Politics – Foreclosure package approved yesterday, despite presidential veto threat.
Not everyone who lives in a home has taken a gamble.
Try heating it for 3 times the price it was 5 years ago.
Try driving to work after you have no work to go to and no job to fill your tank to look for a job.
Try paying 155% fro food than you did 7 years ago.
Try paying local property taxes with no income while your water bills have tripled.
now just staying alive is a gamble when you risk tomorrow not being worse than today..
Join the real world and stop living in a blind eliteville.
Hopefully the President will veto this mess it's not going to help anyone but lending institutions.
wolfie,
You lose sight of the actual problem - legitimate homeowners. The lenders have already received more help than they need, but this bill's aim isn't going to benefit them. FHA is not only a lender, it's also a guarantor of loans for buyers that can't afford inflated home prices.
lm - there is another bill waiting if this one fails. It includes screening for legitimate, honest needs
Remember this a democrat bill and it's the liberal democrats who want to bail out the big banks, not the republicans. lol
Excuse me but how is making the bank write down the principle of the mortgage as they would in this bill to get government backed financing a bailout. The lenders are giving up tens of thousands on each mortgage to get the government to back the new loan and keep the purchaser in the home. I don't see that as bailing out the lenders but helping the purchases to continue to have a place to live.
Beware of un-intended consequences if he doesn't veto ...
This is something the government should not be involved in.
It has to balance itself out via economic forces to become stable and predictable again.
The Bear Sterns was a move to stop a potential chain reaction in the banking system that could have brought the house down. It was in the form of a guarantee to JP Morgan that bad assets would not be allowed to bring them down as well.
It was well done, however it was a disgrace that it was necessary.
NOT WELL DONE AT ALL
The J.P.Morgan deal was well done?
A gift of $30 billion in OUR dollars for a weekend of work is well done?
Certainly NOT well done for the U.S. citizens who now needs to eat the cost of the $30 billion NEWLY PRINTED dollars that went directly into the pockets of the JPMorgan buddies of Mr. Paulson
I wrote you a response, quack. I don't know where it went.
The $30 billion was a guarantee against illiquid assets in the Bear Sterns portfolio which gives Morgan time to work them out of the portfolio without becoming insolvent themselves.
It's similar to the guarantees Chrysler got years ago. It didn't go in anyones' pocket.
The Federal Reserve handled it well and avoided a more dangerous situation that could have developed.
WRONG
NEVER before has the Fed exchanged newly printed money for anything less than Treasury Notes.
The acceptance of essentially worthless Wall Street paper as collateral for newly printed money is unheard of with no established way of repaying the "loan".
When the Fed deals with Banks, it just retires the treasury notes that were submitted in return for dollars. What is the Fed to do with worthless Wall Street Paper?
As the price of JPMorgan amply demonstrates (the 30% rise in value), the U.S. citizens were taken for a ride on this one.
I am not as well educated as most of you folks.
I did spend a bit of time reading about usury today.
Please forgive a sloppy timeline:
Old Testament:
"In thee have they taken gifts to shed blood; thou hast taken interest and increase, and thou hast greedily gained of thy neighbours by oppression, and hast forgotten Me, saith the Lord GOD." (Ezekiel 22:12)
New Testament:
"This servant had already told two lines. First he said the master was an austere or harsh man. Next he called his master a thief because he
reaped where he did not sow.
Finally the master said to him "why did you not loan the money out at interest...so I could collect it and the interest." รข;;(Luke 19:11-19:27)
Adam Smith:
Adam Smith thought that since money can by made by money, so its use ought to be paid for. Nonetheless, "he defended usury laws" as the necessary in order to encourage productive investment and discourage consumptive spending.
1980:
Depository Institutions Deregulation and Monetary Control Act of 1980
Overruled state usury laws
"SEC. 501. (a)(1) The provisions of the constitution or the laws of any State expressly limiting the rate or amount of interest, discount points, finance charges, or other charges which may be charged, taken, received, or reserved shall not apply to any loan, mortgage, credit
sale, or advance which is--(B) made after March 31, 1980"
(Article I, Section 8, Clause 1,3:
The Congress shall have power .To regulate commerce with foreign nations, and among the several states, and with the Indian tribes; over ruling the 10th amendment-states rights)
1982:
Garn-St. Germain Depository Institutions Act
Allowed adjustable rate mortgages.
As I see it from my towering pinnacle of ignorance, it appears that the $30 B purchase of Bear Stearns Paper just treats the symptoms and may have prevented a crash. The $200 B made available is just feeding an impatient addiction.
More than half the folks who have sub-prime loans would have qualified for a standard loan. I blame the Opacity of the industry; most of these loans are paying an interest rate higher than their state usury laws allow.
The disease:
WE are the GDP our consumer spending is what makes this country rich.
If 1 in 50 households are facing foreclosure I think that represents a serious threat to the "wealth of this nation".
A 30 year fixed mortgage for $100 G at 6.5 percent would be $632 per month and cost the borrower $127.5 G in interest.
A Sub-Prime mortgage could hit a an interest rate of more than 20 percent (perspective but based on ignorance) that would mean $1632 per month and cost more than $500 G in interest.
fly - what is your source - it sounds more like 1 in 50 of the loans that were subprime, not all loans. There are quite a few paid off house among those over 60.
Klarissa: I am rightfully embarrassed, thank you for calling me on it.
My source was libsRfunny:
http://politics.propeller.com/story/2008/05/08/...
I regret including it into the comment, I would be happy to name all the other sources of the research I did for the rest. I think they are good.
It does seem that when I do a fair amount of research, my comment is ignored.
I got lazy, sorry and thank you.
The bill appears to be well designed to assure that help goes only to deserving home owners, not speculators and flippers. It also provides money to states to purchase homes rather than let them sit vacant and get trashed, dragging down property values throughout the neighborhood and killing local property tax revenues, which is already devastating public school budgets.
Bush doesn't mind blowing through money one bit. He has spent the Clinton surplus and doubled the national debt on top of that. When he leaves office, the debt will be hovering around $10 trillion dollars. That amounts to a $5.4 trillion dollar tax INCREASE. The uber-rich won't pay that. They are multinationals. They will just move.
Bush's problem with this bill is it spends money helping the middle class and those struggling to enter the middle class. He wants all welfare directed to the wealthy. John McCain seems to want more of the same.
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Buying a home is NOT "gambling". It is a financial commitment, but it is not gambling. Your analogy is erroneous.
Buy a house hoping to sell it at a profit (called flipping) is gambling. Buying a house you could not afford except for the 0% down and flase income statements is gambling. Buying a house with 'interest only' payments is gambling. Buying a house with an ARM (Adjustable Rate Mortgage) is gambling. Buying a house at an over-inflated price is gambling. So you statement is erroneous. BTW, I am against any bailout of those that gambled. BearSterns and the house marketeers.
Listening to you everyone buying a home is gambling. If that is so tell me why most of those homes are occupied by the buyers. Those folks did not gamble but believed the knowledgeable lenders who said they could take this kind of loan and afford the home. When it is foreclosed it is not left vacant, it becomes vacant when the purchaser is tossed out.
Having worked in the banking industry for years I honestly can say the fault is with the lender not the borrower. The percentage of flippers, who I agree are not deserving of help, is minimal compared to those who wanted the house to live in before prices got so high they could never find a way to purchase.
Ian,
I agree that the banks are at fault. I also have worked in banking and financial institutions. I also know that those institutions are doing whatever it takes to make a profit by outsourcing work that once did. There are less loan officers and personnel on their sites. They have depended upon mortgage brokers - actual middlemen - in order to increase profits. But they haven't done is take responsibility for verifying the credit worthiness of the customers brought in by those brokers. The day that banks hold those brokers accountable - say posting security bonds for their customers - then you'll see less speculators and defaults.
This bill's aim is to facilitate home owner's increasing default by rising home prices and mortgage interests that would put them on the street. It may be too little, too late, but it's a viable method that can work for both lender and borrower.
I don't know about your areas, but houses are selling around here because of the price drops - a lot of bargains
klarissa,
To a small degree, it's the same here. But our problems is even larger and different than other states. Property taxes here are based on a market assessment basis when first bought with a capped increase millage rate. For example, 2 houses of the same square footage bought at different times pay vastly different tax amounts. One house bought in 94 is paying less than a house in 01. That means that if my neighbor's house was sold today, the new owners would be paying taxes much higher than mine and both houses are the same size and sit on the same size land.
Another problem is hurricane insurance which has doubled or tripled in the last 10 years.
A further issue is the average home costs, lack of rental property, average income, and dwindling jobs. It's not a pretty sight.
http://www.miamiherald.com/news/breaking_news/s...
http://www.miamiherald.com/548/story/523904.html
buying a home can be gambling - spending money on a hope for future profit is gambling
So why then did the Fed back JP Morgan's unbelievably low offer (about 1/20th of its value) to buy up Bear Stearns?
Speculation by institutions is gambling on a MUCH larger scale than that of house-flippers.
And no one's answered the question I posed above, though a few have negged me for it:
What percentage of foreclosures do you people think are happening to house-flippers rather than those who live in their homes?
The Fed backed JPMorgan in a back-room deal that was brokered during a weekend by Bush's Secretary of the Treasury, Henry Paulson.
Henry Paulson is an ex-Wall Street CEO who will be looking for a cushy job come January.
Right. And JPMorgan was gambling--or would have been, if their purchase of Bear Stearns hadn't been guaranteed.
Only in a Wall Street wet-dream would the U.S. citizen guarantee hedge-fund risk. Wall Street had an orgasm on this one.
about 1 in 3
Okay, let's say one in three are speculators who don't live in the homes that are mortgaged.
That leaves two in three who will lose their homes.
???