PHOENIX – President Barack Obama's plan to tackle the foreclosure crisis will spend $75 billion in an effort to prevent up to 9 million Americans from losing their homes.
The plan, which Obama is releasing later Wednesday, is more ambitious than initially expected — and more expensive. It aims to aid borrowers who owe more on their mortgages than their homes are currently worth, and borrowers who are on the verge of foreclosure.
The initiative is designed to help up to 5 million borrowers refinance, and provides incentive payments to mortgage lenders in an effort to help up to 4 million borrowers on the verge of foreclosure.
"All of us are paying a price for this home mortgage crisis," Obama says in a prepared text of remarks scheduled shortly after 12 noon EST Wednesday at a Phoenix area high school.
I'm not "paying a price". I'm paying my mortgage.
This is actually pretty amazing. Obama wants the American tax payers to absorb the cost of write downs on home values. It's not fair to people who pay their mortgage, and it's not fair to people who don't have a mortgage.
It's completely different than fiscal stimulus spending, and truly is Socialist. I'm really surprised he's trying it.
It's not likely to pass because I doubt he'll get the 3 Republican senators to go along with it. It also would not really change much, but delay the inevitable. The housing market has to find it's own level, and that means that everyone who could not afford a home in the first place is not suddenly going to be able to afford one now.
It's a giant hand out to the mortgage industry, which will end up taking back the properties anyway.
/adding
I'm willing to bet that Obama doesn't get the bill passed. The obviousness of how bad it is will become apparent when even the lefties start asking why people who aren't paying their bills are being bailed out by those who do... or those who don't even have a mortgage.
There's also some additional chatter about the Fed nationalizing the big banks.. from Alan Greenspan, of all people. I hope this happens, and that all the common stock holders are wiped out in the process.
/update
I removed Americablog from my blogroll a while back, because most of the people there have lost their minds. It's pretty hard core. Naturally, there's a post there about the mortgage bailout, and I left a comment.. and some people there aren't happy with my view. That's fine.. but the strange thing is that they actually think that if you buy something on credit and can't pay it back, society should do it for you.
I am completely amazed this is even in consideration.
Many people on the left and right cannot see the distinction between social programs that are designed to keep people from dying, and a program that will financially help people with something they bought on credit.. something they don't actually need.
Food stamps is a great example. Bad things happen to people.. and helping citizens be able to get something to eat so they don't just die is a good thing. Even assistance with temporary housing (rented) is a good thing. You don't want children living in the streets.
A house is completely different. It's a commodity. It's an investment. It's a risk. It's part of the free American market, and the prices must settle on their own, because artificially propping them up is what helped contribute to this problem in the first place.
The people who signed the loan fucked up. Those who did not save up extra money to make payments while out of work fucked up. Those who simply want to walk away from an under water mortgage situation fucked up.
They took a risk. The market shit on them. It's not my problem. I refuse to give them my money unless they are going to pay into my retirement account that lost 20% of it's value in 2008.
I took the risk for that investment plan. I chose poorly. I fucked up. It's my fault. I do NOT deserve to have everyone else pay my account back to where it was.
This issue is the defining moment in determining what sort of nation we live in. Is owning a house a "right"? Is it guaranteed that the value always go up?
This is just so much bullshit, and there's a bunch of whacked out loons on the left who think that anytime somebody does something stupid, even if it's related to things that they buy, everyone should pool their money and make it right.
They're fucking crazy... and fodder for the Right Wing Loons. Has everyone lost their fucking minds?
/update 2
Chuck Todd is on my teevee telling me that this program is not going to apply to people with "jumbo loans".. over some figure, say 500k.
And why not? Why is the home for a "middle class" person more worthy than a loan on an expensive home?
And how the fuck is this going to work when so many loans are not Fannie/Freddie, and are actually held by many different investors. Who the hell is going to agree to write down loans?
I've said it time and again, people are not going into foreclosure over $200 bucks a month. They simply can't pay the loan. That's not going to change.
And it's not going to suddenly change the direction of home values, and people will continue to simply walk away from their mortgages and let the house foreclose. Home values have been artificially high for many years, and this program will not stop the settling of the market.
It's all so stupid.
6 comments:
I find it odd that these people are called "homeowners". Cause technically, they don't own shit. Except for a massive pile of debt anyway.
I'm not for people getting bailed out of their crappy mortgages they can't pay. If they can't afford the house they need to get out of it, and really shouldn't have bought it in the first place.
I'm not sure if there's anything we can do about the housing crisis other than just let it work itself out. The sad part is that there are going to be thousands of really nice homes that will not have anyone living in them.
Sure, there will be a lot of empty houses.. and the prices will keep coming down until somebody decides it's worth buying.
This is called supply and demand, and it's weird to me that some people don't understand that.. (not referring to you of course).
The housing situation is actually a good thing in the long run. The market was artificially inflated for years, and once it settles and the average home price comes down, more people will be able to afford them. The price will settle to the supply/demand curve. Values will slow increase over time as they should.
What really pisses me off is the idea that even someone who doesn't have a mortgage is going to have to pay to help somebody who fucked up theirs.
And you're right. There are very few actual "home owners". There are a lot of "home borrowers".
Are they specifically talking about marking down the homes value?
I would assume they would re-write the conditions of how a mortgage is repaid without affecting the initial debt. The end result is a lower monthly payment but you’re a slave for longer period.
Yes.. principle write downs.
When I read your opinion on this issue... my first thoughts are that it rings quite true and my gut reaction is I'd be pissed at my tax dollars helping others out of their naively self inflicted situations.
-but-
I'm going to play devils advocate here for a minute...
...and ask you to articulate on what I could say are conflicting ideologies:
Tom's Position 1 (as interpreted by yours truly): Higher earners should accept a higher tax burden for the greater good of society. To paraphrase some of your posts as I've read them 'once you're wealthy you're wealthy... and everything over a certain threshold is semantics'. You cite yourself and John's situation, with your Friday Fine Dining and semi-seriously eyeing off 911's and Audi R8's. You can afford comfortable lifestyles and high quality leisure activities. You compare this to your Donald Trump's and Tiger Woods' of the world and ask what's the tangible difference – in quality of life terms- is in getting $1 million, $10 million or $100 million per year after tax?
Tom's Position 2: The use of taxpayer money to provide relief from the current mortgage crisis is bad mmkay?
My point?
Shelter is one of the fundamental human needs. And while I agree that the difference is vast between the basic subsistence level of shelter and a $450k home, you have to appreciate the government’s position.
The government has a responsibility to the American people to facilitate the basic needs - the food, the water, the shelter, the healthcare and the security. It is easy to say ‘let these people be foreclosed on and the market will settle itself’.
But where to go while this occurs and in its immediate aftermath? For some people rental housing, in other cases public housing projects, shelters, slums or the gutter.
Assume the crisis continues to some absolute ‘end-game’ with no intervention of the sort just put on the table by Obama. Assume anyone at risk of foreclosure is foreclosed on. It will put immeasurable stress on the options I listed above that people would deem acceptable to begin with - that is rentals and public housing.
The infrastructure just does not exist for that sheer volume of people to move from private home ownership (or loanership) to other arrangements in such a short window of time.
The rental market will tighten to breaking point, pushing rental prices sky high and providing little relief to people who sought rentals as an affordable respite to their mortgages. Public housing will not be able to cope with the demand either.
So; these people have lost their homes - yes they were greedy to begin with, but there comes a time where that ceases to be the point.
Their credit ratings are destroyed. The world economy is in a bad way for a few years to come and lenders have radically tightened their lending criteria. It’s hard enough for you and I to get a loan let alone someone with a fresh mortgage foreclosure on their record.
These people can’t afford to compete in the rental market. And there’s no public housing left.
What do they do?
This is the sort of result that I’m sure Obama and his advisors have seen play out in simulations. They cannot let the country slide that far. Not for the democrat’s or the republican’s sake… but straight out for the quality of life of the American public.
The worlds’ biggest economic and military power cannot regress to something that resembles feudal European living standards.
So… how do they avert this?
Well. Timelines are too short for building hundreds of thousands of additional public dwellings. Also – such housing would become surplus, vacant and fall into disrepair when the crisis finally subsides – which it will.
Obama and his advisors realise that there is inherent value in having people in homes they feel a sense of ownership over.
People in their ‘own’ homes, take care of the property. There is a sense of pride and responsibility over something they own. They do not treat their property with the same casual contempt they might a rental or public housing. They repair small faults. Do yard work. Make improvements to their asset if they feel it is their asset.
These assets collectively are a huge national asset.
Yes their asset has taken a write down. Yes you the tax payer share in this write down. But the crucial thing here is that the assets remain in the hands of the residents. Not property developers, corporations or foreign investors.
When the crisis subsides, ordinary Americans once again have a tangible asset and – fucking hopefully – have learnt an important life lesson about not living beyond their means.
If things are allowed to continue without intervention, you have hundreds of thousands of Americans in dire living circumstances and simultaneously - hundreds of thousands of empty homes.
It brings to mind another absurd statistic I read somewhere a while back - there are now more clinically obese people in the developed world than starving people in the 3rd world.
Homeless people surrounded by empty houses is equally tragic.
When the housing market bottoms out, the people with all the money will be those like you and John. You could buy… 5, 10, 15 houses with your good credit rating and rent them out to the very people who used to hold their deeds.
The purchase price will be low enough that the incoming rent nearly makes the loan repayments for you. And you and John retire young and rich (perhaps I’m not making my case very well by including that… lol).
But you talk often about the polarisation of wealth as a negative and the increasing socioeconomic stratification of society – if you can find me a situation with more potential for the rich to get richer and the poor to get poorer than this mortgage crisis I’ll buy you a beer.
So yes. People are dumb and inherently greedy. But we have to let that go.
America now faces a crisis that needs intervention at a federal level as much as a viral epidemic, or a famine, or a drought would.
I think in this instance your tax dollars going towards the resolution is just as important as funding medicaid, VA or foodstamps.
That's pretty good reasoning, and I'll parse it out a bit tomorrow.. err.. after midnight now, so later on today.
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