The Homeowner Rescue IS A GOOD DEAL! (bankruptcy, loans, insurance)

[KevK]

All of you really need to look at this deal closer. This was a good deal for everybody. Let's go down the list:
1. A good deal for the homeowner in trouble. A family gets to keep their home that would otherwise sit empty.
2. A good deal for the homeowner not in trouble. If all these forclosures had went through, you home value would fall faster than Michael Vick's career in the NFL!
3. A good deal for renters. Think about what a million or so families out of a home and back in the rental market would do to your rents!
4. A good deal for your neighbourhood. Empty vacant houses cause crime and drive values down.
5. A good deal for children. Families with children get to keep their kids in familair surroundings without having to yank them from school to school. It is a fact that, as a group, children from people with stable owned housing perform better in school than children of renters.
6. A good deal for Wall Street. Up about 700 points this week alone.
7. A good deal for the taxpayer. It is not costing us a dime. The banks are swallowing the whole thing. Also it will save us on local taxes because we don't have to pay police to deal with increased crime because of vacant houses sitting empty.
8. A good deal for the Post Office. They don't have to deal with a million forward orders. Forwarding mail is actaully a loss on each item.
9. A good deal for dogs and cats. Often people who are forced out of owned homes to the rental market have to give up pets which would overwhelm animal shelters and cause more animals to be humanely killed to make room.
Did I leave anybody out?

I know that there are many people on here that can rightlfully argue is is not fair. And I agree. Life is not always fair. Sometimes at work, you work your ass off for a company and when recognition time and promotion time come around, some dumb ass slacker gets it over you. But in this case, the government could not just stand around and watch a whole segment of the economy falter. I did not like it when President Bush I went in and propped up the Mexican Peso either. But if he had not, it would have caused political upheaval in Mexico, hurt our economy and caused millions of more Mexicans to make a run for the border. So I understand why he did it. The President Bush is not exactly a fan of working homeowners so for him to act as he has means that he must have sensed an urgency way beyond the needs of the homeowners. And he will be proven right in this one instance. And any Democrat would have done exactly the same thing he did.

[Philip T]

Gotta say we are in agreement about most of that. Maybe not the Good or Bad part it . . . I would think it would be "good" to severely restrict the activities of the predatory lenders and shut the mess down for good. That would hit the good range in my book.

But as for the rest, I think your assessment of the downside outcome is correct. But I am guessing even this will not save the boat from going under.

Something like only 12% of the no-equity/negative-equity ARMs will be covered in this, correct? Think the other 80% + are going to stay afloat by magic or something?

That is like trying to save 12% of the Titanic. The whole boat is tied together and goes down together.

[KevK]

Originally Posted by Philip T

Gotta say we are in agreement about most of that. Maybe not the Good or Bad part it . . . I would think it would be "good" to severely restrict the activities of the predatory lenders and shut the mess down for good. That would hit the good range in my book.

But as for the rest, I think your assessment of the downside outcome is correct. But I am guessing even this will not save the boat from going under.

Something like only 12% of the no-equity/negative-equity ARMs will be covered in this, correct? Think the other 80% + are going to stay afloat by magic or something?

That is like trying to save 12% of the Titanic. The whole boat is tied together and goes down together.

I fully agree. It needs to be followed up be very strict reforms. We should outlaw sub prime mortgage lending all togther. If your credit stinks, then rent until it is better. The reforms should require:

1. No mortgages for anybody that does not meet the following criteria:
A. A credit FICO score of at least 675
B. No late payments in the past 12 months
C. No bankruptcy, repos or foreclosures in the past 36 months
D. Employed in the same job or profession for the past 12 months
E. Taking and passing an 8 hour homeownership and credit responsibility course for first time mortgage applicants.
2. No loan shall have a prepayment penalty or any fee for early payment.
3. All loans shall require at least a 5% cash downpayment. No part of which may be borrowed. The source of downpayment funds shall be accounted for.
Any loan for property that the owner will not occupy shall require a cash down payment of not less than 20%.
4. ARMS shall have a maximum term of 5 years. At the end of 5 years, the borrower shall be given the option of refinance or being switched to the current rate for the remainder of the mortgage.

[Crew Chief]

OK, KevK, I'm gonna go out and buy the most expensive Ford F350 pickup with all the bells and whistles. And when I can't make my payments, YOU'LL come help me out, right??? Why is buying a home any different from any other financial decision that adults make??? If you are old enough to sign a legal document, you should FULLY understand the consequences. And have the ability to pay for what you are buying (including making plans for emergencies during the payment period) People that got in the sub-prime market have already shown that they have poor money management skills. Why in the H**L should those of us who CAN manage our money be forced to pay for their mistakes???

[8 SNAKE]

Originally Posted by Crew Chief

Why in the H**L should those of us who CAN manage our money be forced to pay for their mistakes???

Whose sub-prime mortgage are you paying for? I checked my mailbox this morning and I didn't get a bill from anyone.

[tallrick]

I say let them reset and the bubble blow up. What is the alternative? Prop it up, let the rest of us suffer under out of control property taxes and cheat all the modest wage earners out of a home.

[KevK]

Originally Posted by Crew Chief

OK, KevK, I'm gonna go out and buy the most expensive Ford F350 pickup with all the bells and whistles. And when I can't make my payments, YOU'LL come help me out, right??? Why is buying a home any different from any other financial decision that adults make??? If you are old enough to sign a legal document, you should FULLY understand the consequences. And have the ability to pay for what you are buying (including making plans for emergencies during the payment period) People that got in the sub-prime market have already shown that they have poor money management skills. Why in the H**L should those of us who CAN manage our money be forced to pay for their mistakes???

The very same thing could be said about people that buy property on beaches and floodplains. We pay their insurance and when they get flooded or blown away by hurricanes they rebuild over and over again and we still pay their insurance via the National Flood Insurance Program. In fact there is a bill in Congress right now that will make me and you liable for the homeowner insurance of almost ALL the residents of Florida. Do you think this is fair? That a person in freezing cold Iowa is being forced to pay to insure people in nice warm Florida? Yet NOBODY opposes this and NOBODY complains about it because it is accepted for the good of the country as a whole. You should look at this the same way. It is a bitter pill to swallow but swallow it we must. What we CAN do and SHOULD do is make sure it is followed by strict reforms that prevent this from ever happening again.

[baystater]

[quote]

Originally Posted by KevK

All of you really need to look at this deal closer. This was a good deal for everybody. Let's go down the list:
1. A good deal for the homeowner in trouble. A family gets to keep their home that would otherwise sit empty.

Wouldn't that make the house easier to show the home to the family/person/investor that was smart enough to sock away there 20% and kept their credit standing high.

2. A good deal for the homeowner not in trouble. If all these forclosures had went through, you home value would fall faster than Michael Vick's career in the NFL!

This is the thing I really, really hoping for! In my area (North east.) the Houses double and in some places Tripled in price. No Young people/familes could actually own a house. I saw a lot of the kids that I grew up with having had to leave my town because it plainly cost to much. Now with his housing meltdown we maybe able to return. I hope so. Also as a hopeful investor I like the prices to be as low as possible. Remember this your primary residence is a place where your lay your head at night. It not a saving account were money is meant to be made. And should have never been thought of in those terms.

3. A good deal for renters. Think about what a million or so families out of a home and back in the rental market would do to your rents!

In the short term you are correct. It will cause rent prices to rise. But let me through this at you. OK so you have homes to buy on the cheap out there and people that still have money to invest out there. Now we both know that the days of flipping are over. At least for now. Even still there are plenty of people that will buy homes in order to rent them out. So the market for will stabilize itself out in the longer terms.

4. A good deal for your neighbourhood. Empty vacant houses cause crime and drive values down.

Actually I depends on where you are. I grew up in a beach town that was very active during May - Aug. But for the rest of the year I'd say about 30% of the housing was vacant because these houses where just vacation homes. And to tell you the truth there was practically no crime. But I must agree with you in a more urban environment this could be a problem.

5. A good deal for children. Families with children get to keep their kids in familiar surroundings without having to yank them from school to school. It is a fact that, as a group, children from people with stable owned housing perform better in school than children of renters.

1. That's not my problem.
2.My parents rented for alot of my life. I actually hold a bachalor degree. Granted it was from a state school. But anyways, finished CumLuade. My Sister went to Brandais finished Magna CumLaude, and my Brother went to Bentley finish Magna CumLaude. BTW I stuck Cumlaude together so it wouldn't get blocked out.

6. A good deal for Wall Street. Up about 700 points this week alone.

I'm near enough to the street to hear what going on. Believe it or not from what I got for information. The rise in the stock market this week was due to the expectation of the Fed lowering interests for 25 to 50 basis points. They actually don't like the plan because they're looking for the cheap money the FED has been handing out.

7. A good deal for the taxpayer. It is not costing us a dime. The banks are swallowing the whole thing. Also it will save us on local taxes because we don't have to pay police to deal with increased crime because of vacant houses sitting empty.

Like I said earlier about the crime it depends on where you are.

Bloomberg.com: Worldwide

Actually we are losing possible tax revenue because this plan.

Henry Paulson: "The Treasury chief today proposed letting state and local governments ``temporarily'' exempt taxes on bonds issued to help refinance subprime borrowers."

8. A good deal for the Post Office. They don't have to deal with a million forward orders. Forwarding mail is actaully a loss on each item.

Don't have a argument again it. Very interesting take.

9. A good deal for dogs and cats. Often people who are forced out of owned homes to the rental market have to give up pets which would overwhelm animal shelters and cause more animals to be humanely killed to make room.
Did I leave anybody out?

Sorry not an animal lover. So I just don't feel about this issue.

I know that there are many people on here that can rightlfully argue is is not fair. And I agree. Life is not always fair. Sometimes at work, you work your ass off for a company and when recognition time and promotion time come around, some dumb ass slacker gets it over you. But in this case, the government could not just stand around and watch a whole segment of the economy falter.

Sorry but the housing crunch is a lesser issue compare to the dollar worth. Everytime Bernake makes the money cheaper it's hurt all of us as nation more. Notice gas prices lately. The weak dollar has an effect on that. Anything we import is more expense as well. Granted we are making out well on our cheap exports. But I'm not sure how much the net exports to imports
are balancing out. Now it the Dollar drop due to the housing sector. I'd say it has a part to play on the dollar falling. But that not the only thing. Our national debt as far as I'm concerned it out of control. And now china is even starting to back off buying our currency. Not too good.

I did not like it when President Bush I went in and propped up the Mexican Peso either. But if he had not, it would have caused political upheaval in Mexico, hurt our economy and caused millions of more Mexicans to make a run for the border.

I actually like to see more upheaval in Mexico. That government is so corrupt that it has made any strides to become even a second world nation. They need to throw the baby out with the bath water and start all over again with there government. Heck honestly if the dumbbell president didn't go off and get up involved in Iraq. Maybe we could have laid the smackdown on the Mexican government. I tired of hear all the rhetoric about how we need to build a wall, or enforce laws on this side of the boarder to keep the illegals out. Tired of it! Look we need to get to the root of the problem that would be the corrupt Mexican government. We need to start knocking some heads around and telling them. There internal problems are deeply effecting our countries people. And this S@#! needs to cease. Now!

So I understand why he did it. The President Bush is not exactly a fan of working homeowners so for him to act as he has means that he must have sensed an urgency way beyond the needs of the homeowners. And he will be proven right in this one instance. And any Democrat would have done exactly the same thing he did.

Paraphrase Bill Clinton: It the up coming election stupid.

Originally Posted by KevK

I fully agree. It needs to be followed up be very strict reforms. We should outlaw sub prime mortgage lending all togther. If your credit stinks, then rent until it is better. The reforms should require:

1. No mortgages for anybody that does not meet the following criteria:
A. A credit FICO score of at least 675
B. No late payments in the past 12 months
C. No bankruptcy, repos or foreclosures in the past 36 months
D. Employed in the same job or profession for the past 12 months
E. Taking and passing an 8 hour homeownership and credit responsibility course for first time mortgage applicants.
2. No loan shall have a prepayment penalty or any fee for early payment.
3. All loans shall require at least a 5% cash downpayment. No part of which may be borrowed. The source of downpayment funds shall be accounted for.
Any loan for property that the owner will not occupy shall require a cash down payment of not less than 20%.
4. ARMS shall have a maximum term of 5 years. At the end of 5 years, the borrower shall be given the option of refinance or being switched to the current rate for the remainder of the mortgage.

Very much agree with you here. Good post.

[Crew Chief]

Originally Posted by KevK

The very same thing could be said about people that buy property on beaches and floodplains. We pay their insurance and when they get flooded or blown away by hurricanes they rebuild over and over again and we still pay their insurance via the National Flood Insurance Program. In fact there is a bill in Congress right now that will make me and you liable for the homeowner insurance of almost ALL the residents of Florida. Do you think this is fair? That a person in freezing cold Iowa is being forced to pay to insure people in nice warm Florida? Yet NOBODY opposes this and NOBODY complains about it because it is accepted for the good of the country as a whole. You should look at this the same way. It is a bitter pill to swallow but swallow it we must. What we CAN do and SHOULD do is make sure it is followed by strict reforms that prevent this from ever happening again.

Agreed, KevK, our flood insurance programs are yet ANOTHER way the rest of us get to pay for those that want to build on coastlines or flood plains. (Actually, I'd love to see a 50 mile "buffer zone" denoted all along the U.S. coastline from Maine on down to Texas. If you own a home within that buffer zone (or on a flood plain) the taxpayers/ other policyholders rebuild you ONCE. After that, you're on your own. In Germany, if you want to live along the river, it's at your own risk. People in my mother-in-Law's village rebuild a couple of times most years... But there's still a difference in disaster relief and bailing out ADULTS who shouldn't be buying homes or buying more house than they can afford. And it's no different than bailing out people that make bad car loans; I don't want to see those of us that have good money management skills to have to subsidize those that don't!

[sheri257]

Originally Posted by KevK

2. A good deal for the homeowner not in trouble. If all these forclosures had went through, you home value would fall faster than Michael Vick's career in the NFL!

I am so sick of hearing this ... you know what? I don't care !!!

Bailing out a bunch of idiots who made stupid decisions to begin with is only going to make the problem worse.

We moved to a cheaper area KNOWING that the market would crash and bought cheap enough that we would never get into a negative equity situation. And we went fixed because we knew these adjustables were scams.

We're going to be living in our house for the next 20 years so property values don't mean much to us at this point. But making accomodations for idiots who didn't make the right decisions makes me very, very angry.

DON'T insult my intelligence and tell me that bailing out a bunch morons who made idiotic decisions to begin with is somehow good for me ... because it's not.

It's totally UNFAIR and rewards the debt junkies for their excesses ... basically perpetuating the problem that got us into this mess to begin with.