I hope we go back to regular 15 or 30 year fixed mortgages.

[AlCzervik]

I'm not gonna lie here, i was raised that way, you didn't even go looking for a house unless you had 20% and with that down payment you didn't need pmi which is an extra not inexpensive cost. I have lived in 3 different homes as an adult and each time we got a 15 year fixed with at least a 20% down payment.

edited--not everyone has 20% but everybody should get a fixed mortgage.

[JANdad]

1. yeah for you...

[AlCzervik]

2. that would help avoid this mess happening again. When a deal sounds to good to be true

it is.

[Ilsa]

3. At current home prices, that will keep alot of people out of the market.

I'd rather see 10% down and a lower percentage of income for the max monthly payment.

[AlCzervik]

5. 10% would good as well with a regular mortgage, maybe the % for pmi can also be changed.

[Yavin4]

22. Good

Then maybe people will do what our parents' generation did. Join labor unions to fight for better wages and vote for politicians that will increase the min. wage to a living wage.

[Ilsa]

26. Yes, we need that. Owning a decent home shouldn't cause a person to

have to pay 50% of their before tax pay in piti.

The post-WWII economic experience was a wonderful and unusual event, but I see no reason why we cannot recreate that economic growth and prosperity for Americans again.

[RoyGBiv]

40. Well, there's part of the point ...

But you're looking at it from the wrong angle.

Part of the reason housing costs are so astronomically high is because of these "creative" methods of financing them.

[RB TexLa]

4. Fixed mortgages are fine if you have a defined pay every month

if you own your business an interest only allow you to pay the same as a fixed with more money actually going toward principle but allows the low billed payment if you come into lean months. Just because some abused them doesn't mean they need to be thrown out.

[Matariki]

29. Perhaps showing past tax returns or the ability to reliably pay mortgage or rent should suffice

I know self employed people who paid their adjustable rate mortgage on time for two years without problems only to have the rate jump 5% on them.

It seems more like the bank being greedy than them being 'risky'. The bank makes them 'risky' by upping their monthly payment by so much and so suddenly.

It's no wonder banks a going under with bullshit like that.

[RB TexLa]

33. If they had a 5% rate jump that meant they had a "teaser" rate and they didn't do what they should

have to repair their credit. ARM's have usually a 2 point increase limit no matter what the LIBOR is.

[Matariki]

36. No, wrong.

It started at 7% and jumped to 12. And there wasn't anything wrong with their credit apart from them being self employed and needing a 'non declaration of income' loan.

I think they believed that 2 years of on time payments would vouch for their credit worthiness. They're able to pay it still, but it's obviously a strain on their budget.

Anyway, my point being that one of the major roots of the current problem is lender's greed.

[RB TexLa]

38. Not lender's greed, they always want to write the loan. The investors who fund the loans were the

ones not balking enough at the packages the lenders were creating. All they had to do was say "I'm not funding that crazy shit," and they could have slowed or stopped it.


PS
Needing a non declaration of income loan is a credit risk loan. Maybe not a teaser rate but they probably didn't have the standard protection against large movement in the LIBOR. I'm sure they understood that is why they were at 7 instead of 5.5 or so. They are still sending out mailers with 7 to 8 % money for investment property.

[tammywammy]

6. I didn't have 20% down

I actually put nothing down. BUT, I got a steal on this house. It was a foreclosure that sat on the market for 6 months and it was below market value when I bought it. (and I did a 30 year fixed)

I can easily afford the payments each month, I bought WELL within my means.

Now, I'm a special case. But in general I agree with you, people SHOULD put 20% down.

[AlCzervik]

9. and you got a boring old mortgage which is the way to for most of us.

and you bought below your means which is also good.

[tammywammy]

20. Yep, my parents taught me well

There was none of that "well with this you could buy a house that's this much." Nope I walked in and said I'm looking for something in this price range and told the bank I wanted a 30-year fixed. :)

[JerseygirlCT]

7. I agree

I'm astounded that anyone took or was offered a mortgage with no money down.

If you cannot save that, then I'm not sure how you think you can weather any setbacks and still pay the mortgage. But it's equally, if not more, irresponsible for banks to offer these loans. And to be honest, the banks really deserve to lose when they make these loans.

But of course, by that time, they've sold them to the slicer/dicer, and no one could even trace the actual collateral back to the original loan anymore.

I think it's probably smart to develop very careful programs to help people who've demonstrated fiscal responsibility to get into a house. Thus things like pmi.

[AlCzervik]

12. mortgage brokers and bankers who offered this shit should be fined up the wazoo

and then make that fund for down payments.

[JerseygirlCT]

24. I agree

That's the most frustration thing about this whole situation.

It seems that the only mistake the small fry made was the size of their mistake.

If you're going to cheat and lose, you've got to make sure you do it on a level that means you take everyone else down with you. Then you get away for free.

The small fry lose their homes. Sure, they were often irresponsible for getting into mortgages they really couldn't carry - but there were definitely some who were victims of a bad system - and one big problem - unforeseen health problems or job loss... put them in a bad place.

[slewfoot]

31. And jailed! N/T

[AlCzervik]

32. after they pay their fine and before the trial that way their money be sucked down

by lawyers.

[Barack_America]

8. No provisions for first-time home buyers?

There's lots of responsible folks with good credit who haven't had the good fortune to save that much money.

[AlCzervik]

10. i think something could be worked out but 0 down interest only loans--

those might help at first but as we can see they don't work out too well long term.

[MissWaverly]

11. am I the only one nervous about this

they are not just going to take over bad mortgages, they are going to insure all mutual funds dollar for dollar, and they can't sit down and discuss the details becuz action is the thing, act now, think later. And they are going to bail out foreign investors who took out bad sub prime loans. When has this administration done anything with proper judgment, w/o fraud, waste, incompetence and just out and out handouts to the greedy.

I am not happy about the rush to the rescue, when did Bush become the Lone Ranger in disguise.

[AlCzervik]

15. the whole thing is scary and there is no guarantee at all that this "bailout" will have

any kind of lasting impact which imo it will not.

Also another big rate reset on those arm's is coming up i think in October.

[MissWaverly]

19. I heard an investor interviewed on CNN today

they have learned nothing through this crisis, the DOW closed today only 5 points down from last week, that is all
they care about. They are as cocky and as greedy as ever. Yes, I think that ARM is resetting at 125% interest, I think there's at least 500 million in value in those.

[AlCzervik]

21. holy shit for real? that's going to hurt.

[MissWaverly]

28. Yes, and the sad thing is IT is greed that is driving this thing

the poor saps were the ones that fell for the "interest only" wheeze, while they paid just the interest, the principle grew, now they will pay 125% on a higher balance than the purchase price. I know that buyers are defaulting but they were conned.

[ellie]

13. I got a mortgage

with no money down. It's a fixed, 30-year loan with a pretty good interest rate. So far, so good. I wouldn't have been able to buy a house if I would have had to have 20% down.

[AlCzervik]

16. fixed is really the key, the 20% avoids PMI which if they allowed the 80/20 to go to

a 90/10 as a standard mortgage then maybe lower the % for pmi.

[Thothmes]

14. Think this is a good idea. Also would require

the original mortgage lender to hold the mortgage for a period of 5 years before they could consider selling to another institution. Being potentially stuck with bad paper would force the original lenders to exercise due diligence in investigating the financial soundness of the individual borrowing the money.

[JerseygirlCT]

27. Yes, I agree with that, too.

That seems to be a big piece of what's missing: responsiblity. Make a bad loan, and you actually have to take the loss.

[Yavin4]

17. Access To Cheap Debt Makes The Workforce Politically Complacent

With 20% down payments and proof of income, the work force will now start demanding better wages and benefits from their employers. They will also be more open to joining a labor union and voting for politicians who are concerned about their rights as laborers.

[many a good man]

18. Except for first-time home buyers

FHA was a god send for me and my family.

[AlCzervik]

23. and classes for first time home buyers, so many people really don't know much about mortgages

and good for you for using the fha, i'm sure you've got a reasonable and doable mortgage.

[JerseygirlCT]

30. I'm sure though that you had to

qualify pretty carefully. And buy pmi?

There ought to be careful programs for responsible buyers. But some people are not ready to be owners and not ready to exercise the fiscal responsibility of a loan that big. (I guess I've seen a few of those and I can only shake my head).

Home ownership is a good goal - it certainly makes a lot of financial sense for a lot of people. But there were also far too many taking advantage of free money without much thought to the consequences.

[many a good man]

39. 3.5% down. Big PMI.

We saved like crazy. Lived below our modest means. Made extra payments. Luckily we got in before prices took off. Got enough equity to refinance for 15 years with no PMI. I'm glad I married a women who knew the value of a dollar. I grew up poor and learned early to despise conspicuous consumption.

The system needs to be able to give a hand up to those in need and who can learn to live responsibly in return for the favor.

Wall Street titans who earn millions for destroying the lives and security of others do not earn my sympathy.

[JerseygirlCT]

41. Mine either

And yours is exactly the sort of case where people ought to be invested in, and offered an opportunity.

The young couple across town though, who felt a 4,000 sq home was absolutely necessary for their first home purchase, and now are whining because they owe more than the house is worth... They're the ones who never should have been offered that much loan, IMO.

I think that personal connection between banker and the people seeking loans is also missing these days. You know, where you apply at the bank you've been using for years, and where they know you and your situation?

[Greyhound]

25. That system cannot support the artificially inflated prices, that's why we got

the so-called sub-prime lending scheme in the first place. People would notice things like the declining standard of living, that nobody makes enough to buy a house anymore in spite of 2 - 3 incomes, and so forth.

[cobalt1999]

34. I agree completely.

We went for generations with that rule in place.

+1 rec for you.

[elfin]

35. WAY BACK - IN 1968 we bought at a fixed 7 1/4

with a 20% down (with stretched collateral) and watched as rates climbed to over 14% - even though it was in the short term cheaper for other arrangements like ARM.

Now debt free on the house and thanks to the advisor who insisted on it, despite other "deals" available to us.

NEVER go for an ARM despite the hype from the Greenspans of this world. If rates decrease, you can refinance. If they increase, you are as safe as your expected income.

[mwooldri]

37. We learned that lesson in the 1990's in the UK.

My dad took out a funky mortgage. The interest rates hit the ceiling: one day they went from 8% to 15% and back down to 12% in the same day - and that's the bank base rate. Thanks to the bad economy plus the funky mortgage, Dad couldn't afford the payments. He gave up the house. Unlike here where if you give up the house that's it, the lenders over there can still come after you. AFAIK he's still paying for that house today.

As such, I will NEVER get anything other than a 30 year fixed mortgage - maybe FHA if I qualify, but 30 year fixed being the main background behind it. And then never never never! refinancing it unless I got in at a silly high interest rate and it then makes sense to go to another... fixed rate mortgage, but still trying to pay it off in 30 years total.

Mark.