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Thread: U.S. unveils plan to shrink some home loans

  1. #1
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    Default U.S. unveils plan to shrink some home loans

    Let me start by saying this:

    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.

    http://www.msnbc.msn.com/id/36050868...ss-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 ()?

    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.

  2. #2
    Member Major Pain's Avatar
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    Quote Originally Posted by ducknwork View Post
    Let me start by saying this:

    .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?
    God bless our Troops and their Family!

  3. #3
    Senior Member Hoosier's Avatar
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    Quote Originally Posted by Major Pain View Post
    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.

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    Senior Member 2tall's Avatar
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    Quote Originally Posted by Major Pain View Post
    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.
    Carol,
    Owned and handled by Cruisin' with Indiana Jones, JH
    Alternate Handler: Westwind Buffalo Soldier
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    Senior Member road kill's Avatar
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    Quote Originally Posted by 2tall View Post
    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
    Stan b & Elvis

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    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by 2tall View Post
    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.

  7. #7
    Senior Member road kill's Avatar
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    Quote Originally Posted by YardleyLabs View Post
    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
    Stan b & Elvis

  8. #8
    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by road kill View Post
    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%.

  9. #9
    Senior Member 2tall's Avatar
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    Quote Originally Posted by YardleyLabs View Post
    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.

    Quote Originally Posted by road kill View Post
    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.
    Carol,
    Owned and handled by Cruisin' with Indiana Jones, JH
    Alternate Handler: Westwind Buffalo Soldier
    Apprentice Handler: Snake River Medicine Man, JH
    http://newhoperetrievers.com

  10. #10
    Senior Member road kill's Avatar
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    Quote Originally Posted by 2tall View Post

    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!



    stan b
    Stan b & Elvis

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