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Government Should Bail Out Homeowners

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posted on Aug, 30 2007 @ 08:12 AM
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Now that I understand how our housing markets work and what has become of the economy of this nation, I am still against the bailing out of the bankers that got us into this situation with their rating systems and predatory practices to benefit the financial elite at the expenses of the people that trust them.

What is more unfair our government bailing out the banks or doing something to help people with their homes.

What happens when in a nation as many as two million people are to lose their homes? homeless people, homeless families that I understand no all of them are blameless, but still our tax payer money will have to go to help them anyway, be with a home or not.

So, what is better, the financial elite or the regular joe.




posted on Aug, 30 2007 @ 08:22 AM
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Originally posted by marg6043
reply to post by grover
 


Well believe it or not the only next thing for the feds to do is lower more the interest rates including the credit. That will help the dollar and will help the regular Americans.



How does lowering the interest rate "help the dollar" against any currency?

Lowering the rate will drive currency traders to other more profitable currencies.

And NO. NO bail outs. The bail out is to move in with your family and/or friends until people get their act together.

Lowering the rate rewards those who KNEW they were taking RISKY SPECULATIVE loans when they should have been taking a 15 yr fixed and taking advantage of locking in those incredible rates.

THEY KNEW the RATE WOULD GO UP on the ARMs, Option ARMs and Interest onlys... the KNEW rates could/would not stay that low.

Sorry... time to move in with mom or rent a cheap, tiny studio.

No love for leeches from me.



posted on Aug, 30 2007 @ 08:24 AM
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Also, NO bailing out the lenders who KNEW they were writing bad loans. No cheap loans for them either. Let them eat the losses.

If a recession/correction is caused by this, such is life.



posted on Aug, 30 2007 @ 08:32 AM
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That is the gamble to take to keep consumer spending high, see we are a nation of spenders, our economy in our nation depend on that spending to keep afloat, right now the spending is going down, the housing bubble crash is spilling into other markets like credit cards and autos.

Our markets also need to support the retail and that is next.

So how can our nation boost consumer spending when people are losing homes by the hundreds of thousands.

And we are bailing out the bankers right now who do you think is paying for that?

So what is better support the bankers that go us into this mess or the people that through unfair practices are now in the red.



posted on Aug, 30 2007 @ 08:38 AM
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reply to post by Pootie
 


On this one I agree with you but, sadly is the financial elite the one that runs our markets and control our nation.

They will always look after themselves, sad, but true.

If we do not bail any of them we are still going to have problems in our nation.

What a future for our children.



posted on Aug, 30 2007 @ 08:40 AM
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Originally posted by marg6043
That is the gamble to take to keep consumer spending high, see we are a nation of spenders, our economy in our nation depend on that spending to keep afloat, right now the spending is going down, the housing bubble crash is spilling into other markets like credit cards and autos.

Our markets also need to support the retail and that is next.


No... they must be allowed to fail. Are you seriously suggesting that people who cannot pay their mortgages should be given a way to spend more money and that that will help the situation?


Originally posted by marg6043
So how can our nation boost consumer spending when people are losing homes by the hundreds of thousands.


You don't... you let the recession happen.


Originally posted by marg6043
And we are bailing out the bankers right now who do you think is paying for that?


I do not support the feds rate cut to help the lenders.


Originally posted by marg6043
So what is better support the bankers that go us into this mess or the people that through unfair practices are now in the red.


What unfair practices?

Why are you giving the borrowers a free pass here? there is FULL DISCLOSURE when you sign the note(s). Why are you so eager to reward greed and overextension?



posted on Aug, 30 2007 @ 08:42 AM
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Originally posted by marg6043
If we do not bail any of them we are still going to have problems in our nation.


Bail outs only extend the problem.

You need to look at the bright side... if we "take one for the team" maybe our children will not have to. Let the correction/recession happen NOW and we will recover.

People need to talk to their grandparents about the Great Depression and LEARN SOME LESSONS on wants vs. needs and survival.

People need to talk to their grandparents about the Great Depression and LEARN SOME LESSONS on wants vs. needs and survival.

People need to talk to their grandparents about the Great Depression and LEARN SOME LESSONS on wants vs. needs and survival.



posted on Aug, 30 2007 @ 08:56 AM
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reply to post by Pootie
 


Actually my mother and father lived through the great depression and they always talk about how the government had to feed the people.

My mother can never forget how they thought that the meat they got from the government was from horses.


I think that our economy can be saved, bring back the producers of wealth, the manufacturing and stop the outsourcing that is killing the bread and butter of this nation the hart working middle class.

Our workers make less now that their parents did in comparison to our standards of living.

Our jobs has been outsourced, and the ones that are still here are been taken by foreigner workers with visa brought by corporations for less money.

Making difficult for our American graduates to find good jobs.

From the millions of job created in America most of them are on service jobs that required no education.

This is a great article of what is going on with our nations jobs.

By Paul Craig Roberts, he served as Assistant Secretary to the Treasury in the Reagan administration.

Return of the Robber Barons

www.creators.com...



[edit on 30-8-2007 by marg6043]



posted on Aug, 31 2007 @ 10:07 AM
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Looks like Bush is going to announce a new program to help homeowners.

Oops he is on tv talking about it now.

Here is one link: Bush Will Offer Relief for Some on Home Loans



posted on Aug, 31 2007 @ 11:46 AM
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reply to post by makeitso
 


Thanks for the update!!!!!!!


I will read more into when I come back, so far I don't see how giving more room for credit is going to help the problem that the roots is more credit that people can afford to Begin with.



posted on Aug, 31 2007 @ 12:04 PM
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Your welcome.


Here is the link to the steps he proposed.



posted on Aug, 31 2007 @ 03:23 PM
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Originally posted by marg6043
... so far I don't see how giving more room for credit is going to help the problem that the roots is more credit that people can afford to Begin with.



two points here.
1. the 'refinancing' homeowners in jeopardy need to get approved
-- mostly thru the FHA-Secure proposal --- has costs involved
so it's not as if the homeowners are getting even more credit
which they couldn't afford to begin with. It's just refinancing at a new
(probably subsidized) rate of interest for a fixed ammount of time
rather han the ARM adjustable rate mortgage) they had which grew
out of control!

2. when refinancing the new loan, the old mortgage debt will be reduced
to the current, somewhat lower house value of the market appraisal at the time of the refinancing loan. A special tax exemption will be extended to the 'poor' refinancers so they won't be liable for the 'tax gain' of any debt forgiveness that they might have experienced.

i believe that only households in jepoardy will be able to get this FHA-Secure' type of package that is guaranteed by the Govt.
1st time buyers, or new mortgage loans, will not be able to get this FHA-Secure refinancing at all.

so, its not a bail out at all, the bean counters estimate that only 50,000
home may qualify for this program.....

& there's something like 7,000,000 households in jeopardy of seizure/defaults/foreclosures, etc



posted on Aug, 31 2007 @ 04:32 PM
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So in other words I understand that this is just a good faith look like done by this administration so people will stop complaining about what the financial elite is doing while been bailed out by the fed.

When you refinance at a fix rate is good for the people that got got on the variable rate mess.

But also it will take away the years that were put into the payment of that house prior to the refinancing.

So I got the feeling (correct me if I am wrong) that along the line somebody is going to keep the money after the refinancing coming from the refinancing of the property and is not going to be the owner like usually is when done on circumstances that are not extreme like this one.

I hope you understand what I mean.


[edit on 31-8-2007 by marg6043]



posted on Sep, 2 2007 @ 07:41 AM
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reply to post by makeitso
 


The problem with his solution is it is not a solution. First off the Government (FHA) does not lend money to people to buy homes. FHA only insures a portion of the loan should it go in default. What Bush proposes is to make it easier to get an FHA loan.

That means, the same lenders who created this mess, can now refinance these borrowers and put them in an FHA loan. Bush is proposing to take FHA more restrictive guides and make them less restrictive, ie, allow a person to refinance there loan who is currently 90 days past due. This could not have been done in the past, even if it was a loan already insured by FHA.

So now we have Bush proposing the use of FHA to bail out borrowers. AGAIN, FHA does not lend money, LENDERS lend money. FHA (Govt) only insures a portion of the loan should it go into default. AGAIN, the lenders are making the money. They can now take the crappy loans and redo them (makine money in the process, ie fees charge on the refinance). Get them insured by HUD/FHA and if they borrowers default, HUD/FHA is now going to take a portion of the loss. Not the whole loss, just a portion (maybe 20%).

So the loss that the lender would have taken would have been substantially more, if they could not have redone the loan to FHA. Now they only have to take a portion of the loss, and FHA (ie the Govt, ie US) get to take a portion of the loss. Thus partially bailing out the lenders.

So the lenders are going to get paid again. The Government will bail out a portion of it. So these same crappy loans, will now be backed by the GOVT.

Wow, what a plan. One on many dumb things the Govt has proposed. That list is way to long to go into.

Hope this helps. If it confuses you, let me know, I will try to be more clear. As I said earlier this is something I can rant about all day.




posted on Sep, 2 2007 @ 08:12 AM
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One of the things that jumps out at me is that a homeowner needs to be 90 days in past due on his mortgage to qualify..........

Why not just stop payments till your 90 days past due to qualify even if they could make the existing payment!

It seems to encourage more people to stop making payments till they qualify!!

They have deep thinkers in the District of Corruption...........DUH!!!



[edit on 2-9-2007 by Silversky]



posted on Sep, 2 2007 @ 01:53 PM
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Originally posted by IrishLass
I'm new to site, so if I mess up, you have to excuse me.


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.


Just a note the "Pay Option" loan minimum payment is LESS than even "Interest Only" payment (up to 115% neg 1st 5 years), an I.O. payment will not create a negative (increase balance), I.O. just pays interest not principal the balance would remain the same as the original loan amount!

Another thing worth mentioning is that during the BOOM "Big Bubble" Alan Greenspan was promoting ARMS and new loan programs to get renters into homes and increase consumer spending..........

Anybody think it's a little odd that bankruptcy laws changed just after this and legislation about 6 months ago allow Credit Cards to now charge up to 30% interest if you are 2 days late with a payment


[edit on 2-9-2007 by Silversky]



posted on Sep, 2 2007 @ 06:05 PM
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They saw the big picture when they started all this. The rich get richer, the poor get poorer. Welcome to America.



posted on Sep, 2 2007 @ 10:56 PM
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Correct me If I am wrong but I notice that every time the financial sector needs a boots on their profits, something happens in our nation, like the market housing crashing so legislation be implemented just to once again target the consumer that happens to be always in the losing side.

So more money to keep the financiers afloat but this new Government incentive is just for certain amount of people in debt.

like somebody already mention this is going to make hundred of thousand stop making payment on their homes so they can qualify.

It makes no sense actually.

Harder to claim bankruptcy for people, more rights to creditors to go after consumers, all done before this happen, like it was expected.

Seems to me that our lives are monitored, play with at will.



posted on Sep, 3 2007 @ 07:00 AM
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This corpgov program is just another in a long line of legislations that is clearly designed to rescue the banking and finance sector, wait till you see the unemployment figures in this sector in the next few weeks!

If the FHA comes in and refinances borrowers the impact to the banking-lending is greatly less than sitting on an empty non-preforming asset they foreclosed on!

The sooner we realize that the odds are always in favor of the big Casino and that Jane and Joe Sixpack are always the losers and expendable, our vision begins to clear.

Unless they can create a new bubble the equity market will be the last. If one norms out the charts on the DOW from 1929 and 1987, 2007 is tracking in a channel, spot on. Tremendously large Sept. put options have be placed on the S&P with a strike price of 700, I'm talking about $1 billion worth, somebody knows something!!

The Credit-Debt bubble for the consumer is simply a microcosm of the economic macrocosm of this nation's debt and the world's (of course they don't let you know how maxed out they are on their cards).

Hope for the best, but prepare for the worst! Can't hurt!



posted on Sep, 3 2007 @ 07:57 AM
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In a couple months we're all going to start hearing economists talk about the importance of the upcoming holiday retail season. About how significant an effect it has on the overall economy. That retail shopping season is basically people being handed the rationalization and lured by 'sales' and promotions to spend more than they can afford. Retrailers love it :: it means their survival. Bankers love it :: the vast majority of that shopping is done on credit.

My wife is in real estate law. Among other things she's the one who sits down with people to execute their mortgage paperwork. She was constantly telling me how people were getting into mortgages they simply didn't understand. Are they responsible for understanding their mortgages? Sure they are. Did you read yours when you got it? Or did you do what 95% of people do and just sign where indicated?

This 'bail-out' idea isn't about saving peoples homes or saving the banks. It's about an attempt to stabilize a seriously listing economy. It's about trying to keep the damage from spreading and many, many more people from getting hurt.

I don't subscribe to the idea of bailing anyone out, per se. But something has to be done. First, the lenders who were writing these subprime adjustable mortgages to people who they knew or certainly should have known would not be able to afford them when their ARM went up need to lower and fix the rates. What they did was most certainly predatory. It was akin to standing in fornt of WalMart and handing out credit cards to anyone who wanted one.

Next, people with these loans (after having their rates re-set) should be allowed to defer any difference between their original monthly payment and the new fixed rate to the end of their loan as additional principal. Also, this 'bail-out' should apply ONLY to people who have mortgages on their principal residence --- not to all the flippers and speculators that got stung.

No one is getting bailed-out here. The lenders are getting (duly) spanked by being forced to reduce their rates. Homeowners are responsible for their princiapls but at a reasonable rates and at monthly payments inline with what they originally had. This would slow foreclosures which financially harm the banks, devastate the homeowner and screw all other homeowners by driving down home values and making selling a home next to impossible.

Or, as has been suggested elsewhere, we can just let the whole thing crash. Drive millions into bankruptcy, destroy families and businesses and further concentrate the country's assets into the hands of the wealthy as they snap-up devalued residential properties.



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