[jjameson922]

Here's another point and aspect to consider. I agree with everyone who is unsympathetic to the investor and speculator who gambled and took on more than they could not considering a downturn. Then industry does a flip flop, particularly the auto industry with it's use of steel, and thousands of workers are put out on the street. My husband's job hit the bricks exactly one year ago. We are still in the rust bucket where possibly only 2 jobs a week hit the want ads and those are for tatoo artists or phone solicitors. Our house has been on the market for 5 years now and is reduced $50,000 from what we paid for it. Approximately 2 buyers a year go through it because there is no housing market left here. Our total monthly housing costs take almost 70% of our monthly income. When this began, our FICO was 830 and today our FICO is still 830. It's a terrible way to exist; make house payment, property taxes, HOA fee, pay insurance and get to buy whatever one can in groceries with whats left. If there was employment or a housing market to sell in, there would be no problem. I can't wait to make my bank call this morning and hope to God our loan is backed by either Ginny or Fannie and allowance is given for the total cost of housing being out of whack.

Also, are you aware that many innocent seniors very likely will be losing the pensions they paid into for a lifetime because the funds they paid into were misguidedly directed into funds that are now worthless? What happens to these people?

[airics]

Originally Posted by ClarkGrisowld

People will still be a little underwater or close to breakeven, so it's not like they really gain anything. Just basically wiping out a loss that otherwise would have been wiped out in bankruptcy court. Which really makes this another bailout of the lenders and financial institutions.

If i am reading this correctly, i think you are assuming that they are going to lower the principle. They are not. What they will be doing is lowering the interest rate and extending the terms... If you can't fit into the bracket (not enough income, etc), i think you will still lose the home.

If they lowered the principles just for those behind or in foreclosure, don't you feel that the ones that are current would be extremely upset.... I for one would probably miss the payments on purpose just to get the principle lowered

[jjameson922]

I downloaded the entire package and it is as Airics says, not a cash infusion to reduce principle. Principle stays the same; mortgage payment gets reduced. Interest could be reduced as low as 2% for 5 yrs. and if that is still not workable for the borrower, mortgage can be refinanced for a length of 40 yrs. The chance of there being profits at the end of this time should the borrower sell, profits you ask can the government recoup, would be minimal if non-existent as all during this time the mortgagee would hardly be contributing anything to principle paydown. The only way a profit would be realized would be in the equity the mortgagee accomplished before this refinance and if the market did a turn around and began to show appreciation.
An interesting aside to my story, finally got through to the bank after an hour wait and was told THEY still do not have the government paperwork to discuss the specifics as it pertains to them.

[banger]

I am one of those small minded people against the "bail out".

At the risk of sounding in-articulate, let me put my thoughts into a "nut shell".

You pi$$ed away your money, now you want mine!!!!

Further at the risk of sounding flippant, WHY!!! is it a "bad thing" to put dead beats out of their houses and sell them.

Has anyone considered that the apartment rental business would see an economic benefit from an increase in renters and therefor rents.

In closing, I have heard the idea that when the markets recover, the profits will be used to make things right again.

TO WHO!!! Certainly not me, the guy who payed for those who acted foolishly.

[tony soprano]

Originally Posted by airics

If i am reading this correctly, i think you are assuming that they are going to lower the principle. They are not. What they will be doing is lowering the interest rate and extending the terms... If you can't fit into the bracket (not enough income, etc), i think you will still lose the home.

If they lowered the principles just for those behind or in foreclosure, don't you feel that the ones that are current would be extremely upset.... I for one would probably miss the payments on purpose just to get the principle lowered

It's a little too early to say definitively that they won't lower the loan principal as the House is going to vote on that today -

March 5, 2009
House to Try Again to Let Judges Alter Mortgages

By CARL HULSE
WASHINGTON — After a brief revolt, the House is scheduled to vote Thursday on a measure that would allow bankruptcy judges to change mortgage terms to help homeowners avoid foreclosure, granting new authority some lawmakers say is central to easing the housing crisis.
The Democratic leadership said it was confident it now has the support to pass the measure, which stalled last week, because of changes won by Democrats who said they feared that homeowners might use bankruptcy to win reductions in mortgages they could still afford. The Senate, where backers of the bill have faced stiff resistance, could consider its own version later this month.

http://www.nytimes.com/2009/03/05/bu...5cramdown.html

[nwlv]

Lowering principle would be a mistake. Think how difficult it will make it to get a future loan if the lender thinks the government can come in a seize assets. GM has been selling cars, that lose half of their value in two years, for five or six decades. Should we re-adjust their payments?

[jjameson922]

Banger, the economic restructuring is much more complicated than what you realize. It's just not about bailing out investors who got in over their heads or bailing out homeowners who signed up to buy more house than they could afford and then were reckless with their money.

Half of it's point is to find a safety net for those whose homes have depreciated, because of either living in a high foreclosure area or a jobless area, who now are faced with paying on a mortgage that is higher than what the house is worth or could be sold for. It is to help those who are unemployed and cannot find work again because of their local economic climate of no jobs, "refinance" their current mortgage
so they can now afford to live in that house that will not sell, while living on their current McDonald's wages instead of what they were approved for as in their highly paid previous job. Many of them, like us, have no other debts. You talk about loose spending but I wonder if you can say that?

You also did not address the seniors whose pensions have evaporated. Most of them in my state are teachers and are a part of the State Teachers Retirement Fund. Are you suggesting they did something wrong?

And in closing, for future reference, the statement should be "to whom," not "to who."

[jpk]

I've got a really simple plan that directs "bailout" money to the heart of the problem instead of throwing at insolvent banks or giving it out to pet earmark projects or welfare for irresponsible people.

The government should buy all homes that are in default from any bank that needs assistance. Instead of that bank getting bailout money, the government siezes the foreclosed home and uses the TARP funds to buy the house. The homeowner is still foreclosed on. The house is put up for auction immediately. If it does not sell in 30 days, the house is razed to the ground and replaced with greenbelt.

This would get to the heart of the problem at the banks and the heart of the problem with housing. If houses didn't sell, they'd be razed which eliminates excess supply and the drag on property values. You don't need complicated re-fi programs or bank bailouts. Just nationalize the houses themselves and destroy any that aren't immediately re-privatized.

[tony soprano]

Originally Posted by jpk

The government should buy all homes that are in default from any bank that needs assistance.

What price should the govt. pay for these homes?

[jjameson922]

That's a great idea but I see a big but in there....if the government seizes the home, puts it up for auction and it does not sell, you suggest it become greenbelt. Greenbelt is generally commercial so let's say if in a residential area, the property the razed house stood on now becomes vacant land. The vacant land would have maintainence costs on it until it sold as buildable property and if the area had a surrounding neigghborhood that had depreciated or, was inner city, who would ever buy that vacant land and build a home on it now that it costs more to build than what the value of the surrounding homes would be. Even though the theory sounds great at the start, what does the government want with vacant, unusable land?