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The Treasury is about to announce a plan to bailout irresponsible homeowners and enrich mortgage companies. Is this fair to those who carefully considered the contract that they were signing or is it yet another government giveaway?
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Mortgage aid plan sparks hope and resentment By Andrea Hopkins
Fri Nov 30, 6:34 PM ET
CINCINNATI (Reuters) - A plan to freeze mortgage rates for troubled homeowners may help ease the U.S. housing crisis, but for wiser borrowers and those who have already lost their homes to foreclosure, such a plan seems unfair.
Good article Wehotex. I am not in favor of using taxpayer money or government funds for bailing out lenders or borrowers who are not able to handle the consequences of home loans that had "teaser" low interest rates for the first few years, and a provision to re-set the interest rates after the initial period. That is not fair to taxpayers or to anyone who did not take the risk of low interest, adjustable rate loans. A government funded loan bailout is too much meddling in the free market economy. What would be next, to give a refund to people who took out fixed interest rate loans over the same period, so that they would not feel cheated out of the lower payments they would have had if they too had signed up for ARMS that had 4 or 5 years of artificially low "teaser" interest rates?
If a lender wants to come up with some creative ways to help their borrowers get through the transition from what was a "teaser" interest rate to a true market based interest rate, well that's fine with me as long as the lender does it on their own accord and does not require tapping into taxpayer or government funds.
My understanding of this plan is it does not require government funding. Some mortgage companies would freeze interest rates if the homeowners meet certain criteria.
I've read a lot about how "responsible" homeowners feel they are being punished and I vehemently disagree with this notion. I suppose I fall into the category of responsible homeowner (put 20% down, no 2nd, no HELOC, no credit card debt, and put money into savings every month), and I do not feel punished when something does not actually affect me or is being done to me.
I think the reality of this plan is it will only help a small percentage of homeowners and, of that percentage, an even smaller percentage of these homeowners will be helped by this long term. The balance of those whose interest rates are frozen may still be unable to make payments, or lose their homes after rates are unfrozen. Still, plans like this make great PR and may stimulate some optimism in the housing market, at least for a short while until another bout of "bad news" comes to light.
If I was reasonable and did not do an ARM and did not get into too expensive of a house and made all of my payments on time in the home that my income level could afford - am I eligible for a lower rate in this new giveaway program??? Or a rebate on the higher interest I paid (even though it was the actual market rate that everyone should have been paying).....
My understanding of this plan is it does not require government funding. Some mortgage companies would freeze interest rates if the homeowners meet certain criteria.
I've read a lot about how "responsible" homeowners feel they are being punished and I vehemently disagree with this notion. I suppose I fall into the category of responsible homeowner (put 20% down, no 2nd, no HELOC, no credit card debt, and put money into savings every month), and I do not feel punished when something does not actually affect me or is being done to me.
I think the reality of this plan is it will only help a small percentage of homeowners and, of that percentage, an even smaller percentage of these homeowners will be helped by this long term. The balance of those whose interest rates are frozen may still be unable to make payments, or lose their homes after rates are unfrozen. Still, plans like this make great PR and may stimulate some optimism in the housing market, at least for a short while until another bout of "bad news" comes to light.
You aren't necessarily being punished, but people who weren't responsible are getting bailed out.
If you run into mortgage payment trouble are you going to get bailed out? Nope. You were responsible, so I guess that's your tough luck.
Just like we were taught when we were kids. If you do something wrong, there must be a punishment, otherwise the behavior will continue.
Why should there be optimism in the housing market? There shouldn't be. In California and FLA the houses are still ungodly high where most people can't buy a house unless they lie on a loan.
There shouldn't be optimism in the housing market. It needs to crash to get things solved.
I am very ambivalent about bailing out folks who got into these loans. To me it seems like anybody with a half a brain should have realized that they should not be going into one million dollar loans on a salary of 80,000.00 a year with no other income. I know lots of people in Cal. and boy, the gloating I heard about how they got a million dollar home and in five years when they have to pay the piper, it will be worth two million and look how much they are going to make. Stupid, stupid, stupid. However, as a person who invests on a small basis in residential real estate, I do wonder if this "help" is necessary for some broader recovery in this sector.
I know lots of people in Cal. and boy, the gloating I heard about how they got a million dollar home and in five years when they have to pay the piper, it will be worth two million and look how much they are going to make. Stupid, stupid, stupid. However, as a person who invests on a small basis in residential real estate, I do wonder if this "help" is necessary for some broader recovery in this sector.
Its funny you should mention the million dollar home and paying the piper. When my wife and I bought our last house, we were preapproved for a loan much larger than we thought we could afford. I was surprised at the amount we were preapproved for and joked that if we had a mortgage that large we would be eating noodles and peanut butter. Ultimately, we used our common sense about what we could afford and were able to sleep at night knowing we did not have a potential financial disaster looming in our future. Our financial planning has always included substantial savings for short term needs and retirement and never involves excessive risk.
I would like to see the housing market have a soft fall rather than a bigger crash, because I believe a crash is bad for the overall economy and could lead to a recession.
I haven't seen where the government is floating any money on this, so it doesn't really appear to be a bailout ala the one the Feds did with Chrysler back in the 80's.
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!!
If this passes, I guess I'll run out and buy that half-million dollar beach house on 100% financing 1-year adjustable. Then maybe I'll quit my job.
Who are the congresspeople voting for these things? Let's see some names!
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a.r.m.
