Palin's comments/no comments

[Flamingo]

In a perfect world, one would take all documentation prior to signing to one's own attorney; what occurs in most cases is that the purchasers are offerred free closing costs or other incentives to utilize the lenders own closing people/attorney, etc. for the loan. Most of the people who signed up for predatory lending could not afford the extra fees for their own attorney so of course they went with whoever the lender suggested or said they would provide (so you could get those free closing costs and/or other incentives offered). Most of these people had no idea what they were getting into. Many people got rich off of their debt. It's a shame but there are many Americans who are too trusting, not enough financial education to see when they could be "had" as to a loan or mortgage or just plain think all will be fine if they sign those papers without reading. They believed the broker was on "their side" and was helping them tremendously (yes, in lining his/her pockets).

[Flamingo]

I think you may have meant "political BS". That generally covers what they all are about.

Remember Biden is in bed with big banks in Wilmington since he lives there and so he proudly signed bk reform a few years back along with McCain. He actually tried to defend it by saying something about only 10% of filers were forced into a chapter 13. He said it was complicated and ducked the issue too.

One of the main purposes of the new BK law was to force more people to pay for their debts that were able to pay and also to stop the continually increasing fraud that was occuring in filings (abusive filings). Of course all that would benefit the creditors but also did not benefit those who did not abuse the system and would not even consider trying to commit fraud. Bankruptcy is still there as a safety net for those that need it; there are many that have and still continue to try to abuse it. There are two sides to every coin - consider being a lender and people owe you money and don't pay and you get all kinds of excuses; six months later you drive by their house and notice all sorts of upgrades done to their house or new cars in the driveway...I think I would be a little more than hot under the collar

[fltoo]

I did a lot of settlement work back in the late 70s and early 80s before moving to some different areas in my career (paralegal) and while I thoroughly enjoyed doing settlements and all the work involved in preparing one (property seaches, document prep., etc.), mortgages starting changing with balloon options being provided as mortgage lenders/banks were trying to get more folks into houses. I remember my boss (great attorney) at that time telling me that at all costs, present and future, never take out one of those types of mortgages in any way, shape or form. We have never had a balloon or ARM. After seeing the problems these mortgages have caused so many people to the benefit of broker's pockets, my boss, so long ago, knew the problems that could arise out of the situation right at the beginning of it all. If you can't afford the payment, you can't afford the item. Simple as that.

Your boss didn't understand mortgage products. The balloon is simply the name for the end period of the ARM, not a mortgage. For instance a 3 yr. arm with a balloon payment due at the end of 3 years. Most balloons were not paid, rather refinanced.

If you never planned on moving out of a house in 3 yrs., as in the case of a transferee, you would never have a reason to even consider an ARM.

Also back in the 80's buyers were qualified on the THIRD year rate, not the ARM first year rate, so there was no problem til lenders got fancy.

[fltoo]

You are 100% right on. Some states use attorneys to close, some use title agencies.

A really good mortgage broker who understood financing would show up at settlement and explain the loan in full to the buyer. Of course, the loan was explained to them before, but this explanation in front of everyone at settlement would prevent the buyer from coming back later and saying, I didn't understand my loan. Lawyers and title agents do not understand the product as well as the person in the loan business. It is unfair to blame them because it is not their area of expertise.

That was a time when mortgages were manually underwritten and a good loan officer had to know his stuff. Now, they hire people to sit at a commuter, plug in numbers and give an on the spot approval. These people have no clue what they are doing and they surely don't show up at settlement anymore!

[fltoo]

In a perfect world, one would take all documentation prior to signing to one's own attorney; what occurs in most cases is that the purchasers are offerred free closing costs or other incentives to utilize the lenders own closing people/attorney, etc. for the loan. Most of the people who signed up for predatory lending could not afford the extra fees for their own attorney so of course they went with whoever the lender suggested or said they would provide (so you could get those free closing costs and/or other incentives offered). Most of these people had no idea what they were getting into. Many people got rich off of their debt. It's a shame but there are many Americans who are too trusting, not enough financial education to see when they could be "had" as to a loan or mortgage or just plain think all will be fine if they sign those papers without reading. They believed the broker was on "their side" and was helping them tremendously (yes, in lining his/her pockets).

Disgusting, isn't it? I wanted to address this also before but didn't have time.

Builders decided that to pad their pockets they would open up their "own" mortgage companies and title companies. Lawyers decided to pad their pockets with opening up their "own" title insurance companies.
"Hey, why don't I make more money on this transaction instead of giving the business to someone else" became the almighty mantra.

But, there was a "little" problem with doing this called KICKBACK which is illegal.

Getting the buyer to use these companies was easy, just offer them incentives and closing cost money. How nice of the builders and lawyers.

So, of course, through lobbying, someone came up with the bright idea that if we DISCLOSE that we are making money on the buyer's mortgage, closing and title insurance, it is not a kickback. Brilliant. So, law passed that as long as you "disclose" in writing and have the buyer sign the disclosure, you are not taking a kickback.

Ok, now the unsuspecting buyer comes along and they are offered a 4,000 dollar upgraded kitchen if they use the builder ancillary companies.

Says the builder, "By the way, would you mind just signing this teeny, tiny disclosure stating that I told you I own these companies."

So, the buyer signs, he gets his upgraded kitchen, gets a mortgage and title work that he could have gotten cheaper somewhere else. The builder? Well, he gets thousands of dollars more than he ever did giving away a lousy
"4000." kitchen that he gets for 500. cost.

Don't even get me started on lawyers. I would disobey the forum rules and start using obscene language, lol.

[Flamingo]

Your boss didn't understand mortgage products. The balloon is simply the name for the end period of the ARM, not a mortgage. For instance a 3 yr. arm with a balloon payment due at the end of 3 years. Most balloons were not paid, rather refinanced.

If you never planned on moving out of a house in 3 yrs., as in the case of a transferee, you would never have a reason to even consider an ARM.

Also back in the 80's buyers were qualified on the THIRD year rate, not the ARM first year rate, so there was no problem til lenders got fancy.

Has nothing to do with my former boss...It's just that I didn't go into lots of detail as to that specific time when those types of mortgages started to appear cause I didn't think I needed to as I was just making a point as to when things started to change in the mortgage market and how it has all come down to all sorts of fancy stuff like "pick a payment". Back then they called them "Balloon Mortgages" not "ARMS." I was just referring to things in layman's terms from that time period. Banks pushed them even then but times were different and bankruptcies and foreclosures only happened to people who gambled or had problems. As time went on things got more "fancy" as you state and I just learned from my first boss and his advice and the entire situation to avoid anything "fancy." When we refinanced to buy out of our Chapter 13 in early 2006 right in the middle of the major predatory lending time, our broker steered us from anything with an ARM and got us a 30 year 6.5% fixed. He would not let us even consider the other offers but did show them to us and I can well understand how someone could easily be talked into it. Now we will all go back to the early times prior to the "fancy" stuff as I believe predatory lending is over for quite a while if probably forever.

[fltoo]

You misunderstood, sorry. I meant the brokers got "fancy" doing ridiculous things to make people qualify. The products were not fancy, they were just geared to what the buyer needed then.

No one mortgage product is right for every person. You have to look at the client's objective. But, like I said, no one does that anymore. They just plug in the numbers.

A lender should sit down with a buyer and find out what their objective is in purchasing. Hopefully with the crisis, we will get back to personal service and manual underwriting.

And, those who choose an arm should never be qualified on anything but the final rate.

Honestly, in the 70s and early 80s, if you planned on staying in your house longer than 3-5 years, no decent lender would recommend you take an ARM with a balloon payment. The cash out refinancing craze and home equity loans were not rampant back then.

These are "new" products invented by the greedy lenders. Some states actually had the foresight to outlaw HE loans. But, of course they caved in later.

[WhatMoney]

For those of you who may have missed parts of the VP debate last Thursday, here's a sampling for you. Tena Fey for VP!!

http://www.nbc.com/Saturday_Night_Li...n-biden/727421

[fltoo]

The moderator was hysterical.

I didn't get to see the whole thing. Did they ever address Joe Biden's "spock" eyebrows due to too much botox?

[WhatMoney]

The moderator was hysterical

That was Queen Latifah (the Queen of Rap) and veteran of 29 movies since 1991 plus a half dozen albums, playing Gwen Ifill. She was a guest star on SNL. A great performance by her and Fey, given the 48 hours they had to prepare such a timely skit.

[JollyGG]

I think you may have meant "political BS". That generally covers what they all are about.

Remember Biden is in bed with big banks in Wilmington since he lives there and so he proudly signed bk reform a few years back along with McCain. He actually tried to defend it by saying something about only 10% of filers were forced into a chapter 13. He said it was complicated and ducked the issue too.

To a certain degree you are right that being from Delaware puts him in a very precarious position. The same is true of my state, SD. If they vote for more consumer protection and restrictions on credit cards they may be voting their conscious or they may be voting for the good of the American people. But since these companies are predominantly in these two states more restrictions results in fewer jobs in their home state. And that means constituents who can't find work. So they have quite a tight rope act to perform and they really end up in a no win situation.

I understand the dilemma because my husband works for a credit card company. We talk frequently about how pending legislation to limit fees on cards would effect his job. While we think that unfair and excessive fees are wrong, we also like being able to pay our bills with his job. So we worry about what will happen if it passes and we worry about what will happen if it doesn't pass.

[JollyGG]

One of the main purposes of the new BK law was to force more people to pay for their debts that were able to pay and also to stop the continually increasing fraud that was occuring in filings (abusive filings). Of course all that would benefit the creditors but also did not benefit those who did not abuse the system and would not even consider trying to commit fraud. Bankruptcy is still there as a safety net for those that need it; there are many that have and still continue to try to abuse it. There are two sides to every coin - consider being a lender and people owe you money and don't pay and you get all kinds of excuses; six months later you drive by their house and notice all sorts of upgrades done to their house or new cars in the driveway...I think I would be a little more than hot under the collar

I kinda agree. I don't see anything wrong with making people prove that they actually need bankruptcy and can't pay anything back. I think it still needs some work. But I don't disagree with the primary premise which was to prevent abuse and fraud. I just think that we couldn't see the future. Now that we are two years into I would like to see some fixes to the things that don't work in the new bill (such as better defining how student loans should be handled in a chapter 13).