s/o on home foreclosures

[aude sapere]

I have sympathy for those individuals who cannot make their mortgage payments.

 

Having said that, I don't understand why the banks should modify the terms of the mortgage contract. Or why the gov't (i.e. taxpayers) should shoulder the burden of someone else's poor judgement/bad circumstances.

 

The home buyer and the lender agree to the terms of the mortgage -- loan amount, duration of the loan, interest, and remedies upon default. No one signed this document under duress.

 

If the home buyer defaults, the home buyer should accept the consequences.

 

When a Well Trained Mind board member recently had a "fire sale," collected money for goods, and then didn't ship the books promptly, the customers in question wanted either their money back or the books they purchased.

 

They didn't offer term modifications ("keep all the money, send me half of the books I ordered"), or donate the money ("sure, you need the money, feel free to keep mine"). They, rightfully, wanted the seller to honor the terms of the deal, and threatened legal action (i.e. pay pal disputes, etc), to compel performance.

 

Why should it be any different for lender and home buyer. Obviously, the dollar amount is bigger, and there's more at stake. But, in my mind, that's even more reason to honor the terms of the contract. Why should the home buyer unable to meet his/her obligations get special treatment?

[Renee in NC]

I have sympathy for those individuals who cannot make their mortgage payments.

 

Having said that, I don't understand why the banks should modify the terms of the mortgage contract. Or why the gov't (i.e. taxpayers) should shoulder the burden of someone else's poor judgement/bad circumstances.

 

The home buyer and the lender agree to the terms of the mortgage -- loan amount, duration of the loan, interest, and remedies upon default. No one signed this document under duress.

 

If the home buyer defaults, the home buyer should accept the consequences.

 

When a Well Trained Mind board member recently had a "fire sale," collected money for goods, and then didn't ship the books promptly, the customers in question wanted either their money back or the books they purchased.

 

They didn't offer term modifications ("keep all the money, send me half of the books I ordered"), or donate the money ("sure, you need the money, feel free to keep mine"). They, rightfully, wanted the seller to honor the terms of the deal, and threatened legal action (i.e. pay pal disputes, etc), to compel performance.

 

Why should it be any different for lender and home buyer. Obviously, the dollar amount is bigger, and there's more at stake. But, in my mind, that's even more reason to honor the terms of the contract. Why should the home buyer unable to meet his/her obligations get special treatment?

 

Because foreclosures hurt everyone. The bank would rather modify your loan than own your house. The banks decide whether to modify or not. Generally, from a business standpoint, they are better off getting you to pay most of the loan than none of the loan. Foreclosures cost money - legal fees, filing fees, realtor fees, etc. Foreclosures can quickly become worth even less as empty houses deteriorate faster (no maintenance or utilities.)

[....]

Don't offer home modifications or deferrment of payment for these people who have lost their jobs in areas that look like the Great Depression.

 

Let EVERYBODY foreclose.

 

See if you'll ever be able to sell your house because your house value will be worthless and most of the population will not qualify for a mortgage.

 

Let's say you have a job that is indirectly or even directly affected by the housing market - are you a realtor, broker, appraiser, inspector, construction worker or even city employee (yes, these were all losing their jobs when we left home last year)? How will you pay your bills??? :confused:

 

This housing market is a downward spiral and it affects everybody.

 

Honestly, I don't want to get all Alex-Jones on Everybody, but I'm starting to become more and more paranoid that there is some kind of scam-agenda going on right now.

[Crimson Wife]

I do believe there should be LIMITED foreclosure assistance from the government. If you bought your house with a "plain vanilla", 20% down, full documentation, 30 year fixed mortgage and could afford the payments at the time you purchased the home but now you cannot because of unforeseen circumstances like extended unemployment or disability or divorce, then I'm all in favor of the government providing a safety net so you don't lose your home.

 

That said, only a small fraction of the homeowners in trouble fit that category. The overwhelming majority used exotic mortgages to overextend themselves and I agree that the taxpayers should not be the ones to bail them out.

[weaver_67579]

I do believe there should be LIMITED foreclosure assistance from the government. If you bought your house with a "plain vanilla", 20% down, full documentation, 30 year fixed mortgage and could afford the payments at the time you purchased the home but now you cannot because of unforeseen circumstances like extended unemployment or disability or divorce, then I'm all in favor of the government providing a safety net so you don't lose your home.

 

That said, only a small fraction of the homeowners in trouble fit that category. The overwhelming majority used exotic mortgages to overextend themselves and I agree that the taxpayers should not be the ones to bail them out.

 

A contract is a contract and both parties need to hold up their ends of it. It is not a job of the government to help me keep my house if I have hard times. That is a sad thing-but not their job-or a use I approve of for my tax dollars. I believe house ownership is not a right. Everyone should have a place to live, but there is no need to own it if you can't afford it-regardless of the reason.

 

btw-my Mom is losing her house to forclosure. She and her husband made bad choices and had some hard luck, but it still isn't the job of the government to help them live where they want in the house they want. They will not be on the street, but in a rental owned by a cousin.

[Guest Dulcimeramy]

We bought our house about 10 years ago.

 

Everyone we knew was buying McMansions with sub-prime mortgages. Every cornfield around here was filled with 80-120 houses. The building boom was astounding.

 

We went to those new neighborhoods and talked with the people who were handing out mortgages as if they were candy.

 

They approved us for two story, four-bedroom homes when we had one (apprentice) income! They said we could afford a monthly mortgage payment that was almost 60% of our monthly income.

 

And of course, this was No Money Down. All fees and costs rolled into a 30yr mortgage.

 

We didn't do that.

 

We went to an older neighborhood and bought a modest brick ranch that we could absolutely afford. Our mortgage was solid, the house value was solid, and our income was solid.

 

We've been responsible. We drive an older, paid-for car and we have zero credit card or medical debt. Still...

 

thanks to the housing crisis caused by the zillions of Americans who played Monopoly with property even as recession loomed,

 

we will probably lose this house.

 

Construction work has slowed to a crawl (my husband is an electrician) and he finds out each day whether he has work tomorrow.

 

We would sell, except we learned just this month that every house on this street has lost at least $30,000 in value over the last year alone. No one can sell, unless they have tens of thousands of dollars in the bank to pay the difference and put a down payment on something cheaper.

 

And no one living on our street can afford these houses anymore, even though we did everything possible 10 years ago to be sure we could afford our homes.

 

Retirees are eating up their savings in higher grocery and utility prices. Those of us in our working years can't find enough work.

 

We did everything "right" but we are still going to lose everything.

 

When the responsible, careful people lose their homes, the nation will suffer.

 

Not everyone facing foreclosure was an idiot.

Edited October 9, 2010 by Dulcimeramy

[Pamela H in Texas]

We lost our house to foreclosure last week. The bank refused the short sale (buyer paying cash available). They weren't gonna get more at sale for the house foreclosed upon so I have no clue why they would not just accept that short sale.

 

Anyway, we were not over-extended or have some weird mortgage we should have researched more. We didn't have outrageous interest. But my hubby lost his job in June 2009. He had to travel for work and then after that, we decided to travel with him. But these are temporary jobs. He was out of work more than he worked. And it's HARD keeping up two households on what most people would consider a normal income. Honestly, it's pretty good that we did it so long! Even now, when we now make supposedly "good money" plus living expenses, the bank agreed that paying to keep the house was a hardship. And what are we to do when this job ends (and ALL temporary jobs end...a few weeks, a few months, rarely a couple years)?

 

We're not perfect, by any stretch; but we had a good situation originally (house was WAY under the amt rent would have been). But we have a number of difficult circumstances and add job loss lasting over a year also? There is only so much a person really can do.

Edited October 9, 2010 by 2J5M9K

[Guest Dulcimeramy]

I do believe there should be LIMITED foreclosure assistance from the government. If you bought your house with a "plain vanilla", 20% down, full documentation, 30 year fixed mortgage and could afford the payments at the time you purchased the home but now you cannot because of unforeseen circumstances like extended unemployment or disability or divorce, then I'm all in favor of the government providing a safety net so you don't lose your home.

 

That said, only a small fraction of the homeowners in trouble fit that category. The overwhelming majority used exotic mortgages to overextend themselves and I agree that the taxpayers should not be the ones to bail them out.

 

Well said! I agree entirely.

[Guest Dulcimeramy]

We lost our house to foreclosure last week. The bank refused the short sale (buyer paying cash available). They weren't gonna get more at sale for the house foreclosed upon so I have no clue why they would not just accept that short sale.

 

Anyway, we were not over-extended or have some weird mortgage we should have researched more. We didn't have outrageous interest. But my hubby lost his job in June 2009. He had to travel for work and then after that, we decided to travel with him. But these are temporary jobs. He still worked less than he didn't. And it's HARD keeping up two households on what most people would consider a normal income. Even now, when we make supposedly "good money" plus living expenses, the bank agreed that paying to keep the house was a hardship. And what are we to do when this job ends?

 

We're not perfect, by any stretch; but we had a good situation originally (house was WAY under the amt rent would have been). But we have a number of difficult circumstances and add job loss lasting over a year also? There is only so much a person really can do.

 

I am so sorry.

[DaffodilDreams]

We do fit the description of the responsible borrower, and referencing another poster's response, we are directly affected by the housing market. When we bought, we qualified for more than twice the amt of what we ended up purchasing. We were extremely conservative in our home choice. We had a huge chunk of savings built up and lived way below our means. Fast forward to now, and my dh's income has dropped 80% and the savings is gone. We are barely scraping by and have been trying to hang on for the past three years as things get progressively worse. We are about to request a mortgage modification to see if we can keep the house. If not, we will be starting over in a new-to-us-city and renting a teeny tiny place from a family member .

 

I know there are more people out there like us - people who tried to do the right thing, who followed the rules, who didn't spend stupidly, buy more house than they could afford at the time. Families who are out of reach of the economic horrors this country is facing are incredibly lucky. Yes, there were some people out there who made stupid decisions, but don't punish the many of us whose lives have been turned upside down due to extraordinary economic circumstances. Please don't just assume everyone you hear about in bankruptcy, foreclosure, or seeking other assistance is stupid or irresponsible. This area has been hurt badly, and the housing market is dead here - - absolutely DEAD. I imagine much of the country is the same. And now we have a vote coming up regarding city/county consolidation. If it passes, not only will we still be struggling to pay our note, our home will most likely become "under water" and taxes will increase tremendously to cover the exorbitant amt of unfunded pension plans the city holds.

[MindyD]

I have sympathy for those individuals who cannot make their mortgage payments.

 

Having said that, I don't understand why the banks should modify the terms of the mortgage contract. Or why the gov't (i.e. taxpayers) should shoulder the burden of someone else's poor judgement/bad circumstances.

 

The home buyer and the lender agree to the terms of the mortgage -- loan amount, duration of the loan, interest, and remedies upon default. No one signed this document under duress.

 

If the home buyer defaults, the home buyer should accept the consequences.

 

When a Well Trained Mind board member recently had a "fire sale," collected money for goods, and then didn't ship the books promptly, the customers in question wanted either their money back or the books they purchased.

 

They didn't offer term modifications ("keep all the money, send me half of the books I ordered"), or donate the money ("sure, you need the money, feel free to keep mine"). They, rightfully, wanted the seller to honor the terms of the deal, and threatened legal action (i.e. pay pal disputes, etc), to compel performance.

 

Why should it be any different for lender and home buyer. Obviously, the dollar amount is bigger, and there's more at stake. But, in my mind, that's even more reason to honor the terms of the contract. Why should the home buyer unable to meet his/her obligations get special treatment?

 

:iagree: We bought our house almost 7 years ago, and had to repeatedly tell our lender that we didn't want as big a loan as they kept trying to give us. We bought something we could easily afford. Fast forward to now. Dh has a new job on the other side of the state so we have to sell. It's HARD because the market is flooded with foreclosures, but we're sticking it out, hoping to sell. Since we had so much equity to begin with, we have wiggle room. In the meantime, dh is renting a room with a friend and coming home on the weekends. It's incredibly hard being separated, but we can't in good conscience just abandon this house because our circumstances changed. We can't afford 2 households so this is where we are. I have a good friend who is in the middle of the foreclosure process. They bought a house they couldn't afford with no money down.Then they decided they needed to move somewhere else for the husand to go back to school. I completely understand that there are real crises that are unavoidable. It's just that most of the foreclosures stem from bad choices and greed.

[tex-mex]

thanks to the housing crisis caused by the zillions of Americans who played Monopoly with property even as recession loomed,

 

we will probably lose this house.

 

Construction work has slowed to a crawl (my husband is an electrician) and he finds out each day whether he has work tomorrow.

 

We would sell, except we learned just this month that every house on this street has lost at least $30,000 in value over the last year alone. No one can sell, unless they have tens of thousands of dollars in the bank to pay the difference and put a down payment on something cheaper.

 

And no one living on our street can afford these houses anymore, even though we did everything possible 10 years ago to be sure we could afford our homes.

 

Retirees are eating up their savings in higher grocery and utility prices. Those of us in our working years can't find enough work.

 

We did everything "right" but we are still going to lose everything.

 

When the responsible, careful people lose their homes, the nation will suffer.

 

Not everyone facing foreclosure was an idiot.

One huge issue is that the money for bailout is not our money -- but loaned from other countries like China. Those AAA bonds that started the whole banking mess were diced up and repackaged to other foreign banks -- folks do not understand the mess we are in is affecting other countries. And the recent discovery of banks misusing documents and halting foreclosures in 23 to 50 states is very serious. If they do go ahead and unleash the shadow inventory could flood the real estate market and crash -- causing a bigger issue worse than the Great Recession. And it will affect everyone, not just those who lost a home.

[Renee in NC]

We lost our house to foreclosure last week. The bank refused the short sale (buyer paying cash available). They weren't gonna get more at sale for the house foreclosed upon so I have no clue why they would not just accept that short sale.

 

Anyway, we were not over-extended or have some weird mortgage we should have researched more. We didn't have outrageous interest. But my hubby lost his job in June 2009. He had to travel for work and then after that, we decided to travel with him. But these are temporary jobs. He was out of work more than he worked. And it's HARD keeping up two households on what most people would consider a normal income. Honestly, it's pretty good that we did it so long! Even now, when we now make supposedly "good money" plus living expenses, the bank agreed that paying to keep the house was a hardship. And what are we to do when this job ends (and ALL temporary jobs end...a few weeks, a few months, rarely a couple years)?

 

We're not perfect, by any stretch; but we had a good situation originally (house was WAY under the amt rent would have been). But we have a number of difficult circumstances and add job loss lasting over a year also? There is only so much a person really can do.

 

Our bank refused the short sale and foreclosed as well. Less than a month later, it was under contract to the same people who had made the short sale offer, FOR THE SAME PRICE THEY HAD ORIGINALLY OFFERED. It was the bank's right, of course, but it was just plain stupid.

[Murmer]

Sadly it is more complicated than a simple stupid buyers with bad lenders. We are one of the lucky ones right now, dh has a solid job but we currently have 2 mortgages because we could not sell our last home in order to move cross country to a job that we knew was a solid bet...until we moved dh was part-time and I was a full time teacher we would have faced major issues had we stayed with the way the economy has become. I am grateful that we have a renter in our other house that we trust and helps us with that mortgage but even still we currently own 2 house which was never part of the plan. I do get mad sometimes that some people are getting help when they made stupid choices but we are stuck with 2 mortgages because of how bad the economy is. But that is the price of being middle class in America. I know that the help has helped some of the people who really did need it and some who didn't.

[Hockey Mom]

I do believe there should be LIMITED foreclosure assistance from the government. If you bought your house with a "plain vanilla", 20% down, full documentation, 30 year fixed mortgage and could afford the payments at the time you purchased the home but now you cannot because of unforeseen circumstances like extended unemployment or disability or divorce, then I'm all in favor of the government providing a safety net so you don't lose your home.

 

That said, only a small fraction of the homeowners in trouble fit that category. The overwhelming majority used exotic mortgages to overextend themselves and I agree that the taxpayers should not be the ones to bail them out.

 

That was exactly how we purchased our home 8 years ago. We could have bought a McMansion, but we chose an older neighborhood, 3/2 house built in the 1980s. When the recession came, we were still doing pretty well. It wasn't until our largest client decided to move his business overseas, that we lost a significant amount of income. By the time that happened, I couldn't even go back to work because unemployment in our area is around 14%.

 

Our whole city is suffering right now. If you were to drive down Main Street you would see half of the businesses are gone. Drive through any neighborhood in my town, and you will see at least 4-5 abandoned homes, with another half dozen up for sale.

 

We feel grateful that our bank allowed for us to do a short sale. I know a lot of people's banks refused. I also know that we weren't that upside-down, so maybe that worked in our favor? Like I said in that other thread, we did try to fight for our home. It was only after the bank decided not to honor the agreed upon price that we chose to walk away.

[aude sapere]

Because foreclosures hurt everyone. The bank would rather modify your loan than own your house. The banks decide whether to modify or not. Generally, from a business standpoint, they are better off getting you to pay most of the loan than none of the loan. Foreclosures cost money - legal fees, filing fees, realtor fees, etc. Foreclosures can quickly become worth even less as empty houses deteriorate faster (no maintenance or utilities.)

 

Modifying loans to allow homeowners to remain in the dwelling without honoring the terms of the original mortgage hurts the capital markets, the housing markets, and, ultimately the taxpayers.

 

By interfering with 'natural' supply and demand, it also prevents the housing market from stabilizing.

[Renee in NC]

Modifying loans to allow homeowners to remain in the dwelling without honoring the terms of the original mortgage hurts the capital markets, the housing markets, and, ultimately the taxpayers.

 

By interfering with 'natural' supply and demand, it also prevents the housing market from stabilizing.

 

If you say so. Who really knows? Most people are *not* getting modifications, so not sure what you are basing your opinion on.

[Joanne]

I do believe there should be LIMITED foreclosure assistance from the government. If you bought your house with a "plain vanilla", 20% down, full documentation, 30 year fixed mortgage and could afford the payments at the time you purchased the home but now you cannot because of unforeseen circumstances like extended unemployment or disability or divorce, then I'm all in favor of the government providing a safety net so you don't lose your home.

 

That said, only a small fraction of the homeowners in trouble fit that category. The overwhelming majority used exotic mortgages to overextend themselves and I agree that the taxpayers should not be the ones to bail them out.

 

Do you have accurate stats to back up your statement in the last paragraph? I am another who purchased less house than I qualified for on a traditional mortgage. I paid each month during the modification and was ready (still am) to pay on the modification. How would foreclosing on me be smart?

[Tess in the Burbs]

well I can tell you that when we signed our documents Dh had a job that could pay for the house and we had every intention of being there and paying the mortgage.

 

LIFE HAPPENS

 

We make much less money now and the job dh got is 4 hours from the house. We moved with him and are currently hoping to short sale but yes, the foreclosure process has begun and we can only hope the bank will get this short sale done before foreclosure happens. It's interesting to me those departments don't communicate on any level :001_huh:

 

Yes, we will be paying dearly for short sale OR foreclosure and I assure you it wasn't done on purpose. We didn't sign the papers way back intending for this to happen. Life happens and you shouldn't condemn good people who have had a lot of bad things happen to them in the past few years. our credit is shot. We had to sign a long lease b/c we knew no one would rent to us once this all went through. We can't get credit to buy anything right now. We have no savings for emergencies. I assure you....any person going through foreclosure is paying dearly.

 

If I could have sold my home I would have. We are 70K underwater. If Dh could have found a job nearby he would have. He looked for a year. We finally had to make a hard choice and go where the work was.

 

I don't know...seems like you shouldn't judge others unless you are in our shoes and truly understand how/why we got here. I don't think many who foreclose intended to do it....LIFE HAPPENS. :glare:

[tabmtbc]

You ladies and gents have given me much to think about on this subject. I thought I knew how I felt about it but now I am not so sure.

[kalanamak]

If you search this forum, you'll find there was a long, long thread on this last year, with various hurt feelings and raised voices. It might have gotten locked.

 

Here's hoping it won't go too political or become stinging. Cheers!

[Renee in NC]

I don't know...seems like you shouldn't judge others unless you are in our shoes and truly understand how/why we got here. I don't think many who foreclose intended to do it....LIFE HAPPENS. :glare:

 

The tendency is to blame the person for bad choices because then it couldn't happen to me, KWIM? If you can look at a desparate situation and say, "Well, they did x and y and z, but if they had done a and b and c this wouldn't have happened," then you don't have to worry it will happen to you.

 

It doesn't work that way.

 

I learned awhile ago to be careful saying, "It couldn't happen to me" because that seems to be a surefire way that it *does* happen to me!!!!:tongue_smilie: If you had asked me 5 years ago if in 5 years my dc would be in school, I would be studying for the CPA exam and planning to go back to work, and dh would be working a manual labor job for peanuts, I would have laughed at you.

 

I never imagined that we would end up here. We did not "buy smart" - we had purchased our land hoping to build a cabin on it and grow slowly. Within 6 months we ended up building a $100K house on it because people I believed knew what they were talking about said we would be stupid not to. We really couldn't afford it!

 

That was 2003. In April 2009, we were foreclosed on.

 

Next time, there will be 20% down (not the 10% we had last time.) There will be a limit of 25% of our income to a mortgage. There will be an emergency fund in place BEFORE we buy. If that means we never buy again, then so be it. I will never go through this again.

[Whereneverever]

The tendency is to blame the person for bad choices because then it couldn't happen to me, KWIM? If you can look at a desparate situation and say, "Well, they did x and y and z, but if they had done a and b and c this wouldn't have happened," then you don't have to worry it will happen to you.

 

It doesn't work that way.

 

I learned awhile ago to be careful saying, "It couldn't happen to me" because that seems to be a surefire way that it *does* happen to me!!!!:tongue_smilie: If you had asked me 5 years ago if in 5 years my dc would be in school, I would be studying for the CPA exam and planning to go back to work, and dh would be working a manual labor job for peanuts, I would have laughed at you.

 

I never imagined that we would end up here. We did not "buy smart" - we had purchased our land hoping to build a cabin on it and grow slowly. Within 6 months we ended up building a $100K house on it because people I believed knew what they were talking about said we would be stupid not to. We really couldn't afford it!

 

That was 2003. In April 2009, we were foreclosed on.

 

Next time, there will be 20% down (not the 10% we had last time.) There will be a limit of 25% of our income to a mortgage. There will be an emergency fund in place BEFORE we buy. If that means we never buy again, then so be it. I will never go through this again.

:grouphug:

[Trish]

Although in most cases loan modification doesn't end up working, it is certainly better than living next to a foreclosed house. While many people made bad choices during the housing bubble (bought more house than they could afford, refinanced and took cash out, etc.), many more DID NOT. And they are STILL underwater.

 

For the majority of people who are underwater on their mortgages, it is through no fault of their own.

 

Also, if you've been following anything on this foreclosure crisis -- referring to many banks now no longer processing them due to the original paperwork not being available, or in some cases, false documentation used to transfer the paperwork from one lender to another, many foreclosures are being called into question.

 

I would definitely NOT allow my house to be foreclosed on before checking into this issue. Google "MERS Scandal" for starters, but there is a LOT of info out there on this topic. Many times the bank attempting to foreclose CANNOT prove it owns the house.

 

Start with MERS Scandal and keep reading.

 

Due to problems like this, and many more, the economy won't be coming back. You can "bank" on that!

[weaver_67579]

The OP posted a comment as to why people in forclosure should get "special" treatment for not living up to their signed contract and why should the government step in to bail them out. A lot of the responses answer "but I did everything right-why punish me....and such the like.

 

Here is how I see the two sides. Some like myself are talking about the contract part of it and the keep the government out of the bail-out business part. Others are talking personal feelings about having to go through forclosure-and no doubt wishing for a bail-out. I don't think anyone said that all the people in foreclosure are there due to bad decisions-and I just re-read the thread. I do think that a bunch of people did get loans they couldn't afford and that contributes to many of the forclosures-not all. On the other hand-nobody said that it was good that folks had to go through foreclosure. That is just what happens when the contract is not honored-for whatever reason and always has-there were forclosures before the recession-my best friend used to be a bank president. As I said before-my own mother is going through foreclosure. It was due to bad financial decisions. I do feel bad that she is losing her home of the last 36 years-but that is what happens and she has to live with it and hopefully learn from it. BTW the modification did not work out for her either-dropped the payment like $20-hopefully the short sale to a neighbor will work out. Feeling bad for someone and thinking it is right for the government to intervene are two different things.

[Trish]

There is usually some self-interest on the part of the government for encouraging things like loan modification. Once you get more than a few foreclosures in a neighborhood, then values start plunging. That isn't good for the remaining homeowners, nor for local governments. It isn't good for anybody, actually.

 

Also I'd point out that many businesses are walking away from commercials properties as a "business decision" -- if they're far underwater on it, then it makes no business sense to hang onto it. They walk away and it seems that is viewed in purely a business light, no value judgment attached to it.

 

With homeowners it tends to be viewed differently, and people have a tendency to think the owners must have made bad decisions to be in that situation.

 

For example, home prices in Las Vegas (a particularly hard hit area) have dropped 58 percent since the peak, and a full 73 percent of homeowners there are underwater. (wow!) You could argue that the "bad decision" was choosing to live in Vegas, but still.

 

Is anyone saying tsk, tsk when a company makes the decision to walk away?

[simka2]

I have sympathy for those individuals who cannot make their mortgage payments.

 

Having said that, I don't understand why the banks should modify the terms of the mortgage contract. Or why the gov't (i.e. taxpayers) should shoulder the burden of someone else's poor judgement/bad circumstances.

You lumped 2 completely different scenarious together and I don't think that is wise. Obviously the government shouldn't help with someones bad choices, but that is not what is happening in the majority of these cases. Now, why should they help in Bad circumstances, because if they don't other neighboring homeowners will suffer as well. Property values will begin to go down further, there will be more foreclosures, and the snowball gets bigger.

The home buyer and the lender agree to the terms of the mortgage -- loan amount, duration of the loan, interest, and remedies upon default. No one signed this document under duress.

 

If the home buyer defaults, the home buyer should accept the consequences.

 

When a Well Trained Mind board member recently had a "fire sale," collected money for goods, and then didn't ship the books promptly, the customers in question wanted either their money back or the books they purchased.

 

They didn't offer term modifications ("keep all the money, send me half of the books I ordered"), or donate the money ("sure, you need the money, feel free to keep mine"). They, rightfully, wanted the seller to honor the terms of the deal, and threatened legal action (i.e. pay pal disputes, etc), to compel performance.

 

Why should it be any different for lender and home buyer. Obviously, the dollar amount is bigger, and there's more at stake. But, in my mind, that's even more reason to honor the terms of the contract. Why should the home buyer unable to meet his/her obligations get special treatment?

 

Just my thoughts!

[mcconnellboys]

I don't think that people should get special treatment, be let out of their agreements, etc. However, I have been reading and hearing news stories for the past couple of years that indicate that lots of buyers who are rather naive for whatever reason (first time buyer; just not finance savvy, etc.) have been misled by those working with them to obtain a home.

 

They are told that they qualify for more than they do, for instance. Now, I'm not sure why they couldn't work up a budget and see that they're just not going to have that much free cash per month to pay on a home, but lots of folks are not good with figuring out such things.

 

I know that years and years ago, when I was still single and bought my first home (a Fannie Mae foreclosure), I was not apprised of the amount of money I would have to come up with at closing. I was told I needed a certain amount in savings for some of the payments that would be due and payable at that time (about $3000, I think) and I had that money at the ready. But just a few days prior to my closing, I was informed that I had to have *another* $3000 for *other* closing costs. I didn't have it! Luckily, I didn't have to ask my parents for it; my fiance' (now husband) loaned it to me and I repaid him later. Luckily, again, I was in a position to be able to get my hands on the extra money quickly. Others are not so lucky and end up having to forfeit hundreds or thousands of dollars when deals fall through....

 

The paperwork is hugely cumbersome and difficult to understand. I feel certain most folks don't read it word for word (or at all) as they spend an hour or more signing all the documents for a home sale. There are often hidden stipulations that may make a difference in how their payments are handled down the road that they may not even be aware of at time of closing. Or ever, for that matter, until a problem arises that involves said stipulations....

 

There may be stipulations as to interest rate changes that they don't understand insofar as what the ramifications of that will be regarding their payments.

 

I've seen a couple of adds lately about some lenders now using a one page document that sums of all the important information regarding a loan in simple to understand language. I feel that something like this really needs to be mandatory for all home sales. The language and amount of paperwork has gotten so ridiculously cumbersome that most folks simply can not really understand what they are getting themselves into, and it can lead to problems down the road.

 

I'm not saying that this fact should dismiss the homeowner from their responsibility - just that I'm not sure that the real estate professionals, lenders, etc. have lived up to *their* responsibilities (and they're the ones making the money, so perhaps they should be held to a higher level of responsibility than they have been in the recent past)....

 

I've been very concerned about the articles I've read recently concerning homeowners who calculate that it's in their best interest financially to just walk away from homes even though they may be perfectly able to pay their mortgages. I think this is a different issue that is also contributing to mortgage defaults and I think it needs to be addressed strongly....

[In2why]

There is usually some self-interest on the part of the government for encouraging things like loan modification. Once you get more than a few foreclosures in a neighborhood, then values start plunging. That isn't good for the remaining homeowners, nor for local governments. It isn't good for anybody, actually.

 

Also I'd point out that many businesses are walking away from commercials properties as a "business decision" -- if they're far underwater on it, then it makes no business sense to hang onto it. They walk away and it seems that is viewed in purely a business light, no value judgment attached to it.

 

With homeowners it tends to be viewed differently, and people have a tendency to think the owners must have made bad decisions to be in that situation.

 

For example, home prices in Las Vegas (a particularly hard hit area) have dropped 58 percent since the peak, and a full 73 percent of homeowners there are underwater. (wow!) You could argue that the "bad decision" was choosing to live in Vegas, but still.

 

Is anyone saying tsk, tsk when a company makes the decision to walk away?

 

 

I remember reading about this and thought it was interesting, but when someone I knew actually did it, I wasn't sure how I feel about it. My cousin and his wife decided to walk away from their house. Their income didn't go down and they are still working, but the house they bought is worth a lot less than they owed. So they didn't default on any of their other bills or obligations, except for their house. They took the money they would have paid on their mortgage and banked it for the 7 months that it took for the bank to move into full foreclosure and then they found a really nice place to rent, cleaned the house out and left the keys on the counter. WOW. They easily could have kept paying the mortgage but his justification is that it financially did not make sense to pay for a house that was no longer a decent investment and that they didn't feel like the house would increase in value, so they would take the hit on their credit report. I guess I still feel like if you can meet your obligations then you are obliged to do so, but then again I am not in an upside down loan, and don't feel any possibility in losing my home so who knows. It is a different world today and I guess the old rules no longer apply?

[weaver_67579]

There is usually some self-interest on the part of the government for encouraging things like loan modification. Once you get more than a few foreclosures in a neighborhood, then values start plunging. That isn't good for the remaining homeowners, nor for local governments. It isn't good for anybody, actually.

 

I don't think anybody said it was good-only a consequence. If the lender wants to modify the loan agreement-it's up to them. I can see how partial payment is better than no payment and a house to sell in a bad market. That may be a good business decision in some circumstances. I think that should be between the two parties in the contract-and not the government. There are a lot of forclosed homes around here too for sale-no doubt our property values have fallen. I also doubt it is good to artificially keep the values higher due to government intervention-I imagine the values will still work their way down to the new "normal" (-vs-the bubble value) eventually anyway.

 

Also I'd point out that many businesses are walking away from commercials properties as a "business decision" -- if they're far underwater on it, then it makes no business sense to hang onto it. They walk away and it seems that is viewed in purely a business light, no value judgment attached to it.

 

With homeowners it tends to be viewed differently, and people have a tendency to think the owners must have made bad decisions to be in that situation.

 

Is anyone saying tsk, tsk when a company makes the decision to walk away

 

 

Are the businesses looking for a bail-out or just walking away? To me Just walking away means your business is giving the property to the lending agency in place of payment-as per what happens when you don't live up to your end of the contract. That would be the expected consequence for not paying your mortgage-home or business. Personally-I feel the same about business bail-out as personal ones. If the business is losing the property due to poor financial decisions-is that different from a person doing so? It's not to me.

 

As to the tendency for people to think folks are losing their homes due to poor decisions (such as buying too much house for what you make, signing an iffy mortgage.....)-is that not the case in the majority of the forclosures? Remember I did not say all or even almost all.

[Renee in NC]

I remember reading about this and thought it was interesting, but when someone I knew actually did it, I wasn't sure how I feel about it. My cousin and his wife decided to walk away from their house. Their income didn't go down and they are still working, but the house they bought is worth a lot less than they owed. So they didn't default on any of their other bills or obligations, except for their house. They took the money they would have paid on their mortgage and banked it for the 7 months that it took for the bank to move into full foreclosure and then they found a really nice place to rent, cleaned the house out and left the keys on the counter. WOW. They easily could have kept paying the mortgage but his justification is that it financially did not make sense to pay for a house that was no longer a decent investment and that they didn't feel like the house would increase in value, so they would take the hit on their credit report. I guess I still feel like if you can meet your obligations then you are obliged to do so, but then again I am not in an upside down loan, and don't feel any possibility in losing my home so who knows. It is a different world today and I guess the old rules no longer apply?

 

You know, I am not sure why this even makes sense.

 

If you leave your home, you have to pay rent somewhere. So you rent for 5 years and have nothing to show for it in the end, except (by then) slightly dinged credit.

 

Or, you stay in your house and make payments for 5 years and have nothing to show for it at the end (but clean credit.) Maybe there were thinking that even after 5 years of payments (and some appreciation or at least stagnation) they would still be underwater?

[Renee in NC]

I don't think anybody said it was good-only a consequence. If the lender wants to modify the loan agreement-it's up to them. I can see how partial payment is better than no payment and a house to sell in a bad market. That may be a good business decision in some circumstances. I think that should be between the two parties in the contract-and not the government. There are a lot of forclosed homes around here too for sale-no doubt our property values have fallen. I also doubt it is good to artificially keep the values higher due to government intervention-I imagine the values will still work their way down to the new "normal" (-vs-the bubble value) eventually anyway.

 

 

 

Are the businesses looking for a bail-out or just walking away? To me Just walking away means your business is giving the property to the lending agency in place of payment-as per what happens when you don't live up to your end of the contract. That would be the expected consequence for not paying your mortgage-home or business. Personally-I feel the same about business bail-out as personal ones. If the business is losing the property due to poor financial decisions-is that different from a person doing so? It's not to me.

 

As to the tendency for people to think folks are losing their homes due to poor decisions (such as buying too much house for what you make, signing an iffy mortgage.....)-is that not the case in the majority of the forclosures? Remember I did not say all or even almost all.

 

Is the gov't actually bailing people out? Is money going from the gov't to pay for people's mortgages? Or are banks who took stimulus money being required to modify mortgages?

[Crimson Wife]

If you leave your home, you have to pay rent somewhere. So you rent for 5 years and have nothing to show for it in the end, except (by then) slightly dinged credit.

 

Or, you stay in your house and make payments for 5 years and have nothing to show for it at the end (but clean credit.) Maybe there were thinking that even after 5 years of payments (and some appreciation or at least stagnation) they would still be underwater?

 

The thinking is that you can rent a much nicer place than the one you are currently living in for the same monthly payment. Not saying that I at all agree with their decision to simply walk away, but there are a LOT of folks in my neck of the woods who have come to see that as the "smart thing to do". To me, it's unethical to walk away if you can afford to keep paying, but so many folks have done so that the practice has lost its stigma. :glare:

[cdrumm4448]

Are we the only people who could pay off their mortgage tomorrow if we chose to? Legitimate question, not snarky. We waited to buy a house (rented for many years and saved) and chose to have a mortgage because the interest rate was so low. Almost like buying a car and instead of paying cash, taking the 0% interest loan.

 

Please keep in mind that even though I spent 10 years as a real estate broker, we didn't have anything to do with the lending aspect (loan type, amount down, etc.) Also, my husband makes a good living but we live way below our means and always have.

 

I guess my point is that paying cash for a house can be done (besides us, I sold many houses to people paying cash). That's why I think cash will make a huge comeback after this crisis. People relied way too heavily on credit and now everybody's paying for it.

[Ravin]

The thinking is that you can rent a much nicer place than the one you are currently living in for the same monthly payment. Not saying that I at all agree with their decision to simply walk away, but there are a LOT of folks in my neck of the woods who have come to see that as the "smart thing to do". To me, it's unethical to walk away if you can afford to keep paying, but so many folks have done so that the practice has lost its stigma. :glare:

 

Around here at least, that thinking is kind of cracked. Rent here is high--if we could qualify for a mortgage, we could get a lot more house for a mortgage payment than what we can rent. Of course, we have lousy credit and no savings for a down payment. It'll likely be ten years before we can own our own home--once I'm out of law school and we've had a chance to clean up our credit more and save some money. As it is, our house isn't really big enough for our needs and we've wanted to move for a couple of years now, but we can't afford the cost of moving, even into something with a little less rent.

 

If we had a house, we'd do whatever we had to keep it, knowing that we'd be going to a worse situation in any rental. I just don't get it.

[RoughCollie]

Also, my husband makes a good living but we live way below our means and always have.

 

 

There is a large percentage of people in this country who do not live below their means simply because they do not have enough means to do that. People who make enough money to more than meet their family's needs have choices that many others do not have. That's what having extra money does for people, it gives them choices.

 

I don't know where all these people are who live lavishly on credit cards instead of using their excess discretionary income wisely. I have not met anyone who does that. I have read about the McMansions and fancy cars and fancy vacations on news sites -- but I do not think that the majority of Americans, even those squarely in the middle class, are like that. The reason those stories make the news is that they are unusual.

Edited October 10, 2010 by RoughCollie

[RoughCollie]

To me, it's unethical to walk away if you can afford to keep paying, but so many folks have done so that the practice has lost its stigma. :glare:

 

I don't think it is a moral or ethical decision. It's a business decision, based on contract terms which generally state that if one party doesn't pay his or her mortgage, the other party gets the property back. That's the agreement, and as long as the terms are met, I don't see an ethical problem.

 

The practice may be losing its stigma among the middle class, but it is business as usual when corporations and the very wealthy do it. Odd, that, especially when it is big corporations and politicians and yes, some of the very wealthy, who got our country into this Great Recession in the first place. Whenever possible, the general public, the ordinary person, has been used to make the rich richer. We are pawns on their chessboards, and the best thing about that is that many of us don't realize it so we are easier to fleece. It's even better when they can get the ordinary people to turn on each other, and to blame each other, rather than blaming Them -- the folks who have the actual power in this country and enrich themselves to our and our country's detriment.

Edited October 10, 2010 by RoughCollie

[aude sapere]

 

I don't know...seems like you shouldn't judge others unless you are in our shoes and truly understand how/why we got here. I don't think many who foreclose intended to do it....LIFE HAPPENS. :glare:

 

I'm not judging.

 

Yes, life does happen. Life is hard. No one sets out to have difficult times. But I still don't see why that should invalidate a mortgage contract. Or why the government should reach its hand into wallets of the homeowner's neighbors (via tax dollars) to smooth the way for said homeowner.

 

The posters to this thread have shared heart wrenching tales of life gone awry. You have my utmost sympathy.

 

But a mortgage is a legal contract, signed by two willing parties. Why shouldn't the terms of the contract should be honored? On a larger scale, the housing market can't ever stabilize if one party to the mortgage can declare "my life got messy, so I shouldn't be held accountable."

 

Banks have tightened lending standards for "prime" borrowers, with strong credit histories and high credit scores. The element of uncertainty ("will they or won't they honor what's been signed") is increasing the costs for all market participants, even those most likely repay.

[Renee in NC]

I'm not judging.

 

Yes, life does happen. Life is hard. No one sets out to have difficult times. But I still don't see why that should invalidate a mortgage contract. Or why the government should reach its hand into wallets of the homeowner's neighbors (via tax dollars) to smooth the way for said homeowner.

 

The posters to this thread have shared heart wrenching tales of life gone awry. You have my utmost sympathy.

 

But a mortgage is a legal contract, signed by two willing parties. Why shouldn't the terms of the contract should be honored? On a larger scale, the housing market can't ever stabilize if one party to the mortgage can declare "my life got messy, so I shouldn't be held accountable."

 

Banks have tightened lending standards for "prime" borrowers, with strong credit histories and high credit scores. The element of uncertainty ("will they or won't they honor what's been signed") is increasing the costs for all market participants, even those most likely repay.

 

I guess I don't get where you are going here. People seeking modifications cannot meet the terms of the contract. Therefore, the solution is foreclosure. However, the bank doesn't want to do that because they don't want another house. So, they work with the homeowner to modify the contract in order for the homeowner to be able to meet the (modified) terms.

 

It's a business decision on the part of the lender. What is the alternative? Foreclosure - the bank gets the house and the homeowner loses what they have invested. The risk has always been around that the mortgage wouldn't be made good, so the bank builds that risk into their profit analysis.

 

What is there to hold accountable? Should we return to arresting debtors who can't pay? In our case, there is nothing to be had. Nothing. We have no assets other than 1 van worth about $7000 and a hodge-podge of household goods that wouldn't bring $1000 at an auction. I couldn't meet the terms, the bank executed their relief, the contract is now null and void.

 

Sorry if that means you can't get a mortgage.:confused:

 

And, no one has answered my question - what tax dollars are being used to modify mortgages? Is the gov't actually paying banks for the modifications?

 

I did a google search and found an article dated August 6, 2010 that stated emphatically that there was NO gov't bailout for homeowners. Not sure what is really going on, though.

[cdrumm4448]

Therefore, the solution is foreclosure. However, the bank doesn't want to do that because they don't want another house.

 

Please keep in mind my license is currently in holding, so I don't have my finger on the pulse of the real estate market today as much as I did before, but lenders always assume a certain percentage of their loans will be foreclosed on. They count on holding those properties and eventually selling them for profit. So, even in a great real estate market, lenders assume foreclosures. It's just that in this crash there's so much product on the market that I'm not sure they want ALL that product.

 

A contract is a contract, even if your circumstances have changed, but owning a home is still the American Dream and people will do just about anything to achieve it. I just hope in the future it involves more people paying cash.

[jld]

The practice may be losing its stigma among the middle class, but it is business as usual when corporations and the very wealthy do it. Odd, that, especially when it is big corporations and politicians and yes, some of the very wealthy, who got our country into this Great Recession in the first place. Whenever possible, the general public, the ordinary person, has been used to make the rich richer. We are pawns on their chessboards, and the best thing about that is that many of us don't realize it so we are easier to fleece. It's even better when they can get the ordinary people to turn on each other, and to blame each other, rather than blaming Them -- the folks who have the actual power in this country and enrich themselves to our and our country's detriment.

 

 

Well, this has to be one of the wisest posts I have ever seen on these boards.

 

Clueless people (who think themselves quite wise) are going to vote next month for people who will continue to put the interests of the wealthy first and foremost in their plans. And people cannot see it! They are deluded by issues other than the most important one -- their own economic self-interest!

 

Wake up! Demand justice for the ordinary citizen! Hold the banksters accountable! Hold the politicians who enabled them accountable! And for wisdom's sake, don't extend tax cuts for the people who never needed them to start with; raise their taxes to pay for this mess! They can afford it! They can see it as their chance to be patriotic and rebuild this country. It's done enough for them! Don't vote for the people who are just using you!!!

[aude sapere]

And, no one has answered my question - what tax dollars are being used to modify mortgages? Is the gov't actually paying banks for the modifications?

 

 

Have you heard of TARP (Troubled Asset Relief Program)?

 

TARP allows the United States Department of the Treasury to purchase or insure up to $700 Billion of "troubled assets", defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."[7]

In short, this allows the Treasury to purchase illiquid, difficult-to-value assets from banks and other financial institutions. The targeted assets can be collateralized debt obligations, which were sold in a booming market until 2007 when they were hit by widespread foreclosures on the underlying loans. TARP is intended to improve the liquidity of these assets by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilize their balance sheets and avoid further losses. (this is from Wikipedia)

 

Taxpayer dollars. Used to purchase bad mortgages.

 

Further, the Making Home Affordable program

 

"The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure." (from makinghomeaffordable.gov)

 

More gov't dollars.

[cathmom]

Whenever possible, the general public, the ordinary person, has been used to make the rich richer. We are pawns on their chessboards, and the best thing about that is that many of us don't realize it so we are easier to fleece. It's even better when they can get the ordinary people to turn on each other, and to blame each other, rather than blaming Them -- the folks who have the actual power in this country and enrich themselves to our and our country's detriment.

 

Great post, and so true.

 

But I still don't see why that should invalidate a mortgage contract.

 

But a mortgage is a legal contract, signed by two willing parties. Why shouldn't the terms of the contract should be honored?

 

 

 

People break contracts all the time. Usually there isn't considered to be a moral dimension to it.

 

Well, this has to be one of the wisest posts I have ever seen on these boards.

 

Clueless people (who think themselves quite wise) are going to vote next month for people who will continue to put the interests of the wealthy first and foremost in their plans. And people cannot see it! They are deluded by issues other than the most important one -- their own economic self-interest!

 

Wake up! Demand justice for the ordinary citizen! Hold the banksters accountable! Hold the politicians who enabled them accountable! And for wisdom's sake, don't extend tax cuts for the people who never needed them to start with; raise their taxes to pay for this mess! They can afford it! They can see it as their chance to be patriotic and rebuild this country. It's done enough for them! Don't vote for the people who are just using you!!!

 

Unfortunately, I don't think there would be anyone left to vote for.

[aude sapere]

People break contracts all the time. Usually there isn't considered to be a moral dimension to it.

 

 

"Well, everybody else is doing it..." isn't legal justification for violating the terms of a contract.

[In2why]

The thinking is that you can rent a much nicer place than the one you are currently living in for the same monthly payment. Not saying that I at all agree with their decision to simply walk away, but there are a LOT of folks in my neck of the woods who have come to see that as the "smart thing to do". To me, it's unethical to walk away if you can afford to keep paying, but so many folks have done so that the practice has lost its stigma. :glare:

 

 

Yep. They rent now for much less than their mortgage. His justification was that if they continued to pay the mortgage it would take too long to recover their investment. But most people do not look at their house as an investment. I think that is the difference between companies and individuals. But that is changing.

[In2why]

Are we the only people who could pay off their mortgage tomorrow if we chose to? Legitimate question, not snarky. We waited to buy a house (rented for many years and saved) and chose to have a mortgage because the interest rate was so low. Almost like buying a car and instead of paying cash, taking the 0% interest loan.

 

Please keep in mind that even though I spent 10 years as a real estate broker, we didn't have anything to do with the lending aspect (loan type, amount down, etc.) Also, my husband makes a good living but we live way below our means and always have.

 

I guess my point is that paying cash for a house can be done (besides us, I sold many houses to people paying cash). That's why I think cash will make a huge comeback after this crisis. People relied way too heavily on credit and now everybody's paying for it.

 

 

Nope I could pay my mortgage off tomorrow if I needed to. Also not being snarky, but we were lucky and smart. We lived/live well below our means. We are thrifty, or cheap if you prefer. We were Dave Ramsey before he even existed. We have never had a car payment, we shop for clothes and toys at thrift shops, and we saved enough that my husband retired last year at 53. We were lucky too because he worked 30 years for a company with excellent benefits, and a full pension that begins at 55. But even if he didn't get pension, we could survive on our savings if we had to.

[RoughCollie]

"Well, everybody else is doing it..." isn't legal justification for violating the terms of a contract.

 

The contract isn't violated. Its terms state exactly what will happen in every eventuality.

[In2why]

There is a large percentage of people in this country who do not live below their means simply because they do not have enough means to do that. People who make enough money to more than meet their family's needs have choices that many others do not have. That's what having extra money does for people, it gives them choices.

 

I don't know where all these people are who live lavishly on credit cards instead of using their excess discretionary income wisely. I have not met anyone who does that. I have read about the McMansions and fancy cars and fancy vacations on news sites -- but I do not think that the majority of Americans, even those squarely in the middle class, are like that. The reason those stories make the news is that they are unusual.

 

It isn't unusual here in Virginia. Most of our neighbors have done it for years. They refinanced and bought cars, RVs, remodeled their homes, and went on vacations until they didn't have any equity in their homes.

The size of houses have about doubled since my parents bought their home. It used to be that 1500 sqft was a decent house and kids shared bedrooms. But now, not so much. Maybe not Mcmansions, but close to it even if they only have one child.

[RoughCollie]

It isn't unusual here in Virginia.

 

Are people like this a large percentage of the population of Virginia? If they are a small percentage, it is unusual no matter what your neighbors are like.

 

The following comment is not directed to you, I just want to put it out there for perspective because often people really don't know their neighbors financial situation. For instance, my brother lives in a 6,000 s.f. house which has a 8 car garage (the cars double stack on lifts) and is on a 2-acre lot. It would be easy for people to assume they know his financial situation based on his lifestyle, especially since he wears jeans all the time, talks like a good old boy, and drives a pickup truck. Unless they assume that he paid cash for everything and had earned over a million dollars a year for many years, they would be making false assumptions.

Edited October 10, 2010 by RoughCollie

[Renee in NC]

Have you heard of TARP (Troubled Asset Relief Program)?

 

TARP allows the United States Department of the Treasury to purchase or insure up to $700 Billion of "troubled assets", defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."[7]

In short, this allows the Treasury to purchase illiquid, difficult-to-value assets from banks and other financial institutions. The targeted assets can be collateralized debt obligations, which were sold in a booming market until 2007 when they were hit by widespread foreclosures on the underlying loans. TARP is intended to improve the liquidity of these assets by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilize their balance sheets and avoid further losses. (this is from Wikipedia)

 

Taxpayer dollars. Used to purchase bad mortgages.

 

Further, the Making Home Affordable program

 

"The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure." (from makinghomeaffordable.gov)

 

More gov't dollars.

 

Making Home Affordable does not pay any money on the mortgages, so your tax dollars are not going to individuals. The modification comes from the lender - those banks that took TARP money were required to allow these modifications if the borrowers met certain requirements. The idea was to stabalize the housing market - whether it is working or not, I don't know. Was it a good idea? I don't know - we'll have to see how it plays out.

 

As for TARP, the only people who really benefited were the executives of the banks and the shareholders of those banks. The money is repayable to the gov't at some level. I was absolutely, totally against TARP from the very beginning. When the stories of bonuses and lavish retreats rolled out, I was outraged (like much of the rest of the country.) It was supposed to free up capital to unfreeze the credit markets (which would theoretically trickle down to the consumers, on whom our economy is based), but that is NOT what happened. Banks held onto the money and the economy crashed anyway.

 

Really and truly, BOTH of these programs help the banks more than individuals. And, for all practical purposes, this is way bigger than someone's moral outrage - our economy is still on quicksand. My opinion was that they should've just let everything crash - quicker, more painful in the short term, but better in the long-term. That was easy for me to say, however, because I was going to lose everything either way.

 

I don't for one minute think that these programs are about altruism in any way - it's still about the bottom line and those with the money have the most money to sway the politicians. Same story, different day.