Quote:
Originally Posted by seattleflamer
When I hear or read stories of buyers who didn't know or understand that their say, $300/mo payment would go up 4x or whatever as much, I don't have much sympathy.
There is a gov't regulation in existence since the 30s called the HUD statement which explicity and in layman terms gives your monthly payments, interest rate, potential payment scenarios and total interest paid, etc whether it is a vanilla 30 year fixed to the more exotic ARMS(adjustable rate mortgages) or option ARMs.
There is a naivite or greed involved if a. you believe or depend on your realtor, mortgage broker or appraisal firm to tell you how much you'll be paying instead of reading the HUD before signing the contract and b. you purchase a home knowing full well you can't afford the payments when your ARM resets GAMBLING that you can sell or flip before the reset.
There were certainly many situations where there was predatory lending but not enough to cause the entire crisis. So in that sense, buyers were part of the problem when they were gambling or didn't really understand what they were doing.
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When you're telling a family that has a combined income of $40,000/year that they can afford the $1.5million dollar home over on the rich side of town, how many of them actually bother to read the fine print?