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Publicly breaking with the Bush administration, the FDIC proposed to use $24 billion in government funding to help 1.5 million American households avoid foreclosure.
FDIC plan could help 1.5 million keep homes
Seeded on Fri Nov 14, 2008 12:42 PM EST
Article Source: msnbc.com- Enjoy this article? Help vote it up the 'Vine.
- Public Discussion (29)
Well...
Paulson keeps giving the bailout bucks to banks in the hope that they'll start making loans, and to companies like AIG who take the help and then send their people on junkets. Congress wants to give the auto industry like $25 billion of it without, as far as I've heard, any stipulations concerning executive pay cuts or changes in manufacturing standards.
So, I'm thinking that another $24 billion of it to try and save 1.5 million FAMILIES (because that's what we're really talking about here) avoid forclosure and potential homelessness and/or bankruptcy - what the heck, might as well. In for a penny - in for a pound, right?
Unless, of course, the ones being saved are those who were just greedy and bought investment properties that they can't afford since they can't unload them.
To the average person - which is what I consider myself to be - there is NO accountability and NO oversight going on with this money, and it seems to be simply good money after bad, and NO ONE...not the Administration or the Congress and certainly not the Treasury seems to care.
PLEASE PLEASE - if you never have before, take time to write to your elected representatives in Congress, and ask them to demand transparency and accountability. This whole thing didn't just happen. The bad decisions of the people who are STILL in charge and receiving the money are why we're in the shape we're in.
But, that's just me thinking...and I've been wrong before.
#1 - Fri Nov 14, 2008 6:34 PM ESTWhat a pointless effort. Why prolong the inevitable. Let the foreclosures begin, people will purchase the properties eventually and the bleeding will stop.
It makes no sense to keep people in their homes that cannot afford to pay for them. If they don't/won't have the resources to meet their financial obligation to their lender what is the outlook that they will maintain their homes to a community standard. Allowing properties to fall into disrepair is no way to regain the losses in equity for those who purchased in earnest.
One more slap in the face to those who make prudent choices.
While in theory we agree that SOME homeowners need help the question that comes up is how and how you avoid the "moral hazard" issue. The proposal by FDIC and Obama's proposal create serious issues both with the "moral hazard" issue and, in the case of Obama’s plan, issues of money no longer flowing into banks which again puts them at risk and the issue in the plan called 'good Faith" which basically means that if a person or family makes an good faith effort to pay then they get help. The problem is that there are millions that got in over their heads at a time when housing prices were high and no matter how much good faith they show they will never be able to pay the loans. This brings in the issue of why the Treasury changed its strategy and that is, right now, it is almost impossible to put a realistic value on non-liquid assets because no one knows where the bottom is going to end up.
So what is the answer? Well, that's hard to say especially given the corruption in D.C. and the fact the Democrats will, like the republicans, act before thinking but here are some starting points:
1) People who only own one house would qualify. We feel no sympathy for those that bought vacation homes or bought property in the hopes of turning it and making a profit.
2) Since most economist except those on the left or right think this recession will last through 2009 and possibly into 2010, then for this period, set a low interest rate on those that meet certain criteria, and have them either pay on the balance or just the interest. This would keep the money flowing into the Banking system and forestall the U.S. having to further run up the deficit by lending them more money.
Once we can see housing prices begin to stabilize and this will not happen all at once but begin in different parts of the country and then spread just as the bust did, Independent assessors will re-assess the house's value and a new loan is then issued at a fixed interest rate. If the individual can't afford the house then one that fits their budget is found and a new loan issued.
This is a start and not necessarily the final answer but one can say that the FDIC and Obama's plan will ultimately cost the taxpayer more money and send us into a deeper recession.
Just as a note- The traditional way of determining amount of disposable income is to take 30% of your gross income and then subtract any debt. We need to get back to this formula.
Unfortunately, for us, with the Democrats in control of both houses of Congress and a Democrat President, we won't see this happen and we will see some variation of the Obama plan which will further devastate our economy. Also, keep in mind, we don't have any faith in the Republicans as they are just as short-sighted and corrupt as the Democrats.
I rent, but have sort of been house shopping. There are bank floreclosures, but in general the banks aren't selling. What they are doing is pricing a 500k home at 250K, then "accepting and reviewing bids". If the bid isn't up in the neighborhood of 80% or 400K, for example, (according to my real estate agent), then the bank simply turns all the bids down.
Why would a bank accept 250K from me when that bank is going to get 400K or more from the government?
In other words, I can't buy the house for 250k, but the government is going to take my tax money to pay 400K for that same house.
And there isn't anything I can do about it.
If you want to see who caused the problem with failed mortgages, click on this link to see
where it started. Notice the date on the memo.
#2 - Fri Nov 14, 2008 9:51 PM ESTIf you want to see who caused the problem with failed mortgages, click on this link to see where it started. Notice the date on the memo.
#3 - Fri Nov 14, 2008 10:03 PM ESTSo 1.5 Million homes were purchased by people who couldn't afford them and I'm supposed to care? Screw them and screw that
I am tired of everyone being the victim, you made your own bed ... lie in it you stupid idiots why should my taxes go to people to stupid to use simple budgets to figure out that they make 40K per year and can't buy a 300K house just becuase they like it
#4 - Fri Nov 14, 2008 10:20 PM ESTYay! 1.5 million imprudent fools win taxpayer funded bailout lottery!
How much you wanna bet the majority of them end up in forclosure just the same? Gov's just prolonging the inevitable at the expense of those who were careful with their money.
Vile.
#5 - Sat Nov 15, 2008 1:52 AM ESTnot all of us are fools as you idiots seem to imply. My wife and I only have a 2 bedroom house that is 900 square foot total. We are in foreclosure not because we overbought but because of cutbacks in hours at our jobs and the rising cost of fuel and food and the increase in everything else that went up because of the economy going to hell. We fell behind in our payments and couldn't get back out of the hole.
Our house only cost 62,500 when we bought it, we only owe 56,000 on it now. We do not want taxpayer money to help us out. We only want the mortgage company to rework the loan so we can continue to pay for it.
However, I see that most of you would rather we bail out the pricks that gutted our economy instead of using that money to help out those that were victims. Yes some of those people way overbought from what they could afford but please do not lump everyone into the same category.
My wife and I have been been at our current jobs for a combined total of 22 years, we are hard working and never would we ever ask for a handout. But should one come our way to help us save our house we will definately take it for the sake of our children.
I for one would rather pay taxes on a bailout that helped the American taxpayer on Mainstreet then the crooks on Wall Street.
- 2 votes
#6 - Sat Nov 15, 2008 4:28 AM ESTBased on what you say and taking it a face value then we would say you would qualify for help.
If you were not saying "my wife" I would have thought it was my wife who wrote this..LOL. Even the mortgage numbers are the same.
And we both lost our incomes in the last 2 months.
Hang in there..there is a measure of honesty that is being weeded our of our society right now and folks like us will survive... as hard working as we are ...we will be able to make soap and grow food.
"Based on what you say and taking it a face value then we would say you would qualify for help"
And that is in fact true..except it is not coming from our mortgage company. We are paying the mortgage first and they are the last people who are willing to talk about it.
What about saving? Does anyone save money anymore, an emergency fund. No, we buy houses and hope for the best. We never consider what would happen if we lose our jobs, we just move forward and make the most expensive purchase of most of our lives. It is mind boggling how many folks state " I can't afford to save a dime" yet they believe that purchasing a home is a wise decision.
And modifying loans will not help most of these people, the majority want out of their homes, the rest could not afford the home even when they were making interest only payments.
No, I do not want bail outs for any of the named institutions, however I realize that allowing these companies to fail would punish the little guy more than ever. It would plunge our economy into an even deeper rut that we would not get out of for many years.
Moreover, there are as many crooks on Mainstreet as there are on Wallstreet. Frankly, there are plenty of realtors out there who should be punished for encouraging their naive clients to buy homes clearly out of there price range because they knew that crooked loan officers could and would make the numbers work. And again, when you are sitting at the table during closing and you see the numbers or better yet before you ever reach closing and you are working the numbers at home, does anyone ever ask "what if I lose my job" how much do I have saved to pay the mortgage etc. for "X" amount of months or longer?
If the answer is "0" then there is your answer. Problem is, in this country we feel entitled to have what everyone else around us has, i.e. houses and fancy cars, so we throw caution to the wind and just buy it. Despite the fact that those around us are now in the foreclosure boat as well.
- 1 vote
#7 - Sat Nov 15, 2008 11:23 AM ESTGood Point. The savings rate in this country since WW2 has hovered around 1% or less. When you see a country whose GNP is 66% based on consumer spending, you see a country in serious trouble and one that isn't going to last. So part of the answer of saving All Americans is to try and increase savings and lower our appetite for consumer goods. Hard to do after 50 years of consumerism but it is our only hop short of Revolution.
our hole world is in a real pickle. Now who is to blame .. that would be everyone. the American people and the government. i am not a dumb woman. when i did my mortgage i looked at every word and understood it all. i didn't take anything that i knew i couldn't afford. but have any of you been keeping up with things. the illegals that are here living and not deported. do you know how much money that cost a year to supply them with heath care, food, rent, clothing, on and on. they get the free ride here in America and were paying for it. we have rules and laws in this country and it seems they are closing the doors to them. the rate of crime is only going to go up and that is going to cost more on us all. the jails are over crowded and were paying for it. over sight on the government part. we need our government to start to act like they care. these bail outs now i know it was not me that helped in that. and its not going to help me in the end. all you hear is about middle class and upper class and the poverty line is never crossed. don't look at them they don't need anything. if our government started to do its jobs the right way not crocked then we could start to heal. we need to fix this country before were off fighting in wars that make no sense and our American children our dying in. that would save billions of dollars. there seems to always be and excuse from the president or Senate or congress why its happing. I don't ask for much i want to live in a home, pay my bills, eat, cloth my children and live a happy life. hard to do that now. so many people have moved here for the better life while doing that it has robed us of our opportunity's to what we have worked for. If you illegal go home. take you family's with you. if your country is in shambles that's not this country's fault. go home and do what we have to do talk to your leaders. this was a rich country at one point in life now its a poor mans world. i am sad to say i have seen this. and wonders why people cant care for there children anymore. its not they don't want to it is that they cant. government agency's have no money to help anyone anymore. cause there helping people who shouldn't be here in the first place. I also have read that they do the work Americans wont do. heck they don't get the chance to do it cause they want to hire cheap labor. company's need to know who they are hiring and hire true Americans. if they send there company's over seas. then they go with them. I do get sick of seeing made in china made in Mexico. I am a American i want American.i don't live somewhere else. we need help and its going to take all of us to do it.
#8 - Sat Nov 15, 2008 11:34 AM ESTAll the money being given to banks through the $700 Billion rescue plan are in the forms that must be repaid with interest. Taxpayers will actually make money.
The FDIC plan is basically a handout. If housing prices continue to fall, as many expect, taxpayers will be on the hook for far more than the $24 Billion claimed by the FDIC. If anyone has read articles on what has happened to those mortgages that have been modified, to include principle reductions, between 25% and 50% of them have gone back into default.
I say no to use of taxpayer money to guarantee loans. The downside risk is too great.
#9 - Sat Nov 15, 2008 4:51 PM ESTI don't think my idea is to see thousand of homes empty and the banks and government owning them. they need to find a way to get those folks back into there homes. and i am not talking about there vacation homes i mean the hard working folks who did lose there homes. Having all these empty homes does nothing for morale and our economy. the banks lose more money not having them there then keeping or putting them back in there. times has caught up to all of us and all of us but more for the poor folks its hurting us. I am sadden that our government rather see family on streets then in those homes. and its a joke to call up your morgage company and try to work out a plain there rude and they don't care. or they tell you to fill months of paper work out first and then we will see if or what if anything we can do for you. been there done that. this is all a joke and the joke is on me.
#10 - Sat Nov 15, 2008 5:51 PM ESTLets see - how's about the bailout billons to go this way: Take the number of adults who have a primary mortgaged home, allot them a generous portion of the money, tax it first so that Uncle Sam get's back his share, the government then cuts a check to the mortgage co. for the balance of your loan so the lender stays afloat and ultimately a citizen has a home.
#11 - Sun Nov 16, 2008 12:54 AM EST You know its about time some of the people who created this mess help take some responsibility for it. I'm talking about the people who took out loans that they could not afford. The real estate companies that sold them and lined there pockets. The housing contractors that influenced the homeowners to build bigger and more costly homes. Then there are the banks that would sell there own souls for the chance to collect as much interest as they could. Everybody rode the economy as if there was no tomorrow. Well guess what? Tomorrow came earlier and everyone got caught with there hands in the cookie jar.
Now everybody wants someone to pay for their mistakes. Well you want to know who is going to pay for it. All of the retirees who lost more than half of what they saved all there lives. Your kids who will propably never have anything because it will take them a lifetime to pay this off. It won't be the rich because, after this is said and done. There are alot of rich people that won't be when this is over. These rich people are the ones who own companies that create jobs and help keep the economy going.
I pray that we can come out of this with some dignity that the rest of the world doesn't think we are as stupid about money as we appear to be.
Russ
#12 - Sun Nov 16, 2008 7:07 PM ESTDont be so naive, I have made my house payments for the last 3 years and my loan(subprime) has been sold 3 times and ended up with Litton Loan Servicing. Now do some research on who these crooks are and you are going to see why all the foreclosures are profitable for some. This man and his company are definitely part of the problem. I can make my mortgate, but you see they dont answer the phone, they put on charges and do not explain them, violate the RESPA act and get away with it. I was forced to get an atty and pay charges that I still do not know exactly what theyare. Finally joined a class action law suit against Litton.No one is working with homeowners, it is all a created fiasco and those that created it will continue to profit, please do your research. Wake up America and get ready to own nothing.
#13 - Sun Nov 16, 2008 10:02 PM ESTBefore we continue tossing blame at congress and the lending business let's stop and look back a few years.. Sometime in the past a bank or maybe a group of banks experimented with the idea of selling mortgages.. We the people accepted this idea and it grew to be industry wide.. Sometime in the past a bank or group of banks experimented with variable rate interest mortgages - loans and credit cards.. We the people accepted that as well and of course it grew to be accepted practice .. Sometime in the past a bank or group of banks experimented with interest only mortgages and we the people accepted that as well.. Had the people rejected these ideas when they were first trotted out the banks and lenders would have realised that they were ideas that the public would not accept and they would not exist.. Same thing as when you go into a retail store to buy let's say a freezer.. You look at the displays and put your money down and the clerk asks you when you want it delivered.. You cannot take your purchase with you - and of course in many cases there is a delivery charge.. So now in addition to an onerous sales tax - you pay to have your new freezer delivered and probably pay additionally to have the old one removed.. We have become a nation of sheep - being herded into plans we really don't like but when these plans were first tried out we did nothing but follow them... Now you see advertising that tries to send you on a guilt trip for holding up lines if you do not use a credit card to buy a cup of coffee or something similiar.. Are we going to let cash become extinct because the credit card companies want us to use nothing but thier cards at 20% plus interest??? Are we going to continue letting the "money people" dictate our way of life ???
#14 - Mon Nov 17, 2008 9:06 AM ESTMaybe it is time for a consumer revolt... Rather then using credit cards and checks we ought to use nothing but cash to buy whatever we need.. Let's let the card issuers feel the squeeze for a change..
#15 - Mon Nov 17, 2008 9:10 AM ESTJimbo, very interesting theory. Someone once said that "religion is the opiate of the masses", or something like that.
Is credit debt the "new religion"?
In a credit created dominant society you will find it for all to begin to do this but for those of us who can only operate that way , we will perservere. In my 62 years on this planet in this country, I have seen credit become the greed mongers way of controlling the masses, thus creating scenarios any way they want. It is time to rethink how we do business!
#16 - Mon Nov 17, 2008 10:43 AM EST24 billion divided by 1.5 million sounds like 16 thousand per household. did their income drop by 16K$ or is the mortgage 16K$ over priced? i suspect the latter. somebody..not tax payers..bet the 16 grand and lost. make the mortgage company eat the loss, or refi the loan at 7.25 percent of say 5 times the acutal cost of the land and dwelling. the pie may be smaller but no one goes hungry.
#17 - Mon Nov 24, 2008 4:22 PM ESTI'll speak again of Texas where economy is still fairly good. Has been a pretty high number of foreclosures here which has driven home values down although land prices still high.
There was relaxed requirements in giving out loans, thanks to govt initiatives that started b4 Bush was in office which caused some problems. There was some corporate greed in bonuses probably being paid out for X $ amount of loans given in certain time period, but I wanted to mention one other thing that I saw and heard of going on here.
Some individuals were taking the ARMs at low rates, using it more like a rent house, and living in it for only year or two till rates adjusted (normally up), then sold home (at a profit) and moved on to do the same thing. I wasn't doing this, but sold two house in past 10 years, both at a profit. When I sold my last house about six months ago, my buyer was moving into his 9th different home in 11 years.
By paying mortgage, the interest was deductible where the cost of renting would not be. With home values moving up and a good pace, profit was able to be made even when sale done in only a year or two. However, when some of the other loans to people who shouldn't have gotten them in the first place started defaulting, more homes wound up on the market and these home "speculators" could no longer make a profit. Some wound up staying in home if couldn't sell at profit, some wound up defaulting also whether by choice or necessity which put more homes on market, lower prices, and so on, and so on.
My point is there, is lots of blame to go around. People wanting to own a home when they should have known they couldnt afford it. Lenders giving them the money to get their bonuses and able to do it because of Lax lending requirements put forth by govt. REal estate "speculators" who were trying to make profit with increasing values and low Adjustable rate mortgages.
I have no mortgage on my home now and since I didn't get help paying my other ones, I really don't want to help someone else pay theirs with my tax money.
#18 - Fri Dec 5, 2008 1:07 PM ESTI am a single mom , trying to hold onto my house. I bought my house with an interest rate of 8.25 thinking once I got into it I could lower my rate.....why would I think that...there is not one person in the morgage industry that wants to help me without alot of money up front, which I do not have ..I keep hearing that the government is going to help out the morgage industry I am one of the people they should help out and I can not get anyone to even listen to me let alone help me ....I will probably end up loosing my house which I have only had for seven months.....really sad...So the big question is where is this money that the government is giving to help bailout the morgage and banks really going....Chase and Wamu sure don't want to help out there customers....So who is getting help I want to know..
Stacey
#19 - Thu Dec 11, 2008 10:34 AM ESTWho is actually getting the help that the government is offering for this big bailout to help people save there homes....I am a single mom with a new home that I have had for 7 months my interest rate is 8.25 my note is killing me....I thought I could lower my interest rate and be one of the ones the government is helping...but I am quickly realizing there is no help out there....my credit is not perfect and I dont have any money to put down so the banks do not even want to give me time or day...chase and wamu keep saying they can not help me unless I have 5,000 or more to put down...well news alert if I had money to put down I probably could make my mortgage....I am doing everything to hold onto my house for me and my five year old but I am not sure if I can .......so if someone could tell me what to do to get my interest lower and my payments please send me some advise...I just would like to know who is getting the help?????
Stacey 39 year old single mom
#20 - Thu Dec 11, 2008 10:42 AM ESTSure hope they help me pay for mine. lol lol YEAH RIGHT. This has become such a JOKE.
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