Things are not so good at the Banks

[Commoner]

That's exactly what Countrywide did. They handed out loans like candy to people that should not have been receiving loans. Lenders were pressured by executives at Countrywide to falsify information to give out more and more loans that Countrywide could package up and sell. There are millions of people that are facing dire financial consequences of Countrywide's deception. Yes, there is an element of personal responsibility here (it is their signature on the papers, after all), but those people would have never even been put into that situation 10 years ago.

[tozmervo]

I don't know that millions are facing foreclosure (those dire consequences, I presume) because of Countrywide's falsification practices, I think the majority of those facing dire consequences were short-sighted and foolish in their financial decisions - just like Countrywide. Each side is responsible for its predicament.

Countrywide made a lot of money as servicer on run of the mill, no-fraud, traditionally-amortizing home loans. To characterize it as a seedy subprime originator, rapist of dreams and nothing else is a little ridiculous. Those people weren't forced to buy a house. The only person who put them into that situation was themselves. Countrywide was just dumb enough to originate loans in those situations.

[monsoon]

Let's see. Two states have filed lawsuits against Countrywide for their fraudulent practices and I believe I read they are under investigation by the justice departments of at least a 1/2 dozen to a dozen more states. Seems to me they are of the opinion that Countrywide has a lot of responsibility for this mess because of that are taking this legal action.

BofA had to know the under handed methods being employed by Countrywide else they were totally negligent by handing them $2B last year. Either way it speaks volumes as to the lows this bank will go these days to make a buck.

Sure there is an element of personal responsibility in this as well, but when you have a lender all too willing to loan you money they know you can't pay back, then I see them as being no better than the common loan shark. Doesn't matter if they are wearing a suit or not.

[Commoner]

Let's see. Two states have filed lawsuits against Countrywide for their fraudulent practices and I believe I read they are under investigation by the justice departments of at least a 1/2 dozen to a dozen more states. Seems to me they are of the opinion that Countrywide has a lot of responsibility for this mess because of that are taking this legal action.

BofA had to know the under handed methods being employed by Countrywide else they were totally negligent by handing them $2B last year. Either way it speaks volumes as to the lows this bank will go these days to make a buck.

Sure there is an element of personal responsibility in this as well, but when you have a lender all too willing to loan you money they know you can't pay back, then I see them as being no better than the common loan shark. Doesn't matter if they are wearing a suit or not.

[GRDadof3]

Countrywide's crime was changing numbers on loan applications to make them appear safer than they actually were. They did this so they could give more loans and sell them to other companies reaping large profits. When someone goes to a bank for a loan and the bank tells them "with this plan, you can afford this house, and have this monthly payment," I believe that there is an element of trust that what the bank is telling you is not going to lead to your financial doom. Were there people out there who took loans who shouldn't have? Absolutely. But when you are fed information that says otherwise, who are you supposed to trust?

[jednc]

Wait - ELECTED judicial officials in 6 states and ELECTED officials in 2 states (both hit hard by falling house prices) are investigating Countrywide and suing Countrywide, respectively? Legal action doesn't create valid legal complaints. It's supposed to be the other way around. There's no shortage of litigiousness in America - and there's no shortage of grandstanding politicians. Elected attorneys general are notorious for pursuing high profile, consumer-friendly investigations and lawsuits. These witch hunts have been extremely worthwhile for ambitious AGs. They might have an opinion that Countrywide bears responsibility for degredation in RE values, but trust me - that's now why they're taking legal action. Those headlines are free and they go so much farther than any political advertising money can buy.

Also - people on this board repeatedly describe Countrywide's behavior as "underhanded" or "a crime". Do you (the "proverbial" you) honestly believe that Countrywide's primary line of business was making loans to people who shouldn't borrow, at excessive amounts, by fraud? Hell - not even a majority of subprime, over-100% LTV, interest-only ARMs are in default.

And what's wrong with loan sharks?

[atlrvr]

What's amazing to me is the sheer volume of people willing to commit to over $200k, $300k, $500k, etc. in debt without even reading loan term sheets. Hell, you don't even have to read it, you are already paying a closing attorney to answer every question about your loan. It's hard for me to be overly sympathetic to all these people who were overestimating their earning power at least, and blatantly committing fraud at most, just to keep up with the Joneses who just moved into 3,800 sq. ft. with granite counter tops in the exciting new Del Rio Chula Vista III.

Countrywide was the company that was willing to finance this perverted American dream, and no doubt was the best company in many American eyes during the mid-2000s. Not too many wanting to sue them the day they just refinanced their house to by that shiny new H2.

Everyone from the lending corporations, to the consumer, to the same politicians now suing were more than complicit in creating this mess. Now, everyone has suffered the consequences except the politicians...why are they the one's getting a free pass?

[GRDadof3]

Everytime I read this thread I just get more angry. This idiotic "award" that keeps getting play from one or two people on here has no basis in reality. Gee, some disgruntled person got to nominate a company and then stuff that ballot box in some unscientific, irrelavant poll on the web? Would the people who believe this means anything please stand up?

The other thing that chaps my ass is how some people acknowledge that "some" personal responsibilty is to blame. Gee, percentage wise what do these people believe...maybe the individual who sought out and contacted a lender, met with them, and decided to sign a mortgage are what, 10% responsible for their situation now? How about 15%?

It's really stunning that each year America moves closer and closer to a society that doesn't ever want to hold a person responsible for their own actions. If you took out a loan, you are 100% responsible for knowing if YOU can afford it. Plain and simple...for some of us anyway.

[rockhilljames]

When my wife and I were shopping for our first house, the realtor had us go get pre-qualified for a loan. When we went to the bank and they went through our financials we got pre-approved for a loan that, if we were to take it, would have left us without any other income for food or clothes, much less gas.

I was smart enough to ask them what they were smoking and took out a loan for about $40k less and bought less house than they said I could afford. I'm on to my second house now and still under what they banks say I can afford.

The fact of the matter is, I'm the one responsible for my fiscal security, not the bank or the lender. While I have NO doubt that Countrywide has engaged in unethical business practices, and that BoA was foolish for buying them, no one is to blame for these foreclosures other than the people that signed the loan.

You know how much you make, someone saying you can pay over 50% of that for a house doesn't change the fact that you ought to be smart enough to tell them no.

In a perfect world. The average reading ability of Americans is about 10th or 11th grade.

[GRDadof3]

When my wife and I were shopping for our first house, the realtor had us go get pre-qualified for a loan. When we went to the bank and they went through our financials we got pre-approved for a loan that, if we were to take it, would have left us without any other income for food or clothes, much less gas.

I was smart enough to ask them what they were smoking and took out a loan for about $40k less and bought less house than they said I could afford. I'm on to my second house now and still under what they banks say I can afford.

The fact of the matter is, I'm the one responsible for my fiscal security, not the bank or the lender. While I have NO doubt that Countrywide has engaged in unethical business practices, and that BoA was foolish for buying them, no one is to blame for these foreclosures other than the people that signed the loan.

You know how much you make, someone saying you can pay over 50% of that for a house doesn't change the fact that you ought to be smart enough to tell them no.

Do you have any information to back up this highly dubious claim? I seriously doubt this.

[jednc]

Do you think I'm too high? Maybe 8th grade? J/K

Seriously, it's about 10th grade level. Many publications, including newspapers, are written at that level. USA Today is written at the 9th grade level. NY Times is 10th grade. I assumed everyone knew that. It's certainly not 12th grade.

There are some charts about halfway down this post:

http://www.impact-information.com/impactin...er/plwork15.htm

But again, you are assuming that all buyers are given the complete picture. Buying a home is a big decision, and buyers look for people they can trust. If it's not the mortgage guy, not the builder, and not the realtor, then who? And most are not going to go out and hire an attorney to review their docs. When those three parties mentioned are bound and determined to sell homes, they will do it no matter what it takes. In fact, most people don't go see a mortgage company first, and then go look at homes. They look at homes first, and then they find the mortgage company through the builder or realtor. Do you for a second believe that they don't "work together" to get deals done?

[monsoon]

What's amazing to me is the sheer volume of people willing to commit to over $200k, $300k, $500k, etc. in debt without even reading loan term sheets. Hell, you don't even have to read it, you are already paying a closing attorney to answer every question about your loan. ....

[Commoner]

And don't forget Countrywide's business plan of partnering up with hundreds (if not thousands) of homebuilders around the country and creating mortgage "joint ventures" and then forcing the builders to withhold discounts on the homes unless the buyer signed with the Countrywide/builder JV. And then the builder and mortgage rep, basically working as partners, doing everything they could to get any buyer into virtually any home, with very little consideration to the buyers' ability to repay the loan in the long term.

I normally would say that buyers need to exercise due diligence, but in this case when you have multiple "trusted" parties in the transaction giving you the same bad advice (don't forget the buyer's agent too), the buyers never stood a chance. This was happening widespread across an entire industry. Anyone who hasn't learned that yet is only paying attention to the news they want to hear.

[Charlotte_native]

This is also how NVR operates (Ryan Homes, a sub of NVR, builds; NVR operates a mortgage originator too). NVR withholds certain incentives when you don't close with NVR.

[Commoner]

But it does speak volumes about why a leading consumer oriented website put not only BofA but Wachovia as well on this year's contestants for worst company in America. It says more when so many people were willing to vote for them, and they had some tough competition.

[monsoon]

Generally speaking, when it comes to personal finance, Americans are retarded. .....

[Commoner]

And it's your position that it is OK for corporations to exploit these "retarded" people?

[wheatie]

Seriously, it's about 10th grade level. Many publications, including newspapers, are written at that level. USA Today is written at the 9th grade level. NY Times is 10th grade. I assumed everyone knew that. It's certainly not 12th grade.

[monsoon]

Were they truly of diminished capacity, then of course it would not be ok. Meaning "retarded" in the pejorative, though, and defining the term as describing one with the average American's financial literacy, yes. ....

[GRDadof3]

The fact that newspapers write at a 10th grade level, does not mean that people can't read above that level.

[HopHead]

In other news, it appears that new Wachovia chief, Mr. Steel has invested in a $2.6 million home in Eastover... Read into as you will, but it appears he's at least committed to Wachovia and Charlotte for the time being. Ironically it's the same neighborhood as Ken Thompson.

[Commoner]

Agreed. The average America is no match for the average banker on financial matters. However it is the average American taxpayer that gives a lot of subsidies to the banks so they should benefit from some of that banker experience in return. It is unconscionable that huge corporate banks (they should have never relaxed the ban on interstate banking) take advantage of this situation due to nothing more than excessive greed. They should be working to advise the people what they can and can't do instead of signing them up for loans they can't afford because they are taking crap shoots on the real estate market too.

[rockhilljames]

I don't mean to hijack the thread, but yes, I do think the average American reads at a higher level than a 10th grader. Just because most publications are written that way doesn't mean that people's reading comprehension can't handle something higher.

This post makes an interesting point about what people are willing to read in terms of grade level: http://lighthouse-writing-tips.blogspot.co...n-audience.html

Back to the point at hand, there is a lot of blame to go around for the current housing mess, and certainly some of it sits with the banks and lending institutions. I guess everyone thought that housing would keep going up, despite the fact that it had been overvalued for more than a decade.

On the flip side, the market tends to correct itself. As prices continue to fall, more people will buy homes helping to offset the current problem.

Assuming there's anyone left to give them a loan, of course.

[wheatie]

This post on Pfizer's site says that a study done by NALS/Dept of Education puts the average American reading level at an 8th or 9th grade level:

http://64.233.167.104/search?q=cache:JdXk5...cd=12&gl=us

I guess I was being too generous.

Do you really, honestly, believe that the AVERAGE American can read at a higher level than that? Assume for a minute that if you subscribe to UrbanPlanet, you are already considerably "above average". Most Americans cannot access the internet effectively.

[InitialD]

In other news, it appears that new Wachovia chief, Mr. Steel has invested in a $2.6 million home in Eastover... Read into as you will, but it appears he's at least committed to Wachovia and Charlotte for the time being. Ironically it's the same neighborhood as Ken Thompson.