Fannie / Freddie Mortgage Principal Reduction Rumor...

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MiniDoom

Diamond Member
Jan 5, 2004
5,305
0
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Not sure how much you put down, but you are blind to the problem. Some put 30, 40, 50% down and more and are still upside down.

I bought at the tail end of all the problems...nearly 2008. Still my home tanked more than $150k...the remaining value is about $110k currently.

I am in a modification, there was no principle reduction. However, I am down to a 2% rate that goes up 1% per year until the current rate at the time of my mod, 5.5%.

My rate was 6.875% previously so it's not like this bail out was like gaining a free home as many think these modifications do, nor did it screw up other sales.

Purchased a foreclosed house in may09 for 25% < my neighbors homes appraised for @ 5% with 20% down. Sold two properties I purchased over 10 years ago so I have plenty remaining for an emergency.
 

Patranus

Diamond Member
Apr 15, 2007
9,280
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Now keep going with that. In the lifetimes of most people on this forum, no republican presidency has ever done anything other than increase debt. The only president that didn't run a deficit all 4 years was a democratic president.

The old stereotypes about spending should be tossed out the window. It doesn't matter what side of the line they're on, they're going to spend your money like a drunken sailor.

Um.....
If Clinton didn't run a deficit all 4 years why did the national debt increase all 4 years?
(Think about that one for a second)


Snipped all the irrelevances. Do you or do you not acknowledge that both parties are bad for this country, and there is no longer a "lesser evil"?

Yes, both parties have done their part to add to the national debt but your assertion that there isn't a "lesser evil" is incorrect.

When you increase the debt at a rate DOUBLE that of the other party you certainly do have one "lesser evil".


If you're already borrowing money and you cut taxes, you will, at least in the short run, borrow more to make up for the loss of revenues (assuming there are not cuts). S

sure, it's for "spending" but you will borrow more if you cut taxes and don't cut spending.

So you agree that spending is the only thing that increases the national debt and tax cuts are not the cause of a increasing national debt.

Now, if we are to examine spending, over the life of the BOOSH tax cuts which political party controlled the executive branch?

The BOOSH tax cuts were signed into law in June 2001 (not sure when they went into law).

The national debt on June 1, 2001 was $5.67 trillion.
The national debt in January, 2007 was 8.68 trillion. (+3 trillion over 5.5 years)
The national debt today is 13.31 trillion. (+4.63 trillion over 3.5 years)

So when the GOP was in control the average added to the national debt per year during the time of the BOOSH tax cuts was 540 billion while the per year addition under the Democrats is 1.32 trillion.

That is 120&#37; MORE each year under the Democrats compared to the GOP.
 
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techs

Lifer
Sep 26, 2000
28,559
4
0
Um.....
If Clinton didn't run a deficit all 4 years why did the national debt increase all 4 years?
(Think about that one for a second)

Have you been paying attention? During the Clinton years we made progress that reduced the deficit. By the end of Clintons term we ran the first surplus in like 50 years.
The way to do it, is to do it gradually by making changes in all facets. Hold down spending a bit, increase taxes a bit and let the economy grow towards a surplus. This is what Clinton and the Democrats AND Republicans did. Before the dangerous wackos took over the Republican party.


I bolded it because apparently some people in threads on the economy know NOTHING about the economy.
 

Patranus

Diamond Member
Apr 15, 2007
9,280
0
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Have you been paying attention? During the Clinton years we made progress that reduced the deficit. By the end of Clintons term we ran the first surplus in like 50 years.
The way to do it, is to do it gradually by making changes in all facets. Hold down spending a bit, increase taxes a bit and let the economy grow towards a surplus. This is what Clinton and the Democrats AND Republicans did. Before the dangerous wackos took over the Republican party.


I bolded it because apparently some people in threads on the economy know NOTHING about the economy.

Please review the above post.

he GOP controlled congress and wrote/passed the budgets. You can hardly blame the "wackos" for doing something you are claiming is so great.

You might want to google "intergovernmental holdings" which might give you an idea of what actually happened and why the national debt didn't decrease yet the budget deficit decreased.
 
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JTsyo

Lifer
Nov 18, 2007
11,816
952
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If this comes true there better be a clause that gets money back if the house is sold for more than it was worth at the time the government got involved.
 

Engineer

Elite Member
Oct 9, 1999
39,230
701
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So you agree that spending is the only thing that increases the national debt and tax cuts are not the cause of a increasing national debt.

**Political bullshit removed because I don't give a fuck about either party at this point**

It takes borrowing to increase debt. Obviously, if you didn't spend, you would not need to borrow. To borrow more, you would either need to spend more (assuming revenue stayed the same) or have a lower revenue (assuming spending stayed the same). Just playing word games here....the effect is the same.

Why hasn't this thread been moved to P&N? It's obviously turned to one of those shitty threads at this point.
 

Patranus

Diamond Member
Apr 15, 2007
9,280
0
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It takes borrowing to increase debt. Obviously, if you didn't spend, you would not need to borrow. To borrow more, you would either need to spend more (assuming revenue stayed the same) or have a lower revenue (assuming spending stayed the same). Just playing word games here....the effect is the same.

Why hasn't this thread been moved to P&N? It's obviously turned to one of those shitty threads at this point.

The loss in revenue is in no way related to borrowing. The only thing directly related to borrowing is SPENDING.

Lowering revenue does not cause borrowing. What causes borrowing is spending more money than you take in via revenue (assuming there is no savings).

Spending is directly related to borrowing while borrowing is not directly related to revenue.

Your assumption is that spending must stay the same or increase.
 
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tk149

Diamond Member
Apr 3, 2002
7,253
1
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I know right...house is still worth what I paid for it, and I've never missed a payment. Also, I bought right before Home buyers credit was started. I missed all the goodies.

Same here. Boy, was I stupid for being smart and responsible!
 

alkemyst

No Lifer
Feb 13, 2001
83,769
19
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Same here. Boy, was I stupid for being smart and responsible!

Well just because it's worth the same as you paid doesn't equal smart and responsible.

Some still bought too much house, some are victims of job loss/pay reduction, some went in on bad faith (many neighborhoods were billed as no investors...however; those working those neighborhoods all had 'buddies').

Most that bought homes between 3 and 6 years ago are screwed even with the best of intentions and means.

In the last 3 years, some areas have corrected better than others. Those really hurt are the many condo/townhome buyers that have too many vacanies requiring all new buyers to pay cash. They have no way to sell except to a cash buyer and at that point the cash buyer may as well buy new which will be cheaper usually and warrantied.
 

Engineer

Elite Member
Oct 9, 1999
39,230
701
126
The loss in revenue is in no way related to borrowing. The only thing directly related to borrowing is SPENDING.

Lowering revenue does not cause borrowing. What causes borrowing is spending more money than you take in via revenue (assuming there is no savings).

Spending is directly related to borrowing while borrowing is not directly related to revenue.

Your assumption is that spending must stay the same or increase.

They (both parties) NEVER cut spending, so, up to now, that's a pretty safe assumption (right or wrong, that's the way it's been).

Not going to argue on this point any more. It's just a matter of words anyway. Fuck politicians and politics in general.....I just don't give a shit anymore (really).
 

mshan

Diamond Member
Nov 16, 2004
7,868
0
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Putting blind political idealogy aside, I think it is better to view rumored plan in terms of:

1) will it ultimately minimize cost to taxpayers of bailing out Fannie and Freddie (we already own both, so no point in rehashing shoulda, woulda, coulda...)

2) Paul Krugman seems to have always been right that economy needed greater stimulus, and also that the way stimulus was designed because of politics (both Republican and Democrat), it was as not as effective as it should have been (Obama August surprise seems like Stimulus 2.0, but doesn't force politicians up for election in November to vote for it)

3) I really wonder how many flipping speculators are even left in market (probably jingled mail'd their investment properties years ago). Sounds like we have a lot of poor souls who bought the hype that housing prices would go up forever and paid up even though they knew prices were high. Housing is one component of sustained economic recovery, and when people can live in the houses for rest of their lives and still not get mortgage loan amount back, well, I think you will have steady trickle of foreclosures and short sales for many years to come.
 
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alkemyst

No Lifer
Feb 13, 2001
83,769
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The main idea behind it is keeping someone in their home is a lot cheaper in the long run than kicking them out of it and the bank taking on that property.

What most don't think about is these bank-owned properties just sit and deteriorate causing a domino affect to the surrounding homes.

The trick is to make sure the program is not being taken advantage of by those looking just to leverage investments. We have had investors claiming their purchases are their primary residence and buying 2+ of these by taking advantage of the way banks work and setting up all those 'homes' to close at the same time / day.
 

IndyColtsFan

Lifer
Sep 22, 2007
33,655
687
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The main idea behind it is keeping someone in their home is a lot cheaper in the long run than kicking them out of it and the bank taking on that property.

We can't keep propping people up in houses they clearly cannot afford. Obviously, some of the situations are through no fault of the owner and are due to job loss. Most of us understand that. However, many of these foreclosures have been due to people using exceptionally poor financial judgment, as has been pointed out numerous times in this thread. At some point, enough is enough and it will be time for them to move to an apartment or a cheaper home. Even with the existing loan modifications, 15&#37; of the people have ALREADY redefaulted on their loans:

Treasury said about 14.9 percent of the 4,764 borrowers who have had a permanent modification for at least nine months by the end of May had re-defaulted on their loan. That's more than six times the 2.4 percent rate they reported on July 20.

The fun doesn't stop there either:

For loans that had been permanently modified for at least six months, about 6.1 percent had re-defaulted, up from just 1.7 originally estimated. Re-defaults are defined as 90 days or more late.

For loans 60 days late and not yet in re-default, the number of borrowers in trouble is even higher.

For loans that had been permanently modified for at least nine months, 19.6 percent of the loans were at least two months behind on their payments, more than two and a half times the 7.7 percent rate first reported.

On loans permanently modified for at least half a year, 10.1 percent were 60 days or more behind on payments, compared to the 5.9 percent originally reported.

20% of the already modified loans are already behind by 2+ months. That is insane and has nothing to do with them being "under water," as I've pointed out several times in this thread. Being under water on a loan in no way requires someone to foreclose and I think that is what is getting missed here. What IS causing foreclosures are job loss, people buying more house than they could afford, and loans people should never have agreed to.

If we gave this entire subset of people this principal relief, guess what is going to happen? Sure, some might be wise enough to cut their losses, sell, and break even. But I think what would likely happen is that people will continue holding onto houses they can't afford, a large percentage will continue to fall behind, and eventually they'll be foreclosed on anyway.

I'm sorry, I do feel bad for some of these people, but at some point they need to be realistic and either take a loss or foreclose. It sucks, but people shouldn't run to the government any time they might have to take a loss. That's called being a responsible adult and realizing that sometimes, life gives you lemons and you just have to try your best to make lemonade from them.
 

alkemyst

No Lifer
Feb 13, 2001
83,769
19
81
That's not what I said though.

If the person can't afford the home and never should have qualified that is different. Same way if they are investors.

The reason people keep defaulting is there is a belief that you may somehow end up with an even better deal or possibly your house for free.

This is why they should have never 'required' a 3 payment default prior to helping anyone. It taught you have to be screwing someone in order to get the reward.

If they stick to the idea properly: Validate Debt to Income ratio (maybe require a lock on credit), adjust the properly to the HIGH side of values, and restructure the loan giving the borrower the ability to properly pay then it's a win-win. I also feel any 'foreclosure' time they had already accrued doesn't get reset. If you were at the 'sheriff's notice' stage, you go 60 days+ you were already served. They should also have to enter self-paid credit counselling/budgeting.

What ends up happening like you said though, they get restructured so now they are on the hook for less when they default the next time, get their default time reset so they can again stop making payments and live for free and also quickly take on new credit as their loans get reported as negotiated.

This is why banks are running new credit reports the day of closing. Too many buy the home and then figure they are entitled to new cars for the driveway, big LCD tv/home theatres, premium appliances, pools, etc.

You are looking at this only in the eyes of someone that is looking to game the system.
 

ebaycj

Diamond Member
Mar 9, 2002
5,418
0
0
A principle reduction will mean home prices will plummet even more than they have in the last 3 months.

Good job!

What kind of so-called "businessman" does not know how to spell (and properly use) the word "principal" ?
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
This is why banks are running new credit reports the day of closing. Too many buy the home and then figure they are entitled to new cars for the driveway, big LCD tv/home theatres, premium appliances, pools, etc.
You could close in the morning and hit up some dealerships in the afternoon. It takes time for a credit report to reflect a new debt.

My guess is that if I hit up three different chevy dealerships on the same day and bought whatever corvette is on the lot I could quite easily take home three of them. The hits to credit (assuming they are immediately recorded in my record and I bet they aren't) would appear as just rate shopping or something. Or I could cross-shop different brands, it would be still very easy for any adult with the inclination to get vast over his ability to pay back debt.
 

Moonbeam

Elite Member
Nov 24, 1999
73,231
6,338
126
I played by the rules and made sensible investments and I pay my taxes. Now I sit up at night stabbing myself in the back of the hand because I did so.

I'm not hurting, mind you, well except for my hand and my ulcer, but I'd feel a whole lot better if the whole society collapsed and those who didn't play by the rules, instead of using some portion of my money to get a free for them bail out, would just fuck off die killing the rest of us too.

Fuck me, god damn it. Fuck me. Wait, I have something wrong here somewhere. Isn't it supposed to be fuck you?
 

hal2kilo

Lifer
Feb 24, 2009
24,205
10,865
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Wow, instead of being thankful that you are not in the position of having to participate in a "possible" mortgage principal reduction program, we hear from the usual players, who if you listen to them, are jealous of people on welfare.

Why are you so mad that you made the right choices in life and (i know you don't think it has anything to do with luck) worked soo hard to get to where you don't have to do this.

Instead, all I am really hearing is this bizarre jealousy.

Why don't you just F up your life so that you can be like them.

I guess going to sleep at night knowing you did the right thing, just isn't good enough anymore.

Seems like class warfare turned on its head.
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
This thread contains some of the lamest whining yet-

"They get something I don't get! Wah!"

There was a time when honest conservatives didn't whine about something the other guy got.

And there's a deeper issue here than the usual "personal responsibility" song and dance, an issue of systemic failure. That's the part Righties refuse to address squarely, if at all. That failure was inevitable prior to Obama taking office, and prior to Dems taking the majority in Congress. It looks like this-

http://www.ritholtz.com/blog/wp-content/uploads/2009/06/case-shiller-updated-1024x804.png

If there's no control on a rising market, then it overshoots drastically, making control on the downside extremely problematical. Which is what we're seeing today. Left to its own devices, the current housing market would be in a much deeper trough than it is, and headed even lower, fast. And that's because foreclosures would be completely rampant in a self reinforcing debt deflation spiral.

Unoccupied housing inventories are still growing, forcing prices lower. More foreclosures simply means more unoccupied housing. Wash, rinse, repeat until the bottom falls out, like it did in the early 1930's.

From a macro perspective, principal reduction will occur one way or another. Foreclosure and resale reduces principal owed. So does principal reduction, in a less disruptive way. If we can't get past the whole notion of retribution for poor personal decisions, then we'll all suffer more than necessary for the poor decisions the country made in electing Republicans in the first place.

Tax Cut! Free Market! De-Regulated Banking! Easy Credit! Low introductory rates! Affordable Loans! Ownership Society!

Easier to just blame it on Obama, right?
 

hal2kilo

Lifer
Feb 24, 2009
24,205
10,865
136
Please review the above post.

he GOP controlled congress and wrote/passed the budgets. You can hardly blame the "wackos" for doing something you are claiming is so great.

You might want to google "intergovernmental holdings" which might give you an idea of what actually happened and why the national debt didn't decrease yet the budget deficit decreased.

Probably service on the debt caused by Reagan's deficets. You do know the difference between deficits and debt don't you?
 
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alkemyst

No Lifer
Feb 13, 2001
83,769
19
81
You could close in the morning and hit up some dealerships in the afternoon. It takes time for a credit report to reflect a new debt.

My guess is that if I hit up three different chevy dealerships on the same day and bought whatever corvette is on the lot I could quite easily take home three of them. The hits to credit (assuming they are immediately recorded in my record and I bet they aren't) would appear as just rate shopping or something. Or I could cross-shop different brands, it would be still very easy for any adult with the inclination to get vast over his ability to pay back debt.

Except the bank is protected at that point for regulations.
 

Pulsar

Diamond Member
Mar 3, 2003
5,224
306
126
Do you have negative equity? If so, you could win.

Quick! Everyone overpay for houses! Offer $500k for a $100k house!
You'll get free money!

You have no idea how upset and sick this makes me. Furious is not the word. Throwing and breaking things doesn't begin to approach it.

I have a house. It's almost identical to my neighbors - just a shape difference on the exterior sets us apart. Built within a month of eachother, by the same builder.

When I bought the house, I put 15 percent down. My neighbor put 1&#37; down, got a second mortgage, built a 1800 square foot pole barn, bought a large 5th wheel camper, a new Chevy Silvarado, 3 4-wheelers for his kids, and installed a pool.

I've never missed a payment, and in fact have been putting more than the minimum in.

He's missed a ton of payments.

When I tried to refinance from my 5.5% down to the current rates (around 4.0%), I could not because I did not qualify for any of Obama's government assistance programs, and I'm upside down on my house despite my initial 15% down payment.

Not only did my neighbor get his refinance, but because of his distressed state he got a large part of the debt forgiven. He now has nearly the same equity in his house than I do because of improvements he made and the debt fogiven, AND he has a lower interest rate. His refinance lowered his payments so that he pays the same that I do.

FUCK. YOU. OBAMA.
 

Fingolfin269

Lifer
Feb 28, 2003
17,948
31
91
You have no idea how upset and sick this makes me. Furious is not the word. Throwing and breaking things doesn't begin to approach it.

I have a house. It's almost identical to my neighbors - just a shape difference on the exterior sets us apart. Built within a month of eachother, by the same builder.

When I bought the house, I put 15 percent down. My neighbor put 1&#37; down, got a second mortgage, built a 1800 square foot pole barn, bought a large 5th wheel camper, a new Chevy Silvarado, 3 4-wheelers for his kids, and installed a pool.

I've never missed a payment, and in fact have been putting more than the minimum in.

He's missed a ton of payments.

When I tried to refinance from my 5.5% down to the current rates (around 4.0%), I could not because I did not qualify for any of Obama's government assistance programs, and I'm upside down on my house despite my initial 15% down payment.

Not only did my neighbor get his refinance, but because of his distressed state he got a large part of the debt forgiven. He now has nearly the same equity in his house than I do because of improvements he made and the debt fogiven, AND he has a lower interest rate. His refinance lowered his payments so that he pays the same that I do.

FUCK. YOU. OBAMA.

And this is why people are mad. It's not about people 'crying' because they want to be like people on welfare because to be quite honest what actually happens is that the irresponsible end up with having so much more than the responsible for either the same $ or somewhat less.