Bush to Outline Aid to Mortgage Holders

First time Home buyer

My husband and I bought our first house in 2004 (I was only 25 at the time, he was 29), during the height of the low interest loans. He wanted to borrow under an ARM loan. I absolutely refused! I had taken the time to research the different types of loan and saw how dangerous an ARM loan could be financially.

I pointed out to him the fact that although interest rates were low at that time, eventually they would go back up and we would get stuck with higher payments that we might not be able to afford. That is just common sense. We decided to pickup a 30 fixed mortgage at a slightly higher interest rate. Neither of us has regretted that decision.

People jump at the thought of lower payments; they are only looking at the short-term. We can blame the mortgage industry for their fast talk and smooth deals and can say that all the blame lies with them, but ultimately the buyer is the one that signs off on that agreement. The information is available to the buyers, they only have to take the time to look it up. Did anyone truly believe that the ARM loans would not go up?

Besides it has always been said, “if it looks too good to be true, it probably is!”

 

wow for somebody with so few posts, you sure are good at it

 

I guess I will throw my 2 cents in, from what I have seen it is a combination of both borrowers and lenders that are at fault. Many borrowers take on far too much and too many lenders are willing to give a loan to anyone with a pulse. It all boils down to what many of you have already posted. Do your research and if it seems to good to be true then it probably is! IMO Lending guidelines need to revert back to some of it's old ways and require more down payments. It is hypocritical of my to say since I did not make a down payment on my first home (I used a gift program which I completely regret), however I have found that it is warranted these days. A home is an investment and any other investment requires you to be vested, so why should this be different. Unfortunately you cannot convince someone that sees the shiny new home that they may need to take a step back and think it through even though a lender is telling them they can afford the home.

I was going to post about this last week but did not have time. Has anyone been affected by this so far besides just the reforms they are proposing? I have noticed SEVERAL homes in close vicinity hit the market recently. It struck me as odd since several of the homes looked like they were custom built on family land or as a forever home. I was just curious.

 

LOL! Guess I don't get to be anyone's hero. Okay, I can do a pretty mean pork tenderloin, and my pasta salad has received compliments...but that's about it. Other than that, I'm pretty well worthless in the kitchen. I also tend to kill houseplants...but that's an entirely different saga.

I can, however, dance the mambo. And I brought a dog back from the brink of death once. So I'm not totally obsolete. :mrgreen:

 

GREENSPAN SAYS HE KNEW ABOUT ABUSES IN SUBPRIME LENDING BUT FAILED TO FORSEE THEIR PARALYZING MARKET EFFECTS UNTIL LATE 2005
Thu Sept 13 2007 12:30:11 ET

Former Federal Reserve Chairman Alan Greenspan admits he "didn't really get it" that the subprime lending trend was significant enough to hurt the economy until very late 2005, but still defends his lowering of interest rates from 2001 until 2004 that critics say caused the crisis in the first place. Greenspan, who led the U.S. Federal Reserve Bank through 18 years and four presidents, speaks to Lesley Stahl in his first major interview, to be broadcast on 60 MINUTES Sunday, Sept. 16 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

Greenspan says he knew about the questionable subprime lending tactics that gave loans to homebuyers and investors with low adjustable interest rates that could rise precipitously, but not the severe economic consequences they posed. "While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he tells Stahl. "I really didn't get it until very late in 2005 and 2006."

Even though one of the Federal Reserve governors raised a red flag on those lending practices, Greenspan says there was little he could do. "Well, it was nothing to look into particularly because we knew there was a number of such practices going on, but it's very difficult for banking regulators to deal with that," says Greenspan.

Several of Greenspan's former Federal Reserve governors have since said that Greenspan's policy of lowering interest rates for three consecutive years early in the decade was wrong because it opened the door for the subprime lenders. They think he kept rates too low for too long. "They are mistaken," Greenspan tells Stahl. "It was our job to unfreeze the American banking system if we wanted the economy to function. This required that we keep rates modestly low," he says.

Some believe today's market slide -- U.S. stocks have lost significant ground over the past few months -- could have been slowed had the current Federal Reserve Chairman Ben Bernanke lowered interest rates like Greenspan did early in the decade. Would he act as dramatically and quickly now as he did then if he were the current chairman as some believe? "I'm not sure that's true," says Greenspan. "We were dealing in an environment back there where inflation was easing. We could have acted without the fear of stoking inflationary pressures. You can't do that anymore... I'm not certain I would have done anything different [if he was the chairman today]," he tells Stahl. "I think [Bernanke] is doing an excellent job."

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