I've also read of cases where large fees the buyer had to pay were not disclosed. I'm curious as to what, exactly, but that's all I know....

Except that when their rates did go up, and they tried to refinance, they found out that they owed more on their mortgage than their homes were worth.

The math all does work out, but only if you assume that the value of your home is only going to go up.

Okay, that's what was I missing. Thank you, Tom.

Basically, what Tom said.

Furthermore, sometimes people - like my boss - run into cluases that weren't caught even by his attorney involving pre-payment penalties. On two of our properties, if we refinance before a certain time period has passed, we have to pay a) 1% of the total initial loan b) 100% of the interest that would have accrued if we let the mortgage go to maturity.

The broker that got him the loans has since gone under and can't be found and we're trying to sue him and the original lender. We're also running into a problem where the original lender had another clause that went uncaught that says they can sell the loan to whomever they like and the purchaser is bound by any contract the new lender says so.

It's all crazy.

Baby elephant is ADORABLE. I'd say I want one, but let's be honest, that is crazy. Much better to get a baby giraffe.

Which one? (I may have seen it lately, and could thus give The Skinny.)

This one (hope the link works): [link]

It wouldn't be our first choice of neighborhood by a long shot, but it's a far prettier house than anything within $100K of that price that I've been able to find north of the Ship Canal. Looks like a bit of a fixer-upper, but it has great bones, you know? Assuming relative market stability, the inheritance actually coming through, etc. (i.e. if the good Lord's willing and the creek don't rise), I figure we're choosing between a pretty house somewhere in Columbia City or the less tony parts of West Seattle, or staying in North Seattle or Shoreline but having to make the best of an ugly rambler or ranch house.

ETA this is a good example of what roughly the same amount of $ will get you in my current neighborhood: [link] It would probably be a better choice in any number of ways, but that is NOT a shining example of architectural beauty.

The math all does work out, but only if you assume that the value of your home is only going to go up.

See, hidden fees and uncaught clauses all seem a more...oh, excusable makes it seem like I have any room to judge...well, those are less shortsighted ways to get caught out.

Assuming your house will only ever always increase in worth? Rich isn't that easy, otherwise more people would be.

Don't giraffes mature to be 17 or 18 feet tall?

Because what they're shown is a payment they *can* afford and the math works out.

Because nobody tells them that the interest rate can go up. Or probably about all the expenses of homeownership besides the mortgage. You know most victims of con men are making bad decisions - often thinking they are doing the cheating rather than being cheated. The bunco squad does not find it a reason to take it easy on any con men they find, and we should not find he fact that some of their vicitims are unsympathetic a reason to go easy on dishonest mortgage brokers or packagers.

Beyond that, as I said, a lot of people caught in this did were not in sub-prime loans. But if they lose their job and have to move and suddenly find they can't sell their house for enough to pay off their mortgage, or rent it for enough to cover the payment - well they will be at least tempted to walk away. In some circumstances they may have no choice.

Also, a lot of people who should have known better took out variable mortgages or negative amortization balloon mortgages on the premise that the value would go up and that they could refinance when the balloon came due. It does not matter whether they are sympathetic or not; that certainly contributes to the crisis. In other words part of life is that people will act like self-destructive dicks. When that threatens others, we pass regulations to limit that behavior. For example health and safety regulations in resteraunts. Nobody expects eating out to be completely risk free. You still have a chance of getting food poisoning or e-coli or something. But regulations do mean you have better odds of getting food that does not make you sick than in nations without those regulations.

First, you should probably state which regulation you mean that would prevent this. >Is it Glass Steagall?

Second, SOX was really supposed to change things, right? No more market corrections?

Gutted from the beginning in response to lobbying.

Third, do you really think we can make markets riskless through regulation?

We can reduce risk, avoid certain forms of mass fraud/stupidity.

Fourth, what regulation could prevent what happened here?

It was too easy to resell and package risky loans because of the repeal of Glass Seagal. Letting banks own or be owned by other financial institutions, allowing all these "bank like" creations. Seriously, the financial sector is not where you want encourage rapid change, and creativity. I like my financial industry stodgy. Let new fincap instruments have to jump through a lot of red tape, and spread slowly.

The house discussion in interesting -- every single one of my friends is a home owner (I'm 35) including my 30 y.o. single girlfriend. When she bought her house, it seems like everyone I know started blah-blahing me about investment, return, yadda yadda, your credit is bad but you're a teacher, a mortage will be a little more than your rent...and it made me fucking crazy.

Two years later, I am so happy to be...er, houseless. I don't WANT a house. They have roofs that trees fall on, and furnances that die in January, and gutters with nasty leaves in them. At the most, I think I'd want a condo, but I don't want to have to be responsible for things like roofs and furnances and sidewalks. That shit is exspensive, and it looks like it would be hot and dirty work.

I do not want a lawnmower. I want to paint my wall turquoise and buy more bookshelves. That's it.

Sure, sumi. But I work in a place with acacia trees, so i could just take giraffe to work with me and he or she could eat there. Until they couldn't fit in the car anymore at around 2 weeks.