Reply #67: Again, that was NOT our experience.

[TicketyBoo]

This loan officer in a LOCAL BANK was trying to get us to get into this house. It doesn't have a lot to do with greed. Yes, we all want the best for our families, but you're sitting across a desk from someone who is looking at your loan application. Supposedly, a loan officer should know what you can afford when they are looking at your application. And we were told that we could afford the home we were looking at plus $35,000 more than that. I knew we couldn't even afford the one we were looking at, never mind an even more expensive home. But if we had been first-time home buyers, the inclination would be to believe the loan officer. I mean, they're supposed to know what they're doing, right? And she had the figures right in front of her and was telling us this. It made me go home and check our budget, trying to figure out what she was seeing that I wasn't. It just didn't add up. But if you were young and dumb (or old and dumb) and naive and trusting, I can certainly see how a lot of people ended up in way over their heads, and greed doesn't have much to do with it, at least not on the borrower's side. The "lender" was out to make that loan as big as possible because they had no plan to hold onto that mortgage, so the bigger the mortgage, the more money they're going to get when the sell it to someone else.

A lot of people who are in over their heads don't have some big old mansion. It can happen with a very modest home, especially when you have lenders crawling out of the woodwork wanting you to refinance every few months and trying to convince you that it's the "smart" thing to do.

This was absolutely predatory lending, and it's still going on to some extent, although with lowering valuations, it's not as lucrative as it once was.