I think this is the actual solution. Everybody wins if the house does not get forclosed. Modifying the loan terms to keep the same payments for an increased number of years might po the loan holder, but is still the best alternative.
what i don't understand is why the banks could not have done this themselves with their customers? why does the gov't have to come in and freeze interest rates which even though is for a small part of the population, affects around 100-200 billion dollars, which has got to have some sort of effect on the economy as a whole.
If this happens, it will be because the banks do it themselves....albeit with the government's help in making it all come about.
This isn't designed with the purpose of helping the homeowners. It's being put in place to keep credit institutions from crashing and possibly taking the entire economy down in the process. In other words, the idea behind it is to prevent those people's mistakes from screwing everyone else. Unfortunately, the only way to do it is to minimize those people's mistakes. Whether or not it's a good idea, who knows - but the purpose of this emergency solution is not for the homeowners or even the debt providers - it's to stabilize the economy.
Whatever you want it to mean. I intend it to mean "Impeach Bush," but after having to listen to criticism for what I wrote earlier, which I may do again in the future, I'm saving myself some typing, attempting some humor (you got it!), and putting Mr. Bush on the same level as a chick's crotch. (not that there's anything wrong with a chick's crotch! one of my favorite places to visit...) Trim Bush!
You have it mostly right. It doesn't make sense to have EVERYONE foreclose, and that would be dire for the economy. But you can go too far as well. It is healthy for SOME people to go into foreclosure. There is such a thing as going too far with a bailout. I believe it happened with Japan, where they bailed out everyone instead of just the banks that had a chance for solvency. As a result, their economy is sluggish for over 10 years. And MadMax brings up a good point about contracts as well. Whether or not it is right, people will sue because they can.
More than just that. I was so totally on board for Afghanistan that I considered signing up. I had been unemployed for four months and felt very strongly about our action against the Taliban. Damn, I'm glad I didn't go through with that.
Absolutely - I'm not suggesting its a good or bad solution. That will be seen based on the results. My only point was that contrary to the poster I was quoting, the purpose of this "bailout" or whatever you want to call it, is not to help the homeowners - that's just the method being used to try to stabilize the financial system.
Of course nobody is fighting it. One, it has no real teeth. Two, it would be political suicide to fight this one. A good portion of my bankruptcy practice is based in stopping foreclosures. I have noticed very few due to an ARM adjustment. Most of the foreclosures I have seen are due to loss of job, cut in hours, increased fuel costs for truckers, etc. It is important to note that you do not qaulify for the rate freeze if you have already fallen behind on your mortgage.
Yeah, this is why big banks can't do it on their own. They're scared ****less about the possible debt load they're carrying from the subprime mess that a lot of them are freezing up on daily lending. Even Fannie Mae has been affected by this, and it isn't known to deal with suspect loans. This will be another crazy year in finance.
I read about this in the Wall Street Journal. There are too many customers and the banks and other mortgage companies are not set up to individually work out a plan that fits with each customer. That would be the ideal situation, but it would take way too much time and work, so they are going with a "one size fits all" approach. Which is the next best thing.
Reagan did it to the oil companies back in the 80's....and the senate is about to do it again with the biodiesel credits
Actually they completely missed the point. While the people who are getting help will get to keep their lower rates, but they are also locked into their loan which a lot of times is bigger than their home value since the housing price has go down a lot. So they can't move, can't get another loan, they are pretty much stuck paying that loan until the 5 year reset time comes. And this is only for people who can afford the initial rate. For the people who were sitting on the sidelines, they can now jump into the market, pick up a house at a much cheaper price, and still get a great rate. The rates are very low now, and likely to be even lower in the future. So no, they are not really getting screwed. This plan is not about bailing out people, but rather try to stabilize the housing market, the mortgage bond market and its derivatives. Although its anybody's guess if it will work.
i hate all this bending over backwards for people who just screwed up. Sorry, but it's part of life. Live, learn and move on. The govt doesnt need to be ass kissing a small % of people who were too stupid to get into something without fully understanding it.
Anybody with a dog in the fight (mortgage companies, etc) would be a little silly to fight it now...because they haven't done anything yet. If something passes, they will likely challenge the Constitutionality of the regulation, and as MadMax pointed out, they will likely win.
