"Reverse mortgage" an obvious scam.

[Brian37]

your 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.

[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.

[surly74]

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

[Brian37]

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.

[surly74]

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.

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.

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.

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.

wow...just wow.

Normal 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.

[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.

[surly74]

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.

[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?)

[surly74]

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.

[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.

[surly74]

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.

[SGOS]

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.

[Plu]

would 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.)

[surly74]

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.

[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.