SEC. 110. ASSISTANCE TO HOMEOWNERS.

[alw 0]

I'm trying to read and digest this bill as fast as possible. So far it looks better, but it also looks like a very complex and bureaucratic giant requiring lots of people to administer.

I'm in the subject section. My read suggests to me that the government may buy troubled securities backed by mortgages and mortgages. They could then encourage the servicers of those mortgages to negotiate with the troubled mortgage owners at the net present value of that mortgage to assist the homeowner to stay in the property and keep paying the loan.

Example: (again my take)
A homeowner is in default of on a $200,000 mortgage on a $220,000 face value home. The Government purchases the mortgage for a "Net Present Value" let's say $180,000. Assuming the homeowner can pay their mortgage if the principle is reduced to $180,000. If that is the deal struck by the servicer, the person keeps the house, pays the lower principle, and the mortgage gets sold to a bank. The proceeds from the sale goes back to the government and the loss is paid for by the insurance that the original owner buys from the government.

This would keep people in their homes but reduce the value of the property and the government would not lose or not lose too much.

Two issues might be, this is a labor intensive operation - lots of people required to administer.
Second, Say this house is in your neighborhood and your house and your neighbors houses cost $220,000. Now there is a house in the neighborhood that is valued at $180,000. When you sell your house the neighborhood comps go down reducing the value of your home. This amounts to a cost to taxpayers that may not be immediately visible.

If I've got this wrong, please discuss.

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Every day is a bonus - every night is an adventure.

[normiss 622]

It would be cheaper if the government simply paid off all outstanding mortgages from some of the numbers I've seen.

[kallend 1,633]

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Say this house is in your neighborhood and your house and your neighbors houses cost $220,000. Now there is a house in the neighborhood that is valued at $180,000. When you sell your house the neighborhood comps go down reducing the value of your home. This amounts to a cost to taxpayers that may not be immediately visible.

If I've got this wrong, please discuss.

The house is only worth what someone is willing to pay for it at the time of sale, not what it cost you years ago. So your $220,000 is probably wishful thinking at this point, regardless.

...

The only sure way to survive a canopy collision is not to have one.

[alw 0]

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Say this house is in your neighborhood and your house and your neighbors houses cost $220,000. Now there is a house in the neighborhood that is valued at $180,000. When you sell your house the neighborhood comps go down reducing the value of your home. This amounts to a cost to taxpayers that may not be immediately visible.

If I've got this wrong, please discuss.

The house is only worth what someone is willing to pay for it at the time of sale, not what it cost you years ago. So your $220,000 is probably wishful thinking at this point, regardless.

I understand your argument, I should have clarified that the $220,000 figure was meant to market value today. The $180,000 figure was meant to represent the discounted NPV paid by the program, which could just as easily be 30% of market value. For the sake of example you might want to use $200,000 as market value, the example reamins consistent.

I didn't want to get into a value debate about discounted value of the paper because it is not well delineated in the draft.

Section 124 adds a bit of confusion to the mix, but I believe the example remains the same.

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Every day is a bonus - every night is an adventure.

[warpedskydiver 0]

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Say this house is in your neighborhood and your house and your neighbors houses cost $220,000. Now there is a house in the neighborhood that is valued at $180,000. When you sell your house the neighborhood comps go down reducing the value of your home. This amounts to a cost to taxpayers that may not be immediately visible.

If I've got this wrong, please discuss.

The house is only worth what someone is willing to pay for it at the time of sale, not what it cost you years ago. So your $220,000 is probably wishful thinking at this point, regardless.

great, so those of us who paid for our homes no matter how bad things were financially are made to pay full value while those who did not pay their mortgages pay far less.


Excellent idea, reward fucking up.

[alw 0]

It looks something like that, but it also may have the effect of putting a floor under home prices. In total cash flow for a family including investment initiative (401K present value and future value) it may be a better deal than letting them go bankrupt.

My own attitude on this is there is no solution that won't cost the majority something. The question is how to minimize the impact.

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Every day is a bonus - every night is an adventure.

[warpedskydiver 0]

True, but no matter what we do, we are going to reward the fuck ups with something the rest of us never received.

I was out of work for seven years, I spent every penny I ever savedin order to keep my home, while living like a peasant, and now people buy home far more expensive, and get a bailout when they do not pay?

When I bought my home, mortgages were around 10% and I had to pay a huge amount of interest until such time that the rates fell, and now when they had rates low, these people went out and bought luxury homes, on a budget of an apartment dweller, and now we will all be paying their bills.

I am very pissed about this.

[Darius11 12]

http://www.youtube.com/watch?v=ticytEUvVhQ


The gov. has fucked this up enough. Let it crash.

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[alw 0]

I here you both and my heart agrees, but my head says I shouldn't cut off my nose to spite my face.

I'm reminded of something my team leader said when discussing hostile engagements, "Anger blows out the lamp of the mind. You can always get even tomorrow and it's easier to do on a full belly."

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Every day is a bonus - every night is an adventure.

[kallend 1,633]

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True, but no matter what we do, we are going to reward the fuck ups with something the rest of us never received.

I was out of work for seven years, I spent every penny I ever savedin order to keep my home, while living like a peasant, and now people buy home far more expensive, and get a bailout when they do not pay?

When I bought my home, mortgages were around 10% and I had to pay a huge amount of interest until such time that the rates fell, and now when they had rates low, these people went out and bought luxury homes, on a budget of an apartment dweller, and now we will all be paying their bills.

I am very pissed about this.

Follow the money. Who benefitted from the losses of the homeowners who lost their houses (or saw their home values plummet)?

Who got away from all this with $Millions in bonuses from their Wall Street banks? Who made $1M and up a year pushing these flaky loans on first time buyers so they got huge commissions?

...

The only sure way to survive a canopy collision is not to have one.

[Darius11 12]

I was not saying let it crash just because I am angry, I truly think it is the best way to deal with this financial trouble.
The market needs to adjust, Homes that should have never been worth 400K simply will not be. It is the interference that has brought this on. It should crash and we should not pay. The people who took the risk should pay.
If they fix prices and start determining what things are worth then the problem will take much longer to solve. We have tough times ahead let’s make them a year and not a decade.

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[rushmc 18]

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True, but no matter what we do, we are going to reward the fuck ups with something the rest of us never received.

I was out of work for seven years, I spent every penny I ever savedin order to keep my home, while living like a peasant, and now people buy home far more expensive, and get a bailout when they do not pay?

When I bought my home, mortgages were around 10% and I had to pay a huge amount of interest until such time that the rates fell, and now when they had rates low, these people went out and bought luxury homes, on a budget of an apartment dweller, and now we will all be paying their bills.

I am very pissed about this.

Follow the money. Who benefitted from the losses of the homeowners who lost their houses (or saw their home values plummet)?

Who got away from all this with $Millions in bonuses from their Wall Street banks? Who made $1M and up a year pushing these flaky loans on first time buyers so they got huge commissions?

Ya WHO??

Raines, Johnson, Dod, Obama, Gorelic, Rangle, Schumer.

Need any more names?

NOBODY has made more than Obamas advisers and only ONE senator got more money from Frannie and it took him 20 plus years

There was a REASON those senators railed against changes in regulation just a few years back.

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[Pendejo 0]

Quote

Example: (again my take)
A homeowner is in default of on a $200,000 mortgage on a $220,000 face value home. The Government purchases the mortgage for a "Net Present Value" let's say $180,000. Assuming the homeowner can pay their mortgage if the principle is reduced to $180,000. If that is the deal struck by the servicer, the person keeps the house, pays the lower principle, and the mortgage gets sold to a bank. The proceeds from the sale goes back to the government and the loss is paid for by the insurance that the original owner buys from the government.

This would keep people in their homes but reduce the value of the property and the government would not lose or not lose too much.

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I think your suggestion could have serious pitfalls. Using the numbers you did (and we will assume for this example that they are all on the money ), there would need some provision that would prevent the person from immediately selling the house for say $200k and keeping the equity from the sale as their mortgage would be for only $180k

Then we get into the government being able to tell you if you can or cannot sell your home. Messy...

On the surface I think something like you’re suggesting would be a good idea and could work well if everyone would use it as it is intended, assistance. The issue to me would be that the people who got us into this mess would recognize the loopholes and exploit them to their benefit. Before anyone starts talking about the government, real estate agencies, or mortgage brokers and bankers, you should know that it is my feeling that the people who were agreeing to the loans are the ones who got us into this mess in my opinion. I am aware that a lot of the groups listed above assisted them in finding and abusing those loopholes, but the fact remains that at the end of the day, the person who signed the contract for the loan reaped the largest benefit (or the largest opportunity for benefit) from the loan.

I agree that there were people who did not have the ability to understand what they were signing, but, somehow I doubt that those people were in the majority. Looking at the numbers that Nerdgirl (who is my hero by the way) supplied in another thread, somewhere around 2/3 of the loans that are in default were made to people in the mid to high income bracket. A large percentage of those people either took all the equity out of their home to spend on other things, or, purchased an investment home that turned out to not be such a good investment. I know there are other reasons, but I think those two reasons will shake out to be the biggest ones in the end.

Personally, I think that if a person has not acted in a responsible manor regarding the largest and longest investment they will make in their life, I should not be asked to pay money for their lack of responsibility.

As to the people who did not have the ability to understand what they were signing, I think that those people should receive relief and that the people who “pulled the wool over their eyes” should be prosecuted to the full extent of the law.

Pendejo

He who swoops the ditch and does not get out buys the BEER!!

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[alw 0]

Just so you know, this isn't my suggestion. It's my take on a read of the actual draft of the bill from the Senate.

---------------------------------------------
Every day is a bonus - every night is an adventure.

[Pendejo 0]

Sorry, I didn't word that very well. I meant the suggestion in general, I didn't mean to imply ownership of the suggestion.

Edited cause I can't spell today for some reason

Pendejo

He who swoops the ditch and does not get out buys the BEER!!

[alw 0]

No problem.

I think this may be the best we can hope for as a rescue bill, but the punishment phase will be another matter.

I hope we can find and punish those responsible without creating a McCarthy style witch hunt. I am much less hope for that.

---------------------------------------------
Every day is a bonus - every night is an adventure.

[kallend 1,633]

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True, but no matter what we do, we are going to reward the fuck ups with something the rest of us never received.

I was out of work for seven years, I spent every penny I ever savedin order to keep my home, while living like a peasant, and now people buy home far more expensive, and get a bailout when they do not pay?

When I bought my home, mortgages were around 10% and I had to pay a huge amount of interest until such time that the rates fell, and now when they had rates low, these people went out and bought luxury homes, on a budget of an apartment dweller, and now we will all be paying their bills.

I am very pissed about this.

Follow the money. Who benefitted from the losses of the homeowners who lost their houses (or saw their home values plummet)?

Who got away from all this with $Millions in bonuses from their Wall Street banks? Who made $1M and up a year pushing these flaky loans on first time buyers so they got huge commissions?

Ya WHO??

Raines, Johnson, Dod, Obama, Gorelic, Rangle, Schumer.

Need any more names?

NOBODY has made more than Obamas advisers and only ONE senator got more money from Frannie and it took him 20 plus years

There was a REASON those senators railed against changes in regulation just a few years back.

I think the primary ones to come away with MILLIONS are Rick Davis, Phil Gramm and the bankers. The others are small fry by comparison.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 18]

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True, but no matter what we do, we are going to reward the fuck ups with something the rest of us never received.

I was out of work for seven years, I spent every penny I ever savedin order to keep my home, while living like a peasant, and now people buy home far more expensive, and get a bailout when they do not pay?

When I bought my home, mortgages were around 10% and I had to pay a huge amount of interest until such time that the rates fell, and now when they had rates low, these people went out and bought luxury homes, on a budget of an apartment dweller, and now we will all be paying their bills.

I am very pissed about this.

Follow the money. Who benefitted from the losses of the homeowners who lost their houses (or saw their home values plummet)?

Who got away from all this with $Millions in bonuses from their Wall Street banks? Who made $1M and up a year pushing these flaky loans on first time buyers so they got huge commissions?

Ya WHO??

Raines, Johnson, Dod, Obama, Gorelic, Rangle, Schumer.

Need any more names?

NOBODY has made more than Obamas advisers and only ONE senator got more money from Frannie and it took him 20 plus years

There was a REASON those senators railed against changes in regulation just a few years back.

I think the primary ones to come away with MILLIONS are Rick Davis, Phil Gramm and the bankers. The others are small fry by comparison.

Soooooo, you think 90 million in 6 years is small fry.

Dam you must be paid well.

I await your number on those you list

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[DrewEckhardt 0]

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Two issues might be, this is a labor intensive operation - lots of people required to administer.
Second, Say this house is in your neighborhood and your house and your neighbors houses cost $220,000. Now there is a house in the neighborhood that is valued at $180,000. When you sell your house the neighborhood comps go down reducing the value of your home. This amounts to a cost to taxpayers that may not be immediately visible.

Homes are worth what people are willing to pay for them which cannot be more than they can pay. Although home prices remained essentially constant in inflation adjusted dollars since the end of WWII with a couple of peaks 20% above the average which quickly collapsed, at the current peak we were up 80% although real income had only increased 15% over that time period.

If at current interest rates people can only buy at $180K, that's the value.

House prices only went higher than their value because enough people bought into loans where they didn't have to pay the costs that went with the prices.

Prices will have to fall or the dollar will have to devalue another 30% for home prices to reflect their actual value.

If you've owned your home for years you're paying less than you would in rent and it doesn't matter.

If you bought at the peak and stay put for enough years it won't matter then either.

It's only people who bought high and had to sell low that got burned. We probably should have been realistic and not thought that things would keep going up, up, up unlike what they'd done for nearly 60 years. I'm glad we only lost $10K (having no agent minimized the loss) on the home we bought and sold in 2006/2007.