathy-Associated Virus." This law does not "immunize an owner or his or her agent from making an intentional misrepresentation in response to a direct inquiry from a transferee or a prospective transferee of real property, concerning deaths on the real property" '



i will repeat that whether participants in this thread like it or not, those "in the industry" have a greater responsibility according to existing law.

MoZo

 

[Allison D.]

in this particular instance, you are talking apples and oranges. jewerly sales are not real estate contract transactions governed by law. when you worked for Tiffany, you did not have a fiduciary obligation under the law as does the mortgage broker, banker/lender, real estate agent. additionally, under california law one as a seller must disclose to the buyer all flaws. these rules/laws are in place because of abuses by those in the industry in the past.

re fiduciary responsiblity/obligation:

http://legal-dictionary.thefreedictionary.com/Fiduciary+obligation

and a must read from their own industry guide:
http://mortgagefiduciaries.com/2008/06/fiduciary-duties-for-mortgage-brokers-and-los/

plain and simple, the industry was out of control according to their own guidelines.

re seller disclosures by law:
http://www.weblocator.com/attorney/ca/law/c22.html

"Seller Disclosures
When a seller signs a standard purchase agreement, he or she is required to disclose certain known problems and hazards to the buyer. In most cases, the seller must provide the buyer with a Real Estate Transfer Disclosure Statement, which supplements the information provided in the purchase agreement. This statement must disclose all known structural defects, as well as problems with or information about the heating, plumbing, mechanical, and electrical systems. The seller also must include potential problems of which he or she is aware such as easements, environmental hazards, landfills, flooding, zoning violations, or noise problems. It is also the duty of the seller's agent to conduct a visual inspection of the home and report all facts that materially affect the value or desirability of the property. These disclosures, while required, are not part of the contract between the buyer and the seller and are not warranties by the seller. Just because problems are listed on this statement does not mean that the seller must repair the problems, but the buyer may request repairs or a price break because of the problems. "

and
http://www.wrightrealtors.com/seller_advisory.htm

'3. Death and Other Disclosures.
Many buyers consider death on real property to be a material fact in the purchase of property. In some situations, it is advisable to disclose that a death occurred or the manner of death. However, California Civil Code Section 1710.2 provides that you have no disclosure duty "where the death has occurred more than three years prior to the date the transferee offers to purchase, lease, or rent the real property, or [regardless of the date of occurrence] that an occupant of that property was afflicted with, or died from, Human T-Lymphotropic Virus Type III/Lymphadenopathy-Associated Virus." This law does not "immunize an owner or his or her agent from making an intentional misrepresentation in response to a direct inquiry from a transferee or a prospective transferee of real property, concerning deaths on the real property" '



i will repeat that whether participants in this thread like it or not, those "in the industry" have a greater responsibility according to existing law.

MoZo

And I will continue to repeat that *the industry* has many obligations, but those do not include saving a buyer from his own stupidity or quizzing him to make sure he understands the information (and the implications of the information) he's been given. He's required to TELL you about those conditions; he's NOT required to make sure you understand them and place appropriate weight on them in your buying decision. That is the BUYER'S job.

He's required to tell you that there's an easement; he's not required to provide you with research so you understand the potential health implications of living next to the easement.

He's required to tell you that the electrical system was just evaluated by a professional who suggested replacement within the next 8 months. He's not required to ask if you understand that choosing to ignore the suggested replacements could result in your house burning to the ground or to ask you if you fully understand the severity of the implications.

Translate this to a lender's role and it means the lender has to give you the data about your purchase, and he cannot LIE if you ask him to explain it more fully (cannot misrepresent). He has to tell you that for the first 5 years, the interest will be fixed at 2%, but at the end of five years, it will move to a variable rate that is prime plus 8% (or whatever it will be). If YOU ASK him "so how much would that likely affect my payment, he'd have to be truthful in his answer to you.

BUT, he is patently NOT obligated to ask you if really think it's a wise choice to commit to a payment that's 40% of your take home pay, if it's wise to make this kind of purchase with two teenaged kids who are likely to begin college shortly, or whether or not you've thought about what your financial load might be if the market tanks and you cannot unload the property before the 5-year fixed low interest rate expires.

It's not his job to sit and say "well gosh, I want this sale, but John seems kinda thick and doesn't seem to understand what could happen if he takes out this loan and something unexpected happens, so perhaps we should deny him to loan until he can give us comfort that he does actually understand it." Sorry....that's NOT his job. That's John's.

 

[Dancing Fire]

In no way does that condone shady sellers, shady lenders, or others who prey on consumers. In no way does it absolve them of responsibility for their part in the fray. But the notion that the sellers/lenders etc bear a responsibility to save consumers who buy under a cloud of ignorance because they shouldn't be expected to be smart enough to understand or learn about their impending purchase isn't one I can get on board with. It's not the seller/lender who makes the final buying decision, it's the *buyer*. HE has final veto power, and it's up to him to understand when/how to exercise it.

yup,the lenders didn't point a gun to their head and say "sign here".

 

[Allison D.]

Way more simply put: The industry has an obligation to disclose a known risk to you, but they are not obligated to make the decision for you about your comfort level with assuming the risk or making sure that you fully understood the implications of the risk you were taking on.

 

[movie zombie]

[quote="Allison D.|1299780676|2868890Translate this to a lender's role and it means the lender has to give you the data about your purchase, and he cannot LIE if you ask him to explain it more fully (cannot misrepresent). He has to tell you that for the first 5 years, the interest will be fixed at 2%, but at the end of five years, it will move to a variable rate that is prime plus 8% (or whatever it will be). If YOU ASK him "so how much would that likely affect my payment, he'd have to be truthful in his answer to you. [/quote]

but they did lie and did not truthfully answer the questions. they did not adhere to minimal industry standards [includes but not limited to setting requirements to get a loan and good underwriting standards]. no one was watching the store as it were. brokers at countrywide have written about that and how they felt the pressure was to "produce" even knowing that what they were doing was not legal and/or ethical. its not merely the interface with the potential buyers, it was the inhouse procedures and the products themselves.

you [and others] will continue to believe that 100% of the fault lies with the borrowers. i will continue to find it industry 60% and borrowers 40%. many buyers were not first time buyers and some were speculators.

we live in the US and you are entitled to your opinion....just as i am to mine.

personally, i know you won't change my mind and i won't change yours.

so i'll return to Cinequest and wish you [and the rest of the participants in this thread] well despite our differing view regarding this particular issue.

MoZo

ps like DF years before i was saying exactly what he was saying re what was happening with real estate. and re what the original OP posted, there are a lot more foreclosures to happen. high end real estate isn't moving as fast as expected. i personally wouldn't buy right now and would wait until the end of the year or beginning of 2012 at least. even then i'm not sure i'd want the responsibility of a mortgage in these economic times. but each to their own.

 

[ksinger]

[quote="Allison D.|1299780676|2868890Translate this to a lender's role and it means the lender has to give you the data about your purchase, and he cannot LIE if you ask him to explain it more fully (cannot misrepresent). He has to tell you that for the first 5 years, the interest will be fixed at 2%, but at the end of five years, it will move to a variable rate that is prime plus 8% (or whatever it will be). If YOU ASK him "so how much would that likely affect my payment, he'd have to be truthful in his answer to you.

but they did lie and did not truthfully answer the questions. they did not adhere to minimal industry standards [includes but not limited to setting requirements to get a loan and good underwriting standards]. no one was watching the store as it were. brokers at countrywide have written about that and how they felt the pressure was to "produce" even knowing that what they were doing was not legal and/or ethical. its not merely the interface with the potential buyers, it was the inhouse procedures and the products themselves.

you [and others] will continue to believe that 100% of the fault lies with the borrowers. i will continue to find it industry 60% and borrowers 40%. many buyers were not first time buyers and some were speculators.

we live in the US and you are entitled to your opinion....just as i am to mine.

personally, i know you won't change my mind and i won't change yours.

so i'll return to Cinequest and wish you [and the rest of the participants in this thread] well despite our differing view regarding this particular issue.

MoZo

ps like DF years before i was saying exactly what he was saying re what was happening with real estate. and re what the original OP posted, there are a lot more foreclosures to happen. high end real estate isn't moving as fast as expected. i personally wouldn't buy right now and would wait until the end of the year or beginning of 2012 at least. even then i'm not sure i'd want the responsibility of a mortgage in these economic times. but each to their own.[/quote]

To the 60/40, with which I agree, I would only add the weight of regulators entrusted with the general economic well-being of the country as a whole, not doing their jobs either.

 

[Allison D.]

[quote="Allison D.|1299780676|2868890Translate this to a lender's role and it means the lender has to give you the data about your purchase, and he cannot LIE if you ask him to explain it more fully (cannot misrepresent). He has to tell you that for the first 5 years, the interest will be fixed at 2%, but at the end of five years, it will move to a variable rate that is prime plus 8% (or whatever it will be). If YOU ASK him "so how much would that likely affect my payment, he'd have to be truthful in his answer to you.

but they did lie and did not truthfully answer the questions. they did not adhere to minimal industry standards [includes but not limited to setting requirements to get a loan and good underwriting standards]. no one was watching the store as it were. brokers at countrywide have written about that and how they felt the pressure was to "produce" even knowing that what they were doing was not legal and/or ethical. its not merely the interface with the potential buyers, it was the inhouse procedures and the products themselves.

you [and others] will continue to believe that 100% of the fault lies with the borrowers. i will continue to find it industry 60% and borrowers 40%. many buyers were not first time buyers and some were speculators.

we live in the US and you are entitled to your opinion....just as i am to mine.

personally, i know you won't change my mind and i won't change yours.

so i'll return to Cinequest and wish you [and the rest of the participants in this thread] well despite our differing view regarding this particular issue. quote]

MoZo, I have of a lot of respect for you, and I do agree that we'll have to disagree on this one, but I really do wish you'd stop misrepresenting my opinion (as you did above in bolded) when I've been clear in every post I've written that I feel the blame is on BOTH sides and does not lie 100% with borrowers. I didn't say that, didn't mean that, and still don't mean it. I've been very consistent in saying that there is plenty of blame to go around on both sides....both sides are culpable. I've consistently said that the lenders were not without fault, too.

I actually think we're closer in opinion than the prior discourse would suggest, because the only area we seem to disagree on is percentage of blame on each side. I do not think it's 0 lenders/100 borrowers; my feeling is that it's more 40 lenders/60 borrowers. We're not as far apart as you think; they only thing we really disagree on is who bears the majority of responsibility.

 

[packrat]

Soooo...at this point I kinda feel like I need to take classes in everything under the sun so that I can be more aware of things and be skeptical and suspicious of anyone I need to do business with. Tax classes so I can trust that the one who does my taxes is getting me everything back I should get. Gotta learn about loans and equity and points and whatever so I can buy a house. Take some mechanic classes so I can be sure my truck is getting fixed properly and maybe pop in and take some medical classes too so I can question Dr. What does a person do if they just don't GET something? Seriously. I don't really understand insurance..car/auto/home whatever..and I worked it for a year and have my license. There are some things some people just don't "get", so what do they do? You know what I do when I don't get something? I ask my parents. If they don't know, or I'm unsure if what they're saying is right, I ask someone who works in that business. I call up my ex coworker Teri and say "I don't get how this policy works, can you explain it to me? Do we need to change something?" And I trust that it's going to get taken care of b/c that's her job, that's what she does, she "gets" it. If my truck is making a weird noise, I call up Phil and ask him to check it out. There are some things my husband just doesn't "get" no matter how hard I explain it to him (like where dirty clothes go, and how to fill ice trays)..so he lets me handle it b/c I know how. Do I have to learn how to fly a plane too? Cripes. I'd like to see Mike Holmes start ripping homeowners apart on his show. "You idiots! You need to become a contractor so you can question and make sure your contractor is doing it RIGHT! GAWD! Figure it out people!"

I guess maybe since I'm a mom and a wife I ought to be used to doing everything myself, and for myself. Honest to Pete if I have to learn how to do ev-er-y-thing b/c I don't know who I can trust and b/c obviously if I get screwed b/c I don't know any better it's my own fault..

If you aren't taught things, how do you know to look/find/recognize/question when things aren't right? I questioned our loan guy in 2001 a LOT b/c I didn't understand it. I'd never done it before, had no clue whatsoever. I thought it was like when I got a car loan. I had a math class at the community college and there was a chapter or 2 on loans and ammortization (sp), and I passed w/flying colors..but then a year later when I went to get a home loan and things are being explained-none of it made sense. Not anything like my class. Points and this other insurance in case you can't pay and blah blah. And I felt dumb b/c some of it I just didn't understand.

I understand a person should try to be a little educated about things, yes. But then I think a person needs to be able to trust that someone in authority/the "experts" in a field, would be able to take care of them properly and that they're not going to be yelled and and blamed "But you should have KNOWN! You have to ASK!" You have to know everything about everything there is so you can be informed and double/triple check how I do my job and I'll just do the paperwork, that's why I get the big bucks.

You trust your Dr to tell you things, diagnose you properly, sometimes you get a second opinion, but if you don't and something happens to you, is it your fault b/c you trusted someone w/the proper training who is licensed in a professional field? Probably what would happen is your family would try to get the Dr for malpractice or negligence or something b/c the Dr is held accountable and answers to a higher medical authority, right? So what happens then if that higher authority says screw it, whatever, figure it out on your own sucka foo.

Whatever. We're busy paying our mortgage and taking on the burden of others' mistakes, scraping by while the ones in authority who did also have a hand in it and the ones who should have stopped it are wiping their butts w/million dollar bills and we're eating ramen. The ones that had absolutely nothing to do w/it (such as myself) still have to help foot the bill. The banks don't. So of course it makes sense to carp on the ones paying for it, rub a little salt in it. Carping on the ones at the bottom rung is nothing new. Us little folk take it on for everybody else, I guess who cares if we have to add the banks into it too, right? Too many people want to ride in the wagon and there aren't many people left to pull it. Doesn't do any good to point the finger, you know? I can screech and gnash my teeth that it's not fair when only some are held accountable, and others that had no hand in it at all are also held accountable and yet a certain other group that also should be held accountable is NOT and just gives a smug lil smile and says "Sowwies" and the rest of us are left holding the bag..again..whatever. Go ahead and cut Education spending in the budget so we can fund the bank buy out. Makes sense to me. Suck it up and deal w/it, it's the American way.

 

[Missy]

Hi Packrat,
I know, it can be so overwhelming at times. Sometimes you have little choice and you have to educate yourself as best you can. Especially when going to the doctor IMO if you have something seriously wrong. You should always get a second opinion if it is something serious and try to speak to other people in the health care field because you must always be your own advocate. There is too much on the line to just trust 100%, KWIM?

Same thing with the house stuff and insurance info. I just finished purchasing insurance for everything all over again since we are changing everything (auto, jewelry, umbrella, 2 homes) to one policy. Well, I did a lot of reading and then I got 4 different quotes and did some more research on the companies and made a decision. And it only took about 10 days from start to finish so not too bad. I feel good about the choice but hey, who really knows for sure till something goes wrong, right? But at least I did the best I could and didn't rely on the so called experts say so without a little independent learning of my own.

There is no way we can be experts in every field etc but we also cannot just blindly trust the experts either. All we can do is the best we can by educating ourselves, asking trusted friends who have been through it, and much of it also comes down to common sense. Which believe it or not is not so common

Oh, and when something seems too good to be true...well, trust your instincts. It usually is (too good to be true).

 

[Allison D.]

Packrat, I get your point up to a point, but let's be a realistic for a moment. No one's suggesting consumers have to garner knowledge to the level commensurate of an industry employee to satisfy a requirement of having done a bit of diligence. As mentioned before, how hard is it to say to one's self, gee - I don't know much about this - who can I ask that doens't have a vested interest?

I had positively NO knowledge about buying property that abuts conservation land.....until we bought our house. I certainly didn't rely on the seller's realtor's word to do a little homework; we decided to hire an attorney with experience in conservation properties to handle our offer/closing. We actually talked with a few coworkers to get their experiences, too....none of which was an 'expert industry opinion' but helped us figure out what were the more likely pitfalls.

I'm a firm believer in trust but verify. When my husband's moronic primary care physician told him he had PLEURSY and that didn't sound consistent to us with what his symptoms were, we sought the opinion of another healthcare professional. You can bet your bottom dollar that if my doctor said tomorrow "hey, you're going to need surgery to correct XYZ", I'd positively be getting a second opinion.....and not from another physician in the same practice either.

There is no bulletproof way to make a purchase, and even smart people still get taken. BUT, the percentage for making a smart buying decision goes up exponentially with even the smallest effort to fact check.

And for goodness' sake, when something seems off or outlandish or too good to be true, take an extra moment to ask why. If someone were offering to sell me a brand new BMW for $20K, I'd certainly wonder why and think "ok, this is good good to be true - what's the deal?" I wouldn't ignore my internal bullsh$t meter just because someone was giving me a way to get what I may really want if it doesn't seem like it should be possible.

 

[movie zombie]

it was a good movie day!

point noted Allison re not being too far apart.

packrat: i think you pretty well summarized what needed to be summarized.

MoZo