I see several companies advertising this and I do not understand other than big money paying off lawmakers to make it legal. But the double speak in it is blatantly obvious and it is intended to suck people into high interest loans. It is nothing short of legalized loan sharking.
A mortgage is a loan, so a re finance is also a loan. How the fuck they get away of implying that it is not a loan is utter bullshit. What do they think happens if they fail to pay off this "reverse mortgage"?
Legal? Yea slavery was also legal at one point. This is on par with payday loan sharking and car title loans. It preys upon the desperation of the financially distressed.
What on earth is a "reverse mortgage"? :/
EDIT: well, aside from an obvious scam :P
Quote from: "Plu"What on earth is a "reverse mortgage"? :/
EDIT: well, aside from an obvious scam :P
I'm not sure what ads Brian is talking about, but I'm not sure it's a scam. I think gyp is a better word. A lawyer presented the idea to me when we were looking at how to pay for an elderly aunt's nursing home expenses.
Here's how I understand it. Let's say you have paid off your home mortgage, as most older folks usually do. If your house is not paid off, or you have very little equity, I doubt you can't get a reverse mortgage because there's nothing in it for the bank. What happens is that instead of paying off the mortgage with a monthly payment, the bank pays you a monthly payment you can use however you want, in our case, for nursing expenses.
What's happening is that the bank is now buying the house from you, and paying you a monthly payment. But it's not as wonderful as it might sound. It doesn't mirror all those 30 or 40 years of payments you made to buy the house. It takes hardly any time at all, maybe two or three years, before you have zero equity in your home, and it then belongs to the bank. Now you've got nothing. I threw this idea out right away and looked no further. I suppose the bank just evicts you from the home when they own it. In the case of putting an older person in a nursing home, it won't make any difference if they are not going to live in the house. It's just a step towards getting rid of their assets so they can qualify for Medicaid. The bank does give you back the money that went to equity (not the interest, which made up most of your monthly payments), so it's not really a scam. It's just like a really fast way to no longer own your home. It reminds me of a foreclosure in the way your equity goes up in smoke, but it is legal.
However, I promised my aunt, she would die in her home. This was something she wanted. We managed the issue in other ways.
A scam is a confidence game or other fraudulent scheme, esp. for making a quick profit; swindle. In what way is a reverse mortgage not a scam? The companies profiting from them are swindling money, or even a house by doing it. Solitary
Quote from: "SGOS"However, I promised my aunt, she would die in her home. .
:-k
Quote from: "Solitary"A scam is a confidence game or other fraudulent scheme, esp. for making a quick profit; swindle. In what way is a reverse mortgage not a scam? The companies profiting from are swindling money or even a house by doing it. Solitary
I don't think it's a swindle, because at least in my case, the bank was up front about what they were doing and how it worked. I don't think it's a swindle when a guy offers you $1000 if you agree to give him $2000. Those are just the terms of agreement. It's up to you to decide if you want to enter that agreement.
Like I said, I haven't read the ads Brian did. If there is not full disclosure in them, which was the way many banks were offering some of those scary mortgages 10 years ago, then I would call it a scam. Of course it's possible that banks have stopped such business practices since then. Wasn't the government going to regulate that shit? LOL
Quote from: "aitm"Quote from: "SGOS"However, I promised my aunt, she would die in her home. .
:-k
And that is very good of you. =D> Just wait until the funeral homes swindle you too. It's really a shame when crooks take advantage of the good in people like yourself. :evil: Bill
So basically, you sell your house to the bank for next to nothing? Yeah, that sounds like a great idea.
The TV adds I see for it claim you "continue to own your own home" when you are obviously slowly selling it to whatever company. I suspect the adds are worded very carefully so that they don't look like a scam to a jury of competent middle aged people, but also so that Grammy--who's not quite all there any more and trusts Fred Thompson for some unearthly reason--doesn't grasp the full implication of the deal.
Quote from: "SGOS"Quote from: "Solitary"A scam is a confidence game or other fraudulent scheme, esp. for making a quick profit; swindle. In what way is a reverse mortgage not a scam? The companies profiting from are swindling money or even a house by doing it. Solitary
I don't think it's a swindle, because at least in my case, the bank was up front about what they were doing and how it worked. I don't think it's a swindle when a guy offers you $1000 if you agree to give him $2000. Those are just the terms of agreement. It's up to you to decide if you want to enter that agreement.
Like I said, I haven't read the ads Brian did. If there is not full disclosure in them, which was the way many banks were offering some of those scary mortgages 10 years ago, then I would call it a scam. Of course it's possible that banks have stopped such business practices since then. Wasn't the government going to regulate that shit? LOL
OK. There is a swindle where a salesman tells you that a certain stock is going to sky-rocket and you should invest in it for a fee. It is also sent to 1,000 people. And then he sends to another thousand people not to invest in the stock because it will fail. He publishes the results and sends it to everyone he advised. They all believe he is up front because he was accurate in his advice. So then he convinces everyone to buy stock in any company by investing all their money in it for a huge fee. He can't lose, just like the mortgage companies can't. :-k Solitary
In Margie's case the reverse mortgage was great. She was elderly, the house was literally falling apart under her feet and her kids damned sure didn't deserve to get the house as they couldn't be bothered to visit ol mom so she got the reverse mortgage, received 60,000 bucks for a house she paid $8000 for 50 years ago. Yes, she could have kept the dump and lived in poverty in her last years, but she could also have enjoyed $60000 in the last 3 years of her life.. It really depends on peoples situations. Did the bank make out? Sure, but Margie had $60000 to squander.. She DID squander it, but enjoyed squandering it and she got to stay in her own home till the day of her stroke.
Quote from: "Plu"So basically, you sell your house to the bank for next to nothing? Yeah, that sounds like a great idea.
Well, I didn't think it was a very good idea. The lawyer just brought it up as she was laying out various financial options. She wasn't pushing it.
It's a good deal for the bank. Since they are essentially giving you money for the equity, they don't have to pay you any interest the way you paid them, and they end up with the house in pretty short order. I've pondered the usefulness of a reverse mortgage a little bit, but I haven't come up with a scenario that makes good financial sense. There may be one, just not that I've thought of.
I'm not sure people think much about what a killer interest rates are when they take out a mortgage. They just decide if they can afford the monthly payments to live in a nice house. If they can afford it, they're happy to get the loan, and everyone is OK with it. For most people, it's the biggest thing they will ever buy, and there aren't many options besides a mortgage and the interest it requires.
Quote from: "SGOS"Quote from: "Plu"What on earth is a "reverse mortgage"? :/
EDIT: well, aside from an obvious scam :P
I'm not sure what ads Brian is talking about, but I'm not sure it's a scam. I think gyp is a better word. A lawyer presented the idea to me when we were looking at how to pay for an elderly aunt's nursing home expenses.
Here's how I understand it. Let's say you have paid off your home mortgage, as most older folks usually do. If your house is not paid off, or you have very little equity, I doubt you can't get a reverse mortgage because there's nothing in it for the bank. What happens is that instead of paying off the mortgage with a monthly payment, the bank pays you a monthly payment you can use however you want, in our case, for nursing expenses.
What's happening is that the bank is now buying the house from you, and paying you a monthly payment. But it's not as wonderful as it might sound. It doesn't mirror all those 30 or 40 years of payments you made to buy the house. It takes hardly any time at all, maybe two or three years, before you have zero equity in your home, and it then belongs to the bank. Now you've got nothing. I threw this idea out right away and looked no further. I suppose the bank just evicts you from the home when they own it. In the case of putting an older person in a nursing home, it won't make any difference if they are not going to live in the house. It's just a step towards getting rid of their assets so they can qualify for Medicaid. The bank does give you back the money that went to equity (not the interest, which made up most of your monthly payments), so it's not really a scam. It's just like a really fast way to no longer own your home. It reminds me of a foreclosure in the way your equity goes up in smoke, but it is legal.
However, I promised my aunt, she would die in her home. This was something she wanted. We managed the issue in other ways.
Thanks for explaining it, I really have no idea what's going on when it comes to loans and bank jargon.
Quote from: "AllPurposeAtheist"In Margie's case the reverse mortgage was great. She was elderly, the house was literally falling apart under her feet and her kids damned sure didn't deserve to get the house as they couldn't be bothered to visit ol mom so she got the reverse mortgage, received 60,000 bucks for a house she paid $8000 for 50 years ago. Yes, she could have kept the dump and lived in poverty in her last years, but she could also have enjoyed $60000 in the last 3 years of her life.. It really depends on peoples situations. Did the bank make out? Sure, but Margie had $60000 to squander.. She DID squander it, but enjoyed squandering it and she got to stay in her own home till the day of her stroke.
That is of course the gamble. You don't know you're going to die before you lose everything. If Margie lived to be 100, it may not have worked out as well. Now I have to admit, there's probably some joy in squandering money, but there's often a negative consequence for it down the road. But you do make a case, conditional on certain assumptions that you try to predict, where a reverse mortgage makes sense.
If she hadn't squandered it she could have invested in sound investments, but she'd lived dirt poor her last ten or so years and her health was horrible.
My dad owned his house in Dayton. I wish he'd gotten the RM because he let my sister live there, it caught fire, a small fire and dad unloaded the place for 10 grand, took the money and ran. He could have repaired the minor damage, gotten an easy $50000 for it and still walked away.. He didn't want to be bothered with it.
FINE! Just log me out and not remember my username and pw.. make.me retype it!
Note: just something to bitch about.. :)
Quote from: "Solitary"OK. There is a swindle where a salesman tells you that a certain stock is going to sky-rocket and you should invest in it for a fee. It is also sent to 1,000 people. And then he sends to another thousand people not to invest in the stock because it will fail. He publishes the results and sends it to everyone he advised. They all believe he is up front because he was accurate in his advice. So then he convinces everyone to buy stock in any company by investing all their money in it for a huge fee. He can't lose, just like the mortgage companies can't. :-k Solitary
And it's a very clever swindle indeed. I wish I could think of shit like that, but I guess my brain isn't very good at that kind of stuff. LOL
And no! Mortgage companies don't lose. It's not in their business strategy, but if they do, they ask the government to bail them out. The bailout is then entered in the assets column of their financial books, and Waalah! It turns out they're still profitable.
I've wondered at times why subprime mortgaging should be legal, while Bernie Madoff goes to jail. They just used different ideas to make a profit. One idea seems just fine, but for some reason, the other one is unlawful. :)
I'm always leery when something is "free" or sounds too good to be true. My dad got caught in a race horse scam when I was around 15. A man told him he had a sure thing on a race horse to win if he bet on it. Of course it won. This took place many times. the man told him again that he was sure a race horse was going to win---my dad thought he was being up front and put his life savings on the horse---it came in last. The bookies at the time got the results of a race before it was made public and knew who would win or lose. So it made them seem upfront when they gave advice. What funny about this is the man who gave my dad advice was my wife's uncle I found out a few years ago. :shock: :rollin: Solitary
This talk of houses for $50,000 makes me hope that's talk from ages past. Because I sure as hell can't find any housing in my area that goes for less than 150,000e and they're not exactly really big or anything.
Quote from: "Plu"This talk of houses for $50,000 makes me hope that's talk from ages past. Because I sure as hell can't find any housing in my area that goes for less than 150,000e and they're not exactly really big or anything.
Depends where you live. In Dayton plenty of houses still go for under 50k, but they're generally shitty areas. If you don't mind crack heads and arsonists... :D/
Quote from: "Solitary"OK. There is a swindle where a salesman tells you that a certain stock is going to sky-rocket and you should invest in it for a fee. It is also sent to 1,000 people. And then he sends to another thousand people not to invest in the stock because it will fail. He publishes the results and sends it to everyone he advised. They all believe he is up front because he was accurate in his advice. So then he convinces everyone to buy stock in any company by investing all their money in it for a huge fee. He can't lose, just like the mortgage companies can't. :-k Solitary
has this ever happend? a salesman doesn't have the power to affect stock prices like this even if he sent it to 1000 people.
The trick is to take both possibilities, tell two different groups that one of the two is going to happen, and then scrap the group that got the wrong answer and continue with the group you got right.
The salesmen doesn't need power; just two faces to present to two unrelated groups.
If the stock rises, group A will think you give good advice. If the stock falls, group B will think you give good advice. Either way, you now have a bunch of people who think you give good advice. And then you use this newfound (but baseless) trust to fuck people over.
Quote from: "Plu"The trick is to take both possibilities, tell two different groups that one of the two is going to happen, and then scrap the group that got the wrong answer and continue with the group you got right.
The salesmen doesn't need power; just two faces to present to two unrelated groups.
If the stock rises, group A will think you give good advice. If the stock falls, group B will think you give good advice. Either way, you now have a bunch of people who think you give good advice. And then you use this newfound (but baseless) trust to fuck people over.
yeah but this is a theoretical scenario that really can't exists. I do have some first hand knowledge having been in the business working toward my certified financial planner designation. There was however a way to make alot of money very quickly and that was called "leveraging" or "buying on margin".
On paper it has the makings to work really well, borrow money to buy stock or in most cases mutual funds. most countries have tax shelters to allow people to do this, you don't pay the loans off but keep the profit when you sell. The problem is when the stock or MF value goes under the loan amount and you have your "margin call". you are left paying back the loan (sucks if you used the equity in your home) for something of very little value.
on paper it's good, it makes the salesperson alot of money really fast and makes them look good if the MF or stock goes up. If it doesn't then people lose alot of money.
it becomes a "scam" or unethical when you get people to leverage more than they normally would based on projected returns.
Quoteyeah but this is a theoretical scenario that really can't exists.
Pretty sure the whole mind-reading industry runs on this. There's a lot of money to be made duping people like that.
Quote from: "Plu"Quoteyeah but this is a theoretical scenario that really can't exists.
Pretty sure the whole mind-reading industry runs on this. There's a lot of money to be made duping people like that.
yes but psyics and cold readers are charging people for a service the people think are real (the people paying).
I'm still trying to figure out how the stock scenario makes any sense and how someone actually makes money from it. To me it's too much like a book maker setting odds so that bets are equal on both sides.
Quote from: "Solitary"A scam is a confidence game or other fraudulent scheme, esp. for making a quick profit; swindle. In what way is a reverse mortgage not a scam? The companies profiting from them are swindling money, or even a house by doing it. Solitary
maybe bank regulations are different in US and Canada regarding reverse mortgages but it doesn't sound like a scam. it's just using the equity in your home to get cash.
//http://www.reverseyourmortgage.ca/faq/frequently-asked-questions/
Cold readers basically tell everyone the same story, and then for some people the story will match (through chance) but because these people don't know that the guy tells everyone the same thing (and he's certainly not going to tell them) it suddenly appears like he can read their mind and they are willing to give him money.
Imagine this:
I take 1000 people, and split them in two groups, and tell one group that stock X will rise and the other that stock X will fall. Stock X rises. I now have 500 people that I gave good advice. I drop the other 500. I split the 500 in two groups, and tell one group that stock Y will rise and the other half that stock Y will fall. Stock Y falls. I now have 250 people that I gave the exactly correct advice twice in a row! I split the group again and repeat the trick. And again. And again. And again.
I now end up with with about 10 people that I gave perfect advice 8 times in a row! I must be the best stock investor ever! Why, everything I say turns out just as I predicted it! So imagine if I now tell these 10 people who got the right advice 8 times in a row to invest all their life savings in a company I secretly own (or whatever way I can come up with to move their money to my bank account.) They have every reason to trust me; they don't know about the 990 people that ditches me for giving bad advice; all they see is a guy who always calls the shots right.
If you don't care who you end up with, or how many people you lose, or fuck over, this kind of trick works really well to seperate people from their money. The whole starting scenario is just to build their trust; with a big enough sample group, and proper seperation, some members of the sample group will think you know what you're doing. As long as members of different groups don't meet, this kind of swindling works really well.
Quote from: "surly74"Quote from: "Plu"The trick is to take both possibilities, tell two different groups that one of the two is going to happen, and then scrap the group that got the wrong answer and continue with the group you got right.
The salesmen doesn't need power; just two faces to present to two unrelated groups.
If the stock rises, group A will think you give good advice. If the stock falls, group B will think you give good advice. Either way, you now have a bunch of people who think you give good advice. And then you use this newfound (but baseless) trust to fuck people over.
yeah but this is a theoretical scenario that really can't exists.
Actually, there are two scenarios, not one. You predict a gain for one group. A loss for another group. The mathematical probability that one will win and one will lose is 100% You just throw out the group that loses. They won't listen to you again, but the group than makes a profit is now interested. Now divide the winners into two groups. You tell half of them to bet big, and the other not to bet, and which ever group you happen to inform correctly, becomes the next target group to be divided for the next prediction.
Start with a big enough group, and after 5 times you end with mostly losers, but what's left is a small core of highly motivated lucky winners, some of whom assume you have psychic powers and will be easy to scam.
The situation does exist. It has to. There is no possibility that it won't. You are mathematically assured to end up with a group of winners who think you gave them good advice 2, 3, or 10 times. After you go through the process of discarding the losers, it's time to call up your schmoozing talents, and fuck them over big time. Some are so enthralled, they might even bet the farm.
It's extremely clever, I think.
Quote from: "Plu"Imagine this:
I take 1000 people, and split them in two groups, and tell one group that stock X will rise and the other that stock X will fall. Stock X rises. I now have 500 people that I gave good advice. I drop the other 500. I split the 500 in two groups, and tell one group that stock Y will rise and the other half that stock Y will fall. Stock Y falls. I now have 250 people that I gave the exactly correct advice twice in a row! I split the group again and repeat the trick. And again. And again. And again.
I now end up with with about 10 people that I gave perfect advice 8 times in a row! I must be the best stock investor ever! Why, everything I say turns out just as I predicted it! So imagine if I now tell these 10 people who got the right advice 8 times in a row to invest all their life savings in a company I secretly own (or whatever way I can come up with to move their money to my bank account.) They have every reason to trust me; they don't know about the 990 people that ditches me for giving bad advice; all they see is a guy who always calls the shots right.
If you don't care who you end up with, or how many people you lose, or fuck over, this kind of trick works really well to seperate people from their money. The whole starting scenario is just to build their trust; with a big enough sample group, and proper seperation, some members of the sample group will think you know what you're doing. As long as members of different groups don't meet, this kind of swindling works really well.
really an intricate ponzi scheme. you could do this a lot quicker printing your own documentation that says what your company has done in the past.
Quote from: "SGOS"The situation does exist. It has to. There is no possibility that it won't. You are mathematically assured to end up with a group of winners who think you gave them good advice 2, 3, or 10 times. After you go through the process of discarding the losers, it's time to call up your schmoozing talents, and fuck them over big time. Some are so enthralled, they might even bet the farm.
It's extremely clever, I think.
clever is too hard to pull off. it needs to be simple.
Why do you keep talking about "influencing the stock market"? That's not the goal. It's not even going to happen. It's just a way to move people's money from their bank accounts to yours by pretending you're a stock broker.
At no point in my story do you need to know anything about stocks, or influence anything.
Quote from: "surly74"Quote from: "Solitary"A scam is a confidence game or other fraudulent scheme, esp. for making a quick profit; swindle. In what way is a reverse mortgage not a scam? The companies profiting from them are swindling money, or even a house by doing it. Solitary
maybe bank regulations are different in US and Canada regarding reverse mortgages but it doesn't sound like a scam. it's just using the equity in your home to get cash.
//http://www.reverseyourmortgage.ca/faq/frequently-asked-questions/
That's exactly what it is. Other variations of the same thing are called equity lines, where you borrow money on the equity in your home. You're just using your home as collateral.
Some guy at the bank sits around and thinks of arrays of "creative financial instruments" which are presented as "many ways to meet your specific financial goals", but they are all based on one common theme: The bank gives you money, you assume debt, you owe the bank with interest. They also charge you fees to set these things up.
It's not a scam, unless they tell you it's something else, like maybe you're getting money for free. But here's the secret: No bank gives you free money. It wouldn't work to the bank's advantage. They don't do it. :-D
Quote from: "Plu"Why do you keep talking about "influencing the stock market"? That's not the goal. It's not even going to happen. It's just a way to move people's money from their bank accounts to yours by pretending you're a stock broker.
At no point in my story do you need to know anything about stocks, or influence anything.
i misread.
Quote from: "surly74"Quote from: "SGOS"The situation does exist. It has to. There is no possibility that it won't. You are mathematically assured to end up with a group of winners who think you gave them good advice 2, 3, or 10 times. After you go through the process of discarding the losers, it's time to call up your schmoozing talents, and fuck them over big time. Some are so enthralled, they might even bet the farm.
It's extremely clever, I think.
clever is too hard to pull off. it needs to be simple.
Clever is better. It's much easier to hide your true intention. When scams are simple they're to easy to catch on to which is why clever works so much better or else dumb people would do it and it wouldn't be a scam, just common practice.
Quote from: "AllPurposeAtheist"Quote from: "surly74"Quote from: "SGOS"The situation does exist. It has to. There is no possibility that it won't. You are mathematically assured to end up with a group of winners who think you gave them good advice 2, 3, or 10 times. After you go through the process of discarding the losers, it's time to call up your schmoozing talents, and fuck them over big time. Some are so enthralled, they might even bet the farm.
It's extremely clever, I think.
clever is too hard to pull off. it needs to be simple.
Clever is better. It's much easier to hide your true intention. When scams are simple they're to easy to catch on to which is why clever works so much better or else dumb people would do it and it wouldn't be a scam, just common practice.
yeah ok. ponzi's were ridiculously simple concepts. pyramids are simple.
Ok, you win.. Stupid is better. No argument here.. :)
Quote from: "AllPurposeAtheist"Ok, you win.. Stupid is better. No argument here.. :)
not sure how a simple plan equals stupid but ok.
Quote from: "SGOS"Quote from: "surly74"Quote from: "Solitary"A scam is a confidence game or other fraudulent scheme, esp. for making a quick profit; swindle. In what way is a reverse mortgage not a scam? The companies profiting from them are swindling money, or even a house by doing it. Solitary
maybe bank regulations are different in US and Canada regarding reverse mortgages but it doesn't sound like a scam. it's just using the equity in your home to get cash.
//http://www.reverseyourmortgage.ca/faq/frequently-asked-questions/
That's exactly what it is. Other variations of the same thing are called equity lines, where you borrow money on the equity in your home. You're just using your home as collateral.
Some guy at the bank sits around and thinks of arrays of "creative financial instruments" which are presented as "many ways to meet your specific financial goals", but they are all based on one common theme: The bank gives you money, you assume debt, you owe the bank with interest. They also charge you fees to set these things up.
It's not a scam, unless they tell you it's something else, like maybe you're getting money for free. But here's the secret: No bank gives you free money. It wouldn't work to the bank's advantage. They don't do it. :-D
don't know if they have it in the US but there is a mortgage product that lumps everything together, mortgage, line of credit, savings accounts. it's supposed to pay off your mortgage faster but it's very easy to burn through your equity.
The title itself is a fucking scam.
Name me one way you can get money from a private industry without paying it back? What happens if you don't pay back this "reverse mortgage"?
Does anyone really think that a private loan company is going to simply say "you still own your home" if you fail to pay?
That is the language they use.
Quote from: "Brian37"The title itself is a fucking scam.
Name me one way you can get money from a private industry without paying it back? What happens if you don't pay back this "reverse mortgage"?
Does anyone really think that a private loan company is going to simply say "you still own your home" if you fail to pay?
That is the language they use.
I Googled reverse mortgage, just to double check. If I read it right, you actually don't pay interest while you draw down your equity (it might vary depending on the agreement with the bank), I think that is, until the time you decide you want to keep your home. Then you give them back the money with interest. Not all people draw their equity down to zero (I'm not sure you could), and just use the reverse to get a loan. Why they would choose that instead of an equity loan, I'm not sure.
See what you think: http://www.dfs.ny.gov/consumer/reversemortgage.htm (http://www.dfs.ny.gov/consumer/reversemortgage.htm)
Also of Interest, sometimes it backfires: http://www.cnbc.com/id/100788816 (http://www.cnbc.com/id/100788816)
Debt is often necessary for first time home buyers and younger folks. Personally, I think seniors should avoid it like a plague, but then I'm not a high financier, and never planned to leverage my debt into wealth. Debt strikes me as an albatross one carries around month after month. There's an initial rush when you get the money, a car, or a home, but that is quickly followed by years of working for the bank and making sacrifices. I don't understand the concept of seniors depending on their home equity to supplement their retirement income. It would seem like paying off the debt before you retire would allow you to live in the home relatively cheaply, while you supplement your income with the extra money you're not giving to the bank each month.
QuoteIt's not a scam, unless they tell you it's something else, like maybe you're getting money for free. But here's the secret: No bank gives you free money. It wouldn't work to the bank's advantage. They don't do it.
Yes, legally fucking your fellow human over is legal as long as you tell them you are going to fuck them over. But there is a HUGE difference between legal and moral.
Quote from: "Brian37"QuoteIt's not a scam, unless they tell you it's something else, like maybe you're getting money for free. But here's the secret: No bank gives you free money. It wouldn't work to the bank's advantage. They don't do it.
Yes, legally fucking your fellow human over is legal as long as you tell them you are going to fuck them over. But there is a HUGE difference between legal and moral.
what are you so mad about?
do you know what equity is? that's all this is.
Quote from: "SGOS"Debt is often necessary for first time home buyers and younger folks. Personally, I think seniors should avoid it like a plague, but then I'm not a high financier, and never planned to leverage my debt into wealth. Debt strikes me as an albatross one carries around month after month. There's an initial rush when you get the money, a car, or a home, but that is quickly followed by years of working for the bank and making sacrifices. I don't understand the concept of seniors depending on their home equity to supplement their retirement income. It would seem like paying off the debt before you retire would allow you to live in the home relatively cheaply, while you supplement your income with the extra money you're not giving to the bank each month.
once the senior sells the house the debt is paid back.
Quote from: "surly74"Quote from: "Brian37"QuoteIt's not a scam, unless they tell you it's something else, like maybe you're getting money for free. But here's the secret: No bank gives you free money. It wouldn't work to the bank's advantage. They don't do it.
Yes, legally fucking your fellow human over is legal as long as you tell them you are going to fuck them over. But there is a HUGE difference between legal and moral.
what are you so mad about?
do you know what equity is? that's all this is.
Bullshit, if it is lagit, then why the Orwellian double speak language "Reverse mortgage"? A loan on your equity is still a loan, the implication in the commercial is that their is no risk. It is intended to suck the "equity" out of high risk people by preying on their desperation. "equity" is the estimated value of your property vs what you owe. And what they should be calling it if they were being honest is "collateral".
Bottom line is that it is a high risk loan and your house is collateral and if you fail to pay, which is how the contract is set up, to insure failure, making it "technically" possible, but in reality is set up basically legalized pick pocketing.
It is a sick scam that preys upon people to rob them. It is no different than a multi level marketing scam. They get away with it by pointing out a minority of success when what is really going on is masking the robbery.
Normal loans and re finance loans are not deceptive and do not use such language.
Quoteyour total debt increases as the lender gives you more money.
From the article about "reverse mortgages", posted a few posts above.
BINGO, a trap set up in the contract to insure failure. It is designed to look easy but in reality, it crushes you long term and then they wipe out your bank account and take your home. It is legalized robbery.
The few times it is used honestly is overwhelmed by the fact that the marketing is not designed to only loan to low risk people, it makes its money the same way credit card companies do, through revolving and increasing dept. It is an extraction scam that hides behind honest loans.
I'd love to have these scam artists put in jail.
Almost all loans are effectively scams. The fact that you take out a loan for anything smaller than a house is usually stupid.
The idea that you need to "build up credit rating" by taking out and repaying loans to get anywhere is the most ridiculous thing I ever heard. Nobody has better credit rating than someone who doesn't loan money, but the banks have you lot firmly fucked over by demanding you take out a loan in order to get a better loan.
now it's starting to make sense how the US allowed its self to get into the financial mess it did with comments like these.
a pyramid scheme is bad, ponzi is bad, Plu's stock scam is bad. Reverse mortgages aren't bad. debt isn't always evil either. It's the interest you have to pay.
Maybe we have different rules in Canada but it's alot harder to get a mortgage and much much harder to refinance based on the rules. Banks in Canada generally want their money paid back so they are more careful who they lend it to.
And yes, having no credit rating in Canada is only slightly better than having a poor one. A good credit rating dictates the interest rate and terms. so having the small loans and paying them off is a good thing to do...at least in the socialist paradise where I live and the only way to get a good credit rating is by borrowing money and paying it off.
There aren't many homeowners in this thread is there.
//http://www.fcac-acfc.gc.ca/eng/resources/publications/mortgageloan/tsshoprmort-eng.asp
Quote from: "Plu"Almost all loans are effectively scams. The fact that you take out a loan for anything smaller than a house is usually stupid.
The idea that you need to "build up credit rating" by taking out and repaying loans to get anywhere is the most ridiculous thing I ever heard. Nobody has better credit rating than someone who doesn't loan money, but the banks have you lot firmly fucked over by demanding you take out a loan in order to get a better loan.
I don't think that has always been the case. You look at what leads to economic disaster vs recovery, what you see is a climate. When the majority of the climate is just about making a buck no matter who it hurts, long term it affects everyone.
I don't see a loan by itself as a scam. But increasingly it is a scam because it is basically turning you into an indentured slave.
I can remember as a kid credit card companies cut you off if you didn't pay on time. Now they prey off the revolving dept.
I think much of our global instability is caused by big banks, big oil and weapons industries. Global extraction is a race to the bottom. These types of scams are becoming business models.
Quote from: "Brian37"Bullshit, if it is lagit, then why the Orwellian double speak language "Reverse mortgage"? A loan on your equity is still a loan, the implication in the commercial is that their is no risk. It is intended to suck the "equity" out of high risk people by preying on their desperation. "equity" is the estimated value of your property vs what you owe. And what they should be calling it if they were being honest is "collateral".
who cares what it's called. high risk people generally don't have alot of equity in their homes.
QuoteBottom line is that it is a high risk loan and your house is collateral and if you fail to pay, which is how the contract is set up, to insure failure, making it "technically" possible, but in reality is set up basically legalized pick pocketing.
high risk applies to the lenders. is the borrower high risk (low credit rating)? You don't pay anything back until you sell your home, then from the sale the reverse mortgage is paid back. it's not that hard of a concept.
QuoteIt is a sick scam that preys upon people to rob them. It is no different than a multi level marketing scam. They get away with it by pointing out a minority of success when what is really going on is masking the robbery.
wow...just wow.
QuoteNormal loans and re finance loans are not deceptive and do not use such language.
[/quote]
this is not deceptive. you need to understand what the tool is. Are you saying americans are too lazy to actually learn about something?...nevermind.
I'm not from the US. I'm from that other socialist paradise, western europe. And I've never loaned money in my life, and don't intend to unless I'm going to buy a house.
And none of that changes the fact that being forced to pay a lot of money for a good credit rating is fucking stupid.
Quote from: "Plu"I'm not from the US. I'm from that other socialist paradise, western europe. And I've never loaned money in my life, and don't intend to unless I'm going to buy a house.
And none of that changes the fact that being forced to pay a lot of money for a good credit rating is fucking stupid.
and that's fine. there are probably stricter rules about borrowing than in the US.
it's just being informed about something that isn't necessarily bad. I pay very little on my debt because i have a very good credit history. someone without any credit history is looked at in the same light as someone with a very bad history. so i can get lower costs.
I'm not here to sell people on the merits of reverse mortgages, the topic could be anything but this is a case of someone being mad about something they know nothing about. they are wrong on their interpretation. everyone is entitled to their own opinons but not their own facts.
The problem, to me, is that the only way to get a good credit rating, is by giving money to the bank. There is no way for me get a good credit rating except
A) buying things I don't need or want by taking out a loan for stuff I can do without
B) literally just throwing money away by taking out a loan and not using it
I'm so good at handling money, that I don't need to loan anything. And apparently I'm being punished for that, because only people who loan money from the bank are considered to have "good credit rating".
But apparently other people don't see how silly this is. So if I'm ever interested in getting a mortgage I'm going to get a bad offer because I haven't been dependant on the bank my whole life, but instead always just pay my bills and don't buy things I can't afford? (Like, the only things that should matter to the bank, and which I can meet handily by virtue of not having a credit rating?)
Quote from: "Plu"The problem, to me, is that the only way to get a good credit rating, is by giving money to the bank. There is no way for me get a good credit rating except
A) buying things I don't need or want by taking out a loan for stuff I can do without
B) literally just throwing money away by taking out a loan and not using it
I'm so good at handling money, that I don't need to loan anything. And apparently I'm being punished for that, because only people who loan money from the bank are considered to have "good credit rating".
But apparently other people don't see how silly this is. So if I'm ever interested in getting a mortgage I'm going to get a bad offer because I haven't been dependant on the bank my whole life, but instead always just pay my bills and don't buy things I can't afford? (Like, the only things that should matter to the bank, and which I can meet handily by virtue of not having a credit rating?)
people are like bonds. bonds are debt instruments where the higher the risk to pay the bond back the higher the interest rate. you can probably buy government bonds and the interest rate is low because government bonds are low risk. the same goes for people.
would you loan $10,000 to someone who asked you with no history? not sure if they had a job? if you were the borrower ou might get the loan but you have no past borrowing history and that is worrysome to lenders so you would charge a considerably higher rate to cover their risk.
if the person has a history of paying back their debts and has a steady job then your risk as the lender is less and you would charge a lower rate because you are more sure you are going to get all your money.
when i was young i started with small loans. bought a car for $1000 when i could easily afford it. didn't cost me much but paid it off as the bank wanted. kept doing that and when it was time for a mortgage there wasn't a problem.
You're claiming "I have no history", but I've been living on my own for years, I have a steady job, I have a family. I have a very long history of being able to pay my bills. It's just that you apparently accepted that only the history of transactions that involve paying the bank money are considered when determining if someone is worth loaning money to.
Why is it only relevant if it was loaned money, and not just relevant if I paid it? Why must I have paid the bank a load of interest to be considered "trustworthy"?
At the end of the day, all I have to do is pay the monthly bill. I have a proven track record that I'm really good at that. But because I didn't decide to start literally donating money to the bank like you, it doesn't count?
I don't think this is about whether the bank trusts me enough. I think the banks have figured out that if you only give mortgage (the only kind of loan that you really kind of need to get anywhere with buying a house) to people who already have a long history of loaning money from you, you're going to be able to earn a lot of money selling people something they don't need with the promise that if they don't do it you won't help them when they do need it.
Or, the shorter version, the bank is raping you up the arse by more or less forcing you to take a loan you don't need and then making you pay good money for it.
Quote from: "Plu"You're claiming "I have no history", but I've been living on my own for years, I have a steady job, I have a family. I have a very long history of being able to pay my bills. It's just that you apparently accepted that only the history of transactions that involve paying the bank money are considered when determining if someone is worth loaning money to.
Why is it only relevant if it was loaned money, and not just relevant if I paid it? Why must I have paid the bank a load of interest to be considered "trustworthy"?
At the end of the day, all I have to do is pay the monthly bill. I have a proven track record that I'm really good at that. But because I didn't decide to start literally donating money to the bank like you, it doesn't count?
I don't think this is about whether the bank trusts me enough. I think the banks have figured out that if you only give mortgage (the only kind of loan that you really kind of need to get anywhere with buying a house) to people who already have a long history of loaning money from you, you're going to be able to earn a lot of money selling people something they don't need with the promise that if they don't do it you won't help them when they do need it.
Or, the shorter version, the bank is raping you up the arse by more or less forcing you to take a loan you don't need and then making you pay good money for it.
enough with the thinking that you are getting fucked by taking a small loan. my first loan, i paid about $100 in interest on $1000 over 12 months. that's not loansharking. i have a credit card that charges me $15 a month to carry a balance of $6000 with no fees. There's no incentive to pay that off now. I'll use that money for other stuff.
you have no borrowing history. you have no history of being lent money and paying it back. forget large sums of money...any money. that is going to scare lenders. look at my example above...would you lend $10,000 to someone you don't know and can't see any past borrowing history on? If so...really?
if you ask for a mortgage without borrowing history you better have a huge ass down payment, long history at a job and even then don't be surprised when you don't get the lowest advertised rate. When you renew your term you would get a lower rate because you have some history.
if you can save up the money and buy a house without borrowing money...all the power to you. it just doesn't happen very often.
This isn't charity.
When I bought my first house, I was stunned at how easy it was to get a big amount of money from a bank. I had borrowed small amounts before to buy cars. That was all. I suppose someone somewhere looked at my credit history. Oddly, three years later, I went to another bank to borrow money on my second home. They listened to my story, but the loan officer apologized that the bank had no money to loan. It seemed strange that a bank had no money to loan. I thought the officer was politely telling me I was a bad risk or something. Turns out the bank filed for bankruptcy within the year. But that's an unrelated side track.
As the subprime thing got out of hand, I understand banks weren't even doing credit checks, sometimes even doing property appraisals by a quick "drive by", and sometimes seemingly not doing them at all, because they were just packaging their risks into tranches and selling them to starstruck buyers. We probably needed this recession, just to learn to be more cautious.
After the housing failure banks reportedly became more cautious about lending, but from my perspective they seem like they are still clamoring to loan me money. I've actually gotten unsolicited calls from my bank offering to give me loans. My credit card limit was lowered after the bank failures, but now I'm getting notices that my credit limit is doubling again.
I get the feeling we didn't learn much from our national financial carelessness.
Quotewould you lend $10,000 to someone you don't know and can't see any past borrowing history on? If so...really?
If said person has a long history of being able to pay their bills, has no history with missed payment, and can show me how the $500 they pay me back each month is going to be paid by dropping something else that costs $500 that they have been paying for years without error and won't be paying anymore from the monent they take the loan?
Yeah. Sure. I mean; really; I'm taking next to no risk by accepting this deal. If I had $10,000 it'd basically be like getting free money. Definately not taking more risk than by loaning said money to someone who has a history of taking out loans and buying stuff that they can't really afford, even though they've been able to pay it back
so far.
In both cases there is no guaruantee of the future. But in the first case, at least we have a person who has shown he can afford to pay the $500 per month that's part of the deal
and that never buys things he can't afford. In the latter, all we know is that this person takes out loans and hasn't missed any payments yet.
But we have no idea if he hasn't been taking out loans to pay off other loans for the past few years and is actually in terrible depth, and just took out the mortgage
before everything collapsed. (I remember quite a few stories about people doing just that; taking out loans to pay off loans and working themselves into a terrible debt because of it. It's one of the reasons that every advertisement in the netherlands that's about loaning money is required by law to state "Loaning money costs money!" in very big letters as part of an awareness campaign. Because yes, people are that stupid. But it won't show on your credit history until it's too late.)
US banks are vastly different from Canadian ones. we have about six banks, other lenders but all regulated heavily.
I can miss mortgage payments and can't be forclosed on. There are strict limits to what i can borrow. this limits the exposure for both myself and the lender.
alot of people don't understand that banks have to loan money too to lend to you.
I wasn't talking about US banks, I only know EU banks. They work roughly the same as the Canadian ones, I guess. That doesn't change the fact that loaning money for a mortgage to someone who has been renting a house at the same cost as the new mortgage payments is basically the most low risk loan you can ever give out. You have all the evidence you need that this person's financial situation has been perfectly stable for years, and that absolutely nothing about that situation is going to change by giving him a mortgage.
Quote from: "Plu"If said person has a long history of being able to pay their bills, has no history with missed payment, and can show me how the $500 they pay me back each month is going to be paid by dropping something else that costs $500 that they have been paying for years without error and won't be paying anymore from the monent they take the loan?
the person will get a loan but probably at a higher rate. also what is the debt secured against? An asset of some kind?
QuoteYeah. Sure. I mean; really; I'm taking next to no risk by accepting this deal. If I had $10,000 it'd basically be like getting free money. Definately not taking more risk than by loaning said money to someone who has a history of taking out loans and buying stuff that they can't really afford, even though they've been able to pay it back so far.
can't afford does not equal "does not need". if you qualify for a loan you can afford it (the loan at least)
QuoteIn both cases there is no guaruantee of the future. But in the first case, at least we have a person who has shown he can afford to pay the $500 per month that's part of the deal and that never buys things he can't afford. In the latter, all we know is that this person takes out loans and hasn't missed any payments yet.
never said you won't get the loan, just not as cheaply as someone like me.
QuoteBut we have no idea if he hasn't been taking out loans to pay off other loans for the past few years and is actually in terrible depth, and just took out the mortgage before everything collapsed. (I remember quite a few stories about people doing just that; taking out loans to pay off loans and working themselves into a terrible debt because of it. It's one of the reasons that every advertisement in the netherlands that's about loaning money is required by law to state "Loaning money costs money!" in very big letters as part of an awareness campaign. Because yes, people are that stupid. But it won't show on your credit history until it's too late.)
banks know that. it's a credit check. in Canada banks know everything about your credit history. there are things called consolidation loans.
Quote from: "Plu"I wasn't talking about US banks, I only know EU banks. They work roughly the same as the Canadian ones, I guess. That doesn't change the fact that loaning money for a mortgage to someone who has been renting a house at the same cost as the new mortgage payments is basically the most low risk loan you can ever give out. You have all the evidence you need that this person's financial situation has been perfectly stable for years, and that absolutely nothing about that situation is going to change by giving him a mortgage.
Canada and the EU never had the meltdown the US had so it's safe to assume they work similar.
Quotethe person will get a loan but probably at a higher rate. also what is the debt secured against? An asset of some kind?
Please keep in mind I am
only talking about mortgages here. (Which are obviously secured against the house you're buying) I can understand the story for a random loan for some random item not being given out to people without credit history. Your arguments make sense there. The only thing that bothers me is banks applying this rule to mortgages, which are incredibly low risk things to give out to people who have a history of living in a house and paying the bills for it, and who secure them against the building they're buying.
Quotebanks know that. it's a credit check. in Canada banks know everything about your credit history. there are things called consolidation loans.
I'd have guessed that, but apparently they either didn't do any or they just didn't care. Considering the size of the awareness campaign to inform people that loaning money is expensive, banks were pretty easy with giving away money for some reason. Of course, can't really blame them considering if they run a loss, they can just cry "bailout" and be saved by the government.
http://www.thedailyshow.com/watch/mon-j ... ey-boo-boo (http://www.thedailyshow.com/watch/mon-june-24-2013/money-boo-boo)
John Oliver, sitting in for John Stewart on the Daly Show, takes a look at Senator Al Franken's defense of his financial reform proposal. I laughed.
Quote from: "Plu"Quotethe person will get a loan but probably at a higher rate. also what is the debt secured against? An asset of some kind?
Please keep in mind I am only talking about mortgages here. (Which are obviously secured against the house you're buying) I can understand the story for a random loan for some random item not being given out to people without credit history. Your arguments make sense there. The only thing that bothers me is banks applying this rule to mortgages, which are incredibly low risk things to give out to people who have a history of living in a house and paying the bills for it, and who secure them against the building they're buying.
Quotebanks know that. it's a credit check. in Canada banks know everything about your credit history. there are things called consolidation loans.
I'd have guessed that, but apparently they either didn't do any or they just didn't care. Considering the size of the awareness campaign to inform people that loaning money is expensive, banks were pretty easy with giving away money for some reason. Of course, can't really blame them considering if they run a loss, they can just cry "bailout" and be saved by the government.
banks are also borrowers at the same time so when it's easy for them to get money there will be more of it to lend. supply and demand. if it costs them more to lend they will be more careful who the lend it to. The US is the example of everything that was wrong with lending and there was greed on both sides. Canada used what happened in the US to make things harder to get a mortgage or refinance.
as far as mortgages, typically there is a large disconnect between what a person can afford and what they should afford. The term we have here is house poor. you have a big house but very little cash flow. Lenders in Canada have different debt ratios they look at. your housing debt and total debt. those play the biggest factor in the amount of money you can get and the credit rating is the amount you will pay.