10-15-2009, 08:03 PM
I think the biggest problem was that the clowns we bailed out in the financial sector sold people on the adjustable rate arms based entirely on the concept that property values always go up. A lot of people who had those loans that reset the interest and in effect refinance the loan every 5 years suddenly had debt of twice what the house was worth. Credit rating or ability to pay had nothing to do with the foreclosure of many of those homes. The banks that had sold the people on a "bill of goods" five or six years ago, suddenly changed their tune when the property values fell. My son in law got one of those loans for the low payments, fortunately he was smart enough to realize that the property values might drop so he made extra payments against the principle from the beginning and thereby reduce the amount that needed to be refinanced so that his house is still worth what he owes on it or close enough that the bank will refinance.