i don't think that you can say that any one thing is the catalyst to all this. yes the cost of gas has impacted a lot - but if you think about it - the housing bubble burst a while back so it was even before the gas crisis hit it's peak. i really do hope though that the housing market gets better since i'd love to be able to sell my house at some point.

Being someone who bought a home during this time, I saw how I could have gone with other companies who offered super low interest rates, but they were adjustable rate mortgages. We stupidly signed one of those, and after the first year our mortgage payments went up significantly. By a year and a half they had gone up by half. Luckily we could cover this but as soon as we hit two years, we re-financed and got a fixed interest rate mortgages. We know that we have no one to blame but ourselves for getting into that situation.

Maybe we should ask John McCain. After all, he wasn't able to answer how many homes he owned when questioned.

This is all on the people who wanted the big houses they couldn't afford. So they went with the interest only mortgages because their home's value will never go down. Guess what? It did. Then they couldn't afford the hikes in their "adjustable" rate, but now couldn't sell because the house isn't worth as much as the mortgage is for. Let the market fail, and let's pick up the pieces and go on. Bailing it out only prolongs the recovery process.

Fuzzles, that's because he actually has family living in these homes. McCain actually takes care of his family. Of course, they aren't living on a dollar a month....

this is an interesting theory, but its wrong. gas prices had nothing to do with the housing bubble. historically it was always more expensive to live in the suburbs. when they were first "invented" (late 1800s outside of NYC) they were accessible by commuter trains, and were marketed for their health benefits of clean air, open space, and safety. people were willing to pay a premium for these things and i believe they always will be willing to, even if transportation costs continue to rise.

the reason home prices have not been affected in central cities in the same way they have been in suburbs is that there werent as many new homes being built in these areas; new homes that were mostly purchased with ARMs and other fiscally "iffy" loan packages. so the less foreclosures you have in an area, the less home prices are affected. it's all about supply & demand. particular people choosing to alter their lifestyles to save on transportation costs may be playing a small role in this - but it is not significant. in the future we will see this trend continue... but only because people want to make wise investments - and buying in a neighborhood that's losing value at a rate of close to 8% a month is not appealing to anyone.

anyway that being said, i LOVE this topic and could talk about it for hours (clearly!) so i'm going to read up on this songwriting urban planning critic now - thanks for helping us find him, Citizen!

>This is all on the people who wanted the big houses they couldn't afford.

I think it's partly on them, but also partly on predatory lenders who convinced people to sign up for stuff when they didn't know better. Yes, they should have educated themselves, but lots of people did ask questions like, "will my payments increase?" and were just lied to by their mortgage brokers.

They weren't lied to. They heard what they wanted to hear.

Um, they asked a question and were deliberately told the wrong answer. How is that not lying?

And I'm not saying it happened to everyone or that it caused the major problems, but it did happen.

should have educated themselves, but lots of people did ask questions like, "will my payments increase?" and were just lied to by their mortgage brokers.

No, they were told (Because it's the law to provide this information) that the rates could increase. "But if they do, and you need to readjust your mortgage, you should be able to. Plus your house will be worth more money, given the current trend in the housing market." (This is what my wife and I were told when we shopped for mortgages. There is nothing in that statement that is a lie. The problem is the bubble burst, and the homeowners were stuck owing more than their house was worth, and an expanding mortgage that they couldn't afford.

"Because it's the law to provide this information"? And shady mortgage brokers would never break the law?

Well, that's what happened to you, but not what happened to everyone. I didn't think it would be so controversial to say that mortgage brokers did a lot of shady things including lying and misleading homewoners about how payments could change, if there was a prepayment penalty, etc. This has been pretty well covered on the news.

Torg, I wouldn't be amazed to see a few people got lied to, or at least not told the whole truth. But still, it's their responsibility to READ the contracts they are signing. That will tell them what they need to know. If they don't, it's really their own fault. As I've said before, though, credit was artificially cheap because the Federal reserve set interest rates too low. Government intervention plays a hand along with irresponsible borrowing.

If those homeowners/lendees could prove they were lied to, then the mortgage company would be responsible for the damages incurred to the lenders. I'm sorry that you feel all mortgage companies are shady people. I'm wondering if you feel that way about all salesmen.

>I'm sorry that you feel all mortgage companies are shady people.

No need to worry! I don't feel that way. Just some of them. I really don't think I'm saying anything controversial: Some brokers lied to some people and caused some of the problem. Yes, people should have educated themselves and not bought such expensive houses, but most people are stupid and easily guided by someone they see as an expert.

But you have no proof that some were lied to. Where are the lawsuits? Which mortgage companies are paying millions in restitution for their misdeeds? Saying some were lied to is like saying all were lied to, if there is no proof to back up the statement.

Okay, since I can't recall the exact details or the dates of the news stories I heard, I'll give up. I don't see how "Saying some were lied to is like saying all were lied to, if there is no proof to back up the statement." because that doesn't even make sense to me, nor do I see how uneducated people would automatically launch large scale law suits against the mortgage companies, but it's Saturday and I don't care to spend it doing research to remember where I learned about something.

Since the provider of the loans must disclose all of the aspects of the loan, if they didn't the mortgage provider is responsible for the payment of that loan. If I was losing my house, and I knew I had been mislead, I'd bring the proof to the lawyer, and then I would be able to keep my house, and the mortgage would be taken care of. That's why I'm asking about the lawsuits. Being uneducated isn't the mortgage companies' fault.

UnDave, any good lawyer would tell you that the contract is the disclosure, and you can't prove they lied to you. And then they'd ask how you planned to pay them when you lost the case.

If you can prove the lender failed to disclose the aspects of the loan, then you can sue. Have you ever purchased a house? Have you ever sold a house? I've done both, and sat through the tedious signings of the loan documents, and the real estate documents. These are tedious because the real estate broker is required by law to go through the documents thoroughly before you sign, or the signature is invalid. It's the same way with the loan documents, so if you can prove that the lender failed to do so, the loan is forfeit. A good lawyer would ask about said proof, and then prosecute (DA).

Disclaimer: This is the law WI, MN and IN. I am thinking it is the law in all states, but as Torg has pointed out, it is Saturday, and I am heading out to play (clean) out in the garage.

See everyone tonight.

Actually, I have purchased a house. But I didn't need a loan.

Real-estate brokers explaining legal documents is very legally binding. They're always dead-on accurate in their interpretation.

It doesn't matter that the contract is what you signed, not the lender or real-estate broker's explanation. Their explanation is legally binding, right UnDave?

The lawsuits are out there, but a lot of people are struggling to save their homes so court is a secondary thought. But here are some:

July 2008:
California officials expanded a previously filed lawsuit against Countrywide Financial Corp., adding allegations on Thursday that the mortgage lender rewarded staff for selling risky loans. The new claims amended a lawsuit filed on June 20 by the California attorney general's office accusing Countrywide of DECEIVING BORROWERS with misleading advertisements and other unfair practices. The latest filing said Countrywide paid higher commissions to agents who put borrowers into loans with higher rates and fees than they qualified for based on credit scores and other factors.

The Center for Responsible Lending has put together a database that summarizes a sampling of the litigation targeting Countrywide. Because most of these cases are in their early stages, these allegations remain just that -- allegations. However, they do give a sense of the kinds of concerns that exist about Countrywide's practices.

Cappuccio v. Prime Capital Funding LLC et al
U.S. District Court for the Eastern District of Pennsylvania
Complaint, filed November 2, 2007

Harden et al v. Countrywide Home Loans, Inc., et al
U.S. District Court for Northern District of West Virginia, transferred from Circuit Court of Berkeley County, W.Va.
Complaint, filed November 2, 2007

Gonzalez et al v. VCH Salinas I LLC et al.
U.S. District Court for the Northern District of California (San Jose) Complaint, filed November 8, 2007

Loo v. Countrybank Bank, N.A. et al
U.S. District Court for the District of Hawaii
Complaint, filed November 15, 2007
Zachary v. Countrywide Financial Corporation et al
Texas Southern District Court Complaint, filed January 17, 2008

Misleading or not, it is your responsibility to read the fine print. During the past 5 years all kinds of people wanted a slice of the pie and thought they could somehow get an adjustable rate mortgage and it wouldn't "adjust". With subdivisions popping up seemingly overnight and companies like country wide licking at the chops for anyone to sign, that should be the sign that you need to do your research. This victim mentality that this country has is going to be our undoing. The fact that whenever something happens to us it is always someone else's fault. The fact that someone can repeatedly not show up for bankruptcy hearings and absolutely screw the vendor, i.e. me, and nothing is done about it. We just need to learn and teach our children, "IF YOU DON'T HAVE THE ACTUAL MONEY IN YOUR BANK ACCOUNT, DON'T BUY SOMETHING!!!" Whether that be a mortgage or car payment, or just another frivolous need (flatscreen tv).

I agree that everyone needs to read all of their paperwork and educate themselves before signing anything--it is their responsibility. I also think that mortgage brokers need to be honest and fair when dealing with home buyers--that's their responsibility.

All I wanted to say originally is that's not "all on the people who wanted the big houses they couldn't afford." There were a lot of factors involved, and blaming one thing oversimplifies the issue.

Torg, that's sales. Saying whatever you can to the particular buyer without actually lying. That goes for cars, insurance, wine, loans, tv's, everything. People make their beds, now they have to lie in them. That is just life. And this bailing people out all the time and blaming other people for our mistakes is a problem. Wait until you are on the stinky end of a moronic lawsuit. It sucks, trust me.

I'm with Torg on this one GS. Just because you don't have enough money to buy something doesn't mean that you can't afford it.

Well, when you put it that way.....

That is disgusting. It is one thing to put a positive spin on your product. It is quite another to deliberately lie or mislead someone for profits. I can't believe you would defend someone for tricking someone to make money.

And I am not saying we need to bail people out, I am not saying people shouldn't do their homework. What I am saying it that there's blame on both sides. I honestly don't see what's so effing controversial about saying a huge, national, gigantic, messy mortgage crisis is all, 100%, with no other blame elsewhere, the fault of greedy people who wanted giant houses they couldn't afford.

Because Torg, that just goes right along with the huge problem of the lack of personal responsibility that is facing this country. You're right, it is a huge problem. So is credit card debt. So is bankruptcy. Which fits more with the other problems. Bad spending skills or poor people who are lied to?

and I am not defending it. It just is. That is sales. Most these people work on commision. If someone isn't lying to you, what is the problem? If you are dumb and get taken advantage of, guess what, you are a bit less dumb. Hopefully you learn a lesson. But, according to you, the lesson learned is, wow, someone must be blamed for this. I can't possibly be responsible. Big evil corporation is to blame.

>But, according to you, the lesson learned is, wow, someone must be blamed for this. I can't possibly be responsible. Big evil corporation is to blame.

If this is honestly your take on my position, then you're either not reading my comments, you're choosing to misinterpret, or maybe just trying to be contrary. I don't know, but I don't know how to make myself more clear.

Torg, you put disclaimers on posts all you want. The message you are repeatedly saying is that people were lied to.

Some people. And it's not even...this isn't a matter of opinion, it's a fact!

Fact? Proven? So all lawsuits are facts? All of them are the truth?

What are you talking about? How do you get "all law suits are facts" from "some people were lied to by brokers."

And the only proof provided is a link to lawsuits.

I wasn't talking about the lawsuits. I was talking about stories I heard on NPR about people who were told things about their mortgages that aren't true. I will try to find the stories if I can but it was a while ago so it may take me a bit.

either way, people are stupid for driving cars that use a lot of gas. and those are usually the people who complain about gas and want to vote for mccain because of gas . the mortgage crisis was due to not enough regulation on the mortgage industry, and some people just being surprisingly dumb. i am guessing that some of the mortgage brokers were just as tricky as used-car salesmen.

The content of this post really doesn't make sense. Everyone knows the reason there is a mortgage crisis is b/c of the adjustable rate loans that companies approved 5 yrs ago. People were allowed to put NOTHING down on a $150,000+ loan, and that let SEVERAL people who could have never afforded homes, homes. Fast forward to now, and you see tens of homes for sell in any given neighborhood. Gas prices didn't make those people foreclose, the adjustable rates did.