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Old 09-30-2008, 07:54 PM
 
862 posts, read 772,751 times
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Quote:
Originally Posted by TristansMommy View Post
THAT.. is NOT a bailout.. the government.. the taxpayer.. wouldn't give a dime to the bank for a remodificaition!! BAsically it's fixing the interest rate and extending the maturity.. hence getting paid back for the loan given!! Where in what I said does it say anything about the government giving the banks money for doing that!!!
You forget that, Socialism for the rich,capitalism for the poor is an unalterable law of the universe, like gravity.So sorry.
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Old 09-30-2008, 08:44 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,113,603 times
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Quote:
Originally Posted by gbone View Post
Tristan, it actually would have been part of the bailout if it was left in. A lender loaned the money at x percentage rate over a certain period of time. The lender then turned around and sold this loan to another player(investment bank, etc.) who expected to get a certain return for their investment(x+1) over a certain period of time. If a judge interferes with this transaction and reduces x or extends the payment period, then the player that bought the loan is losing money. Had this provision remained as part of the bailout package then the money to make up the difference would have been paid by the taxpayer.
You asked in your original post for someone to explain why the provision of letting judges reset mortgages to lower interest rates was no longer in the bailout plan. This was one of the primary reasons and I wasn't stating it to upset you but just trying to answer your question honestly.

And why would the government have to give that "difference" to the bank... The government could allow for that to happen without giving that "difference" from the tax payers dollar to the bank.

As it is now, the lenders are basically asking the gov't to buy all the loans that are about to foreclose.. I think it better that those homes DIDN'T foreclose, get remodified (yes, at a loss..but not as significant a loss as a foreclosure) and be kept on the banks books to absorb that loss... And the extension of the mortgage beyond the 30 year mark could make up for some of that lost return by having it adjust to a fixed rate.

Let me ask you this. If an ARM is adjustable.. then how can anyone expect any kind of measured "return" on something that is flexible with whatever conditions happens to be in the market anyhow? It could go up, it could go down.. so that portion of the reasoning doesn't make much sense to me.

Mine is over and done with.. but my initial rate was 6.95%.. couldn't dip below that, could go higher.. So.. wouldn't it be prudent to purchase something like that anticipating the 6.95% .. the min going forward..maybe with a little higher here or there?..If you know what I mean. And if they purchased anticipating a return at a slightly higher rate, than the extended time should make up for the difference...atleast somewhat..

They just didn't want it included because no one gives a **** about the homeowner or the little guy. The banks took the same, if not 1million times the risk the individual homeowner did and now wants someone to get them out the hot water. They get their money back and can resume their ways while the homeowner gets it not once but twice.. the first time by losing their home etc, the second time by being one of those "taxpayers" bailing out the bank !
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Old 10-01-2008, 09:01 AM
 
Location: Pinal County, Arizona
25,107 posts, read 34,371,245 times
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Quote:
Originally Posted by TristansMommy View Post
I think it probably didn't pass because there was nothing in there that would really halt foreclosures..
Nor, should there be
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Old 10-01-2008, 09:08 AM
 
Location: Pinal County, Arizona
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Quote:
Originally Posted by TristansMommy View Post
As it is now, the lenders are basically asking the gov't to buy all the loans that are about to foreclose..
This is simply not true TM -

The Government would have purchased ALL the sub-prime MBS - very few, as a percentage, are going to be foreclosed - most in fact would have performed.

There is absolutely no reason to have the government, much less a judge, step in a forcibly re-write the loan for the borrower!

Let those who are going to be foreclosed be foreclosed - it will all work out
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Old 10-01-2008, 09:52 AM
 
Location: Pennsylvania, USA
5,217 posts, read 4,113,603 times
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Quote:
Originally Posted by Greatday View Post
This is simply not true TM -

The Government would have purchased ALL the sub-prime MBS - very few, as a percentage, are going to be foreclosed - most in fact would have performed.

There is absolutely no reason to have the government, much less a judge, step in a forcibly re-write the loan for the borrower!

Let those who are going to be foreclosed be foreclosed - it will all work out
BS GreatDay.. if most will perform then why does the government have to step in and buy it from the banks anyway.

Typical.. the rich get all the help in the world while little Joe Homeowner gets no help whatsoever..

Ah.. if only the middle class had enough money to buy the politicians like the wall street bigwigs do!

I'll be paying close attention and it will be reflected in upcoming elections..

As far as restructuring is concerned.. the current law allows for restructing of "second homes" or "boats" etc. I spoke with a bankruptcy attorney way back when on my options. He basically told me that if my home was my second home.. like a ski chalet, the courts could require the restructuring.

I said.. so basically families that have only 1 home.. their primary home can't get a remodification through bankruptcy .. but someone who has more than 1 home can?

RIDICULOUS.. so there is absolutely NO REASON for the bankruptcy courts not to be allowed to restructure..
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Old 10-01-2008, 10:06 AM
f_m
 
2,289 posts, read 7,365,770 times
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Quote:
Originally Posted by TristansMommy View Post

So.. why didn't they put it in there? Why are they being so stubborn about it? Seems to me that if they would have included the ability for judgest to restructure mortgages for those facing foreclosure that enter bankruptcy.. would have been a reasonable and good step to stemming off massive foreclosures?
If they do it for one person, then everyone will want to try to get their loan changed too. So all people with higher rates will want to get their loans changes. If all you need to do is face foreclosure and you will be able to get your loan changed, many people will probably go for it (moving money around to look like they can't afford to pay) even if they don't need to.
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Old 10-01-2008, 10:10 AM
 
Location: Pinal County, Arizona
25,107 posts, read 34,371,245 times
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Quote:
Originally Posted by TristansMommy View Post
BS GreatDay.. if most will perform then why does the government have to step in and buy it from the banks anyway.
Your comment above indicates you lack some understanding of the issue -

Let me try to educate you a little bit:

Banks were not (and are not) the originators of most residential mortgage loans. These loans are originated by private lenders (mortgage brokers / mortgage bankers). These loans, are then sold to the Secondary market which allows for the flow of capital back to the originators so they can make more loans -

What started to happen in the late 90's is, FNMA / FHLMC, with encouragement from HUD, started to purchase MBS with reduced underwriting - in other words, they began to buy loans where the borrower did not have to do much qualification - if any in some cases - the sub prime loans.

Then, FNMA / FHLMC said, they would start buying "Alt A" paper which included the ARM's, including those with "teaser rates". And the explosion began - this is what fueled the real estate explosion.

Then all of a sudden - they changed course - "they" realized that maybe there were to many "risky" loans out there - and the market got choked. Then came the down slide

Too many people tried to re-sell there properties all at one time - all over the country - trying to "cash out". Supply went far higher than demand - prices fell. Borrowers who borrowed 100/125% LTV could not re-fi - prices continued to fall -

But, the fact is - the large percentage of these loans are performing loans - not in default. BUT, because of the LTV's - the holders of these MBS cannot resell them to the secondary market thereby causing them to have a "liquidity" problem. They now do not have money to lend. And the problem continues.

What is proposed with this "bail out" is, the Government would purchase these MBS's - from the various investment houses / banks / insurance companies, FNMA, FHLMC and the like and then the Government would become the largest holder of mortgage debt (currently it is FNMA) and would put capital back into the credit markets - there by making money available for consumers to borrow - to buy that house, to buy that car, to get that student loan etc.

BUT, the oversight component would include making the underwriting criteria / standards reasonable - a nothing down, 125% LTV is not reasonable. A "No Qual" loan - with no verification of ones ability to repay, is not reasonable.

I hope the above gives you some better insight into what is happening and what is proposed.
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Old 10-01-2008, 10:12 AM
 
Location: Pinal County, Arizona
25,107 posts, read 34,371,245 times
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Quote:
Originally Posted by TristansMommy View Post
RIDICULOUS.. so there is absolutely NO REASON for the bankruptcy courts not to be allowed to restructure..
This is a whole different set of statutes.

The Bankruptcy Reform Act of 2006 changed this - btw, it was the Democrats in Congress, who proposed this change.
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Old 10-01-2008, 10:24 AM
 
Location: Moon Over Palmettos
5,975 posts, read 17,147,909 times
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Simple enough for the simplest minds to understand, Greatday. Thanks.
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Old 10-02-2008, 09:20 AM
 
Location: Pinal County, Arizona
25,107 posts, read 34,371,245 times
Reputation: 4893
Quote:
Originally Posted by bibit612 View Post
Simple enough for the simplest minds to understand, Greatday. Thanks.
Thank you. But it seems the Poster I was addressing, in order to help? She is MIA - or, perhaps was unable to understand the explanation
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