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Why can't the US governmt arrange lower interest mortgage loans to all homeowners in good standing?

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posted on Sep, 29 2011 @ 08:47 PM
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I believe the US economy could use a boost especially if it didn't cost that much in taxpayer dollars. I have some ideas and the closest I found in a thread after searching was a thread discussing something Obama was considering only for government held mortgages.

Anyway my ideas to boost our economy:

Banks with your existing mortgage to provide refinancing to those in good standing and/or good to excellent credit refinancing at special rates at 2 percent for 5 year, or 7 or 15 year terms, 2.75 for 30 year terms.

For everyone else who has paid their existing mortgage on time for at least the last 4 months and without any other existing mortgage issues, provide refinancing at existing rates and terms by just refinancing using something I call a rollover loan. Their house loan may be underwater meaning they owe more than their house is valued at or their credit may not otherwise be considered good enough. They already have an existing loan and if they have been paying on time, let them rollover into the same loan amount plus refinance costs but at existing rates.

Pros I see: A really big economic boost for the US economy. I would be willing to refinance my remaining loan with 7 years left to a 2 percent 5 year loan. I'd either pay off my loan faster and/or pay less each month. So would just about every other homeowner who has been paying on time.

Cons:
Existing laws, regulations, bank restrictions, new special laws might be needed to allow such a program
I believe the Fed loans to banks at very low rates or next to nothing, refinancing at a 2 percent loan would cut into bank profit.
Banks would still collect refinance costs by homeowners paying immediately or adding it to the loan.

Letting everyone who's paying on time refinance at existing rates might require legislation because it might violate all the other bank requirements about who can refinance. This would not change how much people owe on underwater loans but it would boost their finances years sooner than the banks would typically allow. They could build up equity much faster.

Banks and the government body in charge of federal loans might have less profit or they might argue decreased revenue or increasing losses by having existing customers pay less. However if banks were so successful doing refinancings in the past with the fees they collect doing so, why can't they do so again? They might need to skip the requirement for house appraisals and rollover the loans giving the best to customers with good or excellent standing the 2 percent rate.

How much would it cost our government? Maybe nothing except special legislation to enact it. Well the federal agency already facing losses from federally financed loans might have decreased revenue. Someone would need to estimate that cost for taxpayers. We want banks to stay solvent too. Would reducing their profit on existing loans make them insolvent? If the Fed is providing funds at next to nothing, I think they could take it. After all, taxpayers were on the hook for billions of dollars in tarp funds. Banks should be required to do their part to help the economy. Besides if the program is successful, GDP and economic activity and all kinds of regular bank loans will increase dramatically.
We could keep the program in effect for 12 months.

What do you think?
edit on 29/9/11 by orionthehunter because: (no reason given)

edit on 29/9/11 by orionthehunter because: (no reason given)




posted on Sep, 29 2011 @ 09:00 PM
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First off for this to work... or any plan for that matter to succeed...

A.)American Politicians have to stop lining their own pockets
B.) They have to actually care about the people...

So until they stop doing A and start doing B... Nothing of good will ever come


...very sadly



posted on Sep, 29 2011 @ 09:03 PM
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I think you have a good idea started.

The only downside I see is that it would do nothing to battle over-inflation of the market, thereby still contributing to the current issue of value vs. finance amount.



posted on Sep, 29 2011 @ 09:07 PM
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I believe this could work if banks were required to do it for existing customers. I doubt banks would do it without special legislation allowing it. I do believe it could provide hundreds of extra dollars each year for existing homeowners and banks would collect refinance costs. Except for whatever extra funding the federal housing authority would need, it might not require that much taxpayer money. If it boosted economic activity, it could be a win win for everyone in my opinion.



posted on Sep, 29 2011 @ 09:12 PM
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It's a good idea. I would take it one step further and take the banks out of it alltogether. Eliminate the banks and their profits then principal could also be reduced for everyone without having the governemnet suffer any loss or use of taxpayer money.



posted on Sep, 29 2011 @ 09:17 PM
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reply to post by orionthehunter
 


This idea was actually proposed by congressmen back in 2008 when the mortgage crisis hit. Instead, we got bank bailouts. But several congressmen surmised that if we were lending trillions to banks, we could actually afford to keep everyone in their homes and refinance under affordable rates instead. However, the banks won the day. And then they kicked people out of their home, some that were only guilty of being laid off. We lived a messed up society, and I would support your proposal without a problem. However, the people we pay to think for us seem hell bent on giving rich people more security and to hell with anyone else.



posted on Sep, 29 2011 @ 09:21 PM
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reply to post by orionthehunter
 


You would think they would return the favor after they used taxpayers money to bail out the banks. Instead, because of their predatory loan practices, the banks are reaping the benefits of our government bail out and kicking home owners out on the street.

If you think there's problems with mortgage interest rates, wait until college students default on their student loans because they can't find jobs in this economy. Our government and bankers lack compassion for the hardships of the average American, yet expect us to have compassion when they're having problems paying their bills.



posted on Sep, 29 2011 @ 09:27 PM
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Really, I do not think the government should have any role in dictating banking regulations. Unless, such banking institutions were bailed out by us tax payers.

Banks are so dang greedy. They would rather lose a 350K house to save face than to work with the mortgagee. Very dumb in this economy.

Reducing rates would be a smart thing. However, the housing market tanked and most folks have negative equity. How can we expect the banks to absorb negative equity from the original loan? Not good for the banks. It's not their fault completely.

This issue is a rock between a hard place. We have a long haul.



posted on Sep, 29 2011 @ 09:28 PM
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reply to post by orionthehunter
 


I think that is an excellent idea. It would fall in line with the Gov's low interest loans that they are providing currently to the corporations... Just today, I learned of a bank that was set up by the Federal Government in the 1970's. The one that loaned Solyndra the money it lost... Check out their interest rates - 1%... Yeah, I know they borrowed a lot and there's probably a million different reasons why they can't do it... but still... Sure would be nice. Of course, those who need it the most are those who DON'T have good credit and can't even get a good rate if they tried. One friend of mine in marriage difficult, poor credit situation is sitting on an 11% interest rate, but can't get credit to get a more affordable loan... That really stinks too...



posted on Sep, 29 2011 @ 09:28 PM
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reply to post by sligtlyskeptical
 

I believe that would cost taxpayers and/or our government trillions of dollars. I believe the banks or some entity holds our mortgages as an asset and for the government to take that and reduce the value of it by reducing the amount owed, our government and taxpayers would be responsible for the amount reduced. Right now, it's mainly the banks who own the mortgages. Plus if a bank owned a mortgage valued at say 100,000 and the government took control of it, the bank would want to be compensated 100,000 for the asset the government took. The banks would love to transfer a lot of underwater mortgages to our government.

It would be a tremendous government giveaway to homeowners if our government reduced principal owed but I believe that would cost trillions of dollars so while it sounds great, I do not believe it's practical with our current economic and political situation.



posted on Sep, 29 2011 @ 09:31 PM
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Good plan, all that I would add is for valuation purposes, the city/town assesses your house and your house only for an accurate appraisal. If there are 10 homes in a two mile radius from me and 5 of them foreclose...and the bank sells them for 60%, why should that affect my house????
Lets be honest, the reason that people are under water on their loan is because the values have dropped.
If I turn my home into a $300,000 home then thats what it should be, not because someone down the street didnt put enough money down and cant pay his bills right??



posted on Sep, 29 2011 @ 09:35 PM
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Ill give you my two cents...(That's close to all I have left...). Your plan is excellent...but what if the Government, in this time of profound recession/depression gave EVERY US taxpayer (who holds a mortgage on the residence) a $5,000 bonus...with the caveat it has to be used for local property taxes that are in arrears; or on energy efficient appliances; new windows; etc. The recipients could NOT save the money--it would have to be spent. Within a given time frame.

It would spur the economy; add jobs; add apprentices to building trades; add money to local tax bases (clearing up past due property taxes). I bet, if the numbers we're run, it would cost LESS than any of the TARPS or even the Green Energy quid pro quos.


But...we cannot have the hoi polloi control any funds...no...DC knows best (and knows which lobbyests are most beneficial).



posted on Sep, 29 2011 @ 09:56 PM
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reply to post by brilab45
 

I suppose to make this fair, the government could dictate to banks who accepted tarp money and for other or possibly all US banks, provide special legislation to authorize these special low interest rate or special underwater roll over refinancing loans. I really don't care if the bank provides the loan or if the government itself offers it. I would be happy to refinance at less than half the rate I'm paying now. I was thinking the banks might protest even more if the government took away some of their best customers.



posted on Sep, 29 2011 @ 11:00 PM
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Too make things worse, there’s about $1Trillion worth of commercial property mortgages coming due within the next year as well.

I’ve been able to help some homeowners who want to keep their home. They sent a letter asking for their mortgage note to be sold to me. If their lender agrees to sell it to me, which some have, I’m able to restructure it and help the homeowner out. There’s so many I haven’t been able to help out, whether it was buying their property out right or buying their note. These lenders could do more to help the situation and I don’t get why they won’t. I’m sure there are some people that work for these lenders that can think of an outside the box solution to help everyone involved. I’m willing to bet if they wanted to they could create a win win situation for all parties involved. They could also cut the amount owed in half by creating two separate notes. Have the second note become dormant while paying the first off and once the first position note is paid off the second will become payable. I’m sure millions of people would benefit greatly by this.



posted on Sep, 29 2011 @ 11:04 PM
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reply to post by orionthehunter
 


Because theres only about .1 % who are in good standing and really they probably even should not be.
I think they should go to homesteading again myself... it's sickening that 99.9% of people can't and never will be able to "OWN" their own home it disgusts me.

Second.



posted on Sep, 29 2011 @ 11:06 PM
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The people I know don't trust the system. At all.
You couldn't pay them to take a house,
if that meant they had to sign a contract.

They would be more likely to take the accountant and beat the lawyer to death with him.

Cash, on the other hand,
they will deal with.


David Grouchy



posted on Sep, 30 2011 @ 12:25 AM
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I do believe the banks could be doing a lot more based on what I've read and heard. If someone is currently making payments on schedule and can't take advantage of the low interest rates to refinance because they owe more than their house is worth, it just doesn't seem fair. I don't know if it's because of regulation and inflexibility between bank controls and government red tape or oversight or just greed but decided to start this thread because I do believe there could be a win win situation here that doesn't cost taxpayers that much if anything and fixing this could help a lot of people and boost the economy which would help everyone else.



posted on Sep, 30 2011 @ 01:18 AM
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Our family bought our first home at the peak of the market in 2004. Hindsight is 20/20, but we overpaid. Lots of folks did, there was a buying frenzy as the values kept going up and up. Regardless, we were satisfied with the deal at the time. Even though my wife and I are both self employed, and provided no actual documentation proving income, we were qualified for a million. A million. The greedy bastards were giving loans away.We purchased something that had payments reasonable for our situation and started happily plugging away at that 30 year loan each month.

Fast forward several years and the housing market crashes. Like so many others, our current home value is half of what we owe. If we wanted to be here long-term, no worries. I'd keep paying it, because that's what I agreed to do when I signed on the line. I honor my debts. The problem arises from the fact that our young family is growing and we need more room. It's time to move up. How can we do it?

The market is so soft that we cannot sell for what we owe. We also don't have the difference to pay off the note. So, potentially a short-sale, if even the bank will agree. The tax hit would be devastating, and our credit would be damaged. The resulting higher interest rates and insurance rates would mean less income to spend on goods and services in the community - stimulating the economy. Do we walk away entirely and go back to being renters? A foreclosure would destroy our financial standing and even further impair the level of "disposable" income we have to spend.So where's the help for those of us that have done the right thing, can afford what we bought and want to be responsible, but have fallen victim to a financial crisis created by the greed of the banksters?

Sure, interest rate reductions help in the short term. We got one, and didn't even ask for it. The holder of our note contacted us directly two years ago and identified us as one of their "Tier One" mortgage holders that had a perfect payment record. They wanted to help us keep it that way, and secured a rate reduction that is saving us a considerable amount over five years. Nothing was packed on the end of the loan, I paid the refinancing costs up front (they paid for themselves in the first four months of payment reductions). All fine and dandy, but we still owe twice what it's worth.

For people like me, who want to get out of our property and into a larger one, the only assistance that would be beneficial would be principal reduction to current market value. Then we could sell, use the savings from the earlier rate reduction as a down and buy something new. Instead we're trapped. I don't care that this will cost the banks. They deserve it. Let's not forget that the banksters bundled up the risky mortgages they were giving away, sold them as assets (often more than once) and make trillions on the artificial financial instruments created for just that purpose. Why can't we play the same game and invent money to pay off these inflated loans? If the Fed can mash buttons to pump trillions in invented dollars into the bankster's coffers, do it in a way that will help the little guys - Remove the burden of being underwater from millions of homeowners. It could stabilize prices, allow inventory to start moving again and stimulate the economy as a whole.

Or, I could just walk away from this property, live completely within my means and pay nothing to the banking cartels in the form of interest or other usury and let them rot from the inside out. Decisions, decisions.



posted on Sep, 30 2011 @ 01:56 AM
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reply to post by orionthehunter
 


I think they are doing something like that now...

www.makinghomeaffordable.gov...

1. People need to be behind on their mortgage and write a letter of intent saying that you intend to keep your home and want to live there but just can't make the payments.

I think the reason for this is so if they MAKE YOUR HOME AFFORDABLE by lowering your rates you don't resell right away and defeat the purpose.

2. They also need to show what income they are making now as in IRS forms and paystubs for last 4 weeks.

3. They need to fill out an income debt sheet showing finances and expenditures monthly. This sounds invasive but what they want to know is - if they give you this lower rate...are you going to make the payments. Some people even at lower rates, it is not clear they will be able to afford to make the payments and so they see this person as a bad risk.


I think it's possible to get interest rates at just over 3%.


edit on 30-9-2011 by newcovenant because: (no reason given)



posted on Sep, 30 2011 @ 01:58 AM
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because the gubberment don't arange mortgage rates, that's bernanke's job.....



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