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View Full Version : U.S. unveils plan to shrink some home loans



ducknwork
03-26-2010, 12:14 PM
Let me start by saying this::rolleyes::rolleyes::rolleyes::rolleyes:

Now that Obama has gotten his healthcare passed, I guess it's time to give more money away to someone else...It sure sucks to be responsible and not buy more than what you can afford! I wish I had bought a house that was out of my price range, because now the principle on my mortgage would get lowered.:rolleyes:

http://www.msnbc.msn.com/id/36050868/ns/business-real_estate


WASHINGTON - After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is announcing a plan to reduce the amount some troubled borrowers owe on their home loans.

The multifaceted effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.

That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. But it could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom. In addition, their existing mortgage companies will be able to receive incentives to lower their principal balances.

The program also includes assistance to help unemployed homeowners keep paying their mortgages.

But the administration cautioned that the plan isn't intended to stop all foreclosures or assist all troubled homeowners.

A Treasury Department document said, "investors and speculators should not be protected under our efforts, nor should Americans living in million dollar homes or defaulters on vacation homes."

"Some people simply will not be able to afford to stay in their homes because they bought more than they could afford," the document said. And whose fault is that? NOT MINE! So why do I have to pay for their idiocy (:p)?

Mark Zandi, chief economist at Moody's Analytics, estimated the plan could help between 1 million and 1.5 million homeowners avoid foreclosure. That compares to 4.5 million that are already in foreclosure proceedings or 90 days delinquent on their mortgages, he said. There are another 10 million homeowners who owe more than their homes are worth, Zandi estimates.

Latest effort
"The changes are wide-ranging and significant and have the real potential for bringing the foreclosure crisis to a much quicker end," Zandi said.

The plan is the latest effort by the Obama administration to tackle the foreclosure crisis which has continued to grow under its watch. Home foreclosures have soared despite the administration's effort to prevent foreclosures, a complex and problem-plagued endeavor involving more than 100 mortgage companies. Only 170,000 homeowners have completed that process out of 1.1 million who began it over the past year.

"We remain dubious about government mortgage modification efforts," wrote Jaret Seiberg, an analyst with Concept Capital's Washington Research Group. "So far none have lived up to expectations and we see little reason to believe the latest effort will turn out any different."

The plan announced Friday will also require the mortgage companies participating in the administration's existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.

Major Pain
03-27-2010, 11:41 AM
Let me start by saying this::rolleyes::rolleyes::rolleyes::rolleyes:

.It sure sucks to be responsible and not buy more than what you can afford!

What do you tell someone who lost their job, due to greedy companies looking for more money in their pocket? That same person who used to be able to afford their home with little worries. They cant sell a home and adjust, or relocate because houses are not selling right now. What do these homeowners do?

Hoosier
03-27-2010, 11:52 AM
What do you tell someone who lost their job, due to greedy companies looking for more money in their pocket? That same person who used to be able to afford their home with little worries. They cant sell a home and adjust, or relocate because houses are not selling right now. What do these homeowners do?

You point them toward a rental they can afford. What do you tell the guy who is paying his mortgage, and bought within his means? I guess we now tell him he has to pay his neighbors mortgage too. We can't socialize every problem that comes down the pike.

2tall
03-27-2010, 11:55 AM
What do you tell someone who lost their job, due to greedy companies looking for more money in their pocket? That same person who used to be able to afford their home with little worries. They cant sell a home and adjust, or relocate because houses are not selling right now. What do these homeowners do?

Those people are ME. What happens is you bought a house with a loan at only 50% of the appraised value, and paid the rest in your own savings. You think, no matter how bad this real estate bust gets, we will always have a little equity. Then, boom, the business that pays your salary goes bust, no job, no income, and darn if the local real estate market doesn't actually lose 50% value. The bank that took a chunk of the bail out money will not consider a "moratorium" on your mortgage until values come back or your employment situation changes. You stop paying because you can no longer, the bank starts foreclosure, you move out, and the bank has one more piece of real estate it can not sell. EVERYBODY LOSES! A 6 month to 12 month moratorium would have retained more for all parties.

Guess what my industry was that went bust? Mortgage lending. As a loan officer I NEVER encouraged a mortgage that was beyond the means of the borrower. I tried to avoid participation in all of the "100% financing" deals. My employers (the big banks) pushed these and other risky programs because they too failed to anticipate the depth of the collapse of real estate values. They just rolled in the gravy dish, took their huge bonuses, and then abandoned their employees and customers to the ashes.

Whew, I don't know what got into me, I've managed to hold back a while, but that felt kind of good.

road kill
03-27-2010, 12:11 PM
Those people are ME. What happens is you bought a house with a loan at only 50% of the appraised value, and paid the rest in your own savings. You think, no matter how bad this real estate bust gets, we will always have a little equity. Then, boom, the business that pays your salary goes bust, no job, no income, and darn if the local real estate market doesn't actually lose 50% value. The bank that took a chunk of the bail out money will not consider a "moratorium" on your mortgage until values come back or your employment situation changes. You stop paying because you can no longer, the bank starts foreclosure, you move out, and the bank has one more piece of real estate it can not sell. EVERYBODY LOSES! A 6 month to 12 month moratorium would have retained more for all parties.

Guess what my industry was that went bust? Mortgage lending. As a loan officer I NEVER encouraged a mortgage that was beyond the means of the borrower. I tried to avoid participation in all of the "100% financing" deals. My employers (the big banks) pushed these and other risky programs because they too failed to anticipate the depth of the collapse of real estate values. They just rolled in the gravy dish, took their huge bonuses, and then abandoned their employees and customers to the ashes.

Whew, I don't know what got into me, I've managed to hold back a while, but that felt kind of good.

Good luck to you!
"Keep on keepin' on...."


I think this foreclosure post ponement will benefit the economy.
It may lengthen the real estate recovery, but the bottom will not be as deep.
It will also provide 2 things, an opportunity for some to get out of their debt and some lower priced homes on the market minimizing the damage.
I'm sure someone can write about 6 to 10 paragraphs on this, but I'll just do 1.



rk

YardleyLabs
03-27-2010, 12:12 PM
Those people are ME. What happens is you bought a house with a loan at only 50% of the appraised value, and paid the rest in your own savings. You think, no matter how bad this real estate bust gets, we will always have a little equity. Then, boom, the business that pays your salary goes bust, no job, no income, and darn if the local real estate market doesn't actually lose 50% value. The bank that took a chunk of the bail out money will not consider a "moratorium" on your mortgage until values come back or your employment situation changes. You stop paying because you can no longer, the bank starts foreclosure, you move out, and the bank has one more piece of real estate it can not sell. EVERYBODY LOSES! A 6 month to 12 month moratorium would have retained more for all parties.

Guess what my industry was that went bust? Mortgage lending. As a loan officer I NEVER encouraged a mortgage that was beyond the means of the borrower. I tried to avoid participation in all of the "100% financing" deals. My employers (the big banks) pushed these and other risky programs because they too failed to anticipate the depth of the collapse of real estate values. They just rolled in the gravy dish, took their huge bonuses, and then abandoned their employees and customers to the ashes.

Whew, I don't know what got into me, I've managed to hold back a while, but that felt kind of good.
Let it all out. Everyone assumes that the fact that someone can't afford their mortgage now implies that they were irresponsible when they took out the loan. There are cases where that may be true, but I think your situation is more often the case. When 20% of our workforce is unemployed or underemployed, there are a lot of good, competent, responsible people who are suffering through experiences that they never expected to face. An inordinate percentage of these are people who thought they were almost ready to retire and are now watching what retirement savings they have left disappear to pay bills that continue whether the income is there or not. You guys are facing your situation bravely, but there has to be a part of you that feels like you are caught up as characters in John Steinbeck's novel, The Grapes of Wrath.

road kill
03-27-2010, 12:18 PM
Let it all out. Everyone assumes that the fact that someone can't afford their mortgage now implies that they were irresponsible when they took out the loan. There are cases where that may be true, but I think your situation is more often the case. When 20% of our workforce is unemployed or underemployed, there are a lot of good, competent, responsible people who are suffering through experiences that they never expected to face. An inordinate percentage of these are people who thought they were almost ready to retire and are now watching what retirement savings they have left disappear to pay bills that continue whether the income is there or not. You guys are facing your situation bravely, but there has to be a part of you that feels like you are caught up as characters in John Steinbeck's novel, The Grapes of Wrath.

I thought it was 9.7% for February??
http://www.bls.gov/eag/eag.us.htm
HMMMMMMM........



rk

YardleyLabs
03-27-2010, 12:29 PM
I thought it was 9.7% for February??
http://www.bls.gov/eag/eag.us.htm
HMMMMMMM........



rk
That's unemployment. When you include underemployment as I noted in my comment, the number rises to 20%.

2tall
03-27-2010, 12:31 PM
Let it all out. Everyone assumes that the fact that someone can't afford their mortgage now implies that they were irresponsible when they took out the loan. There are cases where that may be true, but I think your situation is more often the case. When 20% of our workforce is unemployed or underemployed, there are a lot of good, competent, responsible people who are suffering through experiences that they never expected to face. An inordinate percentage of these are people who thought they were almost ready to retire and are now watching what retirement savings they have left disappear to pay bills that continue whether the income is there or not. You guys are facing your situation bravely, but there has to be a part of you that feels like you are caught up as characters in John Steinbeck's novel, The Grapes of Wrath.

LOL! or should I say COL (?). That was exactly what was going through my mind lying awake last night. We have bought a used travel trailer and will be living on the road soon. I was actually considering some modern version or play on words of that great book for my blog.


I thought it was 9.7% for February??
http://www.bls.gov/eag/eag.us.htm
HMMMMMMM........



rk

rk, 9.7 is reflective of the number of NEW unemployment claims. That does not take into consideration the people like my husband and me that have been out of work for an extended period of time. I believe 20% is closer to accurate on the total number of unemployed citizens. It may even be higher if you count those that were underemployed for years before the big bust.

road kill
03-27-2010, 03:26 PM
rk, 9.7 is reflective of the number of NEW unemployment claims. That does not take into consideration the people like my husband and me that have been out of work for an extended period of time. I believe 20% is closer to accurate on the total number of unemployed citizens. It may even be higher if you count those that were underemployed for years before the big bust.

I understand.
In WI we have a controversy over these bogus numbers.
Every County in the state reported over 10% unemployment, but the Governers office claims 9.6% state wide.
???????????????????????????????????????

Based on folks I talk to in my business all over the US & Canada it could be 25%+.
I have nothing to support that but hear say.

But the print industry is usually the first to dip & the first to recover.
My specialty is Direct Mail & Marketing.
Also trade finishing (foils stampnig & emboss & die cuting & U.V. or specialty coatings, etc.)
Not at the levels we used to enjoy to say the least.
Thank GOD for those great years.

People forget that the affect is broad and wide ranging....post office, vendors, paper sales, ink sales, pressman, car repair and tires, gasoline sales, etc. etc.

Good luck to you!!
I have confidence we will recover!:D



stan b

kjrice
03-27-2010, 05:24 PM
The "reported" UE numbers and the true UE numbers are not the same, with the reported being lower. Where I live, 82% of ALL home owners are upside down due to the ridiculously shrinking price. In a more astounding view, homeowners that bought over the last 10 years....

This editorial in today's paper is excellent: http://www.lvrj.com/opinion/still-not-much-of-a-stimulus-89319987.html

"...
And all this after 14 months of this administration squandering more billions of dollars on "stimulus" and "jobs" bills than any government in the history of the world.
They haven't worked. They were never anything but pork grab-bags. Only the free market can create lasting jobs, and free market entrepreneurs respond primarily to lower taxes, less job-killing regulation and a predictable economic environment.
That's the dead opposite of, "Guess which walnut shell the new tax is under? Nothing up my sleeve. But look! Behind your ear! Cap-and-tax! Card check! A new Value Added Tax! And how about a big bouquet of alien amnesty, wrapped around a new multi-trillion-dollar federal health care bureaucracy, guaranteed to double your private premiums in two years, starting with 16,500 new IRS agents?"
So this is "change."

Snicklefritz
03-29-2010, 07:36 PM
Well, I'm not upside down on my mortgage, but I'm still in the 'ME' category that Carol described. My modest, responsible life style, that my wife and I built not once, but twice, is in jeopardy because my employer figured he could hire three of me in India. And all of this just 5 years short of retirement.

My wife and I went down the tubes, through no fault of our own, 20 years ago, and spent the next 15 years clawing our way back to break even. Now, once again through not fault of our own, we are in danger of loosing it all. We did nothing to deserve our bad, or our good fortune. But, no amount of work on our part made a damn bit of difference. It had nothing to do with hard work, personal responsibility. It was good, or bad luck that turned the tide back and forth.

We are just starting down the road Carol has already traveled. But, we are not traveling alone. There is a caravan of responsible people who did it all right, and responsibly, and who are going down the tubes.

How did that happen?

luvmylabs23139
03-29-2010, 09:50 PM
I can see both sides of this argument. Let's face it, beyond the people who over bought on their house there is also the group that while they may not have over bought they still were not exactly conservative in their finances. People refinanced or took out 2nd mortgages against the equity in their homes and bought toys, took trips etc.
People had 2 brand new 40,000 cars in the garage.
Those of us that basically drive their cars into the ground before we replace them, only take a vacation when the CASH is in the bank etc. have a right to be mad at a bailout for those people.
When the condo market bombed in CT in the early 90's many people just walked away buying another property before ditching the condo to the bank.
We kept ours for 10 years and rented it. I couldn't handle living surrounded by all the section 8 renters. WE were the resposible ones.

Major Pain
03-29-2010, 10:52 PM
I can see both sides of this argument. Let's face it, beyond the people who over bought on their house there is also the group that while they may not have over bought they still were not exactly conservative in their finances. People refinanced or took out 2nd mortgages against the equity in their homes and bought toys, took trips etc.
People had 2 brand new 40,000 cars in the garage.
Those of us that basically drive their cars into the ground before we replace them, only take a vacation when the CASH is in the bank etc. have a right to be mad at a bailout for those people.
When the condo market bombed in CT in the early 90's many people just walked away buying another property before ditching the condo to the bank.
We kept ours for 10 years and rented it. I couldn't handle living surrounded by all the section 8 renters. WE were the resposible ones.


Its hard to see the whole picture when you limit your vision. Your only looking at the part you want to complain about. We all know there are many cases where couples/families bite off more than they can chew. Now the part you refuse to slow down and look at are the families who have managed their money well, honest, simple and hard working, all to lose their job due to this out of control economy. So these people are screwed because you don't approve of the Gov. trying to help out? This plan is designed to help Americans for limited qualifications. I'm sorry people abuse and mismanage their money, but there are so many that can HONESTLY use help. I would hope your good neighbor, whose lost his job and needs time to find a new job or make a life changing decision, could get your support and not a 'sorry bout your luck' attitude.
You say you were the responsible ones....take away your employment and income....whats does that responsibitly do for you now

ducknwork
03-30-2010, 07:29 AM
Just in case you guys missed it, the article specifically said this...


"Some people simply will not be able to afford to stay in their homes because they bought more than they could afford," the document said.

I'm not in a rush to help them.

As far as people in a situation like snickles, I can understand where they would expect to deserve some help and I can't disagree on a human level that I would like to give them help. But please tell me what makes this the responsibility of the government. I can't find anything in the constitution that compels the government to bail out ANYONE at ANYTIME for ANYTHING.

I think the correct answer (as bad as it sounds) would be that people that got screwed this time around are just, well, screwed. To prevent situations such as snickles from happening in the future, the govt should make it more difficult/less profitable/less appealing to companies to ship jobs overseas. You can't be upset with the company for that. They are in business to make money...Make it so that shipping out jobs doesn't help them make anymore money. Problem solved.

WRL
03-30-2010, 08:16 AM
Or maybe, just maybe, "WE" (as Americans) have become "lax" in what is acceptable.

50 years ago, MOST people owned outright their homes.

Now, its become "acceptable" to owe on the house, owe on the car and have "some" cc debt.

Maybe a shift needs to happen away from indebtedness in general??

WRL

badbullgator
03-30-2010, 08:22 AM
While I understand that people like Chuck and Carol are caught up in this due to unemployment, there are equal or greater numbers that did in fact over buy. These people may also now be unemployed, but they bought houses that were far out of their range. Our area is FULL of houses that 3 years ago were “listed” and being sold by builders for 300-400K that were NEVER worth more than 100K. Lehigh Acres and Cape Coral were sold and sold for way more than they were ever worth. We are taking 10’s of thousands of homes. I laughed when I saw the prices on these houses. Lots that sold for 5K were going for 80K. Neighborhoods that were selling for 78K began going for 300K. I went with my nephew to a builder when they were looking for a house. The sales pitch was the price of the house and the lot is 290K and there is a year wait to have it built and move in, by that time it will already be worth 350K. I do feel bad for those who have lost jobs and are now losing houses. I also feel bad for those who got caught up in the real estate boom and sold there home to upgrade to a nicer/bigger house only to find out know that the nicer/bigger house is worth less than the house they sold. I am still not sure that the government can buy our way out of this problem.

luvmylabs23139
03-30-2010, 09:28 AM
Its hard to see the whole picture when you limit your vision. Your only looking at the part you want to complain about. We all know there are many cases where couples/families bite off more than they can chew. Now the part you refuse to slow down and look at are the families who have managed their money well, honest, simple and hard working, all to lose their job due to this out of control economy. So these people are screwed because you don't approve of the Gov. trying to help out? This plan is designed to help Americans for limited qualifications. I'm sorry people abuse and mismanage their money, but there are so many that can HONESTLY use help. I would hope your good neighbor, whose lost his job and needs time to find a new job or make a life changing decision, could get your support and not a 'sorry bout your luck' attitude.
You say you were the responsible ones....take away your employment and income....whats does that responsibitly do for you now
Personally. I am damn sick and tired of the gov't deciding who has a "right" to my hard earned money. This is nothing more than a SOCIALIST redistribution of wealth.
We have always planned for the worst. 2 years of mortgage payments are sitting in the bank. We always overpay our mortgage. Maybe we are old school but we want our house paid off ASAP.

ducknwork
03-30-2010, 09:52 AM
Or maybe, just maybe, "WE" (as Americans) have become "lax" in what is acceptable.

50 years ago, MOST people owned outright their homes.

Now, its become "acceptable" to owe on the house, owe on the car and have "some" cc debt.

Maybe a shift needs to happen away from indebtedness in general??

WRL

Winner winner chicken dinner...

luvmylabs23139
03-30-2010, 10:26 AM
Or maybe, just maybe, "WE" (as Americans) have become "lax" in what is acceptable.

50 years ago, MOST people owned outright their homes.

Now, its become "acceptable" to owe on the house, owe on the car and have "some" cc debt.

Maybe a shift needs to happen away from indebtedness in general??

WRL

That is really the whole problem. While we have a mortgage on our home our goal has always bean to pay off the mortgage early, and we are way ahead of schedule.
Why should someone who is on a path to eliminate a debt early have to pay for someone else who takes the other aproach.:rolleyes::rolleyes::rolleyes:

charly_t
03-30-2010, 01:33 PM
The USA has increasingly had this attitude that we can fix the world's problems and our own by throwing more and more money at all of it. We have the problem of not having any money to fix our own problems anymore but the government is still throwing money at things.........more and more money in fact. We are broke but most of the politicians who are in control don't seem to have noticed. We can not fix everyone's problems. Sad but it is a fact of life. I hate the fact that we can't help fix people's problems but
sometimes life is this way.

pat addis
03-30-2010, 01:45 PM
wouldn't it been better for the people of this country if the dems. had worked on getting people back to work and having money rather than working for a year to jam health care down our throat

Julie R.
03-30-2010, 04:20 PM
To prevent situations such as snickles from happening in the future, the govt should make it more difficult/less profitable/less appealing to companies to ship jobs overseas. You can't be upset with the company for that. They are in business to make money...Make it so that shipping out jobs doesn't help them make anymore money. Problem solved.

Couldn't agree more, but the likelihood is the govt just made it MORE likely that more jobs will go overseas because of Obongocare. Now that businesses will be taxed and fined if they don't pay their employees' health care costs, I suspect more and more of them will probably have to ship jobs overseas to remain afloat, if in fact they don't relocate whole companies outside the U.S.

Henry V
03-30-2010, 04:52 PM
Couldn't agree more, but the likelihood is the govt just made it MORE likely that more jobs will go overseas because of Obongocare. Now that businesses will be taxed and fined if they don't pay their employees' health care costs, I suspect more and more of them will probably have to ship jobs overseas to remain afloat, if in fact they don't relocate whole companies outside the U.S.

Exactly right, as we have seen for years, businesses are moving to the U.S. all the time because we have by far the highest cost health care system in the world and because it is an employer based system. Auto companies in particular would never move operations to Canada and Mexico, in part to avoid more legacy costs.

dnf777
03-30-2010, 06:02 PM
wouldn't it been better for the people of this country if the dems. had worked on getting people back to work and having money rather than working for a year to jam health care down our throat

Yes, and I really liked the republican proposals at job growth and economic stimulation. Oh, wait, there were NONE. What exactly did republicans do this past year, besides wake up, read what Obama proposed, and then campaign vigorously AGAINST it....even if its what THEY were proposing in the past?

Really, what is a republican solution to this republican mess?

ducknwork
03-30-2010, 11:25 PM
Really, what is a american solution to this american mess?

Fixed it for ya.