Posted by Becca_FL on 8/19/07 8:56am
Msg #206478

CBS Sunday Morning Opinion - Ben Stein on Subprime

http://www.cbsnews.com/stories/2007/03/18/sunday/main2581859.shtml

Scroll down a bit and watch the video link to the right.

Reply by Monica Valle-Cavero on 8/19/07 9:02am
Msg #206479

Re:Glad someone else saw it and able to add it here. n/m

Reply by MICarole on 8/19/07 9:37am
Msg #206481

Re: Re:Glad someone else saw it and able to add it here.

interesting. Especially since I have been extremely busy this month so far.

Reply by BrendaTx on 8/19/07 9:46am
Msg #206484

Responsibility put back on the borrowers...

Comments blogged onto the Stein article (not his words, not mine either but interesting to us):



Every day, I hear stories of how the lender's "bamboozled" these poor borrowers into signing Adjustable Rate Mortgages, and the borrowers didn't realize what they where signing.

I've read articles about how Congress is going to get involved with the implosion of the subprime market, and make the lenders give these poor borrowers a break on their interest rates. In fact, a famous woman that is running for President (name withheld) has proposed that these poor borrowers that didn't know what they were signing should have some type of "rollback" of interest!

Reality!
1) ARM disclosures are given to the borrowers about 5 times in closing. In fact on the note;

ADJUSTABLE RATE MORTGAGE NOTE

is the largest printing on the note, and on Page 1!

2 Give Me A Break The borrowers have explained in writing and verbally how the note works, and all the parameters of the note, including adjustment terms, prepayment penalties, negative amortization and whether escrows are included in the payment or the borrower's pay the escrows on their own!

3) Congress can get involved all they want to, but the reality is that the borrowers know full well what they are signing, and these same borrowers that should qualify and purchase a $160,000 home opted for an adjustable rate, or interest only so they could buy the $220,000 home, and "hoped" they could afford it when the adjustments hit.

Reply by sue_pa on 8/20/07 9:25am
Msg #206559

Re: Responsibility put back on the borrowers...

Were you with me Friday night Brenda? The paperwork VERY clearly showed 3.??% interest, until October 1. It then VERY clearly showed 8.??% with yeary adjustments. Borrowers had been assured the 3.??% was locked in for 5 years. I sure didn't see that anywhere in writing and neither did they. I NEVER, EVER attempt to figure out any of these funky type loans for the borrowers - even if I read and reread the paragraphs, it's not my job to interpret or figure anything out other than the very basic 30 year fixed or perhaps 2/28, etc. She called LO who assured her it was for 5 years but she didn't have the paperwork in front of her so she couldn't tell her where or how it was worded. LO did tell her that a lot of my paperwork probably wasn't correct but everything was 'okay'. Borrowers signed anyway because, "She said it's okay. If it adjusts before 5 years, I'm going to go after her". Alrighty then, let us know how that works out for you. Believe a voice on the phone that is contadicting what you are signing in black & white.

Or my all time favorite. They are attending to the kids, phone calls, chatting back and forth between themselves, total shambles in their house and not paying one bit of attention to the paperwork in front of them. Lo and behold they tell me they didn't know their previous loan was adjustable/balloon/negative amort and they were taken by the lender. I guarantee since they're not paying attention at this point in time that they dont' know what this loan says.

Reply by Mary C Cook on 8/20/07 9:41am
Msg #206561

Re: Responsibility put back on the borrowers...

my favorite response the LO gives is not to worry, they'll refinance them in two years or whenever the rate is scheduled to change.

With some borrowers, this may be a good plan if they have bad credit now and plan to repair it before the rate change. But there is no guaruntee.

Reply by Barb/MO on 8/20/07 9:49am
Msg #206562

Yeah, and we'll get that PPP waived for ya, too. n/m

Reply by Sylvia_FL on 8/20/07 11:18am
Msg #206585

Re: Responsibility put back on the borrowers... - Mary

"With some borrowers, this may be a good plan if they have bad credit now and plan to repair it before the rate change. But there is no guaruntee"

The other thing to consider is that the way the housing market is going their home may not be worth as much as they owe when they need to refinance.