Government Should Bail Out Homeowners

I agree, do NOT bail out homeowners or mortgage companies. I'm not coming from some moral high ground, either. In '93 during the presidency of GB sr, my husband and I lost our home. We had an FHA home loan so it wasn't because of sub prime lending leeches. It was because of excessive credit card debt followed by unemployment. It was our own fault. Even though we had purchased a home within our means. The house was 30k, my husband was earning 36k a year. The credit card debt built up while he looked for another job.

However, if we had been able to get government assistance (welfare aka aid for families and dependent children -AFDC) We could have paid our $190 a month mortgage, fed our son, and I could have paid off our other debts with the minimum wage job I had.
We weren't eligible for AFDC, because we were married to each other and living together. We were told that if we legally separated, I could keep my home and get food stamps.

Yes, a lot of people have been living beyond their means and should learn the hard way. The government should not bail anyone out. And I'd really like to know when Aid for Families and Dependant Children became aid for single mothers only? I know several people who have chosen to separate from their partners in order to feed their children.

Instead of bailing out corporations that have suckered uneducated consumers, how about we reform welfare and return to a system that actually helps whole families get back on their feet after a recession or depression? Just my 2 cents

Originally posted by turbokid
.....
and if joe sixpack decided it was a smart move to buy a $500,000 house even though he only makes $11 per hour with an ARM loan (adjustable rate mortgage) then he deserves to lose his house because he is an idiot.
....

Wouldn't make him an idiot if he / she sold that same property 2 months later for a $200,000 profit. In a fickle market that may not exactly be forethought, just the fact that Hank Marvin's gardener hit the lottery and moved next door. i.e BS.

I don't approve of these bail-outs. It's a tremendous disservice to the majority of taxpayers and only serves to give people the wrong idea about personal responsibility.

People wanna live in more house than they can afford - no amount of government money will fix the root cause.

Originally posted by slackerwire
The government has no Constitutional authorization to bail out people who make bad decisions. People chose to sign on the line indicating they are responsible for the debt, it is not the duty of other citizens to cover the cost of irresponsible people.

show me in the constitution where they have the power to bail out irresponsible banks, or businesses? they don't seem to find this a danged problem!!

by the way marg......we bought a house the beginning of this year....every month, that mortgage has been passed on to another company, probably with a profit...a little hot potato being tossed around, let's see who has it when it explodes..
only I would like to point a few things out to people here....

first....we did stay within our means....unless the economy goes real wacky, the mortgage will be paid...

but...well, this is something to consider. we are paying less for this house than we would be for the rent on a home of equal value...and I am sure many of yous remember me saying that hud does have the power of increasing the rent on the homes and apartments they subsidize and sometimes that pushes non-hud renters out of their homes...
if you had a choice between renting a crappy apartment that is within your means... that is within your means because well....it falls below hud standards or buying you a home that is about equal to what you are used too...which would you prefer?
and well....our government has used this little bubble the past six or so years to help them give the impression, or illusion that hey, all is dandy, everything is fine, don't be afraid, just go out and spend!! ya, that's right spend!!! we need you to get yourselves into debt to keep the this great economy running!! to give the local communities the funds they need, that the government has taken from them to fund their war...
they needed us going into debt to keep their illusion alive!!!
well, it didn't get them far enough I don't think, their illusion is dying and only half the job is done, ya the congress has a democratic majority, but there is still a republican president in office who will more than likely receive more blame than the dems....everything wasn't suppose to fall apart until there was a democratic majority that could be blamed.. so ya, here's a few billion, see, everything is fine, the stock market is still rising....go out and spend!!

this grand idea of wealth has all been an illusion, some of us has been telling everyone that it is, but still they have refused to believe it...
I think we should just leave it all well enough alone, let it fall, and then pick up the pieces, maybe then we will all know just what is an illusion what isn't... we'll have at least a halfway stable foundation to stand on!

if they bail out the financiers and not the people, well, the people lose their homes, the same people will come around again, buy their homes for pennies on the dollar, alot of them will be made into multifamily homes and rented out.......or boarded up. you ever noticed how many bordered up houses are around? there seems to be a heck of alot of them out there. we certainly don't need more!! and they are probably owned by the same small group of people, and well...this small group of people are more than likely all set ready to pounce again....now that their buddies in the finance markets and government has set the stage!! either stop bailing out the businesses and let them suffer the consequences or just bail everyone out!
I am sick of this idea that "responsiblity" is only good for the individuals, businesses and governments can be irresponsible as all heck and be protected from all the negative consequences of their actions...


[edit on 24-8-2007 by dawnstar]

At one point mortgage companies and the like were heavily regulated, then in the 80's most of the regulations were removed and the end result is the average buyer pays.

You can be as responsible as you can be, educate yourself till your nose bleeds and still get screwed by these predatory lenders.

Originally posted by FredT

Why should I who lives well within my means and carries no debt beyond my morgage pay to bail out those

i'm with you on this one....a while back, my wife in i were in a crappy situation. we laid out a 5 year plan and stuck to our guns. we bought a house and we have two nice cars. next feb one of th ecar payments are gone so we have our mortgage and a car payment....
we have a big screen tv, computers and all that but we are debt free, other than the house/car.
we paid cash for our tv, cash for our pc's and gadgets...we owe a total of about $400 on a dental credit card.

i don't want to use my money to bail people out that get themselves in a jam...i see it all the time.

i bought my brother in laws house and he bought a 200k dollar house...WAY out of his means...he is already feeling the hit...my wifes best friend at work, man, huge bubblehead.

they both drive new cars with payments in the $600 a month range...they rolled negative equity several times. they live in a shack now that cost like 50 grand. they just bought a house with some land that cost 177k. they're all calm about it...what are you gonna do?
oh, we're gonna rent this house...
they are so, for lack of a better word, stupid. the house they live in now is a hole. they have 3 kids under 6 years old. car payment sthat equal a k a month. they already filed chapter 7 a couple years ago and my wife said she has 9 credit cards....she is all the time going to get a cash advance....why? she don't like walking around with no cash....

i'm serious man...they bought their 5 year old kid a cell phone. they toss money hand over fist at junk....i can see already that they are going to get in financial trouble....more than already...

why should my wife and i, two people that try pretty damn hard to stay debt free have to bail out a bubblehead like that?

i don't feel bad for these people...nobody makes them buy a house that is going to put them at a mortgage double what they can afford...
5 years ago i set a price that i was going to spend for my first house and i went $1,000 over......
i think i did pretty good.

Originally posted by marg6043

www.cnbc.com

The government needs to bail out homeowners who have defaulted on their mortgages in order to "salvage" the U.S. economy, PIMCO founder Bill Gross told CNBC.

i think Bill Gross is more interested in the mortgage paper his operation
is holding than the defalted/foreclosed families' homes.

his idea is self serving.

will he also propose the bailout of the housing speculators who are buying that 2nd or 3rd home?
how about those who can no longer afford that 'vacation' house,
since being laid-off or having their job sent off-shore,
maybe bail out those who were relying on that huge bonus which may never materialize?

the housing craze, & loose easy credit fueled the housing market with
many people wanting to Flip This House and make that $50K
from a fixer-upper in 5 weeks...
dreamers & schemers...

the plan worked for a couple of years, but when a dozen people in your neighborhood were all doing the Flip-This-House program, that was the cue to get out fast.


sorry, but i say tough luck to the foreclosed homeowner,
read the book or watch the movie 'The Grapes of Wrath' for starters

reply to post by St Udio


When the mortgage markets were at its peak, a new breed of wealthy beyond words people were growing.

They became the CEOs that while many moving their companies abroad where able to create the million dollar compensation packages to themselves.

While American workers lost many of their high pay manufacturing jobs and got in exchange service jobs.

The ones that got the best deal were the bankers and their attractive packages full of debt, in the subprime business.

The attractive packages offered the illusion of wealth for many that were losing to the increasing outsourcing of jobs.

If offered the American dream of owning a home and becoming home owners with a promise of better value in the future for their homes.

It did happen for a while and many got the benefits and profits during that time, but it went overboard and now the price of the deceiving practices is biting not the super rich made from this wave of business but the consumer that no longer can rely on that high pay job because it has been moved to Asia or China.

Remember that this outsourcing was encouraged by our government.

While the new wealthy groups are now in trouble, we should remember the dying middle class that has not where to turn.

This problem is not limited to the faulty over spenders but will spread to other sectors of our economy, no matter if the government bail them out or not we are all to pay for the mistakes of the few rich and poor.

Originally posted by marg6043

This problem is not limited to the faulty over spenders but will spread to other sectors of our economy, no matter if the government bail them out or not we are all to pay for the mistakes of the few rich and poor.

your quite correct


the Fed is attmpting to fog the issue, and about all their doing is relaxing the overnight bank rate for the big mortgage lenders & brokeage houses
so they can redem a goodly portion of their bad debt secuities they
over-paid for in the first place
(credit expansion->injecting billions into the U.S. money suppy)


the Fed manipulations is backfiring on them...

yes, the Fed the mega-corps Banks Brokerages & many funds & hedge fund managers all were building this economic hous of cards,

the little guy was just as anxious to grab for that elusive 'Brass Ring'
by using real-estate/housing as a personal ATM money conveyor belt
(encouraged by the Fed & the relaxed lending policies of mortgage lenders
desirious of the commissions to be had)



boom, the 1st tower is slowly collapsing

I'm new to site, so if I mess up, you have to excuse me.

But I want to reply to whether the Govt (meaning all of us) should help so people dont lose their homes. I do mortgages for a living and I knew this was coming for the last couple of years. You cannot do programs, allowing people to state their income and state their assets or even do loans where you verify no income or assets and base your approval on a credit report and appraisal.

Most of the homes going into foreclosure are loans where people have overstated their income so that they could buy a home they cannot afford. The do the pay option, where you can pay interest only or pay interest and principal which allows you to buy more home not realizing that these are adjustable rate loans where the payment changes every month.

Alot of the people only want to continue to pay interest and not principal, therefore turning the loan into a negative. IE they start to owe more then the home is worth. Now you own a home (ex. that you paid $200,000, but with negative amortization you now owe $225,000.) The value of homes have decreased and it now appraises as $150,000.

It is not worth it to these people to keep something that is worth less than they owe. So they let it go to foreclosure. Most loans in foreclosure are these types of loans. They want to blame subprime, but it is not all subprime loans. The loan I ref above as an example is not a subprime.

There are some lenders that only do this type of loan. See Chevy Chase where they just lost a law suit for pay option loans. Not only did the lose the suit, but the judge has stated that case can become a Class Action Suit. (Chevy Chase is appealing.)

So the govt is not bailing out homeowner's, they are bailing out banks that are losing money for loans that should never have been done in the first place. I say let the big guys fall (ie the banks). They started the mess, let them figure out a way to clean it up. BOA just baught a ton of Countrywide (CW) stock to help infuse money into them. Hmmm, wonder who will be the next big lender. The CEO sells off his stocks in CW, makes millions, and now they want to Govt (us) to pay to fix the mess that they created.

The borrowers did not create the mess, the mortgage lenders did by offering stupid programs. Programs, I tried to steer people away from. A point that allot dont know about a stated income loan program, is that the Fed's can supoena a loan file and go after the borrower for taxes on income they stated they make, but really dont.

It has happened. You stated the income, now we want taxes on that stated income.

People are not told that by LYING (yet it is in writing), that they are held liable for in a court of law as misrepresentation/fraud. You know how many people could be fined/jailed for lying on the loan application? I would say more that half of the loans that are out there. Anyway, I'm ranting and if you want me to add more I can.....lol.

reply to post by IrishLass


I am very surprised to learn about how this loans work, I knew about the fix rates secure loans that is what my husband and I have due to VA.

I also know about the subprime loan because they were so popular.

But the ones that has to do with paying only your interest that is new to me.

Thanks for bringing this up.

You are right the only reason the fed keeps injecting money in the markets is to keep the big banks afloat.

Originally posted by slackerwire
The government has no Constitutional authorization to bail out people who make bad decisions. People chose to sign on the line indicating they are responsible for the debt, it is not the duty of other citizens to cover the cost of irresponsible people.

Well said. No one should be forced to be his brother's keeper: that's called socialism.

Glad to see that everyone is in agreement on what should not be done. I just hope the government actually listens. Think what an expensive house we could all ACTUALLY afford if the government stopped wasting money! *gasp*

Originally posted by IrishLass


Most of the homes going into foreclosure are loans where people have overstated their income so that they could buy a home they cannot afford. The do the pay option, where you can pay interest only or pay interest and principal which allows you to buy more home not realizing that these are adjustable rate loans where the payment changes every month.

I agree with your whole post for I bought my house within my means on a 30 year fix 3 years ago. This big bubble burst means nothing to me. I have friends that bought their houses 7 years ago for like 175k and now their houses are 400k, but to me they still look and feel like 175k houses. Now their 175K houses are worth 350k and still going down and for them it means nothing too.

Now that guy who bought the 175K house for 400k thinking it will be 600k in a few years is in deep crap. I have been saying these last few years "how can a average family afford a 500k house?" And the answer is they can't just like I thought.



[edit on 24-8-2007 by Xtrozero]

[edit on 24-8-2007 by Xtrozero]

WHAT I THINK THEY NEED TO DO IS CHANGE ALL SUBPRIME LOANS TO FIXED RATE LOANS. THE PROBLEM WITH SUBPRIME LOANS IS IN THE SMALL PRINT WHERE THEY can change your interest rate for litlle things
like being late with a credit card payment or a utility service payment.and using that as an excuse to double or triple your monthly mortgage. in my state we have a maximum rate of interest a credit card can charge why don't we have one for home mortgages. its kinda hard to keep from losing your house if one month your house note is 1100 dollars the next month it jumps to 3200 because you got behind on light bill.

Originally posted by dawnstar


show me in the constitution where they have the power to bail out irresponsible banks, or businesses? they don't seem to find this a danged problem!!

They do not have that power, much like they lack the authorization to fund other unconstitutional programs such as welfare, education, healthcare, or programs of outright fraud ie: paying the "9-11" families.

Originally posted by Now_Then

Originally posted by turbokid
.....
and if joe sixpack decided it was a smart move to buy a $500,000 house even though he only makes $11 per hour with an ARM loan (adjustable rate mortgage) then he deserves to lose his house because he is an idiot.
....

Wouldn't make him an idiot if he / she sold that same property 2 months later for a $200,000 profit. In a fickle market that may not exactly be forethought, just the fact that Hank Marvin's gardener hit the lottery and moved next door. i.e BS.

right but if he SOLD it, then he wouldnt be the one needing "bailout" would he?

Why should the government excuse and facilitate the bad behaivior of some lenders and bad descision making skills of some borrowers?

Anyone who has taken out any kind of unsecured loan, in any amount, should have seen and signed this document. I hope it looks familiar.....



It's required under law by....

Truth in Lending Act

Anyone who foolishly took out a variable interest rate mortgage over the last 5-6 years, who didn't plan on rate increases, well shame on them.

They have three forms of recourse available...

1. try to sell then downsize or rent
2. get a part time job
3. liquidate all other debt and save your house

It's really this simple.





[edit on 8/27/2007 by darkbluesky]

This may sound cold to some, but I feel no sympathy for those who got in over their head.

NONE

I sacrificed to pay off my homes. I scraped to meet my responsibilities when others simply took out second and third mortgages to feed their greedy ways. When others were buying expensive furnishings and appliances, I worked extra time to pay off my debts. When other were racking up huge credit card debts, I was paying mine off. Why should others debt be forgiven? What did they do to deserve it?

Well it seems that the only way to do now that we are on recession and with 2 million people and families to lose their homes is to lower the interest rates and for the feds to stop trying to bail out the financial elite.

This will give a boost to the dollar and perhaps may save some homeowners.

Because obviously nothing else will work including our own government stepping in to help.

Ahh but marg my dear you know as well as I do that this administration doesn't give a rats ass about the average homeowner. They will bail out the financial elite and leave the rest of us to foot the bill.