I'm not suggesting that the lenders are without culpability in this situation but don't people who accept loans that they can't repay have any responsibility at all in this?

You don't have to buy a house just because someone is willing to give you a loan.

And why is the homebuyer the loser, rather than the shyster that sold them a loan they could not possibly have understood?

First of all the shyster should lose as well, but the homeowner should be the loser because they bought a loan for the most important purchase of their life from a shyster that they did not understand.

How about this? Don't buy a loan you don't understand! If you accept the terms of a loan that you kno...

I'm not suggesting that the lenders are without culpability in this situation but don't people who accept loans that they can't repay have any responsibility at all in this?

You don't have to buy a house just because someone is willing to give you a loan.

And why is the homebuyer the loser, rather than the shyster that sold them a loan they could not possibly have understood?

First of all the shyster should lose as well, but the homeowner should be the loser because they bought a loan for the most important purchase of their life from a shyster that they did not understand.

How about this? Don't buy a loan you don't understand! If you accept the terms of a loan that you know nothing about, then complain about the results all you want, but don't ask me to bail you out.

If people followed that advice then real estate sales would plummet. And surviving real estate sellers would be scrambling to have the easiest to understand (and make the sale) terms.

I know that many people were hoodwinked and it is a very sad state of affairs for many victims. But I don't understand how you put no responsibility of those who either did not understand their loans or did not have proper income or security to pay their obligations. Those who were prudent or lucky enough to avoid taking out a bad loan now are stuck with the bill.

Folks might like this article:

Sheriff: will stop enforcing evictions

it was printed online today, at: http://www.chicagotribune.com/news/local/chi-sheriff-foreclosureoct09,0,6213711.story

(Two folks clipped it)

As far as the actual loans, the FBI is already investigating over 50 cases of fraud.

One of the common frauds is simple: You pay off the bank assessor and price the home at 30% or more of what it is actually worth...and the borrowers accept this bank assessment (Note: always hired yourself another assessor...but first time buyers might easily not think of this or think it's worth the cost; but it is.)

Thus, now, people have mortgages for $200,000.00 or something on houses that...

Folks might like this article:

Sheriff: will stop enforcing evictions

it was printed online today, at: http://www.chicagotribune.com/news/local/chi-sheriff-foreclosureoct09,0,6213711.story

(Two folks clipped it)

As far as the actual loans, the FBI is already investigating over 50 cases of fraud.

One of the common frauds is simple: You pay off the bank assessor and price the home at 30% or more of what it is actually worth...and the borrowers accept this bank assessment (Note: always hired yourself another assessor...but first time buyers might easily not think of this or think it's worth the cost; but it is.)

Thus, now, people have mortgages for $200,000.00 or something on houses that are now valued as being worth: $150,000.00

There are Bankruptcy Courts set up that are suppose to deal with this but the law is unfairly written that you can't write down principle on your First Home.

But you can write down principle on all your other homes.

This obviously favors those who have more than one home and against those more normal folks (like Barack Obama, you and me) who have just one home we live in.

I have total sympathy with people who are exploited victims of credit mis-selling (a phenomenon not related to the mortgage crisis, but an affront on the most vulnerable. Not only are people understandably optimistic in assessment of risks, any degree of financial illiteracy is a reflection on the education system. The selling of money has been the mainstay of western economies for decades). I would have thought that were the global economic crisis merely a result of individual mortgage debts the several trillion dollars being poured in would best be used to refinance householders. This economic system was always going to collapse, and people have been forecasting it for many years: its rela...

I have total sympathy with people who are exploited victims of credit mis-selling (a phenomenon not related to the mortgage crisis, but an affront on the most vulnerable. Not only are people understandably optimistic in assessment of risks, any degree of financial illiteracy is a reflection on the education system. The selling of money has been the mainstay of western economies for decades). I would have thought that were the global economic crisis merely a result of individual mortgage debts the several trillion dollars being poured in would best be used to refinance householders. This economic system was always going to collapse, and people have been forecasting it for many years: its relation to genuine economy (i.e a function of labour and production) was massively dwarfed by what can only be described as theft, albeit disguised in legality, and governments everywhere allowed it to happen.

cp makes an important point: few people have the ability to understand all their loans imply. Because even if you understand what's on the paper - and many, many people cannot - there's more to it than that.

It's crucial to understand that people who've defaulted have not done so because they took on a payment they could not afford. They've defaulted because a once-in-a-lifetime bubble-burst lowered the value of their homes. They had an ARM that had a low initial rate, and they were planning on re-financing at the end of the low-rate term, by which time they would have equity in their home for collateral on which to base a lower priced loan.

But when the value of their house fell, they we...

cp makes an important point: few people have the ability to understand all their loans imply. Because even if you understand what's on the paper - and many, many people cannot - there's more to it than that.

It's crucial to understand that people who've defaulted have not done so because they took on a payment they could not afford. They've defaulted because a once-in-a-lifetime bubble-burst lowered the value of their homes. They had an ARM that had a low initial rate, and they were planning on re-financing at the end of the low-rate term, by which time they would have equity in their home for collateral on which to base a lower priced loan.

But when the value of their house fell, they were unable to get a loan that would pay off their original mortgage - for the bottom had fallen out of their collateral.

So look, you and I struggle to understand how all this happened. Home buyers - who are often complete novices - assumed the plan would work - it always had before. And something unforeseen happened.

There is no way they could have known that was a possibility unless the loan professional across the table told them. But he/she has a conflict of interest, they they make money only if the customer buys.

abailart, excellent comment. If all these massive companies have been unable to accurately assess the risk, surely the little guy at the end of the food chain can't be expected to understand the implications of a worldwide subprime lending crisis relative to over-inflated housing values, and how a once-in-a-lifetime perfect storm would affect his own loan.
The little guys may lose everything. The rich guys that dreamt it up will not have their livelihood threatened, even if their companies tank - because the system is inherently loaded to keep the rich rich no matter what. Markets - influenced far more by corporate players than by defaulters - take down companies and individual borr...

abailart, excellent comment. If all these massive companies have been unable to accurately assess the risk, surely the little guy at the end of the food chain can't be expected to understand the implications of a worldwide subprime lending crisis relative to over-inflated housing values, and how a once-in-a-lifetime perfect storm would affect his own loan.
The little guys may lose everything. The rich guys that dreamt it up will not have their livelihood threatened, even if their companies tank - because the system is inherently loaded to keep the rich rich no matter what. Markets - influenced far more by corporate players than by defaulters - take down companies and individual borrowers. The executives who made bad decisions will still be rich tomorrow. The homeowners, who suffered the effects of the market shifts and unwise actions of executives, (the homeowners being the ones least at fault) are the ones who go bankrupt or live on the street.

And you can hear already a chorus rising from some trickle-down theorists (who defend our bizarre habit of giving money to rich people as the solution to everything) blaming poor people in foreclosure for "causing" the crisis.

When did we allow our banks to become con artists? And our working class to become a victim?

We allow it by demonstrating time and again that we will sign an agreement without reading it or understanding it. I've been guilty of it. We allowed it by electing people who vote for or against bills that they have never read. Our bankers (and others) should not act as con men. But the fact that people will agree to sign almost anything is like a blank check to those who would be con men.

Many of these documents are very difficult to decipher. I don't claim to be able to understand them. So I'll go without what they are offering. The other party after all is trying to sell me so...

When did we allow our banks to become con artists? And our working class to become a victim?

We allow it by demonstrating time and again that we will sign an agreement without reading it or understanding it. I've been guilty of it. We allowed it by electing people who vote for or against bills that they have never read. Our bankers (and others) should not act as con men. But the fact that people will agree to sign almost anything is like a blank check to those who would be con men.

Many of these documents are very difficult to decipher. I don't claim to be able to understand them. So I'll go without what they are offering. The other party after all is trying to sell me something (a home, an insurance policy,a loan etc.) If they want to sell they will make the effort to do so if people start turning down their offers for being too vague and confusing. That's their business. If they refuse to sell on an honest open basis then why buy from them?
. If I found it absolutely necessary to sign such an agreement (especially something as important as a home purchase) I would do some research or get good advice before I sign.

I'm not saying that these who are being foreclosed upon are not the victims of shoddy and deceptive practices. They surely are in most cases. I'm just pointing out that they have some responsibility for the choices they made.
To my knowledge no one signed any agreements under duress.
.
Lots of shady people try to get my money every day. I bear some responsibility to be able to say no thanks for your generous offer but I don't need a new car/house/time share etc. despite the great deal you are offering me.

You're right, we all have the responsibility to understand what we're signing. But do remember that we're talking about an inherently unequal matchup here. On one side of the lender's desk is a pro who knows the business inside and out and will only profit if he closes the deal. On the other side of the desk, very much out of their element, are people who are novices, who risk losing all they have, and who are trusting the other guy to be straight with them. And, of course, things like market changes are not even on that paper, even if they can read it.
One party is in a position of weakness, the other in a position of strength. And the one in the position of strength has a vested inter...

You're right, we all have the responsibility to understand what we're signing. But do remember that we're talking about an inherently unequal matchup here. On one side of the lender's desk is a pro who knows the business inside and out and will only profit if he closes the deal. On the other side of the desk, very much out of their element, are people who are novices, who risk losing all they have, and who are trusting the other guy to be straight with them. And, of course, things like market changes are not even on that paper, even if they can read it.
One party is in a position of weakness, the other in a position of strength. And the one in the position of strength has a vested interest in getting his way.
They can study - and they should - but they're still at a disadvantage.

I want to preface my comment by saying I believe there were many people who bought more than one home and who knew what they were doing. But there is a subset of buyers who bear little resonsiblity in this mess, in my opinion. If someone is not highly educated to begin with, how would you expect them to know when to say "no" to the offer of a lifetime? They walk into a clean office, it looks busy, you trust your bank, you get a slick sales pitch from someone who seems to care about your situation, and you want your children to live in a real home. You want a chance at the American dream. You want out of the crime ridden neighborhood. For years and years, people have watched those who own...

I want to preface my comment by saying I believe there were many people who bought more than one home and who knew what they were doing. But there is a subset of buyers who bear little resonsiblity in this mess, in my opinion. If someone is not highly educated to begin with, how would you expect them to know when to say "no" to the offer of a lifetime? They walk into a clean office, it looks busy, you trust your bank, you get a slick sales pitch from someone who seems to care about your situation, and you want your children to live in a real home. You want a chance at the American dream. You want out of the crime ridden neighborhood. For years and years, people have watched those who own homes create wealth via home appreciation. Okay they bear a little bit of responsiblity for being unsophisticated and maybe naive. If you've never bought "snake oil" of some kind in your entire life, then throw stones.

So you are telling us that you don't have insurance because if you
don't understand the Lawyer speak that is in all insurance policies.
You just wont buy it.

Exactly.
With the exception of a small life insurance policy that was provided by and paid for by my employer I have no insurance.

I'm not claiming to be a typical American in this regard. I have been burnt in the past and bought my share of snake oil. I still (foolishly) buy things without reading the fine print (or agree to accept terms of service I haven't read in full.) But I do that if I'm risking a few bucks, NOT for anything really significant. Sadly anything significant has way too much that is negative to the b...

So you are telling us that you don't have insurance because if you
don't understand the Lawyer speak that is in all insurance policies.
You just wont buy it.

Exactly.
With the exception of a small life insurance policy that was provided by and paid for by my employer I have no insurance.

I'm not claiming to be a typical American in this regard. I have been burnt in the past and bought my share of snake oil. I still (foolishly) buy things without reading the fine print (or agree to accept terms of service I haven't read in full.) But I do that if I'm risking a few bucks, NOT for anything really significant. Sadly anything significant has way too much that is negative to the buyer for my tastes. Or it is incomprehensible.

I believe that the buyer should have the upper hand.The buyer is not the one trying to sell the house,loan,car,appliance,policy etc.
Yet sellers often make the buyers jump through hoops and accept a lot of negative conditions. If buyers refused to accept that crap then things would change fast when sales plummeted.

Home insurance is a great example. You don't have to buy a home. But unless you pay in cash or receive a home as a gift if you do buy a home you must have home insurance. And insurance companies take full advantage of that fact by loading the policy with vague terms that are to their advantage.

tommy I'm curious, you don't have health insurance either? I've never talked to anyone who looks at insurance as a bad idea before and it's an interesting concept. I am wondering if I could truly feel comfortable without health, car, life, or homeowners insurance. I would feel insecure about who might have to take care of me in the event of a personal catasrophe such as a serious health issue or if my home burned down, for example. It would require that I have LOTS of cash in the bank so that either the govt or my family wouldn't have to step in to provide for me in my sickness, poverty, or old age. I sure like the idea of not paying for all the insurances, but I am concerned about the pot...

tommy I'm curious, you don't have health insurance either? I've never talked to anyone who looks at insurance as a bad idea before and it's an interesting concept. I am wondering if I could truly feel comfortable without health, car, life, or homeowners insurance. I would feel insecure about who might have to take care of me in the event of a personal catasrophe such as a serious health issue or if my home burned down, for example. It would require that I have LOTS of cash in the bank so that either the govt or my family wouldn't have to step in to provide for me in my sickness, poverty, or old age. I sure like the idea of not paying for all the insurances, but I am concerned about the potential consquences. I know it's a bit off topic from the original clip, but you've got me curious!