Mortgage Principal Reduction?
 

Seems like a mistake if allowed. Wouldn’t this give someone an incentive to stop paying their mortgage to get a modification if they owe more than what house is worth? Sounds like a plan to stick it to the responsible tax paying, mortgage paying folks once again................

Why does it not pay to be responsible and do the right thing in this Country anymore?

"Seems like a mistake if allowed"

It's idiotic and infantile...

"Sounds like a plan to stick it to the responsible tax paying, mortgage paying folks once again................"

Obama's entire re-election strategy is "us" (everyone who isn't stinking rich) versus "them" (those who are stinking rich), and doing whatever he can to buy votes from the "us" category, and making "us" afraid of "them". Liberals also believe that those in the "us" group, particularly those who enjoy "victim" status in the liberal world, are not responsible, or at fault, for anything bad that happens to "us". So if someone making $35,000 took out a $400,000 mortgage, well it's not their fault they can't pay the loan back. It's the bank's fault. Or Bush's fault. Instead of letting these people learn a lesson they need to learn, Obama gives them a pat on the head, a check, and asks for their vote because Romney won't offer them as much cash for making stupid decisions.

The fact is, there are lots of middle-class and upper-middle-class folks who work hard, do all the right things, and struggle to maintain our standard of living. From what I can tell, Obama has done exactly nothing, from an economic standpoint, for this large group of people. Why anyone in this group (unless they are in a union) would vote for Obama is beyond me. It's just beyond me.

Liberals want to offer in-state tuition to high schoolers whose parents are here illegally and thus pay no income taxes; they offer $7500 rebates to rich liberals who buy Chevy Volts (averege income of a Volt buyer is $175,000), mortgage modification programs for folks who bit off more than they could chew, credits for first-time homebuyers...None of this helps existing homebuyers who made responsible decisions and who struggle to do the right thing all the time. These programs don't help us, but we will be stuck with the bill.

[QUOTE=Jim in CT;932284 they offer $7500 rebates to rich liberals who buy Chevy Volts (averege income of a Volt buyer is $175,000),
[/QUOTE]

I thought the law became effective during the Bush administration? Bob Lutz - a liberal:rotf2:

It pisses me off to no end:fury:

who is responsible for relaxing the qualifications to get a mortgage in the first place? :smash: someone made money off that, let those a holes bail out whoever needs help, the Federal government needs to get their act straightened out quickly.

I don't live beyond my means, never have and never will.

I bought at the peak of the market and the value decreased to less than I paid less than a year into it, I just dealt with it and have for 23 years. Getting screwed by taxes, now that I am 2 years away from paying off the house, the real estate taxes have gone up insane :wall: I wonder why:angel:
this country is in big trouble
time to revolt and take back our government

F that

I am almost done paying for my own home, I am not gonna pay for anyone elses'.

The principal reduction is to prevent homes going to foreclosure and flooding the market with low priced homes. The decreased appraised value of your home in the same area of these foreclosed homes far out weight the tax that you would pay for this principal reduction.
So then you can piss and moan that your house is worth nothing.
The people that take advantage of this for no cause are scum or opportunity seekers.
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Well then, you would be wrong as usual, because the Volt didn't come out until December 2010. You can look it up to see who was President at that time...

Oh yes you are. Your federal income taxes, and the fees you pay to your bank, fund these loan modification programs.

It's disgusting. I tell my 6 year-old that decisions have ramifications. Try telling that to a liberal. Lack of responsibility is one of the pillars of liberalism, one of the core beliefs of the foundation of liberalism. Everything bad that happens, must be someone else's fault.

Gimme, gimme, gimme.

And there in lies the secret of individual and governmental financial security.

"The principal reduction is to prevent homes going to foreclosure and flooding the market with low priced homes."

I don't disagree with that. But it's wrong. Why can't I qualify for a principal reduction? That would help me as well...

"The decreased appraised value of your home in the same area of these foreclosed homes far out weight the tax that you would pay for this principal reduction."

Absolutely, 100% wrong. Completely false. If I'm not selling my home, then it does not impact me at all if my home decreases in value temporarily. That does not impact me one cent. Not one cent. So don't feed me some BS about how this actually helps my bottom line. I don't need liberals looking out for my net worth. Please. If liberals want to help my bottom line, you can start by keeping your hands out of my pockets for five seconds.

"So then you can piss and moan that your house is worth nothing"

If my house is suddenly worth nothing, I won't ask you to bail me out. That's my problem to deal with, not yours. That's the difference between liberals and conservatives.

He's not wrong.

Both Bush 41 and Bush 43 signed laws giving tax credits to promote the purchase of electric vehicles.

Bush 43 did indeed sign the 7,500 tax credit into law as part of the Emergency Economic Stabilization Act of 2008.

Full Text of H.R. 1424 (110th): Emergency Economic Stabilization Act of 2008 - GovTrack.us

See Title II section 205.

Then in the spirit of a more constructive forum debate I think you really do owe Paul an apology.

A few data points are missing from the debate over mortgage reductions.

The reason it's a hot topic is that the 5 largest PRIVATE lenders just settled for 26 billion over accusations of improper lending and foreclosure behavior. A good chuck of this money is going to select underwater mortgage holders as compensation for unfair banking practices.

To date Fannie and Freddie have avoided mortgage reductions given the implications of taxpayer money and obviously the potential for abuse.

There certainly is an economic argument that mortgage reductions can be effective to stabilize the market. Some also argue that payment reductions can achieve the same effect.

While I'd agree that what might effectively be a taxpayer subsidy is a slippery slope, given the large number of mortgages held by Fannie and Freddie the taxpayer will end up taking a hit regardless if the situation doesn't improve.

-spence

And on top of it, a short search shows that the credits were intro. by Bush.

"For those who say that the Volt is the work of government interfering with the private market via the tax incentives given to those who purchase plug-in vehicles like the Volt, they might wish to keep in mind that these incentives were introduced not by the Democratic administration but by the George W. Bush administration"

"in the spirit of a more constructive forum debate I think you really do owe Paul an apology."

We were talking baout the Volt, which did not exist before Obama was President. The reason why I specified the Volt credit is that it's dishonest for Obama to say that Republicans only care about the rich, when his policies (Obama's credit for the Volt) is in effect giving cash back to folks whose average incomes are around $170,000. The fact that Bush had a similar program is irrelevent, because Bush wasn't saying that his political opponents only care about rich people. If my point was that only liberals offer green credits, I would be wrong. Since my point was that Obama has enacted policies that give tax credits to wealthy people, I am not incorrect. But Paul indeed has a point. Obama did not invent the concept of green credits. However, his point was moot, because it was not refuting what I had actually said.

"A good chuck of this money is going to select underwater mortgage holders as compensation for unfair banking practices."

Fine. And after those lenders fork over that money to the feds, they jack up their prices to pay for that. That hurts all of us. It hurts those of us who did nothing wrong.

"There certainly is an economic argument that mortgage reductions can be effective to stabilize the market"

I don't doubt that. However, that doesn't mean it's the right thing to do. If my neighbor did something stupid, why does he get financial help and I don't? Why does he deserve that money more than me?

Spence, there is also a common-sense argument that you take responsibility for your actions.

"the taxpayer will end up taking a hit regardless if the situation doesn't improve."

I may or may not take a hit if foreclosures hit the market. I will definitely take a hit if my money is taken from me and given to someone who was reckless and irresponsible.

If the value of all the homes are artificially inflated, all that does is postpone the inevitable correction that needs to take place.

Paul, if you want both of us to dial it down, I'll do that. You were not asking a simple question, you were making a gotcha! comment, as your laughing-face icon shows.

My point about the Volt was (1) factually accurate in that Obama implemented that credit, as the car didn't exist before he was President, and (2) it shows the hypocrisy of Obama (and his supporters) for making the false claim that liberals are more interested in helping the poor than in helping the rich. Obama's Volt credit exactly supports my claim.

I will henceforth dial it down...

"henceforth" is a cool word. It doenst get used as much as it should. henceforth, i will use the word more often.

Jim, the law was a Bush action. That it was a Volt or Prius doesn't matter, you're still wrong.
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The laughing emicon was for Bob Lutz - the CEO or Chairman of GM. As conservative of a person as there is

"the law was a Bush action."

First, it wasn't a law, it's a rebate program. It's not written in the constitution that anyone who buys a green car gets a $7500 rebate. The feds decide if and when to offer those rebates.

Fact #1. The Obama administration chose to offer that rebate to those who buy Volts (it was part of the Stimulus package). It doesn't matter that Obama didn't invent the notion of a green rebate, the Volt rebate had its genesis in the Obama administration.

Fact #2. The average income of those who buy Volts is $175,000. Therefore, these are people who do not need a tax rebate to buy a car.

Fact #3. Obama likes to say that conservatives care about taking care of the rich.

In my opinion, when you are handing $7500 checks to families making more than $175,000, you forfeit your right to portray yourself as Robin Hood.

That's what I said, and there aren't any factual mistakes.

I am not sure that Piscator's take in the original post is what the law is about. There currently is the HARP program and I beleive the principle reduction he is talking about is related. Many people qualify under HARP, but certain technicalities are limiting how many people actually get to take advantage of it. My understanding is that the new law is to help people who are in some of those situations. Not paying a mortgage, will immediately disqualify you for either program. If the loan is owned by Fannie Mae, and you have made all payments, and you bought during the peak of the market when prices were higher and rates 2 points higher, you may qualify for a streamlined refinance. You still have to pay for refinancing, closing, etc. However, the idea of HARP is to let responsible people, who pay their mortgage, refinance. To refinance under normal programs, you need equity. If you bought your house in 2004 and paid every single mortgage payment, a regular refi may not happen because with a current appraisal (likely 30% below where it was when you bought) you may not have enough equity. It isn't about people who bought 50000 houses when they could afford 200000, it is about everyone else who bought a house at an artificially inflated price. It can mean $500+ dollars a month in interest saved, it can mean getting a mortgage out from underwater. THose things are desperately needed to get the economy rolling.

I don't think you pay anyone elses in any way. I could be wrong with the new law, but under HARP you certainly don't. It just makes it so people who can't refi due to market circumstances beyond their control, can. Fannie mae will make less on interest, but it should not require any change in tax policy. I may be wrong, but I don't think in this case I am.

I can't find specific details, but it does look like the new law would encourage delinquincy. If that is the case, it is insane. Have to see real info first, but...

Update: what I just read on LA Times is not the law tied to HARP that I had recently discussed with some guys in the financial/mortgage industry. To me, HARP makes sense because principal gets reduced as more of the payment goes toward principal. Just dropping the principal for delinquent payers is a harder sell, although anyone who wants to buy or sell a home is held hostage by the situation.

Yes, Zimmy. I was NOT referring to HARP. I was referring to the plan you read in the LA Times. Completely asinine!!!!!!
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Can somebody point to the section in the Constitution where it provides for the pay down of mortgages of irresponsible people?

LOL, maybe it's in the commerce claus.

It's in the section that provides for free abortions, cell phones, lottery tickets and booze.:smash:

More welfare given out=democratic votes come November. Just one more disemboweled standard.

You guys are still confusing two related but different things.

-spence

Enlighten us........

This is what I'm referring too.

http://www.nytimes.com/2012/04/11/bu...reduction.html

Mortgage principal reduction is driven primarily by two factors, to stabilize a weak market and to compensate for abuse by lenders. Ultimately it's a systems problem...this isn't a simple argument of what's fair for some and not for other.

Some might argue that's evidence that the GSE's should be dissolved, but there's a counter argument as well.

-spence

That's BS. You can call it abuse by lenders Spence but I call it abuse by buyers. It’s abuse by people who sign up for something that is out of their means or that they don't care to honor. That’s what is wrong with this Country. I bought when the market was at the highest, nobody put a gun to my head. When I was looking, some tried to tell me I could afford a larger mortgage and tried to sell the risky ARM's, etc. I did the research, was a responsible buyer. When you buy a house, you have to do some research on your own and figure out what you can afford, not what someone might tell you what you can afford. So you say it is a “systems” problem. It’s a dead beat, entitlement problem and now those folks are trying to point the finger at anyone but themselves.

This is craziness and will set a precedence. We no longer have personal accountability. It’s always someone else’s fault.

Bingo.

When I bought my house, I could not believe the value o fthe mortgage that I was approved for, it was three times what I felt comfortable borrowing. The burden is on me, as an adult, to figure out what I wanted to owe, and if I wanted a fixed or variable mortgage.

Spence, it's not the role of the feds to stabilize the housing market. If it was, why limit to housing? Why don't the feds artificially set stock prices to stabilize the stock market? IS that starting to sound stupid yet?

Obama is just buying votes, that's all he's doing. That, and making more people addicted to government welfare, and borrowing more money from the Chinese that our grandkids will have to re-pay...

people lost BILLIONS in the tech bubble of the 90s. A reeession followed.
Why didnt the government step in and make them whole? Why wasnt there a program to help investors recoup their losses?
Because people were investing and investments can result in a loss. A home is an investment. Period.

As we've discussed at length in previous threads, the credit crisis was driven by many factors all around. While there certainly was fraud and irresponsibility, I don't think most people took a mortgage with the intention of not paying it back. Many had the means to pay it back but lost those means because of economic issues, much of which were driven by the investment industry and cheap credit which inflated housing prices.

Mortgage reduction might sound like a give-away, but the analysis shows it would help home owners who are under water continue to make payments...actually reducing taxpayer liabilities.

Here's the rub...as an upstanding homeowner, your net worth is likely going to be higher the more stable the housing market is.

Sometimes it is. Take the 16 Billion dollar settlement some of which is going towards mortgage reductions. You had major lenders falsifying documentation in order to facilitate foreclosures. Fannie and Freddie appear to have known about these unethical practices and others are calling for an investigation of the GSE's as well.

-spence

You're using "investment" in a very broad way.

The only reason people invested in tech stocks was for capital gain.

The primary reason people invest in a home is for shelter and quality of life.

As such the regulations regarding these two methods of investment are quite different. Period.

-spence

both have risks, you can have shelter easily without buying a home, and you should only buy both if you can afford them.
Neither are GUARANTEED. period

Hey you go out and buy a car that you can't afford what happens? They come and take it away, same standard should be in place for homes. Pay the bill or loose the house. Then you can rent. Stop blaming everyone else!

Spence, who held a gun to the borrower's head? Lender abuse. The borrowers got thier mortgages at the lowest rates in history and still couldn't pay the monthly bill. What about the dopes who took out the interest only loans? Show me one instance that a borrower said the guy at the passing was holding a gun?

You're missing the point.

Irrespective of income, the affordability of a stock is highly dependent on risk and return, while the affordability of a home is highly relative to location and market conditions.

I don't have to put any of my income into high tech stocks, but I do have to put income into housing. Most people can't afford to buy a house (or rental property) with cash so large loans are required.

Because of this dynamic, there is risk for both the lender and the borrower (in contrast, a business takes no real risk when it sells me shares of it's company) and as such both ends of the contract are regulated...this is very different from buying and selling equity shares.

That neither is GUARANTEED is an abstract point.

-spence

Often people couldn't pay the bill because of misleading ARMs that blew up or inflated prices plunged and put their houses under water. Money was so easy that predatory lending became common as risk was obfuscated.

Many markets had outpaced the average consumer.

I've repeatedly said that irresponsibility was certainly an issue for some, but the real crisis was due to a system that encouraged lending into a market that needed cheap credit to exist. It was like a coke head that just needed more coke to keep from crashing.


-spence

Everyone knows the potential of an ARM, everyone. Everyone who takes them out hopes they stay the same or goes down, they don't. I understand what your saying. Hell people came here from other countries with no verifiable income and were given mortagages.