Monday, December 10, 2007
No Free Ride For Subprime Borrowers?
This article attempts to explain to a reader that there is no free ride for a subprime borrower. The point the article makes is that the intro rate for an ARM for a subprime borrower is higher than what a responsible person getting a 30-year fix mortgage at prime would be. I understand this point, but by not letting the rate reset an additional 2 or 3 percent higher they are giving these borrowers something they don't deserve. You are putting hundreds of dollars a month into their pocket. They planned poorly. Why do they deserve to get money in their pocket? Their credit was poor. They earned the original rate and the reset rate. A responsible person earned their prime rate and a subprime borrower earned their higher payment after 2 or so years. Interest rates went up and the market went south. They took a gamble on paying the maximum amount they could afford for a house and it didn't pay off. They took a risk. They lost. Put that house they shouldn't be able to afford back on the market and let the market adjust and jump and fall and do its thing. I would love some feed back with another view. I can't understand why they deserve this? (No free ride for subprime borrowers)
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2 comments:
Well said. What kind of message does this send to the responsible borrower, to the few of us that live with in our means? I have no sympathy for those that have treated there homes like an endless ATM sucking out every dime to finance a life style that they could not afford. I have no sympathy for Wall Street hounds and there insatiable appetite for mortgage backed securities and above all I have no sympathy for the mortgage banker and there voodoo product. When did it even begin to make sense? My cat could walk in to a bank and claim a $2M income on his signature and walk out with a liar’s loan.
What do you mean I can’t have my $1M home for $300/month any more, it’s not my fault I didn’t understand the terms Uncle Sam save me. These are the same misfits (with there negative 2% saving rate) that we will be bailing out over and over again (think long term health care, food and shelter and diapers in there old age). How can I teach my kids to pay your self first (15%), live with in your means, save 30% for a down stroke on a house, make sure the college funds are fully financed before there 15th b-day, have 6 months worth of living expenses in the bank at all times, and have retirement 80% funded before age 50 when every fool is spending like there’s no tomorrow?
No to worry irresponsibility and unaccountability are a live and well.
The only guy I feel for is the Joe average guy with his 20% down and a 30yr. fixed driving his Joe average car and taking the kids on a Joe average vacation. With 3 or 4 foreclosures on his block and the people that had no business owning the house next to him turning in the key and tanking his property valves for him well let just hope Joe doesn’t need to move for a while. And yes owning a home is the American dream but it is not and American entitlement ( no yet anyway).
OMG! I am that Joe average. I don't feel bad for them either. And I really don't feel bad for the investors, nay speculators, who snatched up homes like crazy, got subprime loans, drove the demand higher and subsequently homes prices and thought they could filp the house no problem. I see so many new homes forclosed upon that have never been lived in.
I had to sell my house in May becuase of divorce. It was on the market for 9 months before it sold. My next door neighbors but their house on the market the day ours sold (oddly due to divorce) and it's still there. $102,000 less than what our sold for. I feel bad for THEM.
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