Did greedy banks cause the mortgage mess?

Joined: 08 Jul 2003 Posts: 6309

A secondary topic to Nofs B of A problems.

Did greedy banks and financial institutions cause the "mortgage meltdown" or the 'credit' trouble many are experiencing now by raising the cost OF credit?

Did all the fees,HIGH interest rates and penalties make regular credit so hard to get that many individuals went to non standard types of loans that normally could have gotten somekind of loan through a BANK.

Too me the only penalty for missing or being late on payments should be more:not higher interest.They say the theory of high penalties in to give the person 'incentive' to pay but in fact those same penalties may have created the market for those 'creative mortgages/financing' and given many reason to declare bankruptcy.If you want to change a credit score is one thing but these institutions get so much for these electronic transactions I feel they don't justify the costs.

Then again most big business want to be self perpetuating.

Joined: 06 Jul 2003 Posts: 8380 Location: Central CA

I think that when the lender sat down with the customer and hammered out the details of the contract, he or she pushed the customer to the absolute limit in so far as the size of their payment was concerned.

They knew damned well that when the rate reset in a year or two, you were going to shoot right on over the edge but all they cared about is whatever they could get out of you right now plus any late fees or whatever they could gouge out of you before they finally foreclosed.

Foreclosure was no big deal for the banks because they would simply find another sucker and do the same thing to them. In the meantime, the original customer was effectively barred from ever owning a home again.

That being said though, another major factor was the professional house flippers, those that bought homes as an investment, rather than a place to live and raise their children.

The house my son in law is living in now sold 4 times in the six years immediately before he bought it. A couple of weeks ago, even after all that's happened, he got a form letter from the lender asking him if he was considering selling it yet.

The combination of greedy banks and other lenders along with the flippers who didn't care how lousy the deal was because they weren't going to keep their end of it anyway, probably did more than anyone or anything else to actually bring about the situation that exists today.

	Forum Index -> Behind the Banter	All times are GMT
Page 1 of 1