Contributing To The Problem?...

I don't think it's ethical for a realtor to push them beyond their limits, but it is ultimately the buyer's responsibility to know what they can afford. If you go to a car lot and test drive a new $50,000 car, don't the car salesmen do the same thing? Isn't it still your responsibility to say 'thanks for the ride' and walk away? No different than all the credit card offers that come in the mail. If you can't afford to pay for something, then don't buy it!

I think the problem is equally divided. The banks want the loans, which they can sell and never have to deal with. The people are also to blame, they know they cannot afford these things but they want them anyway. We have become a society that thinks we're entitled to home ownership, fine clothing, new cars, etc. We have forgotten to live within or below our means and thus we as a society have no savings, no real worth and a lot of debt. There's plenty of people to place the blame on but it all boils down to one word: GREED!

When my husband and I had inherited some money we thought about looking into getting a house. We were turned down because our credit was not good. They told us we could probably get a house if we paid 20-30 percent down which would take all that we had. We gave up. I had looked at some places that offered the ARM loans and I could not believe people would actually buy them. I have to agree that these lenders have contributed to the mortgage problem. They convince people that they can afford what they really can't. On the other hand people don't know how to take care of their own finances. Plus they don't want to do any research on their own. I also think this whole thing goes even farther back to when dealerships started selling car loans for five years compared to 3 years. Now I see they have 72 months to pay off the car. The trouble is that the car ends up not being worth what buyers still owe when they decide they want a new car. This has moved on to the housing industry and no body has even noticed.

I know exactly what you mean. I see this all of the time. I think the "realtor's" need their heads examined...and whilst I am thinking of it. Let's charge them for the economy fallinmg apart in the area of home loans. Sounds logical doesn't it? I think so. I know that the realtors must do all of this because they want the money. It' completely un-ethical I think. I think this was a great post to point out.

i am not surprised that a realators promised them the loan.i think that times are tough and so the realator has pulled out every thing he has to get a sale,not really ethical at all,but its up to those people to realise they have to be able to afford it anyway.cheers sue

This is called a Ninja loan - no income, no job, and no proof of assets. A lot of financial experts blame loans like this for the problem. After 9/11 the US government needed to boost morale and confidence and released a lot of money into the system, and wtith so much money around loan people had to find a way to spend it. Now it's come back to bite us all, and I get really quite infuriated at the right-wingers who complain about government regulation (=socialism according to them, which only goes to show exactly how ignorant they are). This sort of thing could nevfer happen in Australia because our financial and lending businesses are heavily regulated to protect the consumer. This even has qualified support from our own home-grown market fundamentalists, who seem to accept that the ideal is rarely reached and that greed and immoral business practices do occur and need to be protected against. Lash

Wow, did the real estate broker know they were on welfare? You would think that they would know that someone on welfare cannot afford to pay for a loan for $250,000. I wouldn't even attempt to get a loan for that much even if I wasn't on welfare. That would take forever to pay off unless both of them got a really great job sometime int he near future. Especially with the economy the way it is now, trying to buy a house that costs that much is crazy! I don't think the real estate agent was using good judgment when she promised them the loan would go through like that! All she did was get their hopes up for nothing. It is a good thing the house was sold to someone else because yeah they would have been happy in the beginning with a great house like that but in the near future they would have most definitely lost the house.

I think it's crazy. We bought our house last summer, and we were preapproved for a large loan as well. We knew that there was no way that we would be able to afford payments on a house as expensive as they were offering, though! It would have taken about half of what we make each month, and that wouldn't have left enough for things we have to pay like a car payment (we already had a $500+ car payment, and it should have been factored in as one of our expenses), student loans, utilities, groceries, and gas. We opted to buy a much cheaper house instead. Sure it's not as big as the ones we could have bought, but this way we've never had any problems paying for it. We have never been forced to decide between food and heat, and never had to ask anyone for money.

That does not surprise me to hear that a realtor told them this and it is not even up to the realtor whether or not a person gets the loan. That is unreal to think that someone on welfare could get a home that size and price. I do believe that is one of the reasons that it is like that today.

I really believe that the relators shouldnt do this to people your friends were obviously not able to afford such a house and I think I heard on the news there is a few relators in trouble for this.Yes I think this led to the problems we are now facing or at least helped.You have a great night.

Realtors do have calculators that help determine what buyer can probably qualify for and/or lending representatives that they can consult, but ultimately the buyer has to have some responsibility. But some of these loans that they make (the various adjustables) can be really hard for a layman to understand.

why would anyone w/out a job even be looking at a house period.

This is the problem!!! My sister, who is in real estate, will not sell a house to anyone who cannot put down a percentage. She won't do it. The problem is people want more than they can afford when the carrot is dangled in front of them. When my husband and I bought our first home, we bought a fixer upper. It is all we could afford and we did not mind as we had a home!!! So what it did not have up-to-date anything. It was a home, it kept us in one place, safe, and it was ours. We worked hard in 9 years to improve it. We made a $90,000 profit when we sold it. We moved to another state and there, again, we could not quite get a bigger home, but that was okay. We had a smaller one built. It was new but nothing special. We had no landscaping, no steps, a dirt driveway!! LOL We built them ourselves. We have worked our fingers to the bone (and are still working at it) to have beautiful landscaping. We have a small kitchen that I am busy upgrading, on my own. We finished our own basement. The only things that we did not do ourselves was have our driveway paved and a small deck on the back built. We put in wood floors, I totally did over my master bathroom and the other bathroom is next, after I finish my kitchen. No one wants to put in sweat equity these days. We live in a drive thru society where we can get a hamburger, fries and a coke for $3 and change, in under 90 seconds, so we want everything like that. These people see these gorgeous homes on HGTV and DIY Network and want them, too, forgetting that those people either had lots of dough or put a lot of work in there. Laminate counters?! No way, they want granite!! Linoleum floors?!! No way, they want Brazilian hardwood! A bathroom with one sink and a tub?!! No way!! They want a spa tub, steam shower, double sinks, granite and stone with brushed nickel hardware and cherry wood cabinets!!I am happy to say that we were smart enough to NOT try to overbuy. My mother has been a banker since she was out of high school (she is 80 today) and she cannot believe who they give loans to these days. She would never approve such a loan but these real estate agents want that sale, no matter what and these banks want these loans. Then, when they foreclose on a house and sell it, they never make back the money because the house will never sell for what they loaned out. That is one of the many problems with the economy in the United States and, I hope, whomever becomes president can fix this.

That is crazy, and just a bit unethical, on the agents part. Ok, so she gets the loan pushed through. How are these people going to make payments? This type of thing is absolutely why things are such a mess right now. On the other hand, if people would stick with something they could afford, and maybe upgrade when things get better, that would help, too. No, I would not go in over my head, even if I was promised the load would go through. If I can't afford it, I'm not buying it.

This is exactly the problem. The realtor sells the home to them keeping her big percentage cut. The Loan company then sells the loan to a bigger banking company in a bulk package ( several loans at once which the bank doesn't really investigate ). Then the bank is stuck holding a loan or several loans that can't be paid for & has to foreclose. End result , the housing market crashes. Add to that the hits the economy took because of weather damage & gas prices & even the good loans become unstable. An economy which has become credit based then has nothing to stand on & crumbles. They really need to track this back to the source, sieze these peoples assets & charge them for scamming the public.

This happened to several people and the government is thinking about pressing charges against some of the Real Estate agents and brokerage firms and banks. This is what they did. They promised people loans that could not afford and in some cases they forged documents. One case my sister in-law got a loan for a condo and with a fixed mortgage which she signed papers for. Come to find out it was not a fix mortgage it was a variable interest rate mortgage. One of those designer loans with an ARM it had thee ways to pay. One percent interest, interest only, or interest and principle. When she want to refinance she found out that the mortgage broker lied on her application and said she made more income than she really did. My sister in law is screwed with a mortgage she cannot pay for. Now this is happened to a lot of people around here. It has happen to us. We have a second mortgage on our home what has a balloon payment and my husband signed papers for a 30 year fixed loan. I do not know what we are going to do when the balloon is going to come do. We cannot refine our home because we owe more then our house is worth.

No that's not right at all. If your friends don't even have the money for monthly mortgage payments the house will just get repossessed within a couple months. And, then all of them will be right back in the same spot. But guess what! The Realtor still gets her commission. No refunds on that one! Those kind of people give the real estate industry a bad name.

i'm afraid thats why the banks are in so much trouble now because of this very some problem, no i don't think i would of gone for this house, but i may of been tempted if the loan was on the plate so to speak

I think this behavior is what led to our problems, but the thing is I don't know why they would do it. I guess the reason is, if the people can't pay their mortgages, the loan companies take their homes back, and sell them again to other people at a higher price, and they get their money back, but in the meantime, theres this family without a home. I myself can't see why anybody would try to buy a 250,000.00 dollar home when they know full well that they can't afford it, the house insurance alone would almost equal the house payment a month. I know I couldn't do it, I don't work, we don't have any children, I'm on disability and my husband is a mechanic, now could you see us trying to get a home worth a quarter of a million dollars, we'll never even have that much money in our lifetime, even if we won the lottery. I just don't understand why they do it, why they try to scam poor people like that, and why poor people believe them, and get themselves into it.

Hi there. I feel that people shouldn't try to buy a house unless there fully certain that they will be able afford the mortgage, and that they have a stable income, and secondly the realestate company's should not mislead people in to buying something they may not be able to afford, I feel that everyone has the right to own a home, but you have to make sure your not living over your means and people have to educate themselves about realestate so there not tricked in to a bad deal.