Sub-Prime GOP welfare

Sounds a lot like socialism, do something stupid and risky and we'll bail you out. I thought the republicans were the party of capitolism and free market? they don't give a rats arse about the home owners is the investors and the economy they're panicing about. unless they're going to bail out every bad investment they should let this one sort itself out.
 
There is no doubt it's all about the investors and the economy they are concerned about. The government stepped in and helped out the airlines when they needed it. It's going to be interesting to see how this all plays out.
 
your wrong, it' all about the mortgage companies and the bank - period. these sub prime defaults are not even a blip on the radar in the overall real estate market, mort, even you must know that. . .

This is all about a bail out for the guys who sold the snake oil in the fist place.
 
The thing that I really dislike about this administration is how defensive they get so quickly when questioned. Watch Snow in the news clip. Not just Bush but I really believe the rank and file of this administration has a sense of entitlement that no administration in history has exhibited. Outside of the Romans of course. They need t-shirts with the slogan "How dare you question me I'm always right."
 
Tfinal- I am just curious how this is going to help banks and mortgage companies? I just don't see it happening. Mainly because I work with alot of sub-prime mortgages so I am somewhat biased. Utah is the bankruptcy capitol of the country with 1 in 3 people filing bankruptcy in the last 5 years. The loans that are in default are more than a blip on the radar in my opinion. Check out http://ml-implode.com/. 145 major lenders since late in 2006 are going out of business or have already shut their doors because of these defaults and their secondary market. Those that sold the snake oil are out of business or are going under as we speak.

The changes being proposed in the article are for Fannie Mae, Freddie Mac and the Federal Housing Administration. These are all government backed loan programs in the first place and are not the loans that are having problems. Obviously there is alot of chatter in the mortgage industry right now and no one knows what's going to happen. But I just don't see how this is going to help out mortgage companies and banks. Every FHA loan has mortgage insurance in case of foreclosure, that way the lender is covered because the insurance company pays off the mortgage. Fannie Mae and Freddie Mac also have mortgage insurance on every loan that is above 80% loan to value. There are going to be alot of insurance companies feeling the heat hear pretty soon too. Our clients that have sub-prime loans do not qualify for FHA or any other government backed loan program so they won't be able to refinance on these new programs anyway. If they wanted to help banks and lenders they would help banks and lenders directly.
 
husker- I dont think this administration has anything to do with the credit crisis the mortgage is facing. Government backed loans are not sub-prime and they have not changed their guidelines in over ten years.
 
Corn you're dead right, when you take into consideration they haven't been right on anything yet you'ld expect a little more humble attitude. by this point anyone with a brain ignores them anyway and they probably know it . by the way did you see Tony Snow job is jumping ship next month also, so many newbies in the whiehouse they're going to need name tags to know each other.
 
Mort, thanks for the thoughtful post!

I think it's this simple.

1. "buy" house for 350,000k
2. live in house for 1-2 years
3. cant keep up with payment - or make balloon
4. market changes, housing slips
5. house worth 300,000k or less, still owe 347,000
6. bank/mortgage company stuck with a house now in the hole!

How hard is it to see that if these people are "saved" the bakes will still get their payments, albeit a bit less, but they wont get a pile of houses dumped on them that they 1. dont want (they are not real estate agents or brokers) and, 2. they WILL lose money on.

Am I off base here or what. . . ?
 
There are hundreds of scenarios possible in each and every transaction. So it's not accurate to paint everything with one brush. In your example, you left out at least one important aspect; most borrowers have at least some downpayment/equity in the house.

I'm up to my eyeballs in REO appraisals and yes banks lose money but most of the time the banks recoup most of the loan amount. Its the borrowers that lose everything, every last penny of their equity, their credit rating, not to mention a place to come home to at night.

Its easy to be cynical about this Bush plan and you folks that hate him anyway will be cynical no matter what he does, but it doesn't really jibe with reality.

Liberal Senator Chuck Schumer said that Bush must be a democrat because he stole this plan right out of their playbook.

But don't let that get in the way of your Bush bashing party.

Brahma
 
did you read the title of the post? It's a welfare program and the republican party has always been against welfare, right?

as per equity and down payment - the sub prime borrowers did not have much for downs if any, and almost NOTHING in the first years of the loan goes to principal - you know that. If you have a $1000 per month payment about 100 bucks goes to principal, the rest goes mostly to interest, PMI if you dont have more than 20% down, insurance and taxes.
 
So Bush's bank welfare plan is ok because he's acting like a dem? if you like him acting like a dem why don't you like dems? when this whole real estate and phoney financing thing started I said some people are going to get burned on this, if a hick rancher in eastern Oregon could see it don't tell me the wall street high rollers couldn't. a lot of greedy people did risky stupid things and now they want me to help bail them out, no thanks, you stood to gain the profit and you stand to take the loss, that's the way it works. one of my biggest problems with the dems is their Robbin Hood attitude, now it's in fashion for so called " conservatives " to spend like a drunk sailor and put us in debt up to our ears. Bush has always been liberal with money, none of this should suprise anyone.
 
Tfinal, yeah, you're off-base.

I don't have time to write a proper response to your comments right now, but I will later. I have 15 years in the mortgage industry, and the problem is more complex, and bigger, than you realize or are willing to concede. This is, potentially, a GIANT problem, much bigger than the S&L crisis if it isn't headed off.
 
> So Bush's bank welfare plan
>is ok because he's acting
>like a dem?

I never said I liked the plan.

We finally agree on something Dude. In fact, beyond your false assumption that I agree with the Bush plan, I can't find anything in your post that I disagree with. I believe market forces should teach these greedy buyers the lesson they have earned. I watched this all take place from the front row and it was nothing but pure greed. Let em fry.

Brahma
 
>the problem is
>more complex, and bigger, than
>you realize or are willing
>to concede. This is,
>potentially, a GIANT problem, much
>bigger than the S&L crisis
>if it isn't headed off.


Giant problem is right and it will affect the entire economy. Several things have happened to lock-out a huge number of home buyers from the market.

1) Sub-prime investors are gone, completely. Which means sub-prime borrowers cant get a loan. Thats at least 30% of buyers in my local market.

2) Home equity is drying up fast which means equity that was used for another house or consumer spending is gone.

3) Foreclosures are accelerating which will deepen the crash in housing prices.

4) There is a huge pent-up supply of sellers waiting for the market to improve to put their house on the market, but no pent up buyers with available cash. (see #2)

We are paying the fiddler for Greenspan lowering interest rates to artificially low levels for so long.

Hang on to your hats, it's gonna be a rough ride.
 
I swear to god! It doesn't take a rocket scientist to figure the sub prime issue out! If you can't afford the house you just bought you gamble with your future and take out a sub prime loan and pay later. Now, the prick'$ that can't recover these loans start squealing like little piggies begging the government to bail them out. This issue is just pathetic!! We all need to teach our children to be financially responsible.... or perhaps, it's ok if they go down the shi&!er & figure this out for themselves. Since when is everyone on this planet guaranteed a 4000sq' house & a BMW. I don't like in order: LAWYERS, INSURANCE AGENTS, REAL ESTATE AGENTS, BANKERS, HMO DIRECTORS, and BUGGER EATING MORONS.

Whew!!! I like everyone else.

RUS
 
huntindude .... I'm usually on your side ... but the Tony Snow issue isn't even fair ... the dude is obviously dying ... cut him a little slack!

RUS
 
Don't forget Game Wardens...

Just kidding RUS, you and I actually agree on something for once.

My heart thinks like RUS- I've always understood that just because someone's willing to lend me $40,000 to buy a truck doesn't mean I should be buying a $40,000 truck. My ol fashion American heart says Fukem! My head say's Holy Crap this thing could get ugly for the whole economy. This deal really started to scare me last year when they were talking about how incredibly HUGE (and expensive) most all of the new construction houses were getting. At some point everyone could afford a freaking mansion. Apart from some of what Mortgageman and Brahma and others have said (and I think it behooves us all to LISTEN to what these guys have to say on this issue) We're looking at a huge gap in what houses are there, and what people will be able to afford- setting aside all of the other issues going on within the industry.

Just for the record, I'm a lifelong Republican who happens to have enough sense to see when "My" guy is a total idiot and enough sense to see when a total idiot has a good idea. I don't know enough about this issue to know if this is one of those cases, but I do think this is something we should be concerned about impacting our economy.

JohnQPubicbanner1.jpg
 
>Mort, thanks for the thoughtful post!
>
>
>I think it's this simple.
>
>1. "buy" house for 350,000k
>2. live in house for 1-2
>years
>3. cant keep up with payment
>- or make balloon
>4. market changes, housing slips
>5. house worth 300,000k or less,
>still owe 347,000
>6. bank/mortgage company stuck with a
>house now in the hole!
>
>
>How hard is it to see
>that if these people are
>"saved" the bakes will still
>get their payments, albeit a
>bit less, but they wont
>get a pile of houses
>dumped on them that they
>1. dont want (they are
>not real estate agents or
>brokers) and, 2. they WILL
>lose money on.
>
>Am I off base here or
>what. . . ?
>


Tfinal- Yes, you're off base. I wish it were that simple, but it's not. Unfortunately you will never find a lender than will bail you out when you owe $347,000 on a home that is worth $300,000. Even if you had a 800 credit score. There is nothing that George W. can or will do about that. I don't care how much they loosen their guidelines on Fannie Mae and FHA, it will never happen. This is not the first time in history where someone has owed more than their home is worth. There are markets that the bottom falls out of all the time, just like any other investment there are risks that you run when you invest in realestate.

I am just curious what you mean by "saved"? Do you think the government is going to pay their mortgage payment for them so that the banks are "saved"? This crisis is alot bigger than people think and it's not going to get any better in the near future. This is not a republican or democrat problem. You can't blame this on one political party IMO. The government hasn't changed their guidelines on their loan programs in the last 5-10 years so I don't see them to blame for this. This problem started because lenders and investors were offering aggressive loan programs and weren't thinking about the future of these borrowers and whether they could re-pay these loans or not.

I just hope this does not snowball more than it already has. Like I mentioned before, there are going to be alot of insurance companies feeling the heat in the near future. It could also screw up automobile financing and other types of credit companies down the road. This is not just a blip on the radar. I just don't see anything that can be done to help the banks or homeowners. Obviously the politicians will try.

To each their own. I guess we'll see.
 
the banks dont want the house mort, it's about you guys not the buyer. . .
 
The news articles I have seen have quoted Pres. Bush as stating he did not believe that the lenders who allowed their greed to get the best of them, should NOT BE BAILED OUT. The news articles also quoted him saying that to bail the greedy lenders out would fail to teach them a lesson and they would do it again in the future.

RELH
 
There is nothing in this article that benefits or hurts me one bit. You may be a little mistaken at how the mortgage industry actually works.
 
LAST EDITED ON Sep-03-07 AT 09:01PM (MST)[p]I would likely agree with you mort, so take this chance to educate us. I think the point of this issue is mainly that the republican party should stick to it's roots and NOT use BIG government to bail out the banks. . . Sure the economy is important, but you must admit this policy is neither conservative nor republican. Unless of course the republican party, led by GWB has decided to take his lead and spend, spend, spend and put the debt on the future generations. . . I think the government should stay out of this little problem and let the market take care of it. . .
 
Tfinal;

From what my local newspaper is reporting, GWB has said and is quoted that he feels that the lenders should not be bailed out and need to be taught a lesson for their greedy practices to prevent future abuses by them. Where are you getting infromation that he is planning to do the reverse and bail them out.

RELH
 
I agree gov't spends too much and as you say, we should start cutting right now.

Start by s-canning the entire farm bill ASAP! This years cost is going to be over $300 billion for the biggest business welfare give-away in the budget. What a waste of taxpayers money.

Farmers are making alot more money than I ever will and I never get gov't handouts!

Brahma
 
JUST FOR THE RECORD!!!

I SEE WAY TOO MANY PEOPLE FINANCING THEIR MORNING MOUTAIN DEW WITH A FRICKEN CREDIT CARD!!!

YOU BOYS EVER THINK ABOUT THAT???

469ff2b8110d7f4e.jpg


THE ONLY bobcat THAT KNOWS ALOT OF YOU HAVE HAD THIS IMAGE IN YOUR PEA BRAIN BUT DUE TO POOR SHOOTING TACTICS I'M STILL KICKIN!!!
 
Brahma I love to argue this one. the farm bill has been the best investment the tax payer ever made, it's given you a cheap stable food supply for years at a minium cost. Americans pay the least amount of their income for food of any nation. that said with the need for ag products in biofuel production the need for farm subsidies may be over, and you're going to pay more, lots more. by the way our farm subsidies are MUCH lower than all our competitors and our government does more to run off our customers than anyone in the world, and then there's the countries we can't sell to. My operation has a gross income of 1.1-1.3 million a year and guess how much my farm subsidies will be this year? about $9600, man am I hosing the government huh? I said gross not net, if you don't know the difference I can explain.

Might I ask in the farm budget have you ever looked at how much actually goes to farmers? food stamps and a buch of other crap come from that budget. I love it when people sit around stuffing their face face , spitting food all over while trashing American agriculture, so go ahead and end the farm bill. those of us left standing will just be able to get more from you for our products when the over production ends, supply and demand you know.
 
Tfinal- I would love to educate you on this subject but the fact of the matter is, I have never seen this type of situation before so I can't speak on what is or isn't going to happen. I just don't think the government can do anything to help out this situation. But like I mentioned before, they will try. Why? Because they want to play politics on this issue to try an sway voters. You are right, this issue is neither conservative nor republican.

The problem is a whole bunch of homeowners got interest only loans with short period fixed interest rates and now these arms are going to start adjusting or they may re-cast (re-amortize)and now these people aren't able to pay their mortgage at the higher payments. What can the government do to help that? They can't give them a raise and they can't pay their mortgage for them. I think the government is wasting their time even trying. But there are others in my industry that completely disagree with me.
 
Figured that would bring you out of the woodwork Dude. Just wanted to get a feel for how committed to spending cuts you liberals on this thread really are.

Looks like not that much.


>I love it when people sit around stuffing their face face,
>spitting food all over while trashing American agriculture,

So when I call for an end to $300,000,000,000 in farm give-aways, I'm trashing American Ag? While stuffing my face and spitting food? Uh huh. Right.


>so go ahead and end the farm bill. those of us left standing
>will just be able to get more from you for our products when
>the over production ends, supply and demand you know.

So I would never be able to afford my grocery bill without the Farm bill? Uh huh. Right.

Thanks to the Farm bill, farmers haven't competed under real market forces for decades and American taxpayers have thrown big time money at propping up an industry the likes of which are unmatched anywhere in the history of Govt.

It just proves the point that when the Gov't takes over anything, it screws it up! (please liberals, leave our health care alone)

Market forces are the only way to handle things. Wether it be in the mortgage mess or in farm production or anything else.

Brahma
 
Thank you Brahma and Mortman. The Bush haters are peeing their pants to point the finger.

"One of the key elements of Bush's plan would allow homeowners with a good credit history, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting."

I see nothing wrong with helping out a fellow American that got caught up in this mess. Home ownership is the backbone to a strong country. The only folks winning here is the average Joe that made a mistake. Cut them some slack.


?Justice consists not in being neutral between right and wrong, but in finding out the right and upholding it, wherever found, against the wrong.?
---Theodore Roosevelt,
 
Brahma, like all ultra conservatives you exagerate, dramatize and are just plain wrong most of the time. . I didn't say you'ld you'ld starve without the farm bill but you'ld go without some things and pay more. like most people you have no idea what the government does to insure a cheap stable food supply, many crops have quotas and bases and floors like sugar , spearmint ect. again much of the farm bill goes to food stamps and other programs, until you accept that and look at what the farm bill has done for you and what percentage farmers get you're just looking ignorant. when was the last time you were rationed on a product or the price went so high you couldn't afford it? it used to happen and would again without intervention. if food went up as much as gas has you'ld be the first to cry, look around the world, you're spoiled and wanting to bite the hand that feeds you. go ahead, knock yourself out, put some of guys out of business and fallow their land, does me good, cost you money, it's a win-win situation.
 
LAST EDITED ON Sep-04-07 AT 09:23AM (MST)[p]I sure wish I had over spent to buy a house and then get to refi like that. . . I'm buying my house with my own money and with no special government backed anything - well, I do have an FDIC bank account, but as for my house, I got NO, none, ziltch, special deals, and I certaily wont get any government bail out to refi . . .

you guys who claim to be republicans are total socialists on this issue. if you guys, and you know who you are, ever had your own talk show, it would be called "the spin starts here". . .

Good grief. . . .
 
On this subject I agree with Tfinalshot and Hdude. The government should do nothing to assist either the borrower or the lender.

No guaranteed refinancing nor any relief for the lending institutions. That is the way the Republican party should be not just Democrats Lite.

I guess I should quit paying my mortage so I can get some relief as well.

Nemont
 
It just makes good fiscal scence. Letting all these folks default would hurt the tax payer much greater than simply allowing the ones with good credit a refinance.
Yes I do have a soft spot for the average Joe. I am not an elitest know it all that thinks he is better than every one else...........the rest of you know who you are and whom I am speaking of................


?Justice consists not in being neutral between right and wrong, but in finding out the right and upholding it, wherever found, against the wrong.?
---Theodore Roosevelt,
 
>It just makes good fiscal scence.
>Letting all these folks default
>would hurt the tax payer
>much greater than simply allowing
>the ones with good credit
>a refinance.
>Yes I do have a soft
>spot for the average Joe.

I am an average Joe and I am smart enough to not overextend myelf finacially. Why would it make fiscal sense to extend a helping hand? It goes against nearly every principle of sound economics to have the government skew the market. In addition it will have unintended consquences that are as bad or worse for the taxpayer then not bailing them out.

Also if these people had "good" credit they wouldn't have been in the subprime market anyway.

No bail out for anyone would be the right way to go. Average Joe or Jane will learn far more by having to eat a little humble pie then from getting a hand out. Same goes for the lenders.

Nemont
 
Nemont is right on this one, what's next auto loan bail outs? how could you not see this coming? every market has it's ups and downs and if the downs are absorbed by the feds where does that leave us? it's dog eat dog and it has to be that way.
 
My only wish is that I may someday be as perfect as you two.


?Justice consists not in being neutral between right and wrong, but in finding out the right and upholding it, wherever found, against the wrong.?
---Theodore Roosevelt,
 
202 is at the core of why the republican party is in shambles. Its too darn bad there's sooo much liberal thinking in that party. . . oh well, i'm sure we will survive. . .
 
I am a republican but I am speaking on this issue with first hand knowledge, not on a political bias. People with good credit will always be able to refinance. Unless the market tanks, then you owe more on your home than your home is worth. You can't refinance once you are in that situation no matter how good your credit is.

Unfortunately the situation we are dealing with is a double edged sword. No matter what happens someone is going to get hurt.
 
LAST EDITED ON Sep-04-07 AT 12:59PM (MST)[p]Mort, why dont you explain, as simply as you can, the issues, and then tell us why people who dont play the gamblers game should help bail out the gamblers? I'm for a strong economy, but this is like other bail outs a slippery slope and in your words, where and when should we stop the slipping?
 
like I said in my first post on this subject. The haters are peeing their pants to bash Bush and point fingers. No help what so ever on a solution, same way they treat every issue, the war in Iraq, abotion, you name it.
First of all T you imply that a bail out is a slippery slope. WTF there has never been a bail out that has ever had a slippery slope. No bail out has ever hurt this country.
Calling folks that got in over there head with pursuit of the American dream gamblers is absurd and shameful.
I say give them a second chance. Call me a liberal on this issue if you want but what Bush proposes is right.
Not all Americans are as smart or frugal as you are T.


?Justice consists not in being neutral between right and wrong, but in finding out the right and upholding it, wherever found, against the wrong.?
---Theodore Roosevelt,
 
LAST EDITED ON Sep-04-07 AT 01:58PM (MST)[p]First off I have never claimed that I was perfect. I have made some horrible financial decisions in the past and had to pay the price for those decisions. I got into credit card debt and nearly lost everything until I figured out how to live below my means. Now I have good credit, money in the bank and no debt other then my mortage. I had to learn the hard way.

Bailing out people who knew that if interest rates went up they could not afford the payments is wrong. The lenders were wrong in opening the cash vault to these people and now both should suffer the consquences of their decisions.

I am far from a Bush basher, I have vocally and strongly supported the war, I voted for the guy twice. The proposed bail out goes against every Republican ie (conservative) principle that was in the parties platform for years.

Nemont
 
LAST EDITED ON Sep-04-07 AT 02:20PM (MST)[p]
Tfinal - Anytime you buy a home you are investing in real estate. You are rolling the dice if you are a homeowner no matter what happens. Every home owner is at the mercy of the market. I haven't been a strong advocate for the government bailing these people out all. In fact, I think I have been quite the opposite. Mainly because I don't think that the government can actually bail out people that are in foreclosure. There is no easy plan to do this. The market for sub-prime loans is completely gone and the government has never offered a sub-prime loan in the first place. The people that are having these problems do not fit within the governments guidelines to help out anyway.


The only downside that I see is this: You live in a neighborhood that has quite a few foreclosures because of this crisis. But before they actually foreclose on the property your neighbor hurrys and sells it to an investor for a 100k under appraised value. Now, your neighbors home just became your homes most closest comparable on your homes appraisal. You bought the home for $250,000. You still owe $250,000 on your home because you have only been in your home for a couple years. You now owe $250,000 on a home that is worth $150,000 because your neighbor got an adjustable rate mortgage and had to sell his home to prevent foreclosure. Now your only option is to wait and hope the market rebounds. You can't sell your home because you owe more than its worth and you can't refinance for the same reason. Now do you wish that the government had helped your neighbor? At first you didn't think so because you were so smart with your money and you never missed a payment on your mortgage. How could your neighbor affect you so much? This is a very real scenario that we could all be facing in the future.


I am not certain that the government helping this situation is a good idea at all. There are alot of angles that need to be looked at before such rash decisions are made in my opinion.
 
Mortage Man,

What if instead of a house I had purchased $200,000 worth stock in a company. My neighbor also purchased stock in the same company. Both of our stock holding were worth $250,000 grand but the market went south and a bunch of people dumped the stock and the price went down. Now my stock is only worth $150,000 and the neighbor has completely liquidated for less then he bought the stock for. Would I blame the neighbor for affecting the stock price or just figure that is the risk of investing?

I don't know where people get the idea that markets won't ever go down? Doesn't matter if it is the market for grain, real estate or the stock market. Investing comes with risk. That is the heart of the problem. Both the subprime lender and borrower were willing to take the risk everything would be okay but that isn't the way it turned out.

Nemont
 
IMO Nemont that is the exact scenario that I mentioned. I can't be mad at my neighbor. It's the risk I took. Nor can I be mad at my lenders that have dropped their sub-prime loan programs and now I have turned away business.

I agree completely, investing comes with risk. Most people have the unrealistic belief that the housing market will never go down. If everyone viewed real estate the way that you mentioned, we would not be having this conversation. Most people do not see real estate as an investment.
 
MM,

I guess we are on the same page then. I misread your post to say that we should be supporting bailing out our neighbor due to the impact on the value of our homes

Nemont
 
Most people don't see real estate as an investment? real estate has been a fantastic investment for millions of people. it's treated me 1000 times better than the stock market, most people I know have speculative property bought. let the chips fall where they may, those who can't afford to play the game should stay out. real estate is no different than any other investment.
 
>go ahead, knock yourself out, put some of guys out of business
>and fallow their land, does me good, cost you money, it's a
>win-win situation.

The Gov't has been paying my Dad to fallow his land for many years. Beats heck out of actually working it. Never made any sense to me, but you might be right, it's a little complicated so I'll just keep handing over my dough and quit asking questions.



Brahma
 

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