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2. Don Surber » Blog Archive » Stimulants are harmful to the economy
3. This ain’t Hell, but you can see it from here » So, who’s the party of fiscal responsibility now?
4. Right Voices » Blog Archive » Stimulus Package: IN= Allowing Fannie Mae and Freddie Mac (FRE) to buy loans larger than $417,000..Out=Permanent tax cuts
5. Michelle Malkin » Another massive mortgage bailout is on the way
6. Michelle Malkin » Time for responsible Americans to speak up: Say no to the $300 billion housing bailout

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Comments

1. #1
   On January 18th, 2008 at 8:42 am, ACHefty said:

   Simple concept: Personal responsibility.

   Difficult to apply if you choose to ignore wisdom.

2. #2
   On January 18th, 2008 at 8:44 am, DaMav said:

   I have experience in real estate as well, primarily commercial but occasionally with single family residences. As an agent I found it incredibly discouraging to lose business and money pointing out the downside risks to some borrowers who used any gimmick they could including outright fraud to buy that big house. A word of caution on my part was all it took to send them to competitors eager to push them toward higher risk. Nobody was minding the store. And the industry was increasingly relying on drive by appraisals by agents and shunning the more expensive full appraisals.

   It is extremely frustrating to think that the market will now be distorted to make the rest of us pay for the greed and foolishness of others. And the damage won’t just be for the short term. If people think the government will bail them out of high risk purchases, what will that do to discourage high risk buying in the future? And who is going to want to lend money if the govt unilaterally decides you can’t collect it? Some of the proposals out there are downright frightening to investors.

   The economy may well need a stimulus. But it ought to be done in such a way that people are not rewarded for bad judgement.

3. #3
   On January 18th, 2008 at 8:46 am, Boomer said:

   Michelle,

   Thanks for sharing the comments you received from folks in the home lending industry as well as those that live responsibly within their means like the rest of us who are outraged by this bailout plan. I remember reading a sob story from the Monterey, CA area about a strawberry picker (of questionable citizenship) making $14K a year and qualifying for a $750K home. You know there was some collusion going on between the lender, agent, and buyer as they were flipping these homes as the value continued to run wild, but now they are caught red handed and want the government through our tax dollars to bail them out. I feel the same about those that used their homes as ATMs to pay for their toys and vacations via credit card or home equity loans while the rest of us went without.

   I will be firing off some angry letters to my Congress critters to let them know I do not want any legislation passed to reward irresponsible behavior. This is not only immoral by not letting the guilty suffer the consequences of their poor choices, but is unfair and down right criminal to those of us who have lived within our means to have to foot the bill now that the party is over.

4. #4
   On January 18th, 2008 at 8:48 am, shimauma2 said:

   Simple concept: Personal responsibility.

   NO!! I thought the government was supposed to be in charge of that!? I honestly have no sympathy for foreclosures when I’ve been paying increased rent for a crappy apartment the last four years waiting until I could AFFORD a decent down payment on a home ($20,000)and the idea that my hard earned tax dollars might go to these WHINERS is making me want to puke….

5. #5
   On January 18th, 2008 at 8:57 am, DilbertFan said:

   OK, I am a VET and used a VA loan. Locked in my interest rate, afforded the 15 year mortgage. My monthly payment has stayed at $1380 and I turned in my notice at work, in 13.5 years when the mortgage is paid I am retiring.
   I looked at my income first, then housing prices, then mortgages. Fixed rate seemed the best long range plan.

6. #6
   On January 18th, 2008 at 9:20 am, jsr said:

   Instead of bailing out these lenders and borrowers, we should be looking at throwing some people on jail for fraud. They way these loans were approved, as well as the intentional deception when providing stated income and assets was literally criminal. Twenty years ago people were prosecuted for this type of activity and quite a few served time.

7. #7
   On January 18th, 2008 at 9:20 am, trinitytim said:

   When each of my kids bought their first homes, my “advice” was quite simple. “You will NOT borrow any money using an ARM and your payment will not exceed 30% of your take home income”

   I’m happy to report that all 4 kids are in excellent financial condition. No bailouts required.

   Gimme!!! Gimme!!! Gimme!!! Not from me thank you. You created your problem, now YOU deal with it.

8. #8
   On January 18th, 2008 at 9:21 am, max said:

   JSR:
   Caveat Emptor baby!

9. #9
   On January 18th, 2008 at 9:31 am, hatelibs said:

   Michelle,

   I handle residential mortgages and I’m right there with you. I had these high risk programs available to be but I refused to originate them. I had a number of borrowers who wanted those “option pay” loans even after I explained how dangerous they were so I nicely told them to apply with another lender. I have been predicting the Armageddon that we are seeing because it was painfully obvious this would eventually happen.

   There’s a big difference between certain borrowers who can’t prove their true income but have excellent credit and people buying light years above their means with gimmick products that come back to bite them causing a default. There were also people who should never have been given a loan in the first place. Another big factor fueling this problem was speculators driving up prices (for everybody) way beyond reality who are now just walking away and driving down valuations that hurts everyone. Throw in people leveraging properties based on over inflated values that now have mortgage balances that exceed what they can sell for and you have a huge problem.

   There is plenty of guilt to be tossed around here including tax laws allowing lenders to book negative amortization as income but finger pointing won’t turn the tide.

   The biggest villain is greed and irresponsibility. A taxpayer funded bailout IS NOT the answer. The marketplace will sort itself out without the government making a bigger mess and setting the stage for future bailouts. Lenders are getting it handed to them but will figure out ways to work with troubled borrowers. A credit worthy borrower will find a way to work through their situation. People who had no business buying a home they had no prayer of affording will lose the mansion and come back to earth.

   Cooperation is the best solution not a bucket of taxpayer money!

10. #10
    On January 18th, 2008 at 9:37 am, docduke said:

    Michelle,

    I’m sorry, but you and your readers still don’t get it! We have a really important program under way. We are saving the future for ourselves, by creating a completely dependent underclass. Our program consists of two equally important elements. One is rewarding those who are greedy, don’t think, and come to us for handouts and bailouts. The other is punishing those who don’t follow our directions. We really can’t tolerate people who think, show restraint, and plan to take care of themselves. We must punish them! After all, they could threaten our future!

    You need to get with the program. Restrain your thoughts. Emote! Take your alotted share from the government sow, and thank your masters!

    Signed,
    A Happy Piglet

11. #11
    On January 18th, 2008 at 9:42 am, Barry F. said:

    Simple concept: Personal responsibility.

    Agreed, AC. The problem is, no one is willing to be personally responsible.

    At one time, the Republican Party used to push for personal responsibility in its platform. But, the Republicans aren’t looking too different from the Democrats now.

    My wife and I have stayed put where we are now. Granted, we would like to buy a new home. But, our goal is to save up money for a good down payment and make sure our purchase is within our means.

    Maybe we should have been an irresponsible home buyer and bought something above our means, so we could get bailed out by the federal government. But, it just isn’t in me to have done that.

12. #12
    On January 18th, 2008 at 9:44 am, jfish said:

    The deal here is that for many of these loans, it’s not a fraud issue. The lenders in most cases did not commit fraud by lending more than they should have; what they did was assume risk.

    It is not fraudulent to give someone a $250,000 loan when you’re pretty sure they can only afford $200,000, but it is risky. It is a calculated risk that of the 100 times you do that, most of the borrowers will get to a point where they can make the payments (promotions, second jobs, whatever). The lender’s assumption, then, is that the money coming in on these transactions is enough to offset the ones that fail outright. If you only loan $200,000 to those that can afford $200,000 you’ll have low risk: most will pay out, with only special cases going into foreclosure. At $250,000, the lender knows full well that many more will end up in foreclosure but it is the lender’s assumed risk.

    At no point should it be anyone else’s problem. As many of the letters noted, people got quite wealthy with the overpriced market: we didn’t ask them to share the profits when those risks paid out, we certainly don’t expect to cover their losses when the risks bite them all in the a**!

13. #13
    On January 18th, 2008 at 9:49 am, Old Tanker said:

    I believe I read somewhere (sorry, no link) that as much as %70 of the mortgages that are being foreclosed on had applications with false information on them (from the buyers themselves)

    Shame on the lenders for not checking thoroughly enough and shame on the buyers for lying on their loan apps.

14. #14
    On January 18th, 2008 at 9:54 am, jfish said:

    @Old Tanker,

    I read that 70% somewhere recently, too. Shame on them indeed, and if they lied, all the more reason that they don’t deserve one red cent from any other American out there. Shouldn’t lying be punished, not rewarded?

    Wow, my kids would love it if they got rewarded for lying! As it is, they almost never try to hide stuff or lie about stuff, because they know it’s not tolerated when they get caught. Don’t see how that principle should be any different here.

15. #15
    On January 18th, 2008 at 9:57 am, Michelle Malkin said:

    I believe I read somewhere (sorry, no link) that as much as %70 of the mortgages that are being foreclosed on had applications with false information on them (from the buyers themselves)

    You read it quoted in my column and on this site.

    Here’s the link.

16. #16
    On January 18th, 2008 at 10:01 am, Mister P said:

    I had an 8 1/2 % 3 year agreement of sale. When the 3 years were up mortgage rates were up to 17 % and I couldn’t qualify for a new loan. I lost my equity in the house (can’t lose a house you don’t own). It was a tough lesson, but one I learned.
    These people have it much easier today with 5 1/2 % loans.

17. #17
    On January 18th, 2008 at 10:10 am, graysonret said:

    Well, I think we all know that any bailout is completely unconstitutional, but who cares these days? Take my liberty, take my independence, take my self-esteem and self-respect, so I don’t have to think for myself or compete in life. The heck with human initative and desire to succeed. Let Nanny government take care of me…womb to tomb. And, yes, let’s punish those who do show initative and success. Such is the state of affairs, this country is aspiring to be.

18. #18
    On January 18th, 2008 at 10:10 am, Marshall Russ said:

    Just about everyone you talk to about their loan will tell you that did some “creative” things to qualify. And they did it at the encouragement of their agent/broker. Getting a buyer in the door of that big beautiful home was all that mattered. When I was in real estate it was finding a willing and “able” buyer. Lots of the willing, the able part was the problem.

19. #19
    On January 18th, 2008 at 10:12 am, Old Tanker said:

    On January 18th, 2008 at 9:57 am, Michelle Malkin said:

    Thanks. Now that I see the NYT article I recall that I heard it on a local radio Realty show and they were referencing the Times. Sorry, I didn’t read your earlier article.

    /Vows to be more diligent reading MM’s website…….

20. #20
    On January 18th, 2008 at 10:13 am, hatelibs said:

    Lenders absolutely do assume the risk. But, borrowers promise repayment and that is their responsibility. Whether there was accurate documentation (if any) or out and out lying through their teeth, the borrowers still signed all disclosures and a Promissory Note to repay the loan. Lenders are paying a very high price for the risk they took on. I do question wisdom of taking on the high risk loans but that pain is already beeing realized in a big way.

    There’s nothing wrong with making the process less intrusive with simple documentation or even limited documentation to credit worthy borrowers. Those are not the loans going bad for the most part. People with lousy credit and people who took out ridiculous loans they couldn’t ever afford (but PROMISED to pay back) so they could buy the “mansion” are the core of this problem. Too many people these day also have to drive the expensive car and have no control over their spending. That leads to being buried in debt. Couple all that with people thinking that their home would always appreciate enough to cover the debt, the negative amortization, the new kitchen, and so forth and you have a serious problem. That is individual stupidity and not the fault of lenders.
    Remember this problem is much more than bad mortgages. The mortgage lender can’t
    control borrowers after the loan closes.

21. #21
    On January 18th, 2008 at 10:38 am, On-my-soap-box said:

    I bought my house with an ARM. Oh, it was when Jimmah Carter was President and mortgage rates were 16% That is the time to buy an ARM - when rates are high. When mortgage rates finally came down, I refinanced at a fixed rate. Did it all right and now, I am expected to bail out id10t’s.

    Sheesh

22. #22
    On January 18th, 2008 at 10:41 am, drfredc said:

    This housing crisis is well covered by the Bill of Lefts.

    1. Thou shall be secure in the faith that government will take care of you. Everything is free as long as you don’t work for it. So you are best off not working at all or as little as possible.

    2. Government shall never take away anything it gives you. However, it may take away anything you earn on your own.

    3. There shall be plenty of mandates on the other guy. You are safe as long as you choose do as little as possible — then government will not ask you to do anything in return. Whatever you do, don’t ever think about employing someone.

    4. Bubbas who hang out together can get most anything they want as long as they promise to vote for left wing Democrats.

    5. Government can always raise taxes on the rich because success is just not fair no matter what the tax rate.

    6. Deficits are a part of life, but that is only a problem for those with money. If the government gives you a credit card for health care or anything, use it as much as you want. The more you use it, the more free things you can expect to get with it in the future.

23. #23
    On January 18th, 2008 at 10:42 am, StacyH said:

    Adjustable rate mortgage.

    Unless someone signed a piece of paper without asking what ARM stood for … no one is to blame for this “crisis” than stupid idiots.

    Essentially, an ARM is a credit card with zero APR for 5, 7, 10 years, only in the reverse.

    The thing that got me about them, was for the first 10 years I owned the home (I use the term “owned” loosely) I was only paying interest, and not putting anything toward principle. In 10 years, on the off chance I wasn’t able to sell the home and had to refinance, I would be refinancing from the very beginning, as if I hadn’t paid any money for the last ten years.

    To my mind, it was like renting the home from the bank, only with way more risk, because unlike renting, I’m responsible for the entire cost of the home.

    And since you were only paying 4.5% on your $300,000 home, you weren’t making the bank any money either. So when you refi, you were certain to see a huge hike so the bank could make back the money they’d lost in the first ten years. To me, it was the bank saying, we won’t make any money on this now, but in ten years if you still own it we’re going to want our money back.

    Adjustable rate mortgage. No one lied about what they were. Anyone with half a brain, looking at the most expensive price tag most of us will ever pay, should have run scared from them.

    Like we did. 6.25%, 30 year fixed thank you very much. Our house is 1800 square feet and it’s beautiful. Every time the lender said … “but you can save money with the arm …” I said, “But I can afford this house. So I want the conventional loan.”

    Every time. And he brought it up more than once.

24. #24
    On January 18th, 2008 at 10:56 am, mike volpe said:

    Michelle,

    you are doing a great job on this however, you are missing something very important. The bailout isn’t merely unfair, but counter productive.

    I work in the business and I am convinced that most of the folks that are in trouble aren’t going to be saved by anything. They simply bought way over their heads. This isn’t merely a question of fairness, but ultimately an issue of throwing good money after bad. This policy will only perpetuate and further the crisis. What needs to happen is for these irresponsible borrowers to be weeded out by the market.

    There is no doubt and element of class warfare here. I totally understand each and every borrower that has been responsible and is now angry that the irresponsible ones are being helped, however there is a larger problem. This help won’t save them. These bailouts will only extend the crisis. Here is how I wrote about it.

25. #25
    On January 18th, 2008 at 10:56 am, sharinlite said:

    And, lest we forget, there are now computer “word” programs and programs that can create anything under the sun. Fraud?
    It existed back in the 90’s, but this last bit of time was really something else!! We need to understand that if we elect a Democrat, we will certainly complete the Nanny-government they have been trying to implement forever!! What to do when so many people have become so greedy and stupid in the process? Subprime came at a particularly great time for them, didn’t it? The brainless will rush to the ballot box to put in the politicians that support them.

26. #26
    On January 18th, 2008 at 11:01 am, judybeth said:

    Economics 101: Not more than 25% of one’s monthly income should be allocated for housing! Sadly, city and county governments have approved every home developers’plans to build overpriced homes on postage stamp size lots just to increase local tax revenues for services and for school districts! I know, because my county alderman is useless in fighting over-development! My friends and I have spoken-out at meetings, to streets departments, to sewer companies, to fire/ambulances district reps and presented our findings to County Council members. We are ignored. The Attorney, who represents ALL of the developers, always has the last word! I am a soil expert, and even engineers have agreed with my findings about the impact of run off near established neighborhoods! Who are the WINNERS? Developers! Losers? The home buyers who irresponsibly over extended themselves (buying new or over-priced older homes) and NOW the responsible citizens who will end up “bailing-out” the housing developers who have saturated the market with “inflated prices” for homes and the lenders who financed the short-sighted, irresponsible buyers!

27. #27
    On January 18th, 2008 at 11:06 am, dedalus said:

    I agree that the market should punish bad investors whether they are buying stocks or homes. With the recent 2,000 point drop in the Dow and significant drops in real estate prices in some regions a lot of money will be lost by individual investors.

    However, there is a “too big to fail” dynamic that Bush is dealing with. The sub prime mess has spread to other parts of the economy and is affecting consumer and business lending. During an election year if Bush is perceived as fiddling like Nero while the economy slides into recession and foreclosures continue to rise, you not only get a Democratic President in November but Democratic President with a Democratic congress and a mandate.

    Herbert Hoover championed “rugged individualism”. I agree very much with the idea. But Hoover lost to FDR in 1932 and the result was The New Deal. Hillary could use Bush inaction as an excuse for even greater government intrusion into the economy and private lives.

28. #28
    On January 18th, 2008 at 11:20 am, walterc said:

    I must be missing something here. Due to a failed business in 2002, 2 years ago we had to buy our house using an ARM with a higher fixed rate for 2 years with a 2 year prepayment penalty. The two years was up this past November and two weeks later I refinanced to a 30 year fixed. Knowing that the rate was going up substantially in 2 years, we spent that time getting our credit score as high as possible, and improving our financial situation to increase our refi options and to absorb the increase if necessary. The value of the hosue has increased some 50k in that two years so now, my mortgage is less than 70% of market value and my payment is less than it was before.

    Have house values dropped that much that none of these people can refinance? Or have they not spent the past 2 years improving their credit scores so they can’t qualify for a fixed refi? Did they not know they were facing a major increase?

    I just don’t understand the situation.

    With the exception of Michigan which is dealing with some serious unemployment issues and a glut of available houses, what is the cause of the value reductions in other parts of the country?

29. #29
    On January 18th, 2008 at 11:23 am, Cadman said:

    hmmm, anyone think we could get cars covered in this bailout?? I always wanted a 69 cobra

30. #30
    On January 18th, 2008 at 11:32 am, DanME said:

    All I can say is, we need to flood DC with emails just like we did on the immigration issue. The NANNY STATE is in full view this week. PERSONAL RESPONSIBILITY has been removed from the dictionary.

    Now we have to buy people’s fuel, pay their mortgage, buy their food, give them wage insurance, and on and on.

    I keep chuckling about the video of that dumb congresswomen from Ohio who didn’t even know the difference between the Fed Chair and the Treasury Sec. These are the people “leading” our country.

31. #31
    On January 18th, 2008 at 11:32 am, Eclectic said:

    INMO, one of the very biggest problems in society today is a complete lack of responsibility. “If I make a mistake, it’s your fault and not mine, so there.” Where’s the logic??? Such a society cannot last long without severe consequences!

32. #32
    On January 18th, 2008 at 11:33 am, Eclectic said:

    Oops, sorry - that should’ve been IMHO. I’m still new to blog abbreviations. ;0)

33. #33
    On January 18th, 2008 at 11:35 am, Eclectic said:

    On January 18th, 2008 at 11:32 am, DanME said:

    All I can say is, we need to flood DC with emails just like we did on the immigration issue.

    Since Pres. Bush is so heavily involved, is it possible to flood the WH, too?

34. #34
    On January 18th, 2008 at 11:35 am, madchef said:

    Alot of these people not only bought more house than they could afford, they also over extended themselves further by having to have the BMW for the wife & a Mercedes for hubby in the drive-way. Through in the Plasma T.V. and The I-phone and then scratch their heads when the bills come in.
    I’ve paid off the home that I bought in 1977 many years ago and drive a 10 year old Honda that runs like a champ.
    I am a happy man.

35. #35
    On January 18th, 2008 at 11:41 am, jwm said:

    I get really annoyed about the politicos talking about a bailout for people who were greedy, too lazy to do their homework before signing a loan agreement or who just want the government (which really mean taxpayers) to pay for their bad investments. I knew what I could afford when my wife and I bought our house 6 years ago and we got a 30 year mortgage with a fixed rate even though the real estate agent and the lender were telling us how much more house we could get with an adjustable loan. Now, because I used some common sense. Now, I expect my taxes to go up to bail out people who don’t have to pay for their actions. I guess law abiding middle class people will be getting screwed again. This country has evolved from the land of opportunity to the land of entitlement-si habla?

36. #36
    On January 18th, 2008 at 11:46 am, mike volpe said:

    Walter, the simple answer is yes.

    The problem is very layered. Folks bought homes they couldn’t afford. They perpetuated the problem by refinancing, mutliple times often, and using the new found equity, as real estate increase, to take out cash. Thus, many of these folks continued to increase their loan amounts to new increased real estate values. Now that values have dropped their loans are much larger than the price of the property.

37. #37
    On January 18th, 2008 at 12:07 pm, Blind_Mule said:

    Bait: Refund’s

    Swithch: Bail Out and more entitlment’s

38. #38
    On January 18th, 2008 at 2:15 pm, Common Sense said:

    We are struggling financially. I’ve always been our main breadwinner and I was caught up in the “dot-com bubble burst” and unemployed for 18 months a few years ago. We managed to keep our house by using savings, but that has left us with no savings. Even though I am working again, it’s for much less pay so we struggle to pay our bills from month to month. My husband also makes less than he used to. We have no credit cards or car payments, but costs in general are much higher - food, gas, utilities. Our only luxury is to try and keep our teenagers in their dance, sport, and music activities.

    The mortage used to be less than 30% of our income, but isn’t any longer. Selling is not an option in the current housing market, there are a lot of houses in the neighborhood that have been for sale for a very long time.

    We just live from month to month. If we can make it just 4 more years, the kids will be on their own and we should be able to breath a bit easier. They already know they will have to work or get scholarships for college. If that means community college, that’s just fine.

    However, I will never look to the government to bail me out. We made our choices and have to live with them. We could allow our house to be foreclosed on, but what would that gain us? Lose our equity? Spending even more for rent? Disrupting our children’s lives? So we don’t go on vacation or have iPhones or plasma TVs, and I’m driving a 1993 Oldsmobile. And we’ve never worn designer clothes, Walmart has always been good enough for us.

    We still have more than most people in the world.

39. #39
    On January 19th, 2008 at 6:36 pm, corona said:

    great letters - ’nuff said