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If it sounds too good to be true, probably is. > They were called 80/20 loans, and that second mortgage meant a homebuyer didn't need to come up with a down pa

If it sounds too good to be true, probably is. > They were called 80/20 loans, and that second mortgage meant a homebuyer didn't need to come up with a down payment. > "It was the easiest thing I've ever applied for," McDonough said. "I just filled out paperwork and submitted it and I was approved." That’s the investment risk these people took and now the fine details are coming to bite them back. Don’t make huge purchases with loans unless you fully understand all the terms. > her mortgage company told her a second mortgage she had on the house was forgiven as part of the modification. And she said that seemed to be true — she stopped getting any statements for more than 10 years. “Told her” how? “_Seemed_ to be true” ?! Cancellation of a huge interest-accruing loan is probably where you don’t want the word “seemed” to appear. Have to do your due diligence and make sure you have everything in writing with notarized documents.

hughesjj 2y ago
> Don’t make huge purchases with loans unless you fully understand all the terms. I mean, yes, but they were also under the impression the 20 was forgiven over a decade ago. The debtor definitely should know what they're signing up for. That said, if I loan an economically distressed person some money, I myself shouldn't (wouldn't) be surprised when they fail to pay it back. The creditors in this case were international institutions with entire risk departments, all staffed with nominally intelligent people and definitely more context than any individual debtor could ever have. While I'm miffed at people taking out loans they cannot afford will raise the cost of any investments I'd like to make in the same market, I'm much more miffed at those 'market makers' who set policy on the interest rates (so, risk) and lending qualifications for allowing this situation to exist in the first place.
everybodyknows 2y ago
> Have to do your due diligence and make sure you have everything in writing with notarized documents. You're forgetting that non-responsiveness to communication was the norm for banks at the time.

hughesjj 2y ago

> Don’t make huge purchases with loans unless you fully understand all the terms. I mean, yes, but they were also under the impression the 20 was forgiven over a decade ago. The debtor definitely should know what they're signing up for. That said, if I loan an economically distressed person some money, I myself shouldn't (wouldn't) be surprised when they fail to pay it back. The creditors in this case were international institutions with entire risk departments, all staffed with nominally intelligent people and definitely more context than any individual debtor could ever have. While I'm miffed at people taking out loans they cannot afford will raise the cost of any investments I'd like to make in the same market, I'm much more miffed at those 'market makers' who set policy on the interest rates (so, risk) and lending qualifications for allowing this situation to exist in the first place.

everybodyknows 2y ago

> Have to do your due diligence and make sure you have everything in writing with notarized documents. You're forgetting that non-responsiveness to communication was the norm for banks at the time.