DISQUS

Wisconsin Liberal · 8 months ago

Wait a minute John, wasn't to long ago you ranted on your health insurance, and wanted us to feel sorry for you. Well, that's the insurance you signed on to. But you don't want to feel something for those who lost their homes. Every person's situation is different. So don't lump them together.

Here in Wisconsin our homes didn't get to far out of whack as they did in other places, and we are having plenty of forclosures. Many are due to job loss or medical bills. Are you one of those "elites" that only think of themselves.

And for disclosure, my wife had cancer five years ago. We had just bought a home and got sick a year later, I carried the health insurance, she had no disablity insurance, she worked in retail and didn't make much, so if we did take those insurances from work, she would have came home with little for a paycheck. My insurance didn't cover everything. We are then buried under debt. Luckily her store kept her job open for her. We were very grateful. She was a very dedicated worker and they knew it. Most of her check went to paying off her 401k loan we took out to cover things. Almost lost our home several times, but always found a way to make the payments. But this past January she died of a blood clot. Now I am wondering how I am going to keep the house without her income. But do you call me an "idiot" if I should loose it?

watchington · 8 months ago

John, if you seriously believe this you need to go back to being a Republican.

The real fact is that the mortgage industry DID prey on people, DID lie to them, DID trap them in mortgages they could not afford -- because it was LEGAL and there was a LOT of money to be made.

Desert Rat · 8 months ago

Hate to say it, John, but you're coming off like a king sized asshole here.

I was cheated on a mortgage six years ago. The terms I was told by my mortgage broker weren't what he actually sold me. How did I discover this? I refinanced a year later to get a better rate. At that point, with the second mortgage broker, a neighbor, I discovered that the first one hadn't made me aware of a couple of provisions with regard to the nature of closing costs.

I'm not a moron, John. I'm a college graduate with a career in the financial services industry (not in the mortgage business, fortunately). I'm not somebody who bought more house than I can afford. I'm not somebody who took a risky ARM or no-down mortgage. I'm not a guy who was buying properties just to flip them. I'm not a guy with shaky credit. I'm just a guy with a whole lot less knowledge about the mortgage business than a mortgage broker (the same as you, I might point out), and the person I thought I could trust had a whole lot lower ethical standards than I had.

There are a whole lot of people I've come in contact with over the years who have had the same thing happen to them. And I might point out that you cast a very skeptical eye to the way the regular media covers other stories, on topics as wide ranging as LGBT issues, to politics, to foreign policy, to the broader economy. Why do you accept, so uncritically, all the shit the WaPo and the Gray Lady shovel about the house-flipping real estate speculators, who apparently single-handedly helped bring on the financial meltdown amid the shenanigans going on in the real-estate and mortgage markets over the last decade? Why do you believe them any more on this than on other issues?

Regarding your own situation, I'm glad you did your homework, and got a good deal. But that not only makes you good, that makes you lucky as hell. It's time you accept that, instead of beating the crap out of a lot of people whose only crime was wanting to improve their lives, and walked into a situation they were totally unprepared for.

Until then, I'd suggest you run the danger of sounding a lot like one of those heartless Republican silver spoon bastards we all oppose on other issues.

Malcolm · 8 months ago

John, I think you need to calm down and think more clearly about the wide variety of people who have bad mortgages. You are very, very well educated, with a legal education that taught you how to read documents carefully. Not everyone is in the same fortunate position. I've read about many elderly minority group members, disadvantaged in every sense of the word, who can only be said to have been tricked into disastrous mortgages they didn't need and thence, absent concerted legal aid, into homelessness. It's not nearly as hard as you might think to be tricked. I'm lucky enough to have had a good legal education too, and it saved us from being tricked into an ARM when we had been told up to and including the closing that we were getting a fixed rate mortgage. Fortunately, I insisted on reading the documents very, very carefully before we signed. It was not easy, even for a lawyer. After reading them twice, I said wait a minute, you said this was a fixed rate mortgage but the documents say its an ARM. After a lot of bluster, the closing attorneys trying to tell me I couldn't read or understand what I was reading, I insisted on leaving with the documents unsigned. A nonlawyer of average intelligence, or anyone of low self-confidence, might easily have been persuaded that he didn't understand, and that the lawyers trying so hard to convince him to sign were telling the truth. You have to be very confident to stand up against what people who may be better educated and are certainly more skilled at snake oil sales tell you. Of course I agree that the examples you cite are in a different category altogether, but those examples are far from being the whole story.

alittlebit · 8 months ago

Its not sexy to put honest people on TV.
Visit the housing center in Chicago or any other city across America. Spend a day listening to people who were scammed, lied to, had documents switched on them at the closing table. Predatory lending isn't new they just extended it to middle class whites. When it was only poor people and people of color no one really gave a damn.

Stop sucking up stupid news stories and there were lots of crooked mortgage brokers and honest people who got scammed.

devis1 · 8 months ago

The true villians are the ones who compounded the mortgage crisis 1000%with CDS and the swindlers who brought down 100 year old investment firms and a ton of other companies with naked short sales. Not to mention the crooks at the Fed. I'll save my venom for them.

sgwhiteinfla · 8 months ago

I personally know two couples who were lied to and told they were getting a traditional mortgage and instead were given an adjustable rate mortgage. They are lower middle class people and they don't have a lawyer on retainer and since they are all college grads they felt they knew what they were doing. What they didn't realize is that their interest rate would go from 6% to 11% in one case and up to 13% in the other and if you didn't know, that can and does totally screw up a budget. There is a new MSNBC special with the guy who does "How to Catch A Predator" specifically on this phenomenon coming on Tee Vee soon. This post is pretty phucking ignorant and insulting which is dissapointing because this blog usually does a lot better. Hey I have an idea, how about using teh google next time before you post on this subject?

pdxprobert · 8 months ago

John, if people were betting the market wouldnt turn before they were able to turn the property at a profit, then I have no sympathy... but if the people were sold a piece of property to become their main dwelling and the mortgage rep knew full well that the new homeowners wouldnt be able to maintain that house after the new rates kicked in, why did he / she approve that loan...Isnt that the job of a loan agent, to approve the ability to pay it back?... it was when I bought my house... I had to explain how I was going to budget my income to assure the loan institution I could handle the responsibility of home ownership.. shouldn't people need to be approved for a loan under the full terms of that agreement and not just the short term portion? Isn't that where the problem began?

Nate · 8 months ago

I don't like the new pissed-off-about-the-economy John. This blog is going downhill with these constant posts.....can you find something interesting and helpful to say or devote your attention elsewhere?

Gridlock · 8 months ago

lol I love how the blog is going "downhill" because the author isn't psychically tailoring it to your specific internet experience wants and needs.

John Aravosis · 8 months ago

And, as usual, they never fight back with logic, with examples, with facts. Just with "I don't like you any more." That's not an argument, it's a whine. QED Bye now :-)

lynchie · 8 months ago

If the posts aren't interesting go to another blog.

John Aravosis · 8 months ago

Um, you don't want me writing about the economy, during the biggest economic crisis in 80 years. Okay... I can write about puppies if you like. Here's a beautiful chef d'oeuvre to make you feel better. http://southportbooze.files.wordpress.com/2008/...

stranded · 8 months ago

Oops. This was meant to be a reply to Nate's comment below.

I agree. This post seems indistinguishable from some of the right-wing diatribes I've read. Generalizing with terms like exploding idiots hardly describes the lives of the people in the real world I meet all the time who've been trapped by an exploding economy. Apart from those who got played by playing by the rules, there are others who did take risks because it was an opportunity to rise out of poverty conditions into a stable middle-class existence. These are actual people I know, who did what they thought was right for themselves and their families, not out of greed or playing the system, but to better their lives with the chances that were available at the time. If there's one thing I've learned from the right wing, it's that arguments based on gross generalizations and "common-sense ethics" don't jibe with the lives of individual stories in the real world.

John Aravosis · 8 months ago

Great, then give me examples, because you clearly didn't read what I wrote - which is also indistinguishable from right-wing diatribes. I just wrote an entire post asking why we never get example of real people who got tricked. So what did you do? Criticize me for asking the question, then you never answered it, never gave us one example. Though that's also a far-left way to argue too - try to shame people into silence rather than answer a simple question.

draftmama · 8 months ago

And then there are people like us who have had a successful kitchen design business which has earned us a good living for the last 12 years, and it has now completely disappeared. At least we have been fortunate enough to find jobs which are pretty recession proof (energy auditor and court clerk) but are unable to now afford to keep our home on our drastically reduced income. So we have to sell our house, downsize, probably lose about $100,000 of equity (and here in Montana that's a whole whack of money) and start again at 60. All because a bunch of greedy financiers, together with millions of irresponsible people who thought that credit was the money tree, have trashed the world's economy.

pdxprobert · 8 months ago

here's another scenario, I never over extended myself in terms of debt, but now my income is being cut because of the economy... I am 100% commission and the transportation business is being hit hard by reduced orders which affects that amount of freight that needs to be moved, hence my income is being reduced through no fault of my own.. likewise, my vendors and carriers are also experiencing the same phenomenon... so now I must consider selling and downsizing to an area where my equity could pay for a house in full, just so I can eliminate the cost of a house payment to meet my new income range..the problem with finding a new area is it will most likely not be that appealing of an area as my equity isnt that great, but enough for some areas that never were impacted by the accelerated home prices.. the midwest has many areas like that, but its also very conservative.... its a big decision.. one I didnt want to have to make... Ive cut my cable and increased my deductible on my health insurance to $5000.. sold my car 4 years ago, and the last thing left to cut is my $54 a month gym membership... after that its just basics left... these guys/woman who created this mess have made a mess of many peoples lives vicariously...

John Aravosis · 8 months ago

I'm in the same boat. I was doing fine, and now ad revenues are decreasing because of the recession. So I have to be careful because my mortgage isn't decreasing, my food intake isn't decreasing, my phone bill is a fixed price, electricity, etc. This is my point - and it's a larger point I've made before - a lot of these "fixes" seem to benefit some people, often people who don't "deserve" them, and not others.

Steve_in_CNJ · 8 months ago

sure, but here's the sequence of events: 1) housing bubble bursts and prices fall, 2) 10% of mortgages go late because rates are increased or borrowers can't flip or borrow on equity, 3) the financial industry collapses due to the bad loans, 4) the rest of the world economy goes into a depression 5) you and draftmama fall victim to (1) through (4) through no fault of your own. the question is, do you blame just the lenders or do you include the flippers and overextended equity seekers too?

pdxprobert · 8 months ago

If I were to assess ultimate responsibility, I would place it on the financial companies that should have used a debt to asset/income ratio to approve loans..it was their solvency they were betting with and they are supposed to be the professionals....

nobody should have been given a loan that couldnt pay it back when the higher rates kicked in... and Ive never seen any legislation that stated people and in particular, minorities, had to be given credit that they were not qualified to pay back under their income evaluations at the time the loan was approved...

John Aravosis · 8 months ago

Now THAT is a good example. But you don't hear of your example much.

draftmama · 8 months ago

Well out here in the west I'll bet there are lots of people in the same boat. Our cabinet supplier in Monroe WA is down from 700 employees to just under 400. Instead of using 13 trucks a week to deliver they are down to just 4 (and those are independent trucking companies losing the business). The trickle down effect (now THERE'S an irony) is devastating.

So - instead of taking our three dogs to the groomer once a month we stretch it out to two months. The horses don't get a hoof trim every six weeks, more like three months, so the farrier is hurting. We just don't go out at all any more and we used to go out for dinner every Friday evening. We spend money on nothing that isn't absolutely essential and that has to have an effect in our local economy.

Multiply our situation by a few million and you see why the country is in such trouble. And you can also understand the anger and frustration at the discussion of bankers' bonuses in the millions. Our income is now less than half it was last year. And our budget energy billing which was $183/month in 2003 is now $407/month, thanks to the deregulation ushered in by the republicans led by no less than Marc Racicot who was governor of Montana at the time before he went to raise money for W.

Am I sick of hearing complaints that they need bonuses to maintain their lifestyles? You bet I am. They did the damage, and need to take the pain like the rest of us.

Frank Probst · 8 months ago

These are the same brainiacs who need warning labels on McDonald's coffee to let them know that it's hot.
-----
Not a good comparison. I really hate it when people bash the McDonald's coffee case, but the jury essentially got it right on that one. They found for the plaintiff not because coffee is hot, but because McDonald's coffee was TOO hot. They kept their coffee hotter than anyone else did, they had received hundreds of complaints about it, and the woman who got burned had to spend several days in the hospital and had to have skin grafts for her injuries.

Steve · 8 months ago

"(These are the same brainiacs who need warning labels on McDonald's coffee to let them know that it's hot.)"
Shitty analogy.
The woman who got scalded by McDonald's coffee had third degree burns.
Ever have third degree burns?
Didn't think so.

shell · 8 months ago

True. I am sick to death of hearing the McDonald's story of that woman.

The FACT is that McDonald's served their coffee much hotter (hotter than law allowed) to get more customers.

Drop that argument -- it isn't true.

John Aravosis · 8 months ago

Oh please. I'm sorry. People are blithering idiots if they don't expect a cup of coffee to be piping hot.

usagi · 8 months ago

No, you're blithering idiot for using that story as a touch point when the actual facts of the case are so widely known. The coffee in question was not "piping hot," it was dangerously hot. It was hotter than it should have been for any culinary reason. McDonald's had been repeated warned that it represented a danger to customers and had a long history of complaints.
The plaintiff only wanted compensation for the costs of the medical treatment such as the skin grafts she required, and when she had to take McDonald's to court to pursue any reasonable compensation, the jury, despite finding her (if I recall correctly) 50% liable for the accident still saw fit to award her a significant financial damage award because McDonald's was so egregiously wrong.
It utterly undermines your point.

GoBlue · 8 months ago

The tort "reformers" who claim that the plaintiff made millions out of spilling coffee on herself are flat-out lying. Stella Liebeck and McDonald's settled for an undisclosed sum after the judge reduced the amount of the punitive damages awarded by the jury. The terms were confidential, so only Liebeck and the lawyers know what she ultimately received.

doggril · 8 months ago

Real classy, John, going after an old woman with 3rd degree burns, when you haven't even bothered to educate yourself on the facts of the case.

Nasara · 8 months ago

John,

Ahem. Not everyone has a graduate degree, and I'm glad to see that you're infallible God incarnate, so that you read every document thoroughly before signing, but sadly, most mortgage brokers were not as thorough or well disciplined as yours apparently was. Indeed, shocking as this may seem, there are some people who don't go to ivy league schools, or even college in general, and who were told by more sophisticated financial "experts" that they could afford these financial products.

Should these people have been more savvy? Of course...as should have all of Madoff investors. But we still consider them victims.

We shouldn't buy from men in suits selling snake oil...and that doesn't mean we're not culpable, that doesn't mean they aren't either.

Steve_in_CNJ · 8 months ago

still, i'd like to see a study on how many of the defaulted mortgages can be traced back to predatory lenders. it might not be as many as you assume. i don't think blaming borrowers for their misfortunes is quite the same as blaming food consumers for getting sick on peanut butter.

John Aravosis · 8 months ago

Exactly. I've already acknowledge that I'm willing to believe a lot of people didn't have the education, the smarts, whatever, and in essence got tricked. But I'd like to see evidence of how many people this is. Because to date, I haven't read about a lot of people who were snookered. It just strikes me as odd that we have this nationwide crisis of people who were snookered, and the press doesn't seem to be producing them very much.

beingqreus · 8 months ago

they can come find me. I'll be more than happy to attest to predatory trickery.

John · 8 months ago

Hey John,

I work for a credit union and we have fairly conservative lending standards. Hearing about the details of some of the mortgages, especially regarding stories about California, many people were given mortgages without income verification or employment verification. That is a HUGE no no if you are a responsible lender. The credit union I work for would not even consider doing a mortgage without income and employment verification. While borrowers have as much responsibility as the lenders do, there are certain barriers that any responsible lender shouldn't cross, and waiving income verification requirements for loans over $100k is just stupid. Unless you have Platinum grade credit i.e. 760+ FICO score, you wouldn't get so much as a $500 credit card without income verification at my financial institution. Unfortunately most of the big banks and mortgage lenders don't have the same philosophy that a credit union does.

potroast · 8 months ago

Are you arguing against the regulation of credit cards? Because credit cards can be deceptive, and even punish users who pay on time. They can adjust your rate anyway and anytime they want. Oh sure its all in teh fine print...if you are a lawyer you might be able to find it.

John Aravosis · 8 months ago

No I'm arguing that if you're going to allege deception, prove it. I know, and have read about, a lot of people who weren't deceived, they were stupid.

caphillprof · 8 months ago

The government also protects the stupid.

beingqreus · 8 months ago

well, I was deceived. After having negotiated the terms of a refi, the mortgage bitch switched the interest rate at signing- up to 13.5 %. I should've thrown her out the door (yes, she came to MY house), but had $5000 worth of medical bills to pay after hubby was diagnosed with ms and the ins. co. (Blue Cross) refused to pay. Just because you haven't heard the stories, doesn't mean they don't exist.

Greg · 8 months ago

It is not about being cheated on mortgage. I have not met people who would say they have been lied to on terms of mortgage. It is about banks selling everyone a dream that Real Estate will always go up. I have been told many times by mortgage brokers that values will always go up. That was their response to every concern I ever had. I did not buy it and did it my way. But many bought it. Now, we all were greedy. The whole nation. But banks did it because they never wanted us, consumers, to pay back. Fees were better than interest. And later high interest was even better. Banks never cared to get their money back because they were selling these loans next day. And now banks get help. It seems to me that they win and we loose. And this is where I complain that the nation is being cheated by these banks. We could take Citi, support it but on condition that it breaks up. However, we seem to support that "too big to fail" scenario.

frank · 8 months ago

Open a checking account and they have all the info they need. If your a homeowner with equity they will sell sell sell. Did anybody ever get a credit card they didn't apply for? If you did it's cause they took a peek at your credit report without asking.

doggril · 8 months ago

I don't know anyone who thought real estate would "always" go up. But where I live, it had gone up consistently for 20 years, and, when it had gone down, it didn't go down much. So, it seemed pretty reasonable to friends of mine to accept the bank's terms, when they were told that all they could qualify for was an ARM; but that it would be easy to refi in a year or so. So, they didn't need values to go up FOREVER; they just needed them to continue for one or two more years on the path they had been on for 20 years prior. These folks beleived they were on the verge of being priced out of the market forever.
Does that count as greedy? Because it sounds more like scared to me.

frank · 8 months ago

It's easy to point fingers after the fact. John, please talk to a loan officer at Wells Fargo or BofA and ask them about the culture of greed they soo quietly work in. Foreclosures are everywhere but extremely high in the ghetto, the dumb and stupid are easy prey

AdrianBrowne · 8 months ago

My parents taught me to be extremely skeptical of any advertising and if it seems to good to be true it isn't. In any situation where you're going to be giving someone money, ask yourself why they're offering what they're offering.

Also, I've noticed that people from other countries sometimes can't pick up on cultural clues that help natives easily discern between ripoff artists and someone selling a good product.

Some of it can be attributed to the way you were brought -- not a government problem -- but when a problem becomes widespread and the FBI issues warnings (in 2007) that this is happening:

"Mortgage fraud continues to be an escalating problem in the United States. Although no central repository collects all mortgage fraud complaints . . ."

http://www.fbi.gov/publications/fraud/mortgage_...

then perhaps that's when government should step in and AT LEAST begin a public awareness campaign.

shell · 8 months ago

Although I am annoyed that you brought up the utterly false McDonald's Coffee Story, I must agree with you on many mortgage stories.

Too many Americans pay no attention to mortgage rules/laws, etc. and just HAVE to have that house. You want to play Russian Roulette? Fine. Just don't whine to me, and expect to get helped, when your plan fails.

That is the problem with America -- everyone wants to get rich quick.

And think about this: if no one bought a house they couldn't afford, we might not be in the mess we are now. But that is the American Way -- always buy things you can't really afford and hope for the best.

caphillprof · 8 months ago

People were told they could afford the house. Indeed, the approval of the mortgage alone suggests that you can afford the house.

shell · 8 months ago

Yes, I believe people were told they could afford the house. That's what I am saying -- think for yourself! NEVER trust a business -- EVER. If you can't do research, don't buy a house!

Who knows whether you can afford a house? YOU! When I bought my first house, "they" told me I could afford quite a bit higher than *I* thought I could. (One would assume this was because, with interest rates so high, there weren't many home buyers -- they wanted to lure as many as they could -- at the highest price.)

caphillprof · 8 months ago

You overestimate the capabilities of millions and millions of your fellow citizens.

Chauncey Gardner · 8 months ago

The whole thing was a pyramid scheme and the credit rating firms like Moodys and Standards and Poors are the key to the scam. Brokers, agents, lenders and buyers drove up the prices of the homes but without the risk managers at the ratings firms giving the ok to anyone that wanted a loan the meltdown would have never happened. The ratings people made huge profits on these loans and they stopped being the gatekeepers.
You can blame all of these people for the housing bust but the ratings cops were on the take and the home buyers were left holding the bag after all of the aforementioned agents took their cuts.

Sage24 · 8 months ago

It really annoys me when a has been like Sarah Palin puts in her cheap two cents worth, and makes unwanted statements about President Obama's comment about special olympics. Looks like the wolf killer is really trying to be in the news, and must be desperate to run in 2012. She is milking this situation for what she can get out of it. This woman should spend her time taking care of her large brood, and spend time with her unwed daughter and granchild. So nice of her to act indignant, and outraged.

sam2300 · 8 months ago

Amen, John. I agree with you completely. Thanks for stating it so eloquently.

Ginny · 8 months ago

Wow. Way to go off the rails there.

Off course the mortgage companies would never do anything wrong....
Yeah right!

draftmama · 8 months ago

Sure it would have been easy to get sucked into a weird mortgage. We refinanced I believe 4 years ago and were offered an ARM - looked at each other and back at the broker - are you CRAZY!! So we fixed at 5.75% and she was pissed because she would have made more money on the ARM. But we are pretty savvy about finances - you have to be running your own business. However there are lots of people who don't have a clue about this stuff and would be easy prey for brokers just looking for a quick buck. Don't be so mean about people with less education who were easy prey for these sharks.

Indigo · 8 months ago

Here's what I think: sensible people already know that the coffee is hot. By that same criterion, sensible people already researched how much they can afford to put towards monthly mortgage payments. Sensible people also look both ways before they cross the street. Buyer beware is always the best advice.

True, the Failure's recent administration encouraged risky behavior, but who trusted the Failure? Who believed him? Who voted for him? Who thought he was doing a good job? Yeah . . . I figure, if they liked the Failure, they merit bad luck.

Too bad about the guys who got caught in the crossfire. What can be done to help them? I don't know. I know that people who say they know also don't know. I think we have an unacceptably high ratio of casualties from the economic collapse. I think it is our duty into the future to be very sure that the media, the books, the commentary and everything that gets said about the collapse points the guilt in the same direction: the Republican Party, everyone who voted for them, every Republican on the books today, and every Republican into the future, every person who tries to explain that not all Republicans are bad. Yes they are!

Just that!

Coffeeguy · 8 months ago

The issue in the McDonald's case was that their coffee was served at a substantially higher temperature than anyone else's, so "sensible people" were expecting something a little less dangerous, and McDonald's knew that, knew it was dangerous, had had over 700 similar problems, and went blithely on selling it just as they always had.

What the "sensible people" you're throwing at everyone here knew, had to do with liquids that were substantially cooler and would not cause third degree burns within two or three seconds of being spilled on clothing.

Ms. Liebeck had third-degree burns on her genitals. Just for shits and giggles, why don't you shuck out of your pants and undies, right now, in less than two and a half seconds? In the passenger seat (she wasn't driving) of a parked car (it wasn't being driven)?

Did you beat the clock? Congratulations, you only have second-degree burns on your junk.

Similarly with mortgages ... what "sensible people" knew was not enough to allow them to cope with misinformation and deliberate deception.

John, without using any of the terms your moderator (you have a moderator?) objects to, your argument here comes off poorly -- and John's Moderator, since you're unhappy with some of the language aimed at John, I would be grateful if you would please let John know that calling people who got burned on their mortgages "idiots" and "brainiacs" who play with electrical appliances in the shower is a lousy way to evoke polite responses.

KarenMrsLloydRichards · 8 months ago

It's far better that Obama is listening to Prof. Warren than to the likes of Timmeh and Larry.

She does a far more effective job of "keeping them honest" than AC360 does. She does not deserve this post.

nothingasitseems · 8 months ago

So, basically what your saying is... The morgage industry over the past few years, who were praying on the poor by leading them to believe that they could afford homes that they really couldn't, were not to blame at all. So, in that same mentality, if a neurologist has a patient coming in complaining of headaches, and after an examination, the neurologist comes to the conclusion that the patient just needs a neck adjustment. However, the neurologist, being the "expert professional" that s/he is decides that s/he is going to schedule a procedure that has a 20% chance of causing disability to that patient for the rest of his/her life... but it will make the neurologist a whole lot of money. And this neurologist does this to thousands upon thousands of people, and 20% of those people wind up disabled for the rest of their lives because they went through a procedure based on what their doctor told them was right for them. But the neurologist winds up making millions. So, what your saying is, it would be the PATIENTS FAULT? That's pretty much the mentality you have here.

I've never disagreed with an AmericaBlogger as much as I do with this particular post.

KarenMrsLloydRichards · 8 months ago

John A is a new first-time homeowner who's still coming to terms with the losses we are all suffering.

I was just as pissed off 6 months ago. The equity I thought I had in my Maryland home has evaporated since 2006 (about $100K). But I am at peace now (actually, I am anesthetized on pills and booze . . .)

KerrynowCampau · 8 months ago

Did your property taxes go down accordingly?

I was pissed when the market exploded (but then I don't ever plan on selling)

my property taxes doubled

KarenMrsLloydRichards · 8 months ago

Um, that's a no. And even so, the county is hundreds of millions in the red (as a result of real estate transactions grinding to a halt, and thousands of moribund properties).

Older_Wiser · 8 months ago

I lost a house to foreclosure in 1999. When I bought it in 1993, I put down 10% from the proceeds of my first house (lived in 14 yrs), paid off my automobile, and bought a new refrigerator, washer and dryer (cash), and still had money left; the range and dishwasher came with the house but had to be replaced later. My credit was good, I bought on the low end of what I qualified for ($80-120K), and things were all right, it was a good "middle class" neighborhood with people still there after 20 yrs, and the house was a nice brick and well built (yes, property in Charlotte was still reasonable back then).

Nevertheless, when I lost my job of 5 yrs at a law firm in 1994, it became impossible for someone in her mid-50s to find a similar position with the same level of pay, and it sent me into several jobs that just weren't suitable for my situation. I lost income, and almost lost my mind, as well. It wasn't until I moved out of Charlotte, up here with my son, that I became content, free of the rat race and at peace, finally, without the albatross of a money pit around my neck. I may be poorer on SS, but it's worth every cent.

I truly empathize with anyone who loses what they thought was their security, their job--their house--esp. those with children. It's much easier as a single adult to find space, move in with relatives or friends for a bit, but people just don't seem to want to put up with someone's crying kids, and if you think it's traumatic for adults, it's even more so for children for a variety of reasons.

Regis18 · 8 months ago

The problem is differentiating the speculating cheaters and the innocent, gullible buyers. If I say I didn't know, and the government rules that I did know or should have known, and I decide to sue, how much will that cost the government? And if tens of thousands decide to sue...

Those of us who live responsibly and handle our finances responsibly are always going to be victimized, one way or another by those less scrupulous. It is just important to realize this and to minimize the risk. Don't hire a Realtor just because she wears a tight skirt or won Miss Congeniality in high school. Hire someone who will look out for you first. That's your Realtor's job. He or she is your agent. If they do not do their best for you, report them to the local Board of Realtors and sue them.

Advice from an old Realtor who did it right.

KarenMrsLloydRichards · 8 months ago

Ground zero of what Warren is talking about: the Maryland county adjacent to JA's condo in DC: Prince George's (one of two majority African-American counties in the state).

Racist policies directing subprime mortgages at people who could actually qualify for prime lending, and fraudulent, unregulated, time-bomb mortgages predominated during the Bubble. The wreckage has been devastating.

henry · 8 months ago

The problem is that there is a mixture of truths here.

My partner and I bought a house in CA in summer 08. We’re both highly educated and had done a lot of research before accepting a loan. Still, while we avoided the temptation, all of the loan agencies we looked at (2 brokers, and 2 banks) strongly pressed ARM loans.

The selling point was that you get x amount of years at a very low rate, then you can refinance out before the ARM resets. They all made is seem like it was fiscally wise to do this, save the money up front (and refinance at no-cost later).

As I said, we avoided temptation, but I can understand why people got ‘tricked’ into this.

And, just for the record, the McDonalds story is often mis-understood and misused. The other posters are right – McDonalds kept their coffee much higher than others in the industry, because it made the coffee taste better and stay fresher longer. They also had 700 prior complaints regarding this, had settled a bunch of other claims, and refused (for some reason) to settle this one. Also, while the award was very high , most of it was punitive damages (which were later reduced). A summary of it can be read here, for those interested.

Older_Wiser · 8 months ago

Moreover, I've bought coffee where the lid was not properly fitted to the cup, and bingo! Luckily, though, I was not burned, even though the cup itself is flimsy enough that if you grasp it firmly, it can buckle and spill coffee.

GoBlue · 8 months ago

Also, McDonald's heated its coffee water so dangerously hot because they got more cups of coffee per coffee bean that way. They deliberately burned their customers to save a few bucks on a pound of coffee.

anastasjoy · 8 months ago

With Republicans blocking the door to any disclosure requirements for mortgage brokers, they were free to lie to and confuse potential homebuyers. Just one example that is rife here: the brokers were paid according to how expensive a mortgage they could get you into. They would tell highly qualified buyers they only qualified for a high interest rate or a subprime mortgage when it wasn't true. If you extend this lying to entire neighborhoods — usual black and urban — who is the buyer going to check with? Bank services in the inner city have shrivelled up. This is why there is civil rights litigation ongoing over these mortgages.

KerrynowCampau · 8 months ago

This reminds me of when a financial consultant told me to put my money in tech stocks right before the bubble burst. I had concerns in doing that but thought a financial consultant would know better. Well, we all know how that turned out.

I don't trust anyone.......

Nylund · 8 months ago

You have to remember that, by definition, 50% of Americans have an IQ under 100. About the same percentage only have a HS diploma. In short, there are tons of not-so-bright/uneducated people in this country. Mortgages are pretty complex things and they do indeed base their decisions on the advice of "experts." Many of them were given horrible advice, sometimes even criminally bad advice. So maybe you think "idiots" get what they deserve, but I think its in our mutual best interest to have some more safeguards in place protecting Americans against those who make their living off the fact that there is indeed another sucker born every minute.

tardigrade · 8 months ago

Well, I have a dear friend who bought the cheapest house he could, found someone to do the mortgage, had his credit union help finance it, - it went to Fanny Mae.... I do not know all of the details of the sale, but his taxes on the house are over 4k - his house was 325k (California taxes are 1% of value - the first problem). His credit union, for a reason, screwed things up for a time because they did not take money out for the insurance as they are supposed to do (which he opted to have taken directly from his paychecks)... this is the second problem. SO, he got docked by the bank who owned his loan with penalties and such...

Then.... as my friend was racing to get his house finished so he could refinance (the average house in California was 450k at the time) - his bathroom/kitchen remodel was done by his friends who were plumbers and electricians, and his son does wood work and cabinets - it still cost him a pretty penny to do that on his credit cards. I did his tile work in the kitch and bath... As friends and family, we did not ask for payment.

Then stuff happened. He nearly died a month ago from a ruptured internal blood vessel in his stomach and now he cannot work 7 days a week to pay his bills. He has insurance from work but guess what.... it didn't cover it all. And his balloon payment is coming up next month.

His house is still taxed at 4k(the Tax Assessor needs to lower it but hasn't) + penalties for that mishap that his credit union caused (which by law they should have accounted for and have not rectified that problem) + the house is now worth maybe 300k... more likely 275k or less.

The man picks up various machines to fix and then resell just to make his lunches for work. He gets to see his daughter every Sunday and has just given her his keys to his car for her 16th (I never got a car at 16 but this is who this guy is).

You know, other loan companies (which were on every street corner back then) tried to get my friend to sign up their for loans. They would literally run down my friend in the parking lot, waving their papers. That period of time was NUTS! The loan people were so hungry. They were out and out scarey.

I took a job at AB, too, around that time. I see this sort of thing over and over especially with the blue collar. I think there are a number of factors that exacerbated the problems of guys like this. But the biggest ones were 1) he had to sell off some of his 401k to get a down payment (he pays taxes on that move - problem # 3) 2) he hasn't had a raise about 10 years - everything he buys is more expensive and his health insurance pays for less and less (costs more money for his pills) 3) he had too much faith in the system to protect him from stupidity ..the biggest problem #4. I remember how it was in 2004- 05,

Earl Scheib · 8 months ago

The exploding toaster is an imperfect metaphor, but I don't agree with the rest of your post. Many people were steered to inappropriate mortgages by brokers who held themselves out to be experts working on the borrower's behalf. In fact, they were lining their own pockets and ripping people off. Further, there was a recent story that minorities who would have qualified for the best interest rate were instead given higher-cost loans. There are other loan costs that can and were manipulated beyond the stated interest rate.

Congratulations on being an extremely diligent, highly educated mortgage customer. Just because there are mortgage customers who are not as sophisticated as you and John Stossel (sorry, I couldn't resist) doesn't mean they are idiots.

BTW, the McDonald's hot coffee reference is sooo 1990's. Please update your urban legend references for our new century, and have a great weekend.

GoBlue · 8 months ago

Yes, John, citing the McDonald's coffee lawsuit makes you sound like a tort "reformer." Google "Stella Liebeck" sometime and read up. There's hot coffee and then there's dangerously hot coffee that causes third-degree burns to human skin, which is what happened to Mrs. Liebeck.

SJB · 8 months ago

It is about a culture of owership. The Bush administration, and many others before it, pushed the idea of home ownership--a piece of the American dream. For 'Americans' and successful one at that, you should own your own home. When I came to grad school, EVERYONE pushed me to buy my own home--you will make money, you need property, there are so many great mortages out there to help first time home owners. I heard all of that and more--luckily I refused. People in my family were 'promised' a good deal, people who did not have any experience in finance or any vision of what the market might do. Where are they now? Borrowing money from their parents or tryiing to sell their homes. Why? Their mortages had ARMs that ballooned their payment 300%. So, people may not have been 'cheated' but they sure were fed a line of bullshit.

Pierre · 8 months ago

The real issue here is credit card companies, more than mortgage companies. Credit card companies can change the terms of your card at any time for any reason. Late paying a utility bill? The credit card company can raise the rate of your (entirely unrelated) credit card. It is the unbridled freedom to alter the terms of your contract with the credit companies that I think Obama was referring to. No, banks don't randomly change the terms of your mortgage. If you have an ARM, you have been put on notice of possible changes. But with the thieves and pirates at the credit card companies, it's an entirely different story. And under the revised bankruptcy laws, it's harder to get out from under credit card debt than it is to get out of a mortgage. That's why we read about people walking away from their homes but keeping up their card payments. In another time, people did just the opposite: fight like hell to keep their homes, and let the other creditors take a bath.

anon · 8 months ago

john

I"m going to suggest 2 or 3 classes of people who really did get preyed upon hard, and I can name a few.

1) I knew this guy mario, he cut lawns for a living, mexican immigrant, barely speaks any english. This fast talking spanish real estate agent sold him a house
(Really a converted chicken coop), got him to sign all the documents, and remember this is an illiterate peasant, and then walked. Mario was doing okay until the
25th month when the payments kicked up. He was doing okay renting a place, now he's packing out ahead of foreclosure with wrecked credit. Was he stupid? sure,
but he's also a peasant.

2) Pretty much everybody who got a 110-125% mortgage. Lets be real, the only reason to sell a 110% mortgage is to increase the front fees to the broker.

3) Subprime mortgages in the inner city. These were people who should have been renters entirely.

I"m smart, I hate bankers, so, i'm okay, but, when i bought my house at closing, there were just these miracle junk fees. I raised hell and they took them off, but
for someone less savvy? they'd be screwed.

Jim Pharo · 8 months ago

John, I don't believe I've ever thought this about your views before, but you are way, way WAY off base on this.

The media isn't friends with any regular humans, only friends from college. Therefore the regular people don't get covered. See, e.g., Judith Warner @ NYT.

The vast majority of these folks -- whether they are mortgagors or credit-card borrowers -- were sold a bill of goods. That they weren't more skeptical is not a fault -- they're not supposed to be. They're just toaster-buyers.

Re-find your empathy and read up a bit.

phillydem · 8 months ago

I think there are two problems. First are the credit cards where the credit card companies can just jump your rate without notice. Second, are the mortgages that were sold to people who didn't understand them or the terms. Our local paper, the Pittsburgh Post-Gazette, did a whole series on folks who had no idea what they'd gotten themselves into. Remember the 90 yr old woman in Dennis Kucinich's district who tried to kill herself because her house was being foreclosed after she was talked into getting money by mortaging her house that had its mortgage paid off years ago?

Those are the things Obama is talking about.

jimfromthefoothills · 8 months ago

I love you John, but i disagree with you. The problem was in the way that the mortgages were funded. Since the pools could be sliced and diced, and derivative bets could be placed on prepayment and default rates, Wall Street could make $200k on a $100k mortgage. So basically they could give a shit if the person could afford the house or not, this is course led to massive price inflation in properties.

REmeber those bets? Our pension funds and 401k's were invested in this bullshit paper (of course AA rated).

The lady with the 1.3 million house really bought a $400k house and paid $1.3 million for it.

jimfromthefoothills · 8 months ago

By the way, the reason i am so pissed about the bailout funds is it is ALL going to the people who made the shitty bets to begin with.

chrisnyc · 8 months ago

sometimes you really are a privileged bitchy white guy.

there were lots of people who didn't know all the technicalities who were screwed, knowingly. yes, be mad at the 2 ivy-leaguers who gambled, but they are not what caused the problem...they will still be ok; it's the person who couldn't afford any house but was told they weren't good people if they didn't and that anyone can own a home.

if i knew this wasn't coming from your ex-republican, "i want some money too," or "don't give my money to other people," i wouldn't be so annoyed. we're all in this together...i don't care how the F we get out of it.

monitor · 8 months ago

It's possible to state your objections to John's post points without calling him an asshole or a bastard or a "privileged bitchy white guy" or other derogatory labels.

More of it will be deleted.

sitemonitor

lillieannerose · 8 months ago

All you need to do is walk around my home town and take a look, be interesting to know if there is a ratio between eductation level and the number of foreclosures. ( was there 18-months ago and saw first hand the beginning of this crisis. It's the kind of town where people need a roadmap to drive further than the job or the local party store. Not the kind of folks to ask a lot of questions when they get handed the keys to a home., These people started walking away two-years ago kind of hard to find them now. They thought they'd work hard pay their mortgages and start building for the future.

John · 8 months ago

Sure, there were a lot of house flippers and I don't have much sympathy for them. However, there is a whole category of people who were the objects of predatory lending who lost all equity in their homes because they were slick talked into thinking they could afford to upgrade.
Most of these houses were relatively modest and people of modest means were suckered into the deals. What they lost was all their equity, usually only between $50-100K. But it took them back to 0 in the house equity world.
Same stuff went on before the S&L crash in the late '80's.
Same Republican lack of regulation and looting.
Same snake oil salesmen.
They call them con artists because the cons work so much of the time.
Remember, most people have only high school degrees and barely any economic intelligence.
Slick dude in the suit can hook a lot of suckers.

Diogenes · 8 months ago

Countrywide, the mortgage lender, setlled a fraud case against it recently for $8.4 billion. Complaints were filed in 11 states from Connecticut to California.

A quote from CT attorney general Richard Blumenthal: "Countrywide must now bail out homeowners it recklessly misled into mortgages doomed to fail." Per Jerry Brown: ``With this settlement, homeowners will receive direct relief from the catastrophic damage caused by Countrywide."

In January 2009, Pennsylvania's attorney general reached a $150 million settlement with Countrywide, after alleging predatory lending and violations of Pennsylvania’s Consumer Protection Law.

Also, here's a story involving Creative Financial Solutions (CFS), a mortgage broker in California: "These five individuals admitted that CFS obtained mortgage loans for unqualified borrowers by, among other things, submitting false loan applications, false bank statements, and false income documentation. In total, the victim lenders funded more than $16 million in loans on properties that have been foreclosed or are in the foreclosure process."

Do these count as examples of mortgage companies gone wrong?

rose · 8 months ago

I remember watching a senate committee last spring or summer in which people who had lost their homes testified. One lady got a home on just her social security income. Mortgage brokers were handing out mortgages left and right and didn't care if the given information was accurate or affordability. Definitely if we had not deregulated our financial industry and let firms grow "too big to fail," we would not have the high rate of foreclosures and falling real estate values. I surely don't like paying property taxes on an assessment that is not close to what someone would pay us for our home. But I don't blame the people such as that lady on social security - I blame Countrywide, the Bank of America, and the other institutions who participated in taking risks that pulled down our economy, causing us average people to lose trillions in our 401-K plans as well as in our real estate.

Diogenes · 8 months ago

The New York Times did an expose on Washington Mutual's mortgage lending practices. A few quotes:

"...even by WaMu’s relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer. Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved."

"“I’d lie if I said every piece of documentation was properly signed and dated,” said Mr. Parsons, speaking through wire-reinforced glass at a California prison near here, where he is serving 16 months for theft after his fourth arrest — all involving drugs. While Mr. Parsons, whose incarceration is not related to his work for WaMu, oversaw a team screening mortgage applications, he was snorting methamphetamine daily, he said. In our world, it was tolerated,” said Sherri Zaback, who worked for Mr. Parsons and recalls seeing drug paraphernalia on his desk."

"...pressure to keep lending emanated from the top, where executives profited from the swift expansion — not least, Kerry K. Killinger, who was WaMu’s chief executive from 1990 until he was forced out in September (2008)...WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fees, bolstering profits and ultimately the compensation of the bank’s executives."

I ask you, did the bank have a fiduciary to its shareholders and depositors to make prudent loans? If so, do you think the bank upheld its duty? Washington Muitual shares were trading near $45 in 2007. They now sell at $0.04.

Who is to blame for this fall from grace? The bank or the borrowers? Does this qualify as a mortgage lender gone wrong?

AgentX · 8 months ago

"And presenting it as though "evil" mortgages did these people in, when their own evil avarice and stupidity got the better of them, is increasingly annoying and disingenuous."

It's sort of hard for me to feel sorry for banks and mortgage lenders that wrote mortgages and financial packages basically RIGGED TO FAIL!
Who the hell designs a balloon payment after 3 years? Do they really think someone can afford to pay 1500 when they start out paying 500?
Wall St is full of idiots and they should be "exploded" like you suggest.

There is only 1 real solution to this mess: render all mortgages, on time or not, null and void. turn over the property to those that are paying the bills. Or previously paying the bills. Time to hit reset. go back to start, ctrl-alt-delete and be done with it.

Michael Carr · 8 months ago

If you're going to dispute and criticize Elizabeth Warren here... then you haven't really been following Elizabeth F-N Warren... Her basic argument is that the deck has been stacked against the middle class for years.. Credit cards... medical insurance and payments... mortgages... it's all about how the middle class has gone from sustaining itself from earning decent wages, to surviving on debt.

example · 8 months ago

The whole point of consumer safety testing is that they should never blow up or catch fire no matter how stupid the owner is. Obviously you can't cover every contingency, but the standard for a toaster isn't "won't catch fire if you're not a moron" it's "won't catch fire, ever"

Is there any reason to sell mortgages to people when you KNOW they won't be able to afford it, but let them make low payments for a couple years? Hell no, all you're doing is offloading risk from wallstreet to the consumer. Notice that huge banks can demand bailouts, of course consumers will do dumb things, the whole point is to prevent unsophisticated consumers from making choices which will clearly blow up in their faces and put them in dire economic straits (and often owe money they have no chance to pay back)

John Christensen · 8 months ago

According to popular accounts of the lawsuit, Liebeck coaxed nearly $3 million from an Albuquerque jury in 1994 after being scalded by McDonald’s coffee she spilled on herself while riding in a car. These are the story’s best-known elements, but filling in the missing facts puts the case in a different light.

Trial testimony showed that at 180 to 190 degrees, McDonald’s coffee was much hotter than that served by other restaurants or by people in their homes. The fast-food chain had received at least 700 complaints about hot coffee in the previous decade and had paid more than half a million dollars in settlements, according to trial testimony cited by the Wall Street Journal.

Liebeck’s injuries were hardly minor. She suffered third-degree burns on her thighs and groin area, was hospitalized for a week and had to undergo painful skin grafts. Before filing a lawsuit, she wrote McDonald’s requesting that it lower the temperature of its coffee and cover her uninsured medical bills and incidental costs of about $20,000. McDonald’s offered $800.

Later, as the case neared trial, a mediator recommended that McDonald’s pay a settlement of $225,000. The company refused.

Jurors ultimately awarded Liebeck $160,000 in compensatory damages and about $2.7 million in punitive damages. “The facts were so overwhelmingly against the company,” one of the jurors told the Journal. “Their callous disregard was very upsetting,” another said.

Soon after the verdict, the trial judge slashed the punitive damages by more than 80% to $480,000. Then the case settled for an undisclosed amount.
Yesterday’s LA Times followed-up with this story on how the media feeds into a false popular perception regarding “out-of-control” juries, a culture growing ever more litigious, and damage awards rising to unprecedented new heights. Being a loyal organ of the so-called liberal media, the LA Times can’t quite come out and say that this popular perception is a carefully planned campaign of propaganda, distortion, and outright deception designed to persuade the public to support laws which would effectively allow corporations to negligently injure people without with impunity, but it does the best it can:
While acknowledging that excesses no doubt occur, many legal observers say there is no evidence that people are filing more lawsuits or that juries are getting more generous — indeed, there is some data to the contrary. And mammoth verdicts, in the rare cases in which they occur, almost always are tossed out or sharply reduced later.

Feeding the perception of a crisis in the legal system, they say, is the way the news media cover the courts.

After the big headlines, critics say, the media often drop the ball, losing interest in what happens later. Published studies of news content and a Times examination of major recent cases show that when the immense verdicts were overturned or dramatically reduced, the news frequently was banished to the inside pages or simply not reported.

Legal experts and media observers say such coverage gives a distorted picture of the civil justice system while lending credence to fears of irrational jury awards. News coverage has reinforced the message “that the system’s out of control, and that juries are using the tort system to redistribute wealth in some unjust and unprincipled way,” said Robert MacCoun, a professor of law and public policy at UC Berkeley.

The popular view that there are more lawsuits and bigger damage awards than ever before is not supported by available evidence.

kane5464 · 8 months ago

John, referring to people who got a bad mortgage product a idiots just makes it likely you will get an equally hostile response from your readers. In California many people were looking at home prices rapidly climbing out of their reach with prices going up 20 percent a year. They would go see a mortgage broker who to them was their local neighborhood financial expert who would tell them because of their credit score or lack of sufficient down they could not get a good fixed rate loan but they could get a variable rate loan and refinance in one year when their equity percentage would increase with the increase in house prices. I personally know people who were told this and bought desperate to get in a house before the dream slipped away. Well soon after the collapse happened, the homes equity increase never occurred and the local financial expert who told them they could refinance in a year now just tells them sorry but you are out of luck. Now the balloon payment is coming and they will likely be foreclosed on. Some brokers are convincing sales people. Some like two brokers I know are MBAs who truly felt they were doing someone good when they were convincing someone who really wanted their first house that they should get a variable rate to be refinance in a year. These experts were wrong but in your world the person who went to them and listened to their advice are all idiots---- You are not a really nice person when you make such a blanket statement and beyond that you are just wrong.

doggril · 8 months ago

John Christiansen - Thanks for setting the record straight on the McDonald's lawsuit. I can't believe that, 15 years later, people still ignorantly criticize the poor old woman in that case.

Herb · 8 months ago

You're basing this commentary on media reports? C'mon, John...

"If it's not in the media, it doesn't exist?"

How is that even valid?

fredndallas · 8 months ago

At times I have wondered how you could have ever stomached being a Republican operative, John. At other times, I don't wonder at all.

Regular readers here who have followed your recent transition from being a renter to a homeowner, have been able to observe your growing resentment toward others who were a little "luckier" at having bought before the bubble got so big. Over the years you've done some great work for the community John, but in all candor, you need to take a look in the mirror and do an empathy reality check. Yuppie white gay folk don't have the best reputation for being humble or real and with attitudes like you express in this post, it is no wonder. Slinging around the "idiots" term like you do is not helping the guppie rep for shallow elitism.

There were plenty of victims of manipulative mortgage practices, both educated and uneducated. You of all people should understand why there needs to be tough laws, regulation and oversight in any process fraught with such vulnerability for abuse in the most major purchase most folks make in a lifetime. The flippers are getting what they deserve in my opinion, as perhaps are the educated, sophisticated ARM purchasers, but that still leaves probably millions of victims otherwise and you are right, their story needs to be told -- but without pompous put-downs.

Also, as an educated attorney, what do you not understand about the outrageousness of an apparent "body of law" that openly allows credit card companies to engage in "contracts" -- the terms of which may be unilaterally changed whenever the credit card company feels inclined. The fact that this particular aspect of "contract law" has evolved in this way tells all that needs to be known about the unfathomable influence of the financial monopoly in this country. In few words, they have taken over.

If you were not so self-consumed, while apparently riding a profitable enterprise (birthed on your bountiful serendipitous luck of latching onto the outrageousness of a male prostitute being embraced by the administration of a "conservative" US President) perhaps you would not be so smug, insensitive and condescending in your attitudes.

Take a humility pill, John -- and use the fantastic opportunity you've been handed to make positive contribution helping folks (who haven't been as lucky as you) on this issue.

Who knows, with the smarts, skill, experience and platform you've got, you might even inspire the movement that ends credit card companies outrageous privilege in this country to simply change contracts at will -- the next bubble waiting to explode in all our faces.

Progressive Mom · 8 months ago

Wow. "But how many news stories do we see....." That's the justification for this rant on the validity of the existence of people who got swindled, on their mortgages? "I have yet to see a single news story....."

Somewhat ironic that a powerful liberal blog site is using lack of evidence provided by the mainstream media to suggest something doesn't exist.

Omagod · 8 months ago

I don't know what happened but I think my john aravosis morphed into john stossel -- here's hoping that it was just something he ate and he will be recovered in the morning.

There is plenty of info out there on how huge numbers of borrowers with EXCELLENT credit were steered to inappropriate mortgages. The fact that the mortgage originator only had to bear the risk until the mortgage was sold and repackaged into a (non-Fanie, non-Freddie) MBS sort of shifted the risk/reward profile and enriched the crooked mortgage brokers who were often acting on instructions from the bankers.

Please recover soon.

Omagod · 8 months ago

Spinach -- most of the spinach wasn't tainted.

perl_jammer · 8 months ago

I'm with you on this one, John.

My wife and I waited 11 years to buy a house, saving our money and watching the market. As much as we wanted to jump in, we couldn't bring ourselves to put everything we had into a home we couldn't afford in the long term. It seemed obvious to us that the insane appreciation of home values was unsustainable, and that a crash was inevitable. When the crash finally came, we were ready with a solid down payment and got a great house that we can afford to stay in no matter where the market goes from here.

There's a word for laying down money in the hope you'll be able to make a profit in the short term. The word is "gambling", and you shouldn't do it if you can't afford to lose. Anyone who gambles based on the advice of someone who stands to make money on the deal (banker, realtor, etc.) isn't using their head.

Ken · 8 months ago

John - I agree with you. I bought my house 4 years ago. I was offered some ridiculous mortgages - interest only, adjustable rate, no money down - they were all crap and after reading the fine print it was obvious to me. I didn't take the word of the mortgage broker - I did research. Like you I spent about 5 months before I actually bought. I wanted and got a 30 year fixed traditional mortgage. I also bought a small house that is just the right size for me. I looked at huge homes, but I'm so glad I stayed small - my utilities bill last month - which includes gas, electric, water, sewer, and trash pick-up was just $120. Not bad at all.

Stuart Kaufman · 8 months ago

John, will you get the stick out of your ass already about this? This issue is not as simple as you think it is. If you believe that everyone who's now having trouble paying a mortgage has only himself to blame, then there's a great deal going on that you haven't been paying attention to. Meanwhile, you're turning into an irritating crank, at least on this issue.