Bail out al home owners, problem solved?

[midcan5]

Care, Glock knows nothing about fannie and freddie, he demonstrated that in another thread. I'm not sure what to think of your solution as the goal is to get money to people in need but often the result is far from sensible. Read Galbraith's book on bubbles, fascinating stuff that never seems to stop.

[ame=http://www.amazon.com/gp/reader/0140238565/ref=sib_dp_pt#reader-link]Amazon Online Reader : A Short History of Financial Euphoria (Whittle)[/ame]

 

[midcan5]

Care, you've made me reconsider my feelings about bailouts. I still think that for practical reasons we can't allow huge institutions to fail, but it does seem that the bigs guys are getting a better deal as far as government aide is going. By ignoring the needs of the ordinary citizen to the benefit of big business we are just continuing the same worthless policy of trickle down economics.

Exactly, socialism is for the rich, capitalism is for the working people.

The Conservative Nanny State

The Conservative Nanny State

How the Wealthy Use the Government to Stay Rich and Get Richer

 

[glockmail]

Care, Glock knows nothing about fannie and freddie, ....

I know what I need to know, that they were set up and run by Democrats, therefore unnatural and unstable from the get-go.

 

[editec]

Of course, the argument can be made that the only way the price of houses falls back into line with the salaries of people is for those homes to be foreclosed.

It's an argument I won't take issue with because it is true.

But one cannot help but note that the bankers who caused this situation are being bailed out, while the people, who in many cases invested their meager saving just to get into those homes, are shit out of luck.

How come nobody ever mentions the trickle up theory of economy?

Goods and services aren't just magically created by investments, they are created by CAPITAL AND LABOR combined.

But all the macroeocnomists ever seem to understand is that capital (and capitalists) are the important part of the system.

Hence, the rich of this nation are systematically killing the geese that lay the golden eggs..the working class that we ALL depend on.

So we save the people who CAUSED THE PROBLEM, and let their victims suffer the consequences. \

Incidently, even those of us not in trouble with our motgages lose because we paid too much for our homes, too, if the prices of housing falls back into line with what the real values should always have been.

Adding insult to injury, we devalue our money by bailing out the banks, but we do so because if we don't the whole damned system totally collapses.

And as our money devalues, we grow more poor even if we aren't homeless.

America land of the Rich, and screw the workers.

 

[Care4all]

Of course, the argument can be made that the only way the price of houses falls back into line with the salaries of people is for those homes to be foreclosed.

It's an argument I won't take issue with because it is true.

But one cannot help but note that the bankers who caused this situation are being bailed out, while the people, who in many cases invested their meager saving just to get into those homes, are shit out of luck.

How come nobody ever mentions the trickle up theory of economy?

Goods and services aren't just magically created by investments, they are created by CAPITAL AND LABOR combined.

But all the macroeocnomists ever seem to understand is that capital (and capitalists) are the important part of the system.

Hence, the rich of this nation are systematically killing the geese that lay the golden eggs..the working class that we ALL depend on.

So we save the people who CAUSED THE PROBLEM, and let their victims suffer the consequences. \

Incidently, even those of us not in trouble with our motgages lose because we paid too much for our homes, too, if the prices of housing falls back into line with what the real values should always have been.

Adding insult to injury, we devalue our money by bailing out the banks, but we do so because if we don't the whole damned system totally collapses.

And as our money devalues, we grow more poor even if we aren't homeless.

America land of the Rich, and screw the workers.

This is what bothers me about the people on the news telling us that prices were too high for homes compared to the normal trend of rises in home prices...and on that, I agree....HOWEVER where does supply and demand come in to the picture?

There WERE more people buying homes, (demand was up) so the prices of homes SHOULD have risen at a faster pace than the norm.

Even when this whole mess is said and done with foreclosures, I would bet that more people bought homes during this period and STILL own them than during previous periods of new homeownership, thus the home prices should have ticked up at a faster pace than the normal pace....?

Yet i still hear analysts saying that prices of homes have another 10% drop from their already dropped prices just to get to that "normal" pace in price hikes.....? Why do they have to drop another 10%?

Every time these prices fall, it makes more and more people susceptible to foreclosure due to putting them in an UPSIDE DOWN mortgage, making it impossible for even good standing home owners with Adjustable rate mortgages.... NOT being able to refinance their homes in to a conventional mortgage which they were TOLD by the lender, that they would be able to do when their adjustable rate mortgage begins its adjustable stage.

which means that this fiasco will even get worse...

And it has hurt people like Matt and me, who bought their home cash in late 2006...our home has lost about 30% of it's value since we bought it...which sucks, big time! And we bargained the house down $46k from it's listing price when we bought it...the spiral in value down continues.

And this is the case with pretty much anyone that bought a house in 2005, 2006, 2007, and 2008.....

And anyone that bought a home long previous to this, that refinanced or took equity out of their home to invest in other things, is getting hurt and strapped also, to the home they are in, because they too might be upside down in their mortgages.

This bail out should have occured from the bottom up, if it was to occur at all....it would have put all of America in a better position and still SAVED the financial institutions.

 

[DiamondDave]

they are private corporations ravi, the government can't fire them, the government can't take their millions that they made off of their abuse, the government can't stop them from getting their golden parachutes if let go....

these are private institutions.

My point is, that if the homehowners were helped in to FIXED mortgages of 6%-7% then the PROBLEM would be solved for the most part....

it is the adjustable morgages skyrocketing and the inability to get a fixed mortgage that is causing the defaults for the most part....

help them get in to secure conventional mortgages would keep them in their homes, for the most part...

And the financial institutions are the ones that SCREWED these people to the wall.....with unsaid or said promises...like, when the baloon hits or the adjustable rate becomes adjustable, you can refinance your homes in to a conventional mortgage...these people believed such, but now the conventional mortgages ARE NOT AVAIL to them....they set them up for failure and homeowners have always thought the financial institutions would not loan you money if they didn't think you could afford it....the homeowners were used and abused by these institutions, and all out of the GREED of the corporation....imo.

So... those who did not make proper decisions and did not take care of their personal responsibility can be rewarded with an interest rate that is as good or better than the ones for those who did handle their own loans??? And they get it taken care of by the government (the effort, the 'guarantee', etc)???

Give me a fucking break....

 

[Diuretic]

Hey DD that socialism you despise is working right now to stop the US financial system collapsing. Your government is nationalising financial institutions.

 

[Care4all]

So... those who did not make proper decisions and did not take care of their personal responsibility can be rewarded with an interest rate that is as good or better than the ones for those who did handle their own loans??? And they get it taken care of by the government (the effort, the 'guarantee', etc)???

Give me a fucking break....

bull crap, they would not get a better rate than the people that have conventionals....my last loan on my previous home was at 5.12%, it was at 8.5% but we refinanced it when the mortgage rates fell....

What is WRONG WITH YOU Dave? Why do you think it is A OK to bail out these fricking financial institutions that were NEGLEGENT to their stock holders in handing out like penny candy these subprime mortgages and NOT the people they DUPED?

Securing these homeowners in to a conventional mortgage would STILL BE BAILING OUT THE FINANCIAL INSTITUTIONS because they would not have so many defaults/foreclosures....so your precious financial institutions would still get their bailout, but so too would the homeowners.

 

[Anguille]

....

which means that this fiasco will even get worse...

And it has hurt people like Matt and me, who bought their home cash in late 2006...our home has lost about 30% of it's value since we bought it...which sucks, big time! And we bargained the house down $46k from it's listing price when we bought it...the spiral in value down continues.

And this is the case with pretty much anyone that bought a house in 2005, 2006, 2007, and 2008.....

And anyone that bought a home long previous to this, that refinanced or took equity out of their home to invest in other things, is getting hurt and strapped also, to the home they are in, because they too might be upside down in their mortgages.

This bail out should have occured from the bottom up, if it was to occur at all....it would have put all of America in a better position and still SAVED the financial institutions.

The people down the street from me lost their modest home because of a second mortgage they took out to do basic home repairs on a home that had been neglected for too many years.

Elderly people are being evicted in my city because the apartment buildings in which they rented for many years are being foreclosed on. For some of these people this is not the first time they've been evicted due to circumstances beyond their control. As the housing bubble was expanding, tenants were, and still are, routinely evicted for condo conversion. Ironically some of these condos are being repossessed by the banks.

There are so many ways in which people living on modest means are being screwed by the unchecked greed of the mortgage lenders and the real estate investors.

I'm glad, Care, that at least you were able to negotiate down from the asking price on your home and that you were able to pay cash. And you got a beautiful home, it sounds like! There are so many people in your situation who were buying homes at the time you did to be used as shelter, not investment, who got screwed because of the inflated prices.

 

[Anguille]

bull crap, they would not get a better rate than the people that have conventionals....my last loan on my previous home was at 5.12%, it was at 8.5% but we refinanced it when the mortgage rates fell....

What is WRONG WITH YOU Dave? Why do you think it is A OK to bail out these fricking financial institutions that were NEGLEGENT to their stock holders in handing out like penny candy these subprime mortgages and NOT the people they DUPED?

Securing these homeowners in to a conventional mortgage would STILL BE BAILING OUT THE FINANCIAL INSTITUTIONS because they would not have so many defaults/foreclosures....so your precious financial institutions would still get their bailout, but so too would the homeowners.

Dave is an idealist.

 

[Anguille]

Hey DD that socialism you despise is working right now to stop the US financial system collapsing. Your government is nationalising financial institutions.

They don't want to know about that. LOL!

 

[editec]

This is what bothers me about the people on the news telling us that prices were too high for homes compared to the normal trend of rises in home prices...and on that, I agree....HOWEVER where does supply and demand come in to the picture?

It was always in the picture.

Since there was more money (thatnks to dubious loaning practices) available for people to borrow, that pressure drove up the price of houses till their cost was totally out of line with what people actually make.

As long as the price of houses continued to rise, the banks felt safe making loans to people they KNEW could not afford because the value of the home exceeded the outstanding balance of the mortgage.

This is a classic economic bubble.

There WERE more people buying homes, (demand was up) so the prices of homes SHOULD have risen at a faster pace than the norm.

Well, yeah, that is ALSO part of the equasion, isn't it? Greed drives more people to be greedy, doesn't it?

Even when this whole mess is said and done with foreclosures, I would bet that more people bought homes during this period and STILL own them than during previous periods of new homeownership, thus the home prices should have ticked up at a faster pace than the normal pace....?

I hope you're right.

Yet i still hear analysts saying that prices of homes have another 10% drop from their already dropped prices just to get to that "normal" pace in price hikes.....? Why do they have to drop another 10%?

The average family income here in my part of Maine is about $30,000 bucks.

The average home price in this area WAS (nobody knows now) about $180,000.

Six years pre-tax income?

That was a real estate market that was bound to crash, isn't it?

Every time these prices fall, it makes more and more people susceptible to foreclosure due to putting them in an UPSIDE DOWN mortgage, making it impossible for even good standing home owners with Adjustable rate mortgages.... NOT being able to refinance their homes in to a conventional mortgage which they were TOLD by the lender, that they would be able to do when their adjustable rate mortgage begins its adjustable stage.

YUP!

which means that this fiasco will even get worse...

Yes, probably.

Unless the government decides to completely blow up the value of our specie by giving the PEOPLE money for a change (instead of the banks as usual), that is very likely the outcome.

And it has hurt people like Matt and me, who bought their home cash in late 2006...our home has lost about 30% of it's value since we bought it...which sucks, big time! And we bargained the house down $46k from it's listing price when we bought it...the spiral in value down continues.

Sorry to hear it. Really I am. Americans work so damned hard to get into a home, and then something like this happens. It's tragic.

And this is the case with pretty much anyone that bought a house in 2005, 2006, 2007, and 2008.....

I bought my house at the bottom of the RE market here, in 92. (for 1.5 times my family income at the time, I might add).

I saw the value of my house theoretically rise 300% in the first 15 years, and now I'm watching it drop back down to something more realistic given the average salary in this area (which is dropping, by the way, rapidly!).

And anyone that bought a home long previous to this, that refinanced or took equity out of their home to invest in other things, is getting hurt and strapped also, to the home they are in, because they too might be upside down in their mortgages.

If they refi'd to buy stuff they didn't need, yeah, quite right.

This bail out should have occured from the bottom up, if it was to occur at all....it would have put all of America in a better position and still SAVED the financial institutions.

Yeah, but how?

Do we just send these people money?

And since I'm not in an upside down mortgage, should I be expected to bail out those who are?

What in that for me... except a devalued currency for me and my kids?

Now we KNOW the government is going to bail out the rich people, but the workers?

Don't count on any help for that class of people, Secrets.

Those in charge truly do not give a rat's ass what happens to people like us.

They never did and they never will, either.

We are sheep that the smartests one fleece periodically by creating situations like these.

If I could see the stupidity of these policies, years in advance of the disaster, please don't expect me to think that the people smart enough to get to the top of the heap did not.

 

[PubliusInfinitum]

i call bullshit.

it wasn't so that everyone could own a home, but so that MORE people could own a home and it was Phil Graham's legislation that deregulated that allowed the big financial institutions in to GREED.....

And what about Bear Sterns, and Morgan stanley and Lehman and washington mutual and AIG?

Who had the "relationship" with these corps?

hogwash....

the BANKS and Financial Institutions took advantage of the deregulation and made UNSOUND FINANCIAL MOVES for pure GREED....they f-d us....they couldn't give 2 poops about people owning homes....they only cared about themselves and the immediate money they could make off of the poor new homeowners....

First... PRECISELY how does 'de-regulation eqaute to greed?' Canyou answer that for me please? I am truly interested in hearing how you have come ot this conclusion.

Now if the answer is that you heard someone else say it and you 'felt like that made sense' then FINE... but just admit it.

All deregulation does is CUT the cost of doing business; it allows those IN BUSINESS TO DO BUSINESS.

Now business is merely the process of exchanging vaue for value, where both interests realize a profit. When you buy toilet paper, you exchange the product of your labor for that product... the person that has the toilet paper sells it to you for more than they paid for it, from that he pays a percentage of his expenses which he incurred in the process of selling you that TP and at the end of the calaculation he has more in his pocket than he had before he sold it to you; YOU have a roll of TP which serves a need which you were unable to serve prior to the exchange. How does deregulating the guy that sold you that TP, reducing the burden he was forced to endure to GET YOU THAT TP, amount to GREED?

PLEASE be specific and honest in your response...

Secondly, Business is a human endeavor, thus it is subject to the pitfalls of humanity, JUST AS GOVERNMENT IS A HUMAN ENDEAVOR... EXCEPT WITH GOVERNMENT COMES POWER, WHICH IMMEDIATELY AMPLIFIES THE TENDENCY TO SUCCUMB TO THE PITFALLS OF HUMANITY... The seven deadly sins, negative human traits and what have you.

Businesses are going to make mistakes; their management is going to miscalculate at times and there is absolutely NOTHING that YOU or ANYONE IN GOVERNMENT IS GOING TO DO ABOUT THAT EXCEPT MAKE IT WORSE!

When government regulates business, it simply adds an additional level or LEVELS of complexity to the equation; it adds additional costs in terms of time and capital liabilities which would otherwise not be present. What's MORE is that Government is EVEN MORE PRONE to human error than is Business. This based upon nothing more than government NOT BEING ACCOUNTABLE to ANYONE... it's not even accountable to the MARKET. When Business screws up it suffers in any number of ways... it may be a reduction in cash flow, an increase in its costs, a loss in or OF its profits and if it screws up sufficiently that business DIES...

The Federal Government in particular does not suffer such accountability; its revenues are on going, its tax base ever increasing and when the base falls short it merely increases the tax rate to make up the difference. Thus Government has no incentive to carefully consider its decisions, its expenses.

Oh sure there's the ever present cacophony generated by the various factions, in the case of the US Federal Government you have the Americans trying to tend to their constitutionally mandated responsibilities and the Socialists, moderates and centrists crying about CORPORATE GREED and for more money for future social policy failures through which they buy votes, thus power... but the fact is that there is no person, no market forces such as competition which holds government accountable; THUS GOVERNMENT IS NOT ACCOUNTABLE and as such has NO INCENTIVE FOR GOVERNMENT TO GIVE A HAPPY DAMN ABOUT YOU, YOUR HOUSE OR anything else about you.

Yet people sit around and delude themselves into believing that their government is better able to provide them with Jobs, cares about whether or not they own a home and if they have healthcare, when all government cares about is ITSELF! It lives for no other purpose than to survive. The people in government have their security… individually they have their little chunk of power and their job, their mission in life is to PROTECT THAT... and they aren’t ABOUT to risk it because of YOU.

This falls under the rubric: "Be careful what you wish for." Because while you may not like it that Business is not perfect and that they don't care about you...; those you're letting take over these businesses are by the very nature of their being, SUBSTANTIALLY MORE CARELESS... than business could ever HOPE to be... You're asking the fire to tend to your dinner because the pan is too hot. Take the pan off the fire for a bit and it'll cool down... don't buy into the idea that the fire can do a better job of cooking your meal... as all you'll come away with in that arrangement is a bigger fire and a hungry belly.

Now again... What makes 'de-regulation' synonymous with greed?

 

[DiamondDave]

bull crap, they would not get a better rate than the people that have conventionals....my last loan on my previous home was at 5.12%, it was at 8.5% but we refinanced it when the mortgage rates fell....

What is WRONG WITH YOU Dave? Why do you think it is A OK to bail out these fricking financial institutions that were NEGLEGENT to their stock holders in handing out like penny candy these subprime mortgages and NOT the people they DUPED?

Securing these homeowners in to a conventional mortgage would STILL BE BAILING OUT THE FINANCIAL INSTITUTIONS because they would not have so many defaults/foreclosures....so your precious financial institutions would still get their bailout, but so too would the homeowners.

Show me where I said it was OK to bail out the institutions... I'll be waiting... but nice try yet again to lie about something in a feeble attempt to prove your inane point

Try looking at mortgage rates now... a 6% rate would be better than most ANYONE else is going to get... I have had a lower mortgage rate in the past too, but that means SQUAT in terms of now...

As for DUPED... READ YOUR FUCKING MORTGAGE CONTRACT OR PAY A SMALL FEE TO AN ADVISER TO GO OVER IT AND IT AND EXPLAIN IT FOR YOU... they signed, their problem....

Those who did not do right by their loans do NOT deserve (they are not owed either) to have a guaranteed rate by the government, nor do the institutions deserve to be FORCED to pander to those who did not do right by their loans... there is no reason WHATSOEVER to government mandate that these defaulted people get the same or better rate than those who did right in the first place

 

[DiamondDave]

Hey DD that socialism you despise is working right now to stop the US financial system collapsing. Your government is nationalising financial institutions.

Hey D... it is not going to collapse and the socialism actions will be worse for the financial system in the long run... let alone the basis of our society on personal responsibility, liberty, etc being infringed upon by this socialist style action

 

[Skull Pilot]

Not to worry.

Nobody is going to bail out the homeowners.

They will continue to lose their homes at record rates.

There now, feel better?

record rates??

Actually foreclosures were higher when Slick Willie was in office.

http://http://www.washingtonpost.com/wp-dyn/content/article/2008/09/12/AR2008091202415_pf.html

The Mortgage Bankers Association (MBA) database, which allows rigorous apples-to-apples comparisons, only goes back to 1979. It shows that today's delinquency rate is only a little higher than the level seen in 1985. As to the foreclosure rate, it was setting records for the day -- the highest since the Great Depression, one supposes -- in 1999, at the peak of the Clinton-era prosperity that Obama celebrated in his acceptance speech at the Democratic National Convention late last month. I don't recall hearing any Democratic politicians complaining back then.

Even if Obama is right that the foreclosure rate is the worst since the Great Depression, it's spurious to evoke memories of that great national calamity when talking about today -- it's akin to equating a sore throat with stomach cancer. According to the MBA, 6.4 percent of mortgages are delinquent to some extent, and 2.75 percent are in foreclosure. During the Great Depression, according to Wheelock's research, more than 50 percent of home loans were in default.

Moreover, MBA data show that today's foreclosures are concentrated in that small fraction of U.S. homes financed by subprime mortgages. Such homes make up only 12 percent of all mortgages, yet account for 52 percent of foreclosures. This suggests that today's mortgage difficulties are probably a side effect of the otherwise happy fact that, over the past several years, millions of Americans of modest means have come to own their own homes for the first time.

I wouldn't call a 6% delinquency rate and a 3% foreclosure rate a catastrophe.

 

[AllieBaba]

A few years ago there was there was a lot of government interest in helping people to own their own homes. It was believed that home ownership encouraged responsibility and that people became more invested in their communities when they owned the homes they lived in. This crises has set the country back not only financially but in terms of quality of life. When your neighborhood is being torn apart by evictions and foreclosures it creates anxiety that is felt by all.

That's a democratic concept, and you can see where it has gotten us.

 

[Anguille]

That's a democratic concept, and you can see where it has gotten us.

What are you saying? Are you against home ownership? Perhaps you favor the tenant farmer model?

 

[Care4all]

record rates??

Actually foreclosures were higher when Slick Willie was in office.

http://http://www.washingtonpost.com/wp-dyn/content/article/2008/09/12/AR2008091202415_pf.html



The Mortgage Bankers Association (MBA) database, which allows rigorous apples-to-apples comparisons, only goes back to 1979. It shows that today's delinquency rate is only a little higher than the level seen in 1985. As to the foreclosure rate, it was setting records for the day -- the highest since the Great Depression, one supposes -- in 1999, at the peak of the Clinton-era prosperity that Obama celebrated in his acceptance speech at the Democratic National Convention late last month. I don't recall hearing any Democratic politicians complaining back then.

Even if Obama is right that the foreclosure rate is the worst since the Great Depression, it's spurious to evoke memories of that great national calamity when talking about today -- it's akin to equating a sore throat with stomach cancer. According to the MBA, 6.4 percent of mortgages are delinquent to some extent, and 2.75 percent are in foreclosure. During the Great Depression, according to Wheelock's research, more than 50 percent of home loans were in default.

Moreover, MBA data show that today's foreclosures are concentrated in that small fraction of U.S. homes financed by subprime mortgages. Such homes make up only 12 percent of all mortgages, yet account for 52 percent of foreclosures. This suggests that today's mortgage difficulties are probably a side effect of the otherwise happy fact that, over the past several years, millions of Americans of modest means have come to own their own homes for the first time.

I wouldn't call a 6% delinquency rate and a 3% foreclosure rate a catastrophe.

1 in 10 homes are delinquent or in foreclosure is what the news reports.

your link doesn't work for me skull?

one thing i would have to ask of you....if this is true, that it was no higher than in 1985, right before the savings and loan crash (due to realestate mortgages defaulting) and bailout,

then WHY is our entire financial and insurance market needing the one trillion dollar bailout with our money?

man, why did republicans allow this to happen to us TWICE under their rule?

why?

and why are we HURTING SO BADLY in this market that the feds had to nationalize companies?

does that make any sense to you?

we are STILL paying for the last DAMN bank BAILOUTS....what the heck is going on here???????????

WHY do us tax payers have to foot the bill for the banks ONCE AGAIN?

i just don't get it?

 

[CA95380]

Oh hell! All real estate is still down to rock bottom prices ..... houses, apartment buildings, condo's, commercial builiding's - all of them that are currently now in foreclosure. So let's devise a new plan? Let's all run out and buy about 10 houses each, then when the "bailout" comes we all get a whole new lease on life, and rent these puppies out to low income families!

Is this the way it is going to work?