Obama calls for 90-day moratorium on foreclosures

[cal04]

Source: Associated Press

Democrat Barack Obama is calling for a 90-day moratorium on foreclosures and a two-year tax break for businesses that create jobs as part of a plan to heal the nation's ailing economy.

The presidential candidate says banks that participate in the federal bailout should temporarily postpone foreclosures for families making good-faith efforts to pay their mortgage.

He also called for a $3,000 tax credit for each additional full-time job a business creates. The tax break would end after 2010.

Obama also is proposing letting people withdraw up to $10,000 from their retirement accounts without any penalty this year and next.

Read more: http://news.yahoo.com/s/ap/20081013/ap_on_el_pr/obama

[bluestateguy]

1. I'm not sure what the point of a moritorium would be

It might just forestall the inevitable for many borrowers and lead to a deluge of foreclosures when the 90 days are up.

[Whoa_Nelly]

3. It may be to settle some of the issues surrounding those who are renting

in homes that are being forecloseed upon, and for those living in their homes, giving them an edge to get caught up on payments..

just my first thoughts when I read this

[WriteDown]

11. May make sense in a state like GA

where the average foreclosure period is 67 days, but what about a stated like NJ where the period is around 339 days?

[izquierdista]

4. Mortgage resets

Many of the foreclosures are a result of low teaser rates being reset to well above market rates. During such a moratorium, such mortgages could be renegotiated and the lender could be told "you want bailed out? then cut the crap and just write a straight loan. otherwise the government won't help you and you get to eat ALL the loss."

[notadmblnd]

6. not if they can get jobs and catch up the interest.

People are losing their homes for a variety of reasons, but one I never hear of is those who are unemployed, They could afford their homes when they were working. Their jobs have all been off shored and are now unable to find equal employment in their fields. Not everyone took out a sub prime loan. Not everyone was into flipping houses and not everyone was living above their means. But it makes me damn mad that the media and our government officials put all the blame on working people.

I don't think it's a bad idea. However,what I would like to see is an across the board interest rate drop and payments lowered to be more affordable.

[notaboutus]

17. Which is what will happen in 90 days as Obama will be

president. Once in office he will be able to set policy.

[nocalgirl]

29. Foreclosures, I'm gonna quit my job!

I'm beginning to think its time for me to quit my job and let my house go into foreclosure. All the promised tax cuts and bail outs sound better every day, problem is I have a great credit rating while I work overtime to pay my mortgage. Paying the bills was my mistake - the free ride looks better everyday!

[notadmblnd]

32. Free ride? We've all been screwed over a barrel by these greedy pigs

I think the least they can do, is lower interest rates. And just in case you haven't heard, these people lost their jobs. They did not quit. Mine went 5 years ago and my mortgage is up to date despite the fact that I'm still not working. I've never recieved a fucking dime nor food stamp from you, Mr/Ms self righteous taxpayer. My savings are almost depleted so I'll have nothing for retirement, if that makes you feel better?

[nocalgirl]

33. Sorry

Sorry about all your troubles, it does sound rough. I'm just saying that if Mr. Obama continues to talk about treating everyone to a better life through wealthy people's taxes, then fewer businesses who actually can employ workers (and may in some cases do it honestly and fairly) will stay in business - and that doesn't get us anywhere and may mean even less possibility of work for you. Good luck, and keep looking - I'm serious though, you can have my job for a while... Are you an RN?

[choie]

35. I guess you think that we should only bailout banks

with taxes paid by the middle class - that's much better, huh?

[nocalgirl]

36. not really

I think we should tax the he.. out of greedy corporations and then dole it out to everyone! Don't you agree? It would be best if we didn't have any greedy corporations or greedy CEO's, or any corporations that abuse the earth. Corporations only hire people to make them work like slaves. But without corporations, we wouldn't have their taxes so then we wouldn't have money to dole out.. Hmm.. don't know how to solve that one... guess I'm rambling in a train of thought... I guess I needed someone to work in order to make my computer

[JeanGrey]

42. I don't think we should've bailed out ANYONE...................

And as far as every poll I saw, most of America didn't either.

[notadmblnd]

37. No, I worked in IT and all those jobs are now in India

28 years I worked for that company and I was still too young to retire. I've gone back to school, if I keep at it I'll have a degree in 6 more years. I pay for it one class at a time so as I don't create a hardship for any of those poor rich folks you speak about. :sarcasm:

[nocalgirl]

41. I did too

I went and got a 2 year nurses degree at the age of 43. You'll do great, much better than younger student distracted by other interests. I just wonder where corporations will go if they get taxed even more - they just seem to leave the country when they get taxed - their greed continues in that they'd rather employ other people in other countries than employ us as a higher tax rate. But then that 'cares for the world' and makes us one as Mr. Obama said in Berlin!

[Duke Newcombe]

38. Enjoy your stay...and the pizza. n/t

[endthewar]

7. The LIBOR has been skyrocketing recently

if those adjustable rate mortgages are reset anytime soon, a ton of people will be out of their home.

[azurnoir]

9. Yes the "inevitable"

besides its best to those recalcitrant irresponsible homesquatters out on the street before winter hits, looks lots better that way :sarcasm:

or it could be playing for time so that exactly what type of help for people facing foreclosure the government can come up with.

[no limit]

20. Not having to pay your mortgage for 90 days will let many people catch up

that's a big sum of money for people that are suffering.

[IllinoisBirdWatcher]

25. This is HUGE for renters who pay their rent on time...

Just look at Cook County (Chicago, IL) where the Sheriff is now refusing to process any more evictions because people have fully-paid rent receipts and were being evicted because a bank foreclosed on their landlords.

If nothing else, 90 days gives these renters a fair chance at finding replacement housing. It also gives renters time for legal recourse against the landlords and banks.

[JeanGrey]

43. BOTH of those ideas sound wonderful. This happened to

some people we know - they were evicted and had not missed a payment

[Indenturedebtor]

26. Give people a chance to get a job for one

I lost mine, got behind on payments, now I have no other choice as I can't come up with 3 grand to pay two months of mortgage. If I started a job making 60 grand a year tomorrow I would likely still be foreclosed on.

Sometimes it's best to just slow things down. Also you would slow the entry of houses into the ruined market, which would help all the snobs and more empathetic people who still have houses.

[nocalgirl]

30. You'll be fine

Just wait it out a little longer, I just love how our candidate is promising more every day! You'll surely get it all worked out once he's in office - just don't worry, hang on and you'll be saved from it all.

[Indenturedebtor]

39. Well we're going the bankruptcy route to start over

We're not starving so no problem :D

[David__77]

2. I don't understand the point of this.

What happens during this 90 days? Is it for the purpose of pressuring the banks to eat losses? I don't care what it is, so long as home prices can continue to fall, as they need to, in order to restore housing affordability.

[jdlh8894]

5. I agree

Banks are in enough trouble now! This will kill them! JMO

[David__77]

10. I'm not arguing for or against banks taking losses on mortgages.

What I'm arguing is that policies should not be aimed at propping up housing prices that are out of proportion to median income and the other factors traditionally determining prices. Banks that are failing can be seized. Orderly bankruptcy, whether for a house or for a giant financial institution, are still necessary tools.

[azurnoir]

14. How will this "kill" banks?

It was the number of foreclosures that supposedly was killing banks, however realestate speculators are making quite a "killing" buying foreclosed houses at auction for pennies on the dollar and reselling them for profit, the "contract for deed" has become very popular with these vultures as it provides all the benefits of being an absentee landlord with none of the responsibility. Note the buyers do not have to "qualify" for a mortgage they just have to come up with the first months payment, just like renting.

[jdlh8894]

16. So a 90 day

'Stop/Loss' is going to help the bank? No money coming in?

[azurnoir]

21. first off

if they are foreclosing then there is "no money" coming in anyway, secondly if in that 90 days the government can come up with a plan to help at least some of the people facing foreclosure then yes it will in the long run help banks and the fed is supposedly buying an interest in the troubled banks

[Incitatus]

15. How?

Do you think they have any chance of selling the foreclosures in the next 90 days?

[WriteDown]

8. Agreed....

well reasoned post.

[smoogatz]

23. What's going on now is a vicious circle. Borrowers default, banks

foreclose, foreclosed properties flood the housing market, prices fall, more mortgages go "under water," more borrowers lose equity (and the incentive to pay their mortgage), more borrowers default, more foreclosed homes go on the market, and so on. The hope is--and I think it's actually a good idea--that a moratorium will reduce the flood of foreclosed homes and that the housing market will begin to recover. Then the new administration can find a more permanent fix. "Restoring housing affordability" is kind of a skewed view of what's going on here: what we're seeing is an honest-to-god crash in the housing market, not a correction, and a lot of homeowners are getting crushed in the rubble. Not to mention the trillion-plus taxpayer dollars (your personal share is about $3000 so far) that have already been allocated to bail out the financial sector as a result. The wise thing to do here is to stabilize the housing market and get some control over the current chaos in the financial sector--unless you're a "let it burn" advocate, that is.

[dudewheresmycountry]

12. Seems like some very positive steps to me

A 90 day moratorium with the restructuring will allow homeowners to restructure their home loans, file for protection from forclosure. Use retirement accounts to get caught up. All of this is good news. A 3,000 tax credit for additional full time job a business creates. All of this is what a problem solver does. Good for America and good for the world.

[phantom power]

13. I'm not sure what this country needs is more tax credits, but...

at least it's a tax credit that rewards giving people paying jobs, as opposed to tax credits for the already-wealthy.

[depakid]

27. That would my first thought, too- but at least there's a straight up quid pro quo

that will benefit people needing work, who in turn pay taxes (as opposed to recieving unemployment or other benefits) and can afford to spend some of the money they earn, helping other businesses in their local communities.

Must have been a complicated set of equations to try to put an overall price tag on the program.

[earth mom]

18. Given the chaos right now, the moratorium should be longer that 90 days IMO. nt

[defendandprotect]

19. May be a great idea --- where's Pelosi and Reid?

[NM Independent]

22. This is absolutely brilliant...

"Obama also is proposing letting people withdraw up to $10,000 from their retirement accounts without any penalty this year and next."

I was excited to hear he is proposing this. A lot of people in the next year will have to dip in to savings.

[hamsterjill]

31. Excited here, too.

I haven't heard any clarification as to whether that's $10,000 for the overall total (i.e., $5,000 for 2007 and $5,000 for 2008) or whether it's the sum of $10,000 for 2007 and then another $10,000 for 2008.

As someone who seriously doesn't think she will ever get to retire completely (maybe cut to part-time somewhere, sometime in the very distant future!!!), I feel like this could benefit me a lot right now.

Does anyone here know any more specifics on Obama's proposal regarding this issue?

[The Hope Mobile]

34. You're darn tootin'!! This is what people are looking for.

Straight, clear cut answers about what's going to be done to help them out of this mess, not legalese about what we're doing to help banks. GOBAMA!! US Citizens are craving this kind of thinking.

[TygrBright]

24. The state of Minnesota implemented a tax-credits-for-jobs program during the 1980s...

...to combat the last really bad recession.

It was a phenomenal success. A LOT of new jobs were created. Not only that, but because of the conditions attached by the state, they were good jobs. Decent pay, benefits, and guaranteed to be there (though not necessarily for the same person) for 3 years. It was targeted primarily at medium-size employers and small businesses.

The Jobs Now Coalition spearheaded the effort to get the program authorized (and reauthorized) and collected a lot of data about how effective it was.

This could be a very good thing.

interestedly,
Bright

[Waiting For Everyman]

28. These are good moves.

Needs to go farther on affordable interest terms for everyone. I hope banks aren't going to be allowed to gouge worse than ever to make up their losses. That would tank everything, and cancel out the effectiveness of any relief measures.

[pipoman]

40. Ok, in order to fix this problem people first must understand it

and after reading this and other threads I am not convinced most people here do.

This current crisis is due to a combination of bank deregulation and federally mandated lowering of requirements for mortgage qualification. Twenty years ago buying a house required a commitment. To buy a home required an independent appraisal. The best most people could qualify for is an 80% mortgage, only the most stellar buyer could qualify for a 90% mortgage. The 20% down had to be earned by the buyer. It could not be borrowed or gifted. It had to be in the buyers bank account for 1 year or the buyer had to show how they earned the money. The maximum duration of a mortgage was 30 years. The buyer's long term debt could not exceed 33% of their net income. This included the mortgage(principal+interest+taxes+insurance), auto loans, credit cards, etc.

Over the past several years much of this has gone to the wayside. People were allowed to get a 80% 1st mortgage, 20% 2nd mortgage. 40 year mortgage amortizations emerged, interest only mortgages for a specified time became the norm, and debt to income ratios were determined by these terms.

The result was that people were allowed (indeed encouraged) to buy homes they could not afford. The starter home became a thing of the past. Starter homes used to be a means for young buyers to get started in the home owning business. Since coming up with 20% down requires a true commitment. Many 1st time home buyers would scrimp and save for a year or more to come up with a relatively small amount of money. They would buy a home that may result in a debt to income ratio of less than 30%, fix it up, enjoy home ownership, earn equity through their payments and through appreciation. After a couple of years they could sell and use the equity to buy a home more to their liking. Over the past several years because of the changes these same buyers could buy a turn key, dream home with no commitment at all. This caused the housing bubble, as anyone could (and did) buy a home driving prices up.

Well now those interest only loans are rolling over to principal and interest loans and suddenly their income makes payment impossible. The homes are being foreclosed on and the demand doesn't meet the supply so housing prices began to fall screwing everyone. We have to bring housing prices back into reality and stimulate the starter home mentality again.

All that said I like Obama's 3k for jobs, and the penalty free withdrawal will help short term. The 90 days may allow the other 2 proposals to take effect.