In-A-Gadda-Levitre Posted October 29, 2008 Share Posted October 29, 2008 The Treasury and the FDIC have a tentative agreement on a plan to help stave off foreclosures. Bloomberg says The program, which might help millions of homeowners refinance into affordable loans, would require lenders to restructure mortgages based on a borrower's ability to repay. Under one option, the industry would keep lower monthly payments for five years before raising interest rates, the people said. WaPo reports that To attract financial institutions to the program, the government would then guarantee to repay the lender for a portion of its loss if the borrower defaulted on the reconfigured loan. The mortgage guarantee program would vastly expand the role of the Treasury Department in helping homeowners, while at the same time ensuring some return for lenders. Link to comment Share on other sites More sharing options...
DC Tom Posted October 29, 2008 Share Posted October 29, 2008 The Treasury and the FDIC have a tentative agreement on a plan to help stave off foreclosures. Bloomberg says WaPo reports that It's not a bad plan, as plans go. But basically, it's creating another GSE along the lines of Fannie and Freddie, but this time to back specifically people who have already defaulted on their mortgages. This is eerily similar to the "loan to people who have a history of not paying back loans" industry business model that caused the problem in the first place, but with the added twists of creating a new bureaucracy to oversee the non-payment and passing the risk on to the taxpayer. And the simple fact of the matter is, the banks deserve to take a bath on the foreclosures as much as the people do who bought houses they couldn't afford. Government intervention to protect the economy from collapsing...that I can accept. I can even accept providing incentives to lenders to refinance people in foreclosure to reasonable mortgages with reasonable payments, as a measure to protect the economy from mass defaults. But government intervention to protect individual people and corporations from their own stupidity? Not too fond of that. Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted October 29, 2008 Author Share Posted October 29, 2008 It's not a bad plan, as plans go. But basically, it's creating another GSE along the lines of Fannie and Freddie, but this time to back specifically people who have already defaulted on their mortgages. This is eerily similar to the "loan to people who have a history of not paying back loans" industry business model that caused the problem in the first place, but with the added twists of creating a new bureaucracy to oversee the non-payment and passing the risk on to the taxpayer. And the simple fact of the matter is, the banks deserve to take a bath on the foreclosures as much as the people do who bought houses they couldn't afford. Government intervention to protect the economy from collapsing...that I can accept. I can even accept providing incentives to lenders to refinance people in foreclosure to reasonable mortgages with reasonable payments, as a measure to protect the economy from mass defaults. But government intervention to protect individual people and corporations from their own stupidity? Not too fond of that. Yes, I agree for the most part. It seems like a better idea than McCain's idea of the government paying off the lender's loss. one would hope that restructured terms that matched a buyer's ability to pay would result in way fewer defaults than the past, but who really knows for sure. Link to comment Share on other sites More sharing options...
Not a Hamster Posted October 29, 2008 Share Posted October 29, 2008 Yes, I agree for the most part. It seems like a better idea than McCain's idea of the government paying off the lender's loss. one would hope that restructured terms that matched a buyer's ability to pay would result in way fewer defaults than the past, but who really knows for sure. Payingq for you Isntz the right thingp to do Howm can I everm change thingso Thatm I borrowedp? Ifp I couldu Maybe Id givem you my mortgagem payment How canw i When you wont takem it from me Youz can pay own way Pay yourn own wayz Youz an callw it finance another day You can pay your own way Payz your ownw way Tell me whyl Everything turnedp around Packing upx Shacking upx is all youx wanna do Ifp I couldu Maybe Id givem you my mortgagem payment How canw i When you wont takem it from me Youz can pay own way Pay yourn own wayz Youz an callw it finance another day You can pay your own way Payz your ownw way Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted October 29, 2008 Author Share Posted October 29, 2008 Payingq for youIsntz the right thingp to do Howm can I everm change thingso Thatm I borrowedp? Ifp I couldu Maybe Id givem you my mortgagem payment How canw i When you wont takem it from me Youz can pay own way Pay yourn own wayz Youz an callw it finance another day You can pay your own way Payz your ownw way Tell me whyl Everything turnedp around Packing upx Shacking upx is all youx wanna do Ifp I couldu Maybe Id givem you my mortgagem payment How canw i When you wont takem it from me Youz can pay own way Pay yourn own wayz Youz an callw it finance another day You can pay your own way Payz your ownw way Boomer860, is that you? Link to comment Share on other sites More sharing options...
Wacka Posted October 29, 2008 Share Posted October 29, 2008 Boomer860, is that you? Zoom (passes palm over head). Link to comment Share on other sites More sharing options...
Gene Frenkle Posted October 29, 2008 Share Posted October 29, 2008 Over-regulation! Socialism! Link to comment Share on other sites More sharing options...
YellowLinesandArmadillos Posted October 29, 2008 Share Posted October 29, 2008 Sounds like the Bank executives protection act. Unless there is some real guarantees for homeowners who have lost their equity, what good does this do??? If I am in this situation, I still put the keys on the counter and walk away. Guarantee me a lower payment and interest rate for the life of the loan and then we'll talk. Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted October 29, 2008 Author Share Posted October 29, 2008 Sounds like the Bank executives protection act. Unless there is some real guarantees for homeowners who have lost their equity, what good does this do??? If I am in this situation, I still put the keys on the counter and walk away. Guarantee me a lower payment and interest rate for the life of the loan and then we'll talk. you're about to be foreclosed, you want equity guarantees, and you think you have leverage? hmmm Link to comment Share on other sites More sharing options...
Boomer860 Posted October 29, 2008 Share Posted October 29, 2008 Boomer860, is that you? Since you axed ..no. My stuff is more academic Link to comment Share on other sites More sharing options...
ieatcrayonz Posted October 29, 2008 Share Posted October 29, 2008 you're about to be foreclosed, you want equity guarantees, and you think you have leverage? hmmm Dude if someone is offering you something on a silver platter you should B word about the platter not being gold. Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted October 29, 2008 Author Share Posted October 29, 2008 Dude if someone is offering you something on a silver platter you should B word about the platter not being gold. yeah, what's up with that? I think I deserve better, what is this, Canada? Link to comment Share on other sites More sharing options...
DC Tom Posted October 29, 2008 Share Posted October 29, 2008 Sounds like the Bank executives protection act. Unless there is some real guarantees for homeowners who have lost their equity, what good does this do??? If I am in this situation, I still put the keys on the counter and walk away. Guarantee me a lower payment and interest rate for the life of the loan and then we'll talk. The whole point would be to bailout people who mortgaged themselves to the hilt with loans they couldn't afford to buy houses without a downpayment. So most of the people being foreclosed on probably don't have equity to begin with. Personally, I'd rather be protected as a taxpayer from any INCREASE in their equity. You want a government-backed refinance? Fine...we'll refi at the current assessed value of the house, but if you sell, ANY equity you build up above and beyond the original value of the refi goes back to the government. Otherwise, you'll end up with people abusing the system and refinancing their $600k houses they couldn't afford for $200k mortgages they can afford...then turning around in five years and selling them for $400k and pocketing $200k...which is not a bailout, it's highway robbery. Link to comment Share on other sites More sharing options...
Taro T Posted October 30, 2008 Share Posted October 30, 2008 The whole point would be to bailout people who mortgaged themselves to the hilt with loans they couldn't afford to buy houses without a downpayment. So most of the people being foreclosed on probably don't have equity to begin with. Personally, I'd rather be protected as a taxpayer from any INCREASE in their equity. You want a government-backed refinance? Fine...we'll refi at the current assessed value of the house, but if you sell, ANY equity you build up above and beyond the original value of the refi goes back to the government. Otherwise, you'll end up with people abusing the system and refinancing their $600k houses they couldn't afford for $200k mortgages they can afford...then turning around in five years and selling them for $400k and pocketing $200k...which is not a bailout, it's highway robbery. But if you cap out the potential gains, that isn't fair. It's their God given right as Americans to abuse the system. Other people got out with their profits intact, everyone should be able to do the same. And whether or not the people had any equity invested in the house should be immaterial, it is a HOME for gosh sakes. The good people at Fannie Mae and Countrywide were helping, altruistically of course, people own a portion of the American dream. None who fell victim to this tragic, completely unforeseeable event should ever be prevented from gaming the system again. Link to comment Share on other sites More sharing options...
bills_fan Posted October 30, 2008 Share Posted October 30, 2008 The whole point would be to bailout people who mortgaged themselves to the hilt with loans they couldn't afford to buy houses without a downpayment. So most of the people being foreclosed on probably don't have equity to begin with. Personally, I'd rather be protected as a taxpayer from any INCREASE in their equity. You want a government-backed refinance? Fine...we'll refi at the current assessed value of the house, but if you sell, ANY equity you build up above and beyond the original value of the refi goes back to the government. Otherwise, you'll end up with people abusing the system and refinancing their $600k houses they couldn't afford for $200k mortgages they can afford...then turning around in five years and selling them for $400k and pocketing $200k...which is not a bailout, it's highway robbery. I agree. Any plan should require the homeowner to return any equity to the government above the refi amount + the homeowner's down payment (if any existed). I understand about the whole moral hazard thing but if we don't address the root of the problem, falling home values, we will continue to spiral further down. Moral hazard is a great concept...until you have to bite the bullet. Letting LEH fail showed the gov't won't bail everyone out....until LEH failing forced the gov't to bail everyone out, or lose the whole system. I think Hank wishes he had a mulligan on that one. Link to comment Share on other sites More sharing options...
YellowLinesandArmadillos Posted October 30, 2008 Share Posted October 30, 2008 The whole point would be to bailout people who mortgaged themselves to the hilt with loans they couldn't afford to buy houses without a downpayment. So most of the people being foreclosed on probably don't have equity to begin with. Personally, I'd rather be protected as a taxpayer from any INCREASE in their equity. You want a government-backed refinance? Fine...we'll refi at the current assessed value of the house, but if you sell, ANY equity you build up above and beyond the original value of the refi goes back to the government. Otherwise, you'll end up with people abusing the system and refinancing their $600k houses they couldn't afford for $200k mortgages they can afford...then turning around in five years and selling them for $400k and pocketing $200k...which is not a bailout, it's highway robbery. Actually that seems reasonable, but I what I was balking about was extending the lowered interest only loan for 5 years before it becomes unaffordable through a likely interest rate hike... More borrow and put off the foreclosure till a later date... It may help out the bank, the government and the short term econ crisis, but I don't see how it solves the long term problem of the homeowner being over their heads, whose ever fault it was for giving them the loan in the first place. Link to comment Share on other sites More sharing options...
DC Tom Posted October 30, 2008 Share Posted October 30, 2008 Actually that seems reasonable, but I what I was balking about was extending the lowered interest only loan for 5 years before it becomes unaffordable through a likely interest rate hike... More borrow and put off the foreclosure till a later date... It may help out the bank, the government and the short term econ crisis, but I don't see how it solves the long term problem of the homeowner being over their heads, whose ever fault it was for giving them the loan in the first place. True, that. I didn't mention that in my program the interest rate would be fixed, and unrefinancable...but in either plan, that would be an improvement. If you're going to protect people from their own stupidity, don't do it halfway. Link to comment Share on other sites More sharing options...
JimmyPage Posted October 30, 2008 Share Posted October 30, 2008 Sounds like the Bank executives protection act. Unless there is some real guarantees for homeowners who have lost their equity, what good does this do??? If I am in this situation, I still put the keys on the counter and walk away. Guarantee me a lower payment and interest rate for the life of the loan and then we'll talk. There should be no banker protection OR guarantees for homeowners. This is government meddling in the private sector, which is what created the mess in the first place. Link to comment Share on other sites More sharing options...
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