American Dream Rant.....

[SkyPup]

And let us not forget all the millions of these bimbos that refinanced their mortgages to pay off their credit card debit - two bad financial decisions do not make one right!

 

[turnkey4099]

It is the fault of the people who default on loans of any kind. Yes, there are exceptions due to disasters of some kind but they are the exception. The credit is out there but noone is holding a gun to their heads.

Just hand around a car dealers showroom and see them turning deals for 6 and 7 year loans to pay for a car. That is idiocy! If you can't afford cash or at leat a downpayment to bring it down to 3 years with reasonalbe payments, you don't belong in that car. I worked in a Sheriff's office and watched kids coming out of college, get a deputy job and show up two days later with a spanking new SUV. They may have a degree but they sure don't have any financial smarts.

As for houses? Seems it is a case of conspicuous consumption and 'keeping up with the Joneses'. Noone needs a 3000-4000 sq foot house. Even back in the 'big family' days with 8-12 kids per the houses weren't that big even in the 'rich' section of town.

Harry K

 

[KubotaSteve]

I have to put the blame on the people borrowing the money. Just because the bank says you can afford $xxxxx doesn't mean you borrow $xxxx. When we built our house I figured things up to what I could afford. The bank was willing to give me considerably more which I could have afforded if I got rid of phone, cable, cell phone, set thermostat on 50 dgrees, never go out to eat, have only one car, etc. I knew that my lifestyle wouldn't adjust so I made sure my payment was affordable to me. I think the old saying "Don't bite off more than you can chew!" fits this perfect.

 

[MossRoad]

But for how long will this trend last? The housing market is on a downhill slide and gaining speed fast. Here is a good read on the problem Safe Haven | US Housing Meltdown

I do think banks should take their share of the blame. After all, they're the ones that approves the applications. Then there's the greedy credit card companies. They almost shove credit cards down a person's throat. Then they whine, moan and groan when they have too much bad debt out. Let's not forget all the car manufacturers. No money down, cash rebates, 7 years to pay, no payments for 3 months...

If anything, housing will be more affordable with this trend. There is, believe it or not, a 40% housing vacancy rate in South Bend, Indiana. That means that if you drive up and down all the streets in this town, on average, four out of every ten houses that you pass are empty. There should be no problem finding a house to live in at an affordable price. The problems is, no one wants to start with a small, old house in the city. They want country or suburban living, a new car, big screen T.V. with surround sound, etc... all that material stuff that BobS already mentioned and they want it now. They don't know the meaning of earning something.

 

[mjarrels]

Glad I didn't have a job when I built this house... could'nt borrow much money.

mark

 

[BillyP]

I have to put the blame on the people borrowing the money. Just because the bank says you can afford $xxxxx doesn't mean you borrow $xxxx. When we built our house I figured things up to what I could afford. The bank was willing to give me considerably more which I could have afforded if I got rid of phone, cable, cell phone, set thermostat on 50 dgrees, never go out to eat, have only one car, etc. I knew that my lifestyle wouldn't adjust so I made sure my payment was affordable to me. I think the old saying "Don't bite off more than you can chew!" fits this perfect.

You're right in some aspects but when the bank sets there and tells a person he/she can afford it, that's a different story. There's a whole bunch of buyers out there that don't understand interest rates and how for instance an ARM loan works. That's when the bank should step in and explain things so that person can make a more educated decision.

Here's another good read. Foreclosure rates way up this year - Jan. 17, 2007

The part I especially agree with is Another contributor is that some lenders tried to maintain business in a slower market. To do that, some relaxed their underwriting standards, approving more marginal borrowers for loans.

I'm not in any way saying defaulting on a loan is OK. I'm just saying it wouldn't be such a problem if the lenders would do their job.

 

[ultrarunner]

In 1984, I paid $11,500 cash for a 720 square foot home in Oakland CA. This was the ONLY home I could afford since I lacked steady employment as a student.

I invited my Grandparents to take a look after Escrow closed. My Grandfather told my Grandmother he did not have the heart to tell me I would be money ahead if I would simply walk away and chalk it up as a mistake.

In the 70's Oakland had lots of abandoned homes that could be bought for one dollar with the agreement the new owner would repair and live in the home for 5 years. Unfortunately for me, the $1 homes had all been sold when I bought.

Today, that little home is worth $250k.


My view on lenders is contrary to many. I don't see "Stated Income" loans as a bad thing... for many, myself included, due to working a number of jobs after college and not having a minimum of 2 years with any one employer... a stated income/low doc lender made if possible for me to buy my second home.

Real Estate is cyclical and always has been. With greater risk comes greater reward and the possibility for loss. Traditional lending is based on a person working the same job/industry for a number of years and we know this is not today's reality.

 

[BobRip]

I agree there is some responsibility all around. However, the buck stops with the individual as he is the one who has to live with his own failure, unless the government bails him out and people start betting on that. I would love to see some better financial education in high school. I don't know what they are teaching in that reguard, but judging from the results it's not enough. I have heard of some churches teaching this and it might be a good opportunity for some of us to volunteer and educate young people about finances.

Remember there are thousands of people working for companies trying to find ways to help you spend your money. Most of our kids are not armed to defend themselves against these people and their well thought out techniques.