Hey Nadine:
Check the discussion below, going on for a while now.

An update on that: 7 million families are expected to lose their homes this year because they cannot afford their predatory loan payments. There's been more foreclosures so far this year than any in the last 16 years. And nothing is being done about it.

Here is a link that might be useful: Where does the money come from?

This is more of a general comment on how we live our lives today. I see our society putting themselves and their families into bad situations because of our extended "want" list. I think our parents had "wants" but they understood that you can't have it all. When I read your post, I thought of the sleepless nights that you may be experiencing trying to keep up with your current financial needs. Your kids are in daycare which you stated is like a second mortgage, you borrowed money to remodel your kitchen and now you want an addition which will undoubtedly cost six figures. Of course it is your life, but I ask you....is it really worth it? Is the extra 200 sf of space worth the stress on your family? Our parents and grandparents saved and planned for large expenditures. We borrow and stress out about how to pay for what we already have still dreaming about getting more. It is a vicious cycle that seems impossible to break. Think carefully before you borrow more money to get more space. Treasure your life and your family and value the time you have with them.

Take care!

One thing to look forward to, is that daycare is not forever. My youngest will be going to Kindergarden in a year. At that point she can go to afterschool care at school with my older daughter (which is much less expensive than daycare). Once she goes to 1rst grade, there will be less time in the afterschool daycare. We plan on starting our remodel then when we no longer have day care expenses and the "daycare cost" which is like a 2nd mortgage can really become a 2nd mortgage which we can afford (since we have been affording the daycare all this time).

Good luck!

Nadine33,

I'm the person who started the "where does the money come from" thread and I understand what you mean. Right now, though, I am SO grateful that my family didn't getinto any debt before the current troubles. I've rethought a lot of what I was tempted to do before and I've decided that we need to save for a couple of years and do whatever we do with cash and beat the conventional wisdom when we do the work and NOT buy into those hugely expensive remodels.I'm sure that between using recycled stuff and doing a lot of the work ourselves and hiring out only what we can't learn to do, we can do an addition for a fraction of what many people pay. I am glad at this point in time that our mortgage is a 30 year fixed rate at a payment we can afford, even if one of us ends up unemployed for awhile. NObody will be taking our house away from us unless something REALLY REALLY disasterous happens. A whole lot of people can't say that right now. Read a few threads from the money-saving tips forum and some more of this forum and you will be encouraged to be conservative with debt and realize there are other ways to do it. good luck!

nadine -

I've learned alot about remodeling over the years. It actually started when I went to work for my uncle at age 15/ 16. So I save alot by doing it myself.

When we purchased our present home, we knew much needed to be done. So, we save for each project. The next big one is the master bathroom. New vanity, with countertop & sinks, new shower area (tile and glass) and floor. Much of it I will do but some will be contracted out.

After that, 3 more bathroom to go. Other projects, such as painting, will not be as expensive so they are done a little at a time.

Now we don't have daycare - been there, done that. One more child for get through college though! And if the money's not there, the project waits. It's that simple.

Enjoy the journey.

eal51 in western CT

"predatory loan payments"?

"And nothing is being done about it"?

You're kidding, right? What do you EXPECT to be done about, a taxpayer funded bailout? Why in the world would anybody sign up for a variable rate mortgage in the first place?

Why in the world are banks allowed to offer it?

It's easy to dismiss problems when you can blame the victim. I too wonder why anyone would sign an adjustable mortgage, but I have the advantage of working in the business and being very knowledgeable about predatory mortgage practices. Yes, new homeowners should know better, but not everyone has the resources to study up before buying, and unscrupulous salespeople can be very persuasive -- just like with hundreds of scams inflicted on the elderly.

I guess it comes down to, "Am I my brother's keeper?" In my book, we all have to watch out for each other: the strong protect the week, the informed protect the uninformed. That's the right thing to do.

To stand by while 7 million families lose their homes, and do nothing but blame them for stupidly signing something they shouldn't have, to me is flat out wrong.

nadine,
We can only afford it because:
- we can do most of it ourselves, only getting experts when it makes sense (right equipment and/or licenses - i.e. plumber, electrician, cement guys - and only for the real specialty stuff, not for installing outlets & switches & pulling wire, for example),
- having lots of friends & relatives to help out (you know who your real friends are if they will help you grout)
- ordering many of the materials online (no tax if out-of-state, often free shipping, competitive prices)
- maxing out the credit card!
- because we don't mind "camping out" in the house and cleaning dishes in the bathroom sink for months & months

By figuring out how to better use the space we have instead of adding on, including getting rid of every possession we don't actually love or need - removing or reducing walls, changing to pocket doors when possible and eliminating hallways where we can.

Doing what we can ourselves.

Buying a few things at a time, like finding the lights I want, then finding knockoffs at half the price at Pottery Barn, then finding those on Ebay for a third that(yay!)

But mainly, just doing basic maintenance for years and years and years living in an unfashionable but happy home while saving up for the remodel. We will be spending about $50,000, and not borrowing a dime - I don't pay interest unless I absolutely have to. I was raised to make interest, not pay interest. Other things, appliances, new central heat, I have staggered over the years, like one thing a year to spread out the expense.

Okay, so we are borrowing money for our remodel and it's big loan, We both have dependable jobs and plenty of savings, and can really use the interest deductions at tax time. It's a 30yr loan, but we're planning on paying off in 15 years--to maximize tax advantages. We're not tapping our retirement investments or savings for our children.

And to answer the question why would anyone get an adjustable rate mortgage--when we bought our first home in 1999, we had an ARM, and watched our monthly rate drop for 5 years, and steadily paid off principal. Meanwhile, our home appreciated by 30-40%.
People should be allowed to make their own decisions, and assume the associated risks and rewards. I don't think it's just mortgages that have caused the current crisis. Prior to this credit crunch, everyone was talking about the outrageous interest rates that credit card companies charged. People with horrendous credit card debt put their homes at risk to pay off their balances (often at 16%+ interest rates) via home equity loans, with substantially lower rates. While it may have solved their debt problem temporarily and provided a bit of tax relief, these people did not necessarily change their spending habits. Certainly, there were brokers that were not forthcoming with their clients regarding foreclosures, and the risk of their transactions. I'm not accusing consumers, but it seems the blame is always shifting from one place to another. I think everyone should do what works for their current and future situations, financial and otherwise, and not assume that anyone borrowing money is on the verge of bankruptcy. And don't forget that real estate will still appreciate, definitely not as fast as the last ten years, but I think it's still a reasonable investment.

Thank you eastsider! Sometimes reading this stuff just makes the banker in me crazy. There is NOTHING wrong with ARM's for the right people. I happen to be one of those people. In the long run, we've paid less on our ARM than a fixed rate would have been, but we are also comfortable with the fluxuation in payment, AND we have both a ceiling and floor attached to the ARM that are not unreasonable.

The ARMs that are in question now are loans that did not even allow for payments that cover principal in any form with any payments. In addition many had skip payments attached to them which are almost always used by the homebuyer. They're a bad idea!

The predatory loans are similar...what do they all have in common? They offer unrealistic terms (tiny payments for the big house) with huge penalities to the borrower. They are NOT offered by banks typically, but are instead offered by finance companies, mortgage companies, and private mortgage investors. These are NOT BANKS!

As with any investment...if it's too good to be true, it's not a good investment, be it a "mortgage" or the lattest pyramid scheme. People are stupid to borrow on their home this way, but they do. I do blame those people, but I also don't entirely excuse the industry (and that's NOT BANKS!). If you don't like what's happening, you need to write your congressmen/women and tell them so, but know what you're talking about first, because if you start ranting about banks, they'll send you the standard HMDA letter to explain what "BANKS" are doing about this type of lending.

ARM's aren't evil, if they're reasonable loans and they are understood by the borrower. BANKS offer them as do other lenders. In my case, and many others, they're great products.

Sorry I keep pushing your BANK button there, igloochic. To be more accurate I should probably say "finance companies, mortgage companies, and private mortgage investors" instead, but "banks" is a lot more convenient term. You know that 99.99% of the population makes no distinction between the various segments of the finance industry, and I suspect that's a big part of your frustration.

You say tomatoes, I say tomotoes. You say ARMs are reasonable loans. I say they are total gambles. Let's face it, the only reasons people get them are: they do not qualify for or cannot afford a fixed-rate mortgage; or they decided to gamble that interest rates would stay low and they would end up better off than with a fixed-rate.

In eastsiders case, the gamble paid off. But in the long run, the House always wins, meaning a whole lot of people have to "lose" (i.e., pay more than they would with a fixed-rate) in order to pay for the "winnings" for people like eastsiders, and still make sure the companies involved earn their profits.

We're seeing the effects of that now in new and unprecedented ways, because so many of the "losers" are defaulting on their loans, and losing their homes. It's so bad that the entire lending/finance industry is in trouble, with huge companies on the verge of bankruptcy, and more and more people are having a hard time finding affordable loans because of it.

That's having a huge negative effect on society overall, far outweighing even the tragedies of millions of families losing their homes. Many people are relying on the equity in their homes for long-term economic stability, and now more and more people are seeing that equity slipping away, and a huge part of that is the inability for buyers to get financing. As a remodeling contractor, I can tell you this credit crunch (perceived as well as real) is having a very real and very negative impact on my business, not only because credit is harder to get, but because so many are now paying more for their ARMs, and cannot afford to remodel. That's my selfish viewpoint, but it shows the ripple effect this down-turn is having. It's the same for hundreds of other industries that depend on discretionary spending by homeowners.

Perhaps the finance industry can step up and find a way to fix all of this on their own, but I doubt it. It's going to take a huge effort, from the grassroots on up. For me that includes not only writing to my Senators and Representative, but also participating in forums like this one. I hope those of you in the BANKING industry can help us all find solutions to these devastating problems.

"You say ARMs are reasonable loans. I say they are total gambles. Let's face it, the only reasons people get them are: they do not qualify for or cannot afford a fixed-rate mortgage; or they decided to gamble that interest rates would stay low and they would end up better off than with a fixed-rate."

That's your opinion, and not a very informed one. My husband and I also chose a variable rate mortgage for our new house (we're in Canada). We did so, not because we couldn't qualify (our credit rating is excellent and our salary adequate) nor because we're "gambling".

We made a carefully researched decision, which has saved us a LOT of money in interest. Our rate has gone DOWN three times, only going up slightly a couple months ago when the central bank raised rates by a quarter of a point to curb inflation. We are still 3/4 of a point behind posted closed rates. We can weather two more interest hikes before we need to worry, and will lock in if we are concerned they will keep going up. How is this a gamble?

As to the original question, we are like BettyCBowen. Rather than looking at expanding this modest home, we are divesting ourselves of unneeded possessions and looking at ways to make the current footprint more user friendly and efficient.

We're lucky in that my DH is a carpenter, and we've done lots of reno projects over the years, so we all almost entirely DIY.

We will pay for our (modest) upcoming kitchen/bath remodel with savings. We hope to spend under $15K to do both, which will include new cabinets/vanity, flooring, tiles, concrete counters, appliances (already have the fridge) and fixtures. We are keeping our 9 x 10 kitchen the same size - it's big enough for our family.

I was much more foolish with money when I was younger and had a lot of credit card and student loan debt. I was always stressed out and it just wasn't worth it. Now I never carry a balance on credit cards and aside from our mortgage, we've rid ourselves of all debt.

Bigger isn't better when you have to lie awake at night worrying how to pay for it all.

"How is this a gamble?"

It's a gamble because you had no idea whether interest rates would decline, increase or stay constant. You can make informed decisions based on trends, but in the end you have no control over which way interest rates will go, and how much your payments will be.

In your case, you "won" on your bet, and I find it very interesting that your proof that it is not a gamble is the fact that you won, not lost. Just because you won a poker hand does not mean it wasn't a gamble. As is oh so painfully obvious now, way too many people lost after making their bets, and the results are devastating.

Your opinion about mine being "uninformed" is also uninformed. You have never met me and you have no idea what I know (the same with me for you, of course). The fact that an ARM worked for you has absolutely no relation to the present situation for the millions of homeowners about to lose their homes.

I'm not saying that every ARM is evil, nor that all homeowners who use them are stupid, but I am saying that sub-prime loans in general (the vast majority of which are ARMs) are the root of the present problem.

Here's a good article, for those who truly want to be informed.

Here is a link that might be useful: millions of foreclosures

Matt, the above borrower is TYPICAL of the type of borrower who takes out a NON SUB PRIME ARM loan. NON SUB PRIME!!! You're talking oranges and comparing them to apples. I am entirely for more regulation of the LENDERS (typically NOT banks) who offer significant subprime lending, particularly predatory lending. The banking industry is in favor of this in general.

The loan above has a ceiling (cap on the highest rate possible) floor (limit to how low it can go) and a limitation on the time it can raise rates and how much it can raise the rates, and also has a fixed rate conversion attached, so that if they feel the need, they can switch to a fixed rate loan after a particular time (typcially after the initial low rate period is over). I'm sure they're making principal and interest payments and not stepping backwards by skipping payments.

You're comparing that to a HIGH rate ARM offered by a SUB PRIME lender to a borrower who probably didn't quality for the amount of the loan they wanted, and or didn't have the credit history to justify a debt at that level. The market for these deals HAS to give way somehow. Eventually they're going to fail and those who invest in them will as well. It's a natural market adjustment.

The loan above is NOT one of them.

Banks do not "gamble" at the extent you're suggesting. The reason that banks like ARM loans is that they can then forecast their earnings based on the portfolio and it's ability to adjust. Fixed rate loans are a huge gamble for banks because if the rate that they borrow funds on goes up, but they have a portfolio full of fixed rate loans lower than the borrowing rate, they have to go backwards to borrow the money they need to operate. If all banks did this, the banks would be weak, and that's not good for our economy either. This is why you see a mix of loans offered, based on different factors (prime, treasuries, LIBOR, etc). They spread their risk as any prudent lender would.

My ARM is not a total gamble. The highest rate possible is affordable to me, our credit is excellent and we have a relatively unlimited income (because we own our own company and it's successful). We have a very very low rate now, and if circumstances change, the fixed conversion always an option. I wouldn't change, because I'm educated on the market and understand that over 30 years we'll pay less on our loan that those with fixed rates normally do, but that's me.

You claim to be educated, and yet you won't alter the terms you're using (Bank) because???? You have been educated to the difference, and yet you continue to belabor the evil BANKS out there. If you do care about the issue, lead those who also care towards the right source for change please. Don't point the finger at the wrong bad guy. It's a waste of your time and theirs, and helps absolutely no one!

Maybe I'm not understanding you. But I consider interest only, super-long term amortization periods and zero down mortgages to be a gamble, variable rate far less so.

We have the option to lock in at any time it looks as if interest rates are increasing and likely to continue doing so. We also factored in a possible interest rate hike to ensure we could handle the increased payments if need be. We put 35% down on our house so we have a lot of equity.

You call it a gamble, I call it a calculated, minor financial risk that has saved us a lot of money.

Of course I if was overextended credit-wise, had put zero down on my $600K house (a starter house in Vancouver) and had a 40 year amortization rate, it would be a whole nother ballgame.

Not everyone who chose an open mortgage is in danger of losing their house. I'm no financial wizard, but I'm not a nitwit either.

Kailleanm, what we say in the banking industry about a loan like yours is that we BOTH share the risk and mitigate it to protect both of us (the bank and the borrower). Your loan is what the average ARM loan is built like :) Just the same as mine. To say that everyone with an ARM is a gambler is just plain silly. :)

This is an interesting thread. I afforded my re-model by saving about 1/2 the money and borrowing the other 1/2 from my home equity line of credit (HELOC - which I obtained as a second mortgage when I originally bought my house). I bought my house in 2000 and the home equity line of credit had a 9% interest rate. The rate dropped dramatically for the next several years and I was able to pay down half the HELOC. I used the HELOC even though the rate was going up at that time, because I knew I could still afford to pay the HELOC off within 10 years of originally buying the house.

Regarding predatory lenders - they are real and they are a problem. Most predatory loans are ARMS, but that does not mean everyone with an ARM is victim. A Borrower who understand the risks (gamble?) of an ARM and make sure those risks are limited is not likely to be the target of a predatory lender.

Predatory lenders are so called, because they are predators, they prey on the weak and uninformed. Often times they act in concert with appraisers to over inflate the value of a home so the "victim" ends up paying way more than FMV for a home they eventually realized cannot afford. By this time, the originally lender has sold the mortgage and another lender is left holding the bag. Most of us will never end up in this situation.

That said, it is somewhat risky to rely on paper equity to make improvements. A house that cost $300,000 several years ago and is worth $600,000 today may be worth $450,000 next year. The only amounts that matter are those when you buy your house and those when you sell.

If you look at every improvement you make as an investment then nearly everything related to home improvement is risky/a gamble. If you "invest" $100,000 in the kitchen of your dreams and then need to sell - a buyer may not see the value of your investment and you may lose money. Therefore you may feel you "wasted" a big part of the $100,000. However, if that $100,000 was within your financial reach and you got an amazing kitchen that you enjoyed, you can walk away without feeling too bad about your "expenditure."

Think of home improvements as a really big cup of Starbucks coffee. I pay over $2 every Monday Friday for a cup of Starbucks coffee. Sure, I could get a cup of coffee for a $1, but I really enjoy the Starbucks coffee. Technically, IÂm throwing away $1 everyday (even more if I made my own coffee), but I can afford it and it is worth double the price to me.

nadine33,
We were in the same boat a few years ago. We lived in a 1800 sq. feet standalone condo. It had 3 bedrooms 2 1/5 baths, but no basement. It was so tight with 3 young kids, no basement and no yard. We stayed there for 6 years. Doing an addition was not an option since it was a condo. We enclosed a cathedral ceiling to make a small playroom for the kids. I looked at other homes on and off the whole time we lived there, but knew the larger mortgage payment would be tough. We also live in the northeast and preschool alone for 1 child is 10k (having 3 in preschool at once was a killer). We waited and saved as much as possible. Eventually we were able to upgrade to a larger home. Even with a larger mortgage payment, landscaping costs, renovations and all the other costs associated with owning a home, our financial transition was minor. I think it's because we waited until we were financially ready to afford the move. Don't purchase a new home or do a renovation unless you can pay for it (or finance it) comfortably without losing sleep. We had friends who told us to buy the most expensive house we could afford...even buy a home a little beyond our reach because in a few years my husband's salary would catch up...NO THANKS! We bought a home over $100k LESS than what we could afford. The worrying and counting pennies is not worth it. Be happy with your colonial and in time you'll be able to do your addition.

motherof3

p.s. My youngest starts Kindergarten this year - no more preschool! I'm going to use that 10k and put it away for my addition, or maybe a few vacations!

Hi--
Haven't had internet access for a few days--we've been moving into our rental due to construction on our house. I agree with Igloochic and Kailleanm--if there isn't a prepayment penalty, one always has the option of refinancing or locking in at a better fixed rate. And you're right--there does need to be a distinction between sub-prime and standard ARMs. I have to give credit to our mortgage broker at a BANK who has been a great resource during our last three mortgages. While rates were dropping, we called and asked him to refinance our ARM to a fixed rate, but even though it cost him a sale, he advised us to stick with the ARM as rates were still dropping. So not all mortgagers, financiers, and bankers (past and current) are not evil . . .

Eastsider, I just completed my move to the temporary hovel we're renting (listed as an "executive condo" with delux furnishings...it's a slum) Anyhoo, hope your temporary move went better than mine. One thing I can say is that in 30 days when we move "home" again :) It will feel sooooo good I won't care what I have to borrow to live there in the future LOL

Yes, you have the option of re-fi'ing an ARM to a fixed rate loan, assuming you're not caught in a time of rising rates so that you cannot qualify for or afford a fixed rate loan, or your circumstances change in some unforseen way. This may or may not happen to you, but it does happen to people, often because they don't think ahead or are willing to gamble in a way that has worked out okay for a lot of people in the past.

For example, if you're thinking that you'll re-fi to a fixed as your income goes up over the years, and things don't work out as you had hoped...maybe your income doesn't go up enough to compensate for rising interest rates. The dynamics of these situations raise a lot of possibilities.

-Roger

You're right Roger, and people should not borrow more than they can afford to pay now--we certainly didn't. And our current loan is a fixed rate, since rates were on the rise as we were getting financing.
Igloochic--you're moving in in 30 days? I'm so jealous--we've got at least six months to go! It will be worth it, right?

When I did mortgages many moons ago, I used to advise that you should look to the ARM's maxed out rate and verify you can make THAT payment in a worst case scenario. I also did the DTI (debt to income) calculations at that rate to assist the client in seeing the picture from all perspectives.

I'm moving in 30 days or there will be heckfire to pay eastsider :) This hovel is horrible! Smells to death of cigarette smoke, and whatever else died in it over the last 30 plus years (executive condo my arse). Mind you, the tile guy didn't show up yesterday on the site, so perhaps I won't have a shower or floor or bathroom in 30 days but I'm going home!

Six months....yuck! If all goes well, even if not terribly well but reasonable, my 90 day remodel of the entire home will only take at worst 120, and given how many folks I hear of that have spent so much more time on remodels, I'm thankful for that. My new place is going to seem like a palace next to this joint. We don't even feel very safe outside (it's not a nice neighborhood). If it weren't summer in Alaska (impossible to find housing) I'd have smacked this danged homeowner around and gotten my two grand back and moved to a hotel.

Keep telling yourself it will be worth it. I mumble that all night in my cigarette smelling bedroom LOL

question: Why in the world would anybody sign up for a variable rate mortgage in the first place?

SOme people don't plan on being in their houses forever, so you get a shorter loan. For example, when we bought our last house, we got a 3/1 ARM and knew we would move in 2 years. This gave us a 1 year cushion, which we are using since our house didn't sell. Also, with the really low interest rates we had, the first year our ARM goes up, it still won't even make it to the going rates now. .

its just a matter of what you are looking for and how long you plan to stay. Our current home, we figured is a 7-10 year house and so we got a 10/1 ARM (if we stay in this house, we would have to, at Jr. High Age, start sending out 20 mo old to private schools as the public ones are not good enough)-- again, our family situation. We also figure in that time frame the house will appreciate and any remodeling we do will pay for itself.

We are taking our Lines of Credit (on a rental property and our current home) to afford the remodel we plan to do now.

HOWEVER, I agree with the people in this forum- you have to balance your wants with what you NEED. We are in our early 30s, both have good jobs and free childcare (grandparents), and after our 2nd comes this year, I will either stay home or only work part time. We are very lucky, but we are both savers, have made smart buying decisions on investment properties (and upgrades) and even though we weren't able to sell our last home in the 4 months we gave it on the market, we are able to afford to rent it for a year and try again.

We are just very cautious about biting off more than you can chew. . .it can be done, its just priorities. However, my do-it-yourself saver is planning on using a contractor for our next job so we can get an attic remodel, master remodel and hall bath remodel (our house is 55 years old- everything original in it) done in a shorter period of time, etc.

igloochick:
I haven't answered your last post about me because it's obvious to me you are just scanning what I wrote, rather than actually reading it.

Just for the record, I am one of the luckiest people on earth, as I have had the fortune of having people pay me to learn as much as I can about many things, including high finance. I worked for many years in the Financial district of San Francisco, mostly on commodities but also stocks and bonds. So you're right, I don't know the "language" of the mortgage industry, but I know all too well how the owners of banks and mortgage companies work, and how they make sure that no matter what, they get their profit (usually totally focussed on the short-term, of course, which is a big part of the problem). After about 12 years of that, I burned out, took some time off, and to my total surprise found myself working as a remodeling contractor, and for the most part loving it.

Imagine this conversation in a typical boardroom: "Let's offer a product that greatly reduces our profits! We will be doing a great service to so many people who cannot afford a conventional mortgage! I'm sure our shareholders would greatly prefer we help these people rather than earn the highest profit that we possibly can."

You know that is not the way any business works. For everyone who "saves" by using an ARM, there has to be someone else who spends more, in order to make sure the lending company gets their profits.

My point with all this is that our entire financial system is now in trouble because of a complete lack of oversight while all these companies were offering new and untested products. Rogerv said it best: it's great that many are paying less with an ARM now, but what if they can't lock in a fixed rate loan when interest rates start to rise? What if so many companies are going out of business that credit is no longer available, even to those with perfect credit ratings?

You can see with the problems that Countrywide announced yesterday that many companies are getting swept up in the overall industry problem, even though they don't even offer the products that are causing the main problem. And I'm sure you know, Countrywide's banking arm is also in trouble, having to lay off more than 450 employees, even though they did not participate in predatory loan practices. Capital One is also laying off.

I believe we are headed for a far worse situation than we have now, unless something happens to stop it. I like the proposal I heard yesterday for the mortgage companies to establish a fund that the victims of predatory loan practices could use to refinance. I don't know how much that would help, but at least the industry is starting to talk about this and admitting there is a problem.

I guess that's what I worry about most about you igloochick and the other bankers who have posted here: you seem to be saying that there is no problem. That everything is just fine, and no additional oversight or action is needed. Is that what you are saying? Should we do nothing while millions of families lose their homes, lending companies go out of business, and the stock market goes nuts worrying about it all?

Like I said before, this problem is spreading rapidly, and causing a huge downturn in my business and many others. We went from having more work than we needed, to now not being able to keep all my guys working, and every single one of them has a family.

Finally, do apologize if I give the impression that all in the banking industry are evil. I do not believe that at all, and for the most part I think the banking industry is not nearly as unethical as the contracting industry. We contractors have major challenges in cleaning up our own industry, especially in the residential sector. I am absolutely disgusted by the practices of many of my fellow contractors.

But the problems in the mortgage industry are rippling though the entire financial industry, and having far-reaching effects that have not been seen for at least 50 years. And when the financial industry is in trouble, everyone is in trouble.

I don't think anyone implied that there was not a financial problem, but that the ARM remains a viable option for many people. That choice shouldn't be taken away from everyone because some people and brokers got in over their heads.
Igloochic--90-120 days sounds like a dream! I'd imagine there's not a ton of construction being done in Alaska in December, huh? Hope it's closer to 90 days!!! Our excavation is done, footings poured, basement/garage walls getting poured tomorrow--cross fingers! It's amazing watching the cement mixers and pumper trucks--I'm thinking about keeping my son out of preschool to see them.

Matt I do read your posts. I just don't have time to address your errors in full detail. But to be clear...Countrywide has participated in predatory lending practices. I've mentioned to you before, but I'll go ahead and do it again....read their HMDA reports. They have been in the predatory business for some time.

I'm sorry that you only ran into bankers who cared about profit. Many of us, big and small care about our community as well. We do sit around the boardroom trying to think of new products to open us to new markets. If that happens to be a very low interest loan to a new home buyer, and offering a grant for downpayment funds, that's what we do. We don't make as much as we might if we did predatory lending....but we feel differently :) We don't want a quicky profit...we want to be a part of the young families lifes early, so that in the natural progression of things we'll earn their loyalty by offering this product and the grant, and when they move up financianlly we'll do so with them by offering them other products that are more profitable. THIS is normal banking practices and is done by the majority of banks in the US. If we relied on 50 year old white guys for our profits (they tend to be high income and high profit) we'd eventually go out of business because 50 year old white guys die.

Your view of the banking industry is very skewed and missing huge chunks of information. Bank management includes risk and rewards in offering products and services. Some make more money than others, but as a banker you tend to blend them all in to produce a profitable business for your shareholder. It's not all about profit to the max, despite your experience. Bank's couldn't survive with that mind set, and would never pass the CRA if they did manage to squeeze every cent out of their clients with no concern to their welfare in the long run.

To be honest, if you want to have a successful bank...you just take deposits. No risk there, easy money management, trading back and forth with the feds on a nightly basis. But that's against the law (banking regulations) because of what it does to communities. Banks know this and maybe now you will too.

Eastsider...more fun talking LOL Take your son out of school for that. What a hoot! And take pictures. My son is only 21 months and already he is fascinated with tools that can kill him in a heart beat (so we're very very careful around the construction site LOL). His favorite tool...one he fears and worships, is the electric drill :) He's probably pass out in fear or scream with joy to see a cement truck on site :)

We do work on construction in December, but costs are crazy since you have to errect a ballon over the site. Fortunately my remodel is only on the inside, but even then, I'm still happy it's gone relatively quickly. This last month feels the worst because of this slum we're in, but this too shall pass!

Have fun tomorrow!!! My range is being delivered in the morning and we're skipping Little Gym to see it (DS and I).

So, according to you, there is no problem? Everything is hunky dory?

What's that river in Egypt again?

My husband is actually going to pick him up early and take him over to our house. I had the baby in the backpack all day yesterday and can't really take more lugging this chubster around--my posture is bad enough already! She really doesn't like being in the stroller, and absolutely needs to be be locked in somewhere. Learned my lesson at the library. She ran through knocking down display books and singing/screaming loudly.

Igloochic - I think its great that you are considering adopting a baby girl from China. I just returned on Saturday from a trip to China/Japan. At my hotel in Beijing, I saw many foreigners with baby girls in strollers. Both child and parents are very fortunate....okay now back to the topic about items made in China. I was worried about eating food over there. I had no idea if the pork buns I was eating contained cardboard laced with chemicals. Pollution wasn't as bad as I expected. Traffic was horrendous. My tour guide said that every minute (or hour?) there are 80 new cars in Beijing. I didn't purchase any toys as gift, but I am not sure if not buying "made in China" items is realistic.

Nadine,

You haven't responded to any of the posts answering your question, but I hope you are still reading them. I would have to go along with the general consensus of waiting until you CAN afford it. That may not be what you want to hear. Personally, I don't think there is any magic formula to affording renovations. My DH and I have been married 30 years, kids have all grown up and moved away (we started very young), and we are now really enjoying being able to afford our renos without having to borrow. We are doing most of the work ourselves, except for having our electrical service upgraded, installation of windows, and hardwood flooring, and new furnace. My husband can do all the electrical wiring, fixtures, plumbing, subflooring, interior construction, and budgeting and planning. We are doing all the drywalling, and painting and installation of cabinets, and vinyl and laminate flooring ourselves. I have spent many many hours sourcing products and services, and in some cases have saved over 50% and still been able to obtain the quality we wanted. Trust me, I know about high house prices, I live in the Pacific NorthWest, where I wonder how in the world anyone can afford to get started in this market. Try not to get seduced into wanting the best of everything now. Enjoy your children, make your family a priority, and then when you can afford it down the road, you'll have a 'NEW' house instead of a 10-15 year old one, that needs remodeling again! Just my two cents worth.

Take care, Rae

This is just my two cents worth, and I've recently had an extremely bad experience with contracting the work done, but for my money in future DIY!

There is nothing about remodeling or building additions that is rocket science. As far as I know of, there is only one place in the country the homeowner can't do everything themselves....it just has to pass inspection. If there is something you don't know how to do, hire an expert to show you one and you can do the rest!

If time is an issue (that's one big reason we ended up hiring our kitchen done, but it turns out we could have done it ourselves for less money in less time with less aggravation) you can try to break the project into doable pieces, and utilize vacation time.

All my questions about this hired kitchen remodel, the answer I get is to a professional, it's a small, time-consuming project, and they could do better elsewhere, so you get the crud people at exorbitant rates. What you are experiencing is just par for the course, particularly in a part of the country where new home construction is still booming. If construction has already plummetted in your area, you very well might be able to do better with finding a real pro, but you will still not have the pride diying brings you.

A great resource for diying is your local big box diy store, they often have classes that teach by demo and some by hands on all sorts of things. Our local store will consider teaching anything a group of people can be scuttled up to take the class, so I've done tiling, decks, drywalling, stair construction, how to repair concrete stairs with divots out of it due to age/wear, and a half dozen others. Then I used what I learned on our house, and I've had pretty good results.

The best part? DIYing is way cheaper than having to pay a boss man and all his little subbies, and I get exactly what I want.