I've been hearing a lot about how those who bought into the housing market with subprime mortgages (home loans made to borrowers with higher credit risk) are having hard times right now; some are delinquent in payments and others are being forclosed on altogether. Some are pointing fingers at the lenders for being irresponsible. What are your thoughts?

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It seems like this generation has been taught that nothing is their fault and everyone is entitled to everything they want or see on tv. there was a guy on tv saying that there are predatory lenders out there and it takes a harvard MBA to figure out home financing. google any article on home financing and you find that adjustable rates are bad. fixed rates are good and your mortgage payment should be less than 25% of monthly income.

BUT! I do think there are exceptions depending on where you live though. we did a job search in Napa and were shocked at what the realtor and banker expected us to finance with our income. We are from NJ and live in KY now and couldnt believe the "creative" financing they were suggesting for us to live in a 1.1 million$ dump.

My husband is a mortgage broker. He has his own branch, and it has provided for us well... until now. He has people coming in and calling for loans; he just can't get it funded out there. This is causing problems with our income. In fact, it's the reason I joined the board last night. Trying to find ways to save money, make money, and still do everything that I do at home and school; until the market gets back on track.

I haven't a doubt that there were some lenders just out to get their quota for the month when they approved loans that they prehaps shouldn't have. On the other hand though there were people out there also trying to get loans that they probably shouldn't have been trying to get as well. Everything, that I have read, says do not take the full amount that the lender is offering you. People need to remember that the lender is there to make as much money off of you as possible and that you are the one who knows best what payments you're able to make.

I know with us we took a large chunk of what the bank offered us and that when we mentioned a second house that we were looking at (that was bout $30,000 more) our lender's comment was, "I can get that for you." It was tempting but thankfully we said no as our income changed a bit after we bought the house. We're making the house payment just fine but I don't think I could have said that if we had bought that more expensive home.

I think that the lenders were being irresponsible (if not unscrupulous) by giving out these loans. I also think it's going to cost the rest of us dearly, especially anyone who planned on getting a loan in the future.

There is something to be said for the people who took them out too. Just because a bank tells you they will give you more money than you can pay back doesn't mean you shouldn't get out your calculator and see for yourself that you would be in way over your head.

I'm sure there are unscrupulous lenders but also I think, more of the problem has to do with people not understanding what they're getting into, not reading the paperwork, not asking questions etc

I agree. Every profession has unscruplous people in it. But, it was the homeowners responsibility to understand what they are signing. JMO

I think you all have said it so well. Homeowners need to take the time to be educated; not just listen to the salesperson selling the mortgage - some people don't realize that's just what they are: salespeople. It is buyer beware. There are good ones and bad ones.

We recently looked into refinancing. Once company gave us a decent rate and dh had stars in his eyes. However, I told him not to do anything until I did some research on the numbers. When the Good Faith Estimate arrived, I literally laughed. You should have seen all the junk fees and the small print terms. I have to admit, though, that if we were in a bind and needed the money that this would have offered, we would have been tempted.

Another company gave us a decent rate to roll our first and second into, plus cash out that we would like to have for home improvements, saying our appreciation allows us this wonderful rate. The rate wasn't so wonderful. When we got the paperwork, there were no fees, and it looked great, but the 7.06 rate was magically changed to 7.86. No thank you.

Perhaps there needs to be more regulation, but mostly more education. The advertisements make it seem so wonderful!

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I worked for a subprime mortgage company until a few months ago when I got laid off. I am an accountant, so, wasn't the one originating mortgages. I think many people got very greedy with getting mortgages for houses expecting that the value will go up and they will be able to refinance or sell it when the rates change. And it worked really well for a few years. But at the same time mortgage companies got very creative with their loans. You didn't have to have a stable job, good credit or anything to get a loan anymore. So, I think in a way mortgage companies put themselves in that position in a way.
I am huge huge proponent of personal responsibility, but some of those loans and the paperwork was way to complex for someone with no experience to understand.
So, once again, I will get on my soap boxn my soapbox: and will preach personal finance classes in school, so people have a basic understanding what they get themselves into.

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Lena

I remember how hard it was for my husband and I to buy our first, modest starter home 11 years ago. The past few years we've been looking on in shock as newlyweds and young couples are buying these huge homes. There is totally a mentality of "I want it now" and getting it. Whatever happened to delaying gratification and working towards a goal? The lenders have taken advantage of this "me, me, me" generation/ lifestyle/ sense of entitlement, BUT in the end you are responsible for your own decisions.