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1) This is a very complex issue, and every lender/homeowner/finance/foreclosure situation is different.
2) Forclosures do have a negative effect on neighbors/others' ability to sell their homes.
3) A bailout, on the one hand, can keep people in their homes and avert a crisis. On the other hand, added regulation could tighten the market and affect purchasing/financing ability in the long term.
Hopefully, we can find answers that provide the best balance.
We refinanced our mortgage when someone told me I would lower my monthly payments- so that I would have some money to put into savings. Well , after one year my rate adjusted, AND I now owe 400 more per month- Not to mention the negative AM. My original loan was $ 400,00 and after one year my loan is $ 420!!!- My house appraised for $ 530 a year ago, but in todays market I would be lucky to close at $ 450. My point is this--- Be careful who you deal with, take the time to READ THE FINE PRINT- Remember = if it sounds too good to be true- It usually is.The way I figure it it cost me around $ 30 grand to save $ 1000 per month. I have a call into my current mortgage company to see if they can help--- I hope so- because this is getting scarry
I'm not for bailouts. However, if they happen, the people who benefit from them should have all costs associated with their bailout tacked onto their existing loan, and not be able to weasel out of it in any way. Make them pay for it, at least eventually.
I'm not for bailouts. However, if they happen, the people who benefit from them should have all costs associated with their bailout tacked onto their existing loan, and not be able to weasel out of it in any way. Make them pay for it, at least eventually.
A bail out is when someone else pays for you.. like pays your mortgage etc. That's first.. second the government proposals , alteast of rate freezes, are not using tax dollars. The only ones loosing money are the banks/ investors of these funds.. and shouldn't they too be losing money, as they are part of the problem that caused this? Actually this helps them NOT loose as much money as they would should they foreclose on everyone invovled.
Also.. these remedies are not only to help those homeowners in trouble.. it's to help all of you who AREN'T in trouble too, because when homes on your block sit empty and are in foreclosure, you'll loose just as much as the foreclosed on owner, the banks/investors takign a huge loss! It will hurt you as much, if not more , than it hurts them.
It's not a bail out.. it's a compromise! One that will soften the blow of damages for all parties involved or not involved.
no it screws over responsible people who bought or waited to buy houses they could afford
It certainly does not..
If you give the argument that mortgages will be harder to get.. guess what.. they aleady are and they need to be. As a result of loose lending standards, they let too many people in that shouldnt.. so as a result they are and will be a lot stricter.. regardless of wether or not something takes place to ease the burden. As a matter of fact, they may be more willing to ease the standard somewhat if their damages are lessened. The more the industry hurts, the tighter they pull the reign. And if they are truly good purchasers..ie: good credit with a saved down payment they will not have trouble getting the loan and an FHA one for that matter, as they have increased the FHA caps.
As for the argument that it will keep prices high.. it won't and hasn't.. Look around .. prices are coming down down down.. to affordable levels. It will probably go back to pre-boom prices.. or maybe slightly above.. as the price of housing needs to be in line with income. If you couldnt' afford a house BEFORE the boom or right at the beginning you wn't be able to afford a house after prices settle. Prices will come down to affordable levels now because unless a couplce can prove with documentation that they can afford the house, as their is virtually no mare "stated" loans going out..or atleast not as many.. before they buy it.
Those that saved and waited were already hurt because they were unable to buy when prices rose so much beyond their affordable level. The hurt has happened.. NOW they are reaping the benefits of waiting.. because they get to purchase the house at a much lower cost.. Interest rates are still low. They will rise, of course, but they would have to anyway as the normal cycle of things occurr. And, they have much more choices of homes out their for them.
Those that purchased with a fixed rate that may have been higher than the initial teaser rates.. make out a lot better.. because now their mortgages are LESS than those that purchased with an ARM and guess what. .they are NOT facing the possiblity of foreclosure. Ignore the problem going on around them .. in otherwords don't ease the strain on the housing market caused by this mess.. and they WILL get hurt as their property values plummit so much harder and so much faster as they are surronded by other homes that are sitting empty and abandoned and all that saved money they used to put down in their house.. or their built in equity.. will dwindle away and they could even end up upside down. Maybe they still will with this "relief" but it may be a matter of how much.
Yes.. subprime ARMS are getting relief.. soon to follow will be ALT A and Prime ARMS.. and are in talks now to fix their rates.. WHY? Because the ALT A and the PRIME market are not immune to the effects of the ARM crisis and are also defaulting. Those in fixed rates are fine.
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Buyer Beware
