Wednesday, May 28, 2008

All you need to do is write in your salary and sign at the bottom ...

For the house loan. The additional advice was not to worry that your salary was much less than the minimum threshold for the load, because the bank wasn't going to check. And don't worry about the ethics, because the bank knows everyone does the same thing ...

This little story I heard recently implies that the banks still haven't tightened up their lending practices, in spite of the bankruptcy crisis among homeowners. The reason we got into this mess in the first place was that people were encouraged to take on loans that they couldn't pay back. The eventual massive collapse of an industry was followed by the Fed dumping liquidity into world markets, which have had international consequences in terms of inflation. It strikes me as pretty nasty of the US to try to obtain growth this way. Then when the bubble pops, we export the mess to the rest of the world economy, but that seems to be what we have done.

3 comments:

Marf said...

Oh, I know... It was the banks' own fault. And now we (the tax payers) end up having to bail them out for their own stupidity.

Delirious said...

When we bought our house 12 years ago, we had a fairly good chunk of money to use as a down payment, and my husband's job was pretty good, but we had to take out two loans in order to buy this house. We bought it for a very cheap price, because it was at that time houses were at the bottom of the market. The price hasn't lowered that much in the 12 years we have had it. But you see my point, they gave us a hard time about financing it, but now they would have financed it easily.

Looney said...

My wife and I have bought houses three times in California due to moving between SF and LA. We always try to qualify on one income, which meant buying something much less than we would have liked. I lost money on the first two houses because I had to move at bad market timing. Who losses money twice on California real estate? We could have lost more money if we weren't careful.