Speak Out!
Mortgage Aid
Mon, 04/07/2008 - 09:17 | Economy
While Congress and the administration grapple with whether, and how, to deal with the growing number of defaults on home mortgages, a Los Angeles Times article addresses the issue of who should get aid:
The House and Senate are beginning to consider proposals for federal intervention on a massive scale. In effect, the government would take over many of the risks now borne by lenders, borrowers and investors -- offering to revamp and then guarantee about 1 million troubled mortgages in an effort to shore up plunging home prices. Many of those who bought or refinanced their homes with sub-prime loans were victims of overzealous loan brokers paid on commission. But many others knowingly took out mortgages they couldn't afford, betting that home prices would keep rising and that they could easily refinance. Whether all these borrowers are deserving or not, political leaders are being forced by events to take increasingly pragmatic approaches to the crisis at hand.Does it matter if some undeserving borrowers are helped by the federal government if it means easing the current economic crisis?
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Comments
Mortgages
How stupid can you get? Bailing out people who won't work, have no credit, live like leaches off of taxpayers and expect me to do without so they don't have to makes me gag. When are people going to become responsible for themeselves instead of stealing other people's hard earned money. Get off your butts, get a job, get a credit rating and learn to take care of yourselves. Or maybe you should just move in with the dictator in the White House.
Mortgage Buydowns: A rapid recovery for the Economic Stimulus
President Obama has introduced a mortgage stimulus package that addresses a small portion of the financial crisis, in that it attempts to slow down the rate of foreclosure on “at-risk” mortgage loans; but does not address the broader market-wide property devaluation, nor future economic stresses on “good loans” and the consumers who currently are able to pay them, nor the accountability of the industry for the historical actions taken, nor any rewards to consumers who were frugal and conscientious in their home purchases. We are all victims of an industry that over-inflated the values of property purely for profit; and now the President and Congress proposes - what they contend are necessary - measures that ultimately are rewarding the greedy and reckless for criminal and risky behavior.
Certainly some measures must be taken to forestall the rapid deterioration of our financial infra-structure: some measures that will truly bolster the confidence needed for the financial markets to stabilize and rebound.
It is possible that all economic indicators are correct to suggest that our troubled banking systems need propping-up and rescuing by the government, since the capacities of these financial institutions are currently shrinking daily. But do they deserve to be rewarded, as private corporations, for their irresponsible predatory actions against the American consumer. It is pretty certain that these same corporate entities are not providing a similar level of assistance to the millions of mortgage holders who were duped by their scandalous behavior. It was these corporations, along with the federal agencies and real estate industry regulators who all compromised the stability of global financial markets by escalating property values, creating extremely risky financial systems, de-regulating corporate conglomerates and "green-lining" certain economic demographics for pure profit. Their actions demonstrated absolutely no concern for the impact on either the American or world economy.
It has been conjectured that the basis of the current economic condition lies in the uncertainty of bundled mortgage investment packages that no investor or bank wants to touch; and the problem for the consumer is that this has tightened lending, stifled market growth and left the consumer with tremendously deflated property values and few sufficient institutional supports for recovery. A financial stimulus, to the banks, is only potentially a part of a larger solution needed. Getting to the core of the problem requires a resolution that will move our economy forward rapidly...and here is how I believe this is possible.
Should the federal government designate a portion ($300 billion)of the stimulus package to "buy down" mortgage principles (i.e. - any made between 2002 - 2008: approx. 5 mil loans) by 25 - 30% (max. $60.000.00), it would:
1. put that $ 300 billion back into the banking system, while
2. punish the industry by reducing principles and also reduce the interest they gain – forcing their responsibility in the correction
3. make mortgages more affordable for the average consumer
4. provide certain relief for everyone and help slow down future foreclosures,
5. provide savings that the consumer could then spend on other market products and services,
6. stabilize "bad" mortgages and make those bundled investment packages more attractive to investors,
7. encourage lending by global investors who – at this time – are not,
8. serve as a pragmatic model for stimulating the economy and stabilizing the failing markets around the globe and
9. provide a “feel good” to the regular “Joe public” who is now suffering and is petrified about how this happen to a nation like ours.
If we are to remain the leaders of the world by setting the trends that make people’s lives better, then let's institute "real" solutions to this economic crisis that will demonstrate - to the world - that we are who we claim to be… INNOVATORS.
Leon Haslip
I was looking at a program on
I was looking at a program on TV in which Alan Greenspan in years past (the early 2000's) actually encouraged the sub-prime markets, saying in effect that the banks SHOULD create new mortgage loan vehicles for the market. Now I'm no economist, but it seems to me that when the head money guy says let the hounds go, the foxes better beware. And since the Gov't can prop up the zillion-dollar companies...well you know.
I love all of these
I love all of these responses. You all really have it goin' on! That's a lot of knowledge and ideas to think about. All of our responses are valid.
Peace
V. Moore I applaud you!
V. Moore I applaud you! Credit reporting and FICO Scores. Very good point. Excuse the debt of the BORROWERS, this will reduce the nations debt. Biblical Fact. Credit card interest rate is designed merely for gouging purposes. Business 101 If the consumer does not question these fees, the corporation gets away with the $$$ free and clear. Question and challenge the credit card companies; demand lower interest rates and an offer in compromise. The banks will except a short sale on foreclosed properties and they will have to accept less than what they are charging the homeowners. All of the above works 100% of the time. FICO needs to go because of the underwriters discriminating tastes [so to speak]. If 1-2% is the line in which I know that is used for fees. Then baby please overstand this is the profit margin for originating a new loan. It is the bankers or underwriters choice. The choice made is....mark up for blacks...this is a known fact. Look at the person physically and make the decision...That is how this country's money handlers are trained. Mind Control generally handles the rest.
Scientifically speaking NO ONE HAS EVER BEEN ABLE TO GET BLOOD FROM A TURNIP.
When I signed up for the
When I signed up for the self-help program in my community four years ago, I did not, and still don't think of myself as undeserving. I served in the military and I could have used my VA, but because of my credit history at the time, because I really didn't have anything to show that I made big purchases, they too were reluctant.
Anyway, some people qualified for subsidy from USDA when the homes were built; me, because because my income was so high, I did not qualify, but was told that I still could build the home based on previous income when I signed the initial papers. My thing is they tell you that you can get a home for less than you would pay on the normal market because the program is designed for low-income families. Well what they don't tell you is that your mortgage is subject to go up $200 - $300 over a 3-year period. Now, if your income does not change as much and as often that these payments go up every year, this causes a financial disaster.
I have attempted to apply for subsidy and was told that I made too much. I moved into a rental place in another location for a better paying job because the job I had was not paying the bills. Now, I'm being told that I don't qualify for any type of assistance since I do not reside in the home.
These sweet deals that some of these programs that are offered to low-income families not "undeserving", because that just sounds belittling to me. These deals are not always what they seem; it's like they want to make it seem like they are helping people, but in the long run they hurt you more than you were when you began.
Should people get assistance, yes because people are being deceived and these are people who are actually getting out there and willing to work to support their family. No offense to those that cannot work or cannot afford to work because welfare/SRS says that $6.50 an hour is too much of an income to get assistance even you have three children. But, those that are able to get out there and choose not to are a different story all together.
Something needs to be done in order to have these type of organizations know that you just can't be out there saying we are here to help you and end up increasing mortgage payments by $100 a year.
UNDESERVING.... Hmmmm..... I
UNDESERVING.... Hmmmm..... I just don't like that word... Especially when used in the context to judge and or decide another person's HUMANE WORTHINESS to obtain SHELTER... or to be able to afford FOOD, CLOTHING, GAS to get to work & MEDICINE/HEALTH INSURANCE... The strange to ominous use of this word, UNDESERVING, is that as the "what do we do now" is being talked/thought about, there is a blind eye and deaf ear being turned to the thud of the other shoe, errrr uhhhhh, BOOT DROPPING with regards to rewriting the rules on CREDIT REPORTING & FICO SCORES. Both have been used as profiteering tools and poison to the BANKERS & the BROKE, respectively, to identify those with less than favorable, questionable "redlined" credit.
Further, how *ucked up are we in the head to treat our life necessities... you know, stuff like shelter, air, food and water.... as COMMODITIES!!!
Perhaps the most "deserving"
Perhaps the most "deserving" people in this mess are the prudent renters who have low incomes and rightly judged themselves not ready to try to buy a home.
If we would just let this bubble burst and the home prices come down, then many more low-income people will be able to afford to buy a home in the future.
If, through government intervention, home prices are propped up, it helps the greedy and hurts the needy. It also adds to the Federal debt, which would be financing the intervention.
If government bails out the new home building industry in the name of creating jobs, it is a "make-work" program. Better to hire people with government money to build windmills and solar power plants, than to build new homes when the market is glutted.
I agree w/senator from DC, I
I agree w/senator from DC,
I worked as a loan officer for 7 years and made good money doing so, I made a choice to leave this GREED-driven profession because I knew the bubble would BUST! I started when Sub-prime hit the market over 10 years ago.
First I would like to say the Government cannot bail out American people, but they will try to bail out the lobbyists funding their campaigns; that’s being real about family.
Second, Housing prices increased so fast all across America because of this industry cheating the system without big brother saying anything. Big Brother was paid by lobbyists to look the other way and now the cat is out the bag.
There are going to be some who don’t want to hear this, but I say it because I care. Most of the people loosing their homes COULD NOT AFFORD THEIR HOME IN THE FIST PLACE! If your Mortgage payment is 15% or more of your monthly pretax income then you are taking a real risk and buying more that you can afford. I know that when you do the math, you say 15% takes away my buying power, but that is why you say money for a down payment of 10-20% before you buy.
Here is something else some are not going to want to hear: if you have to get a loan for more that 15 YEARS then YOU CANNOT AFFORD YOUR HOME! No bail out is needed for anyone because in the end the only ones on Government welfare will continue to be the large companies stealing from hard working Americans.
Well, at this point, no
Well, at this point, no matter what their intentions were, ANYONE who bought a home during this tumultuous trend is in trouble. And no matter how you slice it, they are American citizens too! Moreover, they too have helped to finance this 'dumb war' that has helped to make this such an economically challenging time. Not to mention, no one was mad at the 'zealots' buying houses when the gold rush was in full swing and the mortgage & real estate industries were making big bucks!
So in light of all that is going on, and with the big boys having made off like fat rats, I say HELP EVERYBODY! In my humble opinion, it would not be 'pragmatic' to parse charity cases in this scenario. We all need a leg up right now, no matter how stupid we have been. Like the observer at the King event shouted to McCain at his foibled speech, "we all make mistakes", and I agree with that wholeheartedly. I believe that in this age of 'dumbing down' and 'under-education', these folks have learned a valuable lesson in economics and real estate trends. Lord knows they never would have learned it in school! lol. These are entrepreneurs who help make our economy too, so help 'em all! HIP HIP - HOORAY FOR GOVERNMENT INTERVENTION! lol. Hell, ain't that what gov't is for?? ;-)
Glad you asked and glad to
Glad you asked and glad to respond. Greed and dirty deeds are the color of money. The government is part of the problem. The cost of living increases, tax increases for the citizen, tax breaks for banks and corporations....hmmm do the math.....crash! Bail out banks?! Shut them down...All of their redlining and discriminating tactics has finally caught up with them. The gouging and unnecessary fees, the doubling of interest rates on short term loans. The CEOs coasting away on their billion-dollar parachutes. Excuse the debt owed by the borrowers once every ll years and it will all balance out. Amazingly it does not cut into the profit margins nor the skinny piggy banks.
It depends on the level at
It depends on the level at which "undeserved" is taken. Who sets the mark for a group, class, or societal straticized sector of a ton of people who were leant a sub-prime loan? It really does not matter how, who or why the loan was obtained at this point, but more importantly, the whole lot of that particular lending process was WRONG. In my opinion, the government knew what time it was in the first place; many of us cannot even get out of the neighborhood grocery market without our names and SSN#'s being strewn all over the U.S. borrowing boards.
So give me a break on whether someone should even suggest that one is deserving over another; looks like they all deserved the loan according to the lender.
With that said, the U.S. has the money and is able to afford releasing some of the loans along with even subleting most of them. Government agencies, charitable industries and the like all manage to gather up enough money for the Third World countries, why not help out all those thousands that were literally taken for a ride?
I believe that the first ones
I believe that the first ones to be helped with the mortgage crisis are those that were duped by the mortgage lenders and their brokers. For example, here in Chicago, there was a retired elderly man on a TV news piece, that recently had gotten an adjustable loan. The problem - he was on a fixed income, that was known to the broker who falsified his loan papers to show the man's income to be 4 or 5 times his retirement and now his mortgage is 3 or 4 times (approx.) more than his entire retirement income, and an elderly old man is out of his home that he had paid for to live in till he died. He only borrowed to fix it up, and was told that the payment would not go up much.
I think that each case should be investigated (paperwork will tell a lot) and owners interviewed and help should be on a case-by-case basis with certain guidelines. However those taking risk as investments should not be helped. After all if they took the risk on Wall Street, would the government bail them out? Mmm, or would it?
I think that only those duped and with undue hardship, that can show that they now can support a fixed mortgage with a reasonable rate, should be considered.
I also believe that it is foolish for lenders not to consider a re-modification of a loan if feasible, because they stand to lose if the home either sits empty with no payments being made or if the home is sold for less than it's worth. And trying to go after the ex-owners for the default balance, for thousands that is still owed may be a lose-lose situation. These people are families who won't be able to pay for a place to live and pay for the remaining balance on a home that they no longer have. And to make matters worst, this situation means millions of these same former homeowners will not be credit-worthy for another home. At least not in the near future. Even if they have a decent salary. Which is lost future business for the lenders.
To not work with the homeowners now, means a loss of future business for the lenders.
I rest my case.
If the government can back
If the government can back the bailout of Bear Stearns, then surely citizens should receive assistance. Our country has elected to spend billions in the war on terrorism. I believe it is time that the government step up and do something for the citizens. It is conceivable that our government, primarily the Congress, will engage in finger-pointing and ultimately wait until the problem erodes the economy to nothing.
Senator-From-DC, All I can
Senator-From-DC, All I can say to your comment is what a formula. Nevertheless, where does that leave the economy? I say the Government step up and help the citizens, but go after the lenders; bankers; later to get their monies back. After all, we know getting monies back from large corporation is a process. When you sign your name on a document, that is your binding agreement, and it’s not easy or downright impossible to get out of. So what would be the fastest way to revive the economy, or the slowest way? We are dealing with a bigger storm than just the lenders and bankers. This crisis is affecting us all and right now. I personally do not think the Government will go broke if they were to step in and ease the storm.
However, I do agree with people being held accountable; but right now, this instant, the economy needs to be fixed. We are in an emergency mode and it is not getting any better. That’s just like rushing someone to the hospital that jumped off a bridge - knowing clearly the consequences; so should the emergency room say to the victim, hell no take his a** back to the bridge and let him die, or help the crisis?
This scandal is reprehensible
This scandal is reprehensible on so many different levels. Those brokers and their houses are liable, and the consumer who signed on for a loan far above their means are just as culpable.
The Government bailing anyone out is ludicrous. They should be fining and arresting those perpetrators with a quickness. They knew they were duping citizens all across this country. They were not in this for the welfare of these citizens. If they were, at least six months if not more before the change of their rates, they would have contacted these folks and had them prepare themselves for refinance.
These brokers knew that they were duping these citizens.
Let's keep it real. Overwhelmingly, Black people got caught up in this mess. They were targeted. Because they wanted this dream so badly, they figured "why not, we deserve it". Most people do not know the ins and outs of home purchase documents, they are depending on the agents and brokers to have their best interest at heart, and to be on the up and up with them.
Three years ago, I was on The Hill, and this was in fact a topic on the floor. They knew that so many citizens #'s would be up, and they were talking about the ramifications then.
Alan Greenspan was at the helm...he was asleep at the wheel. This should never have seen light of day. This was merely a "Three Card Monty".
Those citizens will not slide....they knew they could not afford a $600 and $700 thousand dollar home!
Hell no...they should not be bailed out. Not the banks, the brokers, or the greedy citizen. Now the citizens that were legit...yes, they should be fully compensated, and their credit restored. Especially the thousands upon thousands of folks who were eligible for a traditional loan and somehow received a sub-prime loan....They were straight out duped!
Peace and Wisdom
If the Federal Government
If the Federal Government does not step at this point, then guess what suffers even more, the economy. Job losses, high gas prices, escalating food prices and so forth. Even though some people may have made bad decisions, greedy lenders, commission demons, we are all feeling the wrath. I think the Federal Government should step in; after all it is not every day the Government steps in. Hint Hint-Katrina. Therefore, instead of contemplating on who did what, I think for the overall welfare of this country, my answer would be yes, the government should.