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View Full Version : Banking, bailouts and idiot homeowners


Hammer67
09-26-2008, 09:52 AM
While watching all of this financial gloom and doom unfold, is anyone else completely pissed off at stupid home buyers for taking on mortgages they couldn't afford and then defaulting on them?

Why should we be bailing these morons out?

And, here I am, bought a home I could actually afford and make all payments on time (even more) and I am getting screwed because of lowering values.

Prospectors, shady lenders and stupid home buyers are the cause of this meltdown...let's not forget it. To blame the government is like blaming the lookout for missing the glacier while the ship shouldn't even be in the water.

:banging:

revefsreleets
09-26-2008, 10:02 AM
But you have to fault the banks, too...they KNEW that these people couldn't afford these loans...and writing these loans is the air that filled the bubble.

There's plenty of blame to go around...

fansince'76
09-26-2008, 10:11 AM
I blame the lenders - you don't approve a loan on a 300K house for someone making 25K.

Mosca
09-26-2008, 10:13 AM
You have to understand; for a lot of these people, home ownership was a dream they thought was never going to happen. When it became possible, their eyes glazed over, their ears went silent, and they signed. 18 or 20 payments in, they came out of the ether.

In my work, I see an awful lot of people who have been taken advantage of due to their poor credit (and frankly I get the opportunity to do the same). Sure, they signed. But a lot of it comes down to unprovable fraud, too, where the person signs something, and then signs another document attesting that they signed and understood the one they just signed. Sure, it will stand up in court, but trust me when I tell you that they didn't understand either one.

revefsreleets
09-26-2008, 10:19 AM
There's also the whole "We may not be able to swing it now, but things will get better" thing that, as we all know, almost never pans out.

fansince'76
09-26-2008, 10:22 AM
There's also the whole "We may not be able to swing it now, but things will get better" thing that, as we all know, almost never pans out.

Then there were the "Get a $300K loan for only $695 a month!" scams that abounded during all this as well. Many people failed to read the fine print on those that indicated the $695 a month was only for the first year, and then ballooned to about $2K a month thereafter.

tony hipchest
09-26-2008, 10:23 AM
There's plenty of blame to go around...absolutely. even the things in the background can share some blame.

you have shows like "Flip This House" and all the home makeovers on television. Lowes, and Home Depos spread across the country like wildfires. Investing in houses was made "sexy". Anyone could get a mortgage loan off the internet.

It kinda reminds me of the internet stock bubble in 2000. All the Ameritrades, and E-Trades, and CNBC shows made "day trading" look sexy. While all the little people were being told to "buy, buy, buy... hold, hold, hold". All the professionals were slowly cashing in and pulling out.

it was pump n dump on a grand scale.

GBMelBlount
09-26-2008, 10:28 AM
My wife and I worked in the mortgage industry for almost 10 years and I can personally say that I pretty much agree with almost every single point that has been made thus far on this thread.....

MACH1
09-26-2008, 10:48 AM
How many of these people have adjustable rates too. After 4-5 years with makeable payments the bank raises its rates into balloon payments.

tony hipchest
09-26-2008, 10:52 AM
ive seen alot of people blame the stupid borrowers. many were just ignorant and kept in the dark. its the sort of "blame the victim" i definitely dont agree with.

...and yes. many were victims of predatory lenders.

ive been on this rant before but the schools need to help fix this problem. all american children are required to obtain an education to prepare them for life in "the real world".

something like "Banking and Finance" should be mandatory curriculum in EVERY school, for every student to take in the 11th or 12th grade.

it needs to cover savings, IRA's, compounded interest, filling out loan and mortgage applications, applying for scholorships, credit card pitfalls, paying taxes and filling out the forms correctly.

a class like this is gonna be much more helpful than a year of chemistry or the mandatory "foreign language".

"home economics" dont cut it and my "economics" class that was offered was a broad grand scheme of things introduction as opposed to actual practical applications one would need when they turn 18 and move out onto their own. it sucked and was watered down.

i guess the schools and government dont wanna be blamed for hurting the business of all the accountants, stock/mortgage brokers, credit card companies, repo men, IRS, etc.

its like theyre afraid educating all the people will shatter our financial institution and the backbone of capitalism. after all it is big business to sell our dollar.

"here, i'll sell you a buck for a dollar and 15 cents." doesnt seem too smart, now does it?

fansince'76
09-26-2008, 11:03 AM
ive seen alot of people blame the stupid borrowers. many were just ignorant and kept in the dark. its the sort of "blame the victim" i definitely dont agree with.

I agree - it's the responsibility of lenders NOT to give huge loans to people who are not only high credit risks, but also simply cannot afford them. I assume the "easy credit" days are now over - kinda late.

X-Terminator
09-26-2008, 11:10 AM
ive seen alot of people blame the stupid borrowers. many were just ignorant and kept in the dark. its the sort of "blame the victim" i definitely dont agree with.

...and yes. many were victims of predatory lenders.

ive been on this rant before but the schools need to help fix this problem. all american children are required to obtain an education to prepare them for life in "the real world".

something like "Banking and Finance" should be mandatory curriculum in EVERY school, for every student to take in the 11th or 12th grade.

it needs to cover savings, IRA's, compounded interest, filling out loan and mortgage applications, applying for scholorships, credit card pitfalls, paying taxes and filling out the forms correctly.

a class like this is gonna be much more helpful than a year of chemistry or the mandatory "foreign language".

"home economics" dont cut it and my "economics" class that was offered was a broad grand scheme of things introduction as opposed to actual practical applications one would need when they turn 18 and move out onto their own. it sucked and was watered down.

i guess the schools and government dont wanna be blamed for hurting the business of all the accountants, stock/mortgage brokers, credit card companies, repo men, IRS, etc.

its like theyre afraid educating all the people will shatter our financial institution and the backbone of capitalism. after all it is big business to sell our dollar.

"here, i'll sell you a buck for a dollar and 15 cents." doesnt seem too smart, now does it?

I agree wholeheartedly. Failing that, using a little common sense wouldn't hurt either. I'd love to be able to own a home because apartment living sucks ass, but I know I can't afford it right now. In a few years, maybe, but not now, not on my salary with the responsibilities that I have. The average home in my neighborhood costs $115,000 - I know I'd never be able to get a mortgage on a house here that would be equal to or slightly more than I'm paying right now for rent. Unfortunately, many people just don't use their heads, partly because many people just don't understand finances. The only thing they understand is "keeping up with the Joneses," no matter how much debt they incur.

Hammer67
09-26-2008, 11:13 AM
That does NOT excuse stupidity. Sorry. I totally agree that shady lenders are to blame as well, as I stated in the OP. But, I was a first time home buyer and I did my research and KNEW that a sub prime ARM mortgage was a bad idea, and there are PLENTY of tools to figure out what you can afford.

Shady lenders are crooks, sure, but people are also stupid for not researching one of the largest purchases they can make.

It reminds me of the people who get caught up in Nigerian Scams...sure the scam artists are scum, but they prey on the stupid and naive. Should I bail them out with my tax dollars too?

It just pisses me off. It's one of those days.

MACH1
09-26-2008, 11:29 AM
Where I live all these contractors out here are buying up all the farms that go up for sale and putting in sub-divisions. In my line of work I know a lot of them and they fill these sub-divisions with spec. houses then they sit there empty till they sale. You take a 100 acres and build 4-5 hundred houses and most sit empty. I know for a fact that these guys can't afford to sit on them all for to long and some have gone under. Then when they go under who's left holding the ticket? The bank they financed through, and now the lender's left with all these empty houses it can't sell.

GBMelBlount
09-26-2008, 11:30 AM
That does NOT excuse stupidity. Sorry. I totally agree that shady lenders are to blame as well, as I stated in the OP. But, I was a first time home buyer and I did my research and KNEW that a sub prime APR mortgage was a bad idea, and there are PLENTY of tools to figure out what you can afford.

Shady lenders are crooks, sure, but people are also stupid for not researching one of the largest purchases they can make.

It reminds me of the people who get caught up in Nigerian Scams...sure the scam artists are scum, but they prey on the stupid and naive. Should I bail them out with my tax dollars too?

It just pisses me off. It's one of those days.

Good post Hammer. I think you were referring to ARM's as opposed to APR.

Mosca
09-26-2008, 11:51 AM
The only thing about there being no excuse for stupidity is, that it's easy to say when you're not stupid. Someone who doesn't understand also doesn't know that they don't understand. Someone who trusts another person doesn't understand that they shouldn't do that.

Hammer67
09-26-2008, 11:53 AM
Good post Hammer. I think you were referring to ARM's as opposed to APR.

Doh! Good catch...writing too fast.

revefsreleets
09-26-2008, 11:54 AM
And a lot of these entities writing B paper were actively seeking out people they knew were vulnerable...

Hammer67
09-26-2008, 11:56 AM
The only thing about there being no excuse for stupidity is, that it's easy to say when you're not stupid. Someone who doesn't understand also doesn't know that they don't understand. Someone who trusts another person doesn't understand that they shouldn't do that.

Not to sound like a dick, but that's not my problem. I have empathy, I do. I understand that some people are naive...but, BUT, there are way too many sources of information out there. There simply is no excuse. I don't enable stupidity...even my own, which my wife tells me, is quite often. :wink02:

Dino 6 Rings
09-26-2008, 11:57 AM
It works like this.

Politicians, especially the top dogs, namely the Presidents, want to look good. So under Clinton, the idea was "a home for everyone" So, he pushed for banks to be more open with their guidelines when giving mortgage and to accept more risk so that people with little or bad credit could get a loan. That carried over to the Bush administration, and then, Fannie Mae, and Freddie Mac actually started to buy up bad loans, in bundles, as instructed to do by the guidelines put in place by the White House. In 2005 a scandal in those two Government Sponsored mortgage companies caused some to re-evalute the way they did business, but it didn't pass in congress. However, Bush and Clinton both looked rosey because they could say "Look at all the Home Owners." Now, other mortgage companies, knowing they could give out risky loans and then turn around and sell them to Fannie and Freddie were inclined to do so. So, more and more bad loans were given out, to people that had zero credit, zero down, and didn't care about the fine print. Including people who were illegally in this country. There was a push to get them into houses as well.

At the same time, builders were over building, thinking that they would sell the houses because basically, everyone was getting loans, so they built and built and built, and over built. So now there are a lot of houses that have never been lived in on the market and the builders, holding the loans on the houses used as collateral are stuck and are also being foreclosed on and going out of business because no one is buying the homes and there is no need to build more.

What does all of this teach us?

That whatever the Government touches...it breaks. bottom line.

Hammer67
09-26-2008, 12:05 PM
A-freakin-men

revefsreleets
09-26-2008, 12:11 PM
Yup...homeownership was stagnant at around 64% from '68 to '92. It jumped up to 69% in 2004...5% is a HUGE gain!

Mosca
09-26-2008, 12:35 PM
Not to sound like a dick, but that's not my problem. I have empathy, I do. I understand that some people are naive...but, BUT, there are way too many sources of information out there. There simply is no excuse. I don't enable stupidity...even my own, which my wife tells me, is quite often. :wink02:

Oh, I understand. And I'm not trying to defend anything, just pointing out how it happens. But I've sat across from these people with contracts between us. Ask GBMB; all you have to do is say, "Sign here. And here. And here...." That being said, I've never done it. First I wasn't raised that way, and anyhow the risk/reward equation is way out of whack; huge risk (perp walk), small reward (maybe $100 in it for me personally, if that).

I'll do you one better; I bet I could get more than half my customers to sign the documents blank. And not just the credit challenged ones, either. You'd be surprised what people will do.

GBMelBlount
09-26-2008, 12:43 PM
It works like this.

Now, other mortgage companies, knowing they could give out risky loans and then turn around and sell them to Fannie and Freddie were inclined to do so. So, more and more bad loans were given out, to people that had zero credit, zero down, and didn't care about the fine print.....

That whatever the Government touches...it breaks. bottom line.

Great post Dino. A large part of this problem can be laid at the feet of our government for getting involved in mortages in the first place imo. Unfortunately. capitalism and free enterprise will be seen as the only reason for this fiasco and many will wrongly think that more government control is the solution even though they created a lot of this problem. I was at a lot of loan closings and in some cases there were 60, 70, 80 pages of typed information that had to be reviewed, and signed by the applicants. After the 4th or 5th sheet of paper, their eyes would often glass over and they would just nod and sign everything. There was so much paperwork and legaleze at closings due to government regulations that some people had no idea what they had signed when the closing was done, even though it was clearly explained.

I agree with Tony that our schools should be teaching this stuff. I don't feel that kids are coming out of school with the knowledge or ability to criticially examine things as they did when I was a kid. This creates a fertile environment for the acceptance of government solutions and control imo....

Hammer67
09-26-2008, 12:44 PM
Oh, I understand. And I'm not trying to defend anything, just pointing out how it happens. But I've sat across from these people with contracts between us. Ask GBMB; all you have to do is say, "Sign here. And here. And here...." That being said, I've never done it. First I wasn't raised that way, and anyhow the risk/reward equation is way out of whack; huge risk (perp walk), small reward (maybe $100 in it for me personally, if that).

I'll do you one better; I bet I could get more than half my customers to sign the documents blank. And not just the credit challenged ones, either. You'd be surprised what people will do.

Well, when we bought our house, they just parade a TON of paperwork in front of you. I have no idea why they need all of that. Just give me the binder and let me sign once...

Anyway, they also hurry you along and get impatient if you want to read what you are signing. I didn't care...I read or browsed everything I signed and double checked all the numbers.

Mosca
09-26-2008, 01:07 PM
Well, when we bought our house, they just parade a TON of paperwork in front of you. I have no idea why they need all of that. Just give me the binder and let me sign once...

Anyway, they also hurry you along and get impatient if you want to read what you are signing. I didn't care...I read or browsed everything I signed and double checked all the numbers.

LOL, I double checked the numbers, found a mistake, and sat there and waited an hour while they re-printed the stuff.

Preacher
09-26-2008, 01:35 PM
LOL, I double checked the numbers, found a mistake, and sat there and waited an hour while they re-printed the stuff.

Good for you.

I double check the numbers, my wife reads the fine print. :chuckle:

There is a place for ARM's, sub-prime ARMS, etc. etc. But a person has to be smart to use them.

The last house we bought, I got us into a 10 year arm with a couple points included, set it up so that between years 5-10, we could refinance without losing money on the original cost of the points... knowing that the interest rate would cycle lower in a 10 year cycle.

The current house we bought... we reached, purposefully. The markets came down real far (California), to the point where foreclosed homes were flying off the market. The prices seemed to hit bottom. So my wife and I realized if we every wanted to buy in our area, we had to jump now.

was it a reach? yeah. Is it possible that one of us could lose our job and lose the house? Yeah. But it was a risk we took with eyes open, and our fault if it doesn't pan out.

And that is the point, people no longer learn lessons anymore because others come and bail them out.

For those lenders who HID the risk, I feel sorry for the borrowers and the lender should make good. But for those who went in with eyes wide open... whether they understood all the ramifications or not, it is their problem.

On a side not, I know of a person who simply LET his house go into foreclosure. But before his credit was hit, he bought a nicer, bigger house at half the price.

Sorry, he should lose BOTH homes, because that is JUST as crooked and shady as what the lenders are doing.

Hammer67
09-26-2008, 04:34 PM
Good for you.

I double check the numbers, my wife reads the fine print. :chuckle:

There is a place for ARM's, sub-prime ARMS, etc. etc. But a person has to be smart to use them.

The last house we bought, I got us into a 10 year arm with a couple points included, set it up so that between years 5-10, we could refinance without losing money on the original cost of the points... knowing that the interest rate would cycle lower in a 10 year cycle.

The current house we bought... we reached, purposefully. The markets came down real far (California), to the point where foreclosed homes were flying off the market. The prices seemed to hit bottom. So my wife and I realized if we every wanted to buy in our area, we had to jump now.

was it a reach? yeah. Is it possible that one of us could lose our job and lose the house? Yeah. But it was a risk we took with eyes open, and our fault if it doesn't pan out.

And that is the point, people no longer learn lessons anymore because others come and bail them out.

For those lenders who HID the risk, I feel sorry for the borrowers and the lender should make good. But for those who went in with eyes wide open... whether they understood all the ramifications or not, it is their problem.

On a side not, I know of a person who simply LET his house go into foreclosure. But before his credit was hit, he bought a nicer, bigger house at half the price.

Sorry, he should lose BOTH homes, because that is JUST as crooked and shady as what the lenders are doing.

Well, I wish everyone went into those situations with as much research and forethought. It's the ones that don't that make me angry.

steelwall
09-26-2008, 07:07 PM
This may sound crazy but it's true. I don't own a credit card and never have. I have never borrowed money from a bank. I saved my money and bought a house back in the states without borrowing a single dime. I'm 31 years old.....it is possible people. Budget your money for goodness sakes.

revefsreleets
09-26-2008, 07:15 PM
Wow...that's old school...that's how my grandparents rolled for about 60 years. Props, dude!

steelwall
09-26-2008, 07:21 PM
Wow...that's old school...that's how my grandparents rolled for about 60 years. Props, dude!


Thanks man, I guess good ole combat pay had alot to do with it, but I think we have a society that wants what they want now. Many of my friends think I'm BSing them when I tell them I don't own a credit card. I have a debit card. Simply speaking...if I don't have the money in my account, I don't buy it. Screw paying more for something when you don't have to.

revefsreleets
09-26-2008, 07:23 PM
You hit the nail on the head. The whole problem with our country right now is "I want what I want, and I want it right now".

That's not how my grandparents did it...nor did any of their ascendants.

Preacher
09-27-2008, 12:01 AM
H5tZc8oH--o

Um... NC..

CRA is what makes banks put money back into the communities they are a part of. When I was a loan agent/new accounts rep for a bank, we would hold small business seminars in order to comply partially with CRA.

Yes, the idea of loaning money to low-credit/bad credit borrowers is bad. But I think there is enough blame to spread around on both parties.

beSteelmyheart
09-27-2008, 12:04 AM
I find some fault with everyone involved in the system in general.
We have been in the market for awhile & although we were approved for a certain loan amount, we knew what we did or did not want to pay & had the discipline to stick to our guns...too bad the houses that were going for what we are willing to pay for are such turds.
I also want to make a bitch about realtors & how they know the mental tricks to take advantage of first time home buyers & the emotions that we feel during the whole process...Asking us to put in offers of higher prices, trying to sweettalk us out of getting home inspections, pushing us, rushing us, lying to us!!! Our past experiences with realtors has literally made us sick. And I used to think car salesmen were bad.

Preacher
09-27-2008, 12:09 AM
I find some fault with everyone involved in the system in general.
We have been in the market for awhile & although we were approved for a certain loan amount, we knew what we did or did not want to pay & had the discipline to stick to our guns...too bad the houses that were going for what we are willing to pay for are such turds.
I also want to make a bitch about realtors & how they know the mental tricks to take advantage of first time home buyers & the emotions that we feel during the whole process...Asking us to put in offers of higher prices, trying to sweettalk us out of getting home inspections, pushing us, rushing us, lying to us!!! Our past experiences with realtors has literally made us sick. And I used to think car salesmen were bad.

Wow.

I never had a realtor try to talk me out of an inspection. Matter of fact, they usually push it.

beSteelmyheart
09-27-2008, 12:21 AM
Wow.

I never had a realtor try to talk me out of an inspection. Matter of fact, they usually push it.

Yep, she kept telling us how the FHA inspector would be good enough, she seemed really concerned about who my inspector was during the 2 day wait leading up to the inspection & she was at the property over 40 minutes early!
It all makes me wonder what she knew about the place because we knew we were going to cancel the contract long before the inspector was finished.
The inspector was money well spent & I don't think we'll be dealing with her anymore.

Preacher
09-27-2008, 12:24 AM
Yep, she kept telling us how the FHA inspector would be good enough, she seemed really concerned about who my inspector was during the 2 day wait leading up to the inspection & she was at the property over 40 minutes early!
It all makes me wonder what she knew about the place because we knew we were going to cancel the contract long before the inspector was finished.
The inspector was money well spent & I don't think we'll be dealing with her anymore.


Yeah... I sure wouldn't either.

Godfather
09-27-2008, 10:43 AM
Wow.

I never had a realtor try to talk me out of an inspection. Matter of fact, they usually push it.

Yep...and every realtor I know tries to get their buyer the best deal possible even if it's a slightly lower commission for them.

As far as the inspection goes, it's better to deter the buyer now. Otherwise they'll be calling you an complaining about everything that's wrong with the house, or worse suing you. WIth an inspection all of that is someone else's problem.

GBMelBlount
09-27-2008, 11:03 AM
Yep...and every realtor I know tries to get their buyer the best deal possible even if it's a slightly lower commission for them.


I have worked with dozens of realtors and though I agree there are many excellent realtors who are very ethical, there are also, as in any profession, many that are unethical and unscrupulous.


For example,

A realtor friend of mine told me she put in an offer for her homebuyer with the listing agent of a sellers home. She never got a response. She bumped into the seller months later and found out they sold the house for LESS than her homebuyer offered and in fact never even knew her buyer was even interested. In other words, apparently the listing realtor never told his seller about the offer so that he could provide the buyer himself and get BOTH commissions while the seller actually got less than what they likely would have......

I guess you will find good and bad in every industry.

Counselor
09-27-2008, 04:07 PM
I have worked with dozens of realtors and though I agree there are many excellent realtors who are very ethical, there are also, as in any profession, many that are unethical and unscrupulous.


For example,

A realtor friend of mine told me she put in an offer for her homebuyer with the listing agent of a sellers home. She never got a response. She bumped into the seller months later and found out they sold the house for LESS than her homebuyer offered and in fact never even knew her buyer was even interested. In other words, apparently the listing realtor never told his seller about the offer so that he could provide the buyer himself and get BOTH commissions while the seller actually got less than what they likely would have......

I guess you will find good and bad in every industry.

Just to throw in my two cents . . .there are a lot of real estate agents who are excellent. Any one who tried to stop you from getting an inspection is VERY shady.

That said, "dual agency" where one agent represents seller and buyer is a terrible thing. Its like having an attorney represent plaintiff and defendant in the same law suit.

beSteelmyheart
09-27-2008, 06:09 PM
We caught her in a few lies & were fortunate to find out the truth before it became more trouble for us.
We also put in a lo-ball offer on a house only for her to come back at us & recommended a waaaay higher price for a counter offer than we were willing to pay for the place because she said there were other bids on it. Later she said it was under contract. We drove by that house today & the sign is still in the yard, plus a For Rent sign..I may contact that realtor about the place just out of curiosity. Alot of people around here are renting out their places because they can't sell them. It would also be interesting if we caught her in another lie.

BIGBENFASTWILLIE
09-27-2008, 08:05 PM
you forgot presidents who run everything they ever tried to run ... into the ground

Preacher
09-27-2008, 09:03 PM
you forgot presidents who run everything they ever tried to run ... into the ground

:pity:

Some people see any opportunity as a shot at someone they don't like... regardless of reality.

I never knew Bush had to underwrite every loan... and talked homebuyers to reach far outside their financial envelope to buy a house.

steelwall
09-27-2008, 09:08 PM
Should have seen my realtors face when she asked, what bank I would be using to take out my loan, and I said "I won't be taking out a loan"....priceless.

Hammer67
09-28-2008, 12:46 PM
You hit the nail on the head. The whole problem with our country right now is "I want what I want, and I want it right now".

That's not how my grandparents did it...nor did any of their ascendants.

Coming from someone (me) who had a lot of credit debt, at one point. It is the most liberating feeling in the world to be debt free. I cut up my cards, paid off my debt over time and am now so less worried about financial issues.

Godfather
09-28-2008, 12:48 PM
We caught her in a few lies & were fortunate to find out the truth before it became more trouble for us.
We also put in a lo-ball offer on a house only for her to come back at us & recommended a waaaay higher price for a counter offer than we were willing to pay for the place because she said there were other bids on it. Later she said it was under contract. We drove by that house today & the sign is still in the yard, plus a For Rent sign..I may contact that realtor about the place just out of curiosity. Alot of people around here are renting out their places because they can't sell them. It would also be interesting if we caught her in another lie.

Well, just to play devil's advocate maybe she did get a contract and the deal fell through on inspection or buyer financing. But based on the other stuff you said she's just shady.

Godfather
09-28-2008, 12:49 PM
Coming from someone (me) who had a lot of credit debt, at one point. It is the most liberating feeling in the world to be debt free. I cut up my cards, paid off my debt over time and am now so less worried about financial issues.

A couple questions about that:

1) How do you get a plane ticket or a hotel room?

2) How did that affect your credit? I know your score is better if you have credit lines that have been open for a long time.

Hammer67
09-28-2008, 12:55 PM
A couple questions about that:

1) How do you get a plane ticket or a hotel room?

2) How did that affect your credit? I know your score is better if you have credit lines that have been open for a long time.

We keep one card with zero balance for things like that (renting cars, etc.) but most fo the time it's debit card or cash.

When we got married, i got rid of all the high interest dept store cards my wife had and consolidated our debt using the 0% offers that kept coming. Eventually we paid it all off at 0% by transferring our debt every year to a new 0% card.

My credit is mid 700's. Hers is high 600's as she missed a payment or two years ago on some cards. I took over finances and we have been fine ever since. Add in a mortgage, car loans, and our credit scores are great.

It takes management, but if you are diligent, you can stay credit debt free and have a high score.

:drink:

Preacher
09-28-2008, 03:55 PM
From working in banks for a while.. I learned there are games that you can play to get your credit score higher.

1. When you DO close credit cards, close the newest ones first... Leave the older ones open because they establish longer credit...

2. Do NOT keep opening new credit card accounts to get the 0 percent or 1 percent offers. Wait until YOUR credit card company offers them and switch between ALREADY open accounts.

3. though it may be a bit higher payment, move your debt to a CLOSE ENDED LOAN rather than a revolving credit. BUT KEEP THAT CARD OPEN IF YOU CAN. It gives you a better debt capacity for scoring and also helps extend credit history.

4. Don't forget your debt to debt capacity. it is better to have 4 cards open and carry 15 thousand in debt with a capacity of 100,000 then it is to have 1 card open with 2000 debt on a 4000 dollar credit limit... all other things being equal.

5. the credit reporters work on mathematical scales each weighing certain things a little more importantly then others. So check all THREE credit bureaus... Equifax, Transunion, and Experian.

6. If you are going to buy a car or home and are a little under where you want to be credit wise... DO NOT CLOSE CREDIT CARDS. You are better off working within the above 4 posts... moving some money around, paying OFF a card but NOT closing it, etc. Too often, someone will close a card that is keeping their debt to capacity ratio decent... or has a long credit history... and their score DROPS... not increases.

7. You have 1 week to shop rates. What that means is that if you are looking to buy a house (or car, or car insurance in many states), every company that you put in for a loan will check your credit rating. that is called a hard hit. Hard hits LOWER YOUR CREDIT RATING. So if you check a loan this month, another lender next month, a car loan this month, a consildation loan in 3 months... your credit rating will take a nice hit for that... and that hit keeps that rating lower for a few months before it drops off. The caveat to that is the 1 week shop. In order to allow people to shop for the best rate, any hits for the same type of loan are bunched as one hit... thus it is only one shot on your credit.


DISCLAIMER!!! This was all as of about 10 years ago. I imagine not much has changed. however, you would be better off checking with a consumer credit counseling service regarding what does and does not affect your credit rating.

GBMelBlount
09-28-2008, 04:04 PM
Good points preach.

As a rule of thumb I had read it really helps to keep your credit card balances at less than 35% of available credit.

Also, making your payments on time can help your scores too. :chuckle:

Hammer67
09-28-2008, 04:42 PM
From working in banks for a while.. I learned there are games that you can play to get your credit score higher.

1. When you DO close credit cards, close the newest ones first... Leave the older ones open because they establish longer credit...

2. Do NOT keep opening new credit card accounts to get the 0 percent or 1 percent offers. Wait until YOUR credit card company offers them and switch between ALREADY open accounts.



Good advice but I have to say that I haven't been affected by #2 and I did it for years...my credit score never dipped below 700. And that was before my mortgage.

beSteelmyheart
09-28-2008, 07:57 PM
I was pleasantly surprised by my credit score (690) after having to file for bankruptcy after leaving my controlling ex almost 5 years ago. I haven't done anything credit-wise since then, the bankruptcy was a small one & my credit was excellent before that. My fiancee has a 789! We are both totally debt free except for the usual utility bills & rent & it is a wonderful thing! We could qualify for alot more house than what we are willing to pay for but we are cheapskates & want to keep our payments low & also be able to have a life.
I think that too many people didn't do that, they let themselves get too emotional & bought more than they could afford. Also I think that people took equity loans out against property that had suddenly gone sky-high & now that the bottom has dropped out they are trying to unload their property at a loss, be stuck with it or go into foreclosure.

R2sojr
09-28-2008, 08:36 PM
Not to sound like a dick, but that's not my problem. I have empathy, I do. I understand that some people are naive...but, BUT, there are way too many sources of information out there. There simply is no excuse. I don't enable stupidity...even my own, which my wife tells me, is quite often. :wink02:



I totaly agree with you here. Working for a bank you give the opportunity to read thru all the documents and trust what customers tell you is correct. Thats why there is a clause on the application that states it is unlawful to falsify information. Ppl still do it. So this goes both ways!! And there is way too much information not to know what your getting into. They'd rather spend time on myspace then researching the biggest purchase of their lives.

Preacher
09-28-2008, 10:17 PM
Good advice but I have to say that I haven't been affected by #2 and I did it for years...my credit score never dipped below 700. And that was before my mortgage.

One of two things happened.

1. You did affect your score... you could have had a higher one.

or 2. You had another limiting factor that made it so that didn't affect it as much.

What happens is that as you open the cards, it makes credit agencies worried that you are trying to get mroe credit to keep a lifestyle above your means. In other words, you are getting deeper in debt.

augustashark
09-29-2008, 12:17 AM
Banks...Banks.....Banks!

They did not care one bit to foreclose on customers. When the loans kept coming that just meant more $$ to them. Move'em in move'em out. It was all a numbers game. The problem was when the move'em out number started overtaking the move'em in number. Plus these banks would not work with the good customers that did not buy on the 2-1 buy down or the Int only. The regular guy that bought on a conv 30 fixed that lost his job and could not find another job for 3 or 4 months. Hell, even when he got back to work making the same kind of salary it was not good enough, the process was already started and unless you can come up with all the past due payments + late fees + attorney fees you are well, looking for an apartment.

Preacher
09-29-2008, 12:23 AM
Banks...Banks.....Banks!

They did not care one bit to foreclose on customers. When the loans kept coming that just meant more $$ to them. Move'em in move'em out. It was all a numbers game. The problem was when the move'em out number started overtaking the move'em in number. Plus these banks would not work with the good customers that did not buy on the 2-1 buy down or the Int only. The regular guy that bought on a conv 30 fixed that lost his job and could not find another job for 3 or 4 months. Hell, even when he got back to work making the same kind of salary it was not good enough, the process was already started and unless you can come up with all the past due payments + late fees + attorney fees you are well, looking for an apartment.

I am not sure what banks you worked with....

but the fact is, the LAST thing the bank wants to do is foreclose. They ALWAYS lose money on foreclosures. If you contact the bank BEFORE it gets bad... they WILL work with you. However, if you wait until you are two or three months behind, the bank can't trust you (you general).

augustashark
09-29-2008, 01:23 AM
I am not sure what banks you worked with....

but the fact is, the LAST thing the bank wants to do is foreclose. They ALWAYS lose money on foreclosures. If you contact the bank BEFORE it gets bad... they WILL work with you. However, if you wait until you are two or three months behind, the bank can't trust you (you general).

I will agree that the bank does not want to foreclose, but if you would please explain to me what you mean by the bank will work with you. And for the record I have worked in the banking/finance field for many years.

Btw, I was coming from the point of view of working in the field, not on a personal basis. I don't think you realized that.

Hammer67
09-29-2008, 08:24 AM
I will agree that the bank does not want to foreclose, but if you would please explain to me what you mean by the bank will work with you. And for the record I have worked in the banking/finance field for many years.

Btw, I was coming from the point of view of working in the field, not on a personal basis. I don't think you realized that.

I think he means that a bank will work with you to restructure payments or work on a payment plan...anything to avoid forclosure, which the bank DOESN'T want.

Utilities companies will generally do this as well if you are up front with them. They would rather you restructure payments then avoid them all together...it's a win-win.

Hammer67
09-29-2008, 08:28 AM
One of two things happened.

1. You did affect your score... you could have had a higher one.

or 2. You had another limiting factor that made it so that didn't affect it as much.

What happens is that as you open the cards, it makes credit agencies worried that you are trying to get mroe credit to keep a lifestyle above your means. In other words, you are getting deeper in debt.

Possibly...

I do keep one card open (the one I've had the longest and with the highest credit limit) which might offset the fact that I transferred debt around. But, as I said, I never saw a dip in my score. In fact the only time I ever noticed a huge change was with my wife's when she missed a $17 payment on a dept store card...probably lost the bill in the mail. Her score dropped almost 30 points.

Preacher
09-29-2008, 12:48 PM
I will agree that the bank does not want to foreclose, but if you would please explain to me what you mean by the bank will work with you. And for the record I have worked in the banking/finance field for many years.

Btw, I was coming from the point of view of working in the field, not on a personal basis. I don't think you realized that.

No, I didn't, thanks for the clarification. I am sure you have more experience in it than I do.

What I meant is that if you talk to the bank early enough... they will show some forbearance. Some will allow you to pay only the interest. Some will allow you to pay a cut rate, tacking the rest of the principle and interest on the back end, etc. etc. In the final payout, yes, you will pay more than you would have if you paid the full payment every month... but you get to keep the house.

HometownGal
09-29-2008, 01:26 PM
Bailout plan rejected. There may be some arm-twisting happening as I post this breaking story.

http://money.cnn.com/2008/09/29/news/economy/bailout/index.htm?cnn=yes

Bailout plan rejected

House leaders scramble for support for controversial Wall Street plan.

NEW YORK (CNNMoney.com) -- The fate of a controversial $700 billion financial bailout plan was in doubt Monday as a House vote turned against it.

The next steps were not immediately clear but supporters were scrambling to put it up for another vote.

What was supposed to be a 15-minute vote stretched past the half-hour mark as leadership scrambled for support. Investors who had been counting on the rescue plan sent the Dow Jones industrial average down as much as 700 points while watching the measure come up short of the necessary support, before rebounding slightly. The key stock reading was down more than 500 points.

The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against.

A four-hour debate included impassioned pleas for and against the measure from Democrats and Republicans alike. Even some of those arguing the legislation must be approved were quick to point out problems with it.

But in the end, the vote began with both Democratic and Republican leadership telling their members the only way to protect the economy from a spreading credit crunch was to vote for the difficult to swallow measure.

"Our time has run out," said Rep. Spencer Bachus, the ranking Republican on the House Financial Services Committee. "We're going make a decision. There are no other choices, no other alternatives."

The vote comes after lawmakers and the Bush administration finalized legislation following a weekend of high-stakes negotiations over the controversial measure, which is designed to get battered U.S. credit markets working normally again.

"Today is the decision day," said Barney Frank, D-Mass., on the House floor. "If we defeat this bill today, it will be a very bad day for the financial sector of the American economy and the people who will feel the pain are not the top bankers and top corporate executives but average Americans."

House Minority Leader John Boehner told his members, many of whom objected the measure, that the had accept something he and many of them found distasteful.

"If I didn't think we were on the brink of an economic disaster it would be the easiest thing to say no to this," Boehner said. But he said lawmakers needed to do what was in the best interest of the country.

Leading House Republicans signed on to the proposal on Sunday after expressing earlier reservations. Senate Majority Leader Harry Reid said Sunday he hoped for a vote in that chamber by Wednesday at the latest.

Earlier on Monday, President Bush and Federal Reserve Chairman Ben Bernanke hailed the measure and urged Congress to move quickly to pass it.

Bush, speaking at the White House, called the proposed measure "an extraordinary agreement to deal with an extraordinary problem." He said he is confident the measure will win bipartisan support.

"With this strong and decisive legislation, we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls," Bush said.

Bush acknowledged that many voters were opposed to helping out Wall Street with tax dollars, but said there is little choice to move forward with the plan. He said most if not all of the tax money spent to buy distressed mortgage-backed securities should be recouped when the Treasury sells them in the coming years.

"Every member of Congress and every American should keep in mind - a vote for this bill is a vote to prevent economic damage to you and your community," Bush said.

Bernanke, who had spent hours before Congress last week testifying in favor of the measure, issued a brief statement promising that it would restore the flow of credit to households and businesses. "I look forward to swift passage of the legislation," he said.

Buying troubled assets
The core of the bill is based on Treasury Secretary Henry Paulson's request for authority to purchase troubled assets from financial institutions so banks can resume lending and so the credit markets, now virtually frozen, can begin to operate more normally.

But Democrats and Republicans - concerned about the potential cost - have added several conditions and restrictions to protect taxpayers on the down side and give them a chance at some of the potential upside if the companies benefit from the plan.

Key negotiators for the financial rescue plan were e busy trying to line up votes on Capitol Hill on Sunday. House Majority Leader Steny Hoyer, D-Md., told CNN he believes a majority of representatives on both sides of the aisle can and will support the bill.

On Sunday evening, the House Republican working group, which stringently opposed earlier drafts of the plan and offered a counterproposal, indicated it would support the bill, and its members are encouraging other Republicans in the House to do the same.

"Nobody wants to have to support this bill, but it's a bill that we believe will avert the crisis that's out there," House Minority Leader John Boehner, R-Ohio, told reporters.

But the bill did draw some opposition during the morning debate.

Rep. John Culberson, R-Texas, said the measure would leave a huge burden on taxpayers. "This legislation is giving us a choice between bankrupting our children and bankrupting a few of these big financial institutions on Wall Street that made bad decisions," he said.

Other conservative Republicans argued the bill would be a blow against economic freedom.

Thaddeus McCotter, R-Mich., said the bill posed a choice between the loss of prosperity in the short term or economic freedom in the long term. He said once the federal government enters the financial market place, it will not leave. "The choice is stark," he said.

But there were also Democrats who opposed the bill for not doing enough to help those who taxpayers facing foreclosure or needing unemployment benefits extended, or taxing Wall Street to pay for the rescue package.

"Like the Iraq war and patriot act, this bill is fueled by fear and haste," said Lloyd Doggett, D-Texas.

The crisis and a proposed fix
Banks and Wall Street firms, worried about both their own needs for cash and the condition of other institutions, essentially stopped loaning money to one another in recent weeks. That choked off the money being made available on Main Street in the form of mortgage loans, business loans and other consumer borrowing.

The crisis stems from problems in mortgage-backed securities, which saw their value plunge as home prices have gone into their worst slide since the Great Depression and foreclosures have soared to record levels. In turn, the market for trillion of dollars worth of those securities held by major firms evaporated, sending them down to fire sale prices and raising the risk of widespread failures among the nation's major financial firms.

Under the plan, Treasury will buy the mortgage backed securities, either directly from the firms or through an auction process. It may also arrange to provide guarantees for the securities up to their original values in return for premiums they would charge current holders of the securities.

To make the legislation more politically palatable, the bill calls for the government, as an owner of a large number of mortgage securities, to exert influence on loan servicers to modify more troubled loans to help prevent additional foreclosures. It also provides that the government will take equity in the firms that sell the securities to the government, and limits pay packages for top executives.

The legislation comes amid great upheaval in the nation's financial system. On Monday morning, the Federal Deposit Insurance Corp., which insures deposits at failed banks, arranged for the sale of the banking assets of Wachovia (WB, Fortune 500), the nation's No. 4 bank holding company, to Citigroup (C, Fortune 500) for $2.2 billion in stock.

That follows three weeks of other shocks: the Treasury Department's seizure of mortgage finance firms Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500); Wall Street firm Lehman Brothers' bankruptcy filing; rival Merrill Lynch (MER, Fortune 500) purchase by Bank of America (BAC, Fortune 500).

In addition, the Fed bailed out insurance giant American International Group (AIG, Fortune 500), loaning it $85 billion in return for a nearly 80% stake. while Washington Mutual (WM, Fortune 500), the nation's largest savings and loan, became the largest bank failure in history.

Preacher
09-29-2008, 01:40 PM
I think this is the best thing for America.....

Why? Simple.

Because Dem and Rep. leadership BOTH wanted their people to vote for the bill, and dem and rep. caucases BROKE with leadership and stood together to vote against it. What I LOVE, is the fact that party lines were crossed, ON BOTH SIDES.

Maybe, FINALLY... we are seeing the first breaks of the ugly partisanship that has had this nation in a strangle-hold for 18 years.

PisnNapalm
09-29-2008, 04:05 PM
I think rejecting this bill is a good thing. I believe that the banks/mortgage companies that racked up all that bad debt should be made to pay for it. Not us the taxpayers.

Yes it will hurt our economy but I feel that the long term affects will be worse if we put a stop gap measure in now.

Hammer67
09-29-2008, 04:29 PM
I think this is the best thing for America.....

Why? Simple.

Because Dem and Rep. leadership BOTH wanted their people to vote for the bill, and dem and rep. caucases BROKE with leadership and stood together to vote against it. What I LOVE, is the fact that party lines were crossed, ON BOTH SIDES.

Maybe, FINALLY... we are seeing the first breaks of the ugly partisanship that has had this nation in a strangle-hold for 18 years.

When this failed Congress is largely voted out, I will share that sentiment! :drink:

Preacher
09-29-2008, 05:00 PM
I think rejecting this bill is a good thing. I believe that the banks/mortgage companies that racked up all that bad debt should be made to pay for it. Not us the taxpayers.

Yes it will hurt our economy but I feel that the long term affects will be worse if we put a stop gap measure in now.


Thank you.

The ONLY place I would disagree... Is if there were companies that were hiding their failures illegally, and as a result, OTHER companies that were playing fair ball got sucked into it.

That kind of second-level problem, I don't mind helping out. But the companies that just made bad choices? Hey, I have friends in business for themselves. I am in all honesty, a CEO of a not-for-profit corporation (church). If we make bad choices, where is our bailout?

Yet, there is also a fine balance because on the other side, there are real jobs being lost.

revefsreleets
09-29-2008, 05:41 PM
There will be some kind of rescue plan, but it's not going to be what the bankers want. Which is, you know, good...they broke it, they gotta buy it.

BIGBENFASTWILLIE
09-29-2008, 06:02 PM
778 points? WOW.

What is happening in America right now is just scary....

HometownGal
09-29-2008, 06:14 PM
Maybe, FINALLY... we are seeing the first breaks of the ugly partisanship that has had this nation in a strangle-hold for 18 years.

Maybe, but that rotweiler Nancy Pelosi obviously doesn't understand partisanship. She needs to have her mouth duct taped.

fansince'76
09-29-2008, 06:15 PM
778 points? WOW.

What is happening in America right now is just scary....

Agreed - my company's stock has dropped $6.00+ per share in the last 3-4 trading days alone.

revefsreleets
09-29-2008, 06:35 PM
I think what we are really seeing is simple checks and balances. We aren't going to have 230 years undone by one catastrophic event, so let's not have 230 years undone by the overreaction to the catastrophic event.

Preacher
09-29-2008, 06:41 PM
778 points? WOW.

What is happening in America right now is just scary....

That is where we have a fundamental disagreement.

I understand that there are jobs and fortunes tied up into this issues... but the fact is, the money isn't going anywhere. The rest of the world's economies are pretty much worse off than ours. Thus, there is really no good place to put the money outside our economy.

The dangerous thing here, is the fact that so many have been talking DOWN the economy for so long, that people think we are on the fast end of a 8 year slide. The danger in that is a loss of confidence which WILL bring a major recession or even depression. After all, the economy isn't as much an act of buying and selling, as it is an act of psychology.

If people play it cool, relax, realize that tomorrow will still come, they will be ok. Sure, save some money. Don't spend it like a wildman. We will dip into a bit of a recession, but then come back.

700 points in a 12,000 point dow isn't much. It isn't half as bad as the 500 point drop in the late 80's, which ended up being just a hiccup in the economy. Fundamentally, we have a healthy nation. That healthy nation WILL produce a healthy economy... IF we don't SCREW with it too much... and IF we don't over-politicize it... from BOTH sides.

Preacher
09-29-2008, 06:43 PM
I think what we are really seeing is simple checks and balances. We aren't going to have 230 years undone by one catastrophic event, so let's not have 230 years undone by the overreaction to the catastrophic event.


:hatsoff:

Great minds think alike.... and so do ours.