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How to fix the Mortage problem with no tax payer Money

N

NewPhone

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How to fix the Mortage problem with no tax payer Money

The Goverment should just lock all mortgage interest rates to 5% for 5 years

If think this is a good idea then write a letter to your senator
 
I think you're an idiot.

The government should just hand everyone $43857024752408758294375, then everyone can buy all the shit they want.
 
The sad truth is anyone with a mortgage on their house that is 5 years old or newer mostly likely owes WAY MORE than their house is worth.
 
Originally posted by: Budmantom
Originally posted by: GoPackGo
The sad truth is anyone with a mortgage on their house that is 5 years old or newer mostly likely owes WAY MORE than their house is worth.
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And?
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and we can't bailout everyone so suck it up!
 
Buyer beware. Not the job of the government to sit there and read the terms of your loan. In most cases, these sub-prime buyers were being as greedy as the lenders themselves. Looking for a quick way to get a lot of money for nothing.

As for home values, a home is an investment - as with any investment there is risk. Anyone who does not understand this should stuff their money into a matress.
 
Originally posted by: NewPhone
How to fix the Mortage problem with no tax payer Money

The Goverment should just lock all mortgage interest rates to 5% for 5 years

If think this is a good idea then write a letter to your senator
Click to expand...

I have a better idea.


laissez faire.
 
I have a better idea let the companies whom were stupid enough to float all those absurd loans allowing people to amass so much debt to go bankrupt and out of business. Then just wipe the debt for all those people with these loans.

These way bad companies go away instead of getting billions in bailout funds which they neither deserve nor will make good use of and no one has to lose their house, a win win for those who deserve to win.
 
Originally posted by: Socio
I have a better idea let the companies whom were stupid enough to float all those absurd loans allowing people to amass so much debt to go bankrupt and out of business. Then just wipe the debt for all those people with these loans.

These way bad companies go away instead of getting billions in bailout funds which they neither deserve nor will make good use of and no one has to lose their house, a win win for those who deserve to win.
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-------------------------- You -------------------------->>>

<<<--------------------- Clue ------------------------------



Go get it.
 
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.
 
Originally posted by: NewPhone
If think this is a good idea then write a letter to your senator
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It isn't a good idea, so I'll write to you instead.

1) 5% interest won't do a thing for many of the troubled mortgages. Consider a fairly common example in California, a 30-year $500k mortgage. Many people can't afford that mortgage, so they got an exotic mortgage.

1a) One possibility was a no interest teaser loan that had skyrocketting interest after a set period. Lets suppose someone got a 0% mortgage that went up to 7% after a year. The initial payment was $1388/month which is quite affordable. After the first year, the payment is $3248 a month. A swing of nearly $2000 a month will put many families under. Your 5% solution will make the payment be $2633/month which is a bit better than $3248/month but probably unaffordable to a family who planned on $1388/month. They will still not be able to afford your solution, especially in this souring economy.

1b) Another common possibility was interest-only loans where the principal wasn't paid for 5 years but the interest was fairly typical (often around 5%). In this case, that $500k mortgage was $2083/month that went up to $2922/month after the 5 year period. That extra $840 caused many foreclosures. Under your plan, the interest isn't changed at all, so they still are at their $2922/month mortgage and aren't helped.

1c) I could go on and on, but I think you get the picture. Millions of families simply are in mortgages that they can NEVER afford without indefinite teaser terms.

2) You'll kill the mortgage industry forever. If the government can step in and take your profit away (profit you delayed in order to give that teaser), then why would you ever make a loan? Or as an investor why would you ever buy a loan? Any good deal you make will be eliminated by the government. You clearly haven't thought about these consequences. It may very well be impossible to ever get a mortgage again if your plan goes through. That'll absolutely destroy the housing market and ruin our economy (GDP change of -20%). The original plan of the government money was to pay the banks and investors their lost profit so that the government can change the mortgage terms WITHOUT forcing anything, it would be done entirely voluntarilly. The banks and investors have crappy mortgages on their hands, and the government was willing to buy them up - everyone in the mortgage business would be happy. Too bad, they never did follow the original plan and instead just handed over money for nothing.

3) 30-year fixed mortgages are now in the mid 4% range and dropping. Why would we want them in 5% mortgages that are not fixed after 5 years? That is a WORSE deal than what is available now. If we are to have the government step in (see my objection in #2), lets have them forced into the currently available 30-year fixed mid 4% loans. That'll be far more helpful than your plan.
 
Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.
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Yow! You seem to understand neither addiction nor economics. 😕
 
The internet is such a wonderful way to observe the bell curve at work.

Welcome to P&N, mister two standard deviations of stupidity!
 
Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.
Click to expand...
Yah, but the whole US economy is addicted to heroin (consumer spending and freely available credit), so we're really getting methadone to try and bring us down slowly. I think cold turkey would kill the patient.
 
Interest rate payments won't get us anywhere. The only real solution is to mark the loan to market, write down the principal balance. If the house is sold for greater than the written down principal balance, subtract out the amount of principal payments made from the delta and the remainder goes to the bank.

Homeowner stays in the house at the current market value.

Bank keeps getting payments

Securitization owners keep getting payments

Upside goes to the bank/bondholders.

Everybody wins.
 
Originally posted by: Fear No Evil
What about those of us that didn't overpay and didn't agree to stupid mortgages?
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You can rest assured that your house won't plummet in value, that you won't have foreclosures at your next-door neighbors and drug dealers/gang members moving in. You can rest assured that you can actually sell your house when time comes for you to move. You still have a good bank account balance, good credit rating, and a home over your head. If the bailout works, the economy won't crash and you'll still have a job. You'll have a pretty nice life after a bailout. Without a bailout, who knows...

Part of the recent bailout moves have put 30-year mortgages in the mid 4% range. Maybe you should consider taking advantage of it and refinance. You could save hundreds of dollars a month.
 
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