"Reverse mortgage" an obvious scam.

[surly74]

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?

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.

can't afford does not equal "does not need". if you qualify for a loan you can afford it (the loan at least)

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.

never said you won't get the loan, just not as cheaply as someone like me.

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.)

banks know that. it's a credit check. in Canada banks know everything about your credit history. there are things called consolidation loans.

[surly74]

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.

[Plu]

the 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.

banks 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.

[SGOS]

http://www.thedailyshow.com/watch/mon-j ... ey-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.

[surly74]

the 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.

banks 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.