Mortgage Principal Reduction?

[spence]

Originally Posted by Piscator

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

[Piscator]

Originally Posted by spence

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.

[Jim in CT]

Originally Posted by Piscator

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...

[spence]

Originally Posted by Piscator

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.

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.

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

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

[Jim in CT]

Originally Posted by spence

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

"Mortgage reduction might sound like a give-away"

It doesn't sound like a giveaway, it is a giveaway...

"actually reducing taxpayer liabilities"

Bullsh*t. Unless I am selling my house, it does not cost me ONE CENT if my house decreases in value temporarily. Not one cent. Spence, please don't try to tell me that this plan will increase my net worth in the long run. There's a southern expression that I picked up in the Marines..."don't piss down my back and tell me it's raining."

"your net worth is likely going to be higher the more stable the housing market is. "

If liberals are concerned about my net worth, how about going 5 consecutive seconds without reaching into my wallet?

[Swimmer]

Originally Posted by spence

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.

-spence

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?

[spence]

Originally Posted by Swimmer

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?

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

[Jim in CT]

Originally Posted by 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

"Often people couldn't pay the bill because of misleading ARMs "

They are not misleading if one is responsible about the contract they are getting into.

"Many markets had outpaced the average consumer."

That's true. But when that happens, intelligent people wait for the inevitable correction. They don't buy $600,000 houses on a $45,000 income.

"It was like a coke head that just needed more coke to keep from crashing."

Using that analogy, if the addict's problem is that he can no longer afford the price of coke, why is it a good idea for the feds to lower the price of coke to make it affordable?

[spence]

Originally Posted by Jim in CT

Using that analogy, if the addict's problem is that he can no longer afford the price of coke, why is it a good idea for the feds to lower the price of coke to make it affordable?

I think you missed it.

-spence

[Jim in CT]

Originally Posted by spence

I think you missed it.

-spence

No, I didn't.

Spence, here is what happened in the years from 2004-2006. Lots of speculators bought houses that they could never afford. They bought these houses with creative loans like ARMs and "interest-only" mortgages. The theory was, that when the mortgages re-set to levels that people could never re-pay, by that time the house would have doubled in value, so they could cash out the equity. Greedy people got caught up in that speculation, and the bubble burst.

(The other thing that was going on, was that your party was putting political pressure on banks to throw away accepted underwriting guidelines for who could get a mortgage. Brilliant, as it turns out.)

That's the same exact thing that happened when the tech bubble burst. But the feds then didn't say they were going to artificially re-set the value of tech stocks. Because messing with markets causes more problems than it solves, and in this case, it costs money that we don't have.

If these folks cannot afford their house, and they can't sell it for what they owe, there is a reasonable mechanism for that, it's called forclosure.

That you try to frame this in a way that makes it sound like you're doing me a favor, is both factually incorrect and offensive. Obama is re-distributing wealth in an attempt to buy vores, that's all this is.

Enough.

[spence]

Originally Posted by Jim in CT

No, I didn't. Spence, here is what happened in the years from 2004-2006. Lots of speculators bought houses that they could never afford. They bought these houses with creative loans like ARMs and "interest-only" mortgages. The theory was, that when the mortgages re-set to levels that people could never re-pay, by that time the house would have doubled in value, so they could cash out the equity. Greedy people got caught up in that speculation, and the bubble burst.

(The other thing that was going on, was that your party was putting political pressure on banks to throw away accepted underwriting guidelines for who could get a mortgage. Brilliant, as it turns out.)

That's the same exact thing that happened when the tech bubble burst. But the feds then didn't say they were going to artificially re-set the value of tech stocks. Because messing with markets causes more problems than it solves, and in this case, it costs money that we don't have.

If these folks cannot afford their house, and they can't sell it for what they owe, there is a reasonable mechanism for that, it's called forclosure.

That you try to frame this in a way that makes it sound like you're doing me a favor, is both factually incorrect and offensive. Obama is re-distributing wealth in an attempt to buy vores, that's all this is.

Enough.

I love it, the finance industry rigs the system to extract billions from the market and the blame is ALWAYS on the individual.

I've come to the realization you don't read a single thing that runs counter to your opinion. Not that you don't agree with it, you don't even want to expose yourself to it.

-spence