Man this pisses me off ->
 

WASHINGTON (AP) - President Bush on Friday outlined ways to help homeowners facing foreclosure—the administration's first effort to deal with an expected wave of defaults fueled by the mortgage crisis.
The initiatives, which are not aimed at bailing out lenders or speculators, are designed to help homeowners with risky mortgages keep their houses. In remarks in the Rose Garden, Bush also discussed efforts to keep the problems from arising in the future. "The government's got a role to play, but it is limited," Bush said. "A federal bailout of lenders would only encourage a recurrence of the problem." The president insisted that the U.S. economy was strong and could weather recent turbulence in the financial markets. He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years.

"This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."
A key element of Bush's plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

Earlier this month, Bush predicted that the ongoing decline in the housing market wouldn't become precipitous, but would result in a "soft landing."
He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms "Anybody who loses their home is somebody with whom we must show enormous empathy," the president said at an Aug. 9 news conference. "The word `bailout,' I'm not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don't support that."

On Friday, Bush:

—Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages.
—Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans.
—Called for rigorously enforcing predatory lending laws and strengthening lending practices. Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes. Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.
The economy enjoyed a strong revival in the spring although growing troubles in housing and credit markets have darkened prospects considerably since then. The Commerce Department reported Thursday that the gross domestic product grew at an annual rate of 4 percent in the second quarter—the strongest showing in more than a year.
But that growth could be the best showing for some time as the economy continues to be battered by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller- coaster ride in recent weeks.

Sorry but if you were stupid enough to get into a RISKY MORTGAGE you should have thought twice about buying a house you could not afford in the first place.

5-year adjustable notes, no money down and interest only loans are for suckers. The government has no right to spend taxpayers money to bail out idiots.

:iagree: I took me 6 years after I started working to buy my first house, small one, which I knew I could afford paying the mortgage for. Then it took me another 9 years to buy a bigger house, then another 6 years to buy a vacation home... Bottom line buy what you can afford and do not ask others to pay for your mistakes.

Let's preface this conversation by saying that both the feds and the homebuyers have responsibility and I do not condone that. But you are failing to see the big picture. This "correction" affects even those who are NOT in subprime loans and or jumbo loans. In a default situation, everybody loses. Banks lose because they lose liquidity. Homeowner loses because he is forced out the house,there by affecting the job market also if he has to move out of the region.

With banks skittish and places like Countrywide hurting really bad, you will have a hard time even getting ANY loan as in this situation. This in turn will cause housing prices to go down because nobody can afford to buy. (this includes YOUR house)This also affects companies that are not cash rich. They can't borrow, can't expand the business, stunts business growth. So to stay afloat, guess what some have to raise prices to compensate. That comes out of your pocketbook.

It's a 0 sum game. Everybody loses since this is a global economy.

Education is key here, and we had millions of utterly uneducated people financed into things they couldn't afford. You bail out those people, and they will never learn. Let them foreclose, try to find a rental, not be able to use credit for a few years, and those people will never make that mistake again.

We have one of the worst savings rates (actually negative) of all modern civilized countries, and we have systems in place to keep our society totallly ignorant to their mistakes. Whenever our citizens make a bad choice, they are automatically victims and demand assistance, and they are showed "empathy" rather than allowing them to grow from their ignorant state. There are so few people that actually take personal responsibility for any of their actions in this country that it makes me sick.

Example...I took out a 5 year adjustable loan on a condo rental I own and rent out about 4 years ago. I had every intention of selling it before the loan adjusted to a higher rate as part of a strategy to get the most out of my investment.

It now looks as though I will lose out because the market is flooded with condos and the value has dropped about 75,000 in the last 6 months.

Good news for me is I've owned the property for about 20 years which I purchased for $87,000 as a first home. Even in this depressed market it will go for $325,000 so I'm not hurting so bad after-all.

Motto of the story is I gambled and lost about 75-80K but will live with my decision. My overall strategy of buying property I could afford had paid off in the long run.

You are under the assumption that the only way to "educate" people is for them to suffer and learn their lesson the hard way. If that is the case, then maybe the surgeon general should not require a warning on tobacco products. Maybe people who smoke should learn their lesson by getting cancer and finding out the hard way.

Or we can simply educate people by providing them with information. How about some regulation of the mortgage industry. If certain types of loans are unfair and "only for suckers", then the government should step in and pass legislation so that such loans are illegal. Or at least people should be required to read some sort of government mandated disclaimer which explains all the risks of such loans. Not everyone is aware of such risks, and I'm sure the salespeople selling these loans do not tell them about it as they are paid on commission and want to close the sale.

It's the government's job to protect its citizens, and even though it may be hard to believe, there are actually things other than terrorism that we need protection from. ;)

Trouble is; even though educated and provided with information some folks are gonna try to game the system. That's why certain people will go for the "certain types of loans which are unfair and "only for suckers", . They reason i can get over and get out before the rates go up. Instead they got caught. Perhaps it's these folks( These suckers that is) that others want to see get a lesson. Not the poor sap who didn't have the moxy to read the documents he was signing.

I fail to see why noone has brought up the Brokers, they also played a MAJOR part in putting people into homes they could not afford by any means possible, be it lying, up selling, saying the good ole "oooh it's interest only BUT you can always change in a few years"

Buying a house is everyones dream, and when someone makes a dream you couldn't see yourself doing a reality, you may not have someone else with knowledge to tell you "bad idea'

I almost did the same thing but my parents said no way on interest only, and they probably saved me from this scenario as well, but not everyone has that

Simply placing people into black/white areas as dumb and uneducated simply because YOU feel so isn't correct, and frankly quite rude

And it's the lazy bum who sits home and collects welfare that people have a problem with, not the single widowed mother of 3 who collects welfare to feed her children.

I understand that. But the good comes with the bad. You cannot punish everyone because you have a problem with only some.

Funny how nobody was making huge federal waves about sub prime loans till the bottom fell out.

I say, let the bottom fall. It's these sub prime mortgages that drove up the prices of homes 100% in the last four years. Everyone just "had" to buy.

If homes go into foreclosure, that means it will become a buyer's market. Great, perfect time to buy some real estate. If my home drops in value, fine, I'll sit on it, for another 26 years, until my mortgage is paid off, and values return to normal.

All those, I'm gonna flip it, make a killing, people., they were all warned. But everyone wanted a taste of the band wagon.

I could of bought a home twice the size in 90210 if I went with a 5 year, interest only. I bought what I could afford, and I don't think my tax dollars should go to the jackasses who were trying to make a quick $100k on a flip.

I also don't think, if someone finances a car, then they are upside down, that the gov't should give them the money, to adjust for the loss in value of the car. Guess what, maybe you should not have bought that Mercedes.. A Volkswagon would have done the job just fine.

My point is, people invested stupidly, why should those of us who weren't trying to make it rich quick, suffer because of it.

B

+1
let the fools burn! let the greedy investors rot with their properties on their hands! why should tax dollars go to save those morons?!?!?!?!??!?!?

The real question here is what dumbass would take on an adjustable rate mortgage when rates were already around 5%...did they really believe that rates were going substantially lower?

The real blame here though lies with the Mortgage Brokers...these guys are really scum pushing people into no interest and adjustable rate loans at a time when rates were already very low.

oh the brokers are burning in hell too, a lot of them in so cal got visits from FBI agents and are behind bars for forging documents!!!!!!!!!! true story from a customer who saw those agents at his neighbor's doors. all of my broker customer have gone awefully quiet too in the last 18 months, i wonder if them too are behind bars?!?!?!??!

Its a shame, but the Brokers flat out lie to you. I have dealt with them on 4 or 5 loans and told them up front I knew the game, have good credit, blah blah...they still try to slip shit in at final closing. I learned many years ago to stand firm and demand the fees are removed or walk...I walked once and they called me back the next day to close with all the bs fees removed.

interesting how nobody on this thread has realized that default/foreclosures affect yourselves in more ways than one.

Don't be silly.... Nothing ever affects anything else. Each event in the world is completely isolated from every other event. :nanana:

liquidity and flight to quality mean nothing to some... ;)

I agree. People need to stop buying what they cannot afford, and they need to be prepared to take the consequences. The gov't is not a safety net. Too many people try to stretch their finances and take out risky loans and mortgage, crossing their fingers and hoping it will all pull through. I say let them suffer. :thumbdown

You have got to be kidding me if you think we are just naive. You don't think we realize that default and foreclosures are driving down the stock market and the housing market?

-- But I am ok with that. The market needed to correct and property values needed some cooling. Lets get rid of the trash, start clean with buyers who can actually afford what they are buying, and let the market self correct.
- Real estate is not a short term investment, and I could care less if my values have gone 20% in the last 4 months, they will climb back up at a rate dictated by real world values, not stupid, interest only, 5 year mortgages.

-- And I don't blame the brokers, if they forged documents that's one thing. But most where just selling a product to consumers who were more than willing to sign on the dotted line to make a quick buck.
Nothing in life comes that fast or that easy without an expected, quick turn.

Can't afford your house now.. MOVE... Chances are most likely you couldn't afford it when you bought it and you mortgaged your future. Taking a big loss on the property? Then you shouldn't have bought something you coulnd't afford to hold onto until the market corrected.

You want to buy a house, don't be a putz. Call a reputable bank, ala Bank of America. Pay the appropriate amount for a 30 year fixed mortgage (6% is a fantastic deal), and ride the wave's of an up and down real estate market..

But don't go crying to uncle Sam that it's not fair, because your neighbor who is living in the identical adjacent house, is paying twice what you are for the privialge, but at least they locked in a long term rate.

B

stock market and the housing market are only small pieces to the puzzle. It's the credit market you really have to worry about. Don't forget US borrows money from other countries too. If state doesn't have liquidity and that only means that they can't have bonds for schools, improvement for public roads, etc (read pothole city) you are going to have bigger issues. Why do you think Arnold and the state had such a tough time with the budget?? It's a whole spiral effect. BTW, for something closer to home, how do you think the paramount and 21st century, dreamworks out there finance their projects... It sure as hell ain't all cash. Guess what happens when they don't have funds for projects...

food for thought. Bank of America AND Countrywide were HEAVILY involved in the subprime market also. You can throw your argument out the window. Like I said, I am not condoning the behavior of borrow more than what you can afford. We have to look past who fcuked up and lay blame. We should be focusing on creating a somewhat soft landing to ensure credit quality for the nation as a whole. BTW, my wife is a VP at very large brokerage in the credit market and she warned against all of these a couple years ago so some insight from insider.

Govt. help.... not...
 

Hmmmm, seems to me no one from government came to my resuce when the stock market dropped and the margin calls started.

I took my beating. Had to down size home and cars, ended up divorced ( not necessarily a bad thing ) got my credit beat up pretty bad etc, etc...

But I worked my way back.

Seems that it shouldn't have taken a rocket scientist, or even an economics major to figure out the you couldn't afford a $600K house on a $50K - $60k income.

You screw up you take responsibility for it and learn from it.

I read today that there are something like 2MM of these loans still out there that will adjust over the next 2 years. I wouldn't look for this to get too much better anytime soon...

what also troubles me is that large, i mean we are talking fortune 500 companies like BofA, Cwide and even IBanks like Bear Stearns played this subprime game and are losing their ass BIG TIME. All those analysts, all those smart ivy league school schmucks and this debacle is unfolding. AMAZING!!!!!!!!!!!!!!!!!!!!

here's what you have to consider - if all your competitors are jumping in on doing these loans and grabbing large market share of the products and profiting, you in turn will need to jump in and get market share even if it is agianst the wishes of your market risk officer. Of course, they do hedge on the other side to balance out the risks but still you can never have an instrument that has 0 risk even with a say a AAA insured bond as rated by Moody or S&P.

so very interesting that you brought that up and i quote:

Originally Posted by MrLabGuy

Sorry but if you were stupid enough to get into a RISKY MORTGAGE you should have thought twice about buying a house you could not afford in the first place.

I sure hope you're not calling yourself stupid. As with any investment you have risk. It's all about how much risk you are willing to take. You win some you lose some.

Hardly, in my case it was in investment property I'd owned for almost 20 years. The loan was minimal and I planned to sell the condo in a few years prior to the 5 year term.

At the time of the loan it was a sound move considering the real estate market 4 years ago. Same goes with the stock market...You win some and you lose some. Good ideas today are a bust tomorrow.

The big difference here is that I did not take on more loan than I could financially handle and I'm not looking for a bailout. What I am doing is refinancing to a 30 year fixed which still has a decent rate. I'll sit on the rental property for a few more years and wait until the inevitable up-swing in the market. I ended up losing a little money in the short term out of equity but I'll recover without any government subsidy.

Real estate is an investment just like the market...You win some and lose some...When you lose you lick your wounds, learn to diversify and come out swinging.

Michael

Two words -"Personal Responsibility". I love my country, but too often the American public looks to place the blame where it does not lie. People who bought more house than they could afford, made bad decisions.

If you invest in the stock market and lose, it is not the fault of your broker or the companies in which you chose to invest in. The same holds true for what could be the largest investment in most peoples' lives. I think people need to stop trying to blame everyone else for their own ignorance.

Maybe and maybe not. Even the best investor may be no match for a scrupulous con artist called a broker. Think about it. From year to year the average Joe continues to vote for politicians who promise the moon and deliver nothing. And they continue to buy cars from slick talkin car salesmen who rip them off. Do you honestly believe that others couldn't be suckered by dishonest real-estate brokers, loan agents, and bank officials? :rolleyes: