As a deliberate renter, I am livid. We pay astronomical taxes, only to see that money taken and given to others in the form of subsidized mortgage rates, or (heaven help us) "subsidized mortgage payments"! The idea that the government should take the taxpayers' money and distribute it to select homeowners is fundamentally UNAMERICAN. And worse yet, those that benefit are those that made the poorest economic decisions.
I can see the reasons to help owners refi if they have some sort of "exploding loan" (ARM or Option ARM, etc), but beyond that I feel home prices should adjust to a level that can be naturally supported by our economy.
If the government did manage to "stabilize" housing prices, they would just be back to finding crazy programs to "increase affordability" again. Seems to me the only beneficiary of higher home prices coupled with affordability through creative financing are LENDERS.
This isn't a bad plan, b/c it doesn't help builders or realtors. Staying below jumbos is sensible. Likely only delays the inevitable for the unemployed. Still not sure why tax money should subsidize people who couldn't afford a home in the first place.
According to this plan, we bought less house than we could afford.
So no goodies for us.
OTOH, if we get laid-off, I am sure we would eventually qualify... so what is the time-frame for determining pre-tax income and how long is the door going to say open for this program?
I would love to see a 6-handle today - freak everyone out in DC! - You might start hearing murmerings of "Lets keep Bam-Bam away from the microphone today"....
Why would any rational person who is underwater and/or behind on payments agree to a refinance deal where they end up paying more long term ( possibly a lot more depending on financing ) when both before and after this program the best course of action is to walk away?
Obama is turning out to be an emptier suit than I had previously took him for....wow.
And again this is coming from someone who fervently believes that the bush administration was the worst in American history hands down. Mr. T. | 02.18.09 - 10:29 am | #
Obama's approval rating is the best short in the market today. He was dealt a bad hand but he is making things worse. He has the wrong economic team in place. I'm hoping for the best but.....
No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.
No help for those that actually were smart enough not to take out a loan that was way above what they could afford and can actually pay on time. What do we get in return we have to bailout those who should have never been given a loan in the fist place.
This is yet another step towards Nationalization. It's not meant to work, it's meant to cause enough outrage in the populace by "subsidizing" the banks so people will gladly accept nationalization...
a subsidy for suburbia and dumbasses. What was I thinking buying a house I could afford and paying it off. Now my taxes can be wealth transfered to assholes so I can be saved. Screw everyone!
Folks, I think you started with the wrong premise. Do you think the administration could issue a press release stating: Our foreclosure plan is to let all those folks who bought too much house get hammered.
Of course this new program will "fail". But the question (and the real measure of success) is: Does it maintain social order while it is failing? Because the other path would certainly lead to rioting among the self-entitled.
So, if I lower my W-2 wage from my corp to say around $ 1.50 per hour, I to can have a $ 18.60 per month mortgage?
This thing is pissing me offÂ…It is going to be riddled w/ fraud!
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There is merit in this line of thinking. That's often an effective strategy where you present a course of action that makes palatable the real course of action you intend to take.
And again this is coming from someone who fervently believes that the bush administration was the worst in American history hands down.
Mr. T. | 02.18.09 - 10:29 am
Sure, Obama was long on sizzle and is now short on steak, but he has a long, long way to go before he comes close to Bush's special place in history.
But the question (and the real measure of success) is: Does it maintain social order while it is failing? Because the other path would certainly lead to rioting among the self-entitled. JP | Homepage | 02.18.09 - 10:34 am | #
My Obama-bedazzled friends scoffed when I told them any sky's-the-limit "change" agenda he might have would be completely buried by economic realities within months of his inauguration, wherein he would show himself to be mostly More of the Same in terms of economic policy.
The only thing I was wrong about was the speed at which the systemic collapse happened.
I can't wait to see if I qualify for this program. I have a FHA loan for a house that I bought long before the boom so it is not underwater, but I haven't seen any restrictions or need based testing in that regard. Second it is based on income from what I can tell. I just sold my business and do not plan on getting a job anytime soon. My income is going to be practically zero. I may actually qualify for this even though I don't need it in any way! Government mortgage subsidy heading my way. Thank you taxpayers.
The only thing I was wrong about was the speed at which the systemic collapse happened.
mal | 02.18.09 - 10:36 am | #
I've felt the same way about much of 2008 and 2009 (so far). Many of us had a fairly good idea what was going to happen, but it was (at times) the breathtaking speed at which certain things unfolded that really got the heart pumping.
WTF is wrong with Bankruptcy, you know, when you can't pay your debts anymore you go to the govt and they work with your creditors to get things worked out?
Both the banks and homeowners in trouble need to declare bankruptcy, lay it out on the table and let judges with the power of cramdowns balance it out. Everyone who is in trouble will take a haircut, but at least we would have a ( reasonably ) fair system that would not be a huge giveaway to the banks.
A healthy housing market is one where prices are RISING...even if only with inflation....because in that environment default becomes rare and less costly (people can sell their way out of trouble), also a homeowner can build up equity through appreciation and principle pay down, which means you have a buy-up market as people can sell and have a downpayment to moveup.
When house prices are falling you have the opposite.
The only way to insure house prices begin to rise is to raise rates to the top...house prices immediately bottom, cash buyers suck up inventory, and anyone who buys now at high rates can refi later as rates have nowhere to go but down, or sell to someone who can afford more because money is cheaper.
If you want housing to bottom you need to raise rates.
Lowering rates only means that housing prices continue to fall and continue to do so for a longer time.
Again...the absolute price of a house is less damaging than the fact that house prices are falling.
(Think stock market...is DOW 10,000 good? Well if it was 9,000 last month then yes, if it was 11,000 last month then no...same with housing.)
Mel writes:
Banks aren't going to participate that much--this was designed to fail--to get an A for effort. Good idea.
yes, that is the point.
in nuts and bolts terms, rather few people near foreclosure will get substantial help from this plan, and that is not an accident.
The main target of the plan is two or three steps down the line.
Don't think in terms of simple equations, A = B, or simple one-step causal solutions A leads to B which solves the problem.
Think in terms of process. What does this step set up?
Well, it sets up the banksters. Why won't they bring DTI down to 38%? Because they committed fraud in giving the loans in the first place? because they are insolvent? because they are greedy and don't care about Mr and Mrs America and their 2.4 kids?
Obama is all about process, both in the Constitutional sense and in the realm of political strategy. Nothing is a complete act in itself. Everything stages what comes next.
OK, this is going to sound really asinine...but if the issue is that the monthly payments are out of hand AND that we (which is up for debate) want to steady the market value of these homes, why modify the interest rate? Why not modify the length of the mortgage? Principal stays the same, monthly payment reduces to a sustainable level for the homeowner, and they now have a much longer road to pay off the home - but they aren't getting kicked out, and the lender's foreclosure risk should be lower.
I'm sure I'm missing something.
Comrade Kristina writes:
This is yet another step towards Nationalization. It's not meant to work, it's meant to cause enough outrage in the populace by "subsidizing" the banks so people will gladly accept nationalization...
Comrade K,
Obviously I agree with you in spirit, but in detail I would liken this more to Obama's strategy with the Repubs on the stimulus bill.
As with the Repubs, Obama begins by offering a cooperative hand to work with the banks to help people nearing foreclosure.
As with the Repubs, the banks will think they can dictate terms and then turn their backs on Obama.
The result will be that the banks, like the repubs, will step into the trap.
I think this is what the leaks and usggestions about Obama's not liking the executive pay restrictions is about, too.
Obama never attacks directly at first. Rather, he sets up and weakens his opponent, and he does it by being sweet to them.
WAIT A SECOND! Homeowners that stay current on their modified home loans will get paid $1000 each year they're current for 5-years?
...."Now Johnny, if you're a good little boy, we will give you a newer, bigger, better allowance. Yes, one day you will be able to live back at home if the friendly judge says you're better"
Principal stays the same, monthly payment reduces to a sustainable level for the homeowner, and they now have a much longer road to pay off the home - 1966 | 02.18.09 - 10:50 am | #
That's what you're missing. Lengthening the term of the mortgage at the same interest rate will make such a miniscule change to the monthly payment that, if it wasn't sustainable before, it won't be sustainable after either.
it sounds unfair, and it is unfair, but think it through in terms of geography and economics
there's a bonus of $1000 a year for staying current on an underwater house for up to 5 years.
and there is a limit to how far underwater one can be to enter the program:
"Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify."
This rules out the bubble areas. Where are people just 5% underwater? And how many of them are there?
It is a little like promising someone $10,000 if they can stop breathing for 30 minutes. Giving away $10,000 is foolish. But then no one can meet the terms and live to collect. Hmmmmmm.
Comrade Kristina writes: This is yet another step towards Nationalization.
+1
It's not meant to work, it's meant to cause enough outrage in the populace by "subsidizing" the banks so people will gladly accept nationalization...
Listen...any intervention is going to help out the banks - whether you give the banks money directly or put price supports under the bad assets and "help the homeowners"...any homeowner bailout is just a transfer payment to bankers passed through homeowners. There is no "clean" way to separate the worthy from the unworthy.
Nationalization is the answer - auction off the assets for whatever can be had - convert them from bad assets into good with a little mark-to-market. If they're junk, great, M3 destruction to help offset the M1 inflation. If the underwater homedebtors are forced out into rentals with reset prices, they'll be better off...after going through a little pain. Well, a little pain can teach you things about foolish and wise choices.
Obama needs to look like he's doing something...just like Shrub did with "HOPE".
Bair has already had full, nationalized, control of a zombie/toxic bank and the opportunity to provide a demonstration proof that there's a chance of 'finessing' the problem - she's failed.
This is not about amateur hour or an incompetent team...it's about a full-on trainwreck that can't be avoided...you cannot 'finesse' a hand with no face cards and no trump, even if you are Goren.
Anonymous writes:
OTOH, if we get laid-off, I am sure we would eventually qualify... so what is the time-frame for determining pre-tax income and how long is the door going to say open for this program?
Anonymous | 02.18.09 - 10:23 am | #
Dittos Anon, I would like to know because my wife can lose her job and go underground very quickly. Then we will become "victims".
"I'm safely under 10% of my pre-tax for mortgage + property taxes"
Dude so was I till I lost my job. Now my wife works, I stay home and we're at about .30 pre tax DTI with a kid. I'm frugal, always have been, but we're slowly eating savings.
Listen...any intervention is going to help out the banks - whether you give the banks money directly or put price supports under the bad assets and "help the homeowners"... Comrade Scott (in VA) | 02.18.09 - 11:06 am | #
True, but the banks have to take a hit first, namely reducing payments to 38% DTI. We'll see how many actually are willing to do that. The major actors, though, will be Fannie and Freddie.
If we are both out of work we have 1-2 years before we burn through all savings... and we even have that covered. We will probably move 2 hours back down to her parents huge, ancient, farmhouse. Grandma can watch the kids while we try and work.
Question: Lets say a homeowner that qualifies, modifies his mortgage, and makes very little personal income. He is paid his $1000 per year PLUS the lender is paid the difference of 38% to 31%. Homeowner then moves out after one of those $1000. payments.
How timely is the lender going to be in reporting to the government that the homeowner has "walked"?
The problems associated with this kind of BS contribute to 1000-page IRS Codes and 1200-page stimulas package explanations.
Being angry about having been prudent and having a low DTI and having other people getting bailouts is a high class problem to have.
California's real estate boom was a huge financial engine for the entire country for years. Trillions of dollars worth of GDP. So if you think your hands aren't dirty because of it, you're fooling yourself.
I used to get angry and worked up when I heard plan ideas floated like this one. Now I just laugh since I know it will be a failure just like everything other plan the gov't conjures up.....
1) It's doomed to failure because it doesn't address the underlying issues
2) It's another blatent handout to the banks
3) It's buying votes
4) It's primed for massive fraud
Under you rational we all benefited from Osama Bin Laden too, but that does not justify his actions either.
Hubbert is exactly right. Where is equal protection under the law for citizens who kept their loans current and hands clean? Justice and equality are not for you dear comrade for some of us are "more equal" than others.
I don't know if my moniker should be Soylent Green is People (as we are eating ourselves alive...) Or Winston Smith of 1984 in this era of DoublePlus Good newspeak from the powers that are. I guess its true - 2 plus 2 is now 5!!
I'm not sure why commenters here are jumping all over this plan. As if there is any better solution out there other than let the system rot and people riot in the streets?
Look, I play by the rules, I pay my mortgage. But if I lost my job in this economy I wouldn't be able to sell my house. Right now I just walk away and then the whole neighborhood goes downhill as rodents and hillbillies come in and squat. Is that really best?
Still not sure why tax money should subsidize people who couldn't afford a home in the first place.
Those people are already out of their houses. This is middle class and upper middle class we are talking about here. Now, if you don't think they should ever own houses, I could see your comment making sense.
This is about overpaying. If they actually took steps to rectify the Realtor/LoanBroker/FraudulantBanker/InvestmentBanker/RatingsAgency scam that produced so much overpaying, I'd be happier and could let some silly bones tossed to the masses slide. As long as the perps have sacred cow status the system is screwed no matter what bailouts they cook up.
Obama is playing with political fire. Average tax payers absolutely hate the idea of paying for anything for their neighbors. This gamble only works if there is an economic recovery by 2010 and salaries are rising by 2012. This one will hurt badly. Stupid too since there are better things Obamarama could do that would ingratiate him with tax payers. The financial services industry collar must be incredibly tight. This is the most lack luster out of the box thinking I've seen since Star Wars The Phantom Menace.
Um, no. If it were, they would not be forced to fork over half the adjustment, would they?
As proposed plans go, this one actually seems like the most equitable so far. But heck, everyone here has a boner for some serious social breakdown and comments appropriately.
"Right now I just walk away and then the whole neighborhood goes downhill as rodents and hillbillies come in and squat."
It only rots while the sellers will not meet the buyers' offers. Millions of Americans can afford to buy their first home right now, if the price is right. Drop the prices and the neighborhood will blossom.
WTF is wrong with Bankruptcy, you know, when you can't pay your debts anymore you go to the govt and they work with your creditors to get things worked out?
Here's WTF is wrong with bankruptcy:
(1) They took bankruptcy away as a workable option for the middle class back in 2005. Chap 13 is essentially a wage-garnished house arrest. I'd sooner slit my own throat than let them suck what's left of my life savings out of me.
(2) Bankruptcy has a social stigma beyond mere finance: With a BR on your record, you can't rent an apt, you can't get a white-collar job, and you will never obtain a security clearance (and if you already have one, you will lose it).
I'm sorry I was born 10 years too late to gain entry into the middle class through hard work. If only I had known: I would have just planned for a life of renting and indentured servitude to my superior, richer elders.
And there are people like me, we (my soon be ex-wife and I) bought in 2003; and now can't get out because prices have dropped to 50% of what we purchased at. Can't refinance the house to get her off of it because of the amount of extra money.
Can't walk away cause of my job. (Silly clearances.)
"I used to get angry and worked up when I heard plan ideas floated like this one. Now I just laugh since I know it will be a failure just like everything other plan the gov't conjures up....."
Exactly. This is like the 38th plan that's supposed to "stem the tide" of foreclosures and keep home values from falling further.
Maybe we need to reinstitute debtors' prisons?
Or, if people are truly incapable of determining whether or not they can afford something, we should create a new branch of govt. (the Bureau of Purchasing) that is required to approve any purchases over $100 for any individuals. Makes sense, if the govt. (taxpayers) are going to be left holding the bag every time someone over extends themselves. . .
Great - now my slob neighbor and his druggie adult kid that refi'd the house he inherited free and clear to the tune of $200K will get to "stay in their house". As a special bonus he's on the sex offender registry and in two years has trashed the nice house he inherited, despite pulling out $200K.
I can really see how this plan is going keep my neighborhood from going downhill by keeping deadbeats in houses they can't afford.
Now that the "Plan" is out, those who are in deeper than the 110% ltv-refi or the interest rate subsidy can finally throw in the towel. This plan is smart, but it cannot save the majority who are >>>10% down and way over the 38% in other debt payments. Those who in so deep they cannot afford the "Plan" also happen to be fully qualified for Chapter 7 with no incentive to choose Chapter 13. The sooner they make the jump the sooner they recover.
That 105% thing is ripe for appraisers to overvalue houses. No pressure. Just make sure it's worth no less than 5% of market value, please. By the way, would you like some coffee with your $1000 bribe?
Read an article in Der Speigel; How Banks Are Worsening the Foreclosure Crisis (Caution recommended, before reading, lockup liquor cabinet, feed the dog the key)
"The banking industry is undermining efforts to keep people in their houses. And nearly 6 million foreclosures are expected in the next four years [...] The industry strategy all along has been to buy time and thwart regulation, financial-services lobbyists tell BusinessWeek."
Anyone remember GWB's Hope for Homeowners? They promised 400,000 mortgagees would be saved from foreclosure. So far,only 25 have been refinanced. The mortgage payments have been increased along with hefty fees.....and that's the beginning of the subterfuge.
What's that saying?, when there down, keep kicking them until they bleed out.
sure way to become a one term President. I predict if this idea passes that the Republicans will take back Congress in 2010. In the 80's it was "Welfare Queens" that was so skill fully used by the Republicans in the 10s it will "mortgage queens"= dead beats who are getting subsidized by the government
So this is a bad plan because previous plans have failed. Yeah, that makes sense.
I'm with Elrod. I don't see the problem with trying this in theory.
All these millions who are waiting to buy a house -- a 40% correction with 4.5% interest rates plus an $8000 tax incentive isn't enough? If you're in for the long term it's a perfectly good time to buy.
Osama Bin Laden aside (wtf?) those who are bragging about 10% DTI benefitted from the artificially low interest rates that help fuel the boom. So again, it's not an Us vs. Them situation. It's all of a piece.
Ho Hum. Glad the people (like myself) that were responsible, have mortgages they can actually afford, are being punished by the morons that are being rewarded....
It is virtually impossible for the Republicans to take back congress in 2010. The republicans will be more seats than they can gain in the senate, and the house isn't going anywhere.
FDR's Democratic majority got higher as the depression went on, not lower.
Are you kidding me? Anyone who saw this train wreck coming will (once again) be left out in the cold by this latest goverment 'stimulus'. IMO home prices need to once again return to at least a somewhat rational relationship to incomes and job growth, something prices haven't done prior in the past decade (untilr ecently). As painful as it is, prices will have to fall further, and any government program that artificially props prices is not exactly fair to smarter investors and buyers.
And to follow up on an earlier comment: this is NOT a good time for every renter. Anyone who sold a home within the past couple of years (and yes, they're out there) is not eligible for the $8,000 tax credit. Furthermore, anyone who sold at a loss or even a marginal gain before the big slide is unlikely to have the required cash on hand to buy again according to new lending standards. And finally, anybody who sold probably sold for a reason, a reason which could include a belief that home prices were unsustainable, and IMO still are.
On the one hand it seems like this is not really going to help anyone. That should mean it is not going to cost a lot of money. It certainly looks as if it is not going to do much of anything here in Southern California's housing market. So I suppose I should be okay with the government trying to appear that they are doing something. An orderly wind down would prevent a LOT of trouble.
On the other hand I am ready to eat my hat! I have been renting for a few years waiting for the market to adjust. It has come down about 15% in my areas. It still needs to fall another 25% to get back to where we were in 1998. Plans like this seem to slow the crash down. As an employed person living within his means I find this to be really annoying. Why am I paying 45% in taxes each year to subsidize stupidity? GRRR...
Hopefully this will not slow the housing crash much. I am ready to buy a house once the prices match reality.
Rant on
Anyone else in California feel like they are living in the decaying glory of the 1950's? Everywhere I look it is another freaking 50's house. If you handed me ANYTHING else from the 1950's to use everyday I would laugh at you. Imagine the disadvantages of using one of these things from the 1950's today: phone, television, car, medical equipment...the list goes on and on. So why on earth should I pay hundreds of thousands of dollars to live in a house that was constructed to support the lifestyle of a bygone era?
How many of these toxic mortgages were done with subsidized down payments?
Gamblers who lose get their money back with the money of those who didn't gamble in the first place.
If this is how the administration is going to look at health care, I'm going to stop taking care of myself because I know government will take care of me and make me better off health-wise than what I am today. But I'm sure we'll just be bailing out doctors.
How is this any worse than the trillions being poured into the banks? Hey, if some guy who owns a 300k house is gonna get a break I don't have a problem with it. Better than giving it to NY a-holes.
It is a little like promising someone $10,000 if they can stop breathing for 30 minutes. Giving away $10,000 is foolish. But then no one can meet the terms and live to collect. Hmmmmmm.
joe shmoe | 02.18.09 - 11:03 am | #
Until Obama understands that these federal banks must have regulations that curtail the abberant home mortgage activities nothing will change. Until Obama creates federal bank regulators committed to doing their regulator duties nothing will change. Financing a mortgage loan through a federal bank or thrift is a crap shoot at best.
Obama at this time does not get it.
L'Emmerdeur writes:
So when do renters get their rents capped at 31% of income? Us Manhattan folk would LOVE that.
Renters are the new minorities.
L'Emmerdeur | 02.18.09 - 1:25 pm | #
Agree completely. How many homeowners who rent out the property are going to lower the rent proportionally to the money they'll save with this plan?
Renters will be stuck paying 2006-level prices forever, while owners' profits will be increased thanks to the government and the taxes renters like myself pay. Doubly screwed.
This is an outrage that only benefits the corrupt lending institutions and the deadbeats who went in way over their head on their mortgages.
Foreclosure is the major cause of our financial crisis. Government should really prioritize this issue.We should really keep ourselves updated.Thanks for sharing your thoughts.Good Day!
I think there are valid arguments on both side about this government plan. Will it raise the budget deficit? Probably. Will it help? ThatÂ’s a good question. I think economies go through cycles and this might be one of them. I read a good article on recessions and their history on
You can get a free consultation regarding your situation.
Even if you may not qualify or want to risk the amount of time it takes to receive help through Obama's bill, their still may be options for you.
The Reality of Housing Plan
This program is going to help SOME people. While an estimate of 9 million is alot, it is nothing compared to roughly 27 million people who may be in this situation.
I have been working in Loss Mitigation for 6 years and know it well. The lenders don't have to accept the terms of the plan, and when a homeowner calls on their own behalf it is easy for the lender to manipulate someone who doesn't do this for a living. For those lenders who DO work with homeowners, they are OVER THEIR HEADS with files to work, they do not have enough employees to handle the demand, and in turn, alot of people don't get help, and still lose their homes.
As a consumer, I want all I can get for free. But as a professional in this industry, I'd rather be safe than sorry.
This is why homeowners PAY a private company to handle this. Private firms have more time and drive to get your situation handled efficently and effectively. I would much rather pay a fee and know MY situation is receiving the upmost attention and than it just falling into a stack of hundreds of thousands which not only may be over-looked but may not qualify.
The above website is a link to a great private company with minimal fees. I have seen lawyers and others taking extreme advantage of homeowners facing forclosure and charging thousands of dollars. Depending on your situation, this company only charges $600-$800, and you would only pay if they determine you qualify and GUARANTEE their work.
first?
No help for jumbo loans.
.................anyway second.........
third-fourth
........Dow just broke previous low point..............
re: Market
Are we selling the rumors and buying the news now, or is it just sell 'til 10:00a like other times?
Another PROGRAM! YEAH and the crowd goes wild!
Yay, avoiding work is fun. I think I'll hang out here today.
As a deliberate renter, I am livid. We pay astronomical taxes, only to see that money taken and given to others in the form of subsidized mortgage rates, or (heaven help us) "subsidized mortgage payments"! The idea that the government should take the taxpayers' money and distribute it to select homeowners is fundamentally UNAMERICAN. And worse yet, those that benefit are those that made the poorest economic decisions.
I can see the reasons to help owners refi if they have some sort of "exploding loan" (ARM or Option ARM, etc), but beyond that I feel home prices should adjust to a level that can be naturally supported by our economy.
If the government did manage to "stabilize" housing prices, they would just be back to finding crazy programs to "increase affordability" again. Seems to me the only beneficiary of higher home prices coupled with affordability through creative financing are LENDERS.
I pay my mortgage every month-all I get are skittles
SOCIAL ENGINEERING at its best. We are the government. We are here to help you. Come to us when in need.
.............Now Dow is in 52 week low region........
The only good thing about this plan is that it will be a laugh out loud, fall on it's face failure.
What a mess.
cetral planning works everytime
central
This isn't a bad plan, b/c it doesn't help builders or realtors. Staying below jumbos is sensible. Likely only delays the inevitable for the unemployed. Still not sure why tax money should subsidize people who couldn't afford a home in the first place.
So what happens to borrowers with say mortgage payments at 75% of income? Can a lender afford the loss?
god left america
According to this plan, we bought less house than we could afford.
So no goodies for us.
OTOH, if we get laid-off, I am sure we would eventually qualify... so what is the time-frame for determining pre-tax income and how long is the door going to say open for this program?
Feels like this week we may see the first true capitulation in '09.
I would love to see a 6-handle today - freak everyone out in DC! - You might start hearing murmerings of "Lets keep Bam-Bam away from the microphone today"....
From Yahoo: The Obama administration's summary said the plan could offer a buffer of up to $6,000 against value declines on the average home.
Wow, that'll help.
DOWN GOES FRAZIER
I wish they would put this much effort into fixing healthcare.
Nothing to do with the value of the houses?
is it true that Obama's dealings with Rezko was an inspiration for the 'plan'?
charlie,
You miss the big picture. This will trash the USD in the mid-term, severely.
All this borrowing to make everyone whole for bad investments has to come from somewhere. We are approaching an end-game.
--bh
They have no clue.
Obama's auto team-God help us
Is it just me or is 38% front-end DTI still unsustainable for a family with kids?
I'm single, my front-end DTI is 28% and I can't imagine handling a wife and kids. And I'm way above median househild income.
Bought for $400K in 2006, owe $300K, just did appraisal, came in at $220K. No help for me
No help for most of the people who are being forced to pay the bill for this---since they also are paying their own bills, they don't fit the government's definition of "distressed!" They are supposed to suck up a 30% loss in home value, suck up the loss of their downpayment, AND pay the other guy's bills? -- "Who the Mortgage Rescue Plan Won't Help and Why That Stinks for the Economy" -- A Surfer's Take: Who the Mortgage Rescue Plan Won't Help and Why that Stinks for the Economy - Associated Content - associatedcontent.com
Why would any rational person who is underwater and/or behind on payments agree to a refinance deal where they end up paying more long term ( possibly a lot more depending on financing ) when both before and after this program the best course of action is to walk away?
All funded with borrowed money when too much debt is the problem to begin with. These stupid bastrds.
"I wish they would put this much effort into fixing healthcare."
....fixing it or just putting that much effort INTO fixing it?
I'm going to call obama to help me run my pharmacy
lorax,
exactly.
--bh
why wouldn't they want to thrash the dollar. thats EXACTLY want they want.
The quicker it is accomplished, the sooner we can move on to the Amero---> then, on to the Global
What private equity is gonna buy up these loans if the cram downs can be done by a judge? How would you price them?
They are scaring away those who could save the day.
I'm going to call obama to help me run my pharmacy
They have pills for that.
Welcome aboard, Charlie.
anonymous-you hit the nail on the head-they are doing everything in their power to make things worse
What private equity is gonna buy up these loans if the cram downs can be done by a judge? How would you price them?
Government guarantees of the underlying assets changes that calculation slightly...
lol
Obama is turning out to be an emptier suit than I had previously took him for....wow.
And again this is coming from someone who fervently believes that the bush administration was the worst in American history hands down.
Obama is turning out to be an emptier suit than I had previously took him for....wow.
And again this is coming from someone who fervently believes that the bush administration was the worst in American history hands down.
Mr. T. | 02.18.09 - 10:29 am | #
I echo that whole comment.
Chris Rea for you :
YouTube - Chris Rea - Road to Hell
Obama's approval rating is the best short in the market today. He was dealt a bad hand but he is making things worse. He has the wrong economic team in place. I'm hoping for the best but.....
Banks aren't going to participate that much--this was designed to fail--to get an A for effort. Good idea.
Okay, who scared the Europeans again? They were going Kermit and now they are causing my graph to be rescaled again.
@Mr. T.
+1
Third
I live in MA. Many Obama bumper-sticker-drivin' peers around here (me, am libertarian). I can see them losing faith by the day. It's amazing to watch.
This don't help
HP
I know: let's subsidize our way out of debt!
Modern Globalist Government to Joe Workingman : here's a tax credit for a fraction of the wages we stole from you.
Just create debtor prisons for the deadbeats. Convert these houses by installing steel bars on the windows and steel doors.
$6K/house won't do much for CA
They were going Kermit and now they are causing my graph to be rescaled again.
yagij | 02.18.09 - 10:30 am | #
Wait for it.....
No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.
Ruh-Roh!
No help for those that actually were smart enough not to take out a loan that was way above what they could afford and can actually pay on time. What do we get in return we have to bailout those who should have never been given a loan in the fist place.
This is yet another step towards Nationalization. It's not meant to work, it's meant to cause enough outrage in the populace by "subsidizing" the banks so people will gladly accept nationalization...
Isn't this just a back door bailout of the big 3? I mean really, $6k per house only helps in Detroit.
HP
Rich jerk needs handle change to rich idiot
a subsidy for suburbia and dumbasses. What was I thinking buying a house I could afford and paying it off. Now my taxes can be wealth transfered to assholes so I can be saved. Screw everyone!
Folks, I think you started with the wrong premise. Do you think the administration could issue a press release stating: Our foreclosure plan is to let all those folks who bought too much house get hammered.
Of course this new program will "fail". But the question (and the real measure of success) is: Does it maintain social order while it is failing? Because the other path would certainly lead to rioting among the self-entitled.
and how does that work for the unemployed?
So, if I lower my W-2 wage from my corp to say around $ 1.50 per hour, I to can have a $ 18.60 per month mortgage?
This thing is pissing me offÂ…It is going to be riddled w/ fraud!
[Is it just me or is 38% front-end DTI still unsustainable for a family with kids?]
Yes... that's about HALF of take-home pay. Sheila Bair thinks this is the magic number. I think otherwise.
This sounds like an investor bailout plan more than a homeowner bailout.
God forbid anyone takes a loss on these "assets."
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Kristina,
There is merit in this line of thinking. That's often an effective strategy where you present a course of action that makes palatable the real course of action you intend to take.
--bh
JP, that's another point.
And again this is coming from someone who fervently believes that the bush administration was the worst in American history hands down.
Mr. T. | 02.18.09 - 10:29 am
Sure, Obama was long on sizzle and is now short on steak, but he has a long, long way to go before he comes close to Bush's special place in history.
blackhat, and that has been Obama's forte from the beginning...
But the question (and the real measure of success) is: Does it maintain social order while it is failing? Because the other path would certainly lead to rioting among the self-entitled.
JP | Homepage | 02.18.09 - 10:34 am | #
Glad to see someone gets it.
My Obama-bedazzled friends scoffed when I told them any sky's-the-limit "change" agenda he might have would be completely buried by economic realities within months of his inauguration, wherein he would show himself to be mostly More of the Same in terms of economic policy.
The only thing I was wrong about was the speed at which the systemic collapse happened.
I can't wait to see if I qualify for this program. I have a FHA loan for a house that I bought long before the boom so it is not underwater, but I haven't seen any restrictions or need based testing in that regard. Second it is based on income from what I can tell. I just sold my business and do not plan on getting a job anytime soon. My income is going to be practically zero. I may actually qualify for this even though I don't need it in any way! Government mortgage subsidy heading my way. Thank you taxpayers.
The only thing I was wrong about was the speed at which the systemic collapse happened.
mal | 02.18.09 - 10:36 am | #
I've felt the same way about much of 2008 and 2009 (so far). Many of us had a fairly good idea what was going to happen, but it was (at times) the breathtaking speed at which certain things unfolded that really got the heart pumping.
WTF is wrong with Bankruptcy, you know, when you can't pay your debts anymore you go to the govt and they work with your creditors to get things worked out?
Both the banks and homeowners in trouble need to declare bankruptcy, lay it out on the table and let judges with the power of cramdowns balance it out. Everyone who is in trouble will take a haircut, but at least we would have a ( reasonably ) fair system that would not be a huge giveaway to the banks.
A healthy housing market is one where prices are RISING...even if only with inflation....because in that environment default becomes rare and less costly (people can sell their way out of trouble), also a homeowner can build up equity through appreciation and principle pay down, which means you have a buy-up market as people can sell and have a downpayment to moveup.
When house prices are falling you have the opposite.
The only way to insure house prices begin to rise is to raise rates to the top...house prices immediately bottom, cash buyers suck up inventory, and anyone who buys now at high rates can refi later as rates have nowhere to go but down, or sell to someone who can afford more because money is cheaper.
If you want housing to bottom you need to raise rates.
Lowering rates only means that housing prices continue to fall and continue to do so for a longer time.
Again...the absolute price of a house is less damaging than the fact that house prices are falling.
(Think stock market...is DOW 10,000 good? Well if it was 9,000 last month then yes, if it was 11,000 last month then no...same with housing.)
You raise rates and people can not afford the housing that is currently over priced.
The only thing I was wrong about was the speed at which the systemic collapse happened.
mal | 02.18.09 - 10:36 am | #
To paraphrase Lily Tomlin: No matter how [negative] I get, I just can't seem to keep up.
Who pays 38% of pretax income for a house? I pay 8.9%, I bet I won't get a bailout.
Ughhh, screwed because we were titanically stupid.
Mel writes:
Banks aren't going to participate that much--this was designed to fail--to get an A for effort. Good idea.
yes, that is the point.
in nuts and bolts terms, rather few people near foreclosure will get substantial help from this plan, and that is not an accident.
The main target of the plan is two or three steps down the line.
Don't think in terms of simple equations, A = B, or simple one-step causal solutions A leads to B which solves the problem.
Think in terms of process. What does this step set up?
Well, it sets up the banksters. Why won't they bring DTI down to 38%? Because they committed fraud in giving the loans in the first place? because they are insolvent? because they are greedy and don't care about Mr and Mrs America and their 2.4 kids?
Obama is all about process, both in the Constitutional sense and in the realm of political strategy. Nothing is a complete act in itself. Everything stages what comes next.
Turning insolvent hoseowners into an insolvent country one mortgage at a time.
OK, this is going to sound really asinine...but if the issue is that the monthly payments are out of hand AND that we (which is up for debate) want to steady the market value of these homes, why modify the interest rate? Why not modify the length of the mortgage? Principal stays the same, monthly payment reduces to a sustainable level for the homeowner, and they now have a much longer road to pay off the home - but they aren't getting kicked out, and the lender's foreclosure risk should be lower.
I'm sure I'm missing something.
Ughhh, screwed because we were titanically stupid.
we are all screwed | 02.18.09 - 10:42 am | #
+1. I'm safely under 10% of my pre-tax for mortgage + property taxes
Comrade Kristina writes:
This is yet another step towards Nationalization. It's not meant to work, it's meant to cause enough outrage in the populace by "subsidizing" the banks so people will gladly accept nationalization...
Comrade K,
Obviously I agree with you in spirit, but in detail I would liken this more to Obama's strategy with the Repubs on the stimulus bill.
As with the Repubs, Obama begins by offering a cooperative hand to work with the banks to help people nearing foreclosure.
As with the Repubs, the banks will think they can dictate terms and then turn their backs on Obama.
The result will be that the banks, like the repubs, will step into the trap.
I think this is what the leaks and usggestions about Obama's not liking the executive pay restrictions is about, too.
Obama never attacks directly at first. Rather, he sets up and weakens his opponent, and he does it by being sweet to them.
WAIT A SECOND! Homeowners that stay current on their modified home loans will get paid $1000 each year they're current for 5-years?
...."Now Johnny, if you're a good little boy, we will give you a newer, bigger, better allowance. Yes, one day you will be able to live back at home if the friendly judge says you're better"
1966, the problem with that is there is NO punishment for the banksters involved in your scenario whatsoever.
Principal stays the same, monthly payment reduces to a sustainable level for the homeowner, and they now have a much longer road to pay off the home -
1966 | 02.18.09 - 10:50 am | #
That's what you're missing. Lengthening the term of the mortgage at the same interest rate will make such a miniscule change to the monthly payment that, if it wasn't sustainable before, it won't be sustainable after either.
Comrade Kristina | Homepage | 02.18.09 - 10:53 am | #
But which banksters? And I don't think modifications like this would preclude "punishments" for illegal loan origination practices.
sportsfan | 02.18.09 - 11:00 am | #
Fair enough - I didn't play with the numbers before spouting off.
BSR
it sounds unfair, and it is unfair, but think it through in terms of geography and economics
there's a bonus of $1000 a year for staying current on an underwater house for up to 5 years.
and there is a limit to how far underwater one can be to enter the program:
"Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify."
This rules out the bubble areas. Where are people just 5% underwater? And how many of them are there?
It is a little like promising someone $10,000 if they can stop breathing for 30 minutes. Giving away $10,000 is foolish. But then no one can meet the terms and live to collect. Hmmmmmm.
Comrade Kristina writes:
This is yet another step towards Nationalization.
+1
It's not meant to work, it's meant to cause enough outrage in the populace by "subsidizing" the banks so people will gladly accept nationalization...
Listen...any intervention is going to help out the banks - whether you give the banks money directly or put price supports under the bad assets and "help the homeowners"...any homeowner bailout is just a transfer payment to bankers passed through homeowners. There is no "clean" way to separate the worthy from the unworthy.
Nationalization is the answer - auction off the assets for whatever can be had - convert them from bad assets into good with a little mark-to-market. If they're junk, great, M3 destruction to help offset the M1 inflation. If the underwater homedebtors are forced out into rentals with reset prices, they'll be better off...after going through a little pain. Well, a little pain can teach you things about foolish and wise choices.
Obama needs to look like he's doing something...just like Shrub did with "HOPE".
Bair has already had full, nationalized, control of a zombie/toxic bank and the opportunity to provide a demonstration proof that there's a chance of 'finessing' the problem - she's failed.
This is not about amateur hour or an incompetent team...it's about a full-on trainwreck that can't be avoided...you cannot 'finesse' a hand with no face cards and no trump, even if you are Goren.
Oh, and I forgot: JP - spot on - you can't announce you're going to allow the truly stupid to get clobbered.
Anonymous writes:
OTOH, if we get laid-off, I am sure we would eventually qualify... so what is the time-frame for determining pre-tax income and how long is the door going to say open for this program?
Anonymous | 02.18.09 - 10:23 am | #
Dittos Anon, I would like to know because my wife can lose her job and go underground very quickly. Then we will become "victims".
"I'm safely under 10% of my pre-tax for mortgage + property taxes"
Dude so was I till I lost my job. Now my wife works, I stay home and we're at about .30 pre tax DTI with a kid. I'm frugal, always have been, but we're slowly eating savings.
Listen...any intervention is going to help out the banks - whether you give the banks money directly or put price supports under the bad assets and "help the homeowners"...
Comrade Scott (in VA) | 02.18.09 - 11:06 am | #
True, but the banks have to take a hit first, namely reducing payments to 38% DTI. We'll see how many actually are willing to do that. The major actors, though, will be Fannie and Freddie.
@.38 DTI
We both work, but we would be able to swing it ( .15 with my work or .30 with just hers ). I believe we would still be well off in the grand scheme.
We also have, conservitavly, have almost %60 equity in our small home. We have in savings more than 50% of what is needed to pay the principal.
The Lorax- good for you my friend and good luck.
If we are both out of work we have 1-2 years before we burn through all savings... and we even have that covered. We will probably move 2 hours back down to her parents huge, ancient, farmhouse. Grandma can watch the kids while we try and work.
Question: Lets say a homeowner that qualifies, modifies his mortgage, and makes very little personal income. He is paid his $1000 per year PLUS the lender is paid the difference of 38% to 31%. Homeowner then moves out after one of those $1000. payments.
How timely is the lender going to be in reporting to the government that the homeowner has "walked"?
The problems associated with this kind of BS contribute to 1000-page IRS Codes and 1200-page stimulas package explanations.
Doomed to fail.
Being angry about having been prudent and having a low DTI and having other people getting bailouts is a high class problem to have.
California's real estate boom was a huge financial engine for the entire country for years. Trillions of dollars worth of GDP. So if you think your hands aren't dirty because of it, you're fooling yourself.
We are all Californians now.
Anybody up for a class action about violations of the CONSTITUTION'S EQUAL PROTECTION CLAUSE?
Citizen, taxpayer, RENTER
I used to get angry and worked up when I heard plan ideas floated like this one. Now I just laugh since I know it will be a failure just like everything other plan the gov't conjures up.....
@jmay
The biggest problems is that
1) It's doomed to failure because it doesn't address the underlying issues
2) It's another blatent handout to the banks
3) It's buying votes
4) It's primed for massive fraud
Under you rational we all benefited from Osama Bin Laden too, but that does not justify his actions either.
Hubbert is exactly right. Where is equal protection under the law for citizens who kept their loans current and hands clean? Justice and equality are not for you dear comrade for some of us are "more equal" than others.
I don't know if my moniker should be Soylent Green is People (as we are eating ourselves alive...) Or Winston Smith of 1984 in this era of DoublePlus Good newspeak from the powers that are. I guess its true - 2 plus 2 is now 5!!
I'm not sure why commenters here are jumping all over this plan. As if there is any better solution out there other than let the system rot and people riot in the streets?
Look, I play by the rules, I pay my mortgage. But if I lost my job in this economy I wouldn't be able to sell my house. Right now I just walk away and then the whole neighborhood goes downhill as rodents and hillbillies come in and squat. Is that really best?
Still not sure why tax money should subsidize people who couldn't afford a home in the first place.
Those people are already out of their houses. This is middle class and upper middle class we are talking about here. Now, if you don't think they should ever own houses, I could see your comment making sense.
This is about overpaying. If they actually took steps to rectify the Realtor/LoanBroker/FraudulantBanker/InvestmentBanker/RatingsAgency scam that produced so much overpaying, I'd be happier and could let some silly bones tossed to the masses slide. As long as the perps have sacred cow status the system is screwed no matter what bailouts they cook up.
Obama is playing with political fire. Average tax payers absolutely hate the idea of paying for anything for their neighbors. This gamble only works if there is an economic recovery by 2010 and salaries are rising by 2012. This one will hurt badly. Stupid too since there are better things Obamarama could do that would ingratiate him with tax payers. The financial services industry collar must be incredibly tight. This is the most lack luster out of the box thinking I've seen since Star Wars The Phantom Menace.
2) It's another blatent handout to the banks
Um, no. If it were, they would not be forced to fork over half the adjustment, would they?
As proposed plans go, this one actually seems like the most equitable so far. But heck, everyone here has a boner for some serious social breakdown and comments appropriately.
"Right now I just walk away and then the whole neighborhood goes downhill as rodents and hillbillies come in and squat."
It only rots while the sellers will not meet the buyers' offers. Millions of Americans can afford to buy their first home right now, if the price is right. Drop the prices and the neighborhood will blossom.
WTF is wrong with Bankruptcy, you know, when you can't pay your debts anymore you go to the govt and they work with your creditors to get things worked out?
Here's WTF is wrong with bankruptcy:
(1) They took bankruptcy away as a workable option for the middle class back in 2005. Chap 13 is essentially a wage-garnished house arrest. I'd sooner slit my own throat than let them suck what's left of my life savings out of me.
(2) Bankruptcy has a social stigma beyond mere finance: With a BR on your record, you can't rent an apt, you can't get a white-collar job, and you will never obtain a security clearance (and if you already have one, you will lose it).
I'm sorry I was born 10 years too late to gain entry into the middle class through hard work. If only I had known: I would have just planned for a life of renting and indentured servitude to my superior, richer elders.
See you at the food riots.
And there are people like me, we (my soon be ex-wife and I) bought in 2003; and now can't get out because prices have dropped to 50% of what we purchased at. Can't refinance the house to get her off of it because of the amount of extra money.
Can't walk away cause of my job. (Silly clearances.)
"I used to get angry and worked up when I heard plan ideas floated like this one. Now I just laugh since I know it will be a failure just like everything other plan the gov't conjures up....."
Exactly. This is like the 38th plan that's supposed to "stem the tide" of foreclosures and keep home values from falling further.
Maybe we need to reinstitute debtors' prisons?
Or, if people are truly incapable of determining whether or not they can afford something, we should create a new branch of govt. (the Bureau of Purchasing) that is required to approve any purchases over $100 for any individuals. Makes sense, if the govt. (taxpayers) are going to be left holding the bag every time someone over extends themselves. . .
Great - now my slob neighbor and his druggie adult kid that refi'd the house he inherited free and clear to the tune of $200K will get to "stay in their house". As a special bonus he's on the sex offender registry and in two years has trashed the nice house he inherited, despite pulling out $200K.
I can really see how this plan is going keep my neighborhood from going downhill by keeping deadbeats in houses they can't afford.
So let the bankruptcy filings begin in earnest:
Now that the "Plan" is out, those who are in deeper than the 110% ltv-refi or the interest rate subsidy can finally throw in the towel. This plan is smart, but it cannot save the majority who are >>>10% down and way over the 38% in other debt payments. Those who in so deep they cannot afford the "Plan" also happen to be fully qualified for Chapter 7 with no incentive to choose Chapter 13. The sooner they make the jump the sooner they recover.
Oh my.
Don't borrow the money if you can't do the time . . . .
That 105% thing is ripe for appraisers to overvalue houses. No pressure. Just make sure it's worth no less than 5% of market value, please. By the way, would you like some coffee with your $1000 bribe?
OK, in another fit of stupidity -
Allow the homeowner to buy down the interest rate by purchasing years on the mortgage note.
But really, this plan is a drop in the bucket. The $6000/house isn't much help. And then there's
"Will refinancing reduce the amount that I owe on my loan?
No."
Why would anyone stay in a $200k house with a $300k mortgage?
@Speed
"Why would anyone stay in a $200k house with a $300k mortgage?"
+1, why indeed? Gravity is a harsh mistress and those bailed out will quickly be back at the trough, just like the banks and automakers before them.
....when each "laughable plan" carries big price tags, the result seems apparent. No country can afford this type of excess expense.
Any thinking man would reconsider any methods of allowing the irresponsible expenditures made through revenues sent to the FedGov.
Read an article in Der Speigel; How Banks Are Worsening the Foreclosure Crisis (Caution recommended, before reading, lockup liquor cabinet, feed the dog the key)
"The banking industry is undermining efforts to keep people in their houses. And nearly 6 million foreclosures are expected in the next four years [...] The industry strategy all along has been to buy time and thwart regulation, financial-services lobbyists tell BusinessWeek."
Anyone remember GWB's Hope for Homeowners? They promised 400,000 mortgagees would be saved from foreclosure. So far,only 25 have been refinanced. The mortgage payments have been increased along with hefty fees.....and that's the beginning of the subterfuge.
What's that saying?, when there down, keep kicking them until they bleed out.
This is INSANITY !
Fraud, mismanagement and waste will be astronomical in this 'plan'.
I guess.. if we just raise taxes to 95% on those morons who are dumb enough to be working then we can pay for this.
sure way to become a one term President. I predict if this idea passes that the Republicans will take back Congress in 2010. In the 80's it was "Welfare Queens" that was so skill fully used by the Republicans in the 10s it will "mortgage queens"= dead beats who are getting subsidized by the government
So this is a bad plan because previous plans have failed. Yeah, that makes sense.
I'm with Elrod. I don't see the problem with trying this in theory.
All these millions who are waiting to buy a house -- a 40% correction with 4.5% interest rates plus an $8000 tax incentive isn't enough? If you're in for the long term it's a perfectly good time to buy.
Osama Bin Laden aside (wtf?) those who are bragging about 10% DTI benefitted from the artificially low interest rates that help fuel the boom. So again, it's not an Us vs. Them situation. It's all of a piece.
Ho Hum. Glad the people (like myself) that were responsible, have mortgages they can actually afford, are being punished by the morons that are being rewarded....
It is virtually impossible for the Republicans to take back congress in 2010. The republicans will be more seats than they can gain in the senate, and the house isn't going anywhere.
FDR's Democratic majority got higher as the depression went on, not lower.
Moral Hazard a go-go.
Are you kidding me? Anyone who saw this train wreck coming will (once again) be left out in the cold by this latest goverment 'stimulus'. IMO home prices need to once again return to at least a somewhat rational relationship to incomes and job growth, something prices haven't done prior in the past decade (untilr ecently). As painful as it is, prices will have to fall further, and any government program that artificially props prices is not exactly fair to smarter investors and buyers.
We are the government. We are here to help you. If you don't need help, we will help ourselves to your money.
Damn it... if we let housing prices fall much further brownies may be able to afford to live next to us!
And to follow up on an earlier comment: this is NOT a good time for every renter. Anyone who sold a home within the past couple of years (and yes, they're out there) is not eligible for the $8,000 tax credit. Furthermore, anyone who sold at a loss or even a marginal gain before the big slide is unlikely to have the required cash on hand to buy again according to new lending standards. And finally, anybody who sold probably sold for a reason, a reason which could include a belief that home prices were unsustainable, and IMO still are.
I wish they would put this much effort into fixing healthcare.
You are a glutton for punishment.
Banks aren't going to participate that much--this was designed to fail--to get an A for effort. Good idea.
The plan - go along with us and you won't get nationalized. Essentially bailing out the shareholders and bondholders.
$6K/house won't do much for CA
It'll triple the value in Detroit.
I am really torn about this one.
On the one hand it seems like this is not really going to help anyone. That should mean it is not going to cost a lot of money. It certainly looks as if it is not going to do much of anything here in Southern California's housing market. So I suppose I should be okay with the government trying to appear that they are doing something. An orderly wind down would prevent a LOT of trouble.
On the other hand I am ready to eat my hat! I have been renting for a few years waiting for the market to adjust. It has come down about 15% in my areas. It still needs to fall another 25% to get back to where we were in 1998. Plans like this seem to slow the crash down. As an employed person living within his means I find this to be really annoying. Why am I paying 45% in taxes each year to subsidize stupidity? GRRR...
Hopefully this will not slow the housing crash much. I am ready to buy a house once the prices match reality.
Rant on
Anyone else in California feel like they are living in the decaying glory of the 1950's? Everywhere I look it is another freaking 50's house. If you handed me ANYTHING else from the 1950's to use everyday I would laugh at you. Imagine the disadvantages of using one of these things from the 1950's today: phone, television, car, medical equipment...the list goes on and on. So why on earth should I pay hundreds of thousands of dollars to live in a house that was constructed to support the lifestyle of a bygone era?
Rant off
How many of these toxic mortgages were done with subsidized down payments?
Gamblers who lose get their money back with the money of those who didn't gamble in the first place.
If this is how the administration is going to look at health care, I'm going to stop taking care of myself because I know government will take care of me and make me better off health-wise than what I am today. But I'm sure we'll just be bailing out doctors.
How is this any worse than the trillions being poured into the banks? Hey, if some guy who owns a 300k house is gonna get a break I don't have a problem with it. Better than giving it to NY a-holes.
It is a little like promising someone $10,000 if they can stop breathing for 30 minutes. Giving away $10,000 is foolish. But then no one can meet the terms and live to collect. Hmmmmmm.
joe shmoe | 02.18.09 - 11:03 am | #
I'll raise the ante: 100k for 1 hour?
Any takers?
So when do renters get their rents capped at 31% of income? Us Manhattan folk would LOVE that.
Renters are the new minorities.
Until Obama understands that these federal banks must have regulations that curtail the abberant home mortgage activities nothing will change. Until Obama creates federal bank regulators committed to doing their regulator duties nothing will change. Financing a mortgage loan through a federal bank or thrift is a crap shoot at best.
Obama at this time does not get it.
L'Emmerdeur writes:
So when do renters get their rents capped at 31% of income? Us Manhattan folk would LOVE that.
Renters are the new minorities.
L'Emmerdeur | 02.18.09 - 1:25 pm | #
Agree completely. How many homeowners who rent out the property are going to lower the rent proportionally to the money they'll save with this plan?
Renters will be stuck paying 2006-level prices forever, while owners' profits will be increased thanks to the government and the taxes renters like myself pay. Doubly screwed.
This is an outrage that only benefits the corrupt lending institutions and the deadbeats who went in way over their head on their mortgages.
Foreclosure is the major cause of our financial crisis. Government should really prioritize this issue.We should really keep ourselves updated.Thanks for sharing your thoughts.Good Day!
Easy to criticize; difficult to construct. Who has a better plan? The Republicans?
I think there are valid arguments on both side about this government plan. Will it raise the budget deficit? Probably. Will it help? ThatÂ’s a good question. I think economies go through cycles and this might be one of them. I read a good article on recessions and their history on
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This program is going to help SOME people. While an estimate of 9 million is alot, it is nothing compared to roughly 27 million people who may be in this situation.
I have been working in Loss Mitigation for 6 years and know it well. The lenders don't have to accept the terms of the plan, and when a homeowner calls on their own behalf it is easy for the lender to manipulate someone who doesn't do this for a living. For those lenders who DO work with homeowners, they are OVER THEIR HEADS with files to work, they do not have enough employees to handle the demand, and in turn, alot of people don't get help, and still lose their homes.
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