Blame "Who" on the Credit Problems

[treehugger1]

It appears that our president is attempting to put the blame on a potential mortgage mess in the laps of demoncrats. I don't care what party you belong to; the "mess" occurred under the current adminsistration's watch. Is this good or bad? I have no idea. But, the country is where it is. I have to remind myself that under the current administration, the country was attempting to bail out from a pseudo-recession. Actions were taken at the time that seemed to be in the "best" interest of the citizens; not so bad, and hindsight is always, well... The real fault lies with those who made "hay" under the super low interest rates and those who accepted the loans without paying attention to the fine print. Again, is this bad? Again, I don't know. We are a country that has survived on borrowed money for far too long. Eventually, someone will get it right.

My point is that I suspect as folks catch on to their individual financial problems, they will turn to the protection of the bankruptcy courts. In my mind, BK offers another check and balance in a system that sometimes goes awry.

Good god, even our constitution recognizes the potential of "credit."

[allavdj]

As someone who's life has been turned upside down from the use and misuse of credit I would be more than happy to see the following happen:

-No more unsecured credit cards....at all
People (myself included) need to learn to live within their means, if you can't pay cash for it, you are either don't REALLY need it, or you are spending your money where you shouldn't be.

-No secured credit on purchases less than...say...$10,000 with the exception of emergency medical situations.
If you can't save up the money and pay cash, you don't need it that bad.

-No more goofy car and house financing. Cars purchase should require 10% down, payoff in no less than 3 years. Homes could be financed for up to 30 years, no more, no second mortgages, no home equity loans
If you need 7 years to pay off a car, you are buying WAY to much car, the same can be said about houses.

-No more chap 7 bankruptcy and all 13's would be 100% payback. While in chap 13 you can NOT be extended credit of any kind.
I like to think of this as personal responsibility.



I know a lot of people are going to pull out the, well I can't afford this or my car broke down or whatever. Stop eating out, drop the cable bill and the cell phones, get rid of the $500 a month car and buy a $2000 car to get your around, sell your home and move into one you can AFFORD.

I screwed up my credit and my life big time with some really stupid decisions and some bad circumstances, but you know what...I got myself here...nobody was holding a gun to my head.

I think if the "system" didn't allow people (myself included) to spend waaaaay outside their means, a lot of corrections in the market would take place (home prices, gas prices, car prices, wages, etc)

[chpxiii]

allavdj, I completely disagree with you. Simply because you were irresponsible with your money doesn't mean that others are, or were, even if they did file bankruptcy. Since you are all about personal responsibility, that really is your problem, not anyone else's.

By the same token, I do agree that there *are* people who do live beyond their means and do purchase things they have no business buying - especially when they are thinking soley of personal gratification. However, I don't believe the "system" should constrict everyone just because some people were unable to constrain themselves.

[BassBoy]

I agree with allavdj to some extent. I do think that the way we are given credit is ridiculous.......7-year auto loans and 40-year mortgages.

I also agree that home owners should not be allowed to finance 100% LTV of their homes, or allow equity loans that total 100% LTV or with some predators, up to 125%. This type of financing has become way to easy to get and I agree that some of the responsibility should fall on the lender. They know we can't really swing those deals and they should be regulated in that fashion. Besides, they are supposedly the experts in finance, right? The same applies to an auto loan.

We live in a society that relies on credit and when something like this becomes a trend, it brings out the hungry sharks. I don't ever recall all of these different mortgage lenders and second rate financing companies. I don't ever remember when you could submit a loan application to 20 different lenders or having all of these teaser rates. You went down to the local bank and that's all that was available to you. And you prayed that there was nothing wrong with your credit because you might get turned down. Of course I was very young and this is what I believed it to be. Anyways, it's outta control today. You can apply for a loan to buy the one of biggest possession's in your life (a house) and can have garbage credit.

I would also agree that we need to be more responsible for our own actions. We need to know our limits. It's a lot harder to resist this though because of the interest free financing that some retailers offer (i.e., furniture stores, Home Depot and Lowes). This is also a trend that has come so easy, and again, it has brought out the sharks.

I believe that something has to be done to regulate how loans and credit work, but until this country goes back to using gold and silver, we may never get it under control.

SuiJuris: My Own Master of My Own Right

[allavdj]

allavdj, I completely disagree with you. Simply because you were irresponsible with your money doesn't mean that others are, or were, even if they did file bankruptcy. Since you are all about personal responsibility, that really is your problem, not anyone else's.

By the same token, I do agree that there *are* people who do live beyond their means and do purchase things they have no business buying - especially when they are thinking soley of personal gratification. However, I don't believe the "system" should constrict everyone just because some people were unable to constrain themselves.

But really...if you can't afford to pay for something with cash...can you really afford it? If you want a pair of shoes and can't write the $50.00 out of your checkbook, what business do you have buying new shoes?

It has nothing to do with "constricting" everybody, in reality, if you can't pay for it when you buy it, you shouldn't be buying it.

(I do make the exceptions for major SECURED purchases such as cars and houses and for those massive medical bills that can pop up in a heartbeat and run a person straight into the ground.)

[chpxiii]

I agree that if you don't have $50 to buy a pair of shoes that you shouldn't buy them. I agree there needs to be some regulations regarding lenders and business practices.

However.

I don't agree that there needs to be constraints and restrictions like you were talking about.

I also didn't appreciate your assumption that just because YOU screwed up and you were not responsible with YOUR credit and finances, that you feel there should be no bankruptcy, all debt should be repaid, the restrictions you feel that there needs to be on extending credit. Again, you're all about taking responsibility for your own actions, this is all on you, not anyone else. Taking personal responsibility is something I do agree with.

Until there are some restrictions as to the way lenders do business (i.e. "universal default" would be illegal) then there needs to be bankruptcy laws and forgiveness of debt.

[BassBoy]

Until there are some restrictions as to the way lenders do business (i.e. "universal default" would be illegal) then there needs to be bankruptcy laws and forgiveness of debt.

I agree.

Good conversation folks.

[kl030505]

The people who are to blame for the current crisis are greedy mortgage brokers who pushed ridiculous loans for better commissions and the investors who made a bunch of money off of selling the loans regardless of terms and circumstances and continued to create an investment demand for such loans.

Something tells me those people are more than likely not Democrats.

[HHM]

Something tells me those people are more than likely not Democrats.

I love the assumption here that somehow Democrats cannot be business people, some of the wealthiest people in our country our democrats.

[kl030505]

I love the assumption here that somehow Democrats cannot be business people, some of the wealthiest people in our country our democrats.

I understand that. But statistically speaking it is far more likely that those who are heavily involved in the investing and trading of mortgage loans (or really, the people who work in the investment field as brokers) are far more likely to be Republicans. Not all. Certainly not. There are plenty of poor Republicans and plenty of rich democrats, but there are general trends that exist.

Regardless my point, though I can see now that I did not properly phrase it, was rather that it doesn't matter what one's political affiliation is, it's the ACTIONS of the brokers and investors that created a the demand for those loans as well as pushed people into them that bear a significant portion of the responsibility. Certainly, it is unfortunate that more homebuyers were not savvy. They made poor decisions and chose to either ignore or not fully understand loans they signed. They do not however shoulder 100% of the blame. Predatory lending is very real and a significant part of the problem.

[HHM]

I understand that. But statistically speaking it is far more likely that those who are heavily involved in the investing and trading of mortgage loans

Hmm, interesting...I'd love to see what statistics you are referring too??

[allavdj]

I agree that if you don't have $50 to buy a pair of shoes that you shouldn't buy them. I agree there needs to be some regulations regarding lenders and business practices.

However.

I don't agree that there needs to be constraints and restrictions like you were talking about.

I also didn't appreciate your assumption that just because YOU screwed up and you were not responsible with YOUR credit and finances, that you feel there should be no bankruptcy, all debt should be repaid, the restrictions you feel that there needs to be on extending credit. Again, you're all about taking responsibility for your own actions, this is all on you, not anyone else. Taking personal responsibility is something I do agree with.

Until there are some restrictions as to the way lenders do business (i.e. "universal default" would be illegal) then there needs to be bankruptcy laws and forgiveness of debt.

I suppose we will have to respectfully disagree?

[kl030505]

HHM, I'll see if I have access to GSS data (General Social Survey) data that correlates things like income, occupation and political status. It's possible things have changed since I last looked at it (it's been a while since graduate school), but it was a pretty long standing trend. If I don't, I'll my friend who is still in that field and have her send me links. Might take a day or two.

[allavdj]

Hmm, interesting...I'd love to see what statistics you are referring too??

Sorry for two separate posts, but here's a link that might answer some questions.

http://people-press.org/reports/display.php3?ReportID=124/

[Granny]

As someone who's life has been turned upside down from the use and misuse of credit I would be more than happy to see the following happen:

-No more unsecured credit cards....at all
People (myself included) need to learn to live within their means, if you can't pay cash for it, you are either don't REALLY need it, or you are spending your money where you shouldn't be.

-No secured credit on purchases less than...say...$10,000 with the exception of emergency medical situations.
If you can't save up the money and pay cash, you don't need it that bad.

-No more goofy car and house financing. Cars purchase should require 10% down, payoff in no less than 3 years. Homes could be financed for up to 30 years, no more, no second mortgages, no home equity loans
If you need 7 years to pay off a car, you are buying WAY to much car, the same can be said about houses.

-No more chap 7 bankruptcy and all 13's would be 100% payback. While in chap 13 you can NOT be extended credit of any kind.
I like to think of this as personal responsibility.



I know a lot of people are going to pull out the, well I can't afford this or my car broke down or whatever. Stop eating out, drop the cable bill and the cell phones, get rid of the $500 a month car and buy a $2000 car to get your around, sell your home and move into one you can AFFORD.

I screwed up my credit and my life big time with some really stupid decisions and some bad circumstances, but you know what...I got myself here...nobody was holding a gun to my head.

I think if the "system" didn't allow people (myself included) to spend waaaaay outside their means, a lot of corrections in the market would take place (home prices, gas prices, car prices, wages, etc)

I never spent WAAAAAY outside my means. I was doing just fine thank you, until my youngest daughter dropped two babies in my lap, one of them with fetal alcohol exposure which affected her sleep and mine. My husband and I made choices that were in the best interest of our family. Unfortunately, it adversely affected our ability to meet all of our payments and we almost lost our home. I was current on all my payments except my house when I filed. I could tell you the whole long story but what's the point? Once you fall behind, it's hard to catch up. Suffice it to say, it wasn't our irresponsibility that got us here, it was doing what was right.

I resent your implying that I can't handle my finances. You need to understand that not everyone mishandles their finances. Life happens. Some have gotten ill and couldn't work. Others have lost spouses unexpectedly. You don't know all the stories and they are all different. Don't be passing judgment on everyone else just because you made some bad choices.

And there are very good reasons to have an unsecured credit. There are times when it is a wise decision to have unsecured credit. More than once I made a purchase that was interest free for 12 months. You can bet your sweet bippy that purchase was paid in full within the 12 month period.

What this country needs is better education for the consumers, starting in high school if not sooner. My middle daughter just finished a 40 page paper titled "The Credit Crisis in America". This was an interdisciplinary paper with 3 pages of citations. One of the conclusions was to start with educating the consumer, not only on the dangers of predatory lenders but also on the danger of depending on 2 incomes to make ends meet. Another conclusion was to put an end to the predatory lending practices.

I don't do politics so I am bowing out of this conversation, but in the future, be careful about generalizing until you know all the facts. Your situation is not the same as mine.