White House to Announce Plan to Alter Mortgage Contracts
[Guest post by DRJ]
The Washington Post reports the Obama Administration will announce new rules for mortgage foreclosures that involve unemployed borrowers:
“Banks and other lenders would have to reduce the [mortgage] payments to no more than 31 percent of a borrower’s income, which would typically be the amount of unemployment insurance, for three to six months. In some cases, administration officials said, a lender could allow a borrower to skip payments altogether.
The new push, which the White House is scheduled to announce Friday, takes direct aim at the major cause of the current wave of foreclosures: the spike in unemployment. While the initial mortgage crisis that erupted three years ago resulted from millions of risky home loans that went bad, more-recent defaults reflect the country’s economic downturn and the inability of jobless borrowers to keep paying.”
So much for job creation.
I don’t know if this is a voluntary or mandatory plan, although it speaks of new requirements for lenders — suggesting it will be a mandatory plan that alters existing mortgage contracts. Unless the government plans to pay for all borrower deficiencies, this plan takes from the banks and mortgage companies and gives to the unemployed. If the government pays, it takes even more from the taxpayers to give to the unemployed.
Max Baucus should be pleased.
I’m not a mortgage or banking law expert but I can’t think of any legal basis for altering valid contracts except “we think we can do it, so we will.” Rep. Alcee Hastings told us the Democrats are making up the rules as they go along. Maybe it’s not just for Congress anymore.
— DRJ
I had the same questions when I first read about this. But the NYT article explains that the plan is to use unspent TARP funds to subsidize the cost to mortgage lenders in writing down loan balances where owners are underwater, to reduce the number that chose strategic default, and to allow borrowers who are out of work to reduce their payments to a certain percentage of their “income”, whatever the source, for a period of 3 years.
These are “voluntary” but if the lenders want to continue in FHA and other federal lending programs, then they have to go along.
shipwreckedcrew (c0d6cd) — 3/26/2010 @ 3:28 amThe legal basis?
The Contracts Clause limits the powers of the states to do this, but not that of the federal government.
Even then, states impairing the obligations of contracts can pass constitutional muster.
In Home Building & Loan Association v. Blaisdell 290 U.S. 398 (1934), the Supreme Court let stand a Minnesota law restricting the ability of mortgagees to foreclose.
mocdeniro (6348d0) — 3/26/2010 @ 4:27 amI guess we’ll just ignore moral hazard from this point on.
Off the top of my head, most of the mortgage contracts should be governed by state law, so the states could possibly alter them.
As for the unspent TARP funds… Tarp is already projected to run a deficit of $110 billion or so. Thus the proposed “Financial Crisis Responsibility Fee” on the 50 or so largest financial institutions (but not Fannie, Freddie, or the auto companies.) How exactly can you allocate unspent funds from a program with a 12 digit deficit?
Hadlowe (061332) — 3/26/2010 @ 4:28 amThis is just plain ridiculous.
And like the credit card crap, this is going to hurt the good apples who honor their agreements. It can be tough to get your first loan that will pay for a house in many places in this country. This just makes it harder.
But I’ve got an Executive Order to sell anyone thinking Obama wouldn’t do this. He had no problem screwing over bond holder rights last year. Just because two parties came to an agreement doesn’t mean jack to him.
Fact is, the banks already are willing to make special arrangements with people who are need help. They do it all the time because it’s good business. Why artificially screw with that? Obama will claim he’s doing the banks a favor, but these banks know people will game the system. This will once again reduce economic activity.
And unspent TARP has to pay off the deficit… or did they deem that one changed?
Dustin (b54cdc) — 3/26/2010 @ 4:29 amHolding up inflated house prices is a bad use of TARP money. The market wants those to fall.
imdw (d83735) — 3/26/2010 @ 4:56 amBy all means we should kick unemployed people out of their houses. That way the value of ALL the houses in the neighborhood is guaranteed to go down. And then a few already wealthy follks can snap them up and resell them when the market improves, and get even richer.
What we really should do is ASK lenders to forego payments voluntarily so that people can stay in their – oh wait. We did that already, didn’t we?
JEA (3fc310) — 3/26/2010 @ 5:17 am[…] Patterico Pontifications WhiteHouse to alter mortgage contracts Possibly related posts: (automatically generated)Obama and the Practice of MedicineA Prescription for American Health CareOld Folks Will Die Because of Dems’ Lies […]
11th Hour Salvation Strategies for Republicans « ON MY WATCH – the writings of SamHenry (054690) — 3/26/2010 @ 5:27 am[…] Patterico Pontifications WhiteHouse to alter mortgage contracts Possibly related posts: (automatically generated)Obama and the Practice of MedicineA Prescription for American Health CareOld Folks Will Die Because of Dems’ Lies […]
11th Hour Salvation Strategies for Republicans « ON MY WATCH – the writings of SamHenry (054690) — 3/26/2010 @ 5:28 amAdd this to the issues Republican leaders could pick up on but won’t. They are too busy figuring out how to stop health care! They let the finance bill leave committee. So I have drawn up some 11th hour suggestions for them since the democrats seem to be winning in 2010:
11th hour strategies for Republicans
On my Watch…the Writings of SamHenry
http://samandimp.wordpress.com
[note: fished from spam filter. –Stashiu]
SamHenry (8f467c) — 3/26/2010 @ 5:28 amI think everyone is missing the big picture here. Yes this is an unfair giveaway now, but look what things are going to look like.
Anyone here own a home? I can’t remember exactly what the mortgage on my first house was but it was a hell of a lot more than 31% of my income, especially after student loan were considered. This looks like a giveaway today, but if this actually gets implimented, in 20+ years time this will be known as the poverty perpetuation act of 2010.
Sean P (334463) — 3/26/2010 @ 5:45 amHome prices have fallen. This is part of the problem homeowners who are “underwater” are facing. In a “normal” market, cash-strapped homeowners could sell their homes at break-even or maybe at a profit and be in good shape. But because the market prices have dropped, the homeowner owes more than the home is worth. Can’t sell it — can’t afford to stay.
The solution is to allow the free market to run its course. Home prices were grossly inflated; they are now about where they should be. Over time, things will equal out. However, when the government tries to “fix” the problem, the unintended consequences often result in the problem being prolonged, or yet a new problem appearing.
In today’s market, there are plenty of homeowners who are just barely making their mortgage payments. Now, as taxpayers, they’re being asked to bail out those who — in some cases — opted to purchase more home than they could afford. Why is it “fair” for responsible citizens to carry the weight for the irresponsible?
navyvet (8e1431) — 3/26/2010 @ 5:48 amJEA, that’s called a ‘strawman’.
Fact is, a contract is a contract. You have to miss quite a few payments before you’re out of your house, and if you can’t afford your house, you probably should find a better housing solution. Opposing this is hardly favoring homelessness.
Get a roommate in a cheap apartment. Or get another job. Or whatever.
Society just plain doesn’t work if you aren’t taking care of your own food clothing and shelter. It’s OK to require people to work and earn those things. A system that attempts to prevent any and all problems winds up causing great problems.
Oh, and these devastating economic policies (all of them together), are causing far more hardship than allowing banks and buyers to have honored contracts.
If a few wealthy people snap up houses, that’s a good thing. They will rent or sell the home. They will maintain the investment. People will keep home values. People needing a short sale will be able to walk away from the deal in much better shape.
So just spare us the tears. I want the maximum number of people to have the good life and freedom. You want government to attempt to wipe out all hardship, at any cost to the people’s general welfare.
Dustin (b54cdc) — 3/26/2010 @ 5:52 amThe authority comes from the interaction of Article I, Section 10, and the current reading of the Tenth Amendment:
Eric Wilner (3936fd) — 3/26/2010 @ 5:57 amNo State shall… pass any… Law impairing the Obligation of Contracts….
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people President.
There y’go.
At this rate, the worst damage that terrorists could do to this country is stay out of DC and let the “ruling class” destroy the country themselves. Inaction by al Qaeda would be completely indistinguishable from action, a win-win for them.
Neo (7830e6) — 3/26/2010 @ 6:03 amThanks, Eric. But they deemed that they have a compelling government interest, and authority via the commerce clause, and that keeping your home is implicit to the concept of ordered liberty, and mandated by the good and welfare clause, and la la la la la.
What I am wondering is why anyone who rents would ever vote for a democrat? Oh, and if you rent, buy a house if you can before the dollar inflates. Hell, 6 months rent free is your worst case scenario, if Obama gets his way.
Dustin (b54cdc) — 3/26/2010 @ 6:03 am“In today’s market, there are plenty of homeowners who are just barely making their mortgage payments. Now, as taxpayers, they’re being asked to bail out those who — in some cases — opted to purchase more home than they could afford. Why is it “fair” for responsible citizens to carry the weight for the irresponsible?”
Bailing out debtors is bailing out creditors. We should do neither. But we should also find some way to get these underwater houses back on the market. Foreclosure and bankruptcy reform would work.
imdw (7c85b9) — 3/26/2010 @ 6:31 amOn the tenth of every month, our mortgage payment comes directly out of my checking account, electronically. We never miss a payment and we’re never late on a payment because we set it up that way.
It’s nice to know that the payment for our being responsible is to have our tax dollars go to subsidize people who haven’t been as responsible. But, then again, it seems like that’s the case in more than just mortgages these days.
The honest Dana (3e4784) — 3/26/2010 @ 6:34 amMaybe what the gov’t should do is declare that credit scores can’t be lowered because someone loses his home to foreclosure.
That would help these people a lot, and who could it hurt, really?
MayBee (ee4d93) — 3/26/2010 @ 6:43 amHmph. In #13 above, the strikeout tag seems to have gotten dropped from “States respectively, or to the people”. It was showing right in Live Preview….
Eric Wilner (3936fd) — 3/26/2010 @ 6:49 amI’d want to know a lot more about the basis for this, in terms of how it’s getting funded and who’s eating it.
For example, they are paying less — does this mean their interest charges on the loan will reflect this? If so, this is not overtly unreasonable, it’s an effort to stave off total ruination for some of the unemployed. And I can somewhat see that as not an excessive thing.
I’m not particularly in favor of this kind of thing, but it is a bit less egregious than a lot of the other stuff that’s being done.
I’d say if you’re going to rail against something that the admin is doing wrong (and it’s not like you don’t have a VAST array of options, here), there are a whole host of real doozies that beat the crap out of this item…
IgotBupkis (79d71d) — 3/26/2010 @ 6:54 ami just wish Ear Leader would leave that poor chicken alone….. where is PETA when you need them?
redc1c4 (fb8750) — 3/26/2010 @ 7:08 amDRJ: “…this plan takes from the banks and mortgage companies” ????
That’s the way liberals describe it, taking from the big bad banks… and who wants to line up on the side of the bad banks?
How about describing it as it truly is, taking away from the people whose 401(k)s own stock in these companies, from the regular folks who work at banks as tellers and loan officers, from the employees of the companies that do business with banks, from the people who want to borrow from banks but won’t be able to do so, and so on?
steve sturm (369bc6) — 3/26/2010 @ 7:18 amDRJ, I don’t think Rep. Alcee Hastings is a mortgage or banking law expert, either.
dchamil (bb7f48) — 3/26/2010 @ 7:25 amAnother ridiculous action by Obama demonstrating an utter ignorance of the markets, economics and basic reality.
This is the ACORN mentality writ large.
SPQR (26be8b) — 3/26/2010 @ 7:29 amMany of these homes are back on the market — there just aren’t many buyers due to the high unemployment rate and the uncertainty about what Washington will do next.
In this market (Florida), some homes have been on the market for over two years with no takers, even though prices have dropped by more than 50% from their peak at the end of the housing bubble (2008). When confidence in the economy and the market improves, sales will recover. How soon that will happen is anyone’s guess.
navyvet (8e1431) — 3/26/2010 @ 7:33 am‘As a candidate, Obama promised to be bipartisan. But, for the first time in history, Congress has enacted an expansion of the government’s role in our lives on the scale of the Social Security and Medicare programs with only Democratic votes. Both Social Security and Medicare passed with broad bipartisan support.
Obama promised to unite a divided America. But he has been completely dismissive of well-informed Americans’ overwhelming opposition to this measure, forcing it down their throats.
Obama promised fiscal responsibility. But he has increased government spending over the next 10 years by more than $2 trillion, and his budget will add almost $10 trillion to the national debt over that period.
If record spending, an explosion of government, and the imposition of debt on the next generation don’t faze you, maybe this will: Obama and the Democrats aren’t done yet…’
GeneralMalaise (20e943) — 3/26/2010 @ 7:36 amThis is a superficial sop to try and convince people they are “doing something” about the rapidly rising default/foreclosure rates, since HAMP has been a complete bust and lending has gone through the floor.
They’re devoting $14 billion to this program. The liabilities on Fannie and Freddie mortgages alone are over $6 trillion–god knows how high the TBTFs are, especially with Bernanke making noise about removing the bank’s reserve requirement, an act of sheer desperation if I’ve ever seen one.
I can’t wait to see what these clowns try to do when the Alt-A and OptionARM loans start resetting next year.
Another Chris (2d8013) — 3/26/2010 @ 8:25 amMany of these homes are back on the market — there just aren’t many buyers due to the high unemployment rate and the uncertainty about what Washington will do next.
Here in Orange County, there is a lot of activity. I’ve listed my home for sale and have had quite a few people look at it even though it wasn’t formally listed until last weekend. We are tracking the market and homes are selling quickly. My house is listed for about 200k less than it was worth four years ago but we still have equity.
In Lake Arrowhead, where I want to buy, those houses, after two years of very slow sales and drops in price of 30 to 40%, are selling so fast that every time I find one I really like, it is gone the next week.
There are local factors but I think the market has reached a bottom in some areas and people who have been waiting for two years to see that bottom are now buying. I’m not sure it is a real bottom. If the Republicans take the House this fall, I would expect a big jump in the stock market and home prices in some areas that are not ridiculously overbuilt.
Every time the Democrats talk about the Clinton stock market boom, remember that the boom took off AFTER the 1994 election.
Mike K (2cf494) — 3/26/2010 @ 8:32 amObama has been ruling by decree for some time now, and the press has been cheering him on. The Republicans need to start talking about this…whatever happened to the Rule of Law? Isn’t that one of those things that investors look for in a stable country?
Kevin Murphy (3c3db0) — 3/26/2010 @ 8:34 amWhen confidence in the economy and the market improves, sales will recover. How soon that will happen is anyone’s guess.
Considering the DJIA’s rocket shot since last March should have been that indication, I don’t think it really matters when the economy actually recovers, personally.
People are still way over-leveraged, a lot of homeowners are going to come out of this with their credit destroyed, and the administration and the Fed seem determined to let the system collapse before they allow housing to drop to market-appropriate levels. Everything they’ve done so far has been predicated on keeping the housing bubble home values in place.
Short of a subprime sequel, banks won’t lend to people with less than stellar credit ratings now (because the banks’ liabilities are likely trillions above their reserves), most people won’t be able to afford even a 10% down payment on an overvalued home, and it’s all irrelevant anyway unless some industry magically finds the capital to hire 7 million people at middle-class wages in the next 24 months.
Add in the fact that every other government entitlement program is on its ass financially, states and municipalities are resorting to desperate measures like government-sponsored traffic ticket farming operations (like Virginia did a few weeks ago) just to get revenue, and there’s little other conclusion to come to other than we are merely in the eye of the hurricane right now.
Another Chris (2d8013) — 3/26/2010 @ 8:41 amnavyvet wrote:
I pick up the (free) real estate sales listings magazine every month when it comes out, and at least around here, I’ve seen the same houses listed that I saw a year or more ago.
The construction Dana (3e4784) — 3/26/2010 @ 8:54 am“You want government to attempt to wipe out all hardship, at any cost to the people’s general welfare.”
No, I want to protect MY investment. I live next to a vacant propoerty. It won’t help if I want to sell my house. And other homeowners are in the same boat. Vacancies drive down the neighborhood’s values. We’ve waited over a year to see what the banks/mortgage lenders will do, and what they’ve done is pretty much nothing.
So, NO, I DON’T like giving irresponsible people my hard earned money. I’ve struggled to pay my mortgage for 15 years.
But neither do I want to vacant houses all over the place and people kicked out on the street. Because guess what? They’re going to gobble up more federal services than if they stay in their homes. And I’m kind of funny about not wanting people to be living on the streets. Unlike you.
Contracts can be modified, and are. All the time.
And where was I advocating not working???
JEA (1eb0e1) — 3/26/2010 @ 9:01 am“We’ve waited over a year to see what the banks/mortgage lenders will do, and what they’ve done is pretty much nothing.”
“Contracts can be modified, and are. All the time.”
These statements are contradictory. Your second one is correct. Banks have been modifying loans because it is their best interest to get something rather than nothing out of the mortgage. And having someone living there, making even partial payments is to their benefit.
The reason this is getting worse is because the Feds haven’t done anything but thwart job growth. Unemployment was around 6-7% as the last administration was leaving. That was too high. Now it has been around 10% – that is even worse.
I’m not just blaming this President and Congress; they just happen to be the ones that have focused on HC instead of jobs. Now the housing market is facing Bubble Round II.
Corwin (ea9428) — 3/26/2010 @ 9:12 amVacancies drive down the neighborhood’s values.
True, but many of those neighborhoods are overvalued to begin with. You’d probably be shocked as to what your “investment” would actually be worth if those vacancies and foreclosures were marked to market and cleared from the bank ledgers.
Banks aren’t doing anything because they simply don’t have the reserves to start foreclosing on the homes they lent on. Marking the toxic loans to market would likely render most of them insolvent immediately–which is what needs to happen anyway so the healthy institutions can be rewarded instead of propping up the toxic TBTFs with yet more taxpayer dollars.
You really ought to be asking why the administration isn’t allowing this to happen, instead of arguing that your home’s bubblicious value needs to be preserved at all cost.
Another Chris (2d8013) — 3/26/2010 @ 9:28 amEveryone was focused on the invasive questions in the census form which were specifically about race and ethnicity. There was also a question concerning how you live. (As I recall something to the effect of do you rent, have mortgage, live with someone else at no charge, own home free and clear?) One shudders to think what *that* question may be getting at, or result in, if the libs stay in control.
elissa (04724f) — 3/26/2010 @ 9:28 am[…] you can’t pay your mortgage, that, too, is something the government should help take care of: White House to Announce Plan to Alter Mortgage Contracts DRJ @ 1:46 […]
Right-Wing Oligarch! » Blog Archive » At what point does it become our responsibility to take care of ourselves? (73d96f) — 3/26/2010 @ 9:37 amDirect quote from the Washington Post article: Administration official say this refinancing program should not strain the FHA’s already weakened finances because the effort will be financed with up to $14 billion out of the federal bailout program.
So, see, no worries, it’s freeee money. Apparently there is never a thought by the administration of maybe NOT spending all the TARP funds and instead retiring some debt. TARP has become nothing more than a massive slush fund.
elissa (04724f) — 3/26/2010 @ 9:40 am____________________________________________
Meanwhile…
Mark (411533) — 3/26/2010 @ 9:48 am
“You’d probably be shocked as to what your “investment” would actually be worth if those vacancies and foreclosures were marked to market and cleared from the bank ledgers.”
I never bought into the ‘my home is an investment’ myth. My home is where I LIVE. If I don’t have one I’m out on the street.
JEA (1eb0e1) — 3/26/2010 @ 10:14 am“No, I want to protect MY investment. I live next to a vacant propoerty. It won’t help if I want to sell my house.”
“I never bought into the ‘my home is an investment’ myth.”
LOL, will the real JEA please stand up? Dude, you can’t keep your story straight.
Corwin (ea9428) — 3/26/2010 @ 10:20 amThen why bring up property values dropping because of increased vacancies? If the value of your home decreases, this doesn’t change the terms of your mortgage or force you out as long as you continue your payments. If anything, it will lower your property taxes… or at least give you ammunition to avoid them being raised.
Seems like you’ve bought into it at least a bit, which is fine. But if you truly hadn’t bought into the “myth”, what others considered your home to be worth would be irrelevant.
Stashiu3 (44da70) — 3/26/2010 @ 10:36 am“Seems like you’ve bought into it at least a bit, which is fine. But if you truly hadn’t bought into the “myth”, what others considered your home to be worth would be irrelevant.”
But… but… sputter… #&%$$##@@!!!!
GeneralMalaise (20e943) — 3/26/2010 @ 10:55 amJEA, at 9:01 am:
No, I want to protect MY investment.
JEA at 10:14:
I never bought into the ‘my home is an investment’ myth.
Corwin already noted it, but I just wanted to put the time stamps in there. That’s got to be a new land-speed record for contradiction in the commenting section.
If you honestly don’t consider your home to be an investment, then it shouldn’t matter a bit what it’s worth as long as it’s still standing. Your desire to keep the housing market bubblicious is what’s really curious, considering the average American doesn’t have the actual means to afford the average cost of buying and maintaining a home at debt levels that aren’t income-crushing.
Typically, the mortgage to income ratio was considered roughly 2-3:1–in other words, if you made $50K, you shouldn’t buy a house that cost more than $150K, especially if you need to put a 20% down payment.
The average income is currently $40K, so realistically, the average house should cost $80-$120K to maintain solvency. The current average is $282K, more than double the traditional spread.
Housing prices HAVE to drop to affordable levels, the bad debt cleared from the system, and the insolvent banks put into receivership, or the economy will not actually begin a true recovery. It’s as simple as that. We’ve been building up to this since the mid-1970s, and any attempts to keep the ponzi going will simply result in even more pain down the road, including the real possibility of a complete collapse.
Another Chris (2d8013) — 3/26/2010 @ 11:00 amI wonder if obama was going to reduce the property taxes for these job losers equally or omit the altogether after all its not just the banks that foreclose
EricPWJohnson (d307e1) — 3/26/2010 @ 11:48 amNo, I don’t consider my home an ‘investment’. I’ve never borrowed against the equity. Never flipped it. I’ve lived in my house for 16 years. THAT’S what I meant. But neither do I want to see the value of it drop precipitously becuase of other peoples’ dumb financial decisions.
As for prices, you’ve hit it on the head. They can’t be sustained. They have to drop. Someone’s going to bear the brunt of the loss. The question is who’s it going to be? The homeowners or the banks, or some of both.
Both are culpable. The lenders promoted the idea of a home as an investment, to be borrowed against and also moving into a bigger, better home every couple of years as upward mobility. I have family members who did just that. And the lenders made loans that should never have been made – and they should’ve known it. Consumers bought into this whole concept. Both should bear some degree of financial burden for that.
The administration is – as I understand it – talking about relief. From the private sector, who caused all this damn mess. And their proposal doesn’t get the homeowners off scott-free (nor should it). Their loans are only reduced, not forgiven.
What good comes from hundreds of thousands of foreclosed homes? What happens to the people living in them? I’d wager a lot of them wind up getting a lot more help from the govt than if they stayed in them. And what about the people who responsibly paid their mortgages? Should they see home values plumment too? What the hell’s fair about that?
There’s no good solution to this. But the proposal seems fair to me. No one should be forced to bear the entire burden for this and Obama’s proposal spreads the pain out.
JEA (1eb0e1) — 3/26/2010 @ 11:55 amI meant omit them altogether
EricPWJohnson (d307e1) — 3/26/2010 @ 12:03 pmThe question is who’s it going to be? The homeowners or the banks, or some of both.
Everyone’s going to get hosed, no matter what this administration claims. As soon as the gov’t decided to go all in regarding the surviving banks after the Lehman bankruptcy, every taxpayer was going to get screwed, sooner or later. I don’t blame Paulson for making the decisions he did (most indications at the time reflected a run on the remaining lenders, necessitating a possible depression), but the reality is that we crossed the Rubicon of private and governmental responsibility when it came to our banking and financial systems. There is no turning back from the final reckoning, which is why we should’ve taken the blows last year, instead of putting off the inevitable.
Dmac (ca1d8c) — 3/26/2010 @ 12:16 pmWhile I did say that owning a house is a hedge against inflation, the fact is that many homes are simply overvalued. That’s scary, but there’s no real way to fix it. You can put off the problem with policies like this, but it’s only an illusion… you haven’t been saved. The can has simply been kicked down the road.
Keep the government out of it. Take your licks. Enjoy having a roof over your head, and if you make a great investment or a poor one, don’t except your neighbor to get the gains and cover the losses. Isn’t that part of the attitude that gets us into trouble?
Losers except the government to provide for every need and cover every misfortune, so they aren’t risk averse enough. They don’t take responsibility. Ultimately, this is extremely costly. But it’s in the name of wiping a few tears away and keeping democrat elites in power.
Dustin (b54cdc) — 3/26/2010 @ 12:20 pmJEA, I agree that this would spread out the pain. But, at least as I see it, the Gov’t is what caused the problem in the first place:
http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html?pagewanted=1
And now, those of us who didn’t try the fast route to success are paying the price created by the @#$% in Washington who are supposed to represent us.
The Feds have too much control. I would rather swallow the bitter pill now and have a few years of gloom while the Feds cut it’s size down by 75% or so. Rather than continue the same flawed policies of bailouts for idiots.
Corwin (ea9428) — 3/26/2010 @ 12:32 pmAs for what happens to people in homes that are underwater; for most, if they reverse what they were doing (and purchase something they can afford, say 80% of what they are currently in), they each lose what they should not have been gaining in the first place. The ones who would get assistance would be those that couldn’t afford a very modest home, at the bottom of the ladder.
Corwin (ea9428) — 3/26/2010 @ 12:39 pmFor someone in a $2 million plus home, why should I want to help them? Let them move to a $1 million dollar home and suffer the loss they are due.
The administration is – as I understand it – talking about relief. From the private sector, who caused all this damn mess.
The private sector caused all this damn mess? Bullsh*t. This was caused by the government and the private sector repeating the easy credit mistakes of the mid-late 1920s. Read Paul Johnson’s assessment of the credit bubble during that period in Modern Times the exact same mistakes were made, only this time the government was in cahoots with the banks and hedge fund firms because they needed something to prop up the economy after the dotcom bubble popped.
Barney Frank blatantly said that allowing people to take out loans they couldn’t afford was “policy”–if you think that’s entirely due to the private sector, you are in denial and it’s not worth trying to convince you in this case.
What good comes from hundreds of thousands of foreclosed homes?
It’s not about what’s “good”–that’s a value judgement that needs to be kept out of matters that are strictly financial. It’s about what’s necessary.
What happens to the people living in them? I’d wager a lot of them wind up getting a lot more help from the govt than if they stayed in them.
Or, they suck it up and either move into an apartment until their credit gets back to normal, and save for a place they can afford, or they move in with relatives or friends and do the same.
I’m sick and tired of the post-WW2 generations thinking they need to be rescued from every hardship life throws at them. I’m honestly starting to hope for an actual collapse so these pampered boomers, GenXers and GenYers finally learn what real, actual hardship is for once in their thoroughly pointless lives. Maybe then they’ll start practicing a little self-reliance instead of short-sighted, short-term ego gratification and depending on Mommy NannyState from wiping their tushies at every turn.
And what about the people who responsibly paid their mortgages? Should they see home values plumment too? What the hell’s fair about that?
What’s “fair” is not making them cover for their neighbors, their neighbors’ lenders, and the government’s malfeseance over the last 7-8 years. Their home value doesn’t mean jack squat if it’s a place to hang their hat, save for property taxes. If they were looking at it simply as a place to eventually turn over for a profit, then tough sh*t. Man up and deal with it, like an adult. The universe doesn’t owe them a prosperous living.
Buying a house, just like any other purchase that costs hundreds of thousands of dollars, comes with inherent expectation of risk. My grandparents have been living in the same home since 1959. They bought it for $15K, saw it’s “value” go up to $175K during the bubble, and drop down to $75K after the bubble popped. In the late 80s, when real estate around Denver was depressed, their housing value took a major hit. In that whole time, between the late 80s and today, I’ve never heard them bitch about the value of their home dropping. I’d say there’s a lesson in that, but I don’t expect the current crop of American generational mediocrity to actually understand it.
Another Chris (2d8013) — 3/26/2010 @ 2:02 pm