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Originally Posted by Danzig
didn't deserve them? and here i thought the biggest reason for these loans defaulting was that the ARM went to astronomical levels for many folks, making affordable housing suddenly anything BUT.
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if you're working (steady income stream), have some $$ to put down, good credit.... then you should and deserve to get an appropriate loan.
the ARM's went up astronomically, because the loaning institutions were giving more money to them than the person should have been eligible for, which caused the ARM to be higher. Personally, I wouldn't ever take out an ARM mortgage for a house.... fixed only (will get less $$ approved, but won't run into any of the problems).
The banks greed is also at fault, as the higher the risk, the higher the interest rate and the higher the bank's income, and all the banks wanted more than the bank next to them which made for more and more of those loans to pad their income statements... but they forgot that loaning the higher interest rate loans... the higher the risk. Trying to get higher and higher income from them means that they have more and more risk, and they didn't take into account what would happen if something happened and the people defaulted on them.
case and point on it's a friend of mine.... bought condo and had std mortgage, no steady income stream and the bank gave him a 2nd and 3rd mortgage on it. he couldn't even pay the first mortgage, let alone the 2nd or 3rd (which he never should have been eligible for). Lost the condo, moved to different part of US and finally now is working again. It'll take him the rest of his life to get any of his credit back, IF he ever does.