Are they really subprime?

Just because brokers lie does not mean people are subprime. People with excellent credit were lied to and taken advantage of by mortgage brokers during the Great Housing Bubble. I know someone with good credit that is just like one of the people in this article Brokers who lie and more subprime nightmares.

Here is the first story in the article

She thought the $1,478 monthly payment quoted by her mortgage broker included taxes and insurance. In fact, Cruz says she asked the broker repeatedly if those costs were included and was reassured they were.

"We just took his word for it, and unfortunately that's not what it was," Cruz said.

Soon, she began receiving tax bills from her town of East Windsor, Connecticut. She couldn't afford to pay them.

And the second story -

Working out a new loan has also been a struggle for Odelle Boykin, a Connecticut home health care worker who housing advocates claim is a victim of a predatory lending.

Boykin says her mortgage broker promised her when she refinanced two years ago at a teaser rate she could afford that she could refinance again when the payments went up. She says when the loan was about to reset in October, with payments shooting up from $1,431 to $1,702 a month, she contacted the servicer, Fremont Investment & Loan, but the company told her it no longer handled refinancing. The payment is set to go up again next month.

We are going to hear story two over and over again. I tried warning people during the bubble - what if your broker is no longer in business in a few years or you run into problems or interest rates shoot higher before you can refinance etc. etc. etc. But the lure of cheap money and low payments was too strong for too many people. Also the idea that the smart people had ARMs and we timid conservative people were the ones going with 30 year fixeds.

Also no wonder people call it Hope No or No Hope -

Faith Schwartz, Hope Now's Executive Director, says the number of loan modifications is increasing. But she admits the vast majority are not getting their payments reduced. "If it's appropriate, they are," she said. "The key here is that it's between the servicer and the borrower. Every circumstance is different."

So other than letting the government know the particulars of your finances what good is it doing? I wonder how much worse off the Hope Now people will be as compared to the You Walk Away people. I think much, much worse.