Program Will Pay Homeowners to Sell at a Loss

Originally posted by Rockstrongo37
reply to post by kozmo

 

All I have to say is that every example we see where the government bails out something, it never becomes profitable for the tax payer. Its always badly managed, and the government gets a stronger hold on something that should be kept in the private sector.

I don't disagree with you one bit!!! If the government had just stayed out of this at the very beginning this problem would have likely resolved itself by now with those banks deserving failure - failing!

Instead, government tinkering has exacerbated the problem. I see this program as the correction that should have been allowed before the tinkering began. This is really a tough call, but I believe it is necessary at this point.

Oh yeah, I do not care what new fangled maneuver they cooked up now.

What caused all this crap to begin with, OH YEAH the government and the banks manipulating the markets to begin with.

I swear, everytime these "supposed" geniuses want to help the market, WHAT HAPPENS?

We either have the most incompetent people ever in government, or the MOST competent in the history of the country.

Every time I hear this stuff, you know what I think? Our country is able to weather their destructive practices even though they are doing there best to completely tank the economy.

Well, the people that did not listen over the last couple years to people to shore up there crap, better at least stock up on guns. I hear they are about to start flying off the shelves again.

Buy Remington stock now!

[edit on 3/8/2010 by endisnighe]

Look at the price slide in the Case Shiller tables from 2007.

www.macromarkets.com...

Out 3 years the decline in reported prices has slowed or even reversed in some areas.

Now compare that slide to the West Coast bust that started in 1990. After the 1990 west coast bust prices declined for over 6 years!

The government economists apparently understand the value of a clear price bottom to attract buyers.

reply to post by kozmo


I knew a number of vultures, and they wait till market hits bottom before they wade into the market to buy.. Now if these are the only people out their able to buy then they will be the ones to establish the market price..

And that is where my problem with this lies.. those with the money are the ones who define the market value and will be able to take advantage of this scheme to the detriment of others.




[edit on 8/3/10 by thoughtsfull]

The people that take advantage of this program and reduce their prices more quickly become potential buyers.

The effect is that the market clears itself of inventory overhang much more quickly. In the short term house prices go down much more quickly but the recovery happens years sooner.

The question is will this approach make the price bottom any lower VS hanging on to inventory for years and putting these potential new buyers through foreclosure?

My guess is that if you are trying to hang on to the old homestead and don't want to play musical chairs you still might be better off price wise say 5 years from now.

[edit on 8-3-2010 by Bordon81]

I see one really big ugly word in the article... Banks will be required to FORGIVE the balance of the loan. From my understanding, when your loan (any loan) is forgiven, you must categorize the amount forgiven as income. 100% of the forgiven amount.

If my understanding is correct ( and I accept, I may be wrong on this ), then say someone was making $120K, bought a $300K house on 30 mortgage, then got fired or layed off. They cannot find a comperable job to help them make $2000/month mortgage payments. So they short sell. Let's say they have been paying a little extra a month and have managed to get that mortgage down to $250K. They short sell for $150K because that is what the market is at, and the bank forgives the $100K differance.

In this scenario, this family, that cannot find a decent job because of the economy, now has to pay taxes on an extra $100K of income that never really existed for them. Meanwhile, the banks are getting an exemption on taxes for the same amount.... Hmm, actually, I seem to recall that in a situation like that, they can already call that $100K a loss and write it off of their taxes.

How does this help homeowners again?

Edit to add: If the banks aren't interested in this, perhaps it is because they already have the system so "baked" that they don't pay taxes anyway, so a tax break doesn't buy them anything.

[edit on 3-8-2010 by rogerstigers]

Another win-win for the banks!

Another laundered bailout leaving the citizen homeless or at best hamstrung, and the banks with a marginalized loss at worst.

Is it any wonder we are drowning in debt, when everything the establishment does is geared to support debt as the means of exchange?

I am beginning to see why some say that bankers run the world and 'captains of industry' is just a euphemism for 'royalty'. Welcome to debt serfdom!

[edit on 8-3-2010 by Maxmars]

reply to post by kozmo


Okay. Let's say you bought a 1972 3BR ranch that was $25K in 1972 for $125K in 2005 and it appraised at $125K. On a 30 year note, the payoff is $195K because you didn't get the best rate. You put $30K down and have made $27K in payments over the past 5 years. So you still owe $138K.

That exact same house is now valued at $75K due to the foreclosures in the neighborhood and the glut of available housing. Best offer you get is $75K so $63K will be forgiven. The bank has made $132K out of a potential $195K in 5 years versus 30 so they have no real complaints since they were never out a dime to begin with. (see fractional reserve banking).

The realtor is going to make 10% commission or 15% if they represent both buyer and seller. So $7500-$11250. They are happy. You the seller is going to be out $57K and you have $1500 to find another place to live. If you have been struggling to make your payment of $458/month on house, you are going to be in a world of hurt trying to find a place to rent because $1500 is not going to be a down payment on anything other than a rental. Because your house will rent for $400-$500/month easy.

Oh, did I mention the fact that banks are still not lending the way the bailouts were supposed to start making them lend? I hate to say it, but an RV looks to be a better investment right now than a house is. At least you can move that to a new location to try to find a job and hookup fees at year round campgrounds are reasonable.



[edit on 8-3-2010 by Ahabstar]

reply to post by kozmo

Today, I am unemployed and unable to find a job that pays even half what I have been accostomed to earning for the past 12 years! My wife's income has been cut by over a third - almost by half. We've exhausted every resource we have to "Do the right thing" and honor our debt obligations. The problem now is that we are flat broke - everything has been used! So..... what are we supposed to do???? House prices have completely collapsed and we've no where to turn. We owe more than the house is worth and cannot get an offer anywhere near what we owe. We also cannot continue to pay the mortgage. Foreclosing on us, puting my family out on the street will help no one!

Have you looked into a Home Loan Modification? I know some people participating in it. It's an Obama plan. From the website:

This plan can lower your interest rate to as low as 2%, extend the term of your mortgage to as far as 40 years and possibly forebear or forgive a portion of your principal mortgage balance to attain a mortgage payment equal to 31% of your monthly house income.

I hesitate to give the full links to the program because of the vague T&C rules, but you know how to use google.

Seriously, look into it. It might help. Good luck.

Yup an RV is the way to go . I bought a 36' 5th wheel for 10k$ 1/2 of what it should have went for. paid cash and now live on 40 acres for pretty much free.