Obama plans to subsidize mortgage payments of underwater homeowners

[mikecat adjuster]

Mikecatadjuster, your notion of appropriate village justice reminded me of a wonderful little movie. Antonia's Line. You might enjoy it, if you haven't already seen it.

As for the bailtout and so on. Has anyone here read Steven Forbes' thoughts on all this? He spoke a coupla weeks ago to the Huntsville, AL, Chamber of Commerce, and spelled out what he saw as the causes of the mess, as well as the fixes, and he said doing it his way, we could quickly emerge from the mess as early as this spring.

Since I don't understand a lot of the jargon of finance, I cannot explain what he said in any detail, sorry, but it did impress me that such a well respected and clearly intelligent fellow could express such optimism while everyone else is wringing their hands and rending their garments...

Thanks Susan. I'll look into that movie. I've only read a portion of Atlas Shrugged, because it is Really, Really Big. But it is relevent to much of what is occurring today also.

It is sad really. Our economy got so big that inefficiencies were put into the mix and even when we noticed them, each inefficiency seemed like a drop in the bucket so we let it slide. Even now, as one of the politicians said, 'the American public doesn't care about pork'. That sentiment by a ploitician is indicitive of where we are. I am ashamed of my fellow citizen. Growing up, I had hoped for more. But I have always seen the ignorance and the apologists. I'm sure glad I'm not a smoker. The taxes that were just put on cigarettes is astonishing. Don't get me wrong, I wish no one smoked at all. But wow! I wonder what is next. Maybe they will tax what is in my svaings account so they can bail out people who spent there supply. Shame on everyone who supports that kind of stuff. Shame on the people who don't understand basic human nature and the politicians who exploit that human nature to gain contituents instead of leading and doing what is right.

 

[Miss Kitty]

Thanks Susan. I'll look into that movie. I've only read a portion of Atlas Shrugged, because it is Really, Really Big. But it is relevent to much of what is occurring today also.

It is sad really. Our economy got so big that inefficiencies were put into the mix and even when we noticed them, each inefficiency seemed like a drop in the bucket so we let it slide. Even now, as one of the politicians said, 'the American public doesn't care about pork'. That sentiment by a ploitician is indicitive of where we are. I am ashamed of my fellow citizen. Growing up, I had hoped for more. But I have always seen the ignorance and the apologists. I'm sure glad I'm not a smoker. The taxes that were just put on cigarettes is astonishing. Don't get me wrong, I wish no one smoked at all. But wow! I wonder what is next. Maybe they will tax what is in my svaings account so they can bail out people who spent there supply. Shame on everyone who supports that kind of stuff. Shame on the people who don't understand basic human nature and the politicians who exploit that human nature to gain contituents instead of leading and doing what is right.

You must be psychic. :shock: Don't you just wonder where this all will end? Will we all become wards of the state?

 

[SHELLY]

Maybe they will tax what is in my svaings account so they can bail out people who spent there supply.

...they already tax dividends in savings accounts.

.

 

[Bobskunk]

We are down that road

Really,
The idea of bailing out those who acted less responsibly than others is nothing new. I lived it during Katrina, as having insurance disqualified us from rebuilding funds. There was no uproar then.

Same with 9-11 as those families who collected life insurance had that amount deducted from the settlements. This did not receive much coverage either.

Now that we are bringing this same mentality to a bigger stage, people are upset, but we have been fostering this for a long time. I think that using the word "taxpayer" rather than government would help a lot.

The taxpayers (we) are bailing out banks, auto makers, irresponsible borrowers, spendthrifts, etc... The government does not have its own money.

 

[Lynnie]

Really,
The idea of bailing out those who acted less responsibly than others is nothing new. I lived it during Katrina, as having insurance disqualified us from rebuilding funds. There was no uproar then.

Same with 9-11 as those families who collected life insurance had that amount deducted from the settlements. This did not receive much coverage either.

Now that we are bringing this same mentality to a bigger stage, people are upset, but we have been fostering this for a long time. I think that using the word "taxpayer" rather than government would help a lot.

The taxpayers (we) are bailing out banks, auto makers, irresponsible borrowers, spendthrifts, etc... The government does not have its own money.

And, if this continues, you'll be bailing out the responsible. Get ready for an interesting ride!!!

 

[30ashopper]

Obama sets aside $75 billion to slow foreclosures - MarketWatch

Ok, so the plan has been released. Essentially a two parter, one, 75 billion for mortgage subsidies on underwater non-jumbo owners that qualify, and two, give bankruptcy judges the right to modify loans as they see fit.

The repercussions of the later part are pretty interesting - why would lenders lend if they knew judges could null and void their contracts with a stroke of a pen? I sense this will add quite a bit of uncertainty and instability to the lending markets going forward.

Personally I complete disagree with both parts. 75 billion to help people who bought houses they couldn't afford just rubs me the wrong way.

Mango, care to comment, I'd love to hear what you have to say about it, especially cram downs.

 

[scooterbug44]

I thought that one of the big lenders (citi or countrywide?) was on board and giving input on the modifications idea. As I understood it, the judges in bankruptcy court are just being given the power to adjust the rate - for cases where an ARM nailed someone.

What is a mortgage subsidy? Is it a tax credit, loan, what?

 

[30ashopper]

I thought that one of the big lenders (citi or countrywide?) was on board and giving input on the modifications idea. As I understood it, the judges in bankruptcy court are just being given the power to adjust the rate - for cases where an ARM nailed someone.

What is a mortgage subsidy? Is it a tax credit, loan, what?

Under the modification program involving government subsidies to lenders, the lenders will be responsible for bringing down interest rates so that a borrower's monthly mortgage payment is no more than 38% of their pre-tax income. After that the government program would match the amount reduced by the lender to bring a homeowner's payments down to 31% of their pre-tax income.

As part of the $75 billion initiative, servicers will receive $1,000 for each successful modification, as well as additional government funding for each month the borrower stays current on its loan. Homeowners can also receive $1,000 a year for five years as part of the program, as long as they stay current on their loan payments.

That sure sounds like a subsidy to me.

 

[scooterbug44]

So first we're bribing the loan issuer to lower the rates to an affordable level (which they should have done in the first place before issuing the loan), then lowering it 7% more and paying the difference, then we're also paying the loan issuer when they're getting paid on time AND giving additional $ to homeowners for 5 years?

Damn, I wish I was upsidedown in a home loan. :angry:

Are their penalties or exclusions for people who falsified their income to get mortgages?

How will they be paying this back to the taxpayers footing the bill?

 

[30ashopper]

So first we're bribing the loan issuer to lower the rates to an affordable level (which they should have done in the first place before issuing the loan), then lowering it 7% more and paying the difference, then we're also paying the loan issuer when they're getting paid on time AND giving additional $ to homeowners for 5 years?

Damn, I wish I was upsidedown in a home loan. :angry:

Are their penalties or exclusions for people who falsified their income to get mortgages?

How will they be paying this back to the taxpayers footing the bill?

They won't. This is the first true bailout we've seen, there are no loans involved, we will not get paid back. The American taxpayer will pick up the total tab.