Mortgage Principal Reduction?

[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...

[RIJIMMY]

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.

[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

[spence]

Originally Posted by RIJIMMY

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.

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

[RIJIMMY]

Originally Posted by 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

[179]

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!

[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 RIJIMMY

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

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

[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

[Swimmer]

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.

[Jim in CT]

Originally Posted by RIJIMMY

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.

EXACTLY, EXACTLY, EXACTLY. Why didn't the feds come in and give me back the money we all lost.

I'll disagree that most homes are simply investments...to many people, a home is just that, a "home", a place to raise kids and watch them grow. But a lot of these people who are now underwater bought these houses SPECIFICALLY as investments, planning to sell the house when the price doubled, because they knew they had no chance of re-paying the mortgage when variable rates were re-set. Their financial loss is no different than what people lost in the stock market crashes of 2001 and 2008.

[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?

[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.

[Piscator]

Would love to pick up a nice foreclosed house down the Cape for short money. This is also a time of opportunity!!!

[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

[RIJIMMY]

Originally Posted by spence

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

-spence

so you're implying the finance industry benefitted? Funny, I thought the largest financial organizations were on the bring of collapse? I thought credit markets were frozen and our entire US economy on the brink? I must have missed something.......

[Jim in CT]

Originally Posted by spence

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

"the finance industry rigs the system to extract billions from the market "

How did they do that, exactly? Did they "extract billions" by hacking into people's accounts and taking their money?

"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, if I didn't read your opinions, I wouldn't be in a position to destroy them so thoroughly.

Spence, you say the banks "extracted" that money, as if the borrowers had no say in the transaction. That's absurd.

"the blame is ALWAYS on the individual."

If someone gets robbed at gunpoint, I don't blame the individual. If someone voluntarily chooses to assume a mortgage that they cannot repay, that's their problem, not my problem.

I've said it before, and I'll say it again. It sure must be nice to be in a group that gets anointed with "victim" status by liberals. When one is so anointed, liberals will tell you that nothing is ever your fault, and that you have zero responsibility or accountability. What a way to coast through life.

Spence, if someone cannot afford a 3,000 sf house, the answer is to move them into a house they can afford. The answer is not for Obama to artificially lower the price that the house sells for.

[spence]

Originally Posted by RIJIMMY

so you're implying the finance industry benefitted? Funny, I thought the largest financial organizations were on the bring of collapse? I thought credit markets were frozen and our entire US economy on the brink? I must have missed something.......

Jimmy, you're smarter than that. Profitable companies don't hoard their cash, they return it to shareholders in the form of dividends.

-spence

[spence]

Originally Posted by Jim in CT

How did they do that, exactly? Did they "extract billions" by hacking into people's accounts and taking their money?

No, they lobby to set the rules so they can exploit the system. Don't be naive, the master is ALWAYS shareholder value. That's why we have regulation.

Spence, if I didn't read your opinions, I wouldn't be in a position to destroy them so thoroughly.

If someone gets robbed at gunpoint, I don't blame the individual. If someone voluntarily chooses to assume a mortgage that they cannot repay, that's their problem, not my problem.

Why not? Perhaps they were walking in a bad area.

I've said it before, and I'll say it again. It sure must be nice to be in a group that gets anointed with "victim" status by liberals. When one is so anointed, liberals will tell you that nothing is ever your fault, and that you have zero responsibility or accountability. What a way to coast through life.

More evidence you don't read a single thing I post.

Spence, if someone cannot afford a 3,000 sf house, the answer is to move them into a house they can afford. The answer is not for Obama to artificially lower the price that the house sells for.

They can't move into a house they can afford because their house is under water and they can't get a new loan.

Sure, the banks didn't mind taking risks when it was with other people's money but now that there's accountability they've shut off the spigot.

-spence

[Jim in CT]

Originally Posted by spence

No, they lobby to set the rules so they can exploit the system. Don't be naive, the master is ALWAYS shareholder value. That's why we have regulation.






Why not? Perhaps they were walking in a bad area.


More evidence you don't read a single thing I post.


They can't move into a house they can afford because their house is under water and they can't get a new loan.

Sure, the banks didn't mind taking risks when it was with other people's money but now that there's accountability they've shut off the spigot.

-spence

"they lobby to set the rules so they can exploit the system."

Spence, bottom line...those houses were sold to folks who voluntarily chose to buy them. Banks most certainly did not, as you put it, "extract" that money. Individuals, reckless and greedy, bought way more than they could afford. I had no right to ask them to help me recoup my losses from the stock crash of 2000-2001, they similarly have no right to ask me to help them pay their mortgage.

"More evidence you don't read a single thing I post."

I read your posts, usually when I need a good, deep laugh. Spence, do you deny that your position here is that these people are not responsible for their situation? You said, in this thread, that the evil banks "extracted" their money. That necessarily implies that you don't hold them responsible for their actions.

"They can't move into a house they can afford because their house is under water and they can't get a new loan."

If they can't get a new loan, they can rent. There are all kinds of programs to help people find affordable housing. Renting never killed anybody, most of us were renters at one point.

With liberals, blame always lies with some evil boogeyman called "business".

[Nebe]

I'm with spence on this one.
Posted from my iPhone/Mobile device

[Piscator]

What's next? Reducing the principle on small business loans? Give me a break. You own the loan, not the people.
Posted from my iPhone/Mobile device

[mag minnow]

Hmmm...Whatever happened to that TV Show "Flip that House?"