Personal Finance

When Lenders Mess Up, Everyone Suffers!

Expertise:
23 Articles Written
The days of the “Fogamir” mortgages are gone. Surely you remember the Fogamir? “Yes Sir! We can give you a mortgage. If you would just take this application and rather than fill it out, could you breathe heavy onto that reflective square at the bottom?” If it fogged up, you got the mortgage. It was [...] View the full article: When Lenders Mess Up, Everyone Suffers! on The BiggerPockets Blog. This content is Copyright © 2017 BiggerPockets, Inc. All Rights Reserved.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free
    Emperor
    Replied about 12 years ago
    This happen in all modern countries not only the US. Money was lent without any control and now that the interest rates have risen many people can afford to pay the monthly bills.
    Colby Callahan
    Replied about 12 years ago
    I do not think the government will step in to bail out lenders. I don’t think they should. The issue was not caused solely by lenders making bad loans, it was the ratings agencies and investors that were the problem. When rating agencies say this portfolio will perform as such and then it doesn’t then investors lose out on money, then lenders can’t sell to investors, and on and on. It is very important to understand where the real issue lies. The only lenders hurting right now are the ones who securitize their loans with investors. Portfolio lenders are loving it right now as conduits are falling off left and right. Here is a quote from Bernanke… “It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.”
    Colby Callahan
    Replied about 12 years ago
    I do not think the government will step in to bail out lenders. I don’t think they should. The issue was not caused solely by lenders making bad loans, it was the ratings agencies and investors that were the problem. When rating agencies say this portfolio will perform as such and then it doesn’t then investors lose out on money, then lenders can’t sell to investors, and on and on. It is very important to understand where the real issue lies. The only lenders hurting right now are the ones who securitize their loans with investors. Portfolio lenders are loving it right now as conduits are falling off left and right. Here is a quote from Bernanke… “It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.”
    Sam Chapman
    Replied about 12 years ago
    The Austin, TX real estate market was very healthy until the lending mess caught up with us. We were selling homes as fast as we could get them on the market in many cases. For the last six or so weeks we have seen probably 35% of buyers drop out of the market and listings are sitting in many parts of town, especially low priced homes and ones requiring jumbo loans. It will settle out over time, but we must be one of many once quite healthy markets that got hit.
    Sam Chapman
    Replied about 12 years ago
    The Austin, TX real estate market was very healthy until the lending mess caught up with us. We were selling homes as fast as we could get them on the market in many cases. For the last six or so weeks we have seen probably 35% of buyers drop out of the market and listings are sitting in many parts of town, especially low priced homes and ones requiring jumbo loans. It will settle out over time, but we must be one of many once quite healthy markets that got hit.
    Sam Chapman
    Replied about 12 years ago
    The Austin, TX real estate market was very healthy until the lending mess caught up with us. We were selling homes as fast as we could get them on the market in many cases. For the last six or so weeks we have seen probably 35% of buyers drop out of the market and listings are sitting in many parts of town, especially low priced homes and ones requiring jumbo loans. It will settle out over time, but we must be one of many once quite healthy markets that got hit. Reply Report comment
    Sam Chapman
    Replied about 12 years ago
    The Austin, TX real estate market was very healthy until the lending mess caught up with us. We were selling homes as fast as we could get them on the market in many cases. For the last six or so weeks we have seen probably 35% of buyers drop out of the market and listings are sitting in many parts of town, especially low priced homes and ones requiring jumbo loans. It will settle out over time, but we must be one of many once quite healthy markets that got hit.
    Rick Jacobsen
    Replied about 12 years ago
    I think that you’ve made a fair assessment of how lenders contributed to the current state of the real estate market. Lenders did suddenly tighten their qualifications causing many of the negative repercussions that related industries have experienced. It’s unfortunate that their lending practices weren’t more tightly regulated, which would have prevented the rising numbers of foreclosures. I tend to agree that the government will likely step in and bail out lenders again… and that the lenders will likely be back to abusing lending practices before long. What, if anything, can be done to prevent this from reoccurring?
    Rick Jacobsen
    Replied about 12 years ago
    I think that you’ve made a fair assessment of how lenders contributed to the current state of the real estate market. Lenders did suddenly tighten their qualifications causing many of the negative repercussions that related industries have experienced. It’s unfortunate that their lending practices weren’t more tightly regulated, which would have prevented the rising numbers of foreclosures. I tend to agree that the government will likely step in and bail out lenders again… and that the lenders will likely be back to abusing lending practices before long. What, if anything, can be done to prevent this from reoccurring?
    Dallas Homes
    Replied about 12 years ago
    The rest of the title should be and they are messing up a lot more than usual now days.