Is gov't mortgage bailout fair to responsible people? (fixed rates, foreclosing, refinance)
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Considering what this is doing to all of our property values I think any homeowner should be very much for this! BUT, i totally agree that it should be limited in scope, the 1, 2maybe even 3 year time frame is more than sufficient. I have no desire to help people who put themselves in this situation but those of us who DID make sure we could pay off our debts are suffering for the idiocy of others right now.
I agree with all of your statement except first sentence. Maybe this overbuying by folks was a partial cause of the increase in property values - if that's the case then the market was overpriced and the values artificially too high. If by not bailing folks out, the market will revert back to a realistic level and the home values will be closer to a more realistic actual value. Market is just righting itself after folks' recent greed.
While I definitely do not agree with helping out the sub-prime borrowers, its also evident that the government is doing this more to stabilize the economy than to help out the individuals.
The problem is, there are always people who will take advantage of this. Who knows, some lender may have even predicted this - "Folk, you have no way of affording this. But you know, millions of folks are in the same situation. And guess what, uncle Sam will bail you out. Now, just sign here, here, and initial here...."
This should come at a cost... i.e. make the borrowers apply for this, but then set some maximum price they can sell the house for in the future. Thus, when this market does eventually turn around, they can't profit from it.
While I definitely do not agree with helping out the sub-prime borrowers, its also evident that the government is doing this more to stabilize the economy than to help out the individuals.
The problem is, there are always people who will take advantage of this. Who knows, some lender may have even predicted this - "Folk, you have no way of affording this. But you know, millions of folks are in the same situation. And guess what, uncle Sam will bail you out. Now, just sign here, here, and initial here...."
This should come at a cost... i.e. make the borrowers apply for this, but then set some maximum price they can sell the house for in the future. Thus, when this market does eventually turn around, they can't profit from it.
Very interesting thought... tends to make sense...
If it doesn't come from federal taxes (or state) why is everyone so upset?? Are you upset that you played by the rules and jealous that you could have gotten a bigger house? Are you just as upset at the people who played the market for years (the low rates have been around for what - 4 or 5 years now, so this didn't just happen) - and made MILLIONS (bought a house at 4.5% for 200,000 - sold 2 years later for $600,000, pocketed $400K cash!... bought another house, etc..)...
You just seem to be mad at the people who were LATE to the party and got caught. It sucks. That's the way it is. You chose to play by the rules, you have a nice house that you love (supposedly) - why be mad at them for facing foreclosure? If this plan goes through - it just holds steady their ARM rate a little longer (for a limited period of time) - they still have to sell the house they know they can't afford at higher rates, or refinance to a reasonable rate (which they may not be able to do). It just takes a little pressure off and stems the bleeding.
Why are you so angry?
Do you want house prices to plummet - so that you can buy a new McMansion for
$50K?? Cause the prices are never going to drop that low. Prices will probably retract to about 1998, 2000 levels. They're now predicting they could drop as much as maybe 15%. Well, for a $500K house, that's only a $75K drop. So yeah - if that was the difference in affordability for you - then go ahead and wait for the crash. But honestly, if all of you who are preaching that you don't have debt and your house only takes up 20% of your income, and you stayed well below your means --- you'd still have to have one heck of a salary to buy a $400+K house.
To get average incomes (under $50K) into these homes - you'd have to have them retract from $500K to under $200K. That's not going to happen. Just isn't.
People under $50K will go back to buying "starter" homes (under 1000 sq feet), and people making more will continue to buy bigger "upgrade" homes (2000-3000sq feet) and people making a lot will still buy BIG homes (4000 sq feet +). Now, they may pay a little less for a few years, but you're not going to suddenly see mansions being liquidated for 50,000 --- unless those mansions need to be bulldozed.
If the bailout doesn't come out of my taxes, or even if it did, but the overall harm to the economy is less than it otherwise would be - I don't care. Just stop yelling that these people all were liars and defrauders and horrible. Some of them were ignorant (like the people who vote every year and are suprised when the politicians lied) and thought they were doing the best for their family and now they are scared and panicked and facing homelessness. I see nothing wrong in trying to cushion that descent.
When does or will this plan roll out? I was "duped" into that dang a.r.m. thing as well. I had no idea that my payment would go from $864.00 to $1,651!!! I am on the very vurge (spell check) of losing my home, like today!!! They (the mortgage co.) told me that the payment could easily go down, who knows, but if it did go up, it would only be like a half a percent or something. That is not, and was not the case!!
i'm sorry that you are on the verge of losing your house, but did you read the contract that you were signing?
The federal govenment knew exactly what was going on when these loans were being handed out like candy to people who should never had been able to "qualify" for a mortgage. I owned apartments and many of my tenants moved to homes that they could not afford and within a year or two they were back into the rental market after losing their homes and credit. Why didn't our wonderful federal government disallow the qualification limits and make a better effort to warn uneducated first time buyers of the speculative nature of these loans before people got into them. Harm the economy? Investors are buying these foreclosed homes and turning around and selling them to people who can actually afford to own them (hopefully); as it should be, or holding them and renting them out. Keep the government out of it. Yes, I am sorry that people have lost and are losing their homes and credit but don't sign a contract that you don't understand. If you are spending that much money to buy a home, hire an attorney to go over the contract for a few bucks more. Buying a home is an investment like anything else and like any investment you don't always win, sometimes you lose.
The federal govenment knew exactly what was going on when these loans were being handed out like candy to people who should never had been able to "qualify" for a mortgage.
Exactly! And now all of us we'll be paying for it in one form or another!
Bush Mortgage Plan Includes Rate Freeze: Financial News - Yahoo! Finance (broken link)
I agree with all of your statement except first sentence. Maybe this overbuying by folks was a partial cause of the increase in property values - if that's the case then the market was overpriced and the values artificially too high. If by not bailing folks out, the market will revert back to a realistic level and the home values will be closer to a more realistic actual value. Market is just righting itself after folks' recent greed.
Sure, there's correction needed, without a doubt. But the way things are going we'll overcorrect and either:
a) hit rock bottom and have this event precipitate recession or
b) hit a bottom and see a new groundswell in buying that makes the subprime bubble pale in comparison.
I'm very worried about the rate of the correction. We want it to be relatively slow and not what we are currently seeing.
I think the plan just announced is WAY too generous. 5 years is far too long to give people to get their stuff in order!
I like this quote from CNN....
The officials said they are close to a deal on a plan to freeze rates for subprime mortgages for qualified borrowers for five years. The rates would be frozen if borrowers meet certain criteria, including being current on payments and being able to prove they cannot afford a higher rates.
...the same people who fudged their income then are going to fudge it again! Maybe I should have gotten an ARM loan a couple of years ago...
Sure, there's correction needed, without a doubt. But the way things are going we'll overcorrect and either:
a) hit rock bottom and have this event precipitate recession or
b) hit a bottom and see a new groundswell in buying that makes the subprime bubble pale in comparison.
I'm very worried about the rate of the correction. We want it to be relatively slow and not what we are currently seeing.
I think the plan just announced is WAY too generous. 5 years is far too long to give people to get their stuff in order!
Generally agree... good post.
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