WSJ: New Obama Plan will Reduce Mortgage Balances for underwater homeowners

[bobbyw24]

The Obama administration on Tuesday will launch its most ambitious effort at reducing mortgage balances for homeowners who owe more than their homes are worth.

Officials say between 500,000 and 1.5 million so-called underwater loans could be modified through the program, the first initiative to target homeowners who are current on their mortgage payments but are at risk of default because they have no equity in their homes. Some experts are warning, however, that the same knots that tied up prior initiatives could do so again.

Under the new "short refinance" program, banks and other creditors that write down mortgages to less than the value of the property can essentially hand off the reduced loan to the government. The process involves refinancing borrowers into loans backed by the Federal Housing Administration.

http://online.wsj.com/article/SB100...+wsj/xml/rss/3_7011+(WSJ.com:+What's+News+US)

 

[VBRonPaulFan]

this is bs. let them default, we have a huge overabundance of housing. let the damn housing market correct itself already so we get out of this goddamn slump.

 

[devil21]

Right after this plan was floated a couple months ago the Treasury issued a press release saying,"No this won't happen. It's just rumors. Ignore it." It mostly disappeared from the news cycle. And suddenly it's happening anyway.

So the short and sweet version is that the underwater loans get rewritten so that the new loan is passed off to the feds, in case of (inevitable?) default. The banks get the soon-to-be toxic asset off their books entirely and pass the risk on to taxpayers. The banks keep all of the payments made plus get bailed out on the written down losses through programs like TARP. Damn it feels good to be a bankster!

 

[Gleaner]

People who bought more house than they can afford.

I'd like to drive a Rolls-Royce but I know I can't afford the payments so should I expect my neighbors to make the payments for me?

Let them lose the house, too many houses for sale, the price drops and then the consumer can buy a house they can afford.

The market place is a brilliant corrector of problems. But when the government messes with the system everything goes out of whack. Remember Freddie & Fannie?

Had lenders not had the "government guarantee" on loans they would have told the applicant "No loan, you can't make the payments and maintain the house". Government interference with the marketplace causes trouble everytime.

 

[torchbearer]

People who bought more house than they can afford.

I'd like to drive a Rolls-Royce but I know I can't afford the payments so should I expect my neighbors to make the payments for me?

Let them lose the house, too many houses for sale, the price drops and then the consumer can buy a house they can afford.

The market place is a brilliant corrector of problems. But when the government messes with the system everything goes out of whack. Remember Freddie & Fannie?

Had lenders not had the "government guarantee" on loans they would have told the applicant "No loan, you can't make the payments and maintain the house". Government interference with the marketplace causes trouble everytime.

I keep seeing post like this, and can't help but to think about the small mind it came from...

What has been the unemployment rate since 2007?
so one month you are making huge pay at a job you been at for years, paying on a house that is well within you budget, the next month you are looking at a pink slip or a major pay/hour reduction.
so you fall behind on all your bills.

so not only has your wealth and future been stolen by politicians in DC-
no only have you just been kicked in the balls by a company that could give a shit about you.
you know have smarmy people who look upon you in judgement, basically saying you just bought too much house. that you are stupid, incompetent, etc.
do you think this is a person who would hang around this forum to hear ron's solution to the problem?
not after your post.

 

[ItsTime]

Where is my free house?

 

[ItsTime]

that you are stupid, incompetent, etc.
do you think this is a person who would hang around this forum to hear ron's solution to the problem?
not after your post.

Anyone who bought at the height of the bubble IS STUPID. End of discussion. Now they are getting f+cking bailed out with MY MONEY, MY DAUGHTERS MONEY, MY FAMILIES MONEY? They can go screw themselves for being a HUGE part of the problem.

 

[roho76]

I keep seeing post like this, and can't help but to think about the small mind it came from...

What has been the unemployment rate since 2007?
so one month you are making huge pay at a job you been at for years, paying on a house that is well within you budget, the next month you are looking at a pink slip or a major pay/hour reduction.
so you fall behind on all your bills.

so not only has your wealth and future been stolen by politicians in DC-
no only have you just been kicked in the balls by a company that could give a shit about you.
you know have smarmy people who look upon you in judgement, basically saying you just bought too much house. that you are stupid, incompetent, etc.
do you think this is a person who would hang around this forum to hear ron's solution to the problem?
not after your post.

While I agree with you on one side I also have to say that if they didn't live like money was pouring out of their asses then they would have had money to pay for their house. It called savings and people don't have any. But they have bitch'n wheels, a sweet boat, 15 iPhones, a $2,000 TV in every room, and a home equity loan that rivals the cost of their mortgage because, why not, right? This is the "living above your means" part. But this is just the side effect of a seriously uneducated public. So in reality it's their fault but when your pretty much forced into public education that feeds this type of behavior to you for breakfast your whole life, it's to be expected.

 

[torchbearer]

Anyone who bought at the height of the bubble IS STUPID. End of discussion. Now they are getting f+cking bailed out with MY MONEY, MY DAUGHTERS MONEY, MY FAMILIES MONEY? They can go screw themselves for being a HUGE part of the problem.

the amount of money borrowed and handed over to these lending institutions could have paid off every mortgage in this country including the million dollars mortgages.
instead, the government took out a huge loan on your credit card for more than you can pay back, gave it to their buddies... and who are you worried about?
the other people who got robbed, not only of their wealth, but of their home as well.
you people are fucking sick.

 

[torchbearer]

While I agree with you on one side I also have to say that if they didn't live like money was pouring out of their asses then they would have had money to pay for their house. It called savings and people don't have any. But they have bitch'n wheels, a sweet boat, 15 iPhones, a $2,000 TV in every room, and a home equity loan that rivals the cost of their mortgage because, why not, right? This is the "living above your means" part. But this is just the side effect of a seriously uneducated public. So in reality it's their fault but when your pretty much forced into public education that feeds this type of behavior to you for breakfast your whole life, it's to be expected.

even if a person had over a years worth of emergency savings, they'd still be in foreclosure today.

 

[jclay2]

the amount of money borrowed and handed over to these lending institutions could have paid off every mortgage in this country including the million dollars mortgages.
instead, the government took out a huge loan on your credit card for more than you can pay back, gave it to their buddies... and who are you worried about?
the other people who got robbed, not only of their wealth, but of their home as well.
you people are fucking sick.

I think you are on to something here torch. We have to remember to keep are anger geared toward the people that created the mess in the first place (The Federal Reserve and the United States Government). The created the atmosphere for the bubble and not surprisingly a lot of people got burned. Yes, there are a lot of people that acted horribly irresponsible, but are these people the real source of the problem? Ask yourself which people are responsible for creating the atmosphere of excess and borrowing. These people and institutions are where we should focus are anger.

 

[cubical]

even if a person had over a years worth of emergency savings, they'd still be in foreclosure today.

hopefully they would be smart enough to move to a smaller more affordable house before they ran out of money.

 

[ItsTime]

the amount of money borrowed and handed over to these lending institutions could have paid off every mortgage in this country including the million dollars mortgages.
instead, the government took out a huge loan on your credit card for more than you can pay back, gave it to their buddies... and who are you worried about?
the other people who got robbed, not only of their wealth, but of their home as well.
you people are fucking sick.

So people without homes are having the same problems. Now you are asking those who could not or did the SMART thing and did not buy a house on the bubble, who are also losing their jobs to be taxed more to pay for those who made BAD, STUPID choices? So where do those people go when they cant pay their taxes? To jail? Where do those people go when they cant pay their rent? To the streets? YOU are fucking sick.

I dont agree with ANY of the bailouts. But you want to spread my wealth, what little I have of it now, to others who made very, very bad choices.

 

[Tal]

I keep seeing post like this, and can't help but to think about the small mind it came from...

What has been the unemployment rate since 2007?
so one month you are making huge pay at a job you been at for years, paying on a house that is well within you budget, the next month you are looking at a pink slip or a major pay/hour reduction.
so you fall behind on all your bills.

so not only has your wealth and future been stolen by politicians in DC-
no only have you just been kicked in the balls by a company that could give a shit about you.
you know have smarmy people who look upon you in judgement, basically saying you just bought too much house. that you are stupid, incompetent, etc.
do you think this is a person who would hang around this forum to hear ron's solution to the problem?
not after your post.

The people who bought into the bubble were just as guilty as the state institutions that encouraged this sort of reckless spending, housing prices would not have gone ballistic if people had stopped to think a little and not jump on the housing mania band wagon.
People who took a risk by buying houses during the bubble in the hope that they would earn top dollar when the house increased 20-30-40% in value should also have to suffer the consequences when their bets dont turn out good.

Having the state robbing the intelligent people who didnt buy into the mania, in order to make life easier for people who behaved irrationally is straight up immoral, it teaches people that they should just keep on betting with their money recklessly and not be responsible and save money and live within their means (like all good citizens should).

In order for the US to grow its economy again it needs to have people that are saving, you will not get savings if you keep debasing the dollar with deficit spending nor if you keep lessening the pain suffered by the people who do not save money but instead blow it all and get themselves heavily in debt.

 

[VBRonPaulFan]

I think you are on to something here torch. We have to remember to keep are anger geared toward the people that created the mess in the first place (The Federal Reserve and the United States Government). The created the atmosphere for the bubble and not surprisingly a lot of people got burned. Yes, there are a lot of people that acted horribly irresponsible, but are these people the real source of the problem? Ask yourself which people are responsible for creating the atmosphere of excess and borrowing. These people and institutions are where we should focus are anger.

the people who bought the homes and put themselves in a risky situation are just as guilty as the institutions that spurred on the reckless behavior. they shouldn't get a pass just because you can empathize with them.

buying a home is a HUGE decision. people were being moronic with the prices they were paying and the loans they were taking on to get them. you don't just jump into it, but people were still getting ARM's, lying about their finances to get approved, etc. that shit was commonplace during the height of the home buying fervor, and people were okay with it? those types of people are just as guilty as the assholes that spurred on all the speculation - nobody should get a pass. and definitely we shouldn't be leeching the responsible people to give a pass to the people who were not responsible. just because you can empathize with those people, doesn't mean we should be rewarding bad behavior.

 

[Disconsolate]

the amount of money borrowed and handed over to these lending institutions could have paid off every mortgage in this country including the million dollars mortgages.
instead, the government took out a huge loan on your credit card for more than you can pay back, gave it to their buddies... and who are you worried about?
the other people who got robbed, not only of their wealth, but of their home as well.
you people are fucking sick.

You're right, it's a shitty situation. The government has pillaged its own people for the benefit of a very small minority.

I don't see how more theft is going to make anything better. I feel for people who bought into the housing hysteria, I really do, but having the taxpayers gobble up more mortgage debt doesn't make anything better.

The government needs to get completely out of the way and allow the housing boom resources to be liquidated/diverted to productive uses. Allow savings, and real growth.

 

[jclay2]

the people who bought the homes and put themselves in a risky situation are just as guilty as the institutions that spurred on the reckless behavior. they shouldn't get a pass just because you can empathize with them.

buying a home is a HUGE decision. people were being moronic with the prices they were paying and the loans they were taking on to get them. you don't just jump into it, but people were still getting ARM's, lying about their finances to get approved, etc. that shit was commonplace during the height of the home buying fervor, and people were okay with it? those types of people are just as guilty as the assholes that spurred on all the speculation - nobody should get a pass. and definitely we shouldn't be leeching the responsible people to give a pass to the people who were not responsible. just because you can empathize with those people, doesn't mean we should be rewarding bad behavior.

I am not giving them a free pass. I am just saying we should focus on the institutions that create the atmosphere rather than the participants in it. What millions of people did during the bubble was irresponsible and stupid. They should live with the consequences of their actions and suffer for it. Not only will this teach them a valuable lesson, but it will also help future bubbles from occurring. But to say that these people have as much fault as the federal reserve, I think is just not honest. Has it been the sole purpose of the average overleveradged joe american to systematically destroy the United States economy? No! Focus on the Fed, the congress critters, and let people live with their financially irresponsible decisions. I don't think we are in disagreement.

 

[bobbyw24]

Fortune Calls it: A Reward for Responsible Homeowners: Principal Reduction

FORTUNE -- The government has bailed out Wall Street firms, giant banks, creditors of Fannie Mae and Freddie Mac -- and is trying to bail out people who've defaulted or are about to default on their mortgages. But let's say you're a hardworking family that has done nothing wrong except buy a home when the housing bubble was at its peak a few years ago. Your mortgage is now way underwater, but you're still making payments because you want to stay in your home -- and you're actually honorable. You're paying for everyone else's bailout, but because you have no equity in your house, you can't refinance to take advantage of the ultra-low mortgage rates that Uncle Sam's bailout strategy has produced. To use the technical term, you're being screwed.

Enter Keith Gumbinger, a leading mortgage expert, with an interesting proposal for how the government can help you, help the housing market, and even help whoever owns your mortgage. Gumbinger, a vice president at the HSH Associates mortgage consulting firm, wants the federal government to issue what he calls "value gap coverage." It would reduce your interest payments, reduce your incentive to walk away from your mortgage, and show that behaving well doesn't make you a sucker.

"This is for people who are underwater on their mortgages but still current on them and have every intention of remaining so, and hope to remain in their homes for the foreseeable future," says Gumbinger. "These people are being compelled to pick up the tab for reckless borrowers and failing banks, and get absolutely no help from anywhere for themselves. How about a reward for doing the right thing for a change?"

http://money.cnn.com/2010/09/03/rea...paign=Feed:+rss/money_topstories+(Top+Stories)

 

[Tal]

FORTUNE -- The government has bailed out Wall Street firms, giant banks, creditors of Fannie Mae and Freddie Mac -- and is trying to bail out people who've defaulted or are about to default on their mortgages. But let's say you're a hardworking family that has done nothing wrong except buy a home when the housing bubble was at its peak a few years ago. Your mortgage is now way underwater, but you're still making payments because you want to stay in your home -- and you're actually honorable. You're paying for everyone else's bailout, but because you have no equity in your house, you can't refinance to take advantage of the ultra-low mortgage rates that Uncle Sam's bailout strategy has produced. To use the technical term, you're being screwed.

''Done nothing wrong except buy a home when the housing bubble was at its peak'', thats still a stupid thing to do, if you studied housing prices just a tiny bit you would see that they rose tremendously from around 2001>2007, if your then stupid enough to buy a house in the middle of a housing mania instead of renting, then you should still suffer the consequences of your actions.

I dont buy this ''but oh we are innocent buyers just suddenly caught up in this housing crash'', you are not innocent, you bought a house at a stupid time.

Now this might sound a little cold, but meh I am a man of principle, I dont think theft is ok just because the one receiving the stolen money is a nice person or family.

 

[HOLLYWOOD]

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