Douglas Johnson <p...[at]classtech.com> wrote:
- quote -

ISTM when one goes case by case, determining the line for the purposes
of identifying unethical conduct can be very easy. It will be fuzzy or
super clear. Fuzzy = not enough evidence to be deemed unethical or
illegal. Super clear = jerk preying on the ignorant, which as we know,
can have effects on us all. We are all in this together, as the recent
crash shows, after all.

Given that only about 27% of the age eligible population has a college
degree, and even fewer have education in financing, I would give the
benefit of the doubt to the theory that many are taken advantage of
and regulating laws are entirely appropriate. At least as long as we
want a health working class to staff our factories, make our products,
and so keep our stock values high.

JoeTaxpayer <JoeTaxpayer[at]comcast.net> wrote:
- quote -

I'm reluctant to call it unethical on its face. It is certainly risky for all
involved, but if the parties involved are informed and willing, I don't see it
as unethical.

True, too often, the parties were not fully informed, sometimes woefully
ignorant. At some point, a naive mortgagee facing a sophisticated mortgage
broker can become unethical, but I don't see a bright line.

-- Doug

Some people suggest the market should control rates.
In recent decades the Fed Reserve interest rate
adjustments have trailed short term market rates
changes more often than not, suggesting the market
sniffs out inflation or recessions better the the Reserve
Chairman. The most egregious case was Fed inflation rate
increases well into 2007 when the market said the opposite.

(I dont know enough to offer my own opinion)

HW "Skip" Weldon wrote:

- quote -

Fair enough. I have some homework now. I need to uncover the data that
shows some relevant details about the mix of mortgages and which ones
fall into which category. While my initial response offers a bit of an
exaggerated example, I hope we can agree that a loan based on current
income, but a teaser rate that can only go up may not be technically
criminal, but it was unethical.
$400K interest only, 2% teaser = $667 payment
$400K 2% teaser, amortizing = $1478
$400K 4% rate = $1910

I don't know what portion of subprime loans were written that blew up
for the difference in the numbers above. Homework.
Joe

On Tue, 24 Mar 2009 15:49:53 -0500, JoeTaxpayer
<JoeTaxpayer[at]comcast.net> wrote:


- quote -

What you describe above is a specific criminal activity which nobody
condones and for which there are legal remedies that lawyers will
enjoy for some time <grin> .

While I don't doubt that there were such instances, my opinion is that
going from isolated instances to insinuating widespread evil lending
practices is an irrational stretch.


-HW "Skip" Weldon
Columbia, SC

Alvin wrote:

- quote -

You have an odd definition of scott free. I keep hearing that the banks
didn't have any skin in the game. So why do they have 3rd degree burns
over 80% of their bodies?

Xho

"HW "Skip" Weldon" <skip5700removethis[at]yahoo.com> wrote in message
news:sqcis4d6q9fnufjo5ugsbicrlejcv3dmvm[at]4ax.com...
- quote -

Imagine yourself a lender. You can sell all of the mortgages you want to and
pass them off to Freddie & Fannie.
You get your 6%, or whatever, and your scott free. That's what happened.
Would you do it?

HW "Skip" Weldon wrote:
- quote -

They "responded to consumer demand" the way a drug dealer or a prostitute are
"responding to consumer demand." Indeed, Bernard Madoff might have had a much
harder time finding takers for his scam if it weren't for "consumer demand" by
the glamorously clueless.

With respect to the latter case -- the really big lesson is that what kept those
"investors" in the game (and perhaps regulators at bay) was the belief that any
rumblings about possible deceit could not possibly be true ... the combined
effect of the scammer's professional status and distinguished clientele
supposedly spoke for itself.

But foolishness is its own reward.

JoeTaxpayer <JoeTaxpa...[at]comcast.net> wrote:
- quote -

This very short "just the facts" article packs an amazing amount of
punch. Well done, Joe.

On 2009-03-24 10:17:11 -0700, "Elizabeth Richardson"
<erichktn[at]worldnet.att.net> said:

- quote -


1. Shop around. The first place you try is rarely the best. If you are
refinancing, your current lender should be the last resort, not the
first place you go. Let each lender you interview know you are shopping
around.

2. Be sure you understand all the details about whatever interest rate
is offered. If it is variable, be aware of when and how much it might
increase in the future.
Get it all in writing.

3. Be fully aware of all added costs that may be associated with the
loan, such as application fees, appraisal fees, title insurance, land
transfer tax, attorney fees, etc. Take these into consideration when
comparing interest rates.

4. Remember that the lender wants your business as much as you want the
loan. Do not be initmidated or think the lender is doing you a great
favor just by talking to you.

5. By all means, look over the following web site: http://www.mtgprofessor.com/
It is an excellent place to get useful information about mortgages,
mortgage brokers, interest rates, and such. It is an academic site for
information purposes and does not try to sell you anything or get you
to sign up for a loan.

HW "Skip" Weldon wrote:
- quote -

Skip - I'd suggest that the person writing a mortgage who signs the
customer's name to a falsified income statement to get them a mortgage
that no one would agree to after the first/second rate adjustment, is
indeed evil.

Elizabeth - one would need to understand enough about the loan they are
getting to at least ask the question "what will my payment be if rates
go up/stay the same".

I think we can agree that the classic 20% down, 30yr fixed, 28/36 (i.e.
mortgage is 26% of income max, and total debt service 36%, max) mortgage
would never have created this mess. People lose jobs, dual incomers turn
to single earners, that's natural, and can almost be predicted (with a
large enough pool of loans), but the classic lending would not have
created the bubble as so many buyers came into the market and
suply/demand got out of whack.

Lastly I offer http://tinyurl.com/commact which link to a PDF document
titled "The Truth about the Community Reinvestment Act" in which the
government gets pretty testy about these accusations.
Joe

On 2009-03-24 12:31:02 -0700, "HW \"Skip\" Weldon"
<skip5700removethis[at]yahoo.com> said:

- quote -

But you could say the same about loan sharks. People cannot make loans
at 10% a week if there are not consumers needing money and wanting
them. The same for "payday" lenders. Certainly not all lenders are
evil, probably not even most, but some are. I would say there is a
blurred distinction between high interest rates and usury, and it is
not always a cut and dried matter in which category a given lender
belongs.

On Tue, 24 Mar 2009 12:17:11 -0500, "Elizabeth Richardson"
<erichktn[at]worldnet.att.net> wrote:

- quote -

I don't like that term ("predatory lending") because it insinuates
that lenders are evil. My view is that one person's "predatory
lending" is another person's "responding to consumer demand".


-HW "Skip" Weldon
Columbia, SC

"Thumper" <jaylsmith[at]comcast.net> wrote in message
news:r42gs412gnoj99gf4lo6kfc8gg6mqqaig0[at]4ax.com...

- quote -


How would you define predatory lending? And, to keep this on personal
finance issues, how does a borrow recognize it and refrain from being the
other half of the contract?

Elizabeth Richardson

On 2009-03-24 02:08:30 -0700, Thumper <jaylsmith[at]comcast.net> said:

- quote -

Somehow I thought I was saying that too! Canadian banks are in good
shape because they have been closely regulated, and US banks are in bad
shape because they were not regulated enough, not because they were
overregulated, as another poster implied. And, indeed, predatory
lending has been more important than any coercion to make loans to low
income groups.

Don <dwz...[at]telus.net> wrote:
- quote -

Your opinion is noted Don but mine is somewhat different. The stats
for the above banks as given by yahoo for one do not make a compelling
case for Canadian banks being in excellent shape. My point is that no
one should put money down on an investment in Canadian banks without
more research. I am not as sure as you that their bank stock prices
are irrationally low as opposed to being low because of each bank's
financial fundamental statistics.

On Mon, 23 Mar 2009 16:26:21 -0500, Don <dwzimm[at]telus.net> wrote:

- quote -

predatory lending.

No bank in the USA was forced to make loans to people they knew
couldn't pay.
Thumper


- quote -

On 2009-03-23 18:49:00 -0700, honda.lioness[at]gmail.com said:

- quote -

I believe that Canadian bank stocks are down as a part of the overall
decline in stock prices in all sectors, not because those banks are on
the verge of collapse or are thought to be unusualy risky investments.
And to some extent it may reflect the distrust of banks spilling over
from the concerns in the USA, even though Canadian banks are in good
shape financially. As to your second paragraph, I have no opinion about
the cause of the housing bubble bursting, although I would doubt that
speculators alone could case it without a climate of lax regulation and
easy mortgages.

Don <dwz...[at]telus.net> wrote:
- quote -

Don, not to steal your thunder altogether (since I think you are
mostly on the mark here), but I checked the five largest Canadian
banks traded on the NYSE (RY, TD, BNS, BMO, CM). They're all still
down around 40% from their 52-week highs. Granted this is probably
much better than U.S. banks, and no small part of the explanation
does seem to lie with Canadian government regulation. But I would
still be curious to know more about why Canadian stocks are some 40%
down before declaring them in "excellent shape."

Also, re the housing bubble bursting, I thought previously evidence
was presented here that, of the two candidates, the greater impetus
for the meltdown came from speculators (= former house flippers and
multiple house owners), not low income, single-home purchasing
borrowers.

Elle

On 2009-03-22 16:30:44 -0700, "Elizabeth Richardson"
<erichktn[at]worldnet.att.net> said

- quote -

Back to Canada again, if what you say is true, then Canadian banks are
in good shape, despite strong government regulations, simply because
they were not forced to make loans to low income groups. And in the
USA, since much stronger regulations are now being put in place by the
new administration as a result of the crisis, all we can be expect in
the future is still more crisis and decline in the economy. That is a
dismal prospect for small investors trying to decide how to invest
their money!