Govt proposing Freeze on Subprime Interest rates is it Fair or not to all Mortgage holders and who should pay?

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Keep in mind while we blame the Banks who gave the loans to bad credit holders, our Govt told them to “Get low income and all first time home owners in their FIRST HOMES”. Also, keep in mind, that the people applying for these loans KNEW their loans “may” go up and YES the mortgage lenders do explain this to you, as the home owners try to play “dumb” now.

Keep in mind, many people combined high credit card balances, car loans and got every extra on the new homes they could knowing it was low interest loans on their new home and now that the rates are up “Ut oh” and now expect the govt to bail them out.

In New home developments, the real estate personnel who do pre-approvals know who can’t afford all the “extras” on the new homes, yet went ahead on their “low interest” loans, knowing they would reap the benefit of their commission, of course the end result is the home owner knows they eventually have to pay for these extras.

  1. Reply
    April 30, 2011 at 1:06 am

    I’m with you. Stupid idea. The mortgage industry will regulate themselves better to protect their earnings. Government doesn’t need to try to do it for them.

    Along the same lines, stupid idea for a 90 day moratorium (sp) on foreclosures too. That came from the same brain child, correct?

  2. Reply
    Angela F
    April 30, 2011 at 1:45 am

    I don’t think that the government should bail anyone out in this mess. The mortgage companies knew that they were taking a huge risk when they gave loan to people that were high credit risk. The people who took them knew exactly what they were getting into. They knew that their rates were going to increase and that was going to make their payments go up–any idiot would know that. This is a classic case of people trying to keep up with the Jone’s. People choose to leave beyond their means and then expect the tax payers to bail them out. Most people who got these flexible rate mortgages could not even pay rent and were constantly being evicted from homes because of that, and yet they thought that they were responsible enough to own a house. I think that they deserve to lose their homes…sorry about your luck and start paying your bills. When my husband and I bought our house, we agreed that we would only do so with a fixed rate loan which we got and that we would buy a house that we could afford if one of us lost our jobs or there were other problems. We were approved for 175,000 loan and the house we ended up buying was a 110,000 which saved us quite a bit on our monthly payments.

  3. Reply
    Pilosopong Tasyo
    April 30, 2011 at 2:32 am

    I agree with Angela that if you don’t have the means, then don’t do it in the first place.

    However, keep in mind that subprime loans were made to people with already questionable credit history. Thus these loans typically have higher interest rates. The mortgage companies though don’t hold all of these mortgages. Some of these are sold to investors.

    This is not however a direct problem. That is, one solution. Okay, suppose they freeze the interest rates, these could save the homeowners but what about those investors who are promised the returns? But if you don’t freeze it, the investors are happy but you could have a lot of people out of their homes.

    So going back to the issue, is it fair? No it probably wouldn’t be. As to who should pay, now that is a good question given that if you read the news, all that’s happening is finger pointing.

    But if I had to guess, the government would probably try and bail the mortgage companies out of this one. Election is almost on the horizon. 🙂

  4. Reply
    April 30, 2011 at 3:24 am

    The freeze is only meant to be temporary. I would expect 6 months, to give the people an opportunity to sell and buy something they can afford. I personally do not think it will work in this regard, everyone knew they needed to sell a long time ago and they have not done so. However, this should stabilize the housing market for awhile.

    I would vote for this (yeah, I know, no vote) if it were short term. If they make it long term I would not.

    Doesn’t it sound wrong that people with bad credit have loans BELOW prime (the teaser rates) and people with good credit pay higher interest rates?

    And the banks need to make up for all of those below prime loans, as they are loosing money on them. What they will be forced to do is raise the interest rate for average people. This is going to make it harder for decent people (who pay their bills) to get started buying homes and for those of us who are established we won’t be able to sell our homes because we won’t be able to afford a new mortgage on another one.

    Giving people loans who did not deserve one was a very bad idea and there is no easy solution.

  5. Reply
    donald e
    April 30, 2011 at 4:06 am

    having been in the mortgage industry for 10 years i think i have seen every gimmick in the trade. unfortunately there are a lot of scam artist doing business as mortgage brokers, and yes lots of times folks bought homes in the last 10 years without realizing or having it explained what type of loan they were actually getting, i have seen this buried numerous times in pennsylvania, and the customer gets to the closing table with the moving van waiting and having moved out of there previous residence, and boom now what do they do, they sign the papers and the mortgage loan officer tells them dont worry we will refinance you b4 the adjsutment period. lol, i would retire wealthy if i had a dollar for every time i had seen that happen in the last 10 years. we dont teach this in school, and you would be surprised at the doctors, lawyers, and professional people, esp. school teachers that i have seen who dont have a clue what they have signed in reference to mortgage obligations. i truly have seen it, no i have never done it. WE NEED TIGHTER MORE GOVERNMENT INTERVENTION TO HOLD THESE SCAM ARTISIT IN CHECK. NO ONE SHOULD EVER USE A MORTGAGE BROKER, GO TO THE LOCAL BANK. would you believe a good mortgage officer in a broker’s office without a college education can make 30,000-50,000 a month. its a commission job, the more you bring in the more you make, i have seen 1000’s of folks in trouble refinancing their home to the hilt with over valued appraisals that arent any where near legit and we wonder why we are in this situation. take it from someone with the experience. this is exactly what has been going on

  6. Reply
    April 30, 2011 at 4:31 am

    whilst their are people in need,the banks will exploit!This is a fact of life in uk now,whether its mortgages or any other loans;hence their are now more pawn shops now than since the ww2,and that’s not to mention illegal money lenders!johnny

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