At the risk of sounding really stupid.... (loans, mortgage, buy)
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Okay, at the risk of appearing considerably stupid, I am going to go out on a limb say, "I do not feel it's fair that those of us who have played fairly over the past 10-15 years must bail out and pay for the greedy wall street workers mistakes." I would LOVE to see a bill put into place that makes these wall street pied pipers have to pony up their millions they've made on the backs of retiring middle class workers over the past 10-15 years (Enron included).
I know it's complicated. I know that it's not just about the housing market (bubble) and that with less money the banks can't lend it as easily as they did before (meaning some smaller businesses will have a hard time getting loans - you know - like in the good old days?) and that quite a bit of it was "paper" money meaning it looked good on paper (until they fired a CEO, CMO or COO who then made millions) but in reality it was only worth as much as someone was willing to pay. All of this is reminding me of the Keating Five scandal and Drexal Burnham (remember dear ole' Michael Milken??? They should have taken away all his money and made him live on 35 grand a year - THAT would have taught him a lesson! Instead he gets to serve a little time, pay a little fee and KEEP THE REST! ARGH!!!!!!!!!)
Anyway, I was asking my husband the other day (understanding that banks sell and buy mortgages all the time) "Why can't the banks just suck it up and arrange it so the people who were able to make the original mortgages, continue to make the same amount until they can refinance at a later date."
So the banks don't make any more money on it then they intended, however, they aren't really losing any either are they? If the person is paying for the house (which is most likely way over priced and wouldn't be able to be auctioned off at a decent price anyway if the person defaulted on their loan so the bank is out the cash either way) why not let them keep the payments the same? The bank still OWNS the property unless said person can pay off the loan, right?
Why continue to force an ARM loan increase when it's obvious the person can't make the payment - and the house will never sell in today's market anyhow. Isn't it better for everyone overall? The person who can still afford to make his original payment is essentially "renting" the house from the bank, the bank doesn't have another empty property to deal with and the neighborhood would not be at risk of falling apart because of all the deserted properties. And of course, then the surrounding businesses wouldn't suffer "as much."
Being that I just moved from Scottsdale, Arizona, I saw firsthand what was happening in some of the outlying areas of Phoenix. Some newer neighborhoods were nearly empty - all foreclosed homes - one right after the other. How could that possibly be better and how could the bank possibly think an empty house is better than a owner occupied house in which someone is making payments on?
It would appear to me, that much of this "bail out" is going to these lending institutions and CEOs. If I make a poor financial decision, would it not be fair for me to ask congress to bail me out too? Keeping mortgage payments the same is not the same thing as buying the house and letting them stay for free. Handing money to lending institutions for selling equity they didn't have in the first place (because the housing market jumped in such a way that "everyone" knew it wouldn't last) is a dumb idea. Let the banks and the bankers fail. Let the government pick up the mortgages and have an oversight committee see to it that the person is making payments (at the original set monthly payment) and THEN if that said person STILL can't pay - then he has to default - but it will because of his own undoing, not because someone else played him.
When replying to me, please keep in mind, I am not a financial wizard nor a person who knows the market very well. I have a financial adviser who I listen to and do my own research to see if his advice is to be taken or not. So far, I'm doing pretty well, even during this crazy time. So please be gentle when telling me how dumb I am if I am way off base on my thoughts. LOL I'm just trying to comprehend all this stuff. Thanks.
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Socialism for the rich
