Biggest thing is that the terms on the 50 not be predatory with super-high interest and/or prepayment penalties.
You KNOW the people getting them won’t be watching for either of these gotchas.
Knowing the big banks….doubt it.
Precisely why they probably shouldn’tbe offered in the first place.. you and other smart money managers may be the exception. I would guess the majority of folks do not think the same way. Many people are barely scraping by.
Say things do get tight and one has to “pull back", then the water heater goes out. Now what? It’s a very slippery slope and in the long run, it’s the banks that win.
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The GFC proved how dumb people are when they lied to obtain loans that they could not afford in the first place.
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Recently my wife and I watched “The Big Short” again. Absolutely brilliant film. On my top ten of all time list.
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Those “dumb” people were encouraged to Lie! “Liar” loans! No interest loans. The banks and mortgage brokers were trying to make their commissions and then sell the loans. This is exactly why there has to be banking laws to keep the banking industry in line. These conservative/libertarian pundits out there that say “It wasn’t the banks” are full of (4 little boxes).
Lefty or righty news site, on a $400K mortgage a person would save less than $250 per month in a payment. I’d take the 30 year loan and if I ran into some tough times, I’d cut out some streaming services to get the money. Of course, if I was preparing to enter into any long term agreement where $250 was the make or break number, I’d think twice before taking one.
Like the guy at Countrywide with the “FundEm” license plate….if they can fog a mirror - fund ‘em. And in many cases it wasn’t the borrower that was lying…it was the loan originator. I don’t expect that to change…and in fact I I expect to see more creative ways to sell these loans.
One thing they might cut down on is people refinancing and using the equity to buy a new car or boat….since these will build so little equity. Edited to add.on a $350k loan at n 6%, after 5 years you will have paid about $7k towards principle. On a 30 year loan you would have paid about $25k;
How did the banks force people to buy homes they could not afford? Its not like they accidentally hired a realtor, went out and found a home, completed an application, then showed up for a closing and signed loan documents without reading them.
People make dumb decisions. That’s just a fact of life. People smoke, vape and dip. People drive without seatbelts. People ride motorcycles without helmets. People are on their phones while driving.
I know people on the Left side don’t believe in accountability, but this is just natural selection at work.
“Force” is not the right word. The bankers/brokers would convince the potential homeowner that they could “afford” this house. “This is how we do it nowadays!” “Everyone can own a house now!”
I knew a gal who bought a house during this era. She really didn’t have enough capitol to own a house but she went in to a broker and was told “No sweat!” The broker made his commission and sold the loan. He washed his hands of any wrong doing because it was allowed during the banking scandal. It “kinda” worked when the home values were going up, but when home prices collapsed, well, we know what happened.
Yep. “why rent when you can own” advertisements. People who may never have contemplated a mortgage had a telemarketer or email or television ad about home ownership and how they were so affordable. And a lot of times it was the brokers who ‘fudged’ the application in the borrowers favor. And for those who blamed the borrower for “not reading the agreement before signing”, I’m willing to bet that few of them read their own loan paperwork…They just knew that they were getting a 30 year fixed rate and signed after the the loan officer pointed to a line and said “this just means that blah blah blah”
But we have to have a bogey man. and it was the government “forcing” banks to make these loans. Or it was the borrowers buying a house that “they knew they couldn’t afford”. They never mention if the government forced them to sell the loan to another servicer, or how the government forced them to bundle these together and sell them as “investment grade” products.
I am sure annuity and timeshare owners fall into this camp as well.