Bailout to Cost $5,354 per Tax Payer…

mrstjohnson

fuzzy_dogs_mom

AMEN!!  Though I think they finally got the budget signed ... dang near three months late.  Really though, if the tax papers are going to be "bailing out"  I'd rather see some of that money go toward helping the people who got talked into some of those wonky loans in the first place and lost their homes. And I do believe the lenders worked pretty hard at talking a lot of them into it because my understanding is that the lenders make more money from loans for people with "iffy" credit than they do from people with high FICO scores.  If your credit score is high, you can wind up only paying maybe $2,000 in costs and fees, but if it's in the mid to low range, your costs could be as high as $8,000 t $10,000. Lenders are going to jump through hoops to make those kinds of loans.

Joyce

Honestly Joyce, those are the people I feel the least sorry for...sorry if that is anyone here.  I have several friends that knew what they were getting into, but they wanted bigger and better and gambled and lost.  They would brag about how their 3500 sq. ft house that cost $400,000 (that's alot around here) was only giving them a $1500/month mortgage for now (interest only).  They would go on and on about how their house value would double in the next 2 years and they would refinance, etc. etc. They gambled and they lost.  They knew they could never afford a mortgage on a $400,000 home with zero to little down payment.  While we are sitting in our relatively small house with our manageable mortgage payment they thought we were crazy.  Now whose crazy.  I feel bad those that are losing their homes because they lost their job and can't make their regular payments, etc. not so much for those that wanted the world, couldn't afford it, and bought it anyway.  Yes, shame on the lenders for selling them something they couldn't afford, but it is a person's responsibility to know what they can/cannot afford.

The people across the street from my parents lost their house...but for some reason they bought a pool all the while they weren't paying their mortgage...I just don't get it.

I completely agree! When I was in the real estate title business, I worked very closely with mortgage brokers and the things they would say to people, how they would lie to sell a huge loan that the broker knew damn well people couldn't afford the loan on the house!! Brokers (at least the ones I worked with) were shady, but honestly, you have to also have enough common sense to be able to look at the numbers and realize "hey, I honestly can't afford this house no matter what" My husband and I got a small 2BR house in a very nice district, and we have been told by some friends and family we are silly for buying such a small house, but it was what we knew we could afford and we know we aren't going to lose our house, period.

it was what we knew we could afford and we know we aren't going to lose our house, period.

if more people followed this logic, maybe we wouldnt be in such bad financial conditions right now.

i recently bought a house, and i knew upfront what i could afford and that i didnt want any crazy loan terms. if i couldnt get a loan inside my criteria, then i was prepared to move into a rental.

 
http://www.whitehouse.gov/news/releases/2002/10/20021015-7.html

President Hosts Conference on Minority Homeownership
George Washington University
Washington, D.C.

You see, we want everybody in America to own their own home. That's what we want. This is -- an ownership society is a compassionate society.....

......And, of course, one of the larger obstacles to minority homeownership is financing, is the ability to have their dream financed. Right now, we have a program that all of you are familiar with, maybe our fellow Americans are, and that's what they call a Section 8 housing program, that provides billions of dollars in vouchers to help low-income Americans with their rent. It encourages leasing. We think it's important that we use those vouchers, that federal money to help low-income Americans go from being somebody who leases to somebody who owns; that we use the Section 8 program to not only help with down payment, but to help with continuing monthly mortgage payments after they're into their new home. It is a -- it is a way to help us meet this dream of 5.5 million additional families owning their home.

I'm also going to encourage the lending industry to develop a mortgage market so that this script, these vouchers, can regularly be used as a source of payment to provide more capital to lenders, who can then help more families move from rental housing into houses of their own.

Is there something wrong with the concept of renting until you can afford to buy?  Isn't that exactly what most of us did, or are doing? Is there going to be a program to make sure that everyone is driving a car no more than two years old? I was reading an article that described these as NINJA loans.  No Income, No Job, (no) Assets.

Joyce

Home ownership is often seen, as a way to revitalize "urban" areas. How many of us have lived near rental properties...how many of us wished we DIDN'T? If there is an entire neighborhood of rentals chances are it's not a nice neighborhood. Give people something THEY OWN and the theory is they will care for it in a different and supposedly better manner. I personally have found that to be the case going by areas we've lived in.

So perhaps that is the general idea...as home ownership concerns minorities and those in areas that need revitalization and "taking back".

fuzzy_dogs_mom

Is there going to be a program to make sure that everyone is driving a car no more than two years old

Germany already has such a program and it works quites well. Not based on the cars age or your ability to pay for it... as much as appearance and efficiency on the road...TUV I believe.

Here they are offering people thousands of dollars to buy a new car and ditch their old ones due to environmental concerns...so I don't think that's so much "next" as "now".

cakana

I hate that there's a need for this bailout but it scares me more to think of what might happen if we don't do it. I'm just disgusted by the whole thing!!

Ditto!

rwbeagles

Give people something THEY OWN and the theory is they will care for it in a different and supposedly better manner.

I think the problems come when you "give" anyone something. It just doesn't have the same appeal as something you've worked really hard for. It doesn't mean it will always fail, but even if it should've worked in theory, it's not working now. There's more "for sale" signs up in low income areas than there probably ever was before. Having the house next door rented out is better than having it abandoned. I don't know enough about the socioeconomic implications of any of the decisions that were made, but there are people who make a LOT of money who should have known better.

No one wants to take blame for any of this. Not the politicians, not the banking CEOs, not the RE agents, not the brokers, not the people who signed on the dotted line. All I know is, I didn't cause it but I'm sure paying for it. Know what it's like to get a call saying that the $25K AAA rated bond you had thru Lehman Bros just vaporized? It figures that it's the only company that didn't get bought or bailed out. Yeah, I'm really mad about this whole mess!

cakana

No one wants to take blame for any of this. Not the politicians, not the banking CEOs, not the RE agents, not the brokers, not the people who signed on the dotted line. All I know is, I didn't cause it but I'm sure paying for it. Know what it's like to get a call saying that the $25K AAA rated bond you had thru Lehman Bros just vaporized? It figures that it's the only company that didn't get bought or bailed out. Yeah, I'm really mad about this whole mess!

True ... nobody wants to take the  blame but everyone's fingerprints are on the gun.  I felt bad about Lehman Bros.  I didn't have any dealings with them, but they've sure been around a long, long time.  Didn't they help fund the railroads about 150 some odd years ago? It kind of surprised me that they were just allowed to go under like that.  I always thought when a bank was sinking, another bank would buy them out - especially one that had been around that long.

Joyce

 This is a direct result of our elected officials trying to fix the economy so that everyone can have a house regardless of whether they are able to pay for it or not. Freddie and Fannie were basically directed to open up more loans for low income people, and to regard welfare checks as income. Combine that with the greed of the CEO's and management who managed to make up to 90 million each during their time with FM and FM and we end up with this mess.

  We need to get away from the thought process that everyone is entitled and get back to earning things. If your credit is not good enough or your income is not high enough then you should rent until you are able to afford a home.

From what I see around here, it isn't the lower income housing ares that have the foreclosure problem...at least not to the greatest extent.  The areas hardest hit are the high middle income areas.  The situations I see most are the people that should have only bought a $200,000 home, but bought a $400,000 home in order to impress.  I know those in CA think this is cheap, but for example our 2 bedroom 2 bath 1500+ sq. foot ranch condo was less than $140,000.  We wanted to make sure that we not only could afford the payment every month, but we could afford it twice...just in case.  Most of my friends are bringing in near 200K with two incomes are they are barely making their $4000 a month mortgage, because it's not just the house, it's the $500 car payments (ea.) its the health club, the designer clothes, the trips, etc. etc. 

Another group are the speculators.  These are the ones that bought tens of homes in these areas with the hope of flipping them and making HUGE profits.  Well guess what, now they can't and they want us to bail them out.  Great!  Thanks!  I didn't save for the last 15 years so I could have a bigg enough down payment to afford a home in a good, nice neighborhood to bail your stupid bum out because you got in over your head.  When I was in debt up to my armpits with credit cards, I got myself out.  No one felt sorry for me because I over extended myself and I worked to fix it - no short cuts.  That's exactly what these people did (overextended) and now we all have to bail them out.  Great!  Thanks!

I am sorry, I don't feel bad for these people.  I work with Habitat for Humanity, which builds homes for deserving families in lower income neighborhoods.  In my experience, these are the people that are hurt by all this greed.  They are the ones that need the government backed loans to give them opportunities because they earned them - they weren't just given something on a platter.  Gina is right, home ownership does help revitalize a neighborhood and all of the greed has ruined it for them.

Sorry - I live in one of hardest hit areas in the country and although we benefited from the drop in home prices because we bought now, it still makes me so mad.

fuzzy_dogs_mom

I felt bad about Lehman Bros.  I didn't have any dealings with them, but they've sure been around a long, long time.  Didn't they help fund the railroads about 150 some odd years ago? It kind of surprised me that they were just allowed to go under like that.  I always thought when a bank was sinking, another bank would buy them out - especially one that had been around that long.

Yes, 150 years!! It just points out how far reaching this whole mess is. I'm a conservative investor. This bond only paid like 5 or 5 1/4%. Never did I imagine it was a risky investment. I'm still in denial about it.

I'm no spring chicken but I really feel for the senior citizens who were already struggling to get by. They don't have time to recoup their losses and their retirement investments was all they had.

cakana

 I'm a conservative investor.  

You and me both !  I don't really understand all the ins and outs of investing but I let the bank talk me into investing one of Mel's life insurance policies because through the bank it's FDIC insured.  I'm not even sure what it's invested in.  How pathetic is that? They send the info with the bank statement every month but it's just all mumbo jumbo to me. I swear if I hear so much as a rumor that Wells Fargo is in trouble I'm going to get it all out in cash and keep it in a fireproof lockbox behind the dog food in the pantry.  I spent an hour tonight listening to discussions about the bailout on CNN and it's starting to make me really nervous .... mainly because nobody could explain exactly what was going on or why.  Geez.  If they don't know, how do they expect us to know?

Joyce

fuzzy_dogs_mom

because through the bank it's FDIC insured. 

It might be a certificate of deposit. They usually pay a little more than regular savings accounts and as long as it's FDIC insured, you should be fine.

It sounds like there's still some disagreements on the bailout details. Hopefully it won't take as long to pass as our state budget or we could be in big trouble

I THINK THE CEO'S SHOULD PAY THRU THE NOSE FIRST.  BUT IT SEEMS THEY CAN ROLL AROUND IN THE BARNYARD AND STILL COME OUT SMELLING LIKE A ROSE.

WE HAVE BEEN THRU A COUPLE OF HARD TIMES AFTER BUYING THIS HOUSE 19 YEARS AGO.  BUT THE GOV DIDN'T COME AROUND SAYING :"SKIP TAXES THIS YEAR" OR OFFER TO MAKE A COUPLE OF HOUSE PAYMENTS FOR US.

I CAN NOT HELP BUT WONDER IF THIS BAIL TREND WILL CONTINUE