Who is responsible the banks who offered ARM mortgages or the idiots that took them?

Whatever happened to buyer beware? Is it the banks fault the idiots didn't read the fine print?Who is responsible the banks who offered ARM mortgages or the idiots that took them?
I have always been taught that I am responsible for anything that I choose to sign my name to. If I don't understand something completely, I am responsible for taking that document to someone to explain ti to me.





The key element in this is self-responsibility. Something that doesn't seem to be too popular right now.Who is responsible the banks who offered ARM mortgages or the idiots that took them?
Both. The banks offered ARM's as a way to get unqualified borrowers into mortgages in order to take advantage of the real estate boom and hedge their own bets against future busts and higher interest rates. The borrowers took them as the only way to get into a home.





I don't think the banks or the borrowers should have been bailed out. That is where buyer beware comes into play, after all.





But once you bail out the lenders, it is absolutely unjust to leave borrowers out in the cold--which is occurring for all Americans who do not qualify for the government loans, including many real estate investors in retirement (like my parents). I bring my parents into the discussion so you can see how this whole mess impacts all of us: My parents did not take out ARMs. They took out conventional loans over the years and have always paid their bills. When the housing market went bust and short sales and foreclosures flooded the market, it pushed their values down, leaving them holding properties worth much less than what they still owed on several of them. In my parents' case, this means they are both still working at 70 to cover mortgages on homes being trashed by delinquent renters (and no one is even talking about this).
I can see you never bought a home.


I have, twice now, and I can tell you that you can't buy a mortgage that the bank doesn't want you to have. They set the interest rate, the amount you have to put down, and then they can refuse you if the mortgage is too high. Of course that was back before the nineties.


Those strange mortgages, no money down...100% financing...no verifiable income needed...balloon payments...teaser rate ARM with huge interest hikes, supposedly built on increase equity, so the client is told they can refi without a problem. Except the market went down and it became a problem for the clients. Not for the bank which chopped up its mortgages and sold pieces of them. They were out from under.


The homeowners weren't idiots, neither were they professional bankers.


When the pros told them no problem, the homeowners believed them.


Buyer beware isn't supposed to function with your banker, they aren't supposed to be behaving like carnival shills. That they did behave like shills is not to their credit. Its the banks fault for encouraging their staff to write bad mortgages by giving them promotions and bonuses based on greed rather than sound business sense.
Ultimately at the end of the day the person who signed the dotted line is responsible. It is not like the banks held a gun to anybodies head. That said the banks were flat out greedy and stupid to think that people who had never repaid any loans or were always late, could not balance a check book, and had slightly better than minimum wage jobs would ever be able to pay back their loans.
If you sign a mortgage you didn鈥檛 read鈥?.well, you deserve what you get.
Barney Frank.
a bit of both.