You see guys, this credit crunch and real estate mess from Europe to Australia didn`t have anything to do with the FED, ECB, Bank of Japan etc, or with those preaching the gospel of MBS and derivatives (Fannie&Co), all over the world. No, no, no! It was Joe GED, the mortgage broker, aka Joe Nofiduciary.

Tanta,
I can relate to your experience with your dad. My uncle left Texas for California after WWII (Purple Heart & Bronze Star). He opened a full service gasoline station with a partner he later bought out. He had nothing but his proud Texas heritage and spunk. When he died a couple years ago mom and I went out there to help settle the estate which was valued at $1.6 million. He was divorced and childless so the estate was divided up among his living brothers, sisters and their children. He worked very hard for every dime he made and did it in an honest way. Several elderly long time customers and their Boomer children attended his funeral and talked about how they still took their cars for minor repairs to his home after he retired and sold the station. Yes, where are those family values now? In the GD crapper as he would say.

Some of what is being addressed here als with the benefits of giving business to your local garage or local bank. They have an interest in their reputations. Perhaps one disadvantage of the internet and, even, globalization, is that the local reputation is much less a factor. This may be especially true in the world of finance, where the cost of starting a company can be very low and where even large companies merge, buyout and disappear, only to reappear with new names.

The Washpost piece might have been more aptly headlined: Junkies still using, even after overdoses!

These lending outfits are going to keep up with the grift not because they have ready cash, but because they have to grift - it's their whole business model. There's no quick fix money in making an honest lender out of yourself ('specially because prime borrowers are probably the least likely to get conned) -- and it's the quick fix that built these lenders' businesses - so they are kind of trapped in their own scam at this point. They'll do bait-and-switch / bad loans until they upend themselves.

jus me, please read my post again.

Dale,

At this rate, in 50 years, there will essentially be no federal government because every one of the states will have realized it's "every one for himself" in order to protect their citizens and their own economies.

Sounds like a good political arrangement to me! People in Alabama can live how people in Alabama want, and people in California can live how people in California want.

I wonder why our nations founders didn't think of that.

Oh wait.

Cheers,
prat

I can't speak for broker, but I can note that FHA allows (indirectly) no down payment mortgages, through the "non-profits." And although we all know that the back-end ratio is much more predictive than the front-end ratio, they use the front-end ratio in their automated underwriting.

One can never underestimate the financial illiteracy of the average person. We here on CR likely move in circles of people who either are financially literate or are smart enough to know they are not. This is not how most of the country works.

I don't care if someone is stupid enough to buy their car based the dealer magically matching the monthly payment to what they are willing to pay. No skin off my back if the repo man comes. And its not as if they took "my" car.

I do care when someone is stupid enough to buy a house because some broker matched the first two years of payments to what the buyer is able to pay. As we learned this last few months, there are far more serious consequences for us all when the repo man comes for a house. And the idiot may well have bought my house, or produced a comp that raises the price of my house.

So the housing market is probably the one place where I want the government to protect idiots from themselves.
So yeah yeah TILA!!

I like Tanta's suggestion. Mort_fin, all my experience tells me that most people don't know how to look that up.

I also have noticed that many of these ads are FTC happy hunting grounds - but then, the FTC doesn't have the staff to do much.

Not to be ugly about it, but sometimes going cheap on regulators costs us all a lot of money.

Mort_fin's link on FHA is good, and the problem with the downpayments he is talking about is real. One thing that happened is that the builders basically set up these non-profits, paid them to give the borrower the downpayment, and then added enough to the sales price to cover it. That's how you get staggering FHA defaults, which are always higher than the norm anyway. So the poor fools were really starting out underwater.

If people cannot save their chance of staying in a home is much lower than the average in the first place. If you put such people into overpriced homes, you guarantee a high foreclosure rate.

And anyone searching for information on TILA may just try that with a ".com" added to the end, and fall into a website from a loan bookie.

They advertise around here on the radio, and make a point about what TILA stands for, right along with making a point about no income/asset verification, and "bad credit ok!".

Makes me ill, but people must be falling for it enough to pay for the ads. Anyone see the full page ads in US Today selling US 1 dollar coins for ~$2? If this is a barometer of the populace's intelligence, we are in for stormy weather.

TILA.com, and that velvet throated Hayes Barnard guy, are on my personal "Mortgage Lender implode-o-I-wish-o-meter".

oops. Committee hasn't been called banking in years. It's the Financial Services committeee. This is the link for the FHA hearings.

http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht062207.shtml

SeattleSun, I think it was Marx who said something like: 'When we get rid of God, we will have to replace him with the gov.' He was smart enough IMO, to realise that people need to believe in something. For those of us who got a taste of the new God, it wasn`t a pleasant experience.

M-O-M said:

"Not to be ugly about it, but sometimes going cheap on regulators costs us all a lot of money."

There are various groups of "us" some of whom are making huge profits from de-regulation while the rest pay the price. Again this is the capitalist business plan repeated frequently on these blogs of "Privatize profits - socialize costs" which is a subset of "The solution to polution is dilution" (ref: CDO's).

However those favoring de-reg have won the political argument so we have what we have.

No help for consumers? Oh, but the Republicans proposed an amendment or two to the great constitution prohibiting lesbian women and gay men from marriage. If former Massachusettts governor Mitt Romney wins the election that will still be on the Repbulican agenda. All the while hard working tax paying Americans continue to lose their homes. Remember to vote people.

I have lately been hearing radio ads from companies that are no longer in business,and for products that are no longer available.My all time favorite was "barney aldrich" whose ad started "getting a mortgage shouldn't be any harder than ordering a pizza!" and ends "and we're nice people too".I almost ran my car off the road the first time i heard it.

dryfly, I think we need a new constitution.(at least 60-70,000 pages) And also, we should change it every 2-3 years, according to our 'needs'. Our forefathers had no ideea what they were doing. They just got lucky that this country turned out to be the greatest nation known to men. You see, Marx@Co had bad luck. Now you tell me if life is fair!