It's hard to say what happened to these people. I feel that with 4 potential incomes they should have been able to pay for this loan. They received a loan with the Wells Fargo guaranteed by the VA (I researched public records and this is not a subprime loan and probably had a lot of requirements for approval). Who's to say what the deal was. There's 3 sides to every story, his side, her side and the truth. So in this instance, the Blankenmyer's, the reporters, and the truth.
I could write a 10 page summary on all of this but I won't. But will offer some points.
* The government "bailout" is no longer going to buy bad loans. $250 billion is being loaned to banks at a rate of 5% for 5 yrs, then at 9%. (with fed funds at 1% and T-bills at .2% that's 500% and 2500% return) So the government is basically being a big bank b/c a lot of banks need to borrow money in order to lend money, and that money has dried up. $350 billion has not been touched and may not.
* On to Freddie Mac and Fannie Mae, below is an article from 2003 about the sentiment back then. FNMA and FHLMC were not in the business of subprime mortgages.
http://query.nytimes.com/gst/fullpage.html...agewanted=print* Also look up "mark to market", that is causing a lot of problems today too. Has to do with how banks have to value there assets.
* I think another problem is Americans don't want to pay to borrow money. My parents took out a 30 yr mortgage at 10.5% in 1979, current mortgage rates are 5.5%, and in 2003 about the same.
* A lot of borrowers don't do enough to educate themselves. What's the old saying, "If it's too good to be true, it probably is." With the internet there are plenty of calculators and resources to help you make informed decisions. You're local bank isn't going to risk there reputation to make a quick buck, unlike a fly by night broker or realtor.
I grew up in Lancaster and have since moved from PA and working in credit adminstration for a community bank that is doing very well where I live now. There are so many factors out there that the media is not reporting. I will agree that there were shady mortgage brokers, realtors and appraisers that contributed to this problem, but they are long gone now. I just hope that what we are going through now will teach Americans to work hard and save and not impulse buy b/c they have a piece of plastic that will allow them to do so or live outside their means to keep up with the Jones's.
This is my two cents. I am entrenched is this day in and day out. In this forum I want to shed another light on what's going on.
