[Rhodes22-list] Economics

[TN Rhodey]

Dave,

I will admit my views may be a little out of the box but I say buyer beware. 
If you don't understand what you are signing don't sign. I guess i should 
disclose I have been in Sales and Sale Management all my life including a 4 
year stint as a Regional Manager in the Mortgage Division of a large bank. 
So my opinion may be biased but if people can't or wouldn't read their paper 
work they should hire an attorney. In fact some states (GA for example) 
require an actual attorney to "close" the loan. There are already laws in 
place to protect the consumer. Every fee, cost, and all payment info is 
disclosed prior to close. If it is a refinance you even have 3 days to 
change your mind.

One should be able to figure out if they can afford the payment. So I blame 
the lender for being stupid enough to underwrite the loan but the consumer 
should not stick their head in the sand and just blindly sign.

Pretty much all sub-prime loans are sold on the secondary market to hedge 
funds and investment groups. They make brokers and lending institutions buy 
back loans that are proven fraudulent or you lose your license. In fact this 
is what is shutting down many lenders now. There is no longer a market for 
the low end loans.

The secondary marker has no confidence in the quality of the loans and will 
no longer buy them. These loans that used to sell for over 100% of value are 
now being sold "scratch and dent" for 70 cents on the dollar. This is a part 
of the industry that few understand. These riskly loans wind up being owned 
by investment funds that are part of many 401Ks and mutual funds. This is 
one of the main reasons market has recently "corrected".

As for time share experience.......I have always passed. I figure if someone 
is offering me a free place to stay they must be trying to sell me 
something. No surprise. What do people expect? If you don't like the sales 
pitch go pay for a room. My neighbor came back from the beach complaining 
about the pushy time share guy...they actually wanted him to listen to the 
whole sales pitch. Imagine that!

By the way I have never been a high pressure sales type. Most of my 
employment has been in Business to Business selling/consulting and my only 
experience in consumer/retail selling has been mortgages. It was an eye 
opener and I will admit there are many crooks out there however there are 
plenty of laws in place. If you don't like what you are being told move on.

Wally



>From: DCLewis1 at aol.com
>Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
>To: rhodes22-list at rhodes22.org
>Subject: Re: [Rhodes22-list] Economics
>Date: Wed, 28 Mar 2007 00:14:51 EDT
>
>
>Wally,
>
>If you take the average person and stand him up against a team of high
>pressure sales people, the sales people will sometimes win.  If you’ve 
>been
>through a time-share sales experience you know what I mean.  So to say 
>it’s  the
>purchasers “fault” (as per Brad in his rare lucid moments) is not 
>enough, I
>think there needs to be some regulation.  I don’t think the existing  
>lending
>disclosures I’m aware of begin to address the issue - they just give you  
>a lot
>of numbers when what’s needed is advice on what you, the purchaser, can
>afford.  I suspect a lot of home purchasers have taken the position - if I  
>can’t
>afford this house they won’t give me a loan - which of course is wrong;
>mortgage originators will give anyone a loan and then promptly sell it to  
>someone
>else who will be left holding the bag.  I think lenders and  borrowers both 
>need
>some protection from originators who have originated  clearly bad loans,
>mis-represented them when they were sold, and then moved on  down the road.
>
>What I’m trying to say is that there are 2 losers in this melt-down: the
>borrower and the loan holder.  The only winner is the loan originator who  
>can
>pack up and get out of town ahead. From my perspective this is not a
>constructive arrangement.
>
>With regards to your point that what was done was perfectly legal: I’m 
>sure
>that for the most part you’re right.  But I think the financial system 
>has
>good ways to deal with legal but overly risky things that appear to be 
>getting
>out of hand.  There’s no reason why Treas, HUD, or the Fed - or all of 
>them
>together - couldn’t have called a meeting with the principal lending
>institutions - which are all subject to state and federal regulation - to  
>publicly
>convey their concern and ask/require that lending standards be  tightened.  
>There
>is precedence for this, the Fed did it with the  derivatives market and it
>worked, I think it could have worked with mortgage  originators.   This 
>doesn't
>take new laws, just call a meeting -  again, it's worked with derivatives.
>
>Finally, as a nation we’ve been down this mortgage fiasco road before in  
>our
>lifetime.  There’s no good reason why the people paid to regulate the
>mortgage markets shouldn’t have been on top of  NoDoc, NINA, and negative
>amortization loans from their start.  I do blame the regulators.  If I  saw 
>this coming
>and you saw it coming, they should have seen it coming, and I  think they
>should have tried to do something about it.
>
>Dave
>
>
>
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