Why did so many Americans sign mortgages that they could not afford?

Were they stupid or something? Why were they so dumb? Why would you ever sign for a mortgage that you might default on?Why did so many Americans sign mortgages that they could not afford?
I know a few people. the banks were guaranteed on the loans so they used mysterious ways to qualify you. You figure, why would they lie? Then, you are in a house for $2k a month. 3-5 years later, they didn't really tell you, the loan becomes due, you have to refinance now that the house has lost money, you have no more equity, payments go up to $4k a month and you are screwed.


Thank god it's not me but I know of 3-5 families in that situiation here in the SF Bay area.Why did so many Americans sign mortgages that they could not afford?
here's a little thought that, so far, no one seems to be saying anywhere --





who advocates for the buyer?





no one, that's who.








how fair is this?





here's who advocates for the seller and tries to get the buyer to sign the paper -- the seller, all of the real estate agents, the mortgage loan broker, the closing agent, the mortgage lender, and virtually every other person involved [appraiser, inspector, etc. -- none of whom get paid much if the deal doesn't happen],





this situation is so unbalanced that maybe your state Legislator ought to pass a law forcing the mortgage broker to work as an agent for the buyer and be financially liable if he doesn't recommend the best deal he can find, as well as if he doesn't counsel his client to refuse the deal completely if it seems financially unsound.
I wouldn't, you're right.





But look, the whole economic 'bubble' was caused by people buying investments, not just houses but stocks, real estate, etc., that they really couldn't afford, because they knew they would be worth a lot more soon. People bought investments they knew were overpriced because they knew some idiot would come along in a few months and pay even more for them. That's how bubbles happen.





It works fine, too, so long as the market continues to grow, so long as the bubble continues to swell. People speculate in hopes of getting rich quick. But as soon as the market stumbles and backs off, everyone goes to unload all their overpriced investments as quick as they can, and the market collapses completely, like a bubble bursting.





Every investment contains an element of 'calculated risk'. You buy a house, you figure there's an 80% chance it will go up 15 or 20% the first year. If it goes down, and you lose your job, you walk away and it belongs to the bank. If not for the big upside potential, nobody would buy houses!





Besides, we tend to think that people who couldn't keep up with their mortgages were all low-life scum. But lots of these houses, maybe most, were bought by millionaires who leveraged their own houses to buy more houses. When the investment houses went south, their own homes did too, so they couldn't borrow more to hold onto the investment properties.
You've obviously never signed a mortgage or you already had someone with prior knowledge check it out cover to cover.


Most mortgages read like the NY city phone book except in legal jargon few people even understand. Then take greedy mortgage brokers who had absolutely nothing to lose and a LOT to gain on the deal who promised the moon stars and sun to the people plus a darn nice house and that's exactly what happened. By in large most people who got suckered into the sub prime thing were poor with little education, decent, but not great jobs, honest hard working people and there was another group nobody hears about... The flippers, people who lead us to believe its great to buy a property, slap a cheap coat of paint on it then resell it for twice its true value. The flippers were by far the worse and its they who also drove real estate prices through the roof to unsustainable levels. I know all about flippers because i worked for a bunch of them and cleaned up after the messes they created. My son and I ran a business cleaning out the mess after a foreclosure when people are thrown out to the wolves and leave their possessions behind.


The VAST majority of the houses we cleaned out were modest homes, not fancy multi-hundred grand houses, but 25k-50k houses with mortgage payments that could choke and did choke the big mortgage banks, but blame the little guys. they're easy to pick on. Don't blame the people who allowed it to happen, just the victims.
You make an assumption that I don't think is entirely true, wait and see, The Chicago Tribune did an expose last year and a paper in Florida did as well, I think you're going to find about 1/2 these Mortgages are out and out criminal fraud, they were basically using the mortgages as a means of theft, they would work in groups consisting of a corrupt broker, appraiser, and straw buyers, over inflate the property value then borrow and pocket the money, there are going to be thousands and thousands of these being brought to light as we sort through this fiasco
Not well informed, never had anything of worth, and just plan dumb.





I had a friend that signed up for one of those subprime loans where her notes doubled.


She said that they sprung the high interest rate on her and the fact that her payments would double in two years at closing.


She said she was so prepared to move into her new home that she just didn't have it in her to just say no to the deal and walk out.





I would have. I think pride had a big stake in her making the biggest mistake of her life.
This is an excellent question! There are so many people in this country that live materialistically, and it is quite ridiculous! People compete with each other and they try to live well beyond their means...people don't know the true meaning of living anymore, they think that if they have the nice car, and the nice house that they will be happy, but that's not the truth in most cases!
Yes, they were stupid. They were financial idiots and have caused the mess we are now in. People have been spending money for years that they did not have (credit crisis) and now the chickens have come home to roost. No one administration is to blame, as it has been going on for well over 2 decades.
Simple answer, greed - followed by the entitlement attitude that leads folks to believe that they deserve the good life whether or not they have earned it.





Yes they were stupid. Yes they were dumb. But our current administration is even more stupid to bail them out.
I worked with a couple of people who got these mortgages. At the time I kept wondering how they could afford it. After all we made about the same pay and I knew I couldn't. One lost hers and the other I don't know about as I lost contact. Both were from foreign country's
Looks like it's only 8% of American Mortgages that fall into this popular category.





Now I wonder why so much of the News is dedicated to this subject. Does someone need a recession to convince us to Stimuloot the Treasury.
They obviously didn't read the fine print and/or had a great real estate agent. People should always study their contracts and if they don't understand it get a lawyer to look at it. Not all of them are stupid. . . they just didn't know.
Many did because their mortgage brokers were telling them that they could. The typical story read, I know it seem high but in six months the house will be worth 60K more and you will refinance. The ';professionals'; selling the paper are equally guilty.
the media makes people feel bad about their social status by forcing celebrity garbage in their heads. the media doesnt report real news unless its negative like a soldier getting killed or a celebrity is making a new fade of some kind of clothing.
Hey it was like Congress someone put a pen and a bunch of papers in front of them and there was plenty of ink in the pen so why not.
1. They wanted the American Dream at any cost





2. Greedy brokers that just wanted to make a sell convinced them that they could afford it.
Because they were stupid.





Now these idiots think they are entitled to some welfare benefits that the responsible people now have to pay for.
American dream


keeping up with the Jones


predatory lending


they could afford it originally





many reasons
They could afford them ';at the time';, but the majority were adjustable rates.. When the interest rate went up? They couldn't afford it anymore.. It was more expensive... etc....
They knew that dummies like us would bail them out. They are now laughing while we are crying.
Because greedy, irresponsible people always want more than they can pay for.
They wanted it, that is all you need to know, now you pay for it.
Why did so many banking ';experts'; approve such loans? When we bought our first house, they was sooooo much more scrutiny than there has been in the last 8 years
There's always stupid people in the world. It's a question of why the banks got so stupid.
Predatory lenders.
What do you expect with government schools.
didn't you hear?? because it is their right. geez its right in the constitution. didn't you see it???
MTV cribs and rap videos of the rich and famous
They were lied to.
ask clinton
they all wanted to live like a celebrity