Christine the Lioness (3122)
Christopher the Pyro (1985)
ProphetJoe the Irreverent (1234)
Trouble the Pirate (600)
Keith the Director (573)
Mara the Peacemaker (532)
eric the Lil' Devil (351)
AJ the Zen Master (305)
Ben the Kingpin (213)
Haas the Addict (187)
Christine 2 the Mercenary (131) Lei the Mercenary (124) Katie the Mercenary (115)
Ben2 the Soldier (56) Mara the Peacemaker spake, and sayeth
Well, charging someone with poor credit a higher interest rate isn’t predatory depending on what the interest rate is and the fact that these loans were all assumed by black people is not necessarily evidence of discrimination. Now if homes in similar white neighborhoods got significantly better deals, you wouldn’t necessarily have discrimination but that should at least raise a red flag that discrimination might have occurred.
To be honest though, the subprime problem didn’t seem racially motivated as much as it was economically. If anyone was preyed upon through the lending practices of the subprime mortgage brokers (and I am not saying that they were), it was poor people and/or people with bad credit, not black people. If anything, full disclosure did seem to be a problem and I do think that in some instances, that is a legitimate argument. Having gone through the rigamorale of buying a home, the process doesn’t lend itself to full disclosure. And while I totally agree that you shouldn’t sign anything you don’t understand or don’t read, almost no one reads in detail every single word of every single page they sign when buying a home. It just doesn’t happen.
So I don’t know. I think that lenders have a duty to inform you of the material terms of the loan (interest rate, what reverse amortization REALLY means, etc), people shouldn’t be totally off of the hook for failing to take the time to make sure they understood the loan they were signing.
Christine the Lioness said this
I’m honestly not sure in this case how the city can be suing on behalf of borrowers who probably wouldn’t win the case in court had they brought the lawsuit themselves. The fact that they’re trying to make this a race issue is beyond me.
With this whole subprime loan thing… no bank forced people who couldn’t afford to buy a house to walk into a bank and apply for a loan. That didn’t happen. These people, thinking that with interest rates the way they were, decided on their own to go buy houses. Now I’m guessing if all these people had been turned down for loans, someone would’ve tried to sue W.F. for THAT, saying they were discriminating against black applicants.
I promise you that not all mortgage companies and loan companies were operating above board during this time. I know a woman who works as a school teacher. She works 9 months a year and her salary is split over 12 months. During her three months off, she works full time teaching swimming lessons at a YMCA. To calculate her monthly salary (and to qualify her for a bigger loan to buy a house), her lender intentionally chose to use the three summer months where she had her regular income plus the supplementary income. Was the lender breaking rules? No. They only had to show 3 months worth of check stubs for income, so it was technically within the law. But were they qualifying her for a bigger loan than they knew she could afford during the other 9 months, yes. These things do happen and people who aren’t keen on these practices can very easily get duped. Which is wrong, especially because the lenders who are familiar with the fact they’re finding loopholes to encourage these people to borrow more than they should, know that that’s what they’re doing. On the other side, there are a lot of free seminars and organizations and articles on the web that expressly explain the nuances of buying a home, especially for first time homeowners. A lot of people are too lazy to bother learning about this for themselves. I’m not saying that being lazy warrants being screwed by the mortgage companies at all, but if the mortgage companies are going to screw people, it’s better to make sure you’re not the one that it happens to.
Mara the Peacemaker got all philosophical
“I’m not saying that being lazy warrants being screwed by the mortgage companies at all, but if the mortgage companies are going to screw people, it’s better to make sure you’re not the one that it happens to.”
A little bit of CYA philosophy.
Christine the Lioness asserted
CYA? I guess I don’t understand what you mean by that.
Mara the Peacemaker spake, and sayeth
Cover your ass. Everyone should operate with this mentality.
Christine the Lioness got all philosophical
Oh. Hehe.
I guess everyone should operate with that mentality to a degree as long as we never take the real accountability off the person who is committing the crime or doing the swindling and make it into the fault of the victim.
That can be sort of a slippery slope in a lot of situations, and to be honest, I can pick up a contract, read it, and pretty much understand it and I’m not a lawyer. But I also realize there are people who would have a very hard time doing that based on their education levels. It would be nice if mortgage companies had to also give applicants a document that explained the contract in layman’s terms as well. Then, if the person refused to read it, it really is on them.
This kind of stuff really shouldn’t be happening simply because people don’t (or can’t) understand what they’re reading. That part, it seems, could be prevented.
Mara the Peacemaker added
Well, CYA is what happens when you go to law school. It’s like second year pathology medical students who think they have every disease known to man. I constantly think in terms of possible lawsuits.
ProphetJoe the Irreverent got all philosophical
“I constantly think in terms of possible lawsuits.”
Woohoo, watch out Trouble!! 
Btw, another parameter in Christopher’s scenario is that this whole ’sub prime’ fiasco is driving the real estate values down — so not only are there less people owning home (b/c of foreclosures), but the remaining owners’ homes are worth less so the property tax revenues will be less (at least in IL they are based on the market value of the house).
Mara the Peacemaker added
PJ, Trouble is not in trouble 
I learned this the hard way. I had a situation with my old roommates some months ago over whether my deposit was a “security” or a “rent” deposit to go toward my last month’s rent. The problem: we orally agreed that it was a rent deposit four years ago but never, for whatever reason, put it in writing. So when I insisted that my deposit went toward rent, I had no way to prove it. It all worked out in the end but I learned my lesson.
ProphetJoe the Irreverent chimed in with
Get a prenup…
Trouble the Pirate chimed in with
Well… The average cost of a used 2 bedroom apartment here is about US$350,000.00, and we do not have sub-prime lending interest rates. The best a home-buyer can expect is about 2% above the prime lending-rate in the US. I’m paying 9.5% [variable] on my 20yr mortgage right now… So I really can’t relate..
Trouble the Pirate scribbled
I do see the point that the US’s consumer-driven economy, the “American dream” and those in control manipulating the market, can prompt people to ‘bite-off-more-than-they-can-chew” though, and I’m sure the lending-companies take advantage of this for a greater profit… But it’s kind of like a parasite that kills its host quickly, it’s not really in its best interest… I don’t think MTV’s Cribs helps either… 
Trouble the Pirate commented
It’s all spin… Ever notice that a Second mortgage is now cheerily called a ‘re-fi’?
Christine the Lioness hunt n' pecked this
Yes, but that’s because second mortgages were being offended by the term “SECOND mortgage.” It implied inadequacy, so in an effort to be politically correct, we unilaterally decided to change the name.
Christine the Lioness remarked
Actually, in most parts of Los Angeles, a 2-bedroom apartment style condo is actually a bit more than 350,000 US$. That would probably buy you a 1-bedroom condo. But in Cayman, you don’t have to pay income or property tax, is that right?
ProphetJoe the Irreverent added
Hmm, I’m not sure we use the same lingo around here.
I re-financed my mortgage about 3 years ago, but I didn’t add a second mortgage — I (effectively) paid off the first and got another at a lower rate… not only did I knock .75% interest off of the rate, but I lowered my term from 20 to 15 years and kept my monthly payments (virutally) fixed.
Btw, around here, a 4 bedroom, 4 bathroom, 2,800 sq ft, 2 story house with a full basement, attached 2 car garage and an in-ground pool will run you about $200-250K. Of course, that’s not new construction… and we don’t have an ocean view of the Caribbean, but then again, we don’t have any of the projects like Cabrini-Green (http://en.wikipedia.org/wiki/Cabrini-Green) or the Robert Taylor Homes (http://en.wikipedia.org/wiki/Robert_Taylor_Homes) nor any neighborhoods with the reputation of Compton/South Central (now called South LA, I’m told).
Trouble the Pirate commented
Right, no income tax here, we pay a 20% duty on all items imported to the islands, 27% on vehicles, along with the basic tariffs on road use, education, banking etc…
Property tax is a one time 6-10% of the total price depending on the area, not recurring annually.
By average I meant like what I own… a 15 year old glorified shoe-box…
If you’re curious about the market here check out http://www.cireba.com
Christine the Lioness asserted
That actually sounds sort of like my and Christopher’s plan to solve the tax issues in the U.S.
I believe there should be no income or property tax here. Instead, there should only be an inflated sales tax on all items except food (the junk food exemptions and food served in a restaurant would be as they are now– still subject to sales tax), and there should be taxes on gas which are allocated to repairing the roads (since the more gas you buy, the more wear and tear you’re causing to the roads).
Wealthy people buy more stuff… and they buy more expensive stuff so they would be paying the same percentage as everyone else, but more dollars toward taxes. Since education affects everyone (or at least an uneducated population affects everyone), education would be paid for by taxes. Medical services wouldn’t be taxed, neither would prescriptions, but the providers could still charge whatever they want for those services.
The idea is basically that taxes would finally be fair. Everyone would be taxed the same eliminating the tax loopholes that both the poor and the rich receive right now, allowing the middle class (who don’t get the benefits of owning their own business, nor do they get the social programs that the poor get) to get screwed.
I used to have two women who worked for me when I was overseeing programs at a YMCA that would refuse their merit increases each year because if we paid them more, they’d lose their welfare and the difference in what they would lose in term of social programs and the additional income they’d gain would actually put them behind because they’d move into a higher tax bracket and would have to pay more in taxes and their net income would actually be lower than before. Now that is a system that’s broken.
Trouble the Pirate chimed in with
Yes, I did read that thread a while back. I believe the theory of our system is much like you describe, and it works fairly well here. It approaches a socialist form of government I suppose, but at least it doesn’t get as far as the US in that respect
If we could just eliminate the Government itself, their greedy conflicts-of-interest, and under-the-table dealings, it might work even better…
Trouble the Pirate scribbled
Bear-in-mind that $350k over 30 years is about 3k per month at 9.5% interest… You could borrow an additional 200k at only 5%…
Anyways, I’m heading home… Later…
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