Ask Me Help Desk - The credit crunch

This week I began a process to renegotiate my mortgage down to a 15 year fixed rate .I had been thinking about doing it for a couple of years but I began this now in no small part because I was encouraged to do so by my bank and their competitors who have been sending me for some time a barage of unsolicited offers to take out loans of all kinds.

I began to ask myself why are these banks offering me loans at favorable rates if there was such an unwillingness by the financial markets to extend credit ? If liquidity was the issue would they be making these offers ? I'm wondering if this whole crisis is being overstated .

Hello tom:

Those Bushies and their Wall Street buddies wouldn't create this so they can rip us off, would they?? Nahhh. He's like TRUMAN. Bwa, ha ha ha ha.

excon

PS> So, if some companies get too big to fail, shouldn't we PREVENT them from getting that big? I think so, but I'm sure you don't.

Thanks for your response but you did not answer my question.

I do not think any company is too big to fail nor should we prevent them from failing . Lehman Bros. went down and their pieces are being poached as we speak.

As for Truman ;you are aware he tried to seize the Steel industry... right ?
But for future reference ; my comparison between Bush and Truman are solely on issues of foreign policy .

Hello again, tom:

I asked a question a while ago about this very thing. I wondered WHO was getting loans, because I KNOW there are mortgage brokers in business. IF they're IN business, they're loaning something...

The answer I received is that people with pristine credit were getting loans, no problem. That's what I was TOLD, right here. I asked, because my son is about to attempt a re-fi, and was wondering whether he can.

Now, we have TWO of you going for the bucks. THAT'S where the proof is. If YOU get a loan, and/or my son does, then that means only the uncreditworthy are being turned down. What's wrong with that and why would it cause a crisis?

excon

Quote:

Originally Posted by tomder55

This week I began a process to renegotiate my mortgage down to a 15 year fixed rate .I had been thinking about doing it for a couple of years but I began this now in no small part because I was encouraged to do so by my bank and their competitors who have been sending me for some time a barage of unsolicited offers to take out loans of all kinds.

Of course. Just fewer with the current reshuffling of buyouts. You should consider this loan if you have a higher fixed rate, or have a variable, or if you just want to cram a curent twenty years left on a loan to a fifteen year loan in an effort to pay off earlier. These banks, and other financial institutions, are in business because they "encourage" and mail you "unsolicited offers." You will pay fees on any refinance. Just do some comparison shopping.

Quote:

Originally Posted by tomder55

I began to ask myself why are these banks offering me loans at favorable rates if there was such an unwillingness by the finacial markets to extend credit ? If liquidity was the issue would they be making these offers ? I'm wondering if this whole crisis is being overstated .

There are so many dynamics here that I won't be able to cover all circumstances. However, to start with the economy is poor, very poor. So forget the conspiracy economic theories that everything is just rosy while banks cry uncle. Not so. On moderate to high risk loans, please don't think that financial institutions are necessarily going to blink either. And understand that mass or even targeted public solicitations to the public doesn't mean guaranteed approvals. The resale of mortgages happens all the time, and if they deal with you today, and are gone tomorrow, then you'll still owe (just somebody else). However, the point is that your using the wrong example. In your case, that has nothing to do with predatory lending, or the notion of failing banks should be liquidating. That's just not reality as to how they usually operate anyhow. Look how many wait until it's too late. It's just a fact. That in part is the reason of why so many fail, but that's another topic. Anyway you are looking at a 15 year mortgage. That means you have demonstrated credibility being that a portion of your house is already paid on. You're a lower risk prospect and more than likely have less debt to income ratio than other applicants.

Thanks Bobby . Besides the mortgage I carry no debt. Every loan I have ever had I have put a top priority in paying it off ahead of schedule . Thus the attraction of the 15 year deal. My plan if it works is to retire that within a decade. But ultimately my task is going to be harder to do because I now have to bail out people who's flat screen TV purchase helped create a personal bad debt to income ratio for themselves . In many cases these are the "vicitims of predatory loans"

http://www.bostonherald.com/news/opi...esponsibility/

I think perhaps the real concern here is that we have been able to bundle these crappy loans together and sell them in the export market and everyone is panicking lest these foreign investors have to take a loss on their investment in America.