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Thread: An August Surprise from Obama?

  1. #41
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    Re: An August Surprise from Obama?

    Quote Originally Posted by Objective Voice View Post
    Let's look at all four suggestions I've made and see if we can find some rationale or middle ground here without the political rhetoric.

    By "got off the hook" I mean they haven't sufferred the wrath of having any new federal regulations impossed on them. As most have acknowledged, the new Financial Reform legistlations did not include Fannie Mae or Freddie Mac. Why that was I don't know, but because both mortgage entities reportedly are carrying the majority of the toxic mortgage debt out there, I think it's fair to say they are not getting away scott free. They're losing money every day a mortgage isn't paid whether a homeowner files for bankruptcy or allows foreclosure to happen. Each action either forces Fannie or Freddie to take on a payment schedule that very likely is far less than what the original mortgage was for or causes them to lose those mortgage payments altogether if the courts allow their mortgage debt to be written off. So, since it's an inevitable lose-lose for Fannie and Freddie either way, wouldn't it make more sense for Fannie and Freddie to modify mortgages with those homeowners who ARE willing to pay their mortgage than to force people into bankruptcy? Mortgage modification generally last from 6-18 months. Those who want out of their mortgage will either file for bankruptcy or allow foreclosure to happen and just rent somewhere else or start the home ownership process anew a few years (7-10) down the line. So, for Fannie and Freddie not to work with homeowers isn't a smart financial move on their parts.
    OV, working with homeowners is very different from forgiving loan principle. Lenders ARE working with homeowners. Just blanket forgiveness -- well, I fail to see what that accomplishes. It sends a terrible message to those who are "breaking even" and bustin' their butts.

    We've already covered this above. But imagine if you will one mortgage at $950/month. Multiply that by 1 million. Now add in an average of 8% interest. Doesn't take a mathmatician to figure out that's ALOT of money Fannie and Freddie potentially are losing each time a homeowner mails in their keys and allows their home to be foreclosed on or files for bankruptcy.
    Adjust their interest rate. They're already doing that, in fact.

    You stated that your home has lost 25% of its value. Why is that? I assume your neighborhood still has a sound economic infrastructure, i.e., stores, shops, manufacturing, banks, technology centers, etc. With that assumption, the only conclusion one can make for the decline in your home's value is that your neighbor's homes have been appraised downward. As such, I assume many of the homes in your neighborhood have been left vacant since the housing bubble burst. Here where I live, the housing bubble hasn't affected my city that much. In fact, we're experiencing the exact opposite! I have five subdivisions going up around my neighborhood as I type this. And last year, my home was appraised at ... well, let's just say I'd make money if I sold my house today. So, if your home has lost value since the housing bubble, I can only assume it's because you have alot of vacate homes around you that have been appraised downward. Get people back into those homes who will pay their mortgages even at a reduced modified rate and I guarantee your home's value will increase over time. And where you have vibrant home ownership, you have property taxes. And when you have property taxes being paid you also have consumers buying goods and services. Therefore, your local economy feels the positive impact homeowership brings...just as it feels the negative impact of not having homeowners stay in their homes.
    They've lost money because there aren't enough viable buyers. No longer can entry-level buyers buy with no money down, negative amortization loans, poor credit, stated income loans, 3% down loans, and all of the creative baloney that allowed people to live beyond their means. And most of them unintentionally, I might add. I'm all FOR assisting these people. But simply forgiving amounts owed over the WORTH of their homes isn't the answer, as far as I'm concerned. It sends a message to everybody else -- why pay your bills? The government will bail you out.

    Taking the above into account, it stands to reason that as long as Fannie and Freddie modify many of the mortgages they own even if they are "made" to do so, the taxpayers won't have to bail them out because in time they'd still make money as opposed to continuing to have homeowners mail in their keys and let foreclosure overtake them or file for bankruptcy.

    Think about it...

    For the record, I'm not on Fannie or Freddie's side here. I'm just giving what I view as a practical solution to a very ugly situation.
    Yeah, I don't sense you're taking sides. I think we just have a disagreement on the value of this kind of program. The one thing I will say is that banks have been just absolutely snails when it comes to modifying mortgages. And even in selling foreclosed properties. There are buyers who are willing to buy these properties -- and banks unwilling to move fast enough to capture them.

    I'll go back to my original post on this thread -- that if the government were to enact this kind of program, the backlash from those who PAY their mortgages, who DON'T get forgiven part of their debt will be, I think, overwhelmingly negative. At the polls.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: An August Surprise from Obama?

    All this spending and not a peep from the left about Michelle's $375K trip? Who paid for that trip?

    Spanish police close public beach for Michelle Obama's 250k Spanish holiday | Mail Online
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: An August Surprise from Obama?

    If they were to do this, why would any pay their mortgage in the future??
    Climate, changes. It takes a particularly uneducated population to buy into the idea that it's their fault climate is changing and further political solutions can fix it.



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    Re: An August Surprise from Obama?

    Quote Originally Posted by American View Post
    All this spending and not a peep from the left about Michelle's $375K trip? Who paid for that trip?

    Spanish police close public beach for Michelle Obama's 250k Spanish holiday | Mail Online
    Different thread topic...try to stay on point, please.

    Quote Originally Posted by MrVicchio View Post
    If they were to do this, why would any pay their mortgage in the future??
    Most loan modifications are a 1-time thing throughout the life of the mortgage loan w/the same homeowner. So, in this case, every homeowner who has a troubled home mortgage and qualifies for a loan modification would only get to do this once.

    Now, that doesn't mean that if they sold their home and got a new home loan they couldn't request a loan modification in the future. The odds of that happening, however, are remote. I seriously doubt home buyers would go that route more than once over the life of two or more 30-year mortgages. Most of us have all we can handle with just one home mortgage.

    MaggieD,

    I'm not advocating forgiving anyone's home loan. I hope you didn't think that's what I was suggesting anyway. There are many economist who agree that where Fannie & Freddie are concerned, it is better for everyone all around if troubled homeowners are allowed to modify their mortgage loans than if the Fannie & Freddie had no money coming in from mortgages at all. If you can keep people in their homes it a good thing for all concerned. Mortgage interest rates are being readjusted, but not nearly enough of them are at this point. But yes, it is a key component to easing the problems within the housing market overall.
    Last edited by Objective Voice; 08-07-10 at 05:06 PM.

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    Re: An August Surprise from Obama?

    Quote Originally Posted by Objective Voice View Post
    Different thread topic...try to stay on point, please.
    Sensitive, aren't we?
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

  6. #46
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    Re: An August Surprise from Obama?

    Quote Originally Posted by Objective Voice View Post
    MaggieD, I'm not advocating forgiving anyone's home loan. I hope you didn't think that's what I was suggesting anyway. There are many economist who agree that where Fannie & Freddie are concerned, it is better for everyone all around if troubled homeowners are allowed to modify their mortgage loans than if the Fannie & Freddie had no money coming in from mortgages at all. If you can keep people in their homes it a good thing for all concerned. Mortgage interest rates are being readjusted, but not nearly enough of them are at this point. But yes, it is a key component to easing the problems within the housing market overall.
    I misunderstood you, Objective Voice. I don't disagree with anything you've said right here. And, further, I reSOUNDINGLY agree that not NEARLY enough of them have been re-adjusted. I'm with ya'.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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