Re: Oil Shock: Analyst Predicts $7 Gas, “Mass Exodus” of U.S. Cars

On Jul 3, 4:44 pm, Rich Piehl <rpiehl5REMOVETHIS...@xxxxxxxxxxxxxxxxx>
wrote:
hanco...@xxxxxxxxxxxx wrote:
On Jun 29, 2:48 pm, Rich Piehl
<rpiehl5REMOVETHIS...@xxxxxxxxxxxxxxxxx> wrote:

That's right.  And you get second opinions.  You don't just start
letting them slice you open in the first doctor's office you walk into..
  You go to the library and research your malady, at least it would seem
to me a prudent person would.

Not really.  First off, if you're away from home or in an emergency
situation, you don't have the luxury of going off to the library to do
research.

Under what circumstances would a person be required to take an
"emergency" mortgage?  And even if they did by law they have 3 business
days to back out. That's spelled out in the disclosure statement.  Are
there unscrupulous lenders - sure.  But there's also people who don't
take the time, the energy and the personal responsibility to understand
what they are dealing with.  And if the lender starts teaching mortgages
101 and they don't understand what's going on it's their responsibility
to speak up and ask.  It's their money.



More significantly, library research will yield information that is
either incomprehensible to a layperson or overwhelming in detail.
Such research can easily mislead a layperson to think they have a far
more or far less serious situation than they actually have.

They're looking at mortgage information, not a stock prospectus.  If
they are so naive as to have no clue about mortgages other than simple
compound interest what the heck are they doing getting into such a
complicated instrument?  If I was that simple and somebody started
firing a bunch of financial and legal mumbo jumbo and numbers at me and
telling me to trust them and just sign I'd feel like I was getting
slickered and walk out.



When I got my own mortgage, I objected that they required advance tax
escrow payments.  So I shopped around and found that all mortgage
carriers required it. (Unless I was willing to pay a very steep
premium interest rate, which would've been self-defeating.)  That's
why I have little sympathy for the mortgage industry as it exists
today.  I strongly suspect those people of modest means would've found
(a) similar ARM terms with a big spike down the road or (b) no
mortgage at all.

Fixed rate is ALWAYS an option.  If they don't understand the difference
between fixed rate and ARM wouldn't it be in their own best interest (no
pun intended) to find out when you're talking about hundreds of
thousands of their dollars????  I know I'm not just going to go signing
like a dope and trust a stranger with that kind of money is in play.  I
don't care how simple or naive they are they darn well better understand
the concept of hundreds of thousands of dollars that are eventually
going to be paid on a mortgage or I'll question their wisdom of even
thinking about buying a house.

I don't think it mattered if you bought the house in a hot market and
you viewed it as a win-win no matter whether you were able to keep the
house or the ARM made it too expensive.. you're just dump it and get
out sometimes several thousand dollars to the good.

As long as the housing market was "HOT" and the house was gaining
value it was almost as if you could not lose.

When market peaked and went down - you no longer could dump the house
without financial harm. When you owed more on the house than what it
was worth - you had two options.

Keep the house and try to find a way to come up with the addition
money when the ARM went up... or ... walk away...

and why would you continue to make payments on a house that you could
not sell and and recover your money for probably years and years
because even if the house gained in value, the ARMs would eat that
value ....as they escalated

the question is - is this something the average person who signed up
for an ARM could anticipate ?

And I believe that a prudent person -the kind of person who would look
up the wholesale price of a car before buying.. would do.

But if you are a person who buys things without researching value and
price, I think I would not be surprised in you signed up for a
draconian ARM that there was probably no way to beat unless you could
sell the house when the ARM got too hungry.


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