Saving all homeowners?

[question everything]

I don't think that we should.

We should not bail out homeowners who purchased houses ten times their income and now, of course, cannot pay the mortgage. This holds for that NY librarian making $40K who purchased a $400K duplex, and for that financial planner from FL who made $250K and purchased a $2.5 million house.

I don't know how they can be helped. It will just postpone the problem. They simply should not have purchased homes beyond their means.

I don't think that we should help the ones did not put a single dollar down payment. They lived like renters while enjoying the tax benefits of home ownership and now, that their mortgage is more than the value of their houses they just walk away, having lost nothing.

We should help the ones who suffer a temporary setback due to loss of a job or medical expenses or who were victims of predatory lending. Perhaps we can freeze their mortgage payments for a year, or so, until they can get a better grasp of their finances.

Perhaps we can re-negotiate the term of the mortgage for an affordable rate, for a few years, at least.

But the ones who should have never purchased their homes, who do not have any change of doubling or tripling their incomes - what can be gained? In a year or two they will be exactly where they are now.

[rubberducky]

1. And who gets to decide who is "deserving" to get a re-written mort.??

[question everything]

2. That's the hard question, of course

because I suspect that there will be a blanket help, instead of looking at each individual one.

In the same line you can ask which banks and corporations will be helped by the bailout plan.

It would be nice if there is some kind of a group with representatives from the community and the banks that can look at all the bad debts.

[JDPriestly]

4. It's very simple. Given really reasonable terms, can the

would-be or existing homeowner qualify?

The OP is correct. I advocate giving distressed homeowners longer term loans at lower interest rates (article in Wall Street J suggested 5.25%), but only if they can realistically pay back a fair loan.

Housing prices need to come down. They went way too high. Allowing the truly impossible loans to be foreclosed is fair to everyone. The loans described above are among those that cannot be salvaged no matter what the plan is.

[Coyote_Bandit]

3. I

bought a small old house in need of substantial repair at a time I could easily have qualified for a mortgage of ten times the purchase price of my home. It was a home that met my needs. I could afford it and paid cash for it. I am now long term unemployed and am fortunate to still live in that home.

As a taxpayer who sacrificed to live within my means I do not think I should subsidize the excess consumption of borrowers who either (1) spent more than they could afford or (2) made assumptions regarding their future earnings that proved untrue or (3) did not understand the financial terms under which tens or hundreds of thousands of dollars were made available to them.

Nor do I think I should be required to subsidize the excesses of lenders and their managers.

I have no problem investing in the economy to insure financial stability provided that (1) there are clear terms for repayment of that investment with reasonable interest paid; (2) there is oversight of that investment (and oversight of the overseers); (3) new regulations are put in place to insure the present scenario is not repeated; (4) CEOs and upper level managers are dismissed without their golden parachutes and face a full prosecutorial investigation; and (5) meaningful steps are taken to rebuild both our infrastructure and our manufacturing base.

I'm not against investing in the economy to provide financial stability. The simple fact is that consumer spending represents something like two thirds of our gross domestic product. Access to credit is required to maintain such an economy - and to enable it to begin a long term transformation.

I am against subsidizing excess and ineptitude - whether that is excess consumption by borrowers, exscess compensation to corporate managers or the ineptitude to qualify borrowers before lending funds.

[question everything]

5. I appreciate the sentiments

though we still carry mortgage on our house.

I agree with all five steps that you suggest and, I think, the Democratic leaders in Congress, as well as The Clintons and Obama agree.

The reason to help keep as many homeowners in their homes, however, is that these empty houses that no one can purchase are a blight on the community. We are not talking tracts in suburbs but also in the inner cities. Such houses become a refuge for drug dealers and meth labs not to mention a safety hazard when thieves cut the gas copper pipes and if the gas has not been shut off, the houses explode.

It is not clear to me whether or not you support the bailout. As you say, access to credit is now in the heart of the economy. Too many small businesses cannot get funds for operations and for payroll. Too many individuals who can qualify to purchase a house or a car cannot get loans.

[Coyote_Bandit]

6. I

do support the bailout. But I consider it an investment in economic stability - an investment that ought to be repaid and compensated with interest.

I also believe that there have to be consequences for CEO's, managers, companies and consumers that fueled the excess and irresponsible consumption. Without consequences responsible folks are penalized simply due to the fact that the irresponsibility of others is excused.

I think these two competing interests can be balanced.

Unfortunately, I do not think the high end housing market will recover. That is a conclusion that is based on demographic and energy considerations. Most (not all) high end housing is owned by older folks and with the advent of the service sector economy many in the younger generation simply do not have and have not had the earnings (and savings) capacity to buy into the market. Looking into the future, the market is at least somewhat overbuilt. Add the consideration of ever increasing energy costs to heat and cool oversize houses and those with both the ability and desire to buy into the market is even further reduced. Another factor negatively affecting these homes will be increasing property tax levels - levels that are increasing as local governments are becoming more responsible for services and as local governments are required to obtain funding for pension plans for their aging and soon to retire workers.

[demodonkey]

7. Where is there a duplex in NY that is only $400K? Where is ANY housing in NYC that is only $400K?

Housing prices are high. The $40K librarian needs a raise to keep a roof over her head, even as a renter.

The fat cats making $450 MILLION a year (and more) should get a tax increase to pay for that. I'm tired of hearing how governments and government employees can't make ends meet while we give tax cuts to billionaires. It's sick, and we are all paying the price of SOME people's greed.

[EmeraldCityGrl]

8. Second home buyers and rental investment buyers can go to hell!

25% of the homes bought during the bubble were by speculators. I'll be damned if
we are to bail them out.