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The Debtors Market
chaoslodge
Member Posts: 790 ✭✭✭✭
Years ago, some of you may remember, Donald Trump got in deep in his borrowing to finance various cassinos and other projects. He got in so deep with the institutions that were lending him money that they were faced with financial ruin if he went under and could not pay them back. It resulted in them having to negotiate on his terms and loan him even more money.
Fast forward.
2 weeks ago I telephoned my mortgage lender, Countrywide. I had jumped on a less than stellar mortgage two years ago and it was about to reset. I informed the loan officer that I was probably going to walk out of the house unless they could come up with an acceptable offer. 1 week ago I get a call from the same fellow I talked to. They are willing to refinance at lower principal and a fixed 5 1/4% for five years. Perfect for me since I am going to be out grad school in a year and a half and should be more than able to find a better note then.
The point is that if you think the fed is going to bail you out I hope you have a lot of patience and are willing to accept whatever terms they hand down. A lot of people, myself included, recognize how precarious the lender's position is and exploit it on our terms.
Fast forward.
2 weeks ago I telephoned my mortgage lender, Countrywide. I had jumped on a less than stellar mortgage two years ago and it was about to reset. I informed the loan officer that I was probably going to walk out of the house unless they could come up with an acceptable offer. 1 week ago I get a call from the same fellow I talked to. They are willing to refinance at lower principal and a fixed 5 1/4% for five years. Perfect for me since I am going to be out grad school in a year and a half and should be more than able to find a better note then.
The point is that if you think the fed is going to bail you out I hope you have a lot of patience and are willing to accept whatever terms they hand down. A lot of people, myself included, recognize how precarious the lender's position is and exploit it on our terms.
Comments
Nice. We need more people like you. Nice morals.
Merc (disgusted by some people's lack of morals and/or ethics)
We are getting ready to tell Countrywide to take their wonderful adjustable rate mortgage, and stick it where the monkey put the peanut. Have already found a great local, hometown bank that will give us a competitive FIXED rate.
how do you buy a house and go to grad school at the same time?
The wife pays for it [;)]
That is NOT negotiating with the lender. That is blackmail. You negotiate BEFORE you sign the paperwork, not after.
Sad that you guys are defending him. This is NOT ethical, at all. And yes, I know that those companies aren't ethical either, but are you going to stoop to their level? Doesn't anyone have any MORALS?????
Merc
Please READ what he said. He said he was "going to walk away" if he didn't get a better deal, after being in the house for a few years already!
That is NOT negotiating with the lender. That is blackmail. You negotiate BEFORE you sign the paperwork, not after.
Sad that you guys are defending him. This is NOT ethical, at all. And yes, I know that those companies aren't ethical either, but are you going to stoop to their level? Doesn't anyone have any MORALS?????
Merc
Cry me a river.
This is not about ethics. It is about money and business. I will get away with whatever I can in the interests of myself and my family.
The guys I am really impressed with are the developers and builders. They walked away from the whole thing with cash. Borrowers and lenders got the fuzzy end of the lollipop.
Cry me a river.
This is not about ethics. It is about money and business.
I will get away with whatever I can in the interests of myself and my family.
Wow ... and to think, car dealers get a bad rap around here!
? otherwise, you'll find an excuse.
quote:Originally posted by chaoslodge
Cry me a river.
This is not about ethics. It is about money and business.
I will get away with whatever I can in the interests of myself and my family.
Wow ... and to think, car dealers get a bad rap around here!
yeah, no kidding.
I heard you don't even have to pay your credit cards off if you don't want to. I mean really what are they gonna do? However I remember that in some countries you can end up in jail, in slavery, or on death row if you get in too much debt.
I find it hard - no, impossible - to have any bad feelings for people that use walking away from their mortgage, or actually do walk away, as a bargain chip with their lenders. Predatory lenders could not care less about you, your family, or your ability to pay your mortgage. If they did, we would not be in this mortgage mess.
It is the mortgage companies' greed and lack of morals and responsibility that got them into the mess they are in. The INVESTED in the borrower. Some investments go bad, that's life.
I know a person that put over $120k of their own money down on a house in the height of the housing bubble who have not only kissed their 120k goodbye, but have also seen the house value cut in half. What do they do now? Keep paying on that money pit or walk away and buy the same house for less than 1/2 price? In the case of one of my friends, he has no debt other than his house ($525k loan) and can barely afford to feed his family of 6. The bank, 100%, should not have given him the loan in the first place. F the bank! (Countrywide BTW)
Why should the borrower bear all that loss? Snap off the key and walk if the lender won't play ball.
It is ok to ask someone for something you want (a loan).
To purchase something you think you need (a new/bigger/different home).
Change your mind later (because it was a bad decision to start with).
And blame the person you asked for help (the bank for predatory lending)
The next step is to sue the bank for the pain and suffering they forced upon you in the process.
Ever buy a used gun for a little more than you wanted because it was really what you were looking for?
Did you change your mind later and tell the seller that you need some of the money back because he sold you the gun at the price you had agreed to before you bought it?
Give that a try sometime.
So let me get this straight.
It is ok to ask someone for something you want (a loan).
To purchase something you think you need (a new/bigger/different home).
Change your mind later (because it was a bad decision to start with).
And blame the person you asked for help (the bank for predatory lending)
The next step is to sue the bank for the pain and suffering they forced upon you in the process.
Ever buy a used gun for a little more than you wanted because it was really what you were looking for?
Did you change your mind later and tell the seller that you need some of the money back because he sold you the gun at the price you had agreed to before you bought it?
Give that a try sometime.
You need to expand your mind and think on a larger scale. This is not the same as some random discretionary spending purchase.
Do you * about the gas prices? That's just capitalism right?
A house is something that you need to live in. The DC metro area is a good example since most people in this area could not afford to buy their house if they did not already have equity in it (including me) from buying before the bubble.
The banks are largely responsible for the drastic increases in housing prices by enabling buyers to buy what they could not afford. If banks used a formula that took into account reasonable debt load for consumers, consumers would not be able to overbuy and be house-poor and houses would not increase beyond what the market could afford.
To say that people should have seen that they couldn't afford the payments and not borrowed the money is unrealistic, immature and lacking in any kind of vision or clarity of the issue.
Do you know why rents are so out of wack with buying in many areas? Because you cannot take a loan to pay your rent. Therefore, rents MUST keep in line with what people can actually afford to pay. Look at the rental rates in any given area, figure out what that translates to in a mortgage loan, and that is about what houses should cost.
I know a person that put over $120k of their own money down on a house in the height of the housing bubble who have not only kissed their 120k goodbye, but have also seen the house value cut in half. What do they do now? Keep paying on that money pit or walk away and buy the same house for less than 1/2 price? In the case of one of my friends, he has no debt other than his house ($525k loan) and can barely afford to feed his family of 6. The bank, 100%, should not have given him the loan in the first place. F the bank! (Countrywide BTW)
Why should the borrower bear all that loss? Snap off the key and walk if the lender won't play ball.
It was the borrowers bad judgement in the first place! Who was the one that caused the bubble? It wasn't the banks ... it was the buyers! Buyers using bad judgement and paying too much for a property.
Predatory lenders??? Did these lenders seek you out and twist your arm to buy a home with their funds?
I doubt it. Buyers seek them out then juggle their funds around so they can qualify ... I see it all the time with people trying to buy $40K-$50K to park in front of their $400K-$500K homes.
Its just stupid ... most people think they have "earned" it even though they can't afford it!
(which begs the question, if they've earned it why can't they afford it?)
Thanks to the psychologists we no longer have any personal responsibility ...
... and thanks to the lawyers for exploiting it.
? otherwise, you'll find an excuse.
Or Ethics, for that matter.
I have to go with the blackmail on this one. If the loan isn't good now, why was it good two years ago? If it was good then, and not now, why didn't you anticipate things could change?
Remind me not to sign any contracts with you.
I agree that the banks and loan companies have written too many risky loans. But the borrowers should know what they are doing and take responsibility for their actions.
I remember when a 10% down payment was required to secure a mortgage. That's what I put down on the three homes I have purchased. Rather than limit interest charges, we need to require a down payment. If buyers can't save up at least 5% of the cost before obtaining the loan, they likely won't make the payments.
Too old to live...too young to die...
Used to be 10 to 20% down required to get a loan.
BTW,.....do some of you realize that lenders had their arms "twisted by the Feds, to come up with creative financing?
When home prices started going up dramatically, it started to cut out the "little guy", so the nanny government told the lenders to find ways to allow said persons a way to be able to "qualify" for the high-priced homes.
This is what happens when you screw with a previously successful formula.
Also,........when did twenty somethings start feeling they were "entitled" to own a home? Used to be most folks were in their 30's or so before being able to afford a home.
That was another huge part of this mess![xx(]
Whats good for the goose is good for the gander! If Donald Chump can get away with it......why not the little guy.
FWIW ... I think its wrong that Trump got away with it too.
? otherwise, you'll find an excuse.
The only different factor this time is the prevalence of these stupid adjustable rate mortages. The last time this happened here in 1990 most people were able to ride it out & we didn't have this massive wave of defaults.
I am living near the epicenter of the problem here in Riverside County, Kalifornia. The bank owned signs are all over the place & the weeded over yards tell you of the other empty homes. Most of them have given up trying to sell their homes as they owe twice what they can sell them for.
I bought in 2000 & could still make a profit but the house across the street & the one to the East are both empty & the one to the West is occupied only because the guy payed cash from the sale of his previous home. He takes the reasonable view that it doesn't matter since he made a big profit on his sale & would have lost the same amount on the other one if he hadn't moved plus now he can get a reduction on his property taxes.
This isn't a crisis because 100 people took a bad deal, but because many people did. The mortgage companies should pay for irrisponsible lending practices.
Sounds like negotiating with the mortgage company was the best thing to do in a bad situation.
Anyone ever hear the saying "pigs get slaughtered?"
It applies to ALL markets.
A contract is exactly that,.......read it before you sign your name, and put your word, and reputation on the line. If you do not have the ability to understand the "legaleze",......spend a few hundred bucks for a real estate attorney.
The part that got me was the threat of, "I will walk away."
Shows a personality trait to me at least.
He won in his game of standoff this time. I just have never lived that way, and do not intend to start it now.
My assumption is bad credit, as you can get very low rates on fixed mortgages now if you have good credit.
Glad it worked out for you.
So much morality so little understanding. Business has nothing to do with morality unless morale actions lead to better business, which they do in many cases. Using morality as the foundation of business practices sounds nice when you talk about it in Sunday school but it is misguided at best. Its kind of like firearms. Thalt shalt not kill is a "moral" position to take but how many of you would blow an attacker away without a tear to be shed for it?
In the meantime, I have solved my situation to my benefit which allows me to keep the job I have in spite of it paying a little less, continue my graduate studies and I have a lower payment. The whole idea when I got the crappy mortgage was to refinance. I just played hardball. Blackmail works only if the people or institution in this case allow themselves to get in a position where they have no choice. Countrywide is a case study in idiots.
I win. The rest be buggered.
[:D]
You lack it.
Too old to live...too young to die...
So are the people who borrowed from them.
Sorry, morality has everything to do with everything.
You lack it.
Absolute statements make me laugh.
http://forums.gunbroker.com/topic.asp?TOPIC_ID=309281
quote:Countrywide is a case study in idiots.
So are the people who borrowed from them.
+1
BTW,......"moral" is different from "morale".
Another insight.
Not making a judgement either way.....I'm just curious if something like this gets put in a credit report.
No, it does not.
Had I walked out, missed a payment, etc,... it would have. That is the risk I take. Not much of a risk really. My credit score has never stopped me whether it was high or low. Lack of creativity and closing my eyes to opportunities has on several occasions though.
BTW,......"moral" is different from "morale".
Another insight.
Thanks
Well, at least you are being entertained.
Too old to live...too young to die...
Years ago, some of you may remember, Donald Trump got in deep in his borrowing to finance various cassinos and other projects. He got in so deep with the institutions that were lending him money that they were faced with financial ruin if he went under and could not pay them back. It resulted in them having to negotiate on his terms and loan him even more money.
Trump has been bankrupted several times( that's what happens when you walk on the edge of leverage and have a gigantic ego), so he knew how to play the game. This led to the so-called "Donald Trump" principle:
If you owe a bank $200,000 you have a big problem.
If you owe a bank $200,000,000 the BANK has a big problem!
A house is something that you need to live in.
I've lived most of my life without owning a house.
I could easily live the rest of my life without owning one.
You don't NEED to own a house.
In most cases if you can afford mortgage payments on a house, you could also afford to live in an apt in the same area.
quote:
The banks are largely responsible for the drastic increases in housing prices by enabling buyers to buy what they could not afford.
Even stipulating that this is true (and its not. . .speculation had a large part to do with rapid inflation and the "bubble" in the hardest hit markets), so what?
Nobody forces anyone to take out a loan they can't afford, and believe it or not, its NOT in the interest of banks to loan money to borrowers who are likely to default on them! The concept of "predatory" lending is itself suspect. . .if you try to squeeze borrowers too much, you're the one that's going to get hurt worst, not the borrower.
True, banks are stupid for lending money to risky borrowers, but borrowers are also stupid for buying overpriced properties they can't afford.
If you don't know what you can afford, you have no business leveraging yourself with a large mortgage.
quote:To say that people should have seen that they couldn't afford the payments and not borrowed the money is unrealistic, immature and lacking in any kind of vision or clarity of the issue.
So let me get this straight.
You're "mature" if you take out a loan you won't be able to pay back, but "immature" if you say that people should think carefully about what they can afford before they take out massive loans?
You're right that there are plenty of irresponsible people who can't save a dime, spend every penny they earn, and are otherwise generally fiscally irresponsible. But its not their fault if they put themselves in hock up to their eyeballs and get called out on it?
quote:
Do you know why rents are so out of wack with buying in many areas? Because you cannot take a loan to pay your rent. Therefore, rents MUST keep in line with what people can actually afford to pay. Look at the rental rates in any given area, figure out what that translates to in a mortgage loan, and that is about what houses should cost.
In what areas are rents "out of whack" with house prices?
Its probably happens under some circumstances (when rental and housing supplies diverge), but personally, I've never seen a market where the price of rent and the price of owning property weren't largely correlated.
They're usually correlated pretty well since the same housing supply and demand issues that control house prices, also control renting availability, and since the ones doing the renting determine their rents in part to cover their loan payments.
But again, even stipulating that this is true, whose fault is it if someone pays three times as much money per month to buy a place as they could to rent it?
The phrase is "caveat emptor".
2. The Mortgagor was at fault for signing up for a bad loan.
3. Morals has EVERYTHING to do with business. My grandfather had a saying "everyone has to make a living". He owned a huge slaughterhouse in CZ. He always made it a point not to screw someone, becuase a. the guy will go out of business and then no more good deals, b. the guy may get wise, and realize that he's been screwed, and not do business with you again, and c. if he did get a good deal, he made sure not to brag about it, becuase then EVERYONE would think that every deal was a screw.
After the war, he had NOTHING; the Germans took everything. Right away the people he had been dealing with before the war IMMEDIATELY extended him credit, and got him up and running again, becuase they knew he was a SQAURE DEAL.
I don't feel bad for the bank - they shouldn't have done this deal with you to begin with, and shouldn't have been offering these shi- loans, which frankly, they offered becuase they figured that the party's gonna last, and if they get the house back, they'll make money. STUPID!!
However, I don't know if I'd be bragging about this one....
quote:Originally posted by rustyh
So let me get this straight.
It is ok to ask someone for something you want (a loan).
To purchase something you think you need (a new/bigger/different home).
Change your mind later (because it was a bad decision to start with).
And blame the person you asked for help (the bank for predatory lending)
The next step is to sue the bank for the pain and suffering they forced upon you in the process.
Ever buy a used gun for a little more than you wanted because it was really what you were looking for?
Did you change your mind later and tell the seller that you need some of the money back because he sold you the gun at the price you had agreed to before you bought it?
Give that a try sometime.
You need to expand your mind and think on a larger scale. This is not the same as some random discretionary spending purchase.
Do you * about the gas prices? That's just capitalism right?
A house is something that you need to live in. The DC metro area is a good example since most people in this area could not afford to buy their house if they did not already have equity in it (including me) from buying before the bubble.
The banks are largely responsible for the drastic increases in housing prices by enabling buyers to buy what they could not afford. If banks used a formula that took into account reasonable debt load for consumers, consumers would not be able to overbuy and be house-poor and houses would not increase beyond what the market could afford.
To say that people should have seen that they couldn't afford the payments and not borrowed the money is unrealistic, immature and lacking in any kind of vision or clarity of the issue.
Do you know why rents are so out of wack with buying in many areas? Because you cannot take a loan to pay your rent. Therefore, rents MUST keep in line with what people can actually afford to pay. Look at the rental rates in any given area, figure out what that translates to in a mortgage loan, and that is about what houses should cost.
The bold quote speaks volumes.
In the New America, it is ALWAYS someone else's fault for the messes we find ourselves in. Thank God we have government to guide and assist us in our mundane daily lives and to save us from ourselves.
Bottom-line....did someone come to an agreement on certain terms and sign papers, e.g. promise/commit to the "deal"?
The concept of a man's word being his bond seems lost in the New America.
Legitimate negotiation of a change in terms is fine, if both parties agree. Walking away from a signed promise/committment is another story entirely.
Go figure.
Well, this thread has told me NOT who to buy a gun from!
Some people are sleazebags, some aren't. End of story.
Merc