This will blow up in their face something hard, something fierce and something memorable. I can't wait to see the polling data, media coverage, lawsuits, investor rejection and unintended consequences.
The 99% of Americans not given a free lunch, the 99% of Americans who did not commit mortgage fraud, who did not "buy" a home they couldn't afford, and who did think signed contracts meant something in the United States, those 99% are going to be ABSOLUTELY F*CKING PISSED OFF today when Bush and Paulson waddle out to announce a Housing Gambler Bailout Plan.
What to do?
1) Submit to your local paper's letter to the editor section
2) Contact your Congressman and Senator
3) Send a friendly little note to the White House
4) If you're a homedebtor with an ARM, stop making payments today, then call your lender and let them know you want a break too. If they don't give it to you, threaten a discrimination lawsuit.
Here's the Washington Post article where we got HP'er Darren interviewed (nice job!), and also some more MSM coverage this morning:
Bush Wins Agreement To Freeze Mortgages
Darren McKinney, 48, a renter in the District, said he has been waiting for housing prices to fall so he can buy a condo without resorting to a dubious loan. He turned down an opportunity to buy his 600-square-foot apartment for $310,000 in late 2004 because he thought it was "absurdly overpriced."
Now the government is rewarding people who made irresponsible decisions and bought homes beyond their means, he said.
"There are those of us who purposely sat on the sidelines during the course of the last three years while the senseless frenzy was going on, and we presumed the free market would be allowed to correct itself," McKinney said. "The government is now meddling in the market and looking to prop up lenders and borrowers alike, and those of us who wisely bided our time get screwed."
Sub-prime bailout helps the greedy
THE chameleons of the free market never cease to amaze. When things are good they worship at the altar of deregulation. When the market turns bad, they squeal like stuck pigs and are first in line for a government leg-up.
Subprime Mortgage Bailout - Paulson Vs the Free Market
No bailout
With nearly $400 billion in adjustable-rate subprime mortgages scheduled to experience significant increases in their interest rates next year, Treasury Secretary Hank Paulson has outlined the possible terms of an ill-advised election-year taxpayer bailout for an indeterminate number of distressed homeowners and the investors who hold the homeowners' deteriorating subprime mortgages in their asset portfolios.
Mortgage relief plan draws fire
Some say proposal to aid subprime borrowers is a bailout; others say it doesn't do enough
December 06, 2007
Washington politicians thought intervening in the Terri Schiavo affair would be good politics too. Housing Gambler Bailout is the new Terri Schiavo.
Subscribe to:
Post Comments (Atom)
69 comments:
http://biz.yahoo.com/ap/071206/mortgage_crisis.html
The big sticking point in the lengthy negotiations was getting investors who have purchased the mortgages after they have been bundled into mortgage-backed securities to agree to accept lower interest payments. Critics have said even with a deal, there are likely to be lawsuits.
"The $64,000 question remains: will investors who might balk at going along with this be able to maintain legal roadblocks and prevent the plan from going into effect?" said Sen. Charles Schumer, D-N.Y.
Is it voluntary or is the fed gov forcing the banks & investors to eat it?
"Steve Bartlett, president of the Financial Services Roundtable...said the deal would benefit banks, investors and homeowners since there is a significant cost when a mortgage is foreclosed."
Banks don't need the gov to tell them to make money, they will foreclose only if it makes financial sense. These stupid politicians just want to look like they are doing something when they enabled this problem.
Oh, and if Iraq and the Patriot Act aren't enough to turn you off to the commies, Hillary and Edwards, here's more...
"Hillary Rodham Clinton and John Edwards, complained Wednesday that, given the risks to the economy, Bush's proposal did not go far enough. They put forward their own plans that would not only freeze mortgage payments but also declare moratoriums on further foreclosures for a period of time"
Paulson Subprime Fix Is Cheered by Democrats, Panned by Right
Dec. 6 (Bloomberg) -- Treasury Secretary Henry Paulson's success in crafting agreement on a five-year fix of subprime mortgage rates owes a debt to an unlikely source: congressional Democrats.
Legislation pushed by House Financial Services Committee Chairman Barney Frank that would bypass lenders and investors, giving power to judges to rewrite loans, helped persuade banks and securities-industry lobbyists to sign on to Paulson's effort, mortgage-industry analysts said.
``The Democrats have given Paulson more leverage and room to maneuver than he otherwise would have had,'' said Howard Glaser, a former chief legal adviser to Housing Secretary Andrew Cuomo under President Bill Clinton who now heads Glaser Group, a consulting firm. Paulson could tell lenders and investors ``if you go my way, you have some control over the outcome'' he said.
While Democrats endorsed the Paulson's effort to stem a wave of foreclosures on adjustable-rate loans resetting higher, some conservatives blasted the administration for breaking its commitment to free markets.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aAsVymCNU7go&refer=us
Martin Feldstein, who served in Ronald Reagan's White House and currently heads the National Bureau of Economic Research in Cambridge, Massachusetts, said the deal may hurt foreign investment in U.S. securities.
``What are they going to think about investing in American securities in the future if the government can say, well, you thought these were the interest rates and the contract, but we're going to roll that back now and you'll just have to settle for less?,'' Feldstein said in an interview yesterday.
`Very Problematic'
``My biggest concern is that there are a lot of Americans who are making their mortgage payments, they are current, and the benefit won't go to them,'' Alabama Representative Spencer Bachus, the top Republican on the House Financial Services Committee, told reporters after meeting with Paulson yesterday. ``It's very problematic when the government starts dictating changes.''
Whitehouse online discussion with Paulson
http://www.whitehouse.gov/ask/question.html
Tell them what you think
Is this still America? The fed government just swoops in and rewrites the business terms in contracts between select private parties? Is this even Constitutional?
I'm starting to agree with other HPers that this will just accelerate the housing crash. only idiots will invest in US mortgage-backed securities now that the socialists can arbitrarily sh!t on investors.
QWEEFER,
You are wrong on this one amigo. You forget a very simple thing. 70% of people own. 30% rent. This helps everyone who owns, or at least is is perceived as helping everyone who owns.
Of the 30% who rents, 20% probably has no clue what is happening/ Actually they might even think it's a good thing since they will view this as helping some of their own, ie subprimers.
What you have left with is anger from people like HPers (me included). But we are such a small group, we will be virtually unheard.
I'm tired of fighting. I was convinced the stock markets would have melted. What did I get, a 10% correction. WOW.Bug fucking deal. Same with housing. Where I live prices have fallen at most 10%. And in the areas I want to buy, less than that.
This bailout is my buy signal for both a house and stocks. The game is rigged. It sucks, but I can't fight it.
So, what they are saying, there is one low low interest rate for irresponsible greedy retards, and the rest of can f%$k off.
Foul, just foul.
Of the 70% of people who own homes, only 25% are in the 18-34 age group, so yet again the greedy baby boomers are going to f@#k their children so they don't have to give up ANYTHING, and finally, for once live within their means.
I look forward to the day when the last boomer finally dies, and we get the planet back.
This plan is total bullshit.I guess we are going to socialize housing and make sure real estate prices always go up.This administration is the shitiest in history.They do not a have a f@cking clue.
“What to do?
1) Submit to your local paper's letter to the editor section
2) Contact your Congressman and Senator
3) Send a friendly little note to the White House”
Sorry, but these will do absolutely nothing. The White House/Congress will not back track with “hey on second thought, this is a bad idea”. The ball is rolling and it is what it is.
The only consolation is that these bail out programs are too little too late, and they will only help a handful of folks.
What can I do? I for one, just spent about 30 minutes on the phone between FHA and 955-HOPE. I told them I was a renter and in the process of obtaining an I/O, negative amortized, ARM, and wanted to be sure that it would meet all criteria for a bail out………they said the did not find that funny……I told them good, because I’m serious.
I plan to call three or four times a week. I figure if there on the phone with me for 30 minutes, that’s 30 minutes that they aren’t bailing out an FB.
From Money and Markets. Doomed I tell ya doomed:
Some of Wall Street's Largest Firms Have More
Level Three Assets Than They Have Capital
Specifically, according to data compiled by the Financial Times:
Merrill Lynch has $27.2 billion in level three assets, the equivalent of 70% of its stockholders' equity. In other words, for each $1 of its capital, Merrill has 70 cents in assets of questionable and uncertain value.
Goldman Sachs has $51 billion in level three assets, or 130% of its equity.
Bear Sterns has sunk its balance sheet even deeper into the level-three-asset hole, with $20.2 billion, 155% of its equity.
Lehman Brothers is in a similar situation — $34.7 billion, or 160% of its equity. And ...
Morgan Stanley tops them all with $88.2 billion in level three assets, or 250% of its capital. That's an unwieldy $2.50 cents in level three assets for each dollar of capital. It implies that, in the absence of new capital infusions, all it would take is a 40% loss — and Morgan Stanley's capital could be 100% wiped out.
Bottom line: The huge Wall Street write-downs you've heard about to date — among the largest in history — could be just the tip of the iceberg.
all very good points. loanowners should be invesstigated for mortgage fraud if they lied on their applics tho!
Let these loans reset, I'm looking
for bargain.
TPTB should just declare an END OF MONEY period! From here on out, everything is FREE! Anyone is now entitled to anything that they want. Go into a store, an auto showroom, a model home...if you want it, you got it--it won't cost you a dime. Issue everybody a credit card with an unlimited credit line, but it won't ever send you a bill. (Didn't some futuristic movies and TV shows talk about the future where money is not needed nor used??? Now is the time!)
If/when they finalize this retarded bailout I on principle will not buy a home. I don't care if the perfect home shows up at 30% off. F&%K them!
BOYCOTT REAL ESTATE
MORATORIUM ON PURCHASING
STRIKE BACK
While I don't like the idea of helping speculators, I don't have a problem with the Gov't negotiating (not legislating or forcing) with private business to give some relief to borrowers. I haven't seen all the details, but I'm pretty sure this will only apply to owner occupied residences (you only get one) and for people that are current, so you may be helping people that made dumb mistakes but your not helping the idiot who bought 9 condos w/ no money down in a building that wasn't finished.
And to the person in the article that is mad about the Gov't stopping (maybe) the fall of housing prices, waiting was a risk, it always is, nothing is guaranteed, except death and taxes.
Good comparison to Terry Schiavo.
That was an incident that appalled the majority of the population and showed how truly out of touch Congress was.
The pols thought it would appeal to their supporters, but even evangelicals were lukewarm.
The tough thing here is how sentiment runs in Ohio and Florida. This is the only thing the politicians care about next year.
Good post at liberty papers
http://tinyurl.com/ywf65q
George W. Bush Channels Richard Nixon
Back in the 1970s, Richard Nixon decided to solve the inflation crisis by arbitrarily freezing wages and prices. Today, President Bush will announce a plan to address the subprime mortgage crisis that pretty much does the same thing with interest rates:
This is a bad idea on so many levels it’s hard to know where to begin. As I’ve noted before, a large share of the blame for the what’s happened in the subprime mortgage field specifically, and real estate in general, can be narrowed down to two things. First, for far too long Americans believed not only that housing prices would continue to rise, but that they would continue to rise at the rates that, in retrospect, were clearly historical aberrations. Second, and partially because of the irrational exuberance in the housing market, individual homeowners were purchasing homes they couldn’t afford and entering into loan transactions that, frankly, were unwise. When the housing bubble popped, it’s no surprise at all that people who were living on the edge to begin with starting falling into default and, eventually, foreclosure. Now that the economic chickens have come home to roost, Bush wants to re-write the rules.
"the 99% of Americans who did not commit mortgage fraud, who did not "buy" a home they couldn't afford, and who did think "
Is this your stance now? That 99% of Americans made well thought out mortgage decisions and are not in houses they can not afford? Because it sure seems like you imply that the "average Joe" is in big trouble with their home/mortgage when you are making your economic armageddon predictions.
I think all the nay-sayers are way over reacting. This is just a political stunt that will have very little real impact on the number of forclosures or on the rate of falling home prices. Very few will qualify for this and many who do will default before they are able to jump through the required hoops to get a rate freeze. Many will also default anyway even with a frozen rate.
All that is needed is a few bullets...
99% is likely generous. 90%?
If 10 million Americans committed mortgage fraud these past few years, that'd be 10/300 or 3.3%
So maybe the sentence should have read "the 96.7% of Americans..."
Note that in 2006, about 6 million used homes were bought, and less than 1 million new homes. Not every buyer committed fraud. But enough sure did to cause the mess we're in now
Many thanks to all you hard working tax-paying suck.. .er, I mean citizens, who are going to help me meet my crushing mortgage payments. Also thank you for the free-schooling for my kids, the free-medical care, the food coupons and my under the table cash job.
Is this a great country or what?
Meanwhile the work-obsessed mooks on this site, brain-washed by inane Puritan 16th century idealogy and corporate propaganda, are angsting over retirement, 401ks, able to buy some POS stucco box, the falling dollar and inflation.Instead of wasting time and energy into trying to become part of a system that won't allow over 95% of Americans to join, figure out a way to live OFF the system and shed all you petty middle-class petty bourgeios
aspirations.
The America of the 1950s and 1960s is finished.Wake up, get over it and figure out a scam to survive and thrive...its the American way.
God Bless President Bush and the Republicans for saving my home.
Bush, Bush ! 4 more years!
PS. Fook moral hazard, the weak dollar and the health of Social Security....that's for taxpayers.
ok, so some percentage of the people will be locked into a grossly inflated home price at a lower percentage. What I've come to realize is that these people might not be fortunate, but instead will be TRAPPED. They will be saddled with a $400000 loan for a $200000 property. They will still be paying more for their mortgage then we will for rent. What this freeze does is create a unknown number of debt slaves who will never buy a house again.
"It sucks, but I can't fight it."
What is the saying? It is better to die standing up on your own two feet than living life on your knees.
How's that cock taste?
I agree with Mr. Bill. This is a political stunt with no real effect except international loss in the faith of currency causing more real inflation.
I wrote a letter to the whitehouse, Treasury Dept, both my Senators and my Congressman.
I doubt anyone will actually read the letters, but at least I tried.
The actions of the president talk louder than words.
1) SPEND
2) DONT SAVE
3) HANG ON, I'm ALMOST OUTTA HERE.
Now look at this mornings Wall St Journal. They cover the bailout with a Hillary interview. I guess Keith is right, now that the free market party is over, the bankers all scurry for the liberal teet.
Just remember, if Hitlery were prez, she would freeze all loans and stop foreclosures. Jorge W. Arbusto is not going quite that far.
As bad as this bailout is, it could have been (and may yet still be) much worse with Hitlery dicating the terms.
Reps are awful. Dems are awfuller.
Anonymous said...
Of the 70% of people who own homes, only 25% are in the 18-34 age group, so yet again the greedy baby boomers are going to f@#k their children so they don't have to give up ANYTHING, and finally, for once live within their means.
-----------------------------------
I think this Anon is confused. The 18-34 age group is the subprime one that is being bailed out.
OK, but this isn't first or certainly the last bubble of this magnitude to hit Western society. Look at the Dutch tulip bulb frenzy and the South Sea bubble.
This has all happened before. Heck, it took Britain about a century to get back on its feet after the South Sea bubble.
I don't see what's so different about this time. The imminent demise of civilization? That's happened before, too, though it was a good millennium to get over the last one.
"but I'm pretty sure this will only apply to owner occupied residences (you only get one)"
Hey, assclown, what do you want to bet that I am currently renting an "owner occupied" townhouse? Were just you born a complete moron or did you have to work hard to become one?
"Second, and partially because of the irrational exuberance in the housing market, individual homeowners were purchasing homes they couldn’t afford and entering into loan transactions that, frankly, were unwise."
A point that is often overlooked is the banks- how could they stand behind the assessments they were getting and loan out money based on the price increases- did this not raise fu*king eyebrows?
So, will illegals get the reduced rates too?
Cause and effect. Normally in a free market adjustment scenario, available inventory is removed from the market by foreclosures and distressed sale.
Stop the foreclosures and you now have a compound increase of inventory; this creates excess supply that can’t be absorbed.
While many have posted that, in the end, this bailout won't work, it's not whether it works, just that they are actually trying to do it.
I AM SO PISSED OFF ABOUT THIS I AM REELING!!!!
MY 30 YEAR FIXED IS 7% ANDI HAD TO YELL AT THE MORTGAGE BROKER SALES WEASEL TO GET IT. I SHOULD HAVE TAKEN THE ARM. HE WOULD HAVE GOTTEN HIS BONUS AND MY 'ON TIME' PAYMENTS WOULD HAVE BEEN UN-PEGGED FROM THE FREE MARKET AND 1/3 OF WHAT THEY ARE NOW!!!!!!!!
Did I spell reeling right??
BUCK FUSH
:::rant off:::
I look forward to the day when the last boomer finally dies, and we get the planet back.
------------------
Yea, well you will be really old by the, the youngest boomers are only in their 40's.
all of casey serin's homes were "owner occupied".
The stupid DemoRat jagoffs are pushing this mess along. Save Our Homes crap from the bleeding brain morons.
It's interesting to note that according to the latest Bloomberg/Los Angeles Times survey, "Almost six in 10 poll respondents say lenders should be required to freeze interest rates to subprime borrowers who can't make higher monthly payments."
Anonymous said...
QWEEFER,
You are wrong on this one amigo. You forget a very simple thing. 70% of people own
Yes, that is true, but, 99 percent of those owners will get no help because they are responsible people who pay their mortgage on a house they can afford. If I was an owner I'd be more pissed then I am now as a renter. My guess is that most owners will be pissed. we'll see. Anything can happen. Just look at Paulson, an icon of capitalism is now a socialist, the democrats are backing the Bush plan, dogs are sleeping with cats and I just saw a pig fly by. Maybe this will help Ron Paul who is beginning to look like the only voice of real change.
Wow, I would have to say 95% of the comments at the Washington Post are against any bailout.
How about if you're a borrower with a FIXED mortgage, call your lender and say you want your interest rate dropped to be on par with the teaser rates that are getting frozen for the next 5 years.
Even CNBC is admitting that by the time the details of this bailout plan are pinned down, hardly anyone will actually "qualify" for the rate freeze. And I think the squawking from everyone else who doesn't qualify will overwhelm this stupidity.
Dubya Shrub + Penis Shooter = "Little Boy" + "Fat Man" !!!
I hope all of you knuckle head out there that had voted for (Little Boy + Fat Man) two terms in a row realize that you just fook this Americano nation up the kazoo. What a pair of comedian idiots. And you wonder why the rest of the world look at the Americano's soap opera and says: "Man, Dude, these people look and act like PIGS out there...".
I repeat: The Americano is as toasted as a snapper turtle skewered on a stick from mouth all the way down the kazoo all sizzling, dripping juices from its fat, obese, diabetic carcass grilled over and over a bed of white hot charcoal.
Americano = Grilled Snapper Turtle !!!
I don't think we have worry about this bailout plan. It is not the 2% teaser adjusting higher that they are targeting. The example some articles present are ARMs that had a teaser of 7 to 8% and are adjusting higher! I don't think any lender will voluntarily keep a 2% teaser at 2%.
Someone wondered how banks could lend money for clearly over stated valuations; I believe they did it because they weren't going to hold the mtg., they were going sell it to someone else.
Every night on the evening news they talk about the housing crash and how NO ONE benefits from seeing prices collapse...blah, blah, blah.
I have seen only ONE reference to real long term affordablity and the benefit to future generations of buyers.
So now, unless you are a doctor/ lawyer/ CEO, your wife must work. America has just hastened it's crawl toward a quasi-European death. Most of my friends in their late 20s/ early 30s now consider having kids a luxury they cannot afford.
Better bring in more illegals with high school degrees to support Social Security and Medicare. Oh, wait, for years I have heard that high school graduates take out more than they put into the system.
Bottom line. American is toast. The writing is on the wall. We refuse to pay the piper so we will just fade away.
So, what they are saying, there is one low low interest rate for irresponsible greedy retards, and the rest of can f%$k off.
--------------------------------
No, I don't think any lender will voluntarily freeze a 2% teaser. BUT, I think lenders would be willing to freeze a 7 or 8% teaser. At 2% I don't think the equation of "loss due to foreclosing" vs "loss due to accepting a below market interest rate" pencils out in favor of freezing the 2% rate. At 7 or 8 percent i think it pencils out in favor of freezing.
Hey, assclown, what do you want to bet that I am currently renting an "owner occupied" townhouse? Were just you born a complete moron or did you have to work hard to become one?
------------------------------
dude, calm down. when these f'd speculators go to apply for a rate freeze the lender will run a credit check and see that they have several mortgages out then they will start asking questions. Lenders are not going to just give these rate freezes away.
The government is making a grave error that will have dire consequences in the future. They are prolonging an inevitable housing correction that absolutely MUST HAPPEN. The longer it is prolonged, the more painful it will be.
This horrible decision will have grave and far-reaching economic consequences for the United States, in ways the proponents of this have not imagined. Woe unto those politicians who have allowed this to happen.
A point that is often overlooked is the banks- how could they stand behind the assessments they were getting and loan out money based on the price increases- did this not raise fu*king eyebrows?
----------------------------------
it was the bubble distortion along with the pressure to meet share holders earnings expectations. Once a few lenders start loosening lending standards then other lenders have to follow suit or else explain to their share holders why their earnings/revenue is not keeping pace with the rest of the industry.
PIMCO blasts Bush Gov't.:
http://www.cnbc.com/id/22128632
Moody says 30% decline, Northest a 5% to 15% decline.
http://www.cnbc.com/id/22125224
"Instead of wasting time and energy into trying to become part of a system that won't allow over 95% of Americans to join, figure out a way to live OFF the system and shed all you petty middle-class petty bourgeios
aspirations."
EXACTLY. This is why I mostly-retired at 40...not because I have enough money to sustain me for the rest of my life, but because if I DO save that much, it will be stolen. The grasshoppers will vote it right out of my pocket.
In the year since I opted out I've managed to live on about 20k...in one of the most expensive parts of California Working a couple days a week as an engineer covers it, with a bit left over for saving.
Poverty can be pretty comfy, if you are smart about it. I think the squalor generally associated with poverty comes from the same kind of poor decision making that gets people into poverty in the first place...things like having nine kids and a crack habit.
I haven't even looked into getting government handouts yet...the whole idea is distasteful and dealing with government drones is annoying. You can bet I'll be all over it when I need some medical care though.
It's actually kind of a relief...for 20 years I was working 50-70 hours per week...thinking I was making the big bucks. Then I tried to buy a house, right in the middle of this mess. It really opened my eyes.
Gonna go out and pick guitar in the back yard now...then maybe a bicycle ride, a workout and my afternoon nap. I'm getting quite buff with all this spare time to excersize. The Mexicans have a mythological figure named "Sancho" that comes around and plooks your wife when you are at work. Maybe I will become "The White Sancho" :)
vote against this stupidity at cnbc
http://www.cnbc.com/id/22117618/site/14081545/
Coalition for Integrity and Personal Responsibility (CIPR).
I saved the below listed comment from one of the posters in foresight of what is happening now related to the potential unjust bailouts and for the true passion of the message. So how 'bout it, perhaps it is time to organize - all honest, responsible, hard working citizens and individuals from all walks of life and political affiliations, who would not get involved in this exotic and toxic mix of loan scams just to get into an artificially overpriced residence, did not contribute to the credit fiasco or housing foreclosures through speculation or unscrupulous actions, and are against free market interventions at their expense.
Paul E. Math said...
"We're not the ones making all the noise." Well maybe we should be.
Blogging away in the anonymous ether is only going to get us so far. It's time to take this to the streets. It's time for our voices to be heard.
We need to organize and we need to get active. We need to be the ones marching on state-houses and congress, wearing matching t-shirts and carrying placards instead of those stupid home-debtors.
We hold the truth - we will not be heard unless we shout. It is time to shout as loud as we can.
October 17, 2007 12:54 PM
There is clearly WAY too much emotion on this blog.
Folks, settle down. People are irate in regards to Paulson's plan because they assume he will somehow be able to "solve" this housing bubble and prevent a return to normalcy with home prices.
Folks, his plan will have no effect, and I mean NO EFFECT on the deflation of the housing bubble. It is nothing more than political grandstanding. Give the people the impression that the government is taking action. (Think FEMA)
But consider what the actual effects of this plan will be.
Now that lending institutions are being coerced (or forced) to freeze the mortgage rates of a select few, how do you think this will play out for the broader derivatives market?
Consider you are an institution who has several CDOs and various mortgage backed securities on your balance sheets. Many of these securitized debts were contractually obligated to provide some broader rate of return to their bond and/or share holders.
So now, you are facing the prospect of not being able to meet your obligations to your bond holders (or shareholders) for a specific rate of return on the mortgage backed assets. (This is where the lawyers are coming in)
How will this need to play out? LIBOR rates will need to go UP. For every mortgage rate that you "freeze", a corresponding new mortgage (or existing ARM) will need to adjust higher than would otherwise have occurred.
Now we certainly hear the trolls cackling over this bailout plan. But in actuality, the end result will be the same, if not worse.
The major problem we are facing right now is a liquidity crisis. Will this plan fix that? No. In fact, it will exacerbate it. In order to compensate for reduced rates of return, lenders and banks will need to increase interest rates for new and existing ARM holders to compensate. Concurrently, because actions like this make it more difficult for them to sell off their securitized debt. (Would you buy an asset that could end up having its rate of return dictated by the government on a whim?)
So in essence, Bush and his merry band of idiots are now actually reducing the likelihood of increased liquidity. New home buyers will now have to contend with higher rates and higher down payment requirements. So they will sit on the sidelines. Those individuals outside of the bailout plan's scope will end up being foreclosed upon anyway.
But the real reckoning will occur next year and the year after. (2008 and 2009)
That is when the realization that this bubble exists far beyond subprime will finally sink in as individuals in the Alt-A and prime categories begin to default. And I would love to see a bailout plan being ratified so Mr. 6 figure Silicon Valley salary guy can keep his house.
My business partner bought a house four years ago and is pretty upset by this story. She thinks its so unfair that she made certain she bought a house that fit their budget on a fixed rate mortgage, when if she had been irresponsible and taken the 0% teaser, she could have gotten so much more AND a bailout.
I'm ticked because I've been waiting to buy at a realistic price, saving money. So now we know that artificially high prices are going to be maintained by a combination of rewarding idiots and causing inflation. In the mean time, if I manage to keep my bankroll expanding with inflation, I'll pay taxes on the increase.
I used to be skeptical about Ron Paul. Now I can't wait for TeaParty. It'd be nice to have a government that 1) didn't give bonuses to the stupid, and 2) allowed the prudent to reap their just rewards.
Think about what's really happening here.
This bail out means that every intelligent, fiscally responsible person who recently financed a home purchase with a down payment and a traditional fixed rate mortgage is being screwed! Anyone who delayed buying into the insanely overpriced bubble housing market is also being screwed!
This is a reward for housing speculators, wannabe "flippers", brain dead debt whores who claim they didn't know their "adjustable rate" mortgages might some day "adjust" and, of course, the banks who don't want to repo houses that can't be re-sold for anything close to value of the loans.
And don't believe the crap about this scam not raising taxes. If the dollar is further debased (and it most certainly will be!) then everyone who has savings or investments in US dollars along with everyone who is paid wages or pensions in dollars is being cheated.
If we really have a society based on equal rights, every citizen should be able to get their share of the hand outs.
I WANT MY FREEBIES TOO !!!
brokersleaveyoubroke said...
Anonymous said...
QWEEFER,
You are wrong on this one amigo. You forget a very simple thing. 70% of people own
Yes, that is true, but, 99 percent of those owners will get no help because they are responsible people who pay their mortgage on a house they can afford.
--
HUH? If 99% of homeowners were responsible you wouldn't have millions of foreclosure happening.
Try more like 25% are responsible.
Remember that the government has no authority to force a lender to do anything.
Lenders won't be freezing rates at 0-3%, but they will consider freezing them at 6-8%. Some of these crazy ARMs had teasers that high, then they reset to double digits.
Folks, none of these homeowners are getting filthy rich off of this deal, but if someone gets to keep their house for 3-5 more years, that gives them the time to work something out that may enable them to keep it.
Plus, if the rate is frozen, the lender is happy that the loan isn't going to default, and the homeowner is happy that they aren't going to foreclose, forcing more inventory onto an overly saturated market.
So again, the government isn't changing rates on a whim, they are simply providing a conduit for the banks and consumers to work something out that is in the best interest of both parties. If it's not in the best interest of the bank to freeze the rate will they? No, they'll foreclose on the sucker and call it a day.
The only people who are truly up a creek are those who can't afford the teaser rates, those who cannot afford 6-8% interest rates, and those who CAN afford their resets, as the LIBOR will be rising as a means of hitting the higher promised payout.
In the end, it's going to come down to what makes more sense for the bank, to foreclose or freeze.
So now, unless you are a doctor/ lawyer/ CEO, your wife must work.
-----------------------------------
This is one of the great myths of our time. You only need the extra income if you want to buy things that you can't buy with one income. Those in the "marketing" profession will try to convince you that these "wants" are "needs". RE agents are of course in the marketing profession.
Renting is very affordable, and affordable home prices will eventually be back. As a kid I moved three times between rentals before my parents finally could afford to buy. I seriously can not remember it making any difference to me whether or not my parents were owning or renting, or how long we stayed in a rental house.
Don't get suckered into the scam. If you think a parent at home with your kids is more important than becoming a homedebtor then just do it, rent.
"Hillary Rodham Clinton and John Edwards ... put forward their own plans that would not only freeze mortgage payments but also declare moratoriums on further foreclosures for a period of time"
So,
Moratoriums on foreclosures. Yeah, that would make things all better. Mortgage victims can just stop making payments, live in their 'homes' for free, and when the moratorium is up, a huge wave of foreclosures will hit all at once. Great plan, well thought out.
I heard a while back that Hillary is the smartest woman in America. I think I need to get my hearing checked.
OK so correct me if I am wrong here:
The plan is voluntary.
It allows lenders to decide whether or not to freeze rates.
Lenders nor borrowers will get any tax dollars.
So exactly what is the plan? Lenders could do the same thing on their own sans plan.
I gotta give Jorge W. Arbusto credit. He hoodwinked the public into thinking he was "doing something" and stole the thunder from Hitlery. As a political move, well done Senor Bush.
anon said ...
"I look forward to the day when the last boomer finally dies, and we get the planet back."
Yikes.
Sweetcakes, you are seriously deluded. Yes, it's comforting to blame someone else for your dissatisfaction with life. It's called denial.
Blame someone else, keep waiting for the universe to align just right so you can remain a happy little toddler and have all the toys.
Newsflash! Bay Boomers are just PEOPLE! Same as their parents, same as you, same as anyone else. They didn't invent the Feudal/Serf system. They inherited it, same as you. Duh.
And a LOT of them aren't even rich! Yes, it's true! Amazing isn't it, the Truth. It's a whole big world outside your own pouty little playpen of a universe. You might grow up one day and actually see it! Or not.
newamerican -- Excellent post!
If we'd all tell the Mozillos of the world that we aren't borrowing their funny money and paying their freight any more, we could change the world.
But in reality, most want to BE the Mozillos, or become as much like them as possible. We've become a nation of baby capitalists with our precious self-esteem and our sense of entitlement. 'Wanting' is what we are about. We want what our friends have, and we want what we see advertized, and we want what our parents have. We want our cell phone, iPod, clothes, ride, even our spouses and children to advertize to the world how special we are. We are addicted to ourselves.
This nation suffers not only from an excess of narcissistic magical-thinking, but from a fatal dearth of imagination. We grow up wanting to play the mass-market corporate game -- get a job, buy this, buy that, whatever everyone else wants, we line up like lemmings to buy it.
THAT is the tragedy of this nation. Liar loans, maxed-out credit cards, that's all just the result of a nation that has 'wanting' as it's primary goal.
Post a Comment