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Well, it looks like you'll have no choice in the matter, because it's already in the works folks!
States: Let taxpayers cover your mortgage
"NEW YORK (CNNMoney.com) -- Unemployed? Owe more on your mortgage than your home is worth? Your state might one day pay your mortgage.
Giving people free money to cover their home loans is just one of the radical ways that four states -- Florida, Michigan, California and Arizona -- plan to use $1.4 billion the Obama administration is sending their way to help the unemployed and underwater avoid foreclosure. These proposals may irk Americans who are keeping up with their mortgage payments or don't want tax dollars used to help their neighbors."
__________________ "No one walking this earth knows what is truly righteous"
Last edited by PatriotsReign; 05-12-2010 at 09:51 AM..
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It's a problem. If people foreclose, it drives prices down, which leaves responsible people with less equity and possibly economic problems if they need to borrow against equity. I would favor long-term loans to people or modest help in areas that are severely depressed (for instance as a result of companies closing up or after-effects of natural disasters). I also think that any help should be contingent on property owners providing a detailed accounting of their income and assets. For instance, people should be expected to go into the retirement funds before getting help. I don't think there's an easy solution.
It's a problem. If people foreclose, it drives prices down, which leaves responsible people with less equity and possibly economic problems if they need to borrow against equity. I would favor long-term loans to people or modest help in areas that are severely depressed (for instance as a result of companies closing up or after-effects of natural disasters). I also think that any help should be contingent on property owners providing a detailed accounting of their income and assets. For instance, people should be expected to go into the retirement funds before getting help. I don't think there's an easy solution.
Patters, responsible people may wind up with less equity, but if that's so, it's either temporary, or their previous gains on their equity were artificial.
For a long time people counted on homes / real estate as a surefire way to build wealth. it isn't, it shouldn't be (at least not in the short or maybe even medium term), and people should be aware that it isn't.
If they have economic problems solely due to a lower equity value in their homes, I doubt they were truly "responsible" in the first place.
[QUOTE=Patters;1819517. I would favor long-term loans to people or modest help in areas that are severely depressed (for instance as a result of companies closing up or after-effects of natural disasters). I also think that any help should be contingent on property owners providing a detailed accounting of their income and assets. For instance, people should be expected to go into the retirement funds before getting help. I don't think there's an easy solution.[/QUOTE]
A similar program, with some of your suggestions and a pay-back expectation at a very low interest rate, has worked pretty well in Pennsylvania.
You're right, Patter, there is no easy solution - and the "let 'em fail" solution isn't one, either. It may be that's what will have to happen to some people, but it surely doesn't have to happen to all the people. To do so would be throwing the baby out with the bathwater - and it's very true that the more foreclosed homes there are in any given neighborhood the more it drives down the prices of others in the neighborhood - which only snowballs and snowballs until even those of us who think we are "good" or thought we were "smart" are adversely affected.
It kills me in a way to see people smugly suggesting that everything bad that happens to someone else is "their own fault." In many cases it is, but in many cases it is not.
Say someone bought a home today....they saved their money, they were careful, they didn't overspend, they did everything "right," and now they have a home they can not only cherish, but afford. Good for them, right? Right.
But say, 4 years from now, that person loses his job because he's gotten sick, or he loses his job because the company he works for goes belly-up, or his kid is diagnosed with CA, or he's transferred to another state. He paid $250,000.00 for his house. All the homes in his neighborhood were appraised at similar value at the time. But things have changed in 4 years. A big factory in his neighborhood shut it's doors right after he bought his house and more than half of his neighbors lost their jobs. Half of those half ended up defaulting on their mortgages and had their homes repossessed because they could not find even temporary assistance with their mortgage payments. There are now 10 houses on his block which are empty - the've been gutted by vandals, the yards are unkempt, the paint is peeling and the windows are broken. There are also another 7 houses which the banks were fortunate enough to have sold - at half price. The people living in them now are not quite the same as the previous owners. They're a bit lower class, and a bit less likely to take care of their property. They also paid only $125,000.00 for the house which means that $125,000.00 has become the absolute top price for a home in that area. Our person who bought that home today, in four years, will have lost at least, at the very minumum, $125,000.00 on his home (and that's only if he can even sell it at all) - and most of it because he and others of his mind set screamed so loudly at the thought of someone "getting something for nothing" that the government changed it's mind about assisting underwater home owners.
Sometimes you cut off your nose to spite your face without realizing it. Sometimes you do it knowingly because you're just plain stupid.
Patters, responsible people may wind up with less equity, but if that's so, it's either temporary, or their previous gains on their equity were artificial.
For a long time people counted on homes / real estate as a surefire way to build wealth. it isn't, it shouldn't be (at least not in the short or maybe even medium term), and people should be aware that it isn't.
If they have economic problems solely due to a lower equity value in their homes, I doubt they were truly "responsible" in the first place.
Chico, you're definately one of the most open-minded posters on this board. And best of all, your opinions don't align along any party lines! I love and respect that a lot.
Also, great post above! The fact is, even if public monies are used to bail out mortgages, home values may still decline. Like you wrote, there are no guarantees either way.
We can not keep relentlessly approving "bail-outs" in this economic crisis. There is a very, very good saying about throwing good money after bad money...or, as in this case, "bad money after bad money".
This clearly is NOT a good idea.
__________________ "No one walking this earth knows what is truly righteous"
...Say someone bought a home today....they saved their money, they were careful, they didn't overspend, they did everything "right," and now they have a home they can not only cherish, but afford. Good for them, right? Right.
But say, 4 years from now, that person loses his job because he's gotten sick, or he loses his job because the company he works for goes belly-up, or his kid is diagnosed with CA, or he's transferred to another state. He paid $250,000.00 for his house. All the homes in his neighborhood were appraised at similar value at the time. But things have changed in 4 years. A big factory in his neighborhood shut it's doors right after he bought his house and more than half of his neighbors lost their jobs. Half of those half ended up defaulting on their mortgages and had their homes repossessed because they could not find even temporary assistance with their mortgage payments. There are now 10 houses on his block which are empty - the've been gutted by vandals, the yards are unkempt, the paint is peeling and the windows are broken. There are also another 7 houses which the banks were fortunate enough to have sold - at half price. The people living in them now are not quite the same as the previous owners. They're a bit lower class, and a bit less likely to take care of their property. They also paid only $125,000.00 for the house which means that $125,000.00 has become the absolute top price for a home in that area. Our person who bought that home today, in four years, will have lost at least, at the very minumum, $125,000.00 on his home (and that's only if he can even sell it at all) - and most of it because he and others of his mind set screamed so loudly at the thought of someone "getting something for nothing" that the government changed it's mind about assisting underwater home owners.
Sometimes you cut off your nose to spite your face without realizing it. Sometimes you do it knowingly because you're just plain stupid.
MrsPats, of course that scenario can occur -- I'm sure it happens every day.
But while it's sad, is it the government's role to keep it from happening? If you think it is, where does that mindset end? (Personally, I'm OK with a limited "safety net," precisely to help out people like those you envision here. But the "limited" part is what I fear becoming lost.)
I said it in my prior post, but people need to understand that they could lose money on their homes and enter into the purchase with that mindset -- particularly over the short term. (After all, even in your scenario, if they manage to keep the home, they are likely will not lose that $125k if they're in for, say, the life of their mortgage, and their loss will only be on paper until they sell.)
Also, re. being "responsible," let's flesh out your hypothetical a bit. How much of a cushion did the buyer have? How many mortgage and tax payments were "in the bank" in case of this nightmare scenario?
MrsPats, of course that scenario can occur -- I'm sure it happens every day.
But while it's sad, is it the government's role to keep it from happening? If you think it is, where does that mindset end? (Personally, I'm OK with a limited "safety net," precisely to help out people like those you envision here. But the "limited" part is what I fear becoming lost.)
I agree wholeheartedly with the "limited" part which is why I linked to the Pennsylvania plan. It seemed to combine the best of everything.....demanding financial responsibility from the borrowers, checking their credit, making sure they weren't in any trouble other than mortgage trouble and setting a time limit (2 years I believe) before making a pay back attempt.
Quote:
I said it in my prior post, but people need to understand that they could lose money on their homes and enter into the purchase with that mindset -- particularly over the short term. (After all, even in your scenario, if they manage to keep the home, they are likely will not lose that $125k if they're in for, say, the life of their mortgage, and their loss will only be on paper until they sell.)
But if you can't make the mortgage payment because you've lost your job or your child has an illness that demands more money than you have on hand, you ARE going to have to sell your house - and then you've lost...and not just "on paper," I don't think. You're still on the hook for the balance of the mortgage minus whatever you were able to sell the house for unless the bank forgives the balance.
Quote:
Also, re. being "responsible," let's flesh out your hypothetical a bit. How much of a cushion did the buyer have? How many mortgage and tax payments were "in the bank" in case of this nightmare scenario?
Rightly or wrongly, most people live payday to payday. Even in the best case scenerio, where someone was prepared to lose their job and built a nest egg in advance, realistically, how much of a nest egg do you think they keep? 3 months, 6 months? (I believe, but am too lazy to look it up) that 3 -6 months is the recommended emergency fund homeowners are advised to keep on hand.) 3 months goes by in the blink of an eye - as do the following 3 and boom!! You're broke. You've done nothing but postpone the inevitable unless you find another job real quick - and from the lay of the land, that's not happening to most people.
In the future I'm pretty sure people will be alot more careful about what kind of house they buy but for now I think alot of the people currently underwater were royally screwed. Should they have been smarter? Sure they should have - but I also know (having bought a home during the height of the madness) that there was a lot of pressure by realtors and a lot of rash and empty promises by lending companies.
It was a combination of things which led to the present situation - the buyer's stupidity or gullibility, the seller's greed, the realtor's lies, the bank's "creative" funding, the govenrment's lack of regulation.....it seems a bit unfair to expect one group of people (the buyers) to bear the brunt of what was most certainly a joint effort.
I see no reason why there can't be a case-by-case review of those homeowners who are currently or in danger of losing their homes. For those who simply bit off more than they could chew, yeah, let 'em lose it. If there's no way they're ever going to be able to keep current it's no use throwing away money that someone else could use. But if their situation is, well, situational, and they're currently out of work but looking or suffering from an illness or had a death of a spouse and they need some temporary help until they can get back on their feet, I say give it to 'em like Pennsylvania is giving it to it's citizens.
You're right, Patter, there is no easy solution - and the "let 'em fail" solution isn't one, either. It may be that's what will have to happen to some people, but it surely doesn't have to happen to all the people. To do so would be throwing the baby out with the bathwater - and it's very true that the more foreclosed homes there are in any given neighborhood the more it drives down the prices of others in the neighborhood - which only snowballs and snowballs until even those of us who think we are "good" or thought we were "smart" are adversely affected.
It kills me in a way to see people smugly suggesting that everything bad that happens to someone else is "their own fault." In many cases it is, but in many cases it is not.
Say someone bought a home today....they saved their money, they were careful, they didn't overspend, they did everything "right," and now they have a home they can not only cherish, but afford. Good for them, right? Right.
But say, 4 years from now, that person loses his job because he's gotten sick, or he loses his job because the company he works for goes belly-up, or his kid is diagnosed with CA, or he's transferred to another state. He paid $250,000.00 for his house. All the homes in his neighborhood were appraised at similar value at the time. But things have changed in 4 years. A big factory in his neighborhood shut it's doors right after he bought his house and more than half of his neighbors lost their jobs. Half of those half ended up defaulting on their mortgages and had their homes repossessed because they could not find even temporary assistance with their mortgage payments. There are now 10 houses on his block which are empty - the've been gutted by vandals, the yards are unkempt, the paint is peeling and the windows are broken. There are also another 7 houses which the banks were fortunate enough to have sold - at half price. The people living in them now are not quite the same as the previous owners. They're a bit lower class, and a bit less likely to take care of their property. They also paid only $125,000.00 for the house which means that $125,000.00 has become the absolute top price for a home in that area. Our person who bought that home today, in four years, will have lost at least, at the very minumum, $125,000.00 on his home (and that's only if he can even sell it at all) - and most of it because he and others of his mind set screamed so loudly at the thought of someone "getting something for nothing" that the government changed it's mind about assisting underwater home owners.
Sometimes you cut off your nose to spite your face without realizing it. Sometimes you do it knowingly because you're just plain stupid.
Say a meteor comes from outer space, and lands on my toilet, just as I was taking a dump.
WTF is wrong with people. So because some absolutely ridiculous, near whacko scenario "might" happen, we should create some program that takes from taxpayers, to pay someone else's mortgage? Ridiculous.
Nevermind how stupid this is, consider the fact that all of this would also mean more gubmit agencies, more gubmit payroll, and more taxpayer money wasted. This is obscene. **** happens. It's why people need to prepare themselves for the worst. Save money, don't live beyond your means, and cover yourself for worst case scenarios as best as possible. Buy an Alfack policy, and make sure you have medical insurance. Rent until you have enough money saved, to cover yourself should your job go in the pooper, or the economy go down the drain. The notion that the gubmit should have a plan, program, or policy, to bailout anyone, and everyone, is ludicris. The more you try to do for people, the less they do for themselves. If my business goes under tomorrow, should the gubmit have a plan where they confiscate your, and Patters' money, and hand it to me? That's outrageous. The very fact that there are people in this country, who think these are good idea's, is truly scary. We're more ****ed than we realize. My Libertarian friends were right 10 years ago, when they told me that the only true solution, was the gubmit going bankrupt. I used to laugh then, and thought they were crazy. Of course, I was 24 at the time, and not as understand of reality as I am now.
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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him." Leo Tolstoy, 1897
Say a meteor comes from outer space, and lands on my toilet, just as I was taking a dump.
WTF is wrong with people. So because some absolutely ridiculous, near whacko scenario "might" happen, we should create some program that takes from taxpayers, to pay someone else's mortgage? Ridiculous.
And if you think someone losing their job in a neighborhood full of people who are also losing their jobs and having their home values decline due to numerous foreclosures is as "whacko" as a meteor falling on your toilet you're right- either the world is way more *****ed up than you think it is or you never heard of Michigan or Rhode Island or Nebraska or California or Ohio.
Say a meteor comes from outer space, and lands on my toilet, just as I was taking a dump.
WTF is wrong with people. So because some absolutely ridiculous, near whacko scenario "might" happen, we should create some program that takes from taxpayers, to pay someone else's mortgage? Ridiculous.
Nevermind how stupid this is, consider the fact that all of this would also mean more gubmit agencies, more gubmit payroll, and more taxpayer money wasted. This is obscene. **** happens. It's why people need to prepare themselves for the worst. Save money, don't live beyond your means, and cover yourself for worst case scenarios as best as possible. Buy an Alfack policy, and make sure you have medical insurance. Rent until you have enough money saved, to cover yourself should your job go in the pooper, or the economy go down the drain. The notion that the gubmit should have a plan, program, or policy, to bailout anyone, and everyone, is ludicris. The more you try to do for people, the less they do for themselves. If my business goes under tomorrow, should the gubmit have a plan where they confiscate your, and Patters' money, and hand it to me? That's outrageous. The very fact that there are people in this country, who think these are good idea's, is truly scary. We're more ****ed than we realize. My Libertarian friends were right 10 years ago, when they told me that the only true solution, was the gubmit going bankrupt. I used to laugh then, and thought they were crazy. Of course, I was 24 at the time, and not as understand of reality as I am now.
You're absolutely correct RW. But some people actually allow their EMOTIONS to influence business and economic decisions and opinions...and that's a fatal flaw as I'm sure you know.
Emotion has nothing to do with what is right or wrong from an economic perspective...or from your own business view.
Sh1t (bad sh1t) happens to people everyday. it always has and always will. And the last thing we need is some smug emotional thinkers worrying about how to protect people from extenuating circumstances with..gulp...MORE gov't programs.
It's called "RISK" people. And when you buy a home, you assume RISK....ALL OF IT! No one is gonna "be there" to help you if the crap hit's the fan and no one SHOULD be there for you. That's what's right and it's simply called LIFE.
Be responsible and save 6-12 months of mortgage payments and if that don't work, you're just plain out of luck!
__________________ "No one walking this earth knows what is truly righteous"
Last edited by PatriotsReign; 05-12-2010 at 01:35 PM..
Do YOU want to bail out other's mortgages?
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