09-20-2008, 06:43 PM
Incredibly, Joe, some of those higher priced mortgages WERE sold to lower- and middle-income borrowers. There was an article in the Baltimore Sun about a woman who was being evicted out of her $500-and-something-thousand house after foreclosure. She ran a home day care business. I mean, for crying out loud. After the invention of mortgage-backed securities, the banks and brokers had no interest in offering loans that were sensible--they were offering loans that were huge because their fees were a percentage of the loan.
And yes, any woman who would sign a loan for $500K-plus based on an income of $50K is seriously stupid. She should have known better. But the mortgage brokers DID know better, and I hold them more responsible. What they did borders on fraud.
EVERY first-time homebuyer should have to take a class on mortgages, budgeting, and affordability. They're available in just about every town (made possible by donations from banks trying to meet their CRA requirements!)
Edit: I did not see Seacrest's post till after I posted the above and Seacrest is absolutely correct. There is plenty of blame to go around.
Here's my prediction: the next "financial innovation" to blow up in the faces of regular Joes is the reverse mortgage. They are effective for the borrower in very very very rare circumstances, but the industry is trying to sell them widely. Shame on Robert Wagner for being the shill.
And yes, any woman who would sign a loan for $500K-plus based on an income of $50K is seriously stupid. She should have known better. But the mortgage brokers DID know better, and I hold them more responsible. What they did borders on fraud.
EVERY first-time homebuyer should have to take a class on mortgages, budgeting, and affordability. They're available in just about every town (made possible by donations from banks trying to meet their CRA requirements!)
Edit: I did not see Seacrest's post till after I posted the above and Seacrest is absolutely correct. There is plenty of blame to go around.
Here's my prediction: the next "financial innovation" to blow up in the faces of regular Joes is the reverse mortgage. They are effective for the borrower in very very very rare circumstances, but the industry is trying to sell them widely. Shame on Robert Wagner for being the shill.