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Exactly... everyone wants to loft out ideas that sound great, but over the long term would do far more harm. Problem is the average person does not think long term and will fight to get these issues passed. I hope our next President does not do something foolish and create a bigger mess.
Every lender, borrower, appraiser and Realtor that committed fraud on a loan should have to pay (fines, penalties, jail, etc). But there is a lot to be said for personal responsibility and everyone learning about budgeting from this.
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.
It is more then just something for folks to think about it is a frightening possible scnenario. I am retired and listen to the financial programs a lot and things have the potential to be horrendous and out of control in some states. Stats with the highest foreclosures are most at risk of themselves going up side down in their budgets. Any number of economies are fragile and we as a nation are dependent on sovereign funds to help prop us up.
First the mortgage companies shouldn't allow zero down mortgages. Now people are having short sales who have a zero down mortgage and walk away with all the appliances and rip off other stuff from the home and never paid one penny down. So in the end they make money. I saw it on tv when some one on this forum had put a link to that program and was shocked to see that things like taht even excist. To me that is a crime and people with no debt are the real victims because they pay on time and their value goes down. What will be done about that?
Yesterday on cnn.com the showed the 3 big shots in the mortgage industry and how much they had made a year. That is a crime. They made an enormous amount while people in the same companies got fired and ended up with foreclosures and because of their mismanagement a lot of people are in financial trouble. They should be liable too.
Our beloved congress, specifically democrats, are now actually proposing bailout bills that would reduce the principal on these fraudulant loans for speculators! How rediculous is this? Let these speculators get burned and foreclosed on and that will help prices revert back to their historical means much quicker. I mean, you get an idiot who makes $40k per year who buys a $500k home by lying on his loan application, and now democrats characterize this type of fool as a "victim" and want to chop the principal down significantly to the current market value of the home.
Can you imagine the ramifications of this? As an example, let's look at two different families who bought homes on the same street at approximately the same time...
Family "A" could actually afford the home with a 30-year fixed rate loan but Family "B" could not and committed fraud (i.e. lied about income on a stated income loan) on their loan application and got an interest-only, teaser ARM. Now that home prices are falling and Family "B" is behind on their payments, democrats are proposing to reduce their principal significantly... Lets just say by 20% in this example.
Don't you think that Family "A" is going to be extremely pissed off about this? Would Family "A" and all the other responsible people like them just sit back and allow their reckless, irresponsible neighbors to have their loans reduced while they continue to be on the hook for the entire amount?
IMO, if this legislation becomes law, a whole lot of responsible families who were paying their mortgage on time will all of a sudden just STOP paying! I never thought I'd say this, because I have rarely, if ever, had anything good to say about our current President, but Dubya is doing the right thing by threatening to veto any bill like this...
FYI, the point of this posting is not to start a political argument. Let it be known to all that I dislike most republicans and democrats equally
I don't agree with any bail out. I say let the market play this out and let the cards fall where they lay.
However, I can't get over the depiction of 'Family B's' as 'speculators'. Many were first time home buyers, and I don't know many that weren't guided into ARM's or through some grey area forgery without the broker or lender helping to 'dust' the application. Again I can't feel someone who signed up for an ARM knowing the interest left in the balance would come due. But that's just a portion of the mortgages in foreclosure. There are also a significant portion of Americans faceing foreclosure that were dependent on two incomes or as a particiular income level that are now jobless. You can argue who came first the chicken or the egg, but for every reckless investor, there are two or three foreclosures that got behind on their mortgages when their job was cut. Ask anyone in the state of Michigan who worked at GM. GM, Phizer cut over 40,000 jobs between 2005-2008. And wonder why Michigan is ranked #3 in foreclosures.
There are a lot of heart breaking scenario's playing in people living room right now. This is awful. I don't feel so much for people who can still afford it and will walk away since they think the should do it because their mortgage is higher than their value. If that is the case almost every home owner should walk away right now only the once who are buying right now are left out of this. That is crazy since if you don't sell the value will go up in the years to come and you can make a profit in years. Same is for stocks, don't sell if the market goes down. So what about when the value goes up and these home owners who now walk away because of the value went down, want to buy again.... if you walk away and still are able to pay off the mortgage I hope you get a big judgment and bad credit and a note so you won't get a mortgage again! Same for the once who have put this mess on others. I just heard a story of some one who wants to do a short sale because another home is cheaper and a better deal and to do a short sale they will lose their down payment, but it worth it because of the value that is in the other home. I'm morally against this, this is making the market only worse. I feel for the people who got into a foreclosure do to healt issues or lost their jobs or got bad advise or were just ripped off by a mortgage broker without a heart!
I calculated my ability to pay XX amount for a monthly mortgage. I researched and identified a home that was within my price range not only at that time, but one that I could afford shoudl either my wife or I find ourselves staring at the face of unemployment. I am in the same home 5 years later and have garnered good equity as I bought on the low side of the market 5 years ago.
For my diligence, I am now faced with the fact that I could very well have to pay higher mortgage rates should I decide to sell, or buy another home within the next many months, or year even.
BUT, the person who was, and let's call a spade a spade, FOOLISH enough to sign up for some ridiculously low tiered mortgage with high level resets (ARM) suddenly realizes that they can't afford their home? Well, color me purple and call me stupid... HELLO.. they couldn't afford the home in the FIRST PLACE and now *I* am held accountable for THEIR actions.
The government has NO BUSINESS trying to disprove what PT Barnum said many years ago about a fool and his money. Let the market shakeup do what it is going to do. Allow people with the financial means to soak up a good part of the foreclosures, possibly creating a decent rental market for those who obviously could not truly afford to buy a home, or at least a home the scale at which they bought, and let's move on.
I'm sick and tired of seeing more and more of my hard earned $$ go to subsidies/bailouts that benefit those most undeserving..
Rant off.
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A lot would agree
