Deborah Solomon, Wall Street Journal reporter, discusses the new Treasury Department plan to push down interest rates on long-term mortgages to jump start the housing market.
Voter from Brooklyn, thanks for your posts...they make sense. My house was affordable, 290K, not a lot of money by most standards on L.I. What happened was everything else went up taxes, LIRR, MTA, Utilities, gas, food. So I was not in a house I could not afford, it was not even over priced, it eventually became unaffordable for me. You gave good insight and beleive me I appreciate a good argument. I am not looking for pity or a hand out, just venting. Enjoy your weekend.
#28/Diane, I’m not bitter. What I am is angry. Angry that Americans have been sold a bill of goods that list their shelter from the elements and location for sheltering, neutering, and protecting their young as an investment vehicle. Your statement that “housing is the biggest investment” is propaganda. If you have a car, is that an investment or transportation? If you have a coat, is that clothing or an investment? If you are married, is your wedding band and engagement ring tokens of the bond between you and the love of your life, or investments? Do you see my point? It sounds like your version of the “American Dream” is for Americans to live beyond their means in debt to creditors hoping they will make a buck or two in the end. Congratulations on getting as far as you have and staying strong and continuing to work hard, I really don’t blame you. I just have problems with the speculator and investor mentalities. This is how people get hurt.
I have a question #20/#26 (Diane) Why didn't you use that 100k down payment of yours to buy a 100k house? you would now own it outright. It sounds like you simply bought more than you could afford. I don't want to make you out to be a bad person or anything, but how is this anyone's fault but yours? (Truth be told, I don't hold you solely responsible... politicians did nothing during this rampant speculation and investing and banks lent on housing as investments instead of shelter.)
To voter #23, you do sound bitter, so sad. FYI I don't live in a big box, I worked very hard for what I have and I did without for a very long time. I came up from nothing, my family was always on welfare. You need to check yourself. And by the way housing is the single biggest investment for most hardworking Americans. That's the "American Dream" and I have faith that it will all turn around, in the meantime I am making strong efforts to turn my situation around.
To g g from NYC, I like that idea. Why do the people of this country have to sacrifice everything to help out corporate America, let the banks waive interest for 2 years, a year, 2 months whatever. When I tried to ask my bank to at least let me "skip" a month or two so I could catch up, they were not open to this idea AT ALL. They could have added it to the end of my term. That alone would have helped me stay in my home. Instead I moved out, rented my home, sold pretty much all of my furniture and belongings and live in a small apt with a friend. I am not complaining, just venting...and I am just trying to hold on till the "wave" picks up again and I can sell the place.
A person who is concerned that the short term value of their home is less than they paid, and that they are therefore not getting value for their investment is a speculator or investor. Speculators should not be bailed out. Perhaps people should by a home as a long term investment, or better still to live in and raise families like our parents and grandparents did. Most people looking for a mortgage bailout would make money anyway in the long term if they just hold on to their homes.
If they prop up the housing prices it will be the greatest broad daylight robbery. The rich want the prices to be propped so that their investments will not loose money. Just think of it. You prop the price of a house, it leads to making sure the Mortgage Backed securities to be valued at the prices they have on them thereby helping only the rich maintain their rackets. THIS IS SO wrong and yet it is made to look like it helps the Home owner.
#20, Diane… you don’t get one nor do you deserve one. Maybe you should have been a little wiser and not bought at the top of the market. OR maybe you should have bought realizing that big box you live in is the roof over your head and not the golden goose that will pay for your new kitchen, your kids college, next year’s vacation, and this year’s Christmas. Sorry to sound so brutal, but if you bought this building as anything more than the thing keeping the rain off your skull, you were a fool. HOUSES ARE NOT INVESTMENTS!
... I have 2 loans one is a fixed rate at 8.9% and the second which is the principal is variable and it is at 10.7 and raising... this is the second time that is going up.. I have been paying on time, etc.. never defaulting however this time we wil be forced to default.. is going up about 600 dolars... last year went up more than 1,000 dolars... I,m with a company called Wilshire... no negotiations are accepted, no loan modification, bank are just not lending... It seems to me that everyone wants you to default.. any suggestions as to what to do?
I planned on taking some equity out of my house to pay my children's school loans...now there is no equity and I put $100K down on my house. Sooooooo, in order for me to make the payments on my house, pay my children's school loans I moved out of my house and rented it. I still must subsidize the rent each month to the tune of $500, sooooooo I got a second job. I am not in foreclosure, I work a full and part-time job and am still struggling, where's my bailout?
Let's only allow Americans to deposit in American banks and only allow them to buy American cars. It would then be impossible to buy a Jap or Kor car. Just like it is in those countries to buy an American car.
House’s are still way over valued. Especially in places where prices have rose 300% or more in just a few years. Prices still have to go way down to actual real prices that houses are worth. Sorry to existing owners but your property value is not worth what it is worth because all house prices have to come down. Otherwise, prices will just go up and only the rich will be able to afford them.
So… your guest thinks people being upside down on their mortgage means they can’t afford the house anymore? WHAT???? A car is worth a heck of a lot less the moment you drive it off the lot than what you’re paying on it. Is that a reason for someone to default on their car note? I wonder if renters could make this same argument the moment they find something a little cheaper. A house is not an ATM and this woman has no idea what she’s talking about.
Maybe the government can own all the banks and all the car companies and then they could also pay everyone who works there and give them government health insurance, the same plan that Congress has. Oh, wait.
Having prices artificially propped up by gov't interference does not help everybody! It hurts the people that were responsible and did not buy into a over inflated housing market. What's amazing to me is a year ago everyone was complaining that housing costs were so high nobody could afford them. Well that was proven true!!!! Let the market work otherwise the cycle will never be broken. Boom, Bust over and over.
What, if anything, would the government do for people who can hardly afford rent, and can certainly not afford a mortgage? There is a huge problem with affordable housing for people (especially in NYC) who make a decent non-six-figure wage, but still live from paycheck to paycheck.
If the gvt sells treasuries at 3% and banks sell loans at 4.5%, then there's only 1.5% profit available to be made.
1)How much of that 1.5% does the bank get?
2)Is the remaining % large enough to guard against the risk of default inherent in all loans?
With rates this low, borrowers are MUCH more likely to stay on for the duration of the loan, so the long term risk of default is probably higher. If the US takes all of that risk, 1.5% doesn't seem like enough to cover it.
How to put a floor on housing prices. This is unfair and against all the laws of economics. Speculation raised prices of houses. Just pure and simple racketeering. Let the price of houses be 70% less than peak prices and we will have real price. People have to accept the loss of value, banks have to accept the loss, those who speculated should also take the loss. This is a function of greed and let it play out. If tomorrow prices depreciated by 70% then we will have reality. If it happens slowly then it maybe worse.
This proposal makes the same mistake that got us in the problem in the first place. It separates risk from reward. Unless the bank earning the reward faces some risk (like having to buy back the bad mortgage) there is no possible way of preventing them passing through bad loans in order to earn more fees.
Why is the government messing around in the markets again - specifically in the market (real estate) where their original intrusions were to make money cheap and push for unqualified people to get mortgages are what are caused this craziness in the first place.
Also, housing will find its value. Who sets prices? The person who buys the house determinse what it is worth to him or her - not some economist or the government. Value changes, and it might be painful, but propping it up will only make it worse when that crutch doesn't hold things up anymore.
Let's remove all artificial "financial tools" including bailouts and interest manipulation and then we won't have to make belive anymore that we're in a true market economy rather than a pseudo socialism.
I just locked a 5.5% rate and thought *that* was great. The very next day, they announced this 4.5% plan. We were scared to buy because our savings fell about 40% since October. But we are just trying to keep things moving in spite of the economy.
Why is this a good idea? The government is trading treasuries for the risk of owning American homeowner debt. That risk has a price. If banks got into trouble by incorrectly pricing their lending risk, why is it OK for the government to do so by pricing below-market interest rates?
I'd rather buy a $400K home for $400K than buy a $400K home for $800K with a slightly reduced -- maybe -- interest rate!
We have been waiting for the market to sort this mess out since 2005. Each taxpayer dollar that interferes with the market delays our investment in a home. Right now renting is the way to go for the smart money.
I listen to all these government investments and I think of Argentina - I think we are being brought to our knees and the evil geniuses of the world are just waiting to devalue the dollar and take it from there.
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Comments [33]
I hope all works out for you Diane. Have a good weekend.
Voter from Brooklyn, thanks for your posts...they make sense. My house was affordable, 290K, not a lot of money by most standards on L.I. What happened was everything else went up taxes, LIRR, MTA, Utilities, gas, food. So I was not in a house I could not afford, it was not even over priced, it eventually became unaffordable for me. You gave good insight and beleive me I appreciate a good argument. I am not looking for pity or a hand out, just venting. Enjoy your weekend.
Hmmn just reread my own post.... nurture your kids, don't neuter them... (and watch out how spellcheck fixes your typos)
#28/Diane,
I’m not bitter. What I am is angry. Angry that Americans have been sold a bill of goods that list their shelter from the elements and location for sheltering, neutering, and protecting their young as an investment vehicle. Your statement that “housing is the biggest investment” is propaganda. If you have a car, is that an investment or transportation? If you have a coat, is that clothing or an investment? If you are married, is your wedding band and engagement ring tokens of the bond between you and the love of your life, or investments? Do you see my point?
It sounds like your version of the “American Dream” is for Americans to live beyond their means in debt to creditors hoping they will make a buck or two in the end.
Congratulations on getting as far as you have and staying strong and continuing to work hard, I really don’t blame you. I just have problems with the speculator and investor mentalities. This is how people get hurt.
I have a question #20/#26 (Diane) Why didn't you use that 100k down payment of yours to buy a 100k house? you would now own it outright. It sounds like you simply bought more than you could afford. I don't want to make you out to be a bad person or anything, but how is this anyone's fault but yours? (Truth be told, I don't hold you solely responsible... politicians did nothing during this rampant speculation and investing and banks lent on housing as investments instead of shelter.)
To voter #23, you do sound bitter, so sad. FYI I don't live in a big box, I worked very hard for what I have and I did without for a very long time. I came up from nothing, my family was always on welfare. You need to check yourself. And by the way housing is the single biggest investment for most hardworking Americans. That's the "American Dream" and I have faith that it will all turn around, in the meantime I am making strong efforts to turn my situation around.
Thank you #25 (Thomas Malloy). You are 100% correct!
To g g from NYC, I like that idea. Why do the people of this country have to sacrifice everything to help out corporate America, let the banks waive interest for 2 years, a year, 2 months whatever. When I tried to ask my bank to at least let me "skip" a month or two so I could catch up, they were not open to this idea AT ALL. They could have added it to the end of my term. That alone would have helped me stay in my home. Instead I moved out, rented my home, sold pretty much all of my furniture and belongings and live in a small apt with a friend. I am not complaining, just venting...and I am just trying to hold on till the "wave" picks up again and I can sell the place.
A person who is concerned that the short term value of their home is less than they paid, and that they are therefore not getting value for their investment is a speculator or investor.
Speculators should not be bailed out. Perhaps people should by a home as a long term investment, or better still to live in and raise families like our parents and grandparents did. Most people looking for a mortgage bailout would make money anyway in the long term if they just hold on to their homes.
If they prop up the housing prices it will be the greatest broad daylight robbery.
The rich want the prices to be propped so that their investments will not loose money. Just think of it. You prop the price of a house, it leads to making sure the Mortgage Backed securities to be valued at the prices they have on them thereby helping only the rich maintain their rackets.
THIS IS SO wrong and yet it is made to look like it helps the Home owner.
#20, Diane… you don’t get one nor do you deserve one. Maybe you should have been a little wiser and not bought at the top of the market. OR maybe you should have bought realizing that big box you live in is the roof over your head and not the golden goose that will pay for your new kitchen, your kids college, next year’s vacation, and this year’s Christmas. Sorry to sound so brutal, but if you bought this building as anything more than the thing keeping the rain off your skull, you were a fool. HOUSES ARE NOT INVESTMENTS!
... I have 2 loans one is a fixed rate at 8.9% and the second which is the principal is variable and it is at 10.7 and raising... this is the second time that is going up.. I have been paying on time, etc.. never defaulting however this time we wil be forced to default.. is going up about 600 dolars... last year went up more than 1,000 dolars... I,m with a company called Wilshire... no negotiations are accepted, no loan modification, bank are just not lending... It seems to me that everyone wants you to default.. any suggestions as to what to do?
think Gordon Brown,
just a day ago he proposed suspending the interest portion of mortgage payments for the next 2 years,
why is this country ALWAYS incapable of moving to do anything positive for it's citizens....
I planned on taking some equity out of my house to pay my children's school loans...now there is no equity and I put $100K down on my house. Sooooooo, in order for me to make the payments on my house, pay my children's school loans I moved out of my house and rented it. I still must subsidize the rent each month to the tune of $500, sooooooo I got a second job. I am not in foreclosure, I work a full and part-time job and am still struggling, where's my bailout?
Let's only allow Americans to deposit in American banks and only allow them to buy American cars. It would then be impossible to buy a Jap or Kor car. Just like it is in those countries to buy an American car.
Sorry,
House’s are still way over valued. Especially in places where prices have rose 300% or more in just a few years. Prices still have to go way down to actual real prices that houses are worth. Sorry to existing owners but your property value is not worth what it is worth because all house prices have to come down. Otherwise, prices will just go up and only the rich will be able to afford them.
So… your guest thinks people being upside down on their mortgage means they can’t afford the house anymore? WHAT???? A car is worth a heck of a lot less the moment you drive it off the lot than what you’re paying on it. Is that a reason for someone to default on their car note? I wonder if renters could make this same argument the moment they find something a little cheaper. A house is not an ATM and this woman has no idea what she’s talking about.
Maybe the government can own all the banks and all the car companies and then they could also pay everyone who works there and give them government health insurance, the same plan that Congress has. Oh, wait.
Having prices artificially propped up by gov't interference does not help everybody! It hurts the people that were responsible and did not buy into a over inflated housing market. What's amazing to me is a year ago everyone was complaining that housing costs were so high nobody could afford them. Well that was proven true!!!! Let the market work otherwise the cycle will never be broken. Boom, Bust over and over.
Not popular but I believe Bush correctly identified the solution to this problem several years ago but wasn't able to politically get it approved.
OPEN THE BORDERS
If Americans really want to "sacrifice" -- sell millions of cars, fill up those empty houses: LOOK SOUTH.
What, if anything, would the government do for people who can hardly afford rent, and can certainly not afford a mortgage? There is a huge problem with affordable housing for people (especially in NYC) who make a decent non-six-figure wage, but still live from paycheck to paycheck.
who stole all the capital from the US economy?
If the gvt sells treasuries at 3% and banks sell loans at 4.5%, then there's only 1.5% profit available to be made.
1)How much of that 1.5% does the bank get?
2)Is the remaining % large enough to guard against the risk of default inherent in all loans?
With rates this low, borrowers are MUCH more likely to stay on for the duration of the loan, so the long term risk of default is probably higher. If the US takes all of that risk, 1.5% doesn't seem like enough to cover it.
How to put a floor on housing prices. This is unfair and against all the laws of economics.
Speculation raised prices of houses. Just pure and simple racketeering.
Let the price of houses be 70% less than peak prices and we will have real price. People have to accept the loss of value, banks have to accept the loss, those who speculated should also take the loss.
This is a function of greed and let it play out.
If tomorrow prices depreciated by 70% then we will have reality. If it happens slowly then it maybe worse.
This proposal makes the same mistake that got us in the problem in the first place. It separates risk from reward. Unless the bank earning the reward faces some risk (like having to buy back the bad mortgage) there is no possible way of preventing them passing through bad loans in order to earn more fees.
Why is the government messing around in the markets again - specifically in the market (real estate) where their original intrusions were to make money cheap and push for unqualified people to get mortgages are what are caused this craziness in the first place.
Also, housing will find its value. Who sets prices? The person who buys the house determinse what it is worth to him or her - not some economist or the government. Value changes, and it might be painful, but propping it up will only make it worse when that crutch doesn't hold things up anymore.
Let's remove all artificial "financial tools" including bailouts and interest manipulation and then we won't have to make belive anymore that we're in a true market economy rather than a pseudo socialism.
Not fair!
I just locked a 5.5% rate and thought *that* was great. The very next day, they announced this 4.5% plan. We were scared to buy because our savings fell about 40% since October. But we are just trying to keep things moving in spite of the economy.
Why is this a good idea? The government is trading treasuries for the risk of owning American homeowner debt. That risk has a price. If banks got into trouble by incorrectly pricing their lending risk, why is it OK for the government to do so by pricing below-market interest rates?
I wrote in about 109 times in teh last yr to WNYC that you should do shows and segments on hydrogen cars. You what the response has been? Zilch.
I'd rather buy a $400K home for $400K than buy a $400K home for $800K with a slightly reduced -- maybe -- interest rate!
We have been waiting for the market to sort this mess out since 2005. Each taxpayer dollar that interferes with the market delays our investment in a home. Right now renting is the way to go for the smart money.
Brian - please ask your guest how we avoid reinflating the bubble? High housing prices won't help, they'll hurt us again.
I listen to all these government investments and I think of Argentina - I think we are being brought to our knees and the evil geniuses of the world are just waiting to devalue the dollar and take it from there.
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