Originally Posted by ACt
....There never should have been the situation of allowing people to buy what they never could afford.....
It wasn't just that people wanted a roof over their head, and that lenders were bending over to help them. Mortgage companies were specifically targeting those A) without the proper knowledge to fully understand the agreements they signed, and B) without the financial backing, being able to adjust to wildly fluctuating loan rates.
Not that it removes all the blame away from the borrowers. If you're going to sign a contract to be lent 250k, you should definitely have the capacity to understand exactly what you're signing. Unfortunately most of them did not realize the rate wasn't fixed, and when the interest rate shot up from an original 3.2% all the way up to 28% on the back-end. It threw them for a fucking loop. Most of these individauls would probably have opted to keep their homes despite such a change, but that kind of ballooning greatly affects the required monthly payment. Even if it weren't to directly increase the principle right way, balances like that aren't calculated on a per month basis. Its anticipatory based on the estimated length of the loan. So one month you are paying $1,300, and the very next your bill jumps up $3,200.
Fuck ups on both ends if you ask me. Amoral asshole lenders, and ill informed borrowers.