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0 pointsaeternum2y ago0 comments

Ah yes when those too-good-to-be-true variable rate mortgages ramp up the rate due to inflation, we can just relabel them as predatory.

It's not like the risk of was ever disclosed to the purchaser. Oh wait.

We continue to bail out and incentivize poor decision-making, then wonder why the proportion of poor decisions seems to be increasing.

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6 comments · 1 top-level

cramjabsyn2y ago· 5 in thread

Whose poor decision is that? The banks created those products, the banks profit from them massively, and the banks receive the socialized bailout using our money.

How exactly is being approved for a loan to buy a first home the fault of the purchaser?

We can shop in any grocery store trusting that the products are safe to consume. Meanwhile, banks are allowed to legally sell financial poison?

Sure, compare rates, terms, insurance, etc. But financial time bombs like you describe should be illegal. The banks should suffer the consequences of their greed. And the working class should not be left homeless as a consequence.

jcalvinowens2y ago

> Meanwhile, banks are allowed to legally sell financial poison?

You will rarely catch me defending the banking industry... but what you're calling "financial poison" here is just how mortgages work in most of the world. A variable rate loan isn't inherently predatory, that's how most loans work.

There are many legitimate reasons a buyer might prefer a variable rate mortgage: the trade off is easy to understand. It takes ten seconds to do an internet search for "interest rates past 30 years" and see the risk. I refuse to accept that most people with ARMs were taken advantage of.

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gustavus2y ago

The people who took variable rate loans made the poor decision. The banks didn't force them to take the loan the banks didn't sign the paper saying the purchaser understood. At some point adults need to be treated like adults and be allowed to make bar decisions.

hackeraccount2y ago

Sometimes they're good and sometimes they're bad. I tend to have most faith the parties with the most interest ( :-) ) in the question - the borrower and the lender - are the best ones to manage the risk.

3rd parties will both be lacking in information and have obligations beyond just seeing the loan paid back.

cramjabsyn2y ago

No. Again. Tax dollars bailed out the banks, after they pocketed billions in profits from predatory arm and similar loans.

Who bailed out the home owners? No-one. They lost their homes, their credit was ruined. Decades worth of setback. But they deserved it? Please. It was a trap in the name of shareholder profits.

The problem is systemic and blaming the consumer is myopic at best.

aeternumOP2y ago

This is what annoys me about people living in the US. Like why not move to Singapore or something if you want government allocated housing. It's probably the best implementation of government housing, government healthcare, etc. in the world, so just go there and be happy.

Let the US remain free where consumer choices matter. You can take a risk with an ARM mortgage and might hit it big, but you might also have to pay the price. That's freedom. People can always downgrade homes, foreclosures are not necessarily a bad thing when there is limited housing supply.

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