Didn't we used to have laws against usury? Whatever happened to them?
Yeah, I remember those too. Something about not being able to breech 29.99 APR, but I don't know how the hell these places get past them. All I know is I have a friend who's wife used to work at one of these places, and it is heartbreaking the stories she tells about people that come in there and take out a $500. advance, then every week or two bring in $575. and come back the next day and take out that same $500. repeating the cycle never paying the loan off. Some of these people are elderly that once snared, never get out. It's sad. And these places if you take a look around, are situated, and saturated in the poor districts of every city and town...These people that own these places deserve a special place in hell.
You're right about the predatory lenders and mortgages. What happened was that houses were sold to perfectly willing buyers who couldn't afford those houses using "creative loans". Lots of buyers as well as lenders made money on the deal until the bottom fell out of the market. Rates were no higher than for any other mortgages.
The part that I will ding the banks on is that the had people sitting in front of them that they knew damned well couldn't afford the houses they were buying, or the 2nd, and 3rd mortgages they were taking out, and did it anyway because they thought they'd just be able to push it back on the government, and get their money. Plus the incentives for the people working within the mortgage loan business was significant in the form of commissions, and to be truthful they simply didn't care, nor did they use any common sense when talking people into these loans....That's on them. But it doesn't give anyone the right to lie about income to get in the house, and then just walk away from it when they couldn't afford it.
What should have happened is laws passed to ensure that buyers had enough skin in the game to lose if the houses were foreclosed, and to have a reasonable assurance that people weren't buying houses that they couldn't afford, that dreaded but necessary word: Government regulation. That didn't happen, and so the whole house of cards eventually fell.
My contention is that we had that, but it wasn't followed. And this is where it gets partisan. There was a point when demo's were in charge that hearings were held, and regulators, as well as Repubs were raising holy hell about what was happening within the industry, and Demo's either ignored, or brushed off warnings....
This IMHO, puts demo's just as culpable as those bank, and mortgage people that pushed the people for commissions.
As far as "skin in the game" I will say this...We aren't doing this now either...Fannie and Freedie announced that they were going to open a program offering 3% down mortgages...Same thing all over again. But I will say this. 5 years ago I bought my house here in SC..I did it with NOTHING down. I have VA backing so, I didn't need to put a penny down according to the rules, but two things I did to ensure I could swing it, first I didn't buy more house than we could afford, and I immediately put the mortgage payment on auto pay through my bank tied to my wife's paycheck...So she gets paid on the 1st, and 15th, and the mortgage payment is automatically paid on the very same days...We never give the payment a second thought, and it's exactly on time for over 5 years now. Too many buy too much house, then play games with the mortgage payment.
Too many people have NO idea how to budget, or the real effect of missing payments, or paying slow...See, I think that there ought to be mandatory budgeting classes say at the Community College before you can buy a house, and then one thing I haven't seen that should be there if someone was accounting savvy, or budgeting savvy, to start up a service not to charge those with budgeting problems, but to have a place for these people starting to sink, to go and put all their bills, and income on the table, and have a place to teach them how to work through it...Right now there are places like that claim that is what they do, but many times they are paid by the creditors, and are really nothing more than 3rd party collectors.
We always say in this country that 'education is the key', yet when it comes to actually putting our money where our mouth is on that we shrug it off, and blame the person suffering...Anyway, those are my thoughts this morning.