Hilary's solution to the crisis

[almost_there]

I wondered which Presidential hopeful would be the first to jump on this...

http://www.thetruthaboutmortgage.com/clinton-calls-for-foreclosure-moratorium-interest-rate-freeze/

[Amerikaner83]

interesting reading.

FOR THE RECORD - I want to nip anything in the bud now - so just a friendly reminder to those who are thinking about making some sort of political statement as a reply to this post...Do so at your own peril! Politics are NOT allowed here... Just a *friendly reminder*

[almost_there]

I forgot to mention that part, Amerikaner...not intended to be a political discussion here, folks. Strictly intended to discuss the solution being offered by a candidate, not the candidate herself.

I'm not sure what the correct, or safest, solution is - but I do agree it will need prompt government action and oversight, as I think the courts will move too slowly for most American's loosing their homes (and money) daily. In fact, I've heard reports that the sheriff's can't even keep up with the amount of sheriff's sales needing to be done. The courts would get back logged with cases if everyone suddenly tried to utilize their rights in this mess...not to mention, so few American's actually know what their rights are!

Glad to know I do :)

[Amerikaner83]

I forgot to mention that part, Amerikaner...not intended to be a political discussion here, folks. Strictly intended to discuss the solution being offered by a candidate, not the candidate herself.

Exactly. Let's all be on our BEST behaviour with this thread ok? :p

[stefdr]

"As part of her proposal, she requested a $5 billion fund to help harder-hit communities that are riddled with mounting foreclosures deal with the ongoing housing crisis."

At the risk of being somewhat political, where is this $5 Billion going to come from? Most likely from those evil, greedy, wealthy people who had the audacity to not be a good little poor person dependent on handouts.

[merkurfan]

I've always believed if you save someone from a bad choice they are bound to do it again.

[admin]

"As part of her proposal, she requested a $5 billion fund to help harder-hit communities that are riddled with mounting foreclosures deal with the ongoing housing crisis."

At the risk of being somewhat political, where is this $5 Billion going to come from? Most likely from those evil, greedy, wealthy people who had the audacity to not be a good little poor person dependent on handouts.

Pretty close to crossing the line here with politics, stefdr - just so you know.

[jq26]

The idea of a bailout blows. Investor money gets flushed by folks that willingly took on too much risk. Taxpayers to the rescue. Furthermore, rate freezes on adjusting loans = a massive repricing of debt MUCH LOWER. The idea that investors have some unlimited ability to sustain losses is silly. Why should pensioneers such as school teachers shoulder the burden of speculators and liar loan applicants who bit off more than they can chew? Let the chips fall or we're just shifting the burden from parties involved to innocent parties (investors) that had no part in it.

[stefdr]

Pretty close to crossing the line here with politics, stefdr - just so you know.

Sorry, I thought I was close to the line with it, but I'm not taking political sides here. It just sounds to me like another attempt at redistribution of wealth. Take from those who earned it, and give to those who didn't.

[willingtocope]

The idea of a bailout blows. Investor money gets flushed by folks that willingly took on too much risk. Taxpayers to the rescue. Furthermore, rate freezes on adjusting loans = a massive repricing of debt MUCH LOWER. The idea that investors have some unlimited ability to sustain losses is silly. Why should pensioneers such as school teachers shoulder the burden of speculators and liar loan applicants who bit off more than they can chew? Let the chips fall or we're just shifting the burden from parties involved to innocent parties (investors) that had no part in it.I always wondered who got hurt and who got helped by the savings&loan bailout a few years ago.

I sure don't have an answer here, but it sure sounds like the sub-prime lender management's scheme to encourage people to get in over their heads and them pull the rug out from under them later may be to blame. The fact that the lenders then laid the loans off to "investor packages" may have scammed both the debtor and the investor. Maybe somebody ought to go to jail for this.

[jq26]

The fact that the lenders then laid the loans off to "investor packages" may have scammed both the debtor and the investor. Maybe somebody ought to go to jail for this.They have to. They don't have unlimited funds either. The crisis here is not a crisis at all- it is a reversion to the mean. The lenders are getting clobbered (they deserve it) and people who should not have qualified to tackle homeownership in the first place will no longer be owners. Ownership is a double-edged sword. Appreciation is a beautiful thing, but when you're leveraged and depreciation occurs, watch out. Why anyone thinks homes are magical assets that go straight up in value is beyond me.

The idea that borrowers were victimized is a joke. And it perpetuates a "whoa is me" attitude that they need not take responsibility for their actions. I certainly feel bad for people who are behind the eight ball, but laying the fallout on retirees and other investors is terrible OR alternatively on taxpayers is a double mistake. This is the typical boom bust cycle amplified by greed on the lenders part and poor risk management on the borrowers part. They took the free lunch upfront, gambled, and lost. Had home values continued to increase and borrowers received equity with no $ upfront, any talk of contract rescission would be heresy. This is the flipside of that scenario and so the gov't should stay out of private affairs.

[merkurfan]

If something can be screwed up. leave it to the government to not only find out how, but screw it up so bad, it takes a government program to try and fix it.

Our republic was lost when people started to turn to the government and not themselfs, friends or family to fix their problems and those that wanted their votes gave it to them.

[almost_there]

The idea that borrowers were victimized is a joke.

Are you following the mortgage servicing fraud story? Because that is no joke.

[jq26]

The mortgage servicing games that are played have nothing to do with a government mandated loan modification. Investors buy bonds based on certain returns on a pool of loans. Modifying these terms has massive ramifications. The mortgage servicing issues may be real but are dwarfed by the trillions of dollars in mortgage bonds.

[almost_there]

*nodding head* Yes, I see where you are coming from. I sincerely don't know what the answer is, definitely disagree with a government bail out...it's hard for me to see straight right now in the wake of learning of the servicing fraud we've fallen victim to. I guess I am one of the lucky one's in that I intend to exercise my right to take legal action....

I just don't know what to think these days :confused:

[jq26]

Are you dealing with Litton?

[LVMortgageMom]

The worst part is that the worst is yet to come. Those whose homes are being foreclosed upon will be ok. They'll be able to rent, not to say that it'll be easy, but there will definitely be some fly by night investor on the verge of losing an invetment property that will rent to them. However, it's the truly qualified homeowners that will continue to have their properties depreciate rapidly. It seems 03-04 is when these 2 and 3 years arms really became prominent. So you have those as well as your 5 and 7 year loans that will adjusting in the coming years. As the banks' inventory of foreclosed homes continue to grow, they will HAVE to get them off of their books. I have personally seen with my own eyes, 3 homes in very stable neighborhoods that were being listed with at least 100k in equity.

As jq stated, we are just experiencing a correction in the market, its just sad that people bought these over-priced homes and paid their downpayments, only to lose them to this debacle.

[Amerikaner83]

So does this mean that potentially, people who will be looking to purchase a home in 2 years or so will find themselves in a better situation come loan / purchase time?

[almost_there]

Are you dealing with Litton?

Yes I am, unfortunately.

[merkurfan]

So does this mean that potentially, people who will be looking to purchase a home in 2 years or so will find themselves in a better situation come loan / purchase time?

YUP! It's been a Sellers market for years..

wait till it's a buyers market, might happen in less than 2 years.

[CleverCynic]

Actually it's a buyer's market right now to the extent that sellers know it. It'll just take a couple years of realizing they can't sell it at the asking price before they know for sure and take anything.

Houses are just sitting on the market because of a stalemate right now.

[jq26]

This spring's market should be interesting. There is such a build up of inventory that prices are really starting to be reduced. Builders have already done so pretty significantly (partially because holding inventory is detrimental to their books), but existing homeowners have only done so modestly.

Here in Philly area, I can get a brand new 3000sq foot home for under $400k right now within 40 miles of the city. Yet existing homes are going for much more. Reality will have to set in eventually.

[amortgageman]

I wondered which Presidential hopeful would be the first to jump on this...

http://www.thetruthaboutmortgage.com/clinton-calls-for-foreclosure-moratorium-interest-rate-freeze/

Secretary of the Treasury Henry Paulsen announced this on Saturday, December 2, 2007, then the others followed. It calls for a 5 year rate freeze on adjustable rate mortgages.

But then again, aren't interest rates beginning to fall again, and when the economy is teetering towards a recession, isn't the liklihood of lower rates going to follow???? So, if the interest rates are frozen for five years, wouldn't that actually be detrimental to ARM holders, because if you freeze the rate, the rate is frozen. Annother smooth move by our friends of, and former employees of Goldman Sachs (one of the biggest buyersof subprime ARMS)!