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Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,313,597 times
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It's a stupid idea in general, but it does have some basis in reality.
The proposal as I understand it is to allow a bankruptcy judge to reduce the amount owing to the current market value of the property. This is pretty much what a short sale does. The difference being the debtor files BK before a foreclosure rather than not filing BK and having the lender accept less than the face value of the note.
If lenders are permitting short sales, I don't see how they would be hurt by this proposal.
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,591,098 times
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wow, great post 43north...
And I agree.
And what about all the family "A's" out there?
Another thought to ponder is this:
Family B shortsales or gets foreclosed on. Drives down property value of Family A.
Can Family A sue the (probably now defunct) lender AND borrower (Family B) for loss of value on their own home?
One of the "good" outcomes of this situation is that loans are now harder to get. I have thought it was wrong to loan someone money like these "interest only loans" and however it has been that people got loans for homes way out of their pricve range.
There are so many people that are basicly ignorant about money and suffer from the "I want it" disease. The lenders have known what they were doing - they wanted to make more doing their business. We all learn from our mistakes and bailing out people won't teach them any lessons.
Overall it would be setting a bad precedent. If financially irresponsible people get reductions on mortgage principals, how long will it be before people start crying for reductions on credit card principals, car loan principals, student loan principals, etc.
Well the rhetoric has gotten even more rediculous since I made this post. The Chariman of the Federal Reserve, Ben Bernanke, has just publically stated that, "we (the govt) should do more to restore the equity" in people's homes.
WTF? If the govt starts ripping up private contracts (i.e. the mortgage contract between a lender and borrower) and rewriting them, we are all in big trouble.
Here's what I want people on this board to hopefully recognize... if we're going through the typical "economic slowdown" as our leaders keep telling us, then why in the world are such drastic and unprecedented proposals being floated by our leaders? I've got my opinion about how bad this economy is really going to get, and by the sounds of the FED Chairman and his drastic calls for action, it looks like he agrees with me. Just something to think about.
Wow that is ridiculously unfair to responsible people. While they're at it, why not just erase all credit card and mortgage debt for all? And as a bonus...free ponies for everyone!
And what about all the family "A's" out there?
Another thought to ponder is this:
Family B shortsales or gets foreclosed on. Drives down property value of Family A.
Can Family A sue the (probably now defunct) lender AND borrower (Family B) for loss of value on their own home?
Gives one something to think about...
While I also agree with 43north, leavingbyron's post was something to think about and so I did and here is my conclusion on it:
Any good defense lawyer for Family B would argue a big picture economic view of the situation. He/She would make the case that both Family A and B's homes were overvalued to begin with due to the housing bubble. Then he/she would go on to admit that Family B's crisis does depreciate Family A's home, however, that depreciation is simply part of the "natural economic correction" that is needed to bring home values in general back to where they "should" be had the bubble not happened - in other words, in line with the historic trend of home appreciation. Further, it might be argued that although Family A's home depreciated due to Family B, when mapping Family A's home value against a current and more realistic trend that follows historical home appreciation, the value of Family A's home has not fallen below that trend and therefore Family A is still ahead on their home investment in spite of the depreciation.
You can also take a stocks approach to this as well. When people invest in the stock market they take a risk with their investment because there is no guarantee that stocks will always go up. In fact, we know stocks are cyclical. Well, an investment on a house is pretty much the same way in that you can't guarantee a positive return. With a stock portfolio, the growth on your principal investment is not really owned free and clear by you until you cash it out of the market. Same thing with the equity on a house. The appreciation on the house is not really owned by you free and clear or guaranteed until you cash it out and have it in hand. Further, when people lose money in their stock portfolios, you don't see them suing wall street or the company whose stocks fell even if the fall was due to something stupid on the part of the company. So in the same light, it doesn't make sense for Family A to sue Family B over their own investment depreciating, no matter how tempting that myopic view may seem.
With either argument, and particularly the first, I think it would be hard to find in favor of Family A. Sorry!
You can also take a stocks approach to this as well. When people invest in the stock market they take a risk with their investment because there is no guarantee that stocks will always go up. In fact, we know stocks are cyclical.
Yes but has the government ever tried to intervene and actually reduce the liabilities of those who have lost money in the stock market?
Location: Georgia, on the Florida line, right above Tallahassee
10,471 posts, read 15,835,178 times
Reputation: 6438
Quote:
Originally Posted by mojo_1979
Well the rhetoric has gotten even more rediculous since I made this post. The Chariman of the Federal Reserve, Ben Bernanke, has just publically stated that, "we (the govt) should do more to restore the equity" in people's homes.
WTF? If the govt starts ripping up private contracts (i.e. the mortgage contract between a lender and borrower) and rewriting them, we are all in big trouble.
Here's what I want people on this board to hopefully recognize... if we're going through the typical "economic slowdown" as our leaders keep telling us, then why in the world are such drastic and unprecedented proposals being floated by our leaders? I've got my opinion about how bad this economy is really going to get, and by the sounds of the FED Chairman and his drastic calls for action, it looks like he agrees with me. Just something to think about.
Perhaps family A should default on their mortgage so they can gain the benefit of all the bailouts... Its NOT okay for the government to bailout the foreclosures... what's next? Pay their credit card bills and auto loans? Its complete B.S. to be "in favor" of family B getting bailouts. The "bigger" economic picture? How about we forgive all credit card debts.. you know, the bigger economic picture... All these bailouts aren't meant to help family B but to help COMPANIES... they are afraid the banks will collapse and lead into a depression. I say let it. Everyone is too much into entitlements, we are going to be bankrupt either way... now or later..
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