Home Bailout Is Wrong Remedy

[The Judge]

75 Billion Dollar bailout is just another give-away to bankers not homeowners the money will pass through the homeowners hands right into the bankers cash registers. There is a also the chance that the foreclosuers will continue after they get the money by driving hard terms on any mortgage re-writes.

The banks could on their own with the money they have already been given re -write the loans and keep people in their homes. If these people are working they will pay their mortgages if the monthly payments were about the same.

After the money is gone the politicans will have them back on the hill calling them names and winking at them while telling us "those rascally bankers fooled us again".

[HUSKER55]

There was a lady on the money channel today that said the vast majority of failed homeowners had extremely high credit card balances at high rates of intrest. She also said they should have never been given a loan in the first place because the mortgage exceded 40% of takehome pay.


Why is the taxpayer responsible for that?

[JustRalph]

I heard a radio show today where a lady called in and she explained that she lives on the Gulf Coast in Florida. she said 6 years ago she paid 404K for a house and it is now worth 200k. Under this new plan announced by President Marx she is going to be able to re-finance her house for 38% of her income. She used to make over 8k a month. She was in Real Estate. Now her only income is 1000 Dollars a month Gross. She also said that there is some kind of tax credit available to the bank that would allow them to make the payment 31% of her income. Making her monthly House payment $310 instead of $380 a month. Toss in Taxes etc and she said her house payment will be around $525 a month for a house she bought for 400k. She stated she was trying to decide whether or not to walk away over the last few months. But now, President Marx is going to make it so that she can stay in her house on the beach for less than a one bedroom apartment rents in town. Although it will take her a gazillion years to pay it off........which she states will never happen.

I am starting to think that this new home bailout will be worse than Stimulus I that was signed yesterday. Oh yeah, they are calling it Stimulus I because Obama's Press guy said today that they "May" be looking for Stimulus II by Summer.

[prospector]

i can't believe we keep bailing out fools, crooks and losers...like a nation of sheep we just keep taking it...

[The Judge]

think homeowners will actually be bailed out? No the banks will take the money and run. In a way I can't blame them the money has just bee thrown at them.

The will be blamed for this when they lose their home a second time. What I want to know is with 75 Billion Dollars should'nt the amount of the mortgages be reduced by the like amount.

[Marshall Bennett]

Originally Posted by The Judge

think homeowners will actually be bailed out? No the banks will take the money and run.

As it should be . Recover whatever losses you can . If your a homeowner and dove in over you head , tough shit . I'm tired of baby-sitting this spoiled brat generation of losers , and we know who they are , we should , we're paying for them . Grow up or die poor . Learn or lose !!

[Secretariat]

I wish some of you had seen the FrontLine show. when Bernake and Paulsen state that the entire finacial system of the US will collapse in a week if a bailout is not passed, you have to wodner just how bad it actually is.

Truthfully, I knew during the primary season this was going to happen, and orginally swung my support to McCain because I wanted the Republicans to inherit the mess they created. When McCain chose Palin I couldn't vote for him (will not go into those reasons again), but I voted for Obama knowing this was going to happen. Anyone who saw what happened to Bear Stearns, Fannie Mae and Freddy Mac, and the disaster of the Lehman Brothers, which Paulsen underestimated thier relationship to AIG. Frankly, this bailout is only the beginning. It is going to cost trillions, and a long time to climb out of this mess.

[kenwoodallpromos]

Why didn't homeowners refinance when Bush was dropping the prime rate 10 times or get a fixed rate in the first place?
IMO this is a bailout of Fannie May and Freddie Mac so the Fed can stay in the homeloan guarantee business. i also thought morgage imsuramce can be bought when the home is bought?

[PaceAdvantage]

I can't believe I'm saying this, but I'm starting to side with ddog and Jim Rogers. Most of these institutions shoud have been allowed to fail. There should have been no massive bailout #1 and there certainly should be no massive "pork stimulus #1" or anything of the sort.

This entire thing is absolute madness. It is the byproduct of the Europeanizing of America, a byproduct of the left wing of the Democratic party and their desire to see to it that nobody ever fails at anything, ever.

This whole mindset only serves to continue us down a path to total ruin. This desire to look towards POLITICIANS to save us from disaster is the most insane thing I have ever heard of...as if America has never, ever seen bad economic times before and come out from under it no worse the wear.

As if the President or the legislature has any sort of real control over anything! IF THEY DID, WE WOULDN'T BE IN HALF THIS MESS TO BEGIN WITH! DON'T YOU GET THIS PEOPLE?

THEY COULDN'T STOP THIS FROM HAPPENING IN THE FIRST PLACE...WHAT MAKES YOU THINK THEY ARE GOING TO HAVE ANY TYPE OF IMPACT ON WHEN AND HOW WE BEGIN TO SHOW IMPROVEMENT?

[gopony]

Originally Posted by kenwoodallpromos

Why didn't homeowners refinance when Bush was dropping the prime rate 10 times or get a fixed rate in the first place?
IMO this is a bailout of Fannie May and Freddie Mac so the Fed can stay in the homeloan guarantee business. i also thought morgage imsuramce can be bought when the home is bought?

It's obvious that a large number of homeowners didn't know what they were getting into. But there were also a large number of (cough) financial experts that thought they knew what they were doing.

The later is the reason why I'm against giving money to banks and financial institutions without strict guidelines on what it is to be used for and how. These guys have already pissed away enough money.

AIG was or is the largest insurer of home loans. So that moneys gone.

Why are they bailing out the home loans? Because these loans are mixed in with other loans making up what they call derivatives and CDO's. A lot of these were sold as AAA bonds. Some of these have nothing to do with home loans, but they are considered worthless paper now because no one will buy them. So what they are doing now is trying to protect these bonds so that when they mature they have value and financial institutions have money to pay them off. Basically these were loans made by financial institution to fund more loans.

So what the government is trying to do is created a financial stream so that most of these bonds can be paid off or that investors can see that there is money moving and the bonds have value.

The one report which I heard was that one financial institution was making these loans at a clip of 50 billion per month and it wasn't considered the biggest. So if you have 5 or 6 institutions making loans at this rate this comes out to 250 to 300 billion per month or close to a trillion dollars each quarter.

So they then took all of this money and mixed it with other loans such as business loans and they all came out as AAA rated bonds ( backed by C.D.O.'s collaterized debt obligations)and investors no longer have confidence in these bonds. So we went from having 3 to 4 trillion of suspect loans to 15+ trillion of suspect loans because of the mixing.

These CDO's are dependent on a stream of money coming in to pay back the loans. That's what investors are worried about that the stream is going to drop below a point which can sustain paying off these bonds.

So what the government is trying to do is restore confidence in these bonds by starting money moving. So if whoever starts paying $500 instead of $2000 then that's better than nothing.

So why is this a better alternative, because we can actually find out what our losses are instead of wondering how many are going to default next month. If we can get a grasp of how much the money stream is actually going to be, we can actually get a handle on the problem.

If the investors start seeing that money is moving again, then hopefully we will start seeing liquidity in the bond market and finally money will start flowing. Right now investors have no idea what the value of the bonds are is it 70, 50, 35 cents on the dollar or is it the full value. Basically they don't know how big their problem is.

So if these bonds mature at full value or we can say they will, then that's great. If not then there are questions about what is going to happen to the US dollar and future bonds.

AAA bonds usually have a default rate of 0.1%. If we just let this go, we are looking at a possible default rate of 2% or much larger.

This is enough to start a downgrade in bonds. So now let's cut our losses and default.

Well the US government is 10 trillion (~$35,000/person in the US)in debt. So what happens if we can't pay for the interest on this debt because all of our bonds are downgraded and the GDP stagnates or falls. We end up paying more taxes.

So lets nip this in the bud and start paying an extra 2500 per year per person in taxes. Well that lady with 14 kids isn't going to pay her share.
So some of you are going to have to help with that tab.

I'll just go to Canada and make due at Woodbine and ice fishing.

[HUSKER55]

Wouldn't that be a hoot? The solution to getting rid of illegal aliens is a bad economy forcing everyone to go back home or citizens "in the know" leaving the country and take the money with them.

I've heard this before and it is worth repeating. America is not for the faint of heart.

[Tom]

We are where we are today not because capitalism failed, it didn't. Government interfered with it, and that is all they are doing to try to fix it. It will not work. It din't work for FDR, it will not work for the current jerk.

[JustRalph]

http://www.cnbc.com/id/15840232?video=1039849853

[ddog]

the guv while funny to watch is a piss ant in a longwave shit storm.
the fed(not part of the guv really) is where the action is.
we will see if they are swept away in the endgame as well.


they are piddling at the edges.

the funds they are talking about would need to be around 15X-20X larger to have much affect on anything.

it's hot air.

same as the tax cut-investing-leverage-wealth-trickle-down-shadow-credit market bubble was.


assume positions.

[Bubba X]

I am for/against:

Against: Taxpayers assuming bad mortgages.
Against: Taxpayers absorbing the difference between laon value and current value on "updise-down" loans.
Against: Allowing homeowners who couldn't afford their home in the first place to re-fi at taxpayer expense

For: Allowing people to re-fi at aggressive rates (that must be made available to every homeoner) for longer terms. If people want to stay in their homes and can swing it on the re-fi, let them stay.
For: A temporary modification of bankruptcy laws that shortens the blacklist period from 7 years to 4 or 5. Besides easing some pain, this would let some more new people into the market.

What little I've seen of Obama's home bailout plan looks ok, at least from an eligibility standpoint. Eligibility is limited to those who owe only up to 105% of their home's current market value. I am not at all thrilled with the provisions that have the gov't matching $1 for $1 reductions in principal amounts made by lenders.

Hopefully both parties will get with it and write a decent bill.