Comments on: Consumers, Lenders, and New Year’s Resolutions

By: Dorothy

Dorothy — Fri, 02 Jan 2009 22:38:07 +0000

Yes, lending practices need to make more sense, with more accountability on both sides. And yes, there were lenders who were willing – even anxious – to sell loans people could not afford. I still think that all of us need to stop excusing the “innocent” consumers, though. Every individual is responsible for the loan papers he or she signs. You can’t blame it all on the lender. “I didn’t understand” doesn’t cut it…

By: Lou

Lou — Fri, 02 Jan 2009 11:53:43 +0000

IF you feel sorry for the rich people scammed by Madoff, you might be able to see the people in my last category as similarly conned. For myself, I’m sorrier for poor people who wind up homeless than for rich people who suffer lesser consequences.

By: Lou

Lou — Fri, 02 Jan 2009 11:50:12 +0000

I agree that there were buyers who knowingly mis-stated their financial status, But they fall into 2 or 3 groups – the ones who were scamming the system (esp those trying to earn a quick buck by flipping) and the ones who were scammed, either because lenders didn’t require documentation (buyers dumb but truly innocent) or because someone on the seller side said “Let me help you here, If we say you are making such-and-such salary we can get you into this house” (buyers dumb and colluding, not truly innocent, but willing to be conned.).

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Fri, 02 Jan 2009 04:02:08 +0000

Lou: I agree that particularly in the case of your niece, the lenders and realtors who facilitate these bait and switch scams should pay for their actions. Also, I wish there was a way for borrowers to do a better job reading and understanding what they are signing. I do not feel sorry for the “liar’s loans” crowd.

GettingUp: It seems that the government is not just willing to let the damage and pain play out in the market and will try to re-engineer the system in a way that may prolong the agony.

By: GettingUp

GettingUp — Fri, 02 Jan 2009 01:32:01 +0000

A very good post pointing out the folly, or fraud, of the easy credit crowd! It may be a rough correction, but everything will be a whole lot better when it is done…

That is, if the government can stay out of it, and let the free market handle everything.

By: Lou

Lou — Fri, 02 Jan 2009 00:17:21 +0000

While i agree with your basic philosophy, I think youmay be being too easy on lenders & too tough on borrowers. The realtors and banks are far more familiar withj the paperwork that accompanies a mortgage and the average consumer just signs & signs and signs at the closing/settlement.

My niece is in her mid 20’s; her mother has been a realtor. When my niece got a mortgage last year, she applied for a fixed rate loan. After the dust had settled and all those papers were signed, it turned out she had a ARM, something she had been adamant about NOT wanting. So a relatively savvy consumer can be the victim of such a “bait and switch,” and such a practice can be implemented by the bank and realtor, without that consumer noticing.

Lots of first-time home buyers were deliberately misled.