Your post confirms my point exactly. As a professional loan officer, you are suppose to be educated and trained to completely interview the client to ascertain their current financial status. Armed with that information, you determine which mortgage product best suits their profile. Being a referral based, commissioned loan officer, you want to make sure that you thoughtfully place them in the correct loan that they do qualify for with a great rate and low fees so that they refer you to their family, friends and peers and come back to you for their additional financing needs. You don’t just force them to qualify for a product that will enevitably cause them to default, just so you can make a large commission. This is not an industry where you state “caveat emptor” and dissolve yourself of any blame.

When I make a major purchase such as a vehicle or even a home (sarcasm) I like to feel that I get the best deal possible. I was under the assumption that it was the American way to haggle our ways into deal infamy or at least the hall of fame. I?m not familiar with any stories/people that I have known that just go take the first deal offered to them when they buy a car. Then how is it when the same person is to purchase/refi a home common sense goes out the window? More than likely the largest investment of ones life that?s not only financial but an emotional investment as well.

If I am at the closing table and I am presented with a loan for my home where I can not afford the payments, understand the terms, understand the benefit to me, well, I would not take the loan no matter how savvy the commissioned entity on the deal was. How is it that the consumer taking the deal that they obviously could not handle free from blame? Help me out here I?m obviously missing something as subtleties are often lost on me?

Thanks and let the Helmet bashing begin?

Mortgage lenders:
Once they’d made all the loans they could reasonably make to qualified borrowers, the banks began relaxing the rules and reaching further down the credit scale. No income? No job? No assets? No problem! The industry even came up with a cute acronym for such deals: NINJA loans.
Wall Street:
The banks and mortgage companies never would have made all those loans if they’d had to keep them on their books. But they didn’t have to, thanks to the remarkable mortgage machine Wall Street’s investment banks and hedge funds concocted. Until two months ago U.S. banks were able to package billions of dollars of mortgages as bonds and sell them to investors, which included other banks, pension funds and mutual funds. Foreigners were huge buyers of U.S. mortgage paper. And hedge funds scarfed up some of the lowest-rated, highest-yielding stuff in a cynical bid to boost returns.
Ratings Agencies:
While the wizards of Wall Street could use financial alchemy to turn shoddy mortgages into respectable bonds, they still needed the blessing of rating agencies like Standard & Poor’s and Moody’s. And the agencies were often all too willing to comply. In the Wall Street pecking order, rating agencies are seen as worthy but plodding accessories. Analysts at the agencies earn far less than their brokerage counterparts, and decisions are nearly always made by a tedious committee process. As a result, they typically fail to react quickly enough to questionable trends and innovations.But they are not simply bystanders. They have long played a big role in helping investment banks structure mortgage-backed securities by conferring with the banks on what rating a certain structure might get. It sounds innocuous, but critics say it allows Wall Street to gain too much influence over the rating.
The Federal Reserve:
If we want to talk about one player that certainly had the power to put a stop to the excesses, we have to look at the Federal Reserve, which sets interest rates and therefore heavily influences the amount of lending that takes place in the economy. The chief charge against the Fed is that former chairman Alan Greenspan kept interest rates at very low levels far longer than necessary, which in turn sparked the bubble in housing prices and mortgage lending. Looking back, the Fed’s behavior does seem bizarre. It kept the key Federal funds rate at 2 percent or lower from November 2001 right through to the end of 2004. Those rate decisions showed that Greenspan had chosen to use the housing market as his main instrument to prop up the economy after the 9/11 attacks. Using monetary policy to encourage a rise in home prices would be a highly unorthodox move for a central bank. But evidence suggests that Greenspan was overly keen to use housing for exactly that. In 2002 he called mortgage markets a “powerful stabilizing force” because they allowed people to extract equity from their homes, and in 2004 he said that homeowners should consider using adjustable-rate mortgages to save on interest and prepayment costs. In 2005, when a record $625 billion in subprime mortgages were made, Greenspan gave a speech that blessed the creation of new loan products, including subprime home loans.

Realtors: Oh boy did they play thier part. Many have their own mortgage companies. Why is it when you ask a realtor to show you a 200k house- why do they show you homes at 250K and Up. Oh I have a friend that works at so and so and he can get you that loan. Buckle down for a couple of years and then sell this house and make 50 to 100k.

Builders: Raising thier prices 20k in a week with promises of rising values. Many builders have their own mortgage companies. So I’ve going to sell you this house and if you go thru my guy we will give you 20k in upgrades. In KY they call this in-breeding. Thier sales agent misrepresent what the fully assessed taxes will be. Then the builders con the villages into letting them build sub divisions without paying for the infrastructure. Oh we will pass this on to the new buyers. So in the 2nd year of a 2 year ARM. The payment will increase for rate and the fully assessed taxes, and add in that SSA cost for 10 years.

Buyers Attornies: Did they review all of the paperwork at the closing and explain to the borrower that your payments are going to go up in year two, and on your new construction home your taxes are going to be 2.5% of the purchase price. Did the attorney do a comparison of the initial GFE and TIL and verify the terms didn’t change . You are paying how much for a 3 bedroom ranch that seems awfully high to me. They have some blame here as well.

Credit Card companies: Why is it that whenever you buy a new house that these jokers send you preapproved charge cards with 10k limits. Get this from 5 or 6 of these companies and now you have just furnished your house on plastic.

American Lifestyle: We have a very high divorce rate- so the first sign of trouble I’m out of here and screw that mortgage company I’m not living their and I’m not going to make the payments. Hell I put little to no money down. The american way is to not save money and leverage yourself to the max. Why is it on TV when you see an interview with a couple in foreclosure they 50 inch lcd tv’s in their living rooms. Why do all of these soccer moms have to drive their kids to school in their 40 to 70k SUVS.

Rising cost of utilities: Gas at $3.5 per gallon, fuel to heat homes is on the rise or in the warm weather states cost of electric. Fuel to heat homes and electric to cool homes many first time buyers never had to pay this it was included in thier rent so they didn’t budget. Drive thru a subdivision and look at all of the Direct TV dishes in a subdivision- $100.00 per month with all of your channels and throw in some pay per view.

You can sit here and pass the blame to anyone you want, their are many reasons for this. But it boils down to greed by buying a house you can’t afford to make money on resale, too many Donald Trump wannabe investors, too many people living beyond their means and not saving a dime or putty any money down on homes.

Yes their may be some bad AE’s, loan officers, appraisers, realtors. But the last time I checked no one put a gun to anyone’s head at a closing or to sign a purchase contract. Whose fault is it when you are a chronic refinancier consolidating your bills every 2 years and using your house as an ATM since you can’t live with in your means.

Everyone in America looks for someone to blame vs. stopping and thinking before they make decisions, then when they make a bad decision they don’t want to be accountable.