Take two: Gov't tries new fix for mortgage crisis

Take two: Gov't tries new fix for mortgage crisis

news.yahoo.com

In theory, the effort unveiled Friday would help millions of troubled homeowners who owe more on their mortgages than their homes are worth, or who are jobless and need a break on their payments.

But it depends on cooperation from investors and bankers

(visit the link for the full news article)

The new effort is designed to help two groups

• Borrowers who owe more on their loans than their houses are worth. More than 15 million homeowners fall into this category.

• Unemployed borrowers. People receiving unemployment benefits would have their mortgage payments cut to no more than 31 percent of their monthly income for three to six months.

The problem is that most of the troubled mortgages aren't owned by the banks themselves. They were bundled into securities during the housing boom and sold to investors. those investors don't care if Joe Blow gets tossed on his ear they want their promised money!

This whole thing stinks of more bailouts more pressure on the tax payer and more opportunities for the rich to get richer and the poor to seek homeless shelters...

I still think we should have just let the markets collapse, it's happened before and we came back undoubtedly it will again and once again we'll pick up the pieces and rebuild...
that's what we do

news.yahoo.com
(visit the link for the full news article)

In theory, the effort unveiled Friday would help millions of troubled homeowners who owe more on their mortgages than their homes are worth

Isn't that called "market forces"? You buy an asset that can depreciate just as easily as it can appreciate, and you take a risk at the time you buy.

The real problem is that credit was offered at levels that were just completely unaffordable to those who took them out. The house prices rose on the back of this lending. The housing bubble, crazy credit lending and the eventual bust was just waiting to happen.

IMHO bailing out the housing market in any way (low interest rates or helping the banks) should not be allowed. The banks should be made to foot any loses, go bust if that what happens, but the home owner should not become a slave to the system because they were mis-led by the bank or mortgage provider (whether knowingly or not).

The fact these mortgages were then wrapped up in financial instruments and then sold on, enabling them to become a ticking time bomb for some other part of the economy was just bad luck.

That homeowners owe more than the house is worth is not an excuse to bail them out. Why not bail them out because they like Ford cars? Crap reason. Negative equity is only a problem if you want to sell. If you choose to sell knowing you'll make a loss, that is your lookout, and don't cry when you do.

Home owners are not completely free of any blame. If your annual income is £25,000/year and you buy a house worth £250,000 (10x salary) when house prices are rising rapidly (it was what, 15% per year at its peak, if not more?) - expect to get burned.

And just like the bank bailouts, this rescue plan poses risks. If it doesn't slow the wave of foreclosures or if home prices nosedive, the tentative recovery in the housing market could fizzle.

That is what it needs. People are selling flats for £200,000 that they bought 15 years ago for £30,000. Salaries in that time have only risen 45% (average. 3% per year, if that) compared to housing prices that have risen 666% in the same period. It is absolutely crazy.

Only when house prices return to some level that is relative to the salaries people earn will things be as they should.

[edit on 27-3-2010 by mirageofdeceit]

reply to post by mirageofdeceit


Amen brother...

securities trading is gambling... your betting your investments will go up...
Not so very different than doubling down at the blackjack tables...

the problem is somehow the Government had decided securities gamblers are entitled to tax dollars to cover their bad bets...

And no one in washington has a problem with that????
Little wonder the rest of us have serious issues with those people in washington!

It's political theatre folks. This is purely VOLUNTARY on the part of the banks and they are simply uninterested in fixing what is broke. I have been trying for 9 months to work with Chase bank and they always find new and creative excuses to NOT offer refinancing assistance. They are no longer receiving any mortgage payments from me. I am saving that money for the eventual foreclosure so that I can afford to move my family and rent an apartment somewhere! Their bravado is going to bite them in the ass as more and more people become fed up and opt out!

reply to post by DaddyBare


Absolutely!

Here in the UK they're keeping interest rates low, in part to try and keep the housing market afloat. Why just prolong the problem?

One argument is that there is a shortage of housing stock, but who owns the home building companies? Do they have a vested interest in not building houses to artificially inflate the price of existing properties, so they can profit from interest on higher mortgages? Makes you wonder...

I may not agree with the program 100% but I think some people might want to look into it.

My brother is unemployed and falling behind on his payments. He went to ask his loan institution if they could help him out and the institution pretty much told him he was S.O.L.

From what I read, most of this is based on encouraging or providing the banks an incentive to help out. Banks don't have hearts, merely deep pockets.

oh goody been waitin patientely for my turn! hot dog all i can say is every american should for one hold there breath> secondly wait. then wait. then wait a bit longer under water. as your free mortage will soon appear. wait its comin. utro. under all this water. the relief is sure to come right? nope just a bit longer? then the average american fizzles out! your dieng breath tells you to grab a breath. but owe no your stilll waiting for the govt to get you out of the pool! as you see saint peter and the perly gates you ask god why? owe why god did i wait patientely for this savior to help me and my family out! and god says hey idiot did you realy think that a guy that has to read from a telepromter was going to save you ?