Mortgage Help Rip-Off

[piasabird]

http://www.cnn.com/2008/POLITI...oreclosures/index.html

Feds, Lenders to Offer Broader Plan to Help with Foreclosures

quote:
The program announced last week it had helped about 545,000 subprime borrowers and 324,000 prime borrowers in the second half of 2007. Hope Now set up several criteria that homeowners had to meet to be eligible for help; the new Project Lifeline is open to anyone who is 90 days behind on mortgage payments.

So why are we helping these people?

This penalizes people who worked hard, are struggling and still managing to pay their mortgage, in favor of people who overextended their credit and made bad business decisions.

 

[Pabster]

It's an election year.

 

[RightIsWrong]

Boy are you both way off base. We are not trying to help these poor people get back on their feet and it wouldn't matter if there wasn't an election this year.

There is money and future consultant/board gigs up for grabs and we cannot and will not let the financial sector take a hit. Especially with the pending gloom and doom already hanging over the economy. This is a giveaway/bailout to the banks and has nothing to do with helping anyone save their home.

 

[Slew Foot]

As usual, the guy who does nothing wrong, gets to help pay for the guy who messed up.

 

[Pabster]

Of course it's a bailout of the banks, RIW. But the fact that this is an election year brings "urgency" to this measure and others like it (like the $192B cash advance upcoming)

 

[Rainsford]

Originally posted by: Slew Foot
As usual, the guy who does nothing wrong, gets to help pay for the guy who messed up.

You know, I kind of agree with you, but the problem is that things don't happen in a vacuum. In some ways those of us who were more responsible with our finances will be better off (I'm thinking about refinancing at a lower rate), but in other ways we get screwed (I put a lot of my money in CDs and high yield savings accounts, which have taken a rate hit lately). Even if we're not going to lose our houses due to poor decision making skills, it's still in our best interest to have a strong economy. And like it or not, people with poorly chosen mortgages are a threat the economy. Bailing them out isn't so much charity as a smart thing to do. I don't think there is anything wrong with not wanting people out on the street, even if they made a bad decision, but there are reasons to do this beyond being nice.

 

[yuppiejr]

Ok, reality check people... this is NOT a bail-out plan... It involves an interest rate freeze and loan term renegotiation options for borrowers that is fully supported by the large banks out there who would rather settle directly for less money from a borrower than deal with even more foreclosed homes. Tax dollars are NOT being used to bail these people out in any way... it's just a a formal version of what a lot of banks already do when someone looks like they might default on their home loan these days.

OP I think you spun this story entirely the wrong way, did you even read the article? A bail out IS a terrible idea but that's not what this plan is all about. If you want to bitch about giveways/bail-outs lets discuss the "economic stimulus" scam that's gotten so much bipartisan support these days...

 

[yuppiejr]

Originally posted by: Pabster
Of course it's a bailout of the banks, RIW. But the fact that this is an election year brings "urgency" to this measure and others like it (like the $192B cash advance upcoming)

Can you point out in the article where a bailout is suggested? Seriously, I've read it 4 times now and don't see anything but a "rate freeze" and "bank-borrower rate renegotiation" mentioned... and I'm normally highly suspect of anything CNN published as "news."

 

[dullard]

We have to realize, first and foremost, that screwing with the free markets will prolong the pain. Thus, as a society we have to decide: do you want a medium length very painful correction or a long length slightly painful correction? I won't claim to be able to say which is better. I generally perfer the longer correction if the pain can be truely minimized - if not, then always go with the free market.

Having a foreclosure is bad for everyone. Yes, it is bad even for you Piasabird. This is especially true with the potential for massive foreclosures that we are looking at. Foreclosures will:
1) Harm the homeowners. It destroys their credit for 1.5 years, it loses their equity, it kicks them out of their home, etc.
2) Harm the banks. Foreclosures are expensive. Banks lose money.
3) Harm the investors. Have mutual funds with bank stocks? If so, you are being harmed. Have bond funds that are the ultimate source of the loan funds? If so, you are being harmed.
4) Harm the economy. The housing section of the economy is massive and it is showing up in lower GDP.
5) Harm the tax revenue. A bad economy means less taxes, which means YOU ultimately pay more in taxes.
6) Harm the good homeowners since a foreclosure makes all houses fall in value, brings in crime, etc.

So, why correct problems if you can? Because you are in at least one of those 6 groups. Ending even one foreclosure with a mutually acceptable plan is good for all. We need a plan that has the homeowners pay a bit more (up to what they can afford), have the banks take a slight hit, and have the investors get less than what they wanted but still get a positive return. Do that, and we all are better off. If you can't do it, then get out of the way of the free market.

 

[Vic]

This is not a bailout. Banks are stuck between a rock and a hard place, and the Fed is encouraging them to re-negotiate with borrowers for terms they can actually afford and take a hit that way rather than sink the whole market with mass foreclosures.

 

[Thump553]

A little heads up-this sort of program existed for decades, it's just fashionable now for politicians to talk about it. Foreclosures (and repos) generate losses all around and nearly every lender knows it's in their best interest to enter into a reasonable forebearance program.

As a practical matter many of these new programs are so rigidly designed that they offer little or no actual help. In my state (CT) the state announced last week that they have yet to actually rewrite even one loan.

 

[Starbuck1975]

Ok, reality check people... this is NOT a bail-out plan... It involves an interest rate freeze and loan term renegotiation options for borrowers that is fully supported by the large banks out there who would rather settle directly for less money from a borrower than deal with even more foreclosed homes. Tax dollars are NOT being used to bail these people out in any way... it's just a a formal version of what a lot of banks already do when someone looks like they might default on their home loan these days.

Why do we need a government brokered deal to help people keep homes they should have never purchased to begin with?

 

[Vic]

Originally posted by: Starbuck1975

Ok, reality check people... this is NOT a bail-out plan... It involves an interest rate freeze and loan term renegotiation options for borrowers that is fully supported by the large banks out there who would rather settle directly for less money from a borrower than deal with even more foreclosed homes. Tax dollars are NOT being used to bail these people out in any way... it's just a a formal version of what a lot of banks already do when someone looks like they might default on their home loan these days.

Why do we need a government brokered deal to help people keep homes they should have never purchased to begin with?

Read dullard's post.


edit:

Originally posted by: Thump553
A little heads up-this sort of program existed for decades, it's just fashionable now for politicians to talk about it. Foreclosures (and repos) generate losses all around and nearly every lender knows it's in their best interest to enter into a reasonable forebearance program.

As a practical matter many of these new programs are so rigidly designed that they offer little or no actual help. In my state (CT) the state announced last week that they have yet to actually rewrite even one loan.

That's correct. Forbearances are nothing new. And while your state might not be doing anything, the banks are. Some large investors are starting to use some retail mortgage operations to solicit re-writes to customers, usually with the intention of flipping a non-agency deal into an agency loan to get it off the bank's books, even if it means losing money/principal in the process.

 

[Lemon law]

So the guy who did nothing wrong, pays his bill on time gets no benefit out of the plan????????

Don't be absurd.

As it is, that responsible person is seeing the paper value of his house investment greatly decline in value. And the more frequent the foreclosures, the greater the decline. So if he has to relocate due to his job, he loses money because of negative equity in his investment, and then pays a higher rate of interest when he purchases a replacement home somewhere else. The higher the foreclosure rate, the more the responsible person is hurt also

And much of it is due to insufficient government regulations of markets allowing unqualified
buyers to buy houses they can no longer afford the payments on when the greedy banks kite the interest rates on the ARM. And now the greedy banks are also victims of their own greed with many in financial distress. And now running to the government for a bail out.

 

[piasabird]

I already got my fixed rate loan, so if all the banks or rather mortgage holding companies start failing, it will not affect me whatsoever. If these financial institutions are hurting that is not my problem. They are all in business and if you go into businesss you should be willing to accept the risks. No one forced these institutions to lend the money or buy the mortgages.

If they fail then that is fine with me. Some other newer companies with better business practices will take over their businesses.

 

[Vic]

Originally posted by: Lemon law
So the guy who did nothing wrong, pays his bill on time gets no benefit out of the plan????????

Don't be absurd.

As it is, that responsible person is seeing the paper value of his house investment greatly decline in value. And the more frequent the foreclosures, the greater the decline. So if he has to relocate due to his job, he loses money because of negative equity in his investment, and then pays a higher rate of interest when he purchases a replacement home somewhere else. The higher the foreclosure rate, the more the responsible person is hurt also

And much of it is due to insufficient government regulations of markets allowing unqualified
buyers to buy houses they can no longer afford the payments on when the greedy banks kite the interest rates on the ARM. And now the greedy banks are also victims of their own greed with many in financial distress. And now running to the government for a bail out.

Once again, no one is getting a government bail out here.

And really, the "insufficient government regulations of markets" card doesn't fly here. First, it's just rhetoric for pushing through new legislation designed to close the barn door after the horse has already gotten out, which will only worse the problem. Second, requiring lenders by law to prove the type of income documentation in ALL cases, like you would support, unfairly harms self-employed borrowers who can't just provide a corporate paystub and VOE on demand. And third, the interest rates on the ARMs were never "kited." They are based on fixed margins and prominent market indexes, terms of which are fully disclosed as required by existing regulation going back more than 30 years. All these borrowers had to do was actually READ before they signed.

 

[Rainsford]

Originally posted by: piasabird
I already got my fixed rate loan, so if all the banks or rather mortgage holding companies start failing, it will not affect me whatsoever. If these financial institutions are hurting that is not my problem. They are all in business and if you go into businesss you should be willing to accept the risks. No one forced these institutions to lend the money or buy the mortgages.

If they fail then that is fine with me. Some other newer companies with better business practices will take over their businesses.

Except it IS your problem, because unless you are independently wealthy or keep your money in a shoebox under your bed, chances are pretty good that you rely in some way on the performance of the economy as a whole. If you have mutual funds, investments of any sort, money in the bank earning interest, if you want to sell your house any time soon, etc, it's good for you if the economy is doing well.

I understand your frustration with the bad choices people made, but leaving them to twist in the wind is cutting off your nose to spite your face. And overall, I don't think it's worth the economic damage doing nothing will cause just so you can feel smug and superior.

 

[Lemon law]

The Vic position is---And really, the "insufficient government regulations of markets" card doesn't fly here. First, it's just rhetoric for pushing through new legislation designed to close the barn door after the horse has already gotten out, which will only worse the problem. Second, requiring lenders by law to prove the type of income documentation in ALL cases, like you would support, unfairly harms self-employed borrowers who can't just provide a corporate paystub and VOE on demand. And third, the interest rates on the ARMs were never "kited." They are based on fixed margins and prominent market indexes, terms of which are fully disclosed as required by existing regulation going back more than 30 years. All these borrowers had to do was actually READ before they signed.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

Blame the buyer is always the free market argument against sound regulation. Well, the free markets ain't working very well. Irresponsible lenders are also to blame. And its hurting everyone and effecting the economy. And if it cause layoffs, formerly responsible buyers will start to default also as they made a bet on a sounder economic future.

 

[techs]

Originally posted by: Lemon law
The Vic position is---And really, the "insufficient government regulations of markets" card doesn't fly here. First, it's just rhetoric for pushing through new legislation designed to close the barn door after the horse has already gotten out, which will only worse the problem. Second, requiring lenders by law to prove the type of income documentation in ALL cases, like you would support, unfairly harms self-employed borrowers who can't just provide a corporate paystub and VOE on demand. And third, the interest rates on the ARMs were never "kited." They are based on fixed margins and prominent market indexes, terms of which are fully disclosed as required by existing regulation going back more than 30 years. All these borrowers had to do was actually READ before they signed.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

Blame the buyer is always the free market argument against sound regulation. Well, the free markets ain't working very well. Irresponsible lenders are also to blame. And its hurting everyone and effecting the economy. And if it cause layoffs, formerly responsible buyers will start to default also as they made a bet on a sounder economic future.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

QFMFT

 

[Vic]

Originally posted by: Lemon law
The Vic position is---And really, the "insufficient government regulations of markets" card doesn't fly here. First, it's just rhetoric for pushing through new legislation designed to close the barn door after the horse has already gotten out, which will only worse the problem. Second, requiring lenders by law to prove the type of income documentation in ALL cases, like you would support, unfairly harms self-employed borrowers who can't just provide a corporate paystub and VOE on demand. And third, the interest rates on the ARMs were never "kited." They are based on fixed margins and prominent market indexes, terms of which are fully disclosed as required by existing regulation going back more than 30 years. All these borrowers had to do was actually READ before they signed.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

Blame the buyer is always the free market argument against sound regulation. Well, the free markets ain't working very well. Irresponsible lenders are also to blame. And its hurting everyone and effecting the economy. And if it cause layoffs, formerly responsible buyers will start to default also as they made a bet on a sounder economic future.

Could you possibly be anymore vague, anymore unknowledgeable about the industry, or possibly misinterpret my position any worse? Seriously. Your empty rhetoric and baseless accusations are not going to fly here.

 

[techs]

Originally posted by: Vic

Originally posted by: Lemon law
The Vic position is---And really, the "insufficient government regulations of markets" card doesn't fly here. First, it's just rhetoric for pushing through new legislation designed to close the barn door after the horse has already gotten out, which will only worse the problem. Second, requiring lenders by law to prove the type of income documentation in ALL cases, like you would support, unfairly harms self-employed borrowers who can't just provide a corporate paystub and VOE on demand. And third, the interest rates on the ARMs were never "kited." They are based on fixed margins and prominent market indexes, terms of which are fully disclosed as required by existing regulation going back more than 30 years. All these borrowers had to do was actually READ before they signed.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

Blame the buyer is always the free market argument against sound regulation. Well, the free markets ain't working very well. Irresponsible lenders are also to blame. And its hurting everyone and effecting the economy. And if it cause layoffs, formerly responsible buyers will start to default also as they made a bet on a sounder economic future.

Could you possibly be anymore vague, anymore unknowledgeable about the industry, or possibly misinterpret my position any worse? Seriously. Your empty rhetoric and baseless accusations are not going to fly here.

Will you ever intelligently reply to an excellent post with anything more than "I know better" and just a blanket condemnation without ANY sort of reasoning?
I doubt it.

 

[Vic]

Originally posted by: techs

Originally posted by: Lemon law
The Vic position is---And really, the "insufficient government regulations of markets" card doesn't fly here. First, it's just rhetoric for pushing through new legislation designed to close the barn door after the horse has already gotten out, which will only worse the problem. Second, requiring lenders by law to prove the type of income documentation in ALL cases, like you would support, unfairly harms self-employed borrowers who can't just provide a corporate paystub and VOE on demand. And third, the interest rates on the ARMs were never "kited." They are based on fixed margins and prominent market indexes, terms of which are fully disclosed as required by existing regulation going back more than 30 years. All these borrowers had to do was actually READ before they signed.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

Blame the buyer is always the free market argument against sound regulation. Well, the free markets ain't working very well. Irresponsible lenders are also to blame. And its hurting everyone and effecting the economy. And if it cause layoffs, formerly responsible buyers will start to default also as they made a bet on a sounder economic future.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

QFMFT

Yeah troll, and I was one of those "responsible people" in the industry. The time to act was then, not now.

 

[Starbuck1975]

As it is, that responsible person is seeing the paper value of his house investment greatly decline in value. And the more frequent the foreclosures, the greater the decline. So if he has to relocate due to his job, he loses money because of negative equity in his investment, and then pays a higher rate of interest when he purchases a replacement home somewhere else. The higher the foreclosure rate, the more the responsible person is hurt also

What about the responsible person who sat on the sidelines and chose not to take on a mortgage he could not afford, and is now priced out of a market whose prices escalated due to speculation, greed and irresponsible lending?

Delaying the inevitable also hurts first time home buyers, who are priced out of the market.

Similarly, those who purchased prior to the housing bubble will not realize negative equity unless they HELOCed the hell out of their home as a virtual ATM machine to claim the phantom speculative equity created by the bubble. Equity only exists if you SELL your house, not speculate on what you project its future value will be.

 

[techs]

Originally posted by: Vic

Originally posted by: techs

Originally posted by: Lemon law
The Vic position is---And really, the "insufficient government regulations of markets" card doesn't fly here. First, it's just rhetoric for pushing through new legislation designed to close the barn door after the horse has already gotten out, which will only worse the problem. Second, requiring lenders by law to prove the type of income documentation in ALL cases, like you would support, unfairly harms self-employed borrowers who can't just provide a corporate paystub and VOE on demand. And third, the interest rates on the ARMs were never "kited." They are based on fixed margins and prominent market indexes, terms of which are fully disclosed as required by existing regulation going back more than 30 years. All these borrowers had to do was actually READ before they signed.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

Blame the buyer is always the free market argument against sound regulation. Well, the free markets ain't working very well. Irresponsible lenders are also to blame. And its hurting everyone and effecting the economy. And if it cause layoffs, formerly responsible buyers will start to default also as they made a bet on a sounder economic future.

The point being, long before this crisis became a crisis, responsible people in the industry were begging for these regulations. So its hardly locking the barn door after the horses got out. All these lenders had to do is read between the lines to see this crisis was being made inevitable. As it is, most of the irresponsible lenders got in and out before the bottom dropped out. Blaming irresponsible buyers is only part of the problem. Sound regulation beforehand could have prevented much of the grief.

QFMFT

Yeah troll, and I was one of those "responsible people" in the industry. The time to act was then, not now.

No the time to act is when the situation has not been corrected.
Which is NOW.

 

[Capt Caveman]

The Mortgage Meltdown Crisis affects everyone. The ability for people/companies with bad to excellent credit to borrow, expand, create jobs, etc. People need to look at the situation at a macro level and not at their current individual situation.