Housing Bailout???

[Prof]

How do you folks view this situation...

Some are in trouble...govt. is thinking about jumping in to help those that are in trouble...but why...and for who...but is it the right thing for the entire economy?

Looks like another political football...at least it will be kicked around like a football...

What do you think?

 

[BriteCrawler]

I think I'm fortunate to have money in the bank (for now) and a good paying Job (for now).

It's difficult for me to empathize with their situations... I think that if I were broke, I'd be happy to have someone fighting for me to keep a roof over my head. Is it right? I don't know. I got my education and job, and they should too.

The way I see it, to effectively help the ones in trouble, all property values would be lowered, which sucks for those of us who are making it work.

I still think the loan approvals for people who make 1200 a month to own a 250,000+ home is where all these issues came from to start with.

 

[Prof]

While I am socially conscious and concerned, I also believe in accountability...each of those people signed contracts that stated what would happen with their interest rates...

On the other hand I am certain that most of those with sub-prime loans were told that they could easily refinance their loans to get out of the balloon rates...

I just feel like I am once again getting the shaft because of the failings of others...is that wrong?

 

[BriteCrawler]

I just feel like I am once again getting the shaft because of the failings of others...is that wrong?

It's the American way.

...and I'd agree, the loan officers have become salesmen - who will mostly tell you what you want to hear to get them on your product. "When banks compete over you, you win" is how the commercials go.

I agree 100% about accountability. I bought my current house in 2004. Put 32% down and got a good rate and payment under what some people in my county pay for apartments. I worked to get that, so I'm entitled to it.

 

[IH8CHVYS]

Wow what a wonderfull thing our goverment is doing:bs:
This type of situation fits todays society! I mean for most people there are no consequences! It's amazing, a family of four, new SUV for the stay at home soccer mom,daddy is driving a import and there living in a $300,000 home and all this is coming from a $80,000 salary! They have over spent and now we have to bail them out?:thumpdown:

 

[eddie102870]

i had a friend stop by yesterday that told me fema is crushing 55000 travel trailers after they clean them up on the inside. just grinding them up. how wasteful is that. also the government is GIVING like 60000 people $200000.00 to rebuild houses from Katrina. i see where my hard earned tax money is going.

 

[Riff62]

I just refinanced out of an adjustable rate first mortgage into a fixed rate..I did it right before my rate adjusted, and was lucky to get the a fixed rate at 7%. If I had waited, my mortgage would have adjusted from 5.5 to 8.5, and then up to 12.5 over the course of 2 years. While I could have handled the 8.5, the 12.5 would have been a stretch.
My original mortgage company, Wells fargo, said it would be easy to refi when my initial term was up. When I went to them about doing the refi, they didnt want to talk to me..
The possible bailout of people having refi issues is a mistake in my eyes. If the government steps in to help, some people will stop paying thier mortgages, and rely on the bailout. I say let nature take its course. if not, people will tend to expect the government to help out with any issue they have.

 

[iraqivet01]

If the Gov didn't step in for those "Dumb Asses", we would all end up paying in the short and long run. Just look what it has done to the market the last 6 months.

Found out really quite how many of the major lending companies were being backed by foreign investors.

Just think what would happen to your property value if a few houses in your neighborhood got foreclosed on.

 

[joemags54]

When government intervenes on any economic issue, they only postpone the inevitable. In this case they will create an artificial floor of support for the housing industry. This will only delay the inevitable. Yes it is a political football. For those who have been screaming about the lack of "affordable housing", the government by intervening here, will keep homes out of the hands of those who may have been able to afford them, if the market was allowed to correct naturally. In New York, when you sign a mortgage document, you must initial every page, signifying that you READ them. Once again it is never a straight line up for any market sector(that includes housing). The building and developement boom, has resulted in a glut of "oversupply". The price needs to correct to a level that will sop up this excess. Intervention here only delays the natural economic law of supply and demand. Let comon sense and cool heads prevail. When you shop for anything on time, you must consider the payment and the term of the loan. If I buy a car, and I budget $100.00 a month, I am NOT shopping for a Bentley!. First off, the term of the loan, without interest, would be 1250 months, give or take. Secondly, who in the financial sector would lend that money for that term? (yes, banks want to make money too). Same principle here. There is plenty of blame to spread around here. The reason why some politicians are calling for a "5 yr freeze" ,we will possibly be into our next administration and it would then be their nightmare to deal with. BUT, eventually the financial institutions will expect to get paid. Contracts must be honored. Markets correct, all the excess would be sold eventually and prices would then begin to climb again. The demand for "REAL ESTATE" (examine that word for a second, REAL..... ESTATE), is always present, we just argue over price, now and again. Case in point, if I told you that 500,000 dollar house you've been dreaming of is now 10,000 bucks what would you do? Well I'm sure of one thing, the price is somewhere in the middle.

 

[amtrucker22]

Me personally, I believe in accountability. As long as we keep bailing people out there will never be any accountability.

I don't tend to trust a lot of people so therefor I do a lot of research when purchasing things. Maybe this is why I feel the way I do. I would think the purchase of a home is a big decision and I would not want to go into it blindly and would think other people would be the same way. I bought books, watched the interest rates, and even found the home on my own (without a Realtor). I guess I have the mentality that nobody has my best interest at heart except me and my family.

Sorry for the rambling...

 

[Prof]

This is really a complicated issue...glad some of you are thinking about it...

Damed if we do and damed if we don't!

 

[iraqivet01]

i had a friend stop by yesterday that told me fema is crushing 55000 travel trailers after they clean them up on the inside. just grinding them up. how wasteful is that. also the government is GIVING like 60000 people $200000.00 to rebuild houses from Katrina. i see where my hard earned tax money is going.

It due to the contamination inside the trailers. They sold a bunch of them really cheap, but with all the bad press on those trailers, who can blame them.

As far as giving 2 million to 60,000 people; well it better than having 60,000 people homeless. 2 million sounds like a lot of money, but it just a drop in the bucket. That about what it costing to support the war for 1/2 day in Iraq.

 

[muscletrucks]

My $0.02:

Every mortgage broker who gave underqualified people sub-prime notes and made significant commisions off the close of the deal should somehow be held accountable. I do agree the people who took the loan should also be held accountable in some way, (perhaps refinance to a 30yr and have a $10K penalty taked onto the note instead of forclosing).

Everyone wants the "American Dream" of owning a home. Unfortunately the average American reads and understands on a 6th grade level and many with higher education don't understand financial terms, issues, etc. So when you have a slick mortgage broker convincing you that on a $40K per year salary that you can afford a $300K home, a BMW, 3 credit cards, etc.; you fail to read the fine print of the contract (or if you read it you may not understand it) and end up in the situation many are currently in.

By stoping some of the forclosures, I do think you help create a "floor" for the market. I read some statistic claiming every forclosed home in a neighborhood causes the value of the other homes to drop $10K or more. So personally, I don't want to see any home go to forclosure in my neighborhood, the market alone has decreased the value of my home enough.

 

[ntw0rk]

I believe in accountability too...

The unfortunate downside to hold all of these people accountable is that it has the potential to create a very large population of homeless people... and that's not good for anybody.

There has to be a way to help, and hold accountable at the same time. And I believe that any of these people that get any help should be forced to go to a course on how to read a contract!

Yes, I know the banks and the real estate brokers are a little crooked, but it's ultimately you the signee, that is responsible for what is in the contract.



And Paul is right about the FEMA trailers Eddie, there was a mountain created from a mole-hill about Formaldehyde in the trailers. Now, no one will buy them, even at the (Sometimes) ridiculously low prices they were selling them for. It would cost the tax payers more to keep them, than to turn them into scrap that can be recycled.

 

[OCBob]

It is a very complex situation.

Some of it has been caused by loan and real estate agents telling folks that refi's were possible down the road before higher rates kicked in. Some of the responsibility also lies with the folks that believed that.

No bailout is going to save my home, we will be losing ours due to the loss of my job. But, the bank has worked with me to allow me to do a short sale.

Doesn't matter though, as the market has taken a huge shit around here. I live in a relatively small town, though it is the largest gated community in the US. We have a private lake for skiiing and boating, a country club, state of the art baseball fields, stables, 18 parks, etc. We also live within an hour of Orange County and San Diego. We have a number of celebrities that live here. But even with all that the bottom has fallen out.

Every street has houses for sale, and I would guess that somewhere around 50% of them are owned by the bank, like mine will soon be. My house was appraised at $550k just 2 years ago. I can't even get anyone to look at it now at $200k less! It has been on the market for 9 months, we have had one person look. We have had 3 open houses without a single person coming to see the house.

This is effecting our entire economy and is going to hurt everyone at some point. The question is, will you really feel it? How bad will it effect you?

I don't know what the gov't should do now, but they do need to put some measures in place to try to avoid this again in the future. This could bring us into a depression, believe it or not, especially coupled with rising energy prices.

(BTW, if you live in Ohio and have a foreclosure coming see a lawyer. There are judges there that are stopping the foreclosures, as it is not evident who really owns the mortgages due to divestures.)

 

[iraqivet01]

I guess by suspending the rate for 5 years, hopefully will help get a few of these people out of the situation they put themselves into.

But even that will not help some people due to their inability to balance a check book and do their own financial planning.

It doesn't take a CPA to realize that if you make X you can't pay for Y.

 

[Kevan]

It may sound callous, but those with the capital (and the smarts to purchase a home PROPERLY!) may want to use this to invest in a 2nd home.

www.realtor.com

The timing is right, and the pickin's are plentiful.

 

[ChrisAZ]

The gov. needs to stay out of this one. People are not going to be homeless. The reality is that these people have income they just stretched it too far (or the adjustabloe mortgage adjusted too much for them). They probably won't buy another home but they will rent an apartment or a home. OCBob is an example. I am sure he won't be homeless after he loses the house.

People will have poor credit after the foreclosure, which is good because they won't be able to over extend themselves and they might just learn how to live off of their wages.

I own a home and I paid too much. The home next door to me is a foreclosure. I certainly don't want to see foreclosures in my neighborhood but I prefer that to the gov. stepping in and "helping".

By the way, I think 50% of the foreclosures are investors that got stuck with homes they planned to flip for a profit. That is the case in my neighborhood. Is the gov. going to bail out these people too? Let the market adjust back to where it should be. It will happen pretty fast if the gov. stays out of it.

 

[joemags54]

It is a very complex situation.

This could bring us into a depression, believe it or not, especially coupled with rising energy prices.

As painful as a depression would be, there are three good lessons the American people would learn:
1. The real value of a dollar
2. What hard work really is
3. Humility
And if you want to throw in a 4th:
maybe saving a little, next time, for a rainy day.

 

[Gaboon]

The Government needs to stay out of this. Any help will only postpone the natural cycle of the housing market.

1 foreclosure in your neighborhood is not going to drop everyones house 10k. The only way that would happen is if foreclosures become the predominant force in the area. If that is the case than nobody can guess how much it will be. Some may be less than 10k some may be way more than 10k. If you aren't planning on selling anytime soon or have your house paid off than don't worry too much about it. Remember what goes up must come down.

To those thinking that now is the time to buy. Consider your market and tap all resources for information. Before buying YOU NEED TO KNOW YOUR MARKET! Has my market begun depreciating? No, there are still some that haven't. How long will my market depreciate. That would suck to buy a house that right now is a good deal but continues to depreciate for another 2 years. There is much gloom and doom being predicted at this time. Some fees that the recession will hit full bore in 2008. New projections are estimating that housing market will not begin to rebound until 2011. Again markets vary but this is very scary.

Lastly, those that think you will not be affected by this you are dead wrong. I think we have yet to see the worst this will create for us all. I hope I am wrong though. This same subject has been discussed tons. For more information go to www.appraisersforum.com