BiggerPockets

I do believe people are accountable for their own actions. However, there seems to have been a LOT of fraud involved with many of these loans, and this one is no exception:

Roughly two to three weeks later, her loan agent submitted the application with a string of incorrect information, according to court documents. This included the Social Security number of Thomas' sister, who had a higher credit rating; a monthly income of $14,000, which was nearly double Thomas' actual income; and assets that included $30,000 cash at Constellation Federal Credit Union. According to the suit, Thomas never claimed to have this much money socked away, at Constellation or elsewhere.

Thomas soon learned that her loan was at 10.625 percent interest, with a monthly payment of roughly $4,600, well above the $3,000 she was expecting. She signed the contract anyway, at the urging of her attorney at the time, figuring it was an honest mistake and Wells Fargo would correct it.

There were a lot of folks in this game who made a lot of money making these loans regardless of whether or not they were good loans. Ultimately, I'm convinced the source of the bubble was investor demand for the high returns and low risk that CDOs and SIVs seemed to be generating. Many law street firms and rating agencies were raking in big bucks on fees generated by these investments. Mortgage lenders were making tons of money making these loans and selling them into these pools. Individual borkers were making lots of money on every loan they made, and had strong incentives to dump people into crap loans when better loans were available, or to make a loan when none should have been made.

And, so in the end, you really think individual borrowers, many of whom are financially naive, who ended up owning money they can't repay on a loan for far more than the underlying property is worth is not a victim?

Certainly many people went into these loans with eyes wide open, and were prefectly willing to take on a loan they couldn't afford, since it seemed RE would appreciate at 20% per year forever. Many, however, got caught up in something they didn't understand. I'm pretty sure that's the definition of a "con", and that's pretty much exactly what many of these loans were.

If you want to figure out where the personal responsibility lies, its in many places. I put many wall street execs, and the executives of Fannie Mae and Freddie Mac right at the center. IMHO, there should be jail time for some of these people.

"Thomas soon learned that her loan was at 10.625 percent interest, with a monthly payment of roughly $4,600, well above the $3,000 she was expecting. She signed the contract anyway, at the urging of her attorney at the time, figuring it was an honest mistake and Wells Fargo would correct it."


I think she knew that it smelled bad and - remember - no one twisted her arms. She signed the paperwork despite her own acknowledgement that it was wrong or even fraudulent - is she at all responsible for getting this mortgage?..... Any contributory negligence?.... Remember, she is not an uneducated person who lived all her life on top of the mountains and then decided to get a mortgage without reading the papers...........

Originally posted by Jon Holdman

Her attorney advised her to sign this contract? What was he thinking? You've never made a financial decision you're later regretted? Especially at a closing, where you're faced with a stack of documents to sign and a bunch of people wanting to just get done. If you're the one that reads every document thoroughly in closings, you're the exception.

I understood that it was her understanding that there was a mistake, not attorney's suggestion "to sign and get it fixed later". However, if an attorney advised her to go ahead and sign and then fix it later, how come his/her name is not mentioned in the article? I think he has done more damage than the person who falsified the paperwork. It's an attorney's job is to represent the client; and if he didn't do it - he should have been sued as well.

Just goes to show how desperate some people are to get a home loan these days...seems to me we should be putting the initial blame (for lack of a better word) on the "powers that be". And people wonder why greed and corruption run so rampant in this country? Just look to our own government - since politics seems so synonymous with greed and corruption, let's start there, shall we?

The real question is, what alternatives do we have, other than the traditional methods, when buying a home?

It's the Buyers fault, they knew they could not afford the new home, but they were blinded by the greed of the lenders

Yes, it does seem like buying too big and expensive of a house would have been the right move.

I read a great article the other day that emphasizes what so many people in our culture fail to realize:

--APPRECIATION IS NOT INCOME
--CREDIT IS NOT SAVINGS
--DEBT IS NOT WEALTH

You can read the rest of the article here:
http://www.irvinehousingblog.com/blog/comments/southern-californias-cultural-pathology/