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Grab a dixie cup! It's time for a bailout!
The economic ship is sinking and we are using a dixie cup to bail it out! One of the biggest concerns I have is the proposed bailout of the Mortgage crisis.
While there are wonderful arguments on both sides, it seems like all the bickering is just for poliitical reasons and has very little to do with actually solving any problems.
IN MY OPINION, the number one economic issue in this country isn't the home mortgage crisis, or the energy crisis but the WAR IN IRAQ. We are spending billions and trillions of dollars there and how do we not realize that is going to hurt us in EVERY aspect.
There are serious problems in housing for sure. Here is my prospective on that. It's a 50/50 split in finger pointing as to who to blame. Unregulated mortgage lending, shady deals and selling to investors on the secondary market was definitley a stupid thing. The investors didn't care if the loan was solid as long as they made some money. The lender didn't care if the loan was solid because they sold the loan. The buyer may have thought they could make the payments until everything else from GAS to Bread went up and maybe their company was downsizing, etc to make ends meet. It's clear the subprime lenders are mostly gone, they got their money, hurt a bunch of people, but they are outta here! It's not as simple as "bailing out" people in foreclosure, because each case should be looked at indivdually and decided WHO lied to whom and there should be indivdual actions taken, not ACROSS THE BOARD like the Senate is proposing. GOOD FOR THEM they are trying to do something, but it's not a ONE SIZE FITS ALL kind of problem! 6% of mortgages are in trouble. WHAT ABOUT THE 94% who did what they were supposed to do. YOU CAN'T HELP ONE GROUP AT THE EXPENSE OF THE OTHER. Good intentions have hurt many people before.
GAS, what the hell is going on with GAS PRICES? I voted for Bush in 2000 because I thought he could figure out, being an "Oil Man" how we could responsilbly drill for oil in the pristine Alaska wilderness and become independent of foreign oil. I AM FREAKING OUT that things have never been so bleak and who is doing anything about it. BUSH being told gas could be $4 a gallon looked like a deer in headlights. IMPEACH him for being a total idiot. If he is that out of touch, he doesn't deserve 6 more months in office!
The WAR is the reason we are in trouble. We can't fix our own roads or bridges (I live 1 1/2 hours south of the Bridge that collapsed in Minnesota) and yet we are building the infrastucture of Iraq. THE WAR is the reason for the insane rising prices in every product. I make good money as does my husband, and yet it kills me to go to the grocery store and pay $300 for the same goods it cost $100 last year. And I live in the HEARTLAND. Things are not even as bad here as they are other places. How long can we sustain this?
I appreciate the work the Senators are doing. It's an effort, but lets stop bickering over where to place the bandaid and go straight to the artery and stop the bleeding BEFORE IT'S TOO LATE!
McCain promises more of the same inept, 'let them eat cake' policies we're currently living with:
Former Treasury Secretary Paul O'Neill was told by Vice President Dick Cheney "deficits don't matter" when he warned, in 2002, of a looming fiscal crisis. Net result: O'Neill was fired and all we got was an invoice for a $3Trillion War.
LOL...let them eat cake. Awesome. Well done.
Nero with the fiddle also comes to mind.
Would China let us make payments on that? Maybe like a furniture store....
Make no payments until 2012!!!! Zero percent financing! WHOO HOOO!!!
I heard you, Sandi. I think it was pretty clear your tongue was firmly in cheek. Perhaps Leather's was, too.
apologies....i pulled a Hillary and was a self pitying "bleep". taking every wrong! i see the winky now and i am feeling like such a dork....could be the kidney stones and the Lortab and maybe lack of sleep...or the bratwurst I just ate....or etc.
my bad!
You know, I've always heard most of it is owed to the Chinese, too. But my husband told me I was mistaken about this the other day. Since I'm never mistaken, I decided to pull up the treasury records to prove him wrong. Turns out he was right (just this once)...China's actually second to Japan now.
http://www.treas.gov/tic/mfh.txt
I also read something really striking: each American household owes $600,000 toward federal obligations! yikes!
Does anyone between the ages of I dunno (35 and 60) remember the lymeric from elementary school
Me Chinese, me play joke?
I never liked Coke anyway. Of course, I'm not in that age bracket, either. :-D
Add to that our rate of increase to the National Debt: http://www.brillig.com/debt_clock/history.gif
<6% of mortgages are in trouble. WHAT ABOUT THE 94% who did what they were supposed to do. YOU CAN'T HELP ONE GROUP AT THE EXPENSE OF THE OTHER. Good intentions have hurt many people before>
Sandi, I guess I see it differently. There may be only 6% of mortgages in trouble now, but there are many more families that are struggling to avoid going into foreclosure. The ones with the ARM mortgages are caught between a rock and a hard place. Their house note goes up regularly, and their buying power is going down. Without perfect credit, they can't refinance in today's market. But as their interest rate rises every few months, they will soon be added to that 6%.
There has to be a simple answer that won't do too much financial harm to anyone. Why can't the holders of the mortgages be required to revert to the original interest rate of the loan, giving the homeowner a grace period on the missed payments? That way the homeowner keeps their house at more affordable rates, and the holders of the mortgage keeps making money at a reasonable rate, without getting stuck with another foreclosed house that is hard to move right now? That would also avoid a huge federal expense that a bail-out of homeowners and/or lenders would entail. I know I have over-simplified it here, but there has to be a simpler, more cost effective way to deal with this. I think the government needs to learn that there are ways to right a situation without spending billions of dollars of taxpayers money for every problem. Or am I just naive about this?
Suzi~I can see where you are coming from totally and as I said, I see great arguments on all sides, however, even the ARM's were a "choice". Many people could have gotten fixed loans at only a slightly higher rate, but CHOSE to risk it to pay lower amounts. Then things went "south" but as they were going "south" things could have been done....and wasn't .
You aren't being naive, as I said, great arguments on all sides, but each and every "foreclosure" is an individual story, and needs a "judge" to decided what that person could have done, should have done and didn't do. Was it their fault (did they buy a bunch of things, pay off credit cards, took the equity out of their house and now can't pay back the loans)? Did they get lied to by shady lenders? Did they lie about income to secure a bigger house? There are TOO many stories and too many different issues to make a blanket solution.
I understand the "lowering" of value too, by a foreclosed house, but that is, in my opinion, not the same thing as a "run on the bank" for while Bear Sterns was rescued. MOST house values, even in low foreclosure areas, are adjusting down. This is a better time than any to have this situation happen. I know most people think REALTORS just want house values to go up so they get a bigger commission, but I am glad there is some sort of an adjustment because first time home buyers having to get these huge mortgages just to get an average size home was getting ridiculous! It had to come back to reality (ha realty) and that is the way the economy goes, up and down.
I stick with what I said before, 94% of the people saved, bought a house, made their payments, and sacrificed a few things to be responsible. Not every foreclosure is someone being irresponsible, but enough are still risk takers who paid well below for a long period of time, and now in trouble. That sucks, but not an easy fix without hurting another group. You just cannot save one group without hurting another. Can't be done.
Love ya for caring, and I care, too! It's just not simple. And can't be fixed with a bandaid.
Sandi, I really appreciate your insight into this matter, and I think you've got a great point. There's just not a one-size-fix-all solution. My Republican friends have an almost ironically Malthusian notion that we abandon those who are at risk of being foreclosed upon. They argue that these buyers "should have known better."
Well, I disagree. First, it's been demonstrated that certain populations and certain areas were deliberately preyed upon by unscrupulous lenders. These buyers were often misled by the lender about the terms of the deal, just for the purpose of closing the sale. So it's not entirely fair to say anyone "should have known better." Second, I think my friends fail to see the economic ramifications for certain communities (and even the nation as a whole) if we allow entire neighborhoods to be foreclosed upon.
That said, we don't want some kind of intervention that rewards speculators who deliberately played the market and lost. These individuals and groups were taking out loan after loan on home after home, hoping to make the most they could off of the boom.
So you're absolutely right. The situation is much more complex than most of us realize. The ramifications are real and frightening. I have no answers...not even any suggestions. But the government had better be doing some real analysis and coming up with a multifaceted approach that will both renew our faith in the lending industry and save certain communities from disintegration.
FOR SURE! FORcloSURE! I just noticed that.
One of the best things being proposed by the Senate is coming from California's Democratic Senator Dianne Feinstein (shocker!)
The SAFE Mortgage Licensing Act was introduced by Senators Feinstein and Mel Martinez (R-Fla.) on February 6. Provisions of the legislation include:
At first, MsFeinstein said REALTORS were against this, but then she got a letter from the National Association of REALTORS that said, NO we most defiinitley are FOR THIS! How aweful for the public that these people were not licensed anyway. GREAT thing to come out of this crisis for sure! REGULATION in the public's interest and setting standards! WONDERFUL!
Other than that, anything else they do is potiential harm to one side or the other. The Durbin Bill (by memory) was to allow bankruptcy judges to renegotiate the terms of a subprime loan. They had to withdraw the Durbin bill because Republicans opposed it, and wouldn't even come the chambers to vote it up or down. I KNOW because I watched it live on CSPAN. I saw with my own eyes. The Republican's are trying to leave the bankruptcy laws alone, so I can kind of see that, too. OH WOW, it's a cluster ****. Obama can't get into office soon enough for meeeeee!!!!!!
"not an easy fix without hurting another group. You just cannot save one group without hurting another. Can't be done."
If that is the case, you believe there neither should be any bailout of any sort, or change to regulating the mortgage lending industry? As you said, you cannot make an adjustment intended to correct/assist one group without hurting (effecting) another. So, just let the market be the market, in your opinion?
Someone is going to be hurt. That is what I am saying. You must have wrote this after I wrote about the new regulations which should have been in place and were not, at the peril of many. I am for the new standards for sure!!! And hopefully, what will be done will hurt the least amount of people because I stand by what I said. You cannot save one group without hurting another, just hope the pain is small. Change for the better can even hurt. Nothing is easy.
And it is not my opinion that we let the market be the market, you have to adjust carefully, not Crazily, and with consideration to all involved.
I am always confused by your posts. When you say "industry association endorses a regulatory change which effects them economically, caution should be the standard" I am thinking you mean, I am cautious about changing because it could effect me financially? Because that is SO not what I am even thinking about. BOTTOM LINE in all of this I am thinking about the PUBLIC. Period. Could one area of the public be hurt to save another area of the public. Regulations wouldn't effect me financially, nor the National Association of REALTORS. My caution is responsibility to my clients and to the general public that needs protection and resuce, in careful consideration of not hurting THEM in the long run for a short run cure.
You just need to speak more plainly to me as I am always confused by inuendo. I do hope it has legs and teeth. This would do so much for limiting the shady charactures who got rich quick and bailed. It's just so sad when you think about it!
Notice he didn't say you specifically...he said "an industry." Any industry as a whole has certain motives, not all of them altruistic. There's nothing wrong with that. If an industry failed to look out for itself and its employees it would be a fairly short-lived sector. It's a pretty good idea to at least consider motive whenever a business assocation endorses anything.
ps. You're not alone. Half his posts leave me confused, too. :D
GOOD POINT! That should be an amendment to the Feinstein/Martinez amendment.
Here is her contact information: http://feinstein.senate.gov/public/index.cfm?FuseAction=ContactUs.EmailMe
"Should only those with felony convictions be prevented from handling what amounts to a large degree of most people's net worth?"
I am personally torn on this one. Maybe it's the X-Files fan in me, but anyone can be accused of anything even if there is no merit to the case. Maybe a regulator has a disagreement with a banker, so he decides to ruin him by trumping up charges against him. Just look at the last two administrations and the number of people that faced ruined lives over political gamesmanship. I just don't like the idea that the government can ruin your life over an accusation (I know they can anyway, but the less power they have the better).
I was kind of thinking the same thing. The truth is out there, but increased records access doesn't necessarily lead us to it.
Okie Dokie. I thought I handled that well, in my mind. Ha!
My sista Sandi....you have so much more knowledge in this field than I. But as I see it, there was so much unscrouplous lending going on, and people, unfortunately, are not educated (myself included) in normal vs abnormal mortgage deals. They merely see an opportunity to have their own home, and jump at it.
What I don't understand is how reducing the interest rates on ARMs would hurt anyone. The holders of the mortgage would still make money, and the homeowner would be able to afford their house payments. Who would get hurt in such a scenario? I guess I'm having a blonde and senior moment.....lol
Hey sis, it is complicated, and I am not disagreeing that some people were duped. That's why the Feinstein/Martinez Amendment is great because it will now regulate a shady mortgage lender...but it is still in the form of a bill state, and real relief won't come until everything passes. The Durbin Amendment that would allow bankruptcy judges to renegotiate (lower) the subprime terms so people could IN FACT stay in their house at a lower term had to be taken OFF the table (set aside) because (sorry but it was the republicans) some Senators didn't want to backtrack on the Bankruptcy reform they had gained on only a few years ago. And the Durbin Amendment ONLY applys to primary home (not vacation or second or flips) That is nuts~o, but that's how our government works. I doubt if we could negotiate an answer to this craziness either. It's so messed up, and there are a lot of should have, could have's but in the end, the majority of the problem is people who did "take a chance" and could have secured a fixed mortgage with no risk (other than prices adjusting down) and didn't. Even when warned things were getting bad, they didn't. Many many many people who are "Upside Down" on their mortgages are people who took out loans against the "equity" in their homes for credit cards, another car, a pool, a new kitchen, etc, and now they can't pay and the equitiy is going down. There is a real problem when people try to sell a house that they OWE more than it's worth and is that the BUYERS problem they bought too much with a credit card, or overspent that they needed a bailout from bills? You can see a handful of people were lied to, but they lied to themselves, too, that they could afford something when they couldn't.
I know I sound heartless, but I am watching out for the majority of the people who followed the rules. It's like Obama agreeing to follow the rules in Michigan and Florida and now someone coming along and changing the rules and screaming FOUL.
ARM's were lower interest, and higher risk. There were MANY that bought a house way above their budget and had a 5 yr INTEREST ONLY loan because they figured, in 5 yrs they would be making more money, or in 5 yrs they would sell for a profit and make a killing. Yeah, that didn't happen. So they are in foreclosure. I don't want to reward someone who took that risk. That's the chance they took. There was a single mom on tv who bought a house and decided to put in all these expensive improvements.....sorry but if you are on a limited budget, do you need granite countertops? Sorry, but our parents and grandparents didn't splurge on luxuries if they couldn't afford it. So now her "line of credit is dried up" and she can't pay for her mortgage, and her home improvement loan and she can't afford to finish the improvements. THAT'S poor planning and poor budget management....that's too bad, but a bailout?
Am I just a beeotch because there are too many "stories" where it was clearly a choice, too. The shady lying mortgage lenders should be "sued" individually and let a court decide who is to blame. It's so complicated, and sorry I just took up so much time again, but it's clear mistakes were made on all sides.
Take a listen at some of Beck's comments at youtube:
http://www.youtube.com/watch?v=OS2fI2p9iVs
BR - It is worst then you think.
haaaaaaaaaa, my crazy southern sister! Your patriotic duty to die! Too bad Dr. Kavorkian is outta business now that he's running for congress or something!
I am 1964, the tail end of the boomers. What do you think will be left for me? I plan on never retiring. I'll take my walker to open houses...I'll just have to only show condo's with no stairs!
Rock on my Patriotic Sister!
By the time you have a walker, I will probably have done my patriotic duty and croaked. lol
Seriously, I have been trying out early retirement for the last six months or so. I had it planned out so carefully, worked towards it for years, and have been enjoying it immensely. With sensible budgeting, I would be able to live my life until reaching the age where SS would supplement my income, and I would be eligible for Medicare. Well, with the economy the way it is, with everything from milk to gas and beyond going up so fast, my health insurance premiums going up every six months or so, etc, I fear I will be a bag lady by the time I reach that magic age, with nothing left to supplement the SS. (Remember, I am widowed, so am totally self supporting.)
So now I'm going back to work, and resenting the he** out of it, to be honest. Not being one who expects anyone else to take care of me, I do what I need to do. I no longer want the stress of the well paying job I had before, so am venturing into another field, using my management skills at a lower level, and in a much smaller, less demanding business. We'll see how it works out.
The point of all of this is to show how the economy, driven downward, by the war and the housing crisis, affects individuals not directly involved. It is so sad to think of the young families struggling with this mess, and makes me wonder what will happen to those that come after me, like you, and my children. I especially worry about those working in jobs that don't pay enough to allow them to save a penny. What are they to do as they age, or perhaps become infirm? Meanwhile, we are spending billions on a war in the Middle East. It's a scary situation.
Sorry the economy had to come along and burst your bubble, Suzi. That's no fun. I'm really worried about my parents. They have almost nothing saved. Their house isn't even paid for. I'm afraid they'll have to work forever, except that's not very feasible, is it?
If I remember correctly, Barabara, your parents are even younger than I am, and they are facing the same problems. And no, working forever isn't feasible, and definately not desirable.
My house isn't paid for either, but that is another part of my plan that is hitting a rocky patch because of the housing crisis. My daughter and her family, husband and two kids, came to stay with me when the 3 year old was born, as they lived in the New Orleans area, and didn't want the commute with an infant. Their plan was to buy a house here within a very few months. Then Katrina hit, and houses here rocketed sky high, and were in short supply. (That is now beginning to change) So I decided they could have my house, and I built a guest house in the back yard, across the patio and courtyard. I'm selling them my house for the payoff, which is about 75,000 below the curent appraisal. Naturally, they are getting a normal fixed rate mortgage, but we are finding it a slow process. We've been told that we would close in "next week" for over a month now. (Due to the Katrina factor, the housing and mortgage business, among other things, is operating in a different way and at a different pace than the rest of the country) I'm glad the mortgage company is being careful, but once again, it is frustrating. I paid for my cottage as I built it, so thankfully, I won't have that to worry about. I hope your parents can find a solution that works for them too, even if it isn't a perfect solution. (Mine isn't perfect, but it works ok for us, and I can go with the flow;-)
My parents were born in '51 and '52. All of us kids stayed close to home, so we'll be able to come up with something when the need arises.
The lesson we learned: save early and make paying off the house a priority. Now we just have to figure out how to pay for junior's college! :o
Suzi, that sucks! However, you know what I see? I think you should take your knowlegde, experience, and your big heart for people in trouble and figure out a way you can "work" for a paycheck, but help all those families right now that are in trouble. You could work for a mortgage person, get in a position to help negotiate better terms or some job that isn't even defined yet.
I don't know exactly what that would be, but you wouldn't even feel like you were "working" while you were "helping" people. It might be the reason we were put together here, at this time, in this place.
***ya never know, ya know?****
That's a great idea Sista! And you're right about people being put together for a reason.....I don't believe too much in co-incidence!
I do volunteer work now at the Crisis Intervention Center, and also man a community "Info Line", that directs people with difficulties to places that can help them, be it financial, such as a utility bill or food, or health care, to mental health issues. I know there are no paying positions right now at either of these places, but I will begin to look at what you suggest. I need to think outside of the box, and welcome all suggestions!
You rock!