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Barack Really is Going to Pay Her Mortgage

By Larry Doyle on March 26, 2010 at 7:42 PM in Banks, Economy, Housing & Housing Crisis, Mortgages, Sense on Cents (Larry Doyle blog)

My blood is boiling. Why?

The assault on the principles of free market capitalism is escalating with news that banks are poised to start reducing principal balances on certain mortgages.

I empathize with those who are strapped, but I have never felt more strongly on a topic than this principal reduction. Despite any and all bulls*%# put forth by those in Washington, the principal reduction program is an enormous escalation of the violation of moral hazard which our country sadly continues to embrace. I have no doubt it will expedite the development of a socialized housing finance system.

Do not think for a second that banks will take the hit on these principal reductions. Who will take the hit? Me and you. Those who have worked hard, saved, played by the rules, and taught our children to do the same. I have no intention of changing that approach and will work that much harder to instill these virtues in my children. That said, these virtues are under assault under this program. My children’s future is being negatively impacted as the costs of principal reduction will be pushed off on them.

The Wall Street Journal addresses this topic this morning in writing, New Plan to Cut Some Mortgage Balances:

The White House will announce Friday an expansion of its foreclosure-prevention efforts to include reducing mortgage loan balances for some borrowers, a controversial step that policy makers have long resisted, people familiar with the plans said.

The revisions, which will also include temporary help for unemployed borrowers, serve as a recognition that the administration’s foreclosure rescue plan hasn’t kept pace with the rising number of souring loans.

Under the plan, the Federal Housing Administration (LD’s edit: the FHA is you and me, boys and girls) will take on a much bigger role in government efforts to avert foreclosures by allowing some homeowners who owe more than their homes are worth to refinance into government-backed loans, according to people familiar with the plans. The FHA, which doesn’t make loans but insures lenders against losses, already faces rising losses on loans it has backed.

Reduced balances, reduced rates, and taxpayers assuming the risk via FHA-insurance is socialized housing. Yes, socialized!!

The WSJ continues:

On Thursday, lawmakers and a government watchdog sharply criticized the administration’s effort to modify loans at a congressional hearing. Neil Barofsky, the special inspector general for the government’s $700 billion TARP, warned that the program risks helping few borrowers and could instead spread out the foreclosure crisis over several years.

Kick the can down the road and have our kids pick up the tab. Screw that!!

Herbert Allison, an assistant Treasury secretary, said that the administration didn’t “fully envision the challenges that we would encounter” but defended the program as the first wide-scale effort that had moved banks toward substantially reducing payments.

Herb, stop the bulls*%#! If the government didn’t understand, then they were too stupid. More likely, the government, including you right here, has lied and continues to lie to the American public.

So far, around 170,000 borrowers have received permanent modifications, while another 835,000 are in a trial stage.

The administration also has struggled to launch a program designed to encourage banks to modify second-lien mortgages. The administration is expected to increase incentive payments under that program.

Increase incentive payments? Read that as more taxpayer bailouts for a failed banking system. If you think you’re getting screwed. You’re right. You are. Your kids are getting screwed, as well.

You can read a copy of what I call the “Socialized Housing Manifesto” here. Now, let’s revisit fall 2008 when one young woman was truly prescient:

carol haka

I don’t want to pay for other people’s mortgages either.

That being said, a lot of people didn’t do anything to get into the position they have been put in.

If they had been smart, they would have declared an across the board deduction of interest without any move on the part of all mortgage holders.

I have been off work for 13.5 months. I was the highest producing salesperson in the nation. Now, no one wants me because I have been paid too much in the past and “probably wouldn’t want a cut in pay.”

I lost my income and my 401k from the banking fiasco.

I am holding on to my house by my past performance.

Some of us didn’t fuck up but worked for companies that fucked up with the assistance of the government and banks.

>:o
carol haka

Not to mention, I am almost 59 now and age discrimination is playing another role in my inability to get a job back into the banking industry. They are only hiring kids fresh out of school so they don’t have to pay them anything.

I’m going back to school to relearn accounting (puke) so that I can get back into another position in banking.

>:o
Diana L. C.

Larry,

I am confused by this, being the financial moron that I am. Let me give you a real situation from my son, because I want to understand how this works?

My youngest son and live-in girlfriend are in a very smal Livittown-style home. When they bought it, they got it for $145,000, put $10,000 down. They refinanced last year to lower their payments to $900 or so a month. The county currently has their home valued at lower than their owed principal–so they are underwater. They owe about $132,000, but their current taxed value is #123,000.

They have done major improvements by landscaping the yards (front and back), which were disasters. They added a shed in the back, put up a six-foot privacy fence. They added an installed AC system for the hot months. They added wall insulation since there wasn’t any. They have repainted the outside, etc., etc. AND, they are making their payments and keeping up with their bills.

Are you telling me that a neighbor with a similar mortgage could get his mortgage reduced to the $123,000 value simply by being on the list of people who might go into foreclosure because of some financial setback?

Then suppose they both stay in these houses for a long while and the house values go up again to the levels they were when they were purchased. Somehow that does not seem fair for my son. Somehow it seems as if people might try to game this situation. Somehow it teaches my son that MOM was crazy when I talked them out of a more expensive and slightly larger house becaue I knew their incomes and didn’t want them to get into financial problems.
Docelder

Principal reduction irks me as well. But seriously when the banks are getting the money right now for next to nothing, they could cap mortgage rates on people at 3-5% over that bank rate for 5-10 years. Then in 5-10 years refinance them at going market rates. By then maybe they can appreciate and they won’t be so much underwater. There is no reason to reduce the principal on these. That does hurt all of us because it takes away the responsibility for the homeowner to sit in and pay down the house until it is no longer underwater. This seems fair, since they bought it and borrowed it up to begin with.
Diana L. C.

I should add that I encouraged them to buy this house, which was a foreclosure, because I was tired of helping to move them from rental to rental. They are only 27 and 26.
PortiaElizabeth

Carol — I’m so sorry to learn what you’re going through. I know you didn’t tellus for sympathy because you don’t seem the sort who looks for pity. But your experience has everything to do with what Larry writes about. The ones who were responsible and careful with their finances and who tried to do everything right are the same ones who will be “punished” under this new program.

I can’t believe this is the best way to handle the mortgage crisis. I can’t believe the govt. would even consider it. Even when my husband was in grad school and I was home with a small baby, we refused to apply for food stamps or assistance because we wanted to make it by living within our means even if it meant eating alot of macaroni & cheese for a few years. We knew we were working to better our situation. As soon as my son was potty-trained, he went to day care so I could go back to work.

We lived paycheck to paycheck, but we learned that you don’t spend what you don’t have. Why can’t these people?
My other site

I would just like to say that Americans who have been responsible (and been lucky enough not to lose their jobs) should welcome whatever measures will keep others from defaulting. If something isn’t done, one in every 5 homeowners will default in the coming year. Is it unfair that irresponsible people should be helped? Yes, but if that many more houses go into foreclosure the homes of responsible people will be worthless. There will be no housing market in this country for years. Almost everyone in our family needs to sell a home so they can move to get a job or retire. The foreclosures must stop.
Always Learning

Diana,

You did the right thing and I commend you. The neighbor may or may not be eligible for this program. For details on potential eligibility please access the link next to the Socialized Housing Manifesto above.

This program will be gamed and will cause changes in consumers behaviors that do not promote disciplined saving and overall productivity.

I hope the link helps you understand this program. Please let me know if I can help explain anything.
My other site

Carol: Wish you the best. Sorry for your situation.
My other site

It’s possible this idea will be gamed, but the banks and mortgage companies gamed consumers in the first place and that’s how this happened. Diana, you might consider that if the neighbors defaulted, their dirt cheap sales price becomes the comp for you son’s house and he will lose even more value. That’s what has happened to us. We have been totally responsible, but now if we tried to sell our house, the value would be way down because other houses on our street and in our neighborhood have gone into foreclosure or been sold in short sales at ridiculous prices.
Diana L. C.

I understand your point. But it is hard asking your children to be responsible when so many other people get breaks for not being responsible, buying houses too expensive for their incomes, not saving for emergencies, etc.
Larry Doyle

Diana,

You did the right thing. Although America has gotten used to treating homes as investments and cash cows, that mentality caused these problems. Your approach is correct: living within one’s means and increasing the home’s value by taking care of it is the way to go. We are all impacted by how others behave but we should not change our own behaviors in the process.

Your son’s neighbor may be eligible for this program or not. Here’s a link to the press release detailing qualifications of this new program.

I do get extremely irked by this program not because of individuals who may benefit, but because I view the costs not only in terms of dollars but even moreso in terms of changed behaviors, lessened discipline and lower productivity.

There will be many unintended and negative consequences including significant gaming of the system.
HC123

The people have become so corrupt that they don’t just find a despotic form of government acceptable, they crave it.
~~Justme~~

Well it took how many months for Peggy’s fairytale to come true?
The middle class lose everything and the less well off get a hand up.
Seems all is fair in Obama land… lalalalala

I could scream >:o >:o >:o
No Longer Banned in Beantown

I am pissed . I looked at buying a house in ’05 & ’06. I did not buy because the prices were rediculusly high.

I told two agents flat out that there was no way the market could sustain these prices. Only 1% of the population could afford a median priced house. Eithe prices go down or incomes shoot up. Incomes were not going up.

The agents told me how wrong I was. Prices would just keep going up, up, up. Foriegn buyers were keeping prices moving up. One said “In fact, my husband an I are going to buy two more.

This was in Florida. In ’06. The market peak.

Oh yeah, well you are your husband are idiots lady. I like to get right to the point.

And now I have to bail these jokers out?

Because I had a brain and sense I am punished and I have to cough up?

This is a Fucked up world.
sybilll

Let a drunken Max Baucus explain it for you:
http://www.realclearpolitics.com/video/2010/03/25/dem_senator_health_legislation_will_address_the_mal-distribution_of_income_in_america.html
I found that video hysterical, and I know it is O/T, my sincere apologies.
In all seriousness, I see both sides of this issue. I am underwater, just from market decline, but, I did not buy more than I could afford, and my interest rate is fixed. My next door neighbor refinanced on an ARM, and bought a Cadillac and Yukon with the equity. Her mortgage is resetting, and she cannot afford it, and now her house is underwater, too. Should I pay for my next door neighbor? I politely say um, no.
Losing your job is different, but, people lose jobs. People get divorced. Spouses die. If you did not plan for unexpected change, renting might have been a better alternative. Sounds harsh, but, sheesh, where does it stop? I became disabled 11 years ago, and I still have my house. And, I was just a middle-manager who used common sense.
carol haka

Thanks.
Diana L. C.

Larry, thanks for the response. I’m looking into your link. And, yes, I guess what I really am worrying about is that “gaming” of the system. I don’t like that as a mother it’s a constant battle to keep up ethics and principles. All through their high school years, I fought the “other kids are doing it” arguments, as those other kids parents bailed their kids out of trouble. I really agree with you on this one, Larry. I hate the changing moral and ethical behaviors of so many in our country. Honor, self-reliance, inner pride, hard work–they’re starting to mean nothing.
Onofre’s arm

If you subsidize something you’ll get more of it. If you tax something you’ll get less of it.

If the banks are forced to artificially lower the principle on troubled mortgages, that may seem to help the person who may be having trouble making payments. But what it really does is decrease the value of the neighbor’s house as well, so even though the neighbor was making his payments, he’ll be penalized because his house may end up underwater as well when assessed values are lowered across the board. And nation wide, this will rob millions of responsible home owners of their equity, and AGAIN the country will lose trillions of wealth over night. Oh those pesky unintended consequences!

Don’t kid yourself, The people behind all of these monstrous policies, from the Stimulus to Obama care, know it will collapse our economy, they couldn’t possibly be so stupid to not realize this. This is Cloward-Pivens to perfection. You convince the people that it’s the government’s responsibility to provide healthcare, housing, welfare, higher education, etc., and then when the government fails to do the impossible and provide such things, the people will believe the government is broken, and a new one will need to be created, on Marxist principles of course. And they are doing everything possible to bring about this collapse before 2012. Obama and crew are very busy setting up the backup government that will swoop in the moment they can convince the masses that there is no alternative, our country is incurably ill and dying, because if it were healthy, it would be able to provide all of the goodies that people wrongly believe to be their birthright. They’ll claim the Constitution has run it’s course, but have no fear, they’re the enlightened ones that will be able to craft a new trajectory for our nation. A nation that will do the impossible and break the fundamental laws of the Universe by pulling all of man’s needs and wants out of nothingness.
Always Learning

NLBiB -

If the real estate agents were buying properties as investments or as secondary residences, they probably wouldn’t be eligible for principal reduction. From today’s press release:

“For example, investors and speculators should not be protected under our efforts, nor should Americans living in million dollar homes or defaulters on vacation homes. Some people simply will not be able to afford to stay in their homes because they bought more than they could afford.”
carol haka

My house is still worth $150K more than I paid for it, but is down $50K. The problem with the assholes program is that my rate is 7.25%, and I can’t refinance for a lower payment because I have no income now.

That is the exact same problem a lot of people have. Their income has decreased or evaporated. If they did an across the board reduction in the interest rate for everyone – hell, they are getting the money from us at 0% – everyone would be able to benefit. Instead they set it up that the mortgage or banker gets between $5k and $12k for redoing the mortagage and you have to be able to “qualify” and pay all the fees.

It is total bullshit. They have done nothing for the people, it is about more fees for the banks.

>:o
Craig Della Penna

OK, it looks like I’m gonna make some blood boil…

Larry, I have to take issue with you on this. I think you are making a fundamental mistake. Your outrage at the ‘moral hazard’ you see in mortgage payers getting some relief is based on a presumption of innocense and fair-dealing by those who made the loans in the first place. You are, in effect, giving a pass to all of the cheating, stealing, fraudulent loans that were made over the past 10 years and you are giving a pass to all the lying cheating, thieves – banksters, mortgage brokers, CDS packagers who got obscenely rich while they robbed their clients and plundered the entire country.

I’m sorry, I cannot feel any anger when I see some real people get a tinly little bit of help. Frankly, the only time I’ll join you in your high dudgeon is after every single one of the banksters, thieves and plunderers is serving a 20-year sentence.

Then you can talk about ‘moral hazard’ and I’ll listen.
carol haka

And, I paid 20% down when I bought it.
getfitnow

WOW–Not only a free lunch with the dems. there are also free breakfasts, dinners, college tuition, cars, drugs, health care and now houses. The only thing not allow is freedom. >:o
carol haka

The problem is that the our government fucked the entire world economy. And, when it was finally revealed, they thought it was such a good idea to keep fucking us until we are all ruined …………….. Where is it going to end? This is not an ordinary adjustment, this is an intentional act to ruin the country……….

>:o
getfitnow

sybill, I don’t think it’s harsh. It’s what we call LIFE. As Uppity Woman would say: Now deal with it!
carol haka

The education bill is crap. They are going to charge minimally 4% over what they can buy the money for – making 8% average interest.

I have my son’s education debt at 3.25%.

They threw the education bill in with the health care bill to collect 4% off the back of students and parents to pay for the health care bill.

They should all be thrown into dungeons with slimy wet creatures.

>:o
Diana L. C.

Craig, I would also like to see some consequences for the people who made so much money helping people get into these messes. They do truly need to be punished.

On the other hand, many of these people weren’t “tricked” into thinking they really, really could afford their new overpriced homes on minimum wages. They simply decided to get what they could while they could. There were far more people like the neighbor sybill mentions in her comments above. There are not that many really brain dead people in this country as you may think who are easily fooled. They just tried to get more than they could afford and many of them are simply now walking away and feeling no remorse or shame.
Larry Doyle

Craig,

You obviously have not read of any of the articles I provided you in that Wall Street-Washington incest link a few days ago.

I should not have to still do this but I will give it another try,

Wall Street-Washington Incest

Craig, come on man. You’re better than this. I am literally feeding you layups here.

I have called ALL of those people out numerous times. There is a LOT of good stuff in that link.

I’m working for you and with you!!
getfitnow

Where is that “era of responsibility” that was to be ushered in with the election of BO?

Seems it’s in a foot race with the” most ethical congress evah!”
getfitnow

Good luck Carol.
Armymom

No kidding, I just got my statement the other day and my interest is 2.4%. And I have actually read some replys to other blogs where they thing 8% average is good. Who the hell are those people?

Question: Will my loan change or is it new loans?
~~Justme~~

Most of the real people have lost everything others are simply hanging on swimming doggy paddle to keep hold of what they have left!
Diana L. C.

Onofre’s arm,

I have been thinking the same thing you express in this comment for a long time. I am just afraid of saying it around many of my more “rational,” politically correct, and with-it friends and family members for fear of being labeled a “conspiracy theorist.”
Diana L. C.

Your forgot “beer summits.”
~~Justme~~
Always Learning

“Frankly, the only time I’ll join you in your high dudgeon is after every single one of the banksters, thieves and plunderers is serving a 20-year sentence. ”

Many of these banksters, thieves, and plunderers were encouraged (forced?) to do so by the government (think Carter Administration and the Community Reinvestment Act). As a result, lenders eased their loan qualifications. Barney Frank has been the biggest cheerleader.
MBC

Here’s another good wish and a prayer. Best to you Carol.
carol haka

It is new loans. And, it will be the only choice.

They are bragging that low income people will get a boost in availability. It is total bs. Most universities will give you a grant if you are a good student and can’t afford the school based on contributions from alumni. The percentage for most loans isn’t subjective per student, only the personal loans from an institution.

It’s the case of the grocery store in the slums with all the items more expensive than if you live in Manhattan – they have a captive audience.

It’s crap.

>:o
~~Justme~~
carol haka

I was forced in the 70′s and 80′s to listen to Pink Floyd because my husband loved them.

I listened to Pink FLoyd in the 90′s and 00′s because my son loved them, and I finally realized what musical genius’es they were.

My son has gone to see them – Roger Waters – a couple of times in LA.

:* :*
Touchet

I do not agree with this either. There needs to be very heavy stipulations on who is eligible. People who can prove that they are unemployed because they were laid off–yeah I’ll let it slide.

People who just happened to be affected, the government should offer them a refund for the amount of their money they have paid on their loans so far. The government would pay the bank the difference to the bank, and the bank resells the home. In other words, Allows other people to outbid the original owner.
they would have to allow the house to stay on market for a certain amount of time. This would not only make it fair–giving everyone the same opportunity to have a house that used to be 30% more expenisve and COULD be in the future, it would also hep the housing market and banks recover some losses becuase some people would most definately pay 10% more or so in hopes that in the future the house would go back up to pre bubble levels.

It wasn’t their money to begin with its a LOAN. What happens if they are forgiven 30% of their value on money that was never theirs to begin with and then the housing market improves? They get 30% of their money for FREE! uummmm. no i don’t think so.
Babs

Hopefully if this plan goes through it will help people like Carol, who are truly looking for a hand up, not a hand out. However, to those many, many people who used their home equity as a “cash cow”, refinancing for a vacation in Europe or new cars, take a hike. They used up all the equity in their homes when values were high, now that they owe more than their homes are worth, tough luck. Sell your new cars and whatever else you bought with all that “free money”, and realize that the home owners who didn’t use their equity for frivolous binge buying owe you nothing.
Onofre’s arm

When something looks like a duck, quacks like a duck, and is in the family Anatidae, it’s probably a duck!

The 60′s radicals like Tom Hayden, Huey Newton, and Bill Ayers tried to bring about government change with violence, but just like Hitler’s Beer Hall Putsch, they failed. But just like Hitler, they never lost sight of their goal, they just adopted new tactics to achieve it. They infiltrated and blended into our political system, and they’ve been patiently moving this country leftward until it reached the point that they were finally able to install the Marxist prodigy who they’ve been breeding and grooming for years, into the office of the Presidency. Nazi Pelosi is also a devotee of 60′s radicalism, and together, she and Obama are pounding the final nails into the coffin holding our Constitution and the American paradigm, a system that sets us far above the western European model they want to adopt.
sybilll

I am so sorry Carol. I should have said that earlier, before spouting off on a personal tangent. You weren’t the highest producing salesperson by accident. You have talent. I hope some wise employer is wise enough to snare you.
iamcameo

This whole mortgage thing is like a thorn in my side when I think about it. I grew up believing that burning the mortgage was a admirable goal. You even paid a little axtra each month to get it paid as soon as possible. Having a home paid for was a wonderful thing.
Then in the last decades that thinking all changed. One day some years ago my son told me he was going to refinance his home. I, of course, said Oh No! You shouldn’t do that. But he explained to me that a man on one of those radio shows that talks about finances and investments had convinced him that his money wasn’t working for him and that having all of your money in your home was just a bad investment. So I started paying attention to a variety of different sources that talked about finance and sure enough that was the type of info that was being drilled into the heads of our younger generation. I couldn’t believe what I was hearing. It was everywhere and no matter how I tried I could not convince him it was wrong, he just said I was old fashioned in my thinking about money and really didn’t understand about finance. Well, you can guess the rest. I just wonder how many of our young people were fed and swallowed the same drivel in the last 2 decades. It’s no wonder so many families are under water.
Touchet

Also, wouldn’t this actually inflame the situation. It would be like 30% of the housing market going POOF in the night. Would this not cause massive deflation even further?
Touchet

Then when the market improved, you would have all these people cashing in and it would burst again.

Bottom line, this bill may seem like its helping but its not. It doesn’t go straight to the problem and that is speculation in the market. people buying things on credit should be completely abolished for long term investment properties. You should get ONE home at a low interest rate and then it should be almost next to impossible to get another property on credit. That is the solution.
carol haka

Problem is that you have to be behind in your payments, etc. So, after your credit is ruined and you are desperate, they will step in and dangle a carrot in front of you ……….. and, once again, the bank will prosper off of all of us.

Just decrease everyone’s rate. It will create an avalanche of money to be able to save the economy.

It’s our money, give it back to each of us to spend as we need.

>:o
getfitnow

Carol, I was being sarcastic. Of course, we all pay in some fashion in the end. This is the grand illusion that some with a welfare mentality have.
carol haka

Thanks. I hope it’s before I have to finish up with accounting.

I do have a back up system. I bought a Texas Lotto, Powerball, and Megamillions ticket for this weekend.

Cross your fingers.

:* :*
carol haka

………sorry, I wasn’t “paid too much”, I “earned too much”. :-$

:*
sybilll

This makes me nuts. *The government* is YOUR money. There is not a government money tree. I swear, if I ever ran for office, I would start with an infomercial that inserted YOUR MONEY SHOULD BE USED TO PAY TO……..every time *the government should* has been spewed by politicians. Personal apologies to you, Touchet.
TermLimits

I don’t care about the people who bought those homes, but I DO care about why they were able to get the mortgages in the first place. In the past it was pretty hard to get a mortgage and if you didn’t qualify, you didn’t get the mortgage, period. It was that simple. This bunch of crooks even gave mortgages to people with no income. Come on!!!! I hate that we have so much government in our lives today, but they need to fix their mess. Do the interest rate reduction for the ones that can afford to stay in their homes. The principal reduction is not right. Hopefully they will pay for their crimes come November!!!
carol haka

Whoops!

CBO just came out and declared there was a $1.2 Trillion in deficits “mistake” in the HC plan.

90% of GDP in less than 10 years will be interest and entitlements.

>:o
catfsh

Why can’t BofA just lower the principal without the government’s help? BofA and the other big banks are getting pissed because people with underwater mortgages are starting to wise up and make a business decision to just default.

It’s in BofA’s interest to lower the principal regardless of whether the gov’t helps or not.

This has Geithner written all over it.
Onofre’s arm

“CBO just came out and declared there was a $1.2 Trillion in deficits “mistake” in the HC plan. ”

Well, as Gomer Pyle would say, “Surprise, Surprise, Surprise!”
sowsear

Go to watchmaking school, 2000hrs. Entry level $60,000 or go to engineering school(if you have 5 yrs and the aptitude), Pays above average for college grad.
The demand exceeds the supply for both.
Babs

Don’t you think that much of the anger in this country right now is because people who followed the rules all their lives feel like they are now being pushed aside and asked to subsidize the economic woes of many who didn’t follow the rules and lived their lives for the moment, foregoing sacrifice and good economic sense for the instant gratification so prevalent today?

I raised four kids by myself from the time my twins were six, got them all through college, and all without a lick of help from the government until the kids got Pell grants, PHEAA grants, and student loans. I worked my butt off and learned very early on to differentiate between “wants” and “needs”. I work with a lot of young people today, and when they complain about not having any money, at the same time walking around with blackberrys in their pockets and ipod earpieces hanging around their necks I could just scream. Now the Social Security I have paid into all my life to help those who came before me is drying up, Medicare is becoming a joke, and somehow the narrative in this country has become one of the “burden” of the elderly. Sorry, America, the “burden” is not those who have lived their lives with a sense of personal responsibility in the forefront, the “burden” is those who have not, do not, and will not.

Oy vey, sorry for the rant, just so tired of feeling punished for following the rules…..
No Longer Banned in Beantown

The agents may not be eligible but they schmoozed a lot of gullible people.
No Longer Banned in Beantown

We the People, who did not make the wrong choices should be rewarded, not the idiots. That is how it works in a capitalist economy. Work hard, save money, be rewared by the fruits of your work.

Not making enough? Then lean a skill that pays you better.

If you like your low paying career, and find it rewarding, don’t demand hat everyone else pony up so you can have a higher standard of living. Don’t tell us you deserve it.

You deserve what you work for. Everything else is charity. Charity is not forced giving.
Docelder

I have several neighbors that have already lost their house. One bought longer ago and the house appreciated nicely. They refinanced twice, bought a fancy speed style boat, a couple new cars and new furniture etc. They abandoned the house and it sold for about 1/2 of what they had it borrowed up to at auction. Another the people bought it about 2007 and they started remodeling projects and the market fell. the had it taken away with most of the flooring ripped out. That one really hurt the market. It didn’t even bring 1/2. Thing is, I am trying to sell mine now. It is listed 140K less than it would have brought in 2007. These abandoned houses are killing the market. Selling at 1/2 at auction isn’t even replacement cost. Already in a solid family neighborhood with an embedded elementary school… family houses are being rented out. One a block behind me that was rented has no less than six cars parked all over the lawn all the time, right on the grass. One directly behind me was rented and the people kept a pit bull in the backyard. One day my son who was 12 was walking our 10 pound dog and the pitbull broke through the fence in their front yard… ran right through two dogear fence slats and went for our dog. My son fought the dog off bravely long enough for a neighbor to rush in with three foot piece of pvc pipe. My son was nipped, but just through a heavy shirt and it just bruised. The dog had a grip on the shirt and was trying to pull him down. The neighbor who helped was bit badly on the hands arm and leg. He is a big guy, the dog got him down at one point. He choked the dog to sleep and liiterally threw it over the six foot fence back into it’s yard. This house is three blocks from an elementary school. A very stable and peaceful solid family neighborhood is turning to crap over this housing crash. There is a lot of collateral damage. A lot. It really was a greater priority than health reform… but so was jobs.
TeakWoodKite

ok, My house lost 300k, in “value”.
We are at the end of a remod of the loan and will sign the non transferable terms of the loan. 2% for years 3% for the 4th 5% there after. we were at 6.25.

It represents a reduction by a third, but the kicker is that the original amount of the loan is stretched out beyond my time on this plane of existence. I am kicking the can down the road. Way down the road.
So I am one of the people who took advantage of what was available to me. While I could have continued to pay the higher rates all I have done is kicked the can down the road at better interest rates. It is purely a business decision. I know that the dollar is going to get watered down to the point of a pin.
The underlying point of what “socalized financing” brings is inflation. The concept of “redisributed wealth” is a ponzi scheme and really a uglyviral strain when it come to the “Chicago Way” brand in which as long as the middle man is getting his cut who cares about “moral hazard”?
LD, if the “Dummy in Chief”, DOTUS, is saying it is second to only the Depression in magnatude, do they not understand it took decades to climb out of?

(In a Nixon voice) I am not a mushroom! You can’t keep me in the dark and feed a lot shit.
Am I morally wrong in using the tools made available to keep the kites flying?
TeakWoodKite

ok, My house lost 300k, in “value”.
We are at the end of a remod of the loan and will sign the non transferable terms of the loan. 2% for 5 years 3% for the 6th, 5% there after. We were at 6.25.

It represents a reduction by a third , but the kicker is that the original amount of the loan is stretched out beyond my time on this plane of existence. I am kicking the can down the road. Way down the road.
So I am one of the people who took advantage of what was available to me. While I could have continued to pay the higher rates at a much greater risk, all I have done is kicked the can down the road at better interest rates. It is purely a business decision. I know that the dollar is going to get watered down to the point of a pin.
The underlying point of what LD highlights is “socalized financing” brings is inflation. The concept of “redisributed wealth” is a ponzi scheme and really a uglyviral strain when it come to the “Chicago Way” brand in which as long as the middle man is getting his cut who cares about “moral hazard”?
LD, if the “Dummy in Chief”, DOTUS, is saying it is second to only to the Depression in magnatude, do they not understand it took decades to climb out of and what they have done is prolong the inescapable fate?

(In a Nixon voice) I am not a mushroom!
You can’t keep me in the dark and feed a lot shit before I respond.
Am I morally wrong in using the tools made available to keep the kites flying?
Craig Della Penna

You’re right, I haven’t had a chance to read the articles at teh link you sent – I will make time this weekend.

I have trouble when I see the ‘little people’ getting dinged, not tbecause they don’t deserve it for being stupid, or naive in this corrupt society or even venal in their rat-scrabble way. I get incensed because the monsters who deliberately created this debacle are still walking free, with millions in the bank. Phil Gramm, Dick Armey, Alan Greenspan, Tim Geithner, Henry Paulson, among many others, are wealthy beyond our dreams, enjoy the respect of our culture and are responsible for the misery, depredation and despair we see all around us.

Sorry, these people just make me see red…
Onofre’s arm

“socalized financing”?

Is this a Freudian slip Teak? Or is there really such a thing as Southern Cal. financing?
Diana L. C.

No kidding! Sorry about the situation.
Diana L. C.

I agree–it’s absolutely horrible that they can make this mess and walk away unpunished.
TeakWoodKite

Slip Sliding away… >:o

While the changes are significant to a year-old program that has helped just 170,000 homeowners receive permanently lowered mortgage payments, administration officials stressed they would make only a dent in the projected 10 million to 20 million foreclosures expected in the next three years.

I am one of 170,000 people. Wierd. Still if the 10 million is the lower end, add in all the humans living in these dwellings out in the street. The other consequence of “socalized financing” is homelessness poverty and the army.
Docelder

Hopefully, I will be taking my licks and moving to middle Tennessee. I am tired of the heat and the bugs to be honest. I don’t think things here will ever be the same again. I bought the house specifically because of the good neighborhood and A schools. This was a very nice neighborhood. We have at least 200 kids come to the door every Halloween. This has been one of the places kids could safely do that. Once enough of the houses are rented, the neighborhood will be crap permanently. Already the house that had the pit bull… they left and somebody else rented it. They fight all the time. We hear all about it because we can’t hardly open the windows now without hearing it. This was such a nice neighborhood. really it was. Nothing ever used to happen here.
snosandy

I understand where you’re coming from Diana L C. My 25 year old son bought a condo for $225K 3 years ago that is now valued at $125K, and he owes $180K on it. He makes all his payments on time, but he really wants to sell it and buy a house. He can afford the condo, but he can’t afford to sell it and lose over $50K plus whatever closing costs would be.
bayareavoter

I am confused. I am totally for loan modifications with varying lengths of the life of the loans and for adjusting the rates downward. It is to the entire neighborhood’s advantage to keep people in their homes. But forgiving the principal just seems so wrong.

The banks, of course, after the bail out, should be forced to modify these troubled mortgages and not be allowed to sit on the money the taxpayers gave them!
snosandy

I have been thinking the same thing Carol. Our house has lost $100K in value, but we can still afford it. We just can’t sell it because we no longer have the 20% equity in it that we put down when we bought it in 2005 to buy another house in an area we would really like to live. Nor can refinance it with the loss of equity. The only fair thing to do for those of us who were responsible enough to buy within our means is to cut the interest and make it the same for all homeowners.
Docelder

A 1.2 trillion “mistake”. That would be hilarious if it weren’t so pathetic. Remember the good old days when we used to gripe over $600 hammers and $1200 toilet seats? Now $1200 is just somebody’s bar tab on a plane and the fuel for the weekend is another $100,000. Not 1.2 trillion is an honest “mistake”. I miss Jimmy Carter right now to be honest about it.
~~JustMe~~

No, no, no laughing here in fact what a difference a week makes, now my sense of humor is lost, gone…… kaput!
elaine

No Longer Banned, Last night I was over at The New Republic reading what the verbose intellectual progressives had to say. One thread was all about the evils of charity, it humbles the recepients & can make them feel like losers, etc. whereas when all their needs are satisfied by rights then & only then do they become equals in society. Oh yeah.

carol haka, OK you’ve worked in banking & you seem to think the solution to the housing situation is reduction in interest. Well when the TARP spicket runs dry & banks have to go back to luring depositors how many depositors do you think are going to lock in serious cash for a crappy 1.5 APY on a pitiful rate of 1.3% or whatever? & then pay 20% in tax on their pitiful returns? with inflation running @ about 2.65%? Just how much $$$ are depositors suppose to loose to facilitate your solution?

Besides that I doubt most mortgages are even owned by banks anymore. I thought most loans got spliced, diced, securitized & farmed out. I’m no obot but don’t think it fair to blame Obama for this entire mess. IMO Big Dawg (as you Clinton fans like to call him) & his jack legged CRA really got this mess up & running. Greenspan & his lousey low rates sped it up too & Larry Summers (that globalist goober) seems to be over seeing the upward & outward sucking sound of any & all wealth ever accumulated by the middle classes.
FranSC

Carol, I would be interested to know your take on this.  About 18 months ago while we were still reeling from the the banking crisis, Neil Cavuto had a guest on his program who reminded Neil how a decade ago the investment banks like Lehman Brothers, Morgan Stanley, JP Morgan were revered institutions. The guest said, “Then there were all those people coming out of MBA school with no concept of what risk was, thanks to their baby-boomer parents.”

These MBAs were fast tracked and put in charge of these banking giants.” The older bank execs were impressed with their creativity and did not want to dampen their aspirations with traditional caution.

The guest went on to say it was a new generation of young investment bank executives with no concept of risk, much less loss, and it was also the begining of the end.  The green-shade group, like the higher-ups were convinced this hi-tec generation must know things they did not know.  None of the older people who had been running things wanted to look like he/she wasn’t “with it”, so chose not to stand up to these 28-year-olds who were then being promoted to executive level positions.

The guest said it was reminiscent of the dot com crisis where again there were young people running companies with the montra, “If you can dream it, you can make it happen.”

This made a lot of sense to me as to what caused this crisis, but I have not heard anyone since speak about that.
FranSC

Diana, as a realtor it is my understanding that the people in the worst shape with their mortgages are those that have the 5-7 year Adjustable Rate Mortgages. A huge portion of those will be resetting this year causing twice the number of foreclosures as 2009.

The reason is the value of these homes has gone down with the weakened economy. So when these ARMs reset, the owners will have to refinance their loans, yet their property will not appraise for what is owed on it. With stricter banking guidelines, many banks will not refinance such properties and even if they do the monthly payments will skyrocket. Many homeowners will then not qualify for the new loan they need.

I would assume those who got fixed rate mortgages will be ok as long as they don’t need to sell the home or lose their job. Regardless, the property is worth less than when it was purchased in the last five years.
FranSC

Yes, snosandy, the loss in value is what creates the problems. Even when you paid cash, if you sell it, you have a loss.

I understand that it may take 10 years for property values to get back to where they were when the decline started. This is why most economists know regardless of any so-called recovery, our financial crisis is far from over.
PortiaElizabeth

Fran — that sounds like Obama. Maybe that’s why so many of those same people voted for him. Kindred spirits.
FranSC

That’s right, Mos. Foreclosures and short sales in the past were termed “distressed sales” and didn’t count against the other homes in the neighborhood, but in today’s market when there are more than one or two, appraisals reflect that these have become the comps.
Larry Doyle

Craig,

I think you will see I call all out the respective crowds both on Wall Street and Washington. Stop over for a visit…bring your friends.
I’m a Linda too

Yep, “If I help him, he’s going to help me”. That’s what we said. He’s saddling all of us to help his special interests and recorded low income volunteers.
Diana L. C.

I would have been totally against any kind of an ARM for my son. It was the fixed rate or nothing. And over 31% of monthly income….I was reading Larry’s link. Why would anyone take that risk?

I know my son and his girlfriend are dong o.k. It’s just hard when they see others living so high. I would just prefer that they be able to see that taking those stupid risks brings consequences.
carol haka

My ex-husband has a Masters in Mechanical Engineering.

I haven’t the time or the aptitude for it.

I can sit for the CPA exam with about 30 hours of accounting. And, I can take most of it from the comfort of my desk I am sitting at right now over the internet! Yeah!

Didn’t win the Megamillions last night – down to the Powerball or Texas Lotto for tonight! :-$
Diana L. C.

Elaine wrote: “One thread was all about the evils of charity, it humbles the recepients & can make them feel like losers, etc. whereas when all their needs are satisfied by rights then & only then do they become equals in society. Oh yeah. ”

Typical intellectual thinking–their rights mean forcing others to do their charity giving in the form of taxes, and more taxes so those who feel they have so many “rights” they don’t have to work for are are still equal to those who have to work for those “rights” don’t have to feel like the losers they are. Never, never, never hurt the “self-esteem” of anyone. That’s the mantra this generation of “verbose intellectuals” was raised by.

If the charity is given from the heart, the one giving benefits as well as the one receiving. A humble acceptance of charity can do far more to raise a person’s understanding that he/she, too, needs to work toward the day he/she will be able to give charity.

I understand your points, Elaine. There has to be some way out of this mess, though, somehow there has to be a return to a reliance on a middle class of hard-working, charitable people, and banks into banking and not so much into high-risk, too-good-to-be-true money making ponzi schemes.
creeper

Only slightly OT, it looks like Barry has begun his ride back down in the polls after the post-health care deform bump. Off three in Rasmussen today.

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

The honeymoon didn’t last long.
creeper

WOW!!! $145,000 for a Levittown-style crackerbox?

My son just looked at something similar here, on foreclosure. Asking price…forty thousand. They couldn’t get it and the house finally went at auction…for thirty.

This is insane.
creeper

Nice, soothing words. As believable as anything else out of this administration.
creeper

Phew! I could smell the fumes just watching that video. He slurred “middle” into “mill” twice. What a lush.
creeper

Caveat emptor.

The willful ignorance of those people who cheerfully signed on the dotted line for mortgages they had no hope of meeting is destroying all of us.

I bow to no one in my disdain for bankers but it took the greed of people who wanted more than they could afford to bring the system down.

Scroom all.
creeper

mr. creeper, sitting beside me, points out another consequence of lowering principal and thus devaluing all surrounding holdings:

“What happens to property taxes?”
Onofre’s arm

Strangely enough, in Wa state, while house values have been dropping, the tax assessment value has been rising. Go figure.
creeper

Oa, is there no correlation in Washington between actual and assessed value?

Here in Iowa, assessed value must by law reflect actual. In appealing an assessment, the argument you use is based on “comparables”…actual sales of similar properties.
Onofre’s arm

Up until about 5 years ago, the tax assessment value was usually much less than the appraised value, (about 75% of appraised value). But while house values have steadily dropped for the last 5 years, the tax assessed values have risen by the maximum allowed by law, Washington is operating in the red you see, and the Government is squeezing every revenue source they can think of, and contemplating new revenue sources (new taxes).
Diana L. C.

Actually, here in the Denver area, we haven’t been hit as hard as other places. Homes prices took a hit, but not so drastically as in many parts of the country.

Most of the houses around him have nice yards, are owned and well-maintained. There are a few rentals, and of course those aren’t in as good condition. Many of the owners have been in their houses forever, and own them outright. The area was considered Denver’s first suburb, and it’s a straight shot into downtown–takes only a few minutes. But there prices are easily twice as much or more. In fact, the house was last bought for $160,000 before it was in foreclosure. We got it at an auction.

Townhouses / condos can be found all around here for $150,000 and up that have the same floor space, and no large yard (of course), which is what the kids wanted for their dogs.

This house is as old as I am, a definite just after war baby. When I was little, my dad, mom, brother, two sisters and I lived in one very similar to my son’s. Only difference is that ours had a detached garage instead of the attached garage. Some of my happiest memories as a very small girl were made in that house. Most people nowadays can’t even begin to think about living in such a small place, much less with four kids.
Michelle

carol haka<img src=”//cdn.js-kit.com/images/icon10-external-url.png”/>
Carol-don’t let them get you down, I have told since I went to work many years ago, over educated, over qualified etc. You have a gift for sales, top producer in the nation, we know what it takes to do that. I hope some very smart person says hey, I want that girl. If you really hate accounting I don’t think you’ll be happy doing that type of thing. Sales people are people persons. Wishing you the best. Been in this boat due to recessions and companies going out of business too. We worked so hard to make them top companies, the company gets arrogant and then sadly they’re done.
dc

Ok Larry you had me at “Vote for Hillary”. You’ve lost me on this piece, and other pro-Republican pieces. You’re starting to sound almost like a Tea Partier yourself. Hillary would not approve!!!
dc

No actually assessed value is dropping more.
dc

Why is that wrong.The banks should have started long ago reducing principal to 95% of market value…that’s the only real fix for this mess. Otherwise smart people will walk on underwater mortgages…and they should. Moral hazard? Oh please, get over yourself.
dc

Wow I can’t believe this site was pro-Hillary. Hillary would have supported this, and is a true populist. This site is starting to sound like a bunch of red necks. Why don’t you join Palin and admit your nut job rethugs.
dc

The banks still don’t have to do anything. They have done hardly any permanent mods, and BoA was the first to announce they were going to start reducing principal. They don’t want all of these homes that will be strategically defaulted on….
dc

REAL Democrats supported Hillary. Folks here look, smell, and sound like rethugs. What’s up with that? You should go join Palin and those whack jobs.
Armymom

Independent now, And I don’t really give a flying f**k if “Hillary” approves or not. Considering she isn’t going to pay my bills, nor would I want her to. I do, however, want those who think it’s okay to take out of my pocket to give to those who don’t deserve it, to quit stealing from me and my family. I worked damn hard, by going back to school, paying my bills to have those who think they are owed everything to keep on sucking on the govertnment tit. I’m smart enough to figure things out for myself and I don’t need you or any of the democrat thugs to do it for me. And I haven’t “joined” a tea party, yet. But I probably will. Enough is enough.
Armymom

Take a long walk off a short pier. I worked hard to buy my house, one I could afford, even in hard times. It took me years to be able to do that. And now I am penalized because I did it the right way, when I know of plenty of friends of my kids who bought way beyond their means because they wanted everything now.
Armymom

Nice. and you want those of us who are independent to come to your way of thinking? You are the one who doesn’t get it. While you may walk, talk, and dream in lock step with your messiah. Many on here can and do think for theirselves. Especially after seeing the way we have been treated. You aren’t making any friends by trying to “dangle” the proverbial “Hillary” wouldn’t want us to be like this. I voted for Hillary because I felt she was the best out of who we had. I don’t however, like how she has gone over to the dark side, for whatever reason she decided to go. So I don’t have to “do” what “Hillary” would want, unlike how you have to “do what “the one” wants. I, fortunately, have a brain to think on my own and right now, I wouldn’t vote for a democrat if it was the last thing I did. Now go away and dangle your “Hillary” would do it this way, somewhere else.
Larry Doyle

DC…..You obviously do not understand the first thing about markets or the economy so why should I waste my time trying to explain it to you.
Denise Comstock

You’re obviously delusional. You don’t have the first clue about what Hillary supported or what is good for the economy or the people. You’re not real bright. You are a bitter, resentful, red neck who probably supported Bush in lock step. You don’ believe in helping your fellow human beings, great support the likes of McCain, Palin, Cantor and the rest of the nut jobs. Just hope that you don’t need any assistance some day. But I’m sure you “independent One” will just pull your sorry butt up by your bootstraps. LOL, what a sorry bunch of bloggers.
dc

What a bunch of whiners!!!! YOu should be pissed at the banks not the average Joe who got into a bad situation because of the bloody banks. You are doing exactly what the powers that be want you to do. Start blaming the ones at fault….Goldman Sachs, BoA, and the rest of em.
dc

Hey genius, you really think it would be better for their to be a run on the banks, and have lots of people strategically default on their homes because their underwater. I think not. People who walk on their mortgages when underwater are doing the smart thing,deal with it.
dc

Wow Finally some sense. Craign you are absolutely correct! This piece displays misplaced anger and blame on the little help that MainStreet gets. Who started this mess, the Banks, the corporations. NOT HOMEOWNERS!!!!!
dc

Boo Fucking Hoo!
dc

Oh Mr. Genius you do? From what I’ve seen here, you have absolutely no clue. Gee, I think a run on the banks from massive foreclosures because of defaults would be a better strategy. Heaven forbid we help out anyone here. I also think that more foreclosures on your street would help your value too? I know let’s blame the aveage joe trying to get into a home with an inflated value, and let the banks get away with suckering all these people into lousy loans…that’s a good idea. You’re obviously not the sharpest pencil in the box.
dc

Ya you deserve what you work for – IF you can find a bloody job!! How did you get so bitter?
dc

Ya let’s vote in the nut jobs. I mean look what they did for us before, I am sure they will fix the problem. What are you kidding me? Bush created this mess, you want more of that?
dc

Larry you’re a smug little arrogant shit aren’t you? What makes you the Messiah, because you have a Blog? Like thousands of other people….Go get tea bagged.