Bush pulls a Hillary on housing???
Does this look like a Hillary-style housing bailout? Because it is walking and talking and quacking like one:
Offering federal help for strapped mortgage holders, President Bush is proposing to aid hundreds of thousands of borrowers hard hit by the housing slump.
The president on Friday was to talk about several initiatives and reforms to help homeowners with risky mortgages keep their homes, a senior administration official said Thursday. Bush also was to discuss efforts to prevent these kinds of problems from arising in the future.
The official said Bush will direct Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson to work on an initiative to help troubled mortgage holders get services and products they need to keep them from defaulting on their loans. The official spoke on condition of anonymity to discuss details of the initiatives ahead of the presidential event.
Bush also planned to:
• Urge Congress to pass Federal Housing Administration overhaul legislation that would give the FHA more flexibility in assisting mortgage holders with subprime mortgages.
• Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.
• Call for rigorously enforcing predatory lending laws and strengthening lending practices.
Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can’t afford to refinance or even sell their home.
Out-Democratting the Democrats: It’s the GOP lame duck way.
Ugh.
Update: Politico says the Bush admin is arguing their plan is not a bailout. Sort of like their amnesty plan wasn’t an amnesty…
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This is absolutely ridiculous. If you take a mortgage, you should be aware of the consequences that comes along with that responsibility. I am not paying for someone’s own financial mistakes.
Buy me a house President Bush. Actually, I take that back. Build the fence on the border for God sakes! Also, stop p-ing off your base. Do you want Hillary to win?
INCREDIBLE!
My wife and I heard this on the radio during our morning commute and she, who normally doesn’t comment on political issues, was outraged! We both are disgusted with the constant bailouts from the federal government.
New Orleans – You build your house BELOW sea level and it gets hit by a hurricane, why didn’t the government do something.
Home loans – You borrow more than you can afford and at an intro rate or ARM. When the rates go up, why didn’t the government do something.
Where will it stop? Our government is destroying the principals that our country was built on, work hard, live right and you will succeed. They want to replace it with work hard, pay more taxes and screw up and “we” will get our claws in you and never let go.
As the sun was rising this morning I could have sworn or hoped I saw a revolt starting!
We shouldn’t be surprised. The GOP has been acting like Dems for years.
When my wife and I bought our first house, the realtor said we were approved for up to $200,000. We started to look at the payments, our income, how much we spent on food and other things. We bought a smaller house for $80,000. Taxpayer money shouldn’t be used to bail out people who made bad financial choices.
More socialism for the rich.
A Realtor I know in the Tampa Bay area is exploring purchasing foreclosed homes at the court house sales. She says what is driving many of these foreclosures is that during the run up of property values the last few years is that some home owners refinanced, pulled out their inflated home equity as cash, and then just walked away from their mortgages leaving the lender holding the bag trying to recover their investment… This is a situation that the GVMT (just another four letter word) should not be bailing out.
Well, this seems to be more tax and regulatory reforms than an actual cash bail out. MM forgot to add that adding a bunch of financial counseling to people about risky mortgages is included in this package, which is desperately needed. The other piece is pushing his FHA modernization bill which was in Congress last year, way before this crisis hit.
Hardly seems like a bail out to me. But maybe I’m missing something.
Okay…so the house I’d like to live in is $174K…where can I get my check?
See, like cmw in #3, we knew we couldn’t afford the mortgage on that and didn’t have enough in savings to get that monthly payment down into our budget.
So the house is still for sale, I’m still in my apartment and - you know what - I’m not devestated. I’m not harmed by the “injustice” of it all.
It’s reality. It’s what I can afford through the income our family has.
No to government bailouts!
Bush is bastardizing “compassionate conservative” ideals. Reagan walked that line pretty well, but Bush is stumbling (distractions notwithstanding) and yes, he is rankling the true conservative base.
Income tax cuts = good. Handouts = bad.
Law enforcement = good. Shamnesty = bad.
You think that tax and regulatory changes won’t involve money? According to the article:
Don’t kid yourself that this has much to do with the borrowers. It’s all about bailing out the corrupt and incompetent lenders.
We either take care of the problem now, or we pay for it later. This isn’t the government paying for a home or forgiving a loan, it assisting in the refinance process. FHA is not going to be much help as it will be able to help maybe 80,000 out of roughly 2 million.
Every foreclosure in your neighboorhood decreases your homes worth.
This is affecting more people than just those that never should have gotten a loan to begin with.
People like John Edwards made a ton of money lending to the very people they knew would statistically not be able to stay in their home.
Well, !#*%&!.
Here I’ve been renting a small crappy apartment in the city and saving for a down payment for a house, and I should have just gone for the big-ass McMansion in Pewaukee and let you all pay for it. I’m tired of getting screwed over for other people’s lousy priorities.
(englishqueen01, we’re not hurt by not being able to afford the big house, but we’re definitely hurt by the actual injustice of being forced to pay for other people’s mortgages)
Agree with flenser #9 — 100% mortgages are borderline loansharking.
No one wants to see a bank fail, but that industry needs a stern lesson taught to it.
If I’m not mistaken, this meant that people who are forced to sell their home for less than their mortgage is worth, won’t be taxed if they are using that money to repay their mortgage debt.Normally, that would be considered taxable income.
This will certainly involve money, but let’s not think that the government is going to step in and cover the difference between the sell price of a house and the remainder of the mortgage.
All I’m saying, is that this could be a much worse plan. And quite frankly, I’d rather not see a bunch of foreclosed properties, which if near me, hurts the value of my home.
Just to clarify, the only way anyone will be forced to pay for anyone else’s mortgage is if the money that they would otherwise be collecting from taxing the home sales of people who are paying off their mortgage loans creates a massive revenue shortage and the government is then forced to raised taxees.
It’s not the role of government to prop up the value of your home.
But it is the role of the govt to provide safety. And increased forclosures lead to decreased home values which lead to neighborhood divestment, which leads to crime.
Again, as long as this situation isn’t taling money out of my pocket- which it won’t unless they have to raise taxes because of it- it’s no skin off anyone’s back.
This appears to be more political eyewash than anything. By the time these types of actions are actually implemented into law in some form, if they ever are, we may not even recognize them as related to the original credit “problem”. They are likely to get lost in the 2009 “tax reform” legislation which sits on the shelf waiting for the results of the general election.
#14
So as long as the government does not raise taxes but just puts it on its credit card, it’s all free?
Supposing that spending from other programs is cut in order to finance any order to balance any other revenue shortfall, then yes, it would be technically free.
Dear God, that is lame. You’ll throw your back out with that sort of pretzel logic.
In other words, as long as the tab is picked up by the taxpayers of the future, you’re happy. Dumb, but happy.
flenser, There are many lenders that should have been shut down a long time ago,no doubt, but what happens when these lenders collapse because the government didn’t step in?
What irks me the most is that the IRS ALREADY will suspend the tax provision if the borrower/debtor is under extreme financial hardship! (where the writeoff between money received by the lender by a sale of the home and the current payoff on the loan is treated as 1099 income) The only ones that will benefit from a full suspension are those who probably don’t qualify for the new Chp 7 bankruptcy standards, which is always an option for those truely in need! They made the mistake of signing the papers, now they can use the existing process to get out from it.
Maybe he thinks the lenders will be more likely to allow deed-in-lieu of foreclosure here, but as far as I know most states allow the lender to sue the borrower for the difference anyway. So the tax provision won’t matter.
A partial government “support” plan is acceptable to me - like this:
Government bailout
Flenser is on the money (no pun intended, heh). Taylor, your logic is laughable.
There is more than a whiff of desperation to these arguments of yours. You actually think that the legislation for this will require that other spending be cut to compensate for this?
And no, technically it would not be free. It would still come out of the taxpayers wallet. All you are saying is that something else, unspecified, would be cut so that you can get this.
Bush has got to be the most disappointing president in recent history. However, it’s kind of a relief to see the real guy emerging. I keep wondering how I could have been so duped. He is, after all, the child of privilege and as such has no real understanding of anything but that value system. A lesson for the future.
Sounds like your argument is not with me, but with the whole concept of free maket capitalism, which assumes that businesses can fail and that govenment is not supposed to step in to help them out.
As for what happens - some extremely rich people get a little less rich.
You know, I’m pretty down on the ol’ Shrub myself, but I look at it this way - He did a good job in 2001 when the nation was under a terrible crisis, and while I believe he should’ve been more aggressive against terrorism, he still wasn’t lousy.
I voted for him in 2000 and 2004 and I’d still cast those votes the same way because, for all his failings, I’d still have had him over Gore or Kerry any day.
I’ll be glad to see him go, but he is still the Commander in Chief and the POTUS. Even if he IS making an
assdonkey out of himself.The only reason the President is stepping in is because of this article
http://www.azcentral.com/news/articles/0826sanctionsimpact08260.html
The money quote is below from the entire article….Jorge does not want all of these poor Mexican’s to head back home because of the housing crisis.
Adrian, a 34-year-old undocumented immigrant from Sonora, plans to move back to Mexico as soon as he can sell a 2-acre tract he owns in Tonopah.
“Yes, we are desperate to leave the moment I sell my property,” said Adrian, who rents a house in Goodyear. He asked that his last name not be used because of his immigration status.
Adrian said his sister also is selling her house with plans to return to Mexico. He knows other undocumented immigrants who are refinancing their houses and getting cash out so they can return right away rather than waiting for their houses to sell.
Live in, or nearby an area, that has been hit by divestment in the past, and tell me that if ythe government can take steps to prevent tha, which won’t cost you anything, you wouldn’t be in favor of it.
And think of it this way, the median housing value has gone down by only 0.6%, that means for all those people who bought a home a $500k, there home is now worth no less than $490,000. If the government were to tax this sale as income, assuming a 7% tax , that means the govt, wouldn’t be getting $34,300. Mutiply that by the 2million people who may be in trouble and you get about $68 billion. This is a maximum amount that assumes everyone needs a bailout and has a $500,000 house. If we assume there are 100 million taxpayers, then without any cuts what so ever, each person would have their taxes raised by $686 a piece, but you would only pay this additional $686 once (this of course assumes, that everyone is paying the same tax rate and that there are no spending offsets).
If you own a home, as I do, and the prospect is either paying $686 or seeing my home value go down by 5% (this could be lower or substantially higher depeding on where you live), then a one time payment 0f $686 which realistically would be spread over a period of several years, doesn’t seem that bad.
Again, I’ve assumed a very high number in terms of home value, and number of people who would need this tax remediation. It’s likely to be substantially smaller.
If you own a home in an area where someone may be hit by a foreclosure, the cost benefit works out in your favor to do tax code reform (at least under the scenario that I’ve presented).
Again, tell that to the people who stay in Philly, Chicago, Baltimore, New Orleans, or any other big city with a crime problem. The federal government will spend more money fighting this additional crime then it would preventing it through tax code reform.
Bush says it’s not amnesty, it’s immigration reform
now it’s not a bailout, it’s what? tax reform?
It is still a bailout, but we don’t know the details, will it cover those buying second homes in the sub prime market?
If the stock market bubble moved to the housing bubble, at some point it pops and there is pain. Easy Al Greenspan helped things look good with easy money, but that allowed mega rich to get highly leveraged on risky investments. It is the banks that get bailed out, which may keep some people that made bad choices in their homes.
I am not an economist and did not stay in a Holiday Inn Express last night
#25-
That’s what I thought, you have absolutely no concept of what/who is involved.
This does not help. The market MUST be allowed to collapse. Otherwise, we only deepen the looming depression with the artificial housing price inflation that was seen through speculation and “flipping”.
As one who does not own a home, who has been locked out by the artificial prices on housing, I REFUSE to pay one cent more in taxes for the poor choices made by the masses.
If your housing value goes down, that’s just too bad.
If you bought more house than you can afford, than too bad.
I am not a social welfare structure! Keep you hands out of my pockets for your poor decision making
From my understanding, a majority of the problem is people that can’t afford the payment after the rates go up. I read of one couple who’s payment went from $2500 to $6000 in one change. That’s rediculous and in my mind loan sharking. A partial solution would be for the gov’t to restrict the amount that a mortgage rate could go up at each adjustment and over the life of the loan.
And some return of usery laws that were suspended during the Carter years may help too.
Bottom line, is a complete bail out ala Hillary is not the answer but neither is a sink or swim philosophy that will just tank the economy as a whole.
Every penny the government spends on anything comes out of your pocket (and mine). Every dollar spent on this is a dollar that’s not available to spend on something else.
The idea that it’s only out of your pocket if they raise taxes is beyond parody.
Also, for folks that have watched their home values jumps for years, this revaluing of their home means little. If you sell for less you can buy for less. But most just sit in their home.
If a homeowner was greedy and borrowed against his house at high appraisal, now loses his job and therefore his house … then he learned why it was not so brilliant to risk his house to buy all new furniture instead of saving for a rainy day.
But the atmosphere of easy money sweeps up good people with the bad in the euphoria. Greed should turn to fear for a bit at least.
Hmm. I live in a poor and crime ridden area. Accoring to Mr taylor, the government should give me money, which will have the effect of making my neighborhood richer, which will make it less crime ridden.
You are entitled to your opinions, but don’t kid yourself that they are anything other than plain old fashioned liberalism and involve wealth transfers from the taxpayers in general to you in person.
This is highly speculative and involves accepting your elaborate chain of cause and affect in which a home forcloses in my nice area and next thing you know I’m dodging bullets and crack dealers.
But let that go for now and assume that reasoning is correct. You are still arguing that that taxpayers in general should shell out money to help out a limited class of people.
Unless you are trying to say that ALL American neighborhoods will become crime ridden slums by the process you mention. Given your reasoning so far, that would not surprise me.
Yes, yes. We are all familiar with the liberal mantra that the govenment can cure crime by giving people money. It does not have a very impressive track record but that never seems to worry you people.
Finally, we get to the distilled essence of liberalism - concentrate the benifit of legislation on a small number of people while distributing its cost widely, since the taxpayer will not notice a mere $686. It’s even better if you can not take that $686 directly from the taxpayer for your scheme but can instead just add it to the governments charge account. That way people are even less likely to notice they are being ripped off.
In your mind it’s loan sharking because you don’t understand why the rate went up.
The lenders don’t just get out of bed one morning and say “hey, let’s hit Mr. & Mrs. Front Porch for an extra three grand.” Variable rate mortgages are indexed to something like the prime rate or the LIBOR. When the underlying rate goes up, the mortgage rate goes up. That’s not loansharking.
Yes, the problem is that people can’t afford their payments. But the cause of that problem isn’t “predatory lending”, it’s people who can’t understand basic financial planning and think they can get something for nothing.
It’s beyond that, which I hope I’ve made clear in the above post. It’s a cost-benefit situation. The “bail out” will cost less than fixing the problems caused by the sub-prime mortgage crisis. As of right now, it’s been over 40 years and we’re still having to pay a large amount of money into the cauffers to remediate the problems from past divestment.
Pay a small amount now (once), or pay a lot later (repeatedly).
Peejz
Ah, how very condescending of you. No doubt you will deign to explain to me at some point exactly who/what IS involved, since you are such an expert.
Outside of being a pious Israelite Evangelical Christian, the King of Spenders is an ultra-lib. He’s the best pardner Ted Kennedy ever had on most issues.
Nothing you’ve said makes it a good idea to bail out people who have made irresponsible decisions regarding their mortgages.
Personal responsibility used to be a virtue in this country. Now it’s been dumbed down to “Make whatever bad choice you want, we’ll charge other taxpayers for the damage you do.”
It’s a crock.
Take care of it now, or pay for it later? The economy grew robustly this last period, in spite of this problem. Housing values have spiraled out of control over the last couple of decades. This is more like a stock market correction than anything else. It needed to happen.
Essentially, you just gave the definition of predatory lending. the practice of a lender deceptively convincing borrowers to agree to unfair and abusive loan terms, or systematically violating those terms in ways that make it difficult for the borrower to defend against.
One of the parts of the “bailout” is to increase financial literacy to make sure this doens’t happen as frequently.
One of the keys to a functioning market is perfect information. The borrowers didn’t have this, but this make sure this doesn’t happen as much in the future.
The lenders DID make the decision to lend money to people who should never have been buying a house in the first place. They lent money to buy houses with zero percent down payment. They lent money to people who are illegal aliens in this country so that they could buy homes. It’s not called the “subprime” group for nothing.
The lenders made a lot of stupid decisions, seemingly with the expectation that if things turned out badly, the government would step in to bail them out.
I live in Phoenix, AZ where the housing market was ruined by investors coming from California who bought houses out here for cash, fixed them up, then sold them for incredibly high prices to other Californians who saw those prices as great…so they sold their houses in California and bought Phoenix houses for cash.
I know a couple of people who did this and it ruined the market. People all over the Valley were putting their houses up for sale at ridiculously high prices just to get the money….then they would go and have a new house built, get one of those “interest only” loans thinking they would live there only a couple of years then sell and make a ton of money to retire on.
Well, guess what?? A couple of years later the housing market dried up and these people are stuck with interest only loans that they cannot pay.
We almost fell for the trap. We considered having a new house built back when they were dirt cheap and out in the suburbs because we knew we could get good money for our existing home. But we didn’t do it and I am glad because there is no way we can afford to purchase a new home or an existing home now.
We lived in an apartment for 18 mos. then bought a mobile home where we live now….with a nice little mortgage that we can easily afford.
I am not bailing out the greedy homeowners who got in way over their heads with ARM loans or Interest Only loans. No way!!
They ruined the housing market here for people like us who want to someday buy a house.
So, I hope the President’s plan isn’t a bail-out.
#40-
It all stemmed from greed. The Appraisal companies were out here in Phoenix appraising some houses for $500,000 that should have been appraised at $200,000.
It was discovered that they were on the take with some mortgage companies out here….so now we Phoenicians are suffering because houses out here are still priced ridiculously high.
Assuming for the sake of argument that this is true, why is it the role of the American taxpayer to prop up the worth of your home?
The key to a good market is perfect information. Clearly the buyers here didn’t have that. The financial literacy part of this “bailout” will only help people.
The “sub-prime mortgage crisis” will not cost me a dime, unless you, Ted Kennedy, and George Bush get their way and force me to bail you out for your bad business decisons.
Because people don’t live in areas where the prices of their homes continue to decline. That leads to divestment.
You say my logic is twisted, but I say to you go to urban areas that have been hit by this in the past. You’re still paying to fix the problems of these areas, and it costs a lot more than preventing foreclosure.
And with that, I must go on another work related poverty tour. I shall return to argue later.
Even by your standards, this is exceptionally idiotic. There is no such thing as perfect information in any market.
Lack of information on the part of the borrowers was not the problem here. Lack of intelligence on the part of the lenders was. These loans should not have been made.
Which, in case I haven’t made it clear, I agree is a bad idea. I don’t think that only the mortgage holders should be held responsible for their own decisions, the mortgage originators should as well.
“Divestment” is a very odd term to throw around to describe home forclosures. Please stop it.
The problems with poor cities, and poor areas in general, are not due to home foreclosures. Camden NJ is not going to turn into the Upper West Side if the Feds step in to ensure that nobody in Camden loses their home to a foreclosure.
Conversely, the Upper West Side will not become Camden if some people there foreclose on their loans.
I know that this flies in the face of everthing liberals believe, but it is reality all the same.
(It’s a different topic, but the problems with places like Camden have nothing to do with divestment either.)
just let the friggin marketplace work. Those who made bad decisions are going to feel the pain, but the market will force a change in behavior without government involvement. If the government starts getting more involved, the risky behavior will continue. People will just expect more and more government bailouts in the future.
He is LJB reborn. Mismanaging a war and giving away other people’s money for votes. Is there anything worse than a compassionate conservative? The worst of both worlds.
Pat said:
Yeah … there sure is … it’s called Hillary and the looney left …
So if I go to these urban areas, I will find that no people live there?
Lots of discussion going back and forth … so I’d like to get in a few facts …
Ths MSM is blowing a certain amount of this whole thing out of proportion so it can play to the leftists social agenda …
1. The sub-prime mortgages are not something newly created by this administration … they have been around since 1998 … and still make up roughly the same percentage of the total mortgage market …
2. There are several types of sub-prime mortgages and only a small percentage of those are the ones having difficulties …
3. The mortgage default rate right now is exactly the same as in was in 2001 and 2002 … before and after 9/11 …
4. The following link is to a couple of Federal Reserve statements and reports … some of you might want to read these as you form your opinions about the total situation …
http://www.federalreserve.gov/Boarddocs/speeches/2007/20070517/default.htm
http://www.chicagofed.org/publications/fedletter/cflaugust2007_241.pdf
The next link is to a CNN Money article … not that I necessarily agree with their statements in the article text … but there is a map that you can use to get the “figures” on subprimes for each individual state …
http://money.cnn.com/magazines/fortune/storysupplement/subprime_statebystate/
Again … these include all classes of these mortgages … not just the “zero money down” that most people think this is all about …
Anything with less than the traditional 20% or more down 30 Year fixed rate mortgage falls into some level of sub-prime classification …
The percentage of subprime mortgages in default is pretty much the same as all other classes of mortgage defaults…
thanks for the legwork, DL.
Q: What happens to a society that punishes good behavior (tax) and rewards bad behavior (spend)?
A: Naturally you wind up with more bad behavior. Good examples are Public Schools and Illegal Immigration. Gosh, it could turn out to be a lifestyle.
Now Bush wants to create a new example for us? Time for a tax revolt.
metsfan4004
My pleasure … just felt with all the verbage going back and forth it was time for some “facts” … lol
Like many of you I’m pretty fed up with Bush and this is the cherry on the sundae for me. Those of us who pay our mortgages on time, who didn’t go overboard on buying a house that technically we could afford but knew we really couldn’t, I’m just sick about this. We scrimped and saved and did without a lot to put 35% down on ourhouse but now I wonder what was the point. We got a giddy email this morning from our friends (don’t know how much longer we can take their idiocy) asking everyone to call the White House to thank El Presidente for his noble move and to call our Congress people to encourage this grand gesture. I wanted to send a nasty note back but put it in my drafts box because it is a small Army and my husband may be under her huband’s command again but this doesn’t make me happy that they may get a free ride off of my back (they got the interest only loan and put down nil for a down payment).
DL thanks for all your research.
One of the MAJOR problems is that the Federal DOJ has procecuted Equal Oportunity Lending violations based on not meeting Quotas for certain minorities.
Equal Opportunity = Equal Outcome to the DOJ at least.
Back off to a reasonable standard making “[proof of credit score and property stability of value} as the determining factors” and use provable use of those factors being accepted as legitimate defense against accusations of violations of EOL law; and many of the bad loans will stop being issued and many of the potential good loans not being offered due to insufficient minority offsetting loans…
Will no longer be a problem.
And that is a “bail out” that the Feds could do without it coming out of taxpayer’s pockets.
(No Corporate Pork!!!!!)
terrig said:
Being a former Marine that struck me because it means that since “her husband” apparently is higher ranking than “your husband” he makes a higher salary and should have been able to do what you folks did to get your house and do it easier on a higher salary
Here is an idea. Let’s give everyone a one time $100,000 to be used in financing a home. The risky folks can get out from behind the 8-ball and the people who sweat and save to afford a home can actually do something good - like getting rid of their mortgage.
Real tax breaks for homeownership would be great (The current interest writeoff is useful but the politicos would just love to kill it if they could). Just using my hard earned money to support some idiot who got over committed is not only stupid but insulting as I did the work to make sure I could afford the home I now live in.
I agree with most of the posters here who say that many of these borrowers should not have taken out some of these ridiculous loans. But make no mistake about it, this action is not being done to help out those people, it’s being done to help out irresponsible lenders and/or those who bought paper investments backed by subprime mortgages.
Some people love capitalism when it benefits them, but once the bill comes due they suddnely become the biggest socialist out there.
This is so irresponsible of W., as not letting the market correct itself now is only going to make the subsequent (and inevitable) correction all that much worse.
Same as the illegal immigration problem. The can has been kicked down the road so many times that it can no longer be dealt with without causing some significant pain.
Shortsighted iceholes.
AND the government actually encouraged lenders, to offer subprime loans to reach out to increase the number of low income homewoners(and Jorge Arbusto was on that bandwagon). They otherwise couldn’t afford to be such without the subprime loans, no doubt our leaders in government already had the idea of coming to the rescue when, nof if, things turned out badly.
I don’t own a home. Explain to us why me and all my neighbors in my apartment complex need to pay you $686 each so you can stay in your home?
Did Jimmy Carter’s base turn on him as viciously as I’m turning on Dubya?
It really does make me wonder what ARE we doing in Iraq? Not because I don’t see the logic in why we went in, and why we’re there. Rather, at this point I’m having a hard time agreeing with ANYTHING the POTUS is for.
I mean, seriously… if he announced tomorrow that oral hygiene was important, I’d have to seriously inspect my toothbrush just to make sure I still agreed.
Can this man do ANYTHING right?
… and the CEO’s of these aggressive lenders will probably still get huge bonuses for all those sales … they had little reason to rein in risk … (I’d guess)
You’re so wrong. It began with divestment. Read up on it.
So if I go to these urban areas, I will find that no people live there?
I ‘ve seen 15% swings in home values due to home forclosures. The bulk of these forclosure are going to occur in previously “hot” markets, so you will see large concentrations of forclosed property, that will affect home values.
Do me a favor and don’t insult me when I’m trying to have a reasonable discussion with you.
You keep saying this isn’t about divestment. Guess what? large clusters of forclosures (which this will be)cause property values to go down. Most people will not choose to stay in an area when their property values decrease (why would you continue to pay a $180k mortgage on a home that will soon be worth $150k, you wouldn’t). thus, the only people who stay are those that can’t afford to leave.
If you think that you won’t be paying more money in the long run for redevelopment of these areas than you have a very myopic view or you plan on dying soon.
Something that I might be misunderstanding, or it is suffering from thread drift here.
The mortgage problem is not foreclosure levels (as DL noted above).
It is that new loans are not being written.
When insufficient likely good loans from protected minorities (white females are not a protected class in this case) are not being written, then they will not offer loans to others due to fear of DOJ prosecutions.
When new loans are not offered, then people cannot sell homes because prospective buyers (other than good credit protected minorities) cannot obtain mortgages to buy homes (except for aforementioned gcpm) good credit or not)
Dubya is sure big on the the compassion. When are we going to see some conservatism?
When hashing over the defeat of the Stupid Party in ‘06 and their bleak prospects for ‘08, the Treason Media likes to tell us that the war in Iraq and various sexual and business corruption scandals were to blame. They never, and conservative pundits rarely, mention that a huge portion of formerly supportive GOP voters have been driven away by this “We’ll see your socialist pandering scheme and raise you…” antics.
Privatize profit and socialize risk - it’s the S&L fiasco all over again. Why bother taking responsibility for your reckless decisions when you can count on Uncle Sam to bail you out on your bad debts.
Closure levels are up 40% from fourth quarter 2004 to fourth quarter 2006. That’s 80,000 additional forclosures. the problem has only gotten worse since then, but we don’t have much data on it yet since forclosure is a several step process.
It gets worse when you consider that these forclosures are not evenely spread throughout the country, but clustered in previously ‘hot’ markets. Without help, these areas could have serious problems in the future (which I’ve noted, despite the fact that certain people refuse to acknowledge past problems) and would end up costing people a lot more of their tax dollars, than tax code and regulatroy reform, and education programs would cost now.
An increase of taxes pisses me off too, but given the choice I’ll take a small increase over a large increase. Remember, there has been over $1 trillion in wealth transfers since the war on poverty began plus hundreds of billions more on anti-poverty programs and community development block grants. We still haven’t fixed those problems yet, so why create new ones in new areas?
Once upon a time they taught basic economics in high school. Now of course it been replaced by Intro to Islam and English as a Second Language.
Stock bubbles, now housing bubbles, once upon a time Tulip Bulb bubbles - they are self-correcting. How the Dutch must have wished their government would take those $60,000 tulips off their hands…
FYI this tax reform is in fact a tax cut. I thought we conservatives (and yes, flesner I am a conservative), liked tax cuts?
I’m for the concept of laissez faire as much as anyone but I also think the government has a responsibility to see that the nation’s economy does not spin out of control.
Make no mistake about it, this is a large problem with widespread social and economic implications. Subprime and other exotic mortgage products have been sold for many years and by recent accounts there are seven-and-a-half million first-lien subprime mortgages outstanding and two-thirds of those are adjustable rate mortgages.
With mortgage rates going up and property values going down, many homeowners cannot make their mortgage payments, they cannot refinance, and they cannot sell their home to get out from under their debt. Having hundreds of thousands of mortgagors and their families lose their homes in a short period of time is not only bad for them, it is bad for the economy as a whole.
In addition, securities backed by these loans are now basically worthless. No one wants to buy them since the fall out rate of the collateral is unpredictably high. With the maze of risk distribution in the financial markets, the situation is choking the entire system and monetary policy solutions may only provide short-term relief and could cause other problems.
Saying that this does not affect you is like saying the stock market crash in 1929 did not affect people who did not own stock.
I don’t know about a bailout, but a widespread renegotiating of loan terms could allow people to keep their homes and allow lenders to recoup their principal and some interest income.
Placing blame for how we got into this is a separate issue and does not address the situation at hand.
That’s fine with me. Those areas also tend to be the ones where housing values were ludicrously inflated and needed the largest correction.
want a bailout? …
it is really quite simple …
a one time option to those truly having problems to extend their home loans for an additional 10 years at a reasonable interest rate with no adjustables or other options involved … requires conversion to a fixed rate mortgage …
just a simple lengthing of the mortgage contract to keep the payment amount at a sustainable level for the buyers … and at a reasonable rate of return for the mortgage providers …
make the longer contracts an option for anyone that needs it in the future as well … put the repossession agenda out of business …
no bail-outs from the government or anyone else …
everyone wins …
of course … this won’t happen … it’s not complex enough for the powers that be …
One thing not remarked upon is that a large number of mortgages and equity loans have been taken out to clean up maxed out credit cards. Accordingly, in order to move us into living within our means, I propose statutory interest rate caps on all borrowing and banning adjustible rate mortgages and teaser rates on all other loans.
Why? Because interest caps will force lenders to look more carefully at whom they issue their loans and plastic to, and that will be a good thing in the end. And such restrictions will not cost the taxpayers a dime.
Reason #4,821 why Compassionate Conservatism should be sent to sleep with the fishes.
Hmmm.
1. Falling home prices doesn’t lead to divestment. That’s utter nonsense. Falling home prices leads to home sales!
A nice neighborhood is still a nice neighborhood even if some homes are foreclosed. So that argument is just frankly beyond idiotic.
2. There are many different vehicles that allows prospective home buyers to get a few years of low payments followed by balloon payments and/or the risk of higher interest rates. Smart people do not take these options lightly because they’re so dangerous.
And if you do take this option and it bites you on the ass then it’s your problem.
3. There is NO definition of the term “predatory lending”. So if you’ve got a definition then you need to provide a link.
Otherwise the definition of “predatory lending” ends up being whatever tends to support your arguments. Which is patently transparent IMHO.
Hmmmm.
You bail out these idiot homeowners and you’ll have to bail out the next set.
And the next.
And the next.
And the next.
And the next.
And the next.
And the next.
And the next.
And the next.
And the next.
And the next.
Hmmm.
@ taylork
1. Then those homes weren’t *worth* the mortgage amount to begin with and are little more than hyperinflated properties.
2. Just because your home prices fall doesn’t mean that it’ll affect me. All real estate markets are local/regional. Your problems are not my problems, so why should I have to dig into my pocket for you?
Want a bailout? Ask your state or local government but leave the federal out of it.
3. So let me get this straight. A house has a mortgage for $180k and it’s prospective value drops to $150k and now you’re talking about people moving out?
Really that’s just silly. You’re trying to tell me that a family living in a home will suddenly pack up and leave the house, adding another $10k in moving and relocation expenses, because their house temporarily dropped in value??
No taylork that’s not how it works. People living in a home that has temporarily dropped in value continue living there if they can afford the payments because it’s generally a better financial decision than renting. For most people the relative current value of a house is important if they’re looking to move ALREADY. But if they’re living there with no plans to relocate then the current value of a house is largely irrelevant.
The only group of people who have any special interest in the current valuation of a home vs the mortgage are speculators looking to profit off of home sales.
And quite frankly I couldn’t give a rat’s ass about them because they should be smart enough to know when not to do things.
There is no legal definition, you are correct. But there is a commonly accepted definition. You can eithe look here http://www.investordictionary.com/definition/predatory+lending.aspx or here
http://www.knowledgeplex.org/kp/text_document_summary/article/relfiles/hot_topics/Carr-Kolluri.pdf
Again, I say to you take a close look at neighborhoods in Balitmore, Philadelhoia and New Orleans. Once nice neighborhoods are in total ruins.
Falling home prices leads to home sales, yes, but falling home prices occur where there is an excess of supply or a lack of demand.
In the case of forclosures a large amount will depreciate the costs of surrounding homes.
Think of it this way. Ssuppose me and 20 of my neighbors all get homes with the same mortgage term. Let’s say that it’s $200k over thirty years. 10 of them forclose. This brings the value of my home down to $175,000. So now I’m paying off the interest from a $200,000 loan, when my asset is only worth $175,000.
I have two options here. First, I can stay in my home and hope the market recovers. Hopefullyy, my family doesn’t get bigger and I don’t need a larger place to live, otherwise I’m stuck with a $25,000 difference to pay off, (depending on how much principle I paid, which is proabaly not that much in these situations).
Option two is to sell my house while these other homes are in the process of being forclosed. The market is going to react to the decreasing property values in my neighborhood and there will not be nearly as many people looking to buy my home. I then have to sell my home for less than the mortgage is worth.
Either way, I got screwed, even though I paid my mortgage on time.
And what happens to the homes that have forclosed? If you’re luck, then they just sit their until someone buys them up. But in urban areas with high crime rates and high levels of drug abuse, there’s plenty of oppurtunity for unsavory characters to move in. (Most of you will say I’m idiotic for suggesting this happens, but I see it happen every day).
The fact of the matter is the forclosures do not happen in a vaccum. Even if you are repsonible you will get affected, either through higher interest rates when you ask for a loan, or through decreased property values if you live near a bunch of foreclosed homes where the market is now weak.
To call this thing a bailout is a minomer. It is a tax break to help people pay off the rest of their mortgages.
As I said, nothing comes out of your pocket, the government simply collects less revenue.
Isn’t that between the borrower and the “borowee”? Doesn’t involve a gov. bailout.
My son and I were out on the range today keeping up with our Second Amendment duties working on our breathing control and aiming exercises (kid had a pretty good grouping going on this morning). Have been off the media and net until now.
I am outraged he wants to reward irresponsible behavior with our tax dollars. I guess he didn’t learn his lesson on Amnesty. Does he fill so bad for Congresses approval rating that he is determined to destroy his until it is below theirs? Someone please show me where it states in the US Constitution the Federal Government is responsible for supporting the housing market. I just scanned my copy again and don’t see it mentioned anywhere.
The only thing I see this President “get it” on is the Global War on Terror.
It would be idiotic to pay another 25 years worth of interest on a home that isn’t worth the amount of the loan.
And not everyone can just wait for the market to recover. The pre-Katrina market in New Orleans was going down for over 20 years. It took over 20 years for neighborhoods in Baltimore and Philadelphia to see rising values again.
Not everyone can wait that long.
#64 Yes, DL he is a LTC and my husband just got on the list for promotion to Major. These people lived on post when we he commanded my husband and every other weekend they were flying to one of the outer islands (we were in HI) and staying at the finest hotels bought brand new Escalades for themselves and a mini cooper convertible for their 16 y/o and paid to have two of the vehicles shipped and placed on trucks to FL when they returned. They spent money like the proverbial drunken individual on leave and this is the first house they bought. They got this house in Tampa and really went overboard. We visited them when we were home in FL visiting my parents and we couldn’t believe the size of this house and it was furnished with brand new furniture from Ethan Allen plus they re-did the kitchen with Viking Range appliances. I would love to have a Viking range myself but know that won’t happen anytime if ever. They are living on a street where there are a lot of people with a lot of money. We can’t figure out with what he makes why they’re in the financial trouble they’re in. But they’ve always been spenders since we have known them and my husband was a 2nd LT the first time he met him. So, we may meet them again.
It does make one wonder though.
Hmmm.
@ taylork
1. Nice definition of “predatory lending”.
I prefer my definition though:
Predatory Lending:
The process of lending money to people who cannot abide by the principle that, if you don’t understand the wording of a contract, then don’t damn well sign it.
2.
Sorry but you just moved the goal posts and I have no intention of allowing you to do so.
Your previous posts all asserted that crime followed foreclosures. Now you’re trying to twist it around so that a *combination* of high crime and foreclosures are the problem.
No taylork you don’t get to do that.
Like I pointed out. If you’re living in a home that temporarily drops in value then that doesn’t mean anything at all because most such situations the homeowners would continue living in that home. And crime does not necessarily follow foreclosures except and unless there is a propensity for crime to already exist.
And in no such situation as you have outlined is there anything requires *federal* intervention. If specific neighborhoods have issues with blight brought about by some strange confluence of foreclosures then that’s a job for either the *local or state governments* to address.
Not federal.
Hmmm.
@ taylork
Assuming of course that the drop in value isn’t temporary. But a nice neighborhood is a nice neighborhood by definition. Also by definition a neighborhood inundated with prostitution, crack houses, carjackings and armed robberies *isn’t* a nice neighborhood. And if you’ve bought property in a crappy neighborhood then guess what?
That’s reflected in the price you paid for the property.
And why was that? Because many of the houses sucked. Because of the rampant local corruption. Because living below sea-level is rather dumb. Etc etc etc.
Those housing values didn’t drop quickly because of a few foreclosures, which is YOUR SCENARIO SO STICK WITH IT, instead those falling values reflecting increasingly violent crime.
Frankly you postulated one scenario and have now invoked at least three others in an attempt at spinning. This does nothing for your argument and quite frankly if this is all you have then I’ll simply won’t bother continuing on. Instead of providing some sort of logical proof that supports your original assertion you’ve now all over the spectrum. It’s not working.
So if you want to continue then please review your position, restate it if necessary and prove your point.
You say that but the federal government is already spending billions in communtiy development block grants. Not to mention every other social program for these areas.
You act as if i haven’t given you concrete examples of cities where this is gigantic problem.
And as I keep saying, this is a tax break to allow peoplet o pay their inflated mortgages off without that getting considered taxable income. Nothing comes out of your pocket.
Would you have advocated a federal government bailout for New Orleans pre-Katrina? What about Baltimore and Philadelphia? If so, why? If not, why?
terrig
I suspected as much … I think it would be safe to say they are on a Champagne diet and a beer budget …
Take care and may your husband and all the rest of our brave men and women be safe in their defense of all of us …
Thanks to you all …
The president said the administration is working to help homeowners avoid foreclosure and to ensure that the problems now disrupting the housing industry do not happen again
FYI all these programs don’t even affect the people who have already forclosed. So this hardly counts as a bailout for them or the people that lent money to them.
Hmmmm.
@ all
Why stop with bailing out current homeowners? Why not implement the *pre-bailout*?
This is where all levels of government gives sweetheart deals to renters so they can finally afford a house.
That’ll stop those nasty crime creating foreclosures.
Jeez. On that note, have a nice weekend everyone.
By giving hundreds of billions through programs such as Community Development Block Grants, HOME funds, and HOPE VI funds, they are already getting a bail out. Besides, most of the people are long gone and even if you could bail them out, you probably couldn’t find them.
taylork and Memomachine
The federal reserve links I posted in #58 talk about the fact that mortgage lenders have been actively working on solutions to the defafult problem for their customers since the end of last year …
so … why do we suddenly need to bail anyone out when the lenders themselves are already working on exactly that with their customers … nothing more than an over-reaction to Hillary crap as far as I am concerned …
Hey, government, I need help here with this place! Oh, and can you send one ( or 2) of those neat debit cards too? I would really like a nice 60 inch plasma tv…or a car. No…hold on! Listen I need help with the credit cards too! Yeah, great, thanks!! Oops, hold on a sec. “Wife, get to the bank, pronto, and withdraw that nice savings account.” Oh, yeah, while we’re on a roll here, how about HillaryCare? Okay, government, just sitting here, waiting for the checks. Liberty? Who cares about Liberty! I’ve got government checks coming in. Again, thanks!!
You didn’t answer my question.
Would you have advocated a bailout of those communities (you can include the programs you listed under your definition of bailout)?
Probably so. Probably a preemptive move to redirect political donations from that industry from Hillary’s pockets to republican pockets, courtesy of Bush.
You know what USMC stands for, in the Marines?
U (you) Signed the M@+#@&!”$*-ing Contract
If you bought a house you can’t afford…USMC
If you bought a house you could afford, but it was seriously overvalued…USMC
If you were foreclosed on, or are about to be foreclosed on…USMC
If you did not take the time to read the details of what you were signing, or ask about how this loan for a $700,000 house was going to get paid for, when you only made $44,000/year…USMC
If you feel that you were cheated or lied to, take the bastards to court, but remember…USMC
But for God’s sake, don’t come asking me and the other tax payers in the United States to bail you out of your bad decisions. I didn’t make you sign things that you couldn’t afford. I won’t get a piece of your house when you sell it.
Just remember: USMC!!!
It’s not an investment, it’s a home. A home many of us can’t afford now because idiots like yourselves were in for a quick buck, and succeeded in destroying a market you shouldn’t have even entered.
I shed no tears for you. Now maybe you’ll understand how to say “no” when someone offers you a deal that is too good to be true.
So what? Did *salaries* fall during those same 20 years? If not, then tell the people who bought those homes 20 years ago “you made a bad decision - suck it up and get on with it.”
If you sell your house for a loss, that’s your business. Don’t ask me to bail you out.
If you made a bad decision and are the only person in your neighborhood making high mortgage payments? Thems the breaks. If you stay long enough you’ll break even. Or not.
This is, btw, essentially what life is like in areas like suburban Buffalo, NY. Housing values there grow so slowly, if at all, the people are happy if they make enough after 5 or 10 years to cover their closing costs and realtor fees. These houses aren’t being foreclosed, because the people buying them aren’t taking idiotic loans. Low, or even zero, housing value appreciation does not lead to foreclosures.
Barring true hardship like catastrophic illness that renders a family destitute, foreclosures are directly correlated to the stupidity of the borrower.
The current “crisis,” and please correct me if I’m wrong, essentially due to people borrowing money that they couldn’t afford to borrow.
The vast majority of them can’t afford it because they foolishly entered into a loan that was basically a bet. Regardless of the specifics, and there were several different instruments being used, these people were betting that either the market would rise forever, or their salaries would balloon. If that’s not the dictionary definition of “Idiot,” I don’t know what is. They entered into loans that they can’t afford, foolishly. Free people have a right to be fools. Why are you trying to have the non-fools indemnify them?
The press will focus on the small percentage of people who truly fell upon bad times, and for every 90 idiots there ARE 10 people I’d like to help. Unfortunately, we are no longer allowed to legally differentiate between the parent whose spouse died of cancer, leaving them destitute and about to lose their home (and whom I’m FINE with helping), and the imbecile who got into a ballon-loan that they couldn’t afford, betting on the come.
… as well as stupid/greedy lenders lending money the should not have lent. In many cases, the lenders knew (or should have known) they were making risky loans, but like the borrowers, they too deluded themselves into believing everything would be paid back just fine.
And are now working hard with both Hillary and George to see that they are paid back just fine - but by us, and not the borrowers.
There is more to this that I don’t understand … it has to do with the derivatives market. The players leverage against the imaginary value of this inflated and risky housing market … and if they are heavily leveraged (LTCM leveraged 300:1) then the real risk is not just the inflated value … it is all that “money” that has been put into play backed only by thin air valuations.
That is my vague understanding. These derivative markets involves many trillions … if i am getting it right. Feel free to clear that up for me