cc431
Posted : 2/20/2008 11:29:30 PM
probe1957
But what is the solution, Charlie? To do nothing?
Let me say, I am with you. I don't have much of an interest in tax payers bailing these people out but really, for the grace of God, go any of us. As I understand the problem, you described it pretty accurately. Someone bought a condo for $350, with an adjustable rate mortgage and a 5 year balloon. Their thought process was, when the balloon came due, they would refinance. The problem is, as you suggested, their $350k condo is now worth considerably less and no one will refinance it. So they are stuck in their now high interest adjustable rate mortgage.
This is a HUGE problem. We have only seen the tip of the iceberg, as it were. This trap will get many more people before it runs its course.
Well, it is a huge problem and maybe do nothing is the best thing? We will end up paying anyway regardless I suppose. The spin is this: Hillary wants us feel like we should feel sorry for some folks who made mistakes, put a freeze foreclosures so these poor people who made mistakes don't lose their home and get thrown out on the street and become homeless. What a shame. How can we throw them out and foreclose on them, pandering for votes. We want to come to rescue and waive around 30 billion dollars of tax payers money and maybe we can help these out these poor folks about to lose their homes and get forclosed...and get some votes at the same time. It adds up to a stall tactic because if they don't come up with the cash to make the mortgage payments (ARM or no ARM) their getting foreclosed on regardless whether it is tomorrow or after a three month freeze.
The homeowner had to live somewhere in that short term. You could view their contributions similar to rent, you would have to pay somebody anyway regardless to live the past few years. They get thrown out due to a foreclose, they are stuck deposit money (if any) but they till had to pay to live somewhere. Taxes, insurance, utilities can all be calculated in somewhere if they were paying rent anyway, no loss there. The 30 billion and the freeze sounds attractive to the homeowner, but this is bail out money for the sector, for the money lenders, not the PB getting foreclosed on because they can no longer afford the mortgage. All they have to do is move on and find another place to live. The money lender is stuck with the house which will go up for sale in a declining market, and that is where the losses are incurred. So who does Hillary expect us to feel sorry for those getting foreclosed on or those poor, poor money lenders stuck with a house in a declining market? The 30 billion is to bail out the money lenders and the tax payers get the shaft either way. The money lenders made it all sound attractive, they want these loans, they encouraged people to get involved in something where realistically on paper they probably couldn't afford it anyway, but they want the signature on the paper. It is a gamble, gambling the market will continue to be strong, house values will continue to rise, maybe they won't get stuck. They rolled the dice in that respect and lost and after the foreclose will be forced to eat the loss, but here comes Hillary to the rescue for the risky gamble. Well, I say let them both sink. The homeowner learns a lesson, buy low sell high and beware of risky loans. The moneylenders need to stop pushing crazy loans and stretching the paper to get people in any way possible. And who pays in the end...mostly likely you and I. These guys are all affiliated within the sector, banking, credit cards, notes, car loans, home improvement loans, etc. Watch out the return of the "annual fee" on those credit cards, higher interest rates on the car loans and home improvement loans, etc. Bailout or no bailout, one way or another they will recoup their losses, even if it takes 50 years.
CC.