What's worst is that the mortage companies' won't refinance loans to fixed rates because the people that had adjustable loans no longer can afford the increased interest rate. Yet those same mortage companies are looking for a bail out to the problem they helped start. If they want to really stop the foreclosures that are killing their bottom line they need to help by refinancing the adjustable ratses, if they don't they are hurt themself and losing more money in the long run.

Should we give some responsibility to home owners who borrow and borrow and borrow against their home?  To buy what?  An RV.  So they can leave home for an extended period of time and take their pots and pans with them.  I'm telling ya ..... it is crazy. 

Yup, I agree Lori. I'll never understand why so many people just can't say no. To me it's real simple. If I can't afford it.....I can't afford it, and I'll just have to make do.

uH...yeah, that's why i am unemployed

"Realtors pumping the deals for 6%"  Are you objecting to the commission the agent earns for selling your property or helping you buy a property?  Have you seen the paperwork they have to know about?  Makes my eyes glaze over.  I think 5-6% is worth it.  My agents have always earned their money.  Why are you letting the lenders off the hook so easily?  Most of them made a ton of fast cash and then sold the loans to the big lenders, like Countrywide.  Now the fly-by-night lenders closed up shop and moved on to something else, like the snake-oil salesmen of yore, and the big lenders are holding the bag when all those balloon payments and ARM's blow up.  It would be nice if companies like Countrywide would do what they could to help out the people losing their homes, but they shouldn't be forced to help.  The borrowers were dumb.  Just because they could buy a house doesn't mean they should have bought the house. 

I think I posted in another blog awhile back about how corrupt the real estate market is.  Its not so simple as to blame people for going over their heads.  The lenders and mortgage brokers go through a lot of trouble to hide what the actual cost of the loan will be while making it very easy for people to "buy the house of their dreams."  If you are living in a 700 square foot apartment with three kids and find out you can buy a 2000 square foot house for no (or very little) money down for almost the same monthly payment as your rent, its hard to turn that down.  Especially when the lenders and brokers are telling you that you will have no problem refinancing into another loan when your 5 year ARM runs out.

Well guess what happened?  The market started to crash, houses started to lose value, a ton of people are backwards on their loan to value ratio and now all these people who were assured they could refinance into another interest only loan are left with ballooning payments that are like 3 to 4 times what they were a few years ago.  Thats pretty much the typical situation that is causing this string of foreclosures.

Prior to the crash lenders were lending on poor credit and high loan to value ratios and selling them off as fast as they could make the deals.  So the pressure was always to push value on homes and I could write pages about the pressure appraisers were under to "make value," (meaning the lender would call a a huge list of appraisers until they found one that would agree to make the house come into whatever price they needed, which is unethical and can cause you to lose your appraisal license).  Now that they are left holding the fruits of their actions they are going out of business.

The irony is they will do this again once the market starts to pick back up.  It happens over and over and over.  Someone is getting rich off this you can bet that.

TK,

Sorry for the confusion. I am not saying the lenders are not to blame. They are almost at the end of that food chain. At the beginning of the food chain are other "professionals" with "stacks of papers" in front of those buyers hoping the sale was going to take place. The lenders had some blind tactics to make the deals. One was the "No Qual" loans. Everyone in that food chain was pushing them to the feast. And the feeders were the sellers all the way to through the lenders. It's not hard to follow the money trail. The seller with their professional meets the buyer with their professional and produce a stack of paper that is worth about $1000 per page if the deal goes through. It's not hard to turn a blind eye to the reality of the financial error the buyer is making if he/she isn't qualified.

"The borrowers were dumb.  Just because they could buy a house doesn't mean they should have bought the house."   It is very rare to have a person that is standing to make a lot of money council a person not to enter a deal that they can't afford down the road. Who would know better than that first person they see with a big stack of paper. That "glaze"in the eyes in a lot of those people (not suggesting you) in that food chain is greed.

That 6% was always there even when the houses that are selling for $400,000 today were selling for $90,000 5 years ago.

I just wanted to share with you how a Realtors commission is broken down. A 6% commission is very rare the normal is usually 5%. That is 2.5% to the selling agent and 2.5% to the buyers agent. Most company's split there commission with there brokers anywhere from 50% to 70%. So in the end after time spent either looking for homes with a buyer or advertising fees for a seller it doesn't come out to as much as you think.

TK - The mountains of paperwork that you see in front of a realtor are mostly there to cover the broker's butt.  You can take two rational people, a title officer, and an escrow officer and complete a real estate transaction without a realtor and the paperwork is minimal.  The realtor being needed is a fiction.  If people are too stupid to look past decorating shortcomings and they have to have the home "staged" before they can appreciate its' value, then they deserve to be ripped off the extra $10,000 grand that $800 of paint and a deep cleaning would cost them.

Tehachapi realtors are the worst for badmouthing the "for sale by owner" properties.  These realtors are in a class all by themselves.  They practically blackmail the 'for sale by owner' seller into using their services because they black ball the seller by telling potential buyers that the FSBO property is trashed and is almost condemned.  Tehachapi area realtors are malicious in their lies and deceit.

DeVerie - In my experience realtors are at the bottom of the foodchain when it comes to commission, right there along with car salesmen.  According to your math, that 6% is normally 5% is a line of BS unless you are a loser realtor. 

And, let's assume on a 5% commission on a $400,000 sale of which you personally get 50% of 2.5%, that is still $5,000 and at 50% I'll guess that your broker doesn't pay for any advertising so you have to pay for that yourself.  Your $5,000 less advertising comes out to be $3,000.

That's a great months pay for the little work that you have had to do in recent years and usually not even advertising when the market was hot.  So now days you have to work a little harder which means you will lie to your buyers and sellers.  Anything to make that commission.  What you didn't say was that unless your one of the loser realtors, you don't sell just one home per month.  When you sell three to five homes per month then you are looking at an average of $10,000 per month.  Not bad.

Of course you could be one of the 2.5% of realtors in the market that is professional, trustworthy, honest and a hard worker.  I hope you are.  But it took a lot of dishonest realtors putting pressure on appraisers to come up with inflated housing figures and a lot of dishonest lenders offering "pie in the sky" loans to get us in the financial mess this country is in today.  And, I don't blame the small guys like you trying to make a buck.  The big mortgage houses that offered the crummy loans to begin with are to blame for the whole rotten mess.  You guys just helped it along.

I've sold 3 of my flip houses my self in the late 90's and early 2000's before flipping and selling it yourself become poplular.  Offered them a few percent under market since I didn't have realtor fees and one sold in 24 hours, another in 6 days and they other one in 2 weeks.  I used a title company to do the paper work, did the usual home, termite and septic inspection and it was a no brainer and saved me over $25,000!

awsmom8 - you are awesome.  You used your common sense and made the flips happen.  Like I said, "We don't need no stinkin' realtors!"  Thanks for the input.