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Does anyone have numbers on loans given with 0 down? I think renters have the perception that loans were given with no investment or obligation, but everyone I know who owns a home had to provide a down payment. My down was $45K, about 10% which is historically low, but it was still a large investment. It would be interesting to have an understanding about the percentage of these loans that truly required no investment from the homeowner.
One of you guests (perhaps Bajaj) this morning gave a very flawed definition of socialism -- he said it's when "the government owns the means of production."
That's communism. (and the government is owned by the people--at least in theory). I am very frustrated when people talk about the U.S. government as if it's a private corporation. That's right wing Republicanism i.e. "the government is the problem."
Socialism is more like all of the advanced democracies' national health care systems. It's more like SOCIAL Security and one of the ways that FDR saved capitalism.
I would like to ask all who are extremely critical of the population of people going through foreclosures to consider this - each case is different and we cannot all be measured by the same criteria. Responsibility towards financial obligation is one thing. But we may have found ourselves in this mess for circumstances beyond our expectations. I feel little sympathy for people who willingly took advantage of the situation and walked away with financial gains.
There are however, many people with a strong sense of responsibility, who tired very hard (and still are) but found themselves in a really bad situation. I am sure they did not plan on anyone bailing them out or asking for any handouts.
Please feel to learn a little bit more if you care to.
Also - for those who obtained mortgages with little or no money down, what are they really losing? The idea of "losing the house" really applies more to those who actually have equity in the home.
For the zero down crowd, how is their mortgage payment any different than my rent???
why has no one spoken about extending life of mortgage from 30 to 50 years for instance--focus has only been on interest rate--and some should certainly be lowered --but some reasonable ones may be kept if you can extend the term life of the mortgage --thus reducing monthly payment, allowing time for values to come back and banks to eventually get their money back when property is sold---in all of this time I have not heard anyone mention extending the length of mortgages---much to my amazement
The "moral hazard" argument may be a good one, but the home buyers aren't the ones whose morals need adjusting. Subprime lending was invented in the 70's as a compromise to allow poorer minorities to get homes (because the government was no longer spending money on public housing, and they wanted another solution). In the 80's and 90's, that well-intentioned project became a great way for brokers to make money; all they needed was a bunch of mortgages for them to trade amongst themselves.
What actually happened to the people who signed those mortgages was unimportant to these traders. Let's talk morals. Whose is worse?
Im a little behind on the discussion, but there is something that i have been hearing with ohio RE market. the banks are allowing property to go to foreclosure / sheriff sale as opposed to accepting new offers / re-structuring of loan. for the simple reason of PMI payout + anticipated sheriff sale being of higher value than the current owner or prospective buyer can offer. not sure the plans impact on this formula....
Us, renters are going to pay in taxes for the greed of those who knowingly overextended themselves. Why couldn't our rent be considered a temporary invetment and substracted from taxes?
I would normally call my self a socialist. BUT, I have a hard time swallowing this because personally I know too many people who refinanced to have fun—cars, vacations, new kitchens and now they are in trouble. This is greed. Why should they not be responsible for their situation? Meanwhile my family ate spaghetti most days last year to be able to pay our modest mortgage.
Ya...well let adults make adult desicions Vikas......if there is a better job somewhere else, take it and take the loss on your BAD home mortagage...pay the piper
No, I do not agree with this on its face. But first, I agree with #1 Jennifer 100%. People should have known better and people who should have been renting were fooled by politicians and their so called “American Dream” into thinking they were either middle-class or potential homeowners.The reason I do not support this is because this show parades around free marketers, like the last guest, who say “let markets work.” This is a correction. This housing was overinflated. There were bad actors all around. Stepping into this seems to go against free market capitalism, promotes overinflated price, and encourages bad behavior.And for the guest’s last comment… having the responsibility of a mortgage keeps a person in their home and away from a job elsewhere the same way having a rental agreement does. Shees, where do you find these people.
I feel sympathetic for homeowners who have gotten in trouble, but I feel like a proposed mortgage bailout is unfair to those of us who have resisted overextending ourselves with mortgages we can't afford.
I am part of a dual-income household and we do quite well, but we've been saving to put our 20% down into a home purchase(getting close now!)
Oh by the way, guess who gets hit with the tax increases to support the bailout? ... it's people like us.
I am so sick of my tax dollars going to save entities and people who made risky decisions. This is the biggest injustice to prudence that I could have ever imagined.
1) By bailing out these irresponsible, risk taking homeowners, the government is punishing renters, who are 30% of the population, prudent homeowners who took out fixed rate mortgages, and future generations who can't afford to buy homes because the price level is being artificially propped up by the government
2) Home price to income and price to rent ratios are still to high in the majority of the country, we need the foreclosures to help drive down home prices so the average American can buy a home
3) There is nothing wrong with these people who bought more home than they could afford going into foreclosure and renting
4) What help is the government giving to RENTERS? I have not heard one word about how renters are being punished while homeowners are being bailed out.
I have compassion for some of these people, but what about personal responsibility? A couple years ago I bought a new home and when I requested a 30 year fixed mortgage everyone (the mortgage broker included) thought I was crazy. Then, as now, I know what my payments will be, and at the time adjusted the size home I chose to purchase. Why should I have to pay for those who did not do the same?
I definitely do not want to be paying other people's mortgages through this bailout. I already have to pay my own.....
If people made bad decisions they should live with the consequences. I have a serious medical ailment and two young kids... I have tried hard to be very prudent in my financial decisions so that my family can be in the best possible financial situation if I am not around.
I can't believe that on top of a very precarious personal situation I'm also going to be paying for irresponsible home buyers...
It's completely ridiculous.
I dont support a bailout of homeowners at all. I know many personally who took these exotic mortgages saying they would be out of the home with a profit before it would adjust. Also, why do we want to keep these housing prices still so far above their historical costs making it far more expensive for people to get into the market and also keeping property tax costs so high for people who have no intention of moving?
this is bogus. i consult to large banks. they were going through the process of analyzing what loans to renegotiate. i know because we were doing the work for them. now, they have no incentive to do it.
we are bailing out businesses when we shouldn't because it is in their interests to do it. we are bailing out people who made poor decisions. i am also a renter who decided not to buy and am now being punished for not doing so.
I completely agree with Jennifer.I wouldn't be averse to providing some help to those who were deceived into taking out badly-structured mortgages, but who otherwise would have qualified for "normal" mortgages that they could have afforded at the time. I don't want to bail out greedy folks who figured they could get a free lunch -- whether or not they have income to stay there. To me, a big part of this is whether or not someone had the tools to understand the deal they were making. It's all about moral hazard.
As a renter, do you believe people who rent should be subsidized to stay in their (rental) homes if they can’t afford to, and if not, why not? The deification of home ownership is a huge part of the problem. What about people whose retirement accounts are “under water”? The real question is who should pay for anyone’s bad, or sad, decisions? And why should one such decision be privileged over all others?
A contingency of this bailout should be required credit counseling or a money mangement class for all people who will be benefiting from this bailout. When my husband and I applied for our first mortgage 4 years ago we were given preapproval for 800k. We looked closely at our finances and bought a home for half of that. IT WAS WHAT WE COULD AFFORD! It is frustrating that we are the responsible ones who have scrimped and clipped coupons to make our payments when other people who are living beyond their means will be given a "pass". Same goes with credit card debt. Americans need to take responsibility for their own finances!
Why not guarantee ALL mortgages for 5-10 years? If the government did that to begin with, then the banks would not have had to write down their securities. You could have avoided the chaos while you reform the system of securitization of loans.
Also the government could do with the houses what they did in the past with the resolution trust corporation.
What are the unintended consequences of this plan in terms of reflating home prices and allowing some people to have artificially low mortgage rates for five years? As a freelancer with a 5.25% fixed rate mortgage, what incentive do I have to continue paying this rate when those being bailed out will pay less: I've heard as low as 3-4%
How have the mortgage payments made by homeowners who paid 0% down and had baloon mortgages compared to the rental prices these same individuals would have paid?
Sure sounds like a good deal...restructure home owners mortagages so I they can/want to pay they can figure out a better way...but the people that cam't pay NO favors...and Banks should take a hit for making too many sub primes...everyone should listen to Peter Schiff for info and sane ideas...
i second jenniferi didn't even know you could get money with bad credit. i want a retro active sub prime no income loan, then i want the government to buy it back.
I only support the homeowner bailout ifthe borrower was purchasing their primary residence and the property is a single-family residence.
Who can afford a balloon mortgage? And who was going to re-finance all those loans, as promised by the mortgage sellers?
The problem will continue until we get rid of these unworkable loans. It's time to go back to usury rules!
Isn't it interesting how we can do casino socialism and bail out the Wall St. millionaires but if we help the middle class people with their mortgages, g/d forbid!
I really hope Obama wins, we are already going in a socialist direction, let's take it all the way and do it right, with Obama and give everyone health care.
I guess this plan makes sense, but as a renter who has wisely stayed out of purchasing in the overinflated real estate market, it makes me annoyed
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