The Brian Lehrer Show

The reasons why we have this fiasco for some and for some increased creation of wealth is straight forward lack of any fiduciary responsibility on the part of the Elected Represenatatives and the Various Agencies that are supposed to be the watch dog looking out for the citizens of the country.

I blame us the people for this as we have not held those responsible to do our bidding and until that happens such disasters will continue to happen all the time.

You underestimate the intelligence of a borrower, if you think he doesn't understand that 300,000 paid over 30 years doesn't come to 100,000 every ten years plus interest -- isn't that slightly patronizing?

A lack of lending regulations doubled or tripled housing values in a span of 10 years. Values have only shrunk by 20 percent or less. From the perspective of creating value, banks were VERY successful.

We refuse to pay more than 33% of our post tax income on housing because it goes against our morality and common sense -- too risky for us. But apparently many borrowers and lenders were willing to take this risk.

Are we the suckers for waiting for the prices to drop to ones we know that we can afford?

To the woman from Vermont -- it sounds to me like YOU were primarily responsible for screwing over the old man who sold you your house.

I make over 80 K a year. I couldn’t even fathom owning a house in the area I live in or the area I work at. So how and why should I be remotely sorry that people who make 30 k a year are being foreclosed on houses that go for half a million plus? And remind me why my tax dollars should bail these people out?

Sorry, just cant feel sorry for any of these people….

Certainly lenders and banks bear responsibility for their poor lending practices. People who don't have proof of income shouldn't be given loans. What many people are ignoring is that for the past decade, homeowners have been using their homes as bank accounts by refinancing and pulling the equity out of their homes to pay their credit card debt and fund their unsustainable lifestyle. People were not forced to borrow, they did it because they wanted the cash and were betting that home prices would rise. Anyone with any sense should have known that prices cannot go up forever. Borrowers who are complaining that they didn't know the terms of their loans were obviously neglectful about finding out the terms of their loans and should have hired an attorney to review the loan documents. They ended up being penny wise and pound foolish. Now they are paying the price.

These loans would not have been profitable for wall street if more borrowers had done their homework. If it's too good to be true, it probably is. People need to face reality. Yes, owning a home is the american dream, but financial solvency is the practicality.

When my fiance and I entered the housing market two years ago, we were approved at several banks for a 500K loan, but made a decision to borrow no more than 350K, to make sure we could truly afford the payments without worry. We also made sure to research loan terms and picked up materials at our library for further study. We were suspicious of rates that seemed too low and always asked for a schedule of payments and possible scenarios for rate changes on ARMs

It seems to me that communities need to offer more resources for personal financial management. If consumers were more educated about this process, banks would not have been able to take advantage of them.

Where's the personal responsibility? I've had adjustable rate mortgages, and fixed. I recently refinance my adjustable rate to a fixed rate mortgage. During the mortgage process you're told the rate, the period of adjustment, and the cap per adjustment and the life time cap. If you fail to understand what those terms mean, and sign anyway who's fault is it? The lender? I feel for the people who are trapped by mortgages that they can't afford, but it is a personal decision and should be based on the facts presented at closing.

93.5 FM. Ever listen to how they prey on the West Indian community with guilt about not being a homeowner and promises of no doc loans? I saw this coming thats why I waited

People forget that the reason these loans were so attractive was because renting is such an exploitative process. We were living in a 1,400 dollar a month apartment on an income of 40,000 a year. Eventually, our landlord terminated our lease and we saw them advertising the apartment for 1,800 a month. With rentals at 1% vacancy and rents going up, an adjustable rate mortgage doesn't look so predatory.

In cases like the man whose house the Vermont caller bought, who wasn't mentally competent, is there a basis for legal action? Would the buyer be able to testify? And even in cases where buyers just weren't educated enough, is there legal recourse, or was it actually legal for the lenders to pressure buyers who couldn't afford these mortgages & reassure them that they could buy those homes?

and the war on the middle class goes on

If someone gets a house with a mortgage with no money down, pays some of the mortgage payments until it no longer makes sense and they walk what is the loss to them? It's just like paying rent until you decide to move. The losers here are the investors in this paper that were making great money until the train came to a stop. They should know better and should not be bailed out for this.

NYC community groups, HPD and major lending institutions have recently come together and announced the creation of the Center for NYC Neighborhoods. While some details are still being worked on, the Center will be able to connect homeowners to post-purchase counseling, legal services and educational events.

Homeowners who are struggling with their mortgage payments can call 311 to get further information on where they can turn to for assistance.

The problem is not only the home owners who may lose their homes, as one caller suggested, but the investors who may lose significant amount of their investments. Many of these people are depending on their investments for their retirement.

What I would like to know is why is the government taking so long to deal with the situation. The government could, for example, pay off all or most of these "troubling" mortgages and reissue them directly to the home owner at a "reasonable" fixed interest rate.

To Mike Cole,

Why should the government pay one dime for both borrowers and lenders piss poor financial decisions? What’s next? Will the government buyout my loan on a half a million dollar exotic car that I could never afford or never be able to afford from the very beginning? Sorry, I just can’t see any of my very hard earned tax paying dollars go towards aying off greed, greed, greed on both sides….

Brilliant work by Kevin on the report mostly from secondary verifiable sources. An amazing example of 'systems thinking' which I have rarely seen in this business. It looks like the judge in the class action suit against Lehman and the lender in CA was a significant enabler to the whole charade.

All the references to "personal responsibility" ignore the historical and socio-economic issues in this country. My husband and I considered a subprime loan a few years ago until we were able to borrow the money for our downpayment from relatives who had inherited money from their great grandparents. The history of this country (i.e. legacy of slavery) means entire communities have not been able to build savings over generations and have much less access to capital to make downpayments. The subprime mortgage industry deliberately targeted these communities.

We had our own legal representation when we bought our home, and yet experienced a bait and switch with our mortgage broker that still costs us extra every month. I can easily believe there has been incredible manipulation going on around these subprime loans.

I am curious, claudia, how that "bait and switch" happened. It might be helpful to hear how such manipulations occur, so others can keep an eye out for it. If you realized it was going to cost extra money, why go through with the contract? Was it too late, or did they somehow block your ability to back out?

A disappointing discussion because it failed to seriously explore the borrower-fault side of the equation, and even when that subject was touched upon, there was no follow up. When Amy Eddings asked the gentleman from the Bronx organization about what she referred to as "liar-loans", i.e., where the borrower lies about his/her income in order fraudulently to induce the lender to make the loan, the Bronx gentleman slipped the punch and Ms. Eddings made no effort to bring him back to the point.

And when Mr. Connor, the author of a "report" on the subprime loan subject, criticized Goldman Sachs for hedging its bets on collaterallized mortgage debt, there was no follow-up with, "Hey, isn't that what prudent investors are supposed to do?" So you end up castigating the prudent bank, as opposed to the major institutions whose short-sighted investment decisions yielded billions of dollars in write-offs which, in turn, resulted in their shareholders, large and small, individuals and pension funds all, with a whopping loss of investment.

There is plenty of fault to be spread around in this mess, but you presented an unbalanced and unintelligent treatment of the problem.

MartyL

Regarding the "borrower fault" issuse. It would be interesting to compare the experience of a typical "working" family buying a home right after WWII, say early 50's, and today. Putting asside for the moment the whole issue or race, in the early days of the fixed rate 30 year mortgage (an New Deal innovation) mortage lending was highly regulated and you didn't need an advanced degree in law and econonomics to not get screwed. Borrowers were, in a sense, protected from their own ignorance. Interest rates were low and a guy with a job in the post office could buy a decent house and support his family. Stagnant wages at the low end of the middle class along with high housing costs, poorly regulated mortgage lending that took no account of predictable isssues of "human nature" led to this crisis. Govenment better step in or it will be "Bronx is burning" (and not just in NYC) all over again. Do we really want this wastfull cycle of urban decay to repeat itself again?

Joe D, it is too late, I see a lots where construction has ceased. The 70's NYC will be back.

Joe D, it is too late, I see a lots where construction has ceased. The 70's NYC will be back.

Everyone's happy to blame the homeowner who, in many cases, got conned into a bad loan by a broker who played the expert and promised to do right by them.

But what about all the financial experts who ENCOURAGED the giving of no-doc loans? Would you lend someone $400,000 with no documentation? The big investment banks SPECIFICALLY encouraged the brokers and banks to make the most risky type of loans, so they could package them for especially lucrative investments. The homeowners lose, the investors lose, but the investment bankers made a mint, at least in the short run. That's why they should DONATE THEIR BONUSES to pay for refinancing of bad mortgages.

There is plenty of blame to go around, including subprime bonds rated prime, and the willingness of investors to believe it. What I found lacking are the author's credentials. Writing a report for 2 small nonprofits hardly qualifies him as an expert. His thesis lacks strong logical connections, as well. One could equally assert that the abundance of mortgages created an excess of structured bond output. That NPR gave such credence to this kind of report troubles me. Why not cite an economist? There is a lot of content out there. We need NPR to present CREDIBLE sources.