More Occupation of Wall Street

[TerraPrime]

I'm curious -- did you sit down with the banker and discuss terms before you actually looked at condos?

Yes we met to discuss what kinds of loans were available so we'd know what level of pre-approval we could get, which affected what level of houses we'd be looking at.

Also, I'm not quite clear on what you're saying. Are you saying that you ended up paying more per month than you thought you were going to pay, or was it that you found out that the amount you were willing to pay per month permitted you to get a more expensive place? Because if it's the latter, I don't see the problem.

Let me clarify.

If I had gotten a fixed rate mortgage, we wouldn't have been able to afford as expensive a house as with the variable rate mortgage. Our monthly payment did go up by $50 from our "maximum comfortable" range, but it's not like it was double of what we wanted to pay. The issue I'm raising is that in the process, I was convinced that I could afford more house, by the loan officer at the bank. The variable rate mortgage worked out for us because we were certain we'd be selling before the rate changes, but I can easily see someone being guided to that loan, or even the 20/80 loan, and then become stuck with a higher rate when the 5year ends.

The whole process was very interactive, and it's not like you go with a plan and they tell you yes or no. The loan officer actually works with you to find the mortgage that works. In the process, they're making a profit, so I don't think the loan officers have the best interest of your financial health in mind. As long as your debt-ratio is this, then you can get Y amount on your loan, and wouldn't you want to make it Y+$12000? You can, if you do this type of loan! etc. It's a sales pitch. The officer defines what a variable rate is, but she didn't tell me the implications. I learned it from reading on my own. Even the truth in lending statement, which I did try to read most of, at the end, didn't really tell anyone what the month-to-month situation would be like if the rate goes up.

[Tempra]

That's certainly not how it works here, or at least not five years ago. The provisional loan approval comes quite independent of the actual property, so you go to the bank first for a quote, then work out what price range you are able to even start househunting in, based on the likely repayments you can manage on your salary. Obviously the bank needs the survey report on the house before they will confirm the loan, but that's really just a tickbox rather than a prerequisite.

That's similar to how it is here with mortgage preapprovals. The bank will tell you the maximum amount you can afford/they will lend. Of course, banks often lent beyond the maximum to get a deal through. Things are obviously stricter now, but I would wager that banks have reeled in the amount they are willing to lend now vs. 2006 based on the same numbers.

[Tormund Ukrainesbane]

Ummm... yes?

So we have no obesity problem in the U.S. because all food items come with nutritional information on the back?

We have an obesity problem. It isn't Coca Cola's fault that we have an obesity problem. Fraud is wrong and should be punished. But someone too dumb to say "I make 2000.00 per month, a 950.00 per month mortgage is unaffordable for me" does not get my pity. I forbore purchasing a house through a decade of working in this industry because I can add 2+2. It really is that simple. Same as being fat. Eating more than you exercise = fat. End of story.

[Arthmail]

We have an obesity problem. It isn't Coca Cola's fault that we have an obesity problem. Fraud is wrong and should be punished. But someone too dumb to say "I make 2000.00 per month, a 950.00 per month mortgage is unaffordable for me" does not get my pity. I forbore purchasing a house through a decade of working in this industry because I can add 2+2. It really is that simple. Same as being fat. Eating more than you exercise = fat. End of story.

No.

[TerraPrime]

We have an obesity problem. It isn't Coca Cola's fault that we have an obesity problem. Fraud is wrong and should be punished. But someone too dumb to say "I make 2000.00 per month, a 950.00 per month mortgage is unaffordable for me" does not get my pity. I forbore purchasing a house through a decade of working in this industry because I can add 2+2. It really is that simple. Same as being fat. Eating more than you exercise = fat. End of story.

That's rather simplistic, I'd say. People make bad choices, and their bad choices have direct consequences on the lives for the rest of society. When you're looking at policies and regulations, you have to make room for consumers making bad choices, otherwise it's just begging for troubles.

[Tormund Ukrainesbane]

Occupy Phoenix all marching down to the baseball stadium that Arizona taxpayers built but for some reason has Chase's name on it. Jaime Dimon is giving a speech down there. Somehow I doubt he'll be coming to talk to them.

[KAH]

Felice;

If you measure imports by the price paid for them, sure. If you measure them by how much it would cost to replace them with locally made alternatives, the picture looks very different. And irrespective of cost, if imports suddenly stopped, the US simply doesn't have the infrastructure to produce stuff itself any more. Making its own clothes, for example - how many sewing machines are there in the country? Nowhere near enough. Do you have any idea how much clothing would cost if most of it had to be hand sewn from hand-woven cloth? And GDP is just a measure of money changing hands; it doesn't measure the actual value produced in any meaningful sense.

If imports suddenly stopped - exceedingly unlikely unless there remains only one country in the whole world who exported clothes...but shit, I'll humour your little fantasy:

If imports suddenly stopped, there would be an immediate problem, but not a lasting one. First, the clothes on your back will not immediately fall apart, so until the clothes flow start over, there is something to fall back on.

Secondly, yes, there is no clothing industry to speak of in the US. Yet, it's hardly impossible to create one, not with guaranteed demand for the products. Considering that the scenario requires a remaining imbalance in wage levels between the US and the clothes exporter(s), one possibility could be to simply import cloth labourers rather than clothes. Buy factories and hire those who can make clothes. If that is not feasible, things get a little harder and costlier, but entrepreneurs in the US would set up shop quickly. It would start with substandard clothes for high prices, sure, but eventually things would get better. Machinery would get added after a while, pushing prices down further.

As for GDP and prices, you can legitimately criticize them, but that you can do with any kind of pricing.

Peak Oil will affect prices, of course, but it's going to be rather more gradual and drawn-out than what the worst alarmists claim.

It would be far, far worse if other countries were as rich as the US, though, because it's not possible to increase production to meet the increased demand.

Yes, but that will not happen overnight, which is exactly my point.

[Former Lord of Winterfell]

That's rather simplistic, I'd say. People make bad choices, and their bad choices have direct consequences on the lives for the rest of society. When you're looking at policies and regulations, you have to make room for consumers making bad choices, otherwise it's just begging for troubles.

The problem is that whenever you restrain freedom because some people make bad choices, you restrict the freedom of those who don't. Maybe the better course is to let them make their mistakes, but take measures to make sure their errors don't hurt the rest of society.

[TerraPrime]

The problem is that whenever you restrain freedom because some people make bad choices, you restrict the freedom of those who don't. Maybe the better course is to let them make their mistakes, but take measures to make sure their errors don't hurt the rest of society.

That sounds great, No.1. Make it so.

[Inigima]

The problem is that whenever you restrain freedom because some people make bad choices, you restrict the freedom of those who don't. Maybe the better course is to let them make their mistakes, but take measures to make sure their errors don't hurt the rest of society.

You mean like BoA's doing right now? That kind of error hurting society?

Atrios knocks it out of the park:

think i'll just assign all my debt and risky investments to "bad atrios"

If this BoA shit is allowed to fly, I wouldn't be shocked if we start to see mob violence.

[Lany Freelove Cassandra]

Question for those who have accounts with the big banks: anyone planning on closing their account on or before November 5?

If I was with BoA I would, but I (mostly) like my bank. If they start doing stuff like BoA is, then I will close all 6 of my accounts with them.

[DanteGabriel]

You mean like BoA's doing right now? That kind of error hurting society?

Atrios knocks it out of the park:

If this BoA shit is allowed to fly, I wouldn't be shocked if we start to see mob violence.

As I said. A beheading or a pillorying of some asshat greedheaded shitheel like the CEO of BofA will be a nice start to breeding some humanity back into the overprivileged capital class.

And to Zabzie, who asked "are we really here?" in response to my previous post:

Yes, we are.

[Former Lord of Winterfell]

You mean like BoA's doing right now? That kind of error hurting society?

Let BOA go DOA.

[Swordfish]

Yes we met to discuss what kinds of loans were available so we'd know what level of pre-approval we could get, which affected what level of houses we'd be looking at.

Let me clarify.

If I had gotten a fixed rate mortgage, we wouldn't have been able to afford as expensive a house as with the variable rate mortgage. Our monthly payment did go up by $50 from our "maximum comfortable" range, but it's not like it was double of what we wanted to pay. The issue I'm raising is that in the process, I was convinced that I could afford more house, by the loan officer at the bank. The variable rate mortgage worked out for us because we were certain we'd be selling before the rate changes, but I can easily see someone being guided to that loan, or even the 20/80 loan, and then become stuck with a higher rate when the 5year ends.

The whole process was very interactive, and it's not like you go with a plan and they tell you yes or no. The loan officer actually works with you to find the mortgage that works. In the process, they're making a profit, so I don't think the loan officers have the best interest of your financial health in mind. As long as your debt-ratio is this, then you can get Y amount on your loan, and wouldn't you want to make it Y+$12000? You can, if you do this type of loan! etc. It's a sales pitch. The officer defines what a variable rate is, but she didn't tell me the implications. I learned it from reading on my own. Even the truth in lending statement, which I did try to read most of, at the end, didn't really tell anyone what the month-to-month situation would be like if the rate goes up.

And in your case, since you knew you'd be selling, It sounds like you got the right advice, as well as being presented other possible options, you did the necessary research to understand the personal implications to you, and you ended up with the right loan.

What is the problem you are trying to illustrate with this example?

Because it sounds to me like it worked exactly the way it should work.

Could you have fucked it up and gotten greedy? Sure. but I still don't see where, in your example, the loan officer would've been culpable for anything.

I think the Industrial Revolution and the living conditions of the average worker are a really good example of what happens if you don't regulate the economy. Just my two cents.

the living conditions of the average worker in the US are among the best in the world.

So i guess I agree?

[Inigima]

Let BOA go DOA.

I'd love to, but they're trying to make the government -- and by extension, you and me -- responsible for their losses.

I don't understand what rational, consistent mentality says "I shouldn't have to pay for that guy's bad judgment, but you should have to pay for mine."

[TerraPrime]

And in your case, since you knew you'd be selling, It sounds like you got the right advice, as well as being presented other possible options, you did the necessary research to understand the personal implications to you, and you ended up with the right loan.

What is the problem you are trying to illustrate with this example?

Because it sounds to me like it worked exactly the way it should work.

Could you have fucked it up and gotten greedy? Sure. but I still don't see where, in your example, the loan officer would've been culpable for anything.

Yes, I am well fed, so the world has no malnutrition problem?

The point is that less well-prepared people, of which I am going to assume there are many given the general state of affairs in credit card debt and obesity, will have been easily shuttled into loan programs that make it sound like they can afford a lot more. The people who defaulted on these loans are typically (from what I read) the ones who got the riskier loans, and they had to get those riskier loans because their income levels are lower, and education level tends to correlate with income level. So the target audience for these high-risk loans are such that they are less likely to be able to judge the risk accurately.

The loan officer is just doing her job, which is, to sell loans. Unless someone is working with an advocacy group for mortgage, they don't have anyone looking out for their interest in this transaction. If I walk in to buy a car and I haven't done my own research, I'd be at the mercy of what information the salesperson tells me, and those people are driven by the interest of selling a product, not to watch for my financial health.

The point, over all, is that assessing risk of a loan is not as straight forward as it sounds on the forum here. People's capacity to understand these financial terms and people's resource (time and access to information) to protect themselves as consumers vary tremendously depending on many social and cultural factors. It is not helpful at all to say that people who defaulted on loans made bad choices in calculating the risk. Well duh, water is wet.

[Swordfish]

Yes, I am well fed, so the world has no malnutrition problem?

Yes. Exactly.

:rolleyes:

The point is that less well-prepared people, of which I am going to assume there are many given the general state of affairs in credit card debt and obesity, will have been easily shuttled into loan programs that make it sound like they can afford a lot more. The people who defaulted on these loans are typically (from what I read) the ones who got the riskier loans, and they had to get those riskier loans because their income levels are lower, and education level tends to correlate with income level. So the target audience for these high-risk loans are such that they are less likely to be able to judge the risk accurately.

The loan officer is just doing her job, which is, to sell loans. Unless someone is working with an advocacy group for mortgage, they don't have anyone looking out for their interest in this transaction. If I walk in to buy a car and I haven't done my own research, I'd be at the mercy of what information the salesperson tells me, and those people are driven by the interest of selling a product, not to watch for my financial health.

And if you buy more car than you can afford, and later lose it, there is no national outcry about the car salesman fucking you over.

Because you are culpable for that decision, and your lack of doing the research, not him.

The point, over all, is that assessing risk of a loan is not as straight forward as it sounds on the forum here. People's capacity to understand these financial terms and people's resource (time and access to information) to protect themselves as consumers vary tremendously depending on many social and cultural factors. It is not helpful at all to say that people who defaulted on loans made bad choices in calculating the risk. Well duh, water is wet.

it has nothing to do with calculating the risk of a loan. We're talking about very basic budgeting here.

Simple arithmetic, not actuarial science.

[Shryke]

And if you buy more car than you can afford, and later lose it, there is no national outcry about the car salesman fucking you over.

Because you are culpable for that decision, and your lack of doing the research, not him.

Actually there is an outcry over predatory lending, it's just those practices seem alot less common in car loans and the like.

Of course, the big reason for the outcry isn't that some guy lost his house, it's that TONS of people lost their houses and because the financial sector was spreading all those shitty loans around so that when all those people lost their houses, everyone went down with them.

Also it went the other way in a nice self-reinforcing cycle (ie - the collapse of the economy cost people jobs which caused them to then default on their loans)

The problem is that whenever you restrain freedom because some people make bad choices, you restrict the freedom of those who don't. Maybe the better course is to let them make their mistakes, but take measures to make sure their errors don't hurt the rest of society.

Indeed FLOW. And how would one do this?

By, say, making sure the risk of those bad choices can't be spread out all over the place?

[Swordfish]

<p>

I have to agree. If I may remind everyone...I never went beyond pre-algebra in 8th grade. Somehow, I managed to understand the terms of my home loan! :)

And of course, none of THAT would even matter if the government had not created an environment that encouraged the buyer to walk in that door in the first place by artificially manipulating the market SPECIFICALLY to get them to buy a house.

(By the way, for those of you wondering &quot;how in the hell did she ever bcome a CPA&quot;...accounting is *rules*, not *numbers*. Actuarial science is numbers. Accounting has a lot in common with grammar and etiquette.)

I could of never made a good accountant. ;)

[Mlle. Zabzie]

I'm curious -- did you sit down with the banker and discuss terms before you actually looked at condos?

Also, I'm not quite clear on what you're saying. Are you saying that you ended up paying more per month than you thought you were going to pay, or was it that you found out that the amount you were willing to pay per month permitted you to get a more expensive place? Because if it's the latter, I don't see the problem.

We had to have preapproval before we even put a bid on a place. In this market, you have to submit your pre-approval letter with your offer.

As I said. A beheading or a pillorying of some asshat greedheaded shitheel like the CEO of BofA will be a nice start to breeding some humanity back into the overprivileged capital class.

And to Zabzie, who asked "are we really here?" in response to my previous post:

Yes, we are.

Nothing in that piece that I saw justifies beheading or pillorying anyone. It's the same figures that have been batted around ad nauseum in the past 4 threads. Putting a picture of Michael Douglas as Gordon Gecko, smoking a cigar, in the middle of the graphs doesn't suddenly justify violence of any kind. Advocating violence (against anyone, actually) in my mind is irresponsible.