61 Responses to “Government says “NO” to Personal Responsibility - “We will do everything in our power to help those persons who didn’t read the fine print””

1. Maggie, Santa Maria, Ca
   August 31st, 2007 10:32
   1

   Wow, I can’t believe they will help homeowners. Kinda just like when you screw up in high school, get pregnant, have kids and then the government steps in and pays for your apartment, insurance, food, etc. No one takes responsibility for their own mistakes, they just want someone else to fix them. I’m a homeowner and I have an ARM and I am probably getting close to becoming backwards as values fall but I don’t think anyone should “help” me with my payments or the fact that my “investment” is now losing money. Oh well, isn’t this what makes America great? (sarcasm)

2. PBRenter
   August 31st, 2007 10:59
   2

   The part that really annoys me is that they are bailing out the financial interests under the guise of helping out the little person. They make money on the way up and get subsidies on the way down. What a country.

3. SoCalMtgGuy
   August 31st, 2007 11:03
   3

   PBRenter…

   That is what kills me. It is ok for Wall Street and the CEO’s to make hundreds of millions on the way up…but when it turns they use the millions they made to influence the politicians.

   Then you have the ‘poor and unfortunate’ that whine to guvment for help as well.

   Sadly, this country is BANKRUPT in personal responsiblility.

   SoCalMtgGuy

4. Dan
   August 31st, 2007 11:13
   4

   I’m following this bailout issue VERY closely. If indeed FB’s are given a break IN ANY WAY, SHAPE OR FORM on our tax dollar I will seriously consider leaving the US for good. Here I am, a responsible person who will end-up penalized for something I took no part in while the culprits are rewarded for their lack of responsibility ON MY DIME. WTF is going on?. Wrong is ‘right’ now and right is wrong!. I can’t take this shit anymore.

5. Billy in Texas
   August 31st, 2007 11:17
   5

   This mortgage correction will be market driven and the government will not be able to stop it. The speech today was a political stunt to make it seem like the government is in control of the situation. The market is already demanding tighter/conventional loan requirements to purchase/refinance real estate. The Government’s main role will likely be to keep this from happening again with future legislation on brokers, lender disclosures and borrower education.

6. anon666
   August 31st, 2007 12:28
   6

   It’s more of corporate handout under the guise of helping the little stupid people. The banks\lenders are about to receive a tidal wave of unwanted worthless homes. They made a lot of money on the way up and they sure as heck are not going to lose any money on the way down. As they say, “privatize the profit, socialize the risk”. The system is rigged folks….

7. Peter T
   August 31st, 2007 12:52
   7

   I see three scenarios for the “bail-outs”:
   1. The politicians want to be seen as doing something and spend a billion here and there, but as soon as as 2008 election are over, they get tight - best scenario.
   2. The politicians do indeed spend the trillions needed to have any meaningful effect on housing and cut spending somewhere else (Iraq) and/or raise taxes after 2008 - unlikely.
   3. The politicians spend the trillions but don’t cut spending and/or raise taxes but rely instead on massive government debt and inflation - worst scenario, dollar gets pummeled.

8. Peter T
   August 31st, 2007 12:58
   8

   “We will do everything in our power to help those persons who didn’t read the fine print”

   If people make one of the biggest purchase of their life and don’t read the fine print or get reliable help with the purchase, then they don’t deserve help to stay in their homes, they deserve a place in the trailer park beside the highway. And this is our secretary, and the “our power” he speaks of are my tax dollars - how did this moron Alphonso Jackson escape detection of his moronity in such a high position? Was he surrounded by too many others morons?

9. MISSY
   August 31st, 2007 14:25
   9

   We are not just bailing out private homeowners, what about all the scumbags who initiated these loans, cashed in , and now have no piper to pay. Now, in addition to their first set of loans, will be cashing in, on these next set of loans the Govt issues. It’s a win win for everybody except the hardworking, financially educated, dime-saving Citizens who know they can’t afford a house like on MTV”S cribs. We just know better.

10. SoCalMtgGuy
    August 31st, 2007 14:29
    10

    Missy….

    MTV Cribs you say????

    From December 2005:

    MTV Cribs and the Housing Bubble??? (Dec 2005)

    Enjoy…

    SoCalMtgGuy

11. Irfan
    August 31st, 2007 14:34
    11

    US is going through some serious housing market drop at the moment. Investors who invested lot of money in the housing market are suffing now.

12. Jeff
    August 31st, 2007 14:40
    12

    FHA Plan:Bring a water gun to fight a fire.
    http://thegreatloanblog.blogspot.com

13. Rich
    August 31st, 2007 14:44
    13

    He’s still fishing for his “Legacy” just put it on the list with the Border Fence,fixing NOLA,Personal SS accounts,I wonder if he cleared this with his boss Dick Cheney ?

14. desi dude
    August 31st, 2007 14:54
    14

    SMG,

    I dont think it is such a big deal. Other than the fact that an FB thinks that govt will help him

    first, forgiveness/reorg of debt: It is only possible if the lenders/bond holder . Am I right? WIth mortgages sliced and diced in infinite ways, isnt it very difficult to get an agreement on forgiveness.

    The side effect of this is the increase in interest rates. The investors have to be compensated for the risk that the govt will one day force them again.

    Some one who is making 45000 and bought 500,000 income will not be able to make the payment even if it is reduced to 400K (current value of the home).

    Will the govt force the interest rate on the loan to be 2%/3% to help them? Can they? will they be able to do it with out affecting the business of lending?

    what happens to all those who bought 2nd/3rd home? outside of fraud, will they begetting help through this program, hope not!

    ….

15. SoCalMtgGuy
    August 31st, 2007 15:04
    15

    Desi Dude…

    That is the ‘convoluted’ legislation I am talking about. Yes, are some people that probably deserve some sort of help, and would use it wisely…BUT, like every other attempt guvment makes to help people, it becomes a never-ending waste and abuse of money.

    How do you determine who gets help and who doesn’t?? First off, I say ONLY people with FULL DOC loans get help. Then I would add a DTI and LTV requirement to that as well.

    Next thing you know, you see very few people that actually ‘deserve’ any help.

    I say let Wall Street and the mortgage companies take it on the chin. It was ok for them to make hundreds of millions of dollars the past few years. Now it is time for them to take the lumps of their bad investments.

    SoCalMtgGuy

16. Rich
    August 31st, 2007 15:28
    16

    SoCalGuy sorry for this quote but from the movie The Jerk sums up the system:
    New Accounts Bank Manager: I will need two pieces of identification.
    Navin R. Johnson: Ah yes. I have my temporary driver’s license - and - my astronaut application form… I didn’t pass that though, I failed everything but the date of birth.

17. IUnknown
    August 31st, 2007 15:59
    17

    Dan…

    You’re not the only person thinking this. My wife was saying the exact same thing this morning. Originally I was thinking of cashing out all my accounts to hide the money, leaving work, going on welfare, etc…

    But now, I think leaving the country all together might be the idea. Seriously, I do not want to pay for these people. You’re not the only one pissed off to high heaven. How many of us here have postponed having a family because housing costs are tooooo high. We’ve lived in budget and saved money to be ready for when the market corrects. Now the government wants to punish us!! F’ that.

18. Rich
    August 31st, 2007 16:26
    18

    I feel if you bail out one that’s one to many. When my wife and I bought our house in 1982 the loan company went through our paperwork with a fine tooth comb, they even called my job and wanted to know about a 6 month period I worked years before when I worked for cash because that was what my old boss was paying. The loan we got was at 15% and we lived on mac and cheese and kool aid but we always paid the bills on a tight budget but did it. Now these clowns today just charge it to the hilt and say F@ck It and walk away to the next house and credit card. My house is paid off and we saved every penny we could for our kids college. Now they are gonna give these flakes that can’t handle money a get out of jail free card on my dime ? This is total BS !!!

19. shark
    August 31st, 2007 16:39
    19

    I can’t for the life of me figure out who this bailout is going to help longterm. Forgiveness of loan equals reduction housing value, which will only drive the rest of housing values down. What, we do this all over again in 2 years?

    The view from here in Reno, a major bubble market: Something like 90% of the subprime foreclosures have nothing to do with rate resets - people just can’t keep up with the initial payments. Same for the Alt-A paper. Sales have tanked, and we are now getting about 1 REO for every 4 houses that are selling through. The 80/20 loans are the biggest culprits, and the banks are listing the REO’s at the 80% level - comp killers, and still not selling. And how is market psychology and absence of funding options effecting the market? It looks like we are heading for a 40%+ decline in sales volume this month over July. No joke - 40% M/M. Can you imagine the panic and price reductions that will happen in a couple weeks when the “official” data gets released?

    Housing Tough Love is the only way through this mess.

20. Joe six pack
    August 31st, 2007 16:59
    20

    Bushadmin are a bunch of thieves and clowns. The Democrats are no better with their bailout plans. This country is screwed.

21. JOATMON
    August 31st, 2007 18:01
    21

    All that I can say is SERENITY F’n NOW!!!!!!!!! I moved to CA in 2005 and considered my options as a new resident. Buy w/ a 30-year style mortgage for $2500 (PITI, HOA) or rent in the same complex for $1250? Duh, rent! For 1 mortgage payment I bought an HDTV projector that I OWNED free and clear instead of something shy of 1/360th of.

    No BAILOUT’S for these morons. The only legislation that I’d support is requiring an amortization schedule w/ a SIGNATURE on the 25th month block where the payment jumps by a FACTOR of 5, 6, or 10, or whatever it is on those FUNNY MONEY loans. Then there is no CLUELESS excuse.

    The mortgage YAHOOS and the DELIQUENT borrowers can each join up with their local HABITAT FOR HUMANITY chapter and build a house for a needy non-FB, then one for the FB. That’s the bailout that I’m in favor of.

22. Daniel Newby
    August 31st, 2007 19:19
    22

    “We have been discussing this for months, we believe we caught this in time.”

    Oh, dear.

    The HUD Secretary needs to look at the ARM reset schedule (scroll down for chart). Subprime resets have not peaked yet, the real hurtin’ will lag resets by many months, and it will be 2012 before all the low-quality loans crater.

    Note: I have not reviewed the exact accuracy of that chart, but it seems plausible.

23. Peter T
    August 31st, 2007 19:38
    23

    > let Wall Street and the mortgage companies take it on the chin. It was ok for them to make hundreds of millions of dollars the past few years. Now it is time for them to take the lumps of their bad investments.

    I agree. People who cannot pay their moprtgage should walk and rent instead. Mortgages should be non-recourse, the creditor gets just the collateral (the house).

    There might be some larger consequences also - a lot of the bad paper was bought by foreign investors after the ratings agencies put an AAA (or AA) on it. (A source on the web claimed that foreign buyers even dominated after 2003.) Those investors would loose a lot, and the trust in the American financial system would be shaken for a long time. Wall Street would not suffer so much directly (they sold most the bad stuff), but indirectly when foreigners don’t give them money anymore to play with.

24. D.
    September 1st, 2007 04:17
    24

    At the end of the day, intervention or not, banks and investors will be left holding the bag.

    Look, if the homeowner gets a 100K “gift” that means someone holding the debt loses 100K, be it a bank or a MBS holder.

    I prefer the sick little old lady who got screwed getting to keep her house than having all the destitute on the street while the banks are stuck with millions in inventory up for sale!

    No help = people on the streets like in the 30s. I don’t know if the frugal of the 20s thrived during the great depression but something tells me those were hard times for both conservative people and speculators.

25. expat
    September 1st, 2007 04:41
    25

    Dan and IUnknown,

    I did leave the U.S. a couple of years ago, and I don’t regret it. There are a lot of nice places to live in the world, and the internet makes so many things possible now (I have two U.S. phone numbers that ring here so friends and relatives can call me without any cost).

    I live in another housing bubble country, and I most people here don’t have any idea what’s going to hit them (”property always goes up”). Unfortunately, politicians are the same everywhere in the world. They want to spend taxpayer money to try to buy votes. And people almost everywhere believe that the government should solve all of their problems for them.

    I think the next decade will look very interesting.

26. Steve
    September 1st, 2007 11:32
    26

    D,

    Oh come on with the rhetoric…

    “I prefer the sick little old lady who got screwed getting to keep her house than having all the destitute on the street while the banks are stuck with millions in inventory up for sale!”

    —you really think ’sick little old ladies’ are the main ‘victims’ here??? come on! And guess what happens if the banks have MILLIONS of homes they are holding…they will have to LOWER THE PRICES so that people can AFFORD TO BUY THEM again…and that is how the market will correct.

    “No help = people on the streets like in the 30s. I don’t know if the frugal of the 20s thrived during the great depression but something tells me those were hard times for both conservative people and speculators.”

    —people default, foreclose…and then they go rent someplace much cheaper to get back on their feet. Enough people go to rent, rents will probably go up some, but at the same time the prices on all the foreclosed homes will drop to levels that are more in line with income and what the banks will ‘loan’ to people. There WILL be standards again after people feel some ‘pain’ after this runs it’s course.

    Sorry, but I don’t think bailing out 2 million homeowners to help the ‘100 old ladies’ is a worthwhile use of money.

    Steve

27. Lou Minatti
    September 1st, 2007 14:37
    27

    I don’t see a bailout. I see a band-aid applied to the nub of an amputated leg. This is just politicians wanting to show that they have done something without actually doing anything.

28. Manny
    September 1st, 2007 16:48
    28

    I’ve had it with the likes of Dodd and Bush. I am voting independent that’s for sure, so are 6 family members!

29. Peter T
    September 1st, 2007 18:39
    29

    > I don’t know if the frugal of the 20s thrived during the great depression but something tells me those were hard times for both conservative people and speculators.

    Many of the frugals lost their savings in the following bank crashes. Best was life for people with secure jobs (e.g. government employees), because they could by cheaper goods and services.

30. Fred Fry
    September 1st, 2007 20:11
    30

    If the Government really wanted to inject money into the economy, then they should give it to the responsible people. Then maybe I too can get a new car, a large flat-screen TV, reward myself with a vacation and even perhaps take a house off of a ‘motivated seller’. When I am done with that, get a second car for the wife.

    This way, everyone wins.

    Too bad the Government would still manage to F that up as well. No to Mortgage Fraud Bailout!

31. Dax
    September 1st, 2007 23:42
    31

    I think Lou is right: this is all just lip service during an election season. There will be no REAL bailouts. This is all political rhetoric and I think the emotional response to the bailout talk is a little overdone here. I agree with everything SoCalMtgGuy says except for the fact that there will not be a true rescue to make even a small 1% dent in this multi-billion dollar mess. The weak will perish… like they always do.

32. harry
    September 2nd, 2007 10:02
    32

    i too am hopping mad.
    i have always lived within my means.
    i have no debt.
    when everyone pressured me to buy (i sold my
    place in 2002 and chose to rent ever since)
    i took my calculator out and figured what’s going
    on is complete madness.
    you, SoCalMtgGuy were one of the few voices during
    this fiasco who had a clear head and thank you for that.
    anyway … why on earth should i now start paying
    for the guys who decided they need to own a macmansion,
    and buy a boat and a car and who knows what to boot.
    why the f**k do i save and act like an adult when
    the guys who live it big without money end up reaping
    the benefits of my labor !!
    sorry if this rant is a little incoherent, i’m that angry.

33. bw
    September 2nd, 2007 17:21
    33

    The real serious multi-trillion dollar bailouts will happen after prices have dropped by 75% or more.

    300 million is just a drop in the pissing-match bucket. ‘Wake me up’ (figuratively speaking) when this number reaches 300 billion..

    ..and make sure that you have some gold/silver as a hedge against this eventuality, because the dollar isn’t going to be worth sh*t..

    This country is more than just bankrupt in personal responsibility — It is bankrupt, period!

    These people don’t want (or can’t) make intelligent decisions for themselves, because they want a totalitarian/populist govt. to make those decisions for them.

    Now how’s that for a SCARY thought?

34. Dan
    September 2nd, 2007 20:21
    34

    “..and make sure that you have some gold/silver as a hedge against this eventuality, because the dollar isn’t going to be worth sh*t..”

    That’s actually my greatest fear right now. The scale of this disaster will apparently be so big it might just go way BEYOND a situation most responsible buyers are hoping for.
    What if effectively home prices drop 100% ..but the dollar tanks 300%?. Which I see a a VERY real possibility.

    Let’s face it; with this massive RE fraud, the stupid stupid war in Iraq, the glaring manipulation of the stock market, the Katrina relief effort along with MANY other expenditures, our dollar is probably already a worthless piece of green paper.

    How do you guys see euros?.

35. mel
    September 2nd, 2007 22:14
    35

    Dan,
    I reccomend Yen, there appears more scope for appreciation.

36. Ron Marquis
    September 3rd, 2007 05:25
    36

    The Ant and the Grasshopper (2007 Version) Part 1

    Once upon a time there lived a frugal ant who paid her bills on time, saved for a rainy day in her 401(K), and put a little aside for her kid’s education.

    She noticed in 2004-2005 that the down payment amount (10-20% ) for a 30 yr. fixed mort loan was going up faster than she could save it.

    So, she stuck to renting for the time being.

    However, at the same time, Mr. Grasshopper was encouraged by his local Real Estate Agent to ‘Fog a Mirror’.

    “OK, Mr. Grasshopper, let’s look at your qualifications:”
    “Where do you work and for how long have you been there?”
    “Well, I have fiddled around for the past 10 years does that count?”

    “Oh, gracious yes, we will just put down that you have been a member of a band for the last ten years.
    That’s the ticket. The lenders always like to see a long and steady employment history.”

    “OK, now how about your credit history?”
    “Well, I have been using new credit card applications to transfer my old credit card balances so that I would have to just pay a minimum amount each month.”

    “Wonderful, Mr. Grasshopper, this shows that you have an astute grasp of the use of credit.”

    Just as an aside, Mr Grasshopper, we had an ant in here just the other day looking for a loan. Well, she could not provide proof of any revolving credit. She said that she always saved up for something and paid cash for it when she could afford it.

    Can you believe it ??
    No credit history, and she expected to get a loan??
    Well, I could hardly suppress the chuckle as I escorted her to the door.
    Takes all kinds, I suppose.

    Now, have you ever owned property before?
    Well, I am living back with my parents at the moment.
    I was mooching off of another guy’s apartment, but when I dove head first into the Mosh Pit one night I sprained my neck and got a severe concussion.
    So, right now Momma is nursing me back to health back at the home 20.

    Well, Mr. Grasshopper, I see that you are an astute investor because:
    “Housing never goes down”
    “This time it’s different”
    “They aren’t making any more land”
    “Get in before you REALLY can’t afford it”
    “Look at it as an Investment and a Home”, you know sort of a twofer kinda thingy.

    So, Let’s sign you up for a sub prime 2/28 loan at 110% appraisal.

    “You can take the extra money to:”
    “Pay off those awful Credit Card interest rates”
    “Buy that monster HD TV you had your heart set on”
    “Take that long overdue vacation you owe yourself “
    “Sure, go ahead get that SUV, you deserve it”
    “Heck, I bet you will still have enough money left to buy
    your Mum some Mums.”

    SoCalMtgGuy, I can continue the saga with:
    Part 2 (Mort Lenders)
    Part 3 (Loan Re-Packagers)
    Part 4 (Intl Investers)
    Part 5 (Washington Politicians)

37. Cassandra
    September 3rd, 2007 09:36
    37

    Where to begin?

    Nice rant. Seriously, it’s always nice to see some truly righteous rage. Always good to read your posts SoCal.

    I actually like to see Hillary, George, and the like talk about bailouts. I think when they do so they tip their hands. I mean really, what do either of them know about mortgages? Both have spent all their adult lives living in government housing. How much was the rent on that nice house on Pennsylvania Ave? Although I got to give Hillary credit for renting out rooms in it for some spending money. I’ll bet I’ve had more mortgages in my life than the two of them together.

    But more importantly, I think there is a very quiet, responsible, and very significant majority of voters out there that share your outrage. I know your fond of math, so lets do some.

    About 70% of households are “homeowners” (I use the term loosely). That means 30% don’t give a crap about a bailout, and are likely to share your opinion. Of the remaining 70%, about 40% of those own their home free and clear. So another 28% of households (70%x40%) are in the same camp as renters. And if only 25% of the remainder are responsible debtors (there must be a couple out there) that means that 30+28+17 75% are likely to share your opinion.

    The actual percent of households that are in trouble is actually pretty small. Significant yes, but small. I like you say let them fry.

    My guess is you will vote as I do. This issue simply removes the veil.

    Cassandra

38. Reader
    September 4th, 2007 08:26
    38

    Can we get organized?

    1) Get all old posts that mentioned/predicted this mess.
    2) Get things like Appraisers petition to congress and check out which politician paid attention when the horse was still in the barn and they could have help limit the crises.
    3) Get all Analysts (Deutche Bank, Swiss Bank, Collage Professors Etc.) Reports / Research Papers and prove that many people had this information well before the crises blew in the face.
    4) Show that all these folks (Bank CEOs, B&S, S&P, Countrywide) who care crying now or asking for bailout had prior knowledge that this could / would happen.
    5) In short - show that many many people knew or had reason to know or should have known and they CHOSE to ignore the obvious because it profited them.

    Therefore they have no right to ask of bailout.

39. Adam
    September 4th, 2007 08:38
    39

    http://www.projo.com/opinion/contributors/content/CT_baker31_08-31-07_8G6SA6I.1c1d9dc.html

    Here is the fair yet compassionate option.

    And NO bailout needed and No or very little government bureaucracy and the least amount of fraud possible.

    1. Give the mortgage to the mortgage holder on those distressed properties.
    2. The former owner has the right to rent as long as they want at an fair appraised value.
    3. The mortgage holder can sell the property but the renter gets to stay (as long as they keep paying the rent and want to stay).
    4. To limit size of program cap the amount available to local median price of homes or lower.

    Read the article for more information.

40. bubble_watcher
    September 4th, 2007 18:02
    40

    Old joke..

    What’t the opposite of progress?

    Answer:

    CONGRESS!

    …

    While both the Democrats and the Republicans can come up with nearly identitical plans for bailing out our beloved F@cked Borrower’s, I think that this may take a while for the following reasons:

    1. Neither party will vote for the other’s ‘bailout plan’. Thus resulting in what Congress does best; which is to do absolutely nothing..

    2. Stupid people don’t tend to vote, whereas ‘angry’ people do. If the number of voting ‘angry’ people outnumber the number of non-voting financially greedy, corrupt, stupid people, then the ‘bailout’ plans of either political party will not take flight.

    3. The idea that “Hey! George Bush and Hillary said that they would pay my mortgage payments!” may actually encourage quite a large number of these dumbasses to stop making mortgage payments and speed up the deflation of the housing bubble by forcing the banks/real estate disposition companies to dump record numbers of foreclosure properties on the MLS and letting “supply/demand” do its job.

41. david
    September 5th, 2007 08:26
    41

    Just received a great letter in the mail yesterday, that went roughly like:

    “We are forming a CLASS ACTION LAWSUIT against dishonest lenders who sold adjusting ARM loans in the past four years. Our records indicate you had one of those loans….”

    I did have one - until I changed it to a fixed rate a while back.. but damn! Maybe I can get in on some litigious payouts.. Love the US of A!

42. Peter T
    September 5th, 2007 11:46
    42

    “Fair” bail-out plan
    > 1. Give the mortgage to the mortgage holder on those distressed properties.
    > 2. The former owner has the right to rent as long as they want at an fair appraised value.

    Who does the appraisal? The government?

    > 3. The mortgage holder can sell the property but the renter gets to stay (as long as they keep paying the rent and want to stay).

    No, the mortgage preceeds the rental contract. Contract law demands the possibility to sell without a renter inside.

    I like the idea of giving the borrower an annual rental contract to avoid a costly foreclosure. The rent could be based on the actual income of the borrower at the time of the house purchase, like 40-50% of it. If the income was small, tough luck for the lenders, they should have checked.

43. Peter T
    September 5th, 2007 19:22
    43

    I have another “bail-out” plan that concentrates the pain where it belongs, at the lenders and the borrowers, and uses a minimum of government guarantees to offer an alternative to foreclosures with their undeniable social costs:

    If a borrower is in danger of loosing the house, the borrower can apply for a FHA rescue plan. The FHA determines how much the borrower could pay per month (maximum of 50% of income) and how much the house is currently worth. If a FHA mortgage of 80% of the house value doesn’t lead to more than the maximum monthly payment, the FHA offers to support the borrower in a short sale of the house to him- or herself. Only the first mortgage for 80% of the house gets FHA guarantee. The lender can force the borrower to take a second mortgage that makes partly up for the loss of the lender and that brings the total monthly payments up to 50% of income. Neither borrower or lender are forced to accept the whole plan, they can always insist on doing it the traditional foreclosure way.

    If they accept, both borrower and lender take a loss. The borrower is on the hook for 50% of income (current or previously stated, whatever is higher) and gets a black mark on the credit report for the short sale. The lender has to accept a loss or deal with a foreclosure. Service companies need to have some routines for short sales anyhow, they could use them for these short sales, too. An additional feature might be a lien on the house by the lender, which is only due when the house changes ownership.

44. Jeff
    September 6th, 2007 03:13
    44

    An option for today’s home sellers:Lease-Options
    http://thegreatloanblog.blogspot.com

45. RoadTripBoy
    September 6th, 2007 20:37
    45

    SoCal,

    I too share your outrage. Even though I believe that the bailout talk is merely political rhetoric by presidential hopefuls and a current president whose only hope for his own party is to try to steal the opposing party’s thunder, I too become enraged when I think of Washington arbitrarily deciding to use my tax dollars to reward Wall Street (not the average Joe/Jill) for their irresponsibility. I also think about the S&L Crisis in the 1980s when the government did implement a bailout program for a similar kind of irresponsibility. Our government also bailed out Chrysler Corporation in the early 1980s when they were in trouble. While the current incarnation is in all likelihood rhetoric, the guvmint does have a track record of rewarding irresponsibility. With that in mind, I used this opportunity to write my elected officials. I edited a letter template that I found either here or on the NJ Real Estate Report blog and am sending letters to my elected officials (can’t remember which). Here it is:

    The Honorable Senator Robert Menendez
    United States Senate
    324 Hart Senate Office Building
    Washington, DC 20510-0001

    Dear Senator Menendez,

    I am deeply disturbed by proposals for relief programs to benefit homeowners facing foreclosure and lending institutions who lent money to these homeowners. Please understand that I do not support any efforts to bail out irresponsible mortgage borrowers and lenders.

    While I appreciate and understand the desire to help people who are genuinely in trouble, I do not support any initiatives that will bail out borrowers who made the decision to get a home loan that they could not afford.

    Bailout initiatives punish taxpayers who work hard to save down payments as well as those who decided against buying a home that they could not reasonably afford. Ironically bailout initiatives have the effect of creating Moral Hazard, rewarding individuals and institutions for making reckless financial decisions that ultimately threaten not only themselves but the entire economy as well. If such irresponsibility continues unabated, economic losses can become so great that even the U.S. Government will not be able to avert economic disaster.

    Individuals and lending institutions made a great deal of profit in the real estate market during the past five or six years. Yet I’m not aware of any program, government or private, aiming to share these profits among American taxpayers. Why then should American taxpayers be expected to share their losses? This is grossly unfair and just plain wrong.

    Many of us Americans are saving money for a down payment so that we can achieve the American dream of buying a home. Taking our hard-earned money and distributing it to people who are financially and morally irresponsible is a huge slap in the face. I don’t deserve it and neither does the rest of America.

    Please understand that I will be monitoring congressional votes on any bailout proposals very closely and will vote accordingly.

    Sincerely,

    To all, feel free to use/edit/ignore as you see fit.

46. Jennifer
    September 6th, 2007 22:37
    46

    Everyone took a gamble, the home owners, the lenders, those they sold the loan to. Many made thousands, but now that the tables have turned they expect a bailout. Gimme a break.
    I worked in the casino industry for years. Some won thousands, others lost thousands. Is the Government going to bail out the losers. Sorry, not at my expense. I will refuse to pay any taxes associated with a bailout, and like Dan maybe move from the US. Or maybe a class action suit is in order.

47. Peter T
    September 7th, 2007 16:51
    47

    RoadTripBoy, I agree with your letter, but was disturbed by a little detail:
    > Individuals and lending institutions made a great deal of profit in the real estate market during the past five or six years. Yet I’m not aware of any program, government or private, aiming to share these profits among American taxpayers.

    The program is from the government and is called “taxes”. Ironically, taxes on real estate speculation were reduced just before the housing bubble (no capital gains tax anymore on many deals).

48. Steve
    September 11th, 2007 13:09
    48

    It’s sad I can see the politics of blog just from what they wish for. I want to address the flat tax just to make sure everyone really understands. the national sales tax will be about 23% or 24% and income from - say Steve Forbes will not have to pay taxes on his $360 million income from Forbes stock. But you will pay 23 cents tax on 98 cents worth of bananas. According to the 2006 tax code, if you owned a home that was consistent with you income - in the third to fifth year of the mortgage, you would have to earn more than $80,000 to pay 23% in taxes. Since the average income in Tennessee is $46,000, The average Tennessean would watch his income tax double or just a little more.

    I agree the tax code is a problem but shifting the tax burden to middle income wage earners is not the answer. By the way, the less government, less taxes, less intrusiveness party has spent nearly a Trillion Dollars more than they took in and now we all - you and me and your kids and your grandkids and everyone alove in the USA now owe $40,000 each just to cover the excess spending by the frugal party! BS!

49. Tracy
    September 11th, 2007 22:48
    49

    I, too, am outraged at the idea of socializing private losses. Yes,it’s nothing more than posturing to say “our party feels for the average American’s pain.” However, I don’t mind the tax break on mortgage forgiveness (except that it only applies to homes purchased on ARMs that reset from 2005-2009). Yes, the pain of paying taxes on home losses would discourage borrowers from getting over their heads, but how is it fair to tax people on money they never received? Taxing mortgage forgiveness is just as unfair as taxing phantom income on qualified stock options, and I would love to see taxes eliminated on both types of phantom income.

    That said, I hope that the changes will not permit borrowers who took cash out, or got free cars, TVs, vacations, etc., to avoid paying taxes. My read on the proposed change indicates that cash out is a grey area to be defined by IRS, while freebies-with-purchase will be tax-free. I hope I’m wrong. Even game show contestants have to pay taxes on free cars.

    The quote about helping people who didn’t read the fine print floored me, though I’m almost numb to this whole mess anymore. If I were investing half a million dollars in a stock - what most homes around here cost - I would certainly have done enough due diligence to at least scan the fine print. I would expect the same from a homebuyer before he/she/they/it was eligible for a bailout loan insured by the taxpayer. It’s too bad our government doesn’t hold people to the same minimal standards. Although, try the “I didn’t read the documents” defense if you underpay your taxes. I hear the IRS isn’t as understanding as HUD.

50. SoCalMtgGuy
    September 11th, 2007 23:47
    50

    Steve,

    I said FAIR TAX, not flat tax, or national sales tax. I don’t have the time to refute your incorrect statements. If anything, the Fair Tax would BENEFIT the middle class more than anything.

    http://www.fairtax.org/site/PageServer?pagename=about_basics_main

    SoCalMtgGuy

51. Chrysta
    September 12th, 2007 11:56
    51

    I too am opposed to this “bail out”.

    My husband and I did not jump on the “liar loan” bandwagon, because? We still didn’t imagine we could afford a home that sold in 2000 for 175,000 now selling for 899,000.

    We did a “real” mortgage calculator through USAA and it said we could essentialy borrow $200,000. Now, I -assumed- (and it saved my financial life) that we could never afford a home, even if it were a ‘mere’ $629,000. This is California. I believe there are many people like us that thought these prices were unreasonable. Agents aren’t “into” finding a family (we have a kid, with no back yard) a -home-. They want their closing costs so they can have their fancy cars. Its just bad business by vultures.

    And, as for the buyout, it is shameful. This administration is a complete failure. Politicians these days should be ashamed.

52. RoadTripBoy
    September 12th, 2007 19:48
    52

    Peter T (47),

    You raise an interesting point about taxes. However, I don’t view income taxes as a government program to redistribute wealth. I see taxes as a necessary part of living in a civilized society. We have infrastructure that must be maintained. It costs money to live the way we live. And everyone has to contribute.

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    September 13th, 2007 12:47
    53

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54. Nozferat
    September 25th, 2007 23:22
    54

    Let’s make it clear…

    BUSH doesn’t give a shit about people of this country. He gives a shit about corporations. That’s who they will bail out. If some people, benefit, lucky for those undeserving bastards. Otherwise, they’ll get screwed…which I don’t mind.

    What I DO MIND, as one poster stated, is those people who are responsible and NOT greedy, they’ll get screwed too.

    I applied to become a Canadian resident back in late 05….almost ready. Won’t hesitate for a second to get out of this shithole.

55. Dan
    October 11th, 2007 13:22
    55

    “We will do everything in our power to help those persons who didn’t read the fine print”

    You mean like giving out free Reading Comprehension classes?

56. Andrew
    October 22nd, 2007 09:36
    56

    Seedy lenders? Screw ‘em.

    Bought $900K house on $100K salary? Screw ‘em.

    Bank? Screw ‘em.

    But what happens to you and me when 50% of the houses in our neighborhoods are in foreclosure? Given the choice, it’s worth at least some of my tax dollars to try to keep my neighbors in their houses. It’s no fun living in a ghost town.

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