Government Should Bail Out Homeowners

Well one thing is for sure, the holiday season is near and lets see how much is spend on credit and how much is spend on cash.

Right now retail stores are offering between 6 to 12 month no interest on their store credit cards.

But the incentives become a nightmare when people can not meet the 6 or 12 month obligations and their credit cards interest reverse to the 30 percent.

First, Marg - you were way ahead of the curve on this one. I forgot how far back this thing started. Now they may be voting on it today. I have been focusing almost entirely on this issue for the past 6 months, but not here, because let's face it, financials are not a priority on ATS.

Unfortunately this has evolved into more of a bank bailout than a homeowner bailout at this point. In fact the Bill that started in the House a month or two ago, was basically written by a few Banks. Then Freddie/Fannie Mac go insolvent and now there are provisions to bail them out to in this bill, not to mention some real questionable provisions that have shown up in the 600+ page draft that was still being madly re-written all day yesterday. The cost of this Bill rivals the cost of the war. there is even a provision to raise the cap on Gov't debt to accomodate it.

*I'm scared*

www.abovetopsecret.com...

why don't they just freeze all mortgages till the economy picks up again..all the home owner has to pay is the interest on the mortgage..surely its the easiest thing to do and costs the tax payer nothing..

The banking industry has been financially raping us (through all their fees, charges and credit interest) for years. Then they get overly greedy and reach a little too deep into the till and their whole industry crashes. Now, during the heyday of their predatory lending they raked-in biollions and billions of dollars. Now, their industry in shambles, they want the US taxpayers to bail them out. Screw that. Let their shareholders take the hit for shoddy and marginally legal lending practices.

The housing downward spiral has to be stopped. Adding more unsold properties to the already glutted market helps no one. Not the banks, not the housing industries, not homeowners. What they need to do is to suspend all mortgage payments for a finite period of time. Freeze everything in place for say 6mos. That would allow people to catch their financial breath and stop foreclosures. The banks won't like it because they'll have to foot the bill. But what we're asking is that they shell over some of the profits that they made getting us into this mess to begin with. It's their fault. Period. They should take responsibility for it. My $.02.

reply to post by marg6043


There is one and only one reason why the government should bailout home owners (Okay if you insist, two)... the second is that if all the houses currently in danger of default are allowed to go into foreclosure it will do even greater damage to the economy (which means ALL of us including you, you silly conservatives) than it already has but the primary reason they should bailout the homeowners is that this crisis is largely due to financial deregulation and lax inforcement... in other words its the government's own fault. There are good reasons why all the restrictions and controls were put into place after the great depression... to hold in check predatory lending and out of control speculation, among others.

You really can't blame either the bankers or the borrowers, even though there is plenty to go around.... they were all driven by greed... but of the two the banking community bears greater responsiblity and are the ones who should bear it.

But as this pitiful excuse for a government goes, the little guy will get screwed once again and the fat cats will get the platinium saftey net.

Thanks for coming back to this thread and post the follow ups

I was very surprised when today in the news it was topics on this issue and how this corporate written new bill will make our deficit the biggest one in the history of this nation and will officially make the bush administration the biggest failure in our history also.

And guess what the winners will be corporate American and the loser as usual will be us the American tax payer.

But it is any surprises here? the bail out jackpot is for the banking institutions people are losing their homes and they will lose their homes still.

But Bob and Bill the CEOs in all the devious banking deals will still get to reap the outrageous bonuses and pay.

This is the America of today a bankrupt superpower.

What bush proposes in that bill really bothers me. Why should the sub prime borrowers, get to refinance their homes at current market levels?

I bought my house the traditional way. I have a fixed loan. I bought my house in February at 6 percent.

My house has now lost 30k in value and its only a 100k house! But the person down the street who bought what he could not afford will now get refinanced and only have to pay 70k for his mortgage.

That is just not right. Reward the ones who wanted something for nothing, and those of us that did it the right way, well, we have to eat it.

reply to post by amatrine


So why not try to benefit off this yourself? I was totally against this bill, but now that it will soon be law, oh well.

This only has a chance of working if values stop declining otherwise they'll refi and default in a year or so.

There are some nifty little things in the bill that may make it a poison pill. First it must be owner occupied so flippers are out of luck.For someone to refi under this they have to prove they can afford payments and have a certain debt-to-income ratio. Won't help anyone who had a liar loan, since they will be unlikely to have the income or DTI for approval. They have to secure the agreement from the holder of the mortgage to accept a write down to 80% of current appraised value. Then they have to pay 1.5% of total principal in insurance PER YEAR to the government. Also anyone who takes advantage of this will share any appreciation with the government 100% of any appreciation if they sell within a year decreasing by 10% each year till 5yrs. So if the market comes back and you stay in the house ten years then sell the govt will get half of any appreciation when you sell.

[edit on 28-7-2008 by jefwane]

With What NAB(national Australian Bank) just did ,It will be clear today on Wall Street ,that there is no way to bail out the banks.

NAB cleared all of its off balance sheet and it will become clear in the near future to Wall Street and the Government ,that no bail out of banks ,homeowners is at all possible.
American banks have 1.5 trillion in loses and thats for starters !
The effect will be felt by every American

Wow , I was just thinking that if these people that get the lower value refi, go to sell in the future, they should have to pay for the amount that was taken off their mortgage . I was getting madder thinking so that person that gets the house now at 70k, when they goto sell, will make 30k in profit if it goes back up, and I will just break even. Did not realize they had to pay that appreciation. Good!!!
I was just thinking that they should to make it fair.

Ama

I've cooled a bit since Saturday when the housing bill passed. I read alot of pretty good commentary on it from both sides. The main thing I'm still angry about is the FRE/FNM bailout as well as some of the sneaky little things in it like help for Chrysler, money for cities and states to bulldoze foreclosed properties.

It is definately good for the banks, they did basically write it after all, but will they really accept 80% for these mortgages when they are by and large held on their books currently from anywhere to 85%-100% of value? If so I would expect further write downs to be coming. Only time will tell how much this will really help struggling home owners. I think the effect will be pretty minimal due to the large amounts of speculation and overbuilding that was rampant during the bubble.

Originally posted by jefwane
I've cooled a bit since Saturday when the housing bill passed. I read alot of pretty good commentary on it from both sides. The main thing I'm still angry about is the FRE/FNM bailout as well as some of the sneaky little things in it like help for Chrysler,

jefwayne,

I see that you have cooled down a bit about this whole bill. I am keeping a cautious eye on it being on the opposite side of the housing spectrum that you are. What is this help for Chrysler that you mentioned?

It may sound like a good deal for the borrowers but remember that most of the borrowers are at default already so if the reason people were losing their homes to begin with was because they could not afford them, who is to tell that a year for now they will still no be able to afford them with bail out or not.

Its not that the economy is going to back flip and we all going to have higher pay jobs and higher incomes, that is nothing but an illusion, the economy of our nation is not going to get any better and now we are to top the deficit with more deficit on top of an already outrageous one.

All at the expenses of tax payer money, so, no is not victory for the consumer, tax payer or borrower, but for the banking institutions behind this bill.

And please everyone beware! Don't think you can reset your mortgage now. there are provisions in the bill that you had to be in trouble by a certain date.

Don't stop making payments on your mortgage now to try and take advantage of this bill - you will not qualify (not even if it's legitimate - like you just got laid off). This bill does not provide for you, which I find particularly disturbing with the amount of layoffs going on now. They have made no provisions for people who go under after the dates set in the Bill at exactly the same time unemployment is rising.

So, if you already lost your home, or find yourself in a position later this year due to circumstance you didn't create, you are not going to get any relief from this. Too little too late, except for the Banks and Freddie/Fannie. This bill was not written for the American taxpayer in the end, even though that was the suppossed original intent.

IT'S A DISGRACE!

I Think Lyndon Larouche has a good idea

freeze all foreclosures
all chartered banks get bankruptcy protection
until the economy picks back up
use the Constitution as a guide

Too bad Americans didn't vote for him because they were too busy thinking about smooth talkers and warmongers

out right bail out for home owners would be too expensive
House prices are slated to drop at least another 25%
which means millions more will be foreclosed on
Oh and I believe the agenda is to collapse the American Economy
So that the NAU is hailed by the greedy grubbers as a solution to their dire straits. which would send the grubby money lovers on a stampede trampling the Constitution on their way to vote for the NAU

I think I have to admit, the government bailing out the homeowners might not be a bad idea, not after reading this....

www.lucianne.com...

bank forecloses on the house, the house sits empty, theives come and strip the house of everything, siding, doors, sinks, the fence, heck, even the boards that were used to board up the house. It cost the bank $10,000 to close the sale of this house. the selling price was a dollar...

the banks would be better off just letting the people keep paying the low interest loans and not adjusting the rate....or at least renegotiating with them to come up with something that's affordable to them if possible....
of course, why should the bank care if they just got a dollar for this house, we, the kind taxpayers have already bailed them out! they've gotten their money!
they gripe about welfare being a redistribution of wealth, well, what do you call it when the banks make up terms that they know no one will be able to handle, commit fraud to get people into the houses, then, when the people go under, we the taxpayers get the bill and the house is sold for a buck to someone for "investment purposes".

save up your pennies, nickels, and dimes, by the time it's over you might be able to buy entire city blocks for a buck!

[edit on 14-8-2008 by dawnstar]

[edit on 14-8-2008 by dawnstar]

The government blew it. It's to late and we will pay for this. There are very few homeowners who will even qualify for this bailout.

But all the banks, Freddie/Fannie and even corporate America got bailed out big time in this bill.

Here is what I am seeing in my community. The REALTORS backed this bill big time (NAR) but it is not even stick saving anything. Right now the inventory numbers in the MLS are dropping, the REALTORS are bcoming optimistic - but what they aren't looking at is the number of foreclsures being filed monthly is twice the number of homes being sold. These foreclosures are not on the market yet. This snowball is not going to be rolling right over all of us folks.

In the end, bailing out anyone is a mistake, this market has to be reset, it's going to hurt, but it has to happen. It's only being postponed by this Bill.

What they might have done is just put a moratorium on resetting the sub-prime market (give everyone a REASONABLE fixed rate and maybe even more years to pay it). But it's too late now.

The original draft of this bill was practically written by 1 - 2 pretty large banks for their benefit. It was a readable document in the beginning. By the time it got voted on it was 700 pages of unbelieveable raping of America, I can't say it any more plainly. This one Bill will cost us more than the whole war so far, but it is not bailing out homeowners.

reply to post by Relentless


What they might have done is just put a moratorium on resetting the sub-prime market (give everyone a REASONABLE fixed rate and maybe even more years to pay it). But it's too late now.
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that would have been just too sane!! I mean, it's a much better solution to kick the presses into overdrive printing money to enrich your buddies, let the values of ALL the houses plummet, drive up the cost of living for EVERYONE.....and well, those buddies that you protected and bailed out can go back and buy these houses for dollars....ya, I know the dollar sale house was an anomoly....lol...but still....they will be getting the houses under their value now. and not only that, it's not only gonna be the subprimers now that are being kicked out of their homes. as the cost of living is driven up, and the fed sees the lack of decent jobs as a silver lining....

money.cnn.com...

( God economics 101 really sucks!! does it even give a clue as to what happens when the cost of living get so far ahead of the wages that the wage earners end up homeless, hungry, and with no gas in their car to get to work??)

well, anyways, back to my main topic here.....
thier actions has driven up the cost of living, you can forget about the wages going up to make the difference. state and local government are now gonna have to readjust their appraisals for the lower values of homes, they are gonna have a shortfall, and the property taxes will rise....and the end result is that it will be more than the subprimers that get burned in this. and well, those that rent homes and apartments are getting burned now also, the inestor that rented them their home are now in foreclosure, and the banks are seeing fit to kick them out instead of letting them stay and giving the bank the rent check (like I said, the banks and such have been bailed out, by the taxpayers, what do they care if they make any more money out of these houses.) add to that that a couple companies have already made plea deals concerning these mortgages, and well, I think we still have the turmoil of all alot of these mortgages coming back home to the originator of the loan to roost.
again, I like to point out the sequence of events that led up to this nice scheme......if I am wrong, please correct me.

bush started two massive, long extending wars....and about at the same time decided to give his buddies a nice deep tax cut!!
this created a shortfall in the budget, which he made up by just not giving the states the federal share of the cost of those programs mandated by the federal government......ya know medicaid, medicare, ect.
so, he passed the shortfall onto the state and local governments.
which the state and local governments had to make up and mostly they chose the property taxes to increase.
which led to what was close to a taxpayer revolt!!
so, bush and greenspan started spouting the "ownership society" and exalting these subprime loans that the greatest things in the world!
and people bit! the values of the real estate began to climb, thus the appraised values did...the revenue for the state and local governments began to take care of their shortfall, and then, low and behold.....the state and local governments were reporting great surpluses!! everyone was happy....homeowners had lots of equity in thier home which they could (and idid) draw out and use. the governments were, the banks were, hey, according to some, our economy was doing great!!!
ya, then the great illusion fizzled, since it was all based on deception, fraud, and manipulation!
and we are here.
if anyone doesn't think that this wasn't a planned, orchestrated ripoff of the american people, well....I think you need to look at the facts again....

again, what does economics 101 give as the solution as to when the cost of living goes so far above the means of the average wage earner that he no longer is able to work? do they die out, leaving the business community with no workers? does the government step in and use taxpayer money to keep them going? do we allow cardboard shanties to be built just outside of our cities? just what?

Originally posted by dawnstar
and well, those that rent homes and apartments are getting burned now also, the inestor that rented them their home are now in foreclosure, and the banks are seeing fit to kick them out instead of letting them stay and giving the bank the rent check (like I said, the banks and such have been bailed out, by the taxpayers, what do they care if they make any more money out of these houses.)

This is a very good point, and a part of the mess people don't realize how bad it is. The laws on foreclosures give the Banks unbelieveable sweeping rights, and tenants are getting none. In fact, they could be paying the rent on time, not having a clue the owner has stopped making the mortgage payments until the house gets posted by the Sheriffs Dept. that they have 24 hours -24 HOURS to vacate. They have no recourse, will not get back their secuirty deposits (which in many cases include pre-paid last months rent as well as one months security where I am). Even if they knew the house is headed into foreclosure, they legally cannot break the lease up until the day they are told they have no home. So the rental market is being flooded with people who have 24 hours to move with no security deposits to do so.

There was an article in my local paper yesterday about the number of children registering for school this year with hotel addresses due to this. It's a disastor. My boss started making emergency calls to all our Representatives to ask for emergency legislation to address this, no one returned her phone calls. Right now we are trying to figure if it would be possible to set up a non-profit emergency fund for these situations.

The banks are being incredibly obstuse here, surely allowing the lease to continue while they process the foreclosure and get it back on the market has to be better than another vacant house with a huge yellow sticker on it.

reply to post by dawnstar


This one of the biggest problems now here in my neck of the woods, they are stealing the wiring and air conditioning units for copper.