Bernanke urges lenders to lower loan amounts! (buy homes, interest rate, foreclosures)

[jaindow]

"Federal Reserve Chairman Ben Bernanke called Tuesday for additional relief and urged lenders to help distressed owners by lowering the amount of their loans."

Bernanke Calls for More Mortgage Relief: Financial News - Yahoo! Finance (broken link)

If this was to really happen, there would surely be many people up in arms.
What do you think about this?

[TimtheGuy]

Originally Posted by jaindow

"Federal Reserve Chairman Ben Bernanke called Tuesday for additional relief and urged lenders to help distressed owners by lowering the amount of their loans."

Bernanke Calls for More Mortgage Relief: Financial News - Yahoo! Finance (broken link)

If this was to really happen, there would surely be many people up in arms.
What do you think about this?

Principal reduction....stupidest thing I have heard of yet with respect to the mortgage debacle. Surely this will not happen.

[sierraAZ]

Originally Posted by jaindow

"Federal Reserve Chairman Ben Bernanke called Tuesday for additional relief and urged lenders to help distressed owners by lowering the amount of their loans."

Bernanke Calls for More Mortgage Relief: Financial News - Yahoo! Finance (broken link)

If this was to really happen, there would surely be many people up in arms.
What do you think about this?

It appears to be for real.... At first I thought it was April 1 already. Unbelievable! Not that all of us are not gonna pay for this whole orchestrated scam one way or another anyway...

[MotleyCrew]

I am a little bipolar on this one. I usually do not favor "bail outs" but at whose expense do we write this off? The bank is losing so many dollars when they forclose and do a "short sale" anyway. Why not let the families stay put and just write off the differences. Again, I am torn, but if it will help to stabilize the situation, then maybe it will be a good thing.

[surfingatwork]

Originally Posted by MotleyCrew

I am a little bipolar on this one. I usually do not favor "bail outs" but at whose expense do we write this off? The bank is losing so many dollars when they forclose and do a "short sale" anyway. Why not let the families stay put and just write off the differences. Again, I am torn, but if it will help to stabilize the situation, then maybe it will be a good thing.

I'm torn as well. On one hand I believe most of these folks don't deserve help. some deserve to lose their homes and get wacked credit wise and boo hoo to them. However if it will help stablize (like you said motley) then maybe it is a good thing. I can't even say I'm biased because I have my home on the market because my town (knock on wood) has had very, very few foreclosures/short sales (less than a dozen) so my home isn't even "competing" with these properties. Maybe, just maybe this will help. NO ONE KNOWS.

[Boomerang]

Originally Posted by jaindow

"Federal Reserve Chairman Ben Bernanke called Tuesday for additional relief and urged lenders to help distressed owners by lowering the amount of their loans."

Bernanke Calls for More Mortgage Relief: Financial News - Yahoo! Finance (broken link)

If this was to really happen, there would surely be many people up in arms.
What do you think about this?

My knee-jerk reaction would be that I'd rather see the lenders lower the interest rate than lower the principle. Those people consciously and purposely borrowed X amount of dollars and they should be responsible for repaying X amount of dollars; they just don't need to give up a pound of flesh for the privilege, I think.

It is a little aggravating when those of us who make the conscious decision to live within our means, no matter how much we might like to have a bigger house, newer cars, expensive vacations and clothes, etc., have to think about people who simply wanted to have it all, without thinking about how they were going to pay for it, get off the hook. I know several people who spend money like drunken sailors on their credit cards and loans, even though they know, beyond a shadow of a doubt, that they can't afford to pay these debts until they stop their wild spending for at least 5-10 years. They just don't care. I think they operate on a misplaced sense of entitlement. They replace the word "want" with "need".

I am not saying that some people don't truly deserve some help. We all do, at one time or another. I just don't feel that there should be blanket "amnesty" for everyone whose eyes were bigger than their purse.

[MotleyCrew]

I hear you boomerang. I think if it would help the overall crisis then I would like to see the homeowners get some relief and have the principal lowered. However, if these people have drained the equity cow when things were good and purchased new cars, boats etc., then they should get to the back of the line. These fools need no rewarding.

[TimtheGuy]

I bought my house in 2003 for $240k. It is now worth about $210k. I still owe about $228k. Can I get the principal reduction that you are all supporting for $18k so I am not 'underwater' any more? Or are you saying it should only be doled out to those who bought homes they can't afford and risk losing them?? Do you really want to forgive people who took out Option ARMs and the like???

How in the world could 'they' come up with who would be eligible to get this principal reduction and how much would it be?????

[pghquest]

Originally Posted by Boomerang

My knee-jerk reaction would be that I'd rather see the lenders lower the interest rate than lower the principle.

I'd rather see them extend the loan out longer term then do either.

Lower the principle, getting more equity, so they can just go refi again makes no sense to me at all. Lowering the interest rates, well how much lower can they go before it becomes an incentive to borrow against the home to invest in other locations? Extending the loan period only option left.

Remember class, we didnt force them to buy homes that they cant afford to pay, we shouldnt be using tax money to reward their incompetence, or giving those who are incompetent a better interest rate then those who bought what they could afford. Giving them instant equity, or lower interest rates rewards them for over spending.

[pghquest]

Originally Posted by TimtheGuy

I bought my house in 2003 for $240k. It is now worth about $210k. I still owe about $228k. Can I get the principal reduction that you are all supporting for $18k so I am not 'underwater' any more? Or are you saying it should only be doled out to those who bought homes they can't afford and risk losing them?? Do you really want to forgive people who took out Option ARMs and the like???

How in the world could 'they' come up with who would be eligible to get this principal reduction and how much would it be?????

And those who got interest only loans would be way further ahead if this forgiveness plan was to be put into place. Taken your example, they would be $12,000 further ahead then you.. Rediculous proposal and the man should be instantly fired. If he doesnt understand the problem that Greenspan created, and how you dont give those an incentive that was to stupid to buy what they could afford, then I surely have no confidence in the nations financial future.