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Government Shouldn't Bail Out Failing Homeowners
Bailing out beleaguered homeowners isn't just ineffectual — it's immoral.
User Comments
Posted 11:13 PM EST October 28, 2007
Posted by: trisharae
I don't want to bail out the homebuyers or the banks. The homebuyers knew they couldn't afford the house and the banks knew from the application that they couldn't afford the house. It was the responsibility of both to say no to the loan. The banks and homeowners should have to figure out a solution to this mess. It shouldn't become the taxpayer's responsibility.
Posted 9:23 AM EST September 04, 2007
Posted by: matsuuragy
Irresponsible home buying is exactly what caused this mess, and massive foreclosures, although sad, is exactly what is needed to bring prices down to a stable level. I do not want to spend sixty percent of my income just to own a home in a decent neighborhood. Government should consider the millions of people who did not buy into the frenzy and would one day like to be homeowners.
Posted 4:49 AM EST August 22, 2007
Posted by: allynd
I will add that which form any potential 'bail out' takes is very significant. And it is crucial to weigh the impact of rising defaults against the cost of any federal action. Is it better to let massive defaults based on looming resets take their toll or assist with some form of refi activity? This may be as much about protecting the larger population as helping those directly involved. Containment may be the issue.
Posted 12:28 AM EST August 21, 2007
Posted by: allynd
More rhetoric from the Che Guevara School of Business! Any of those 'victimized' (former) homeowners could have easily accessed the internet to run some numbers on a free calculator to cross verify what their evil, greedy lenders were offering them. Even the public library offers free internet. Now we must protect people from themselves? Why, because their own parents did not teach them prudent financial responsibility?
Posted 11:47 AM EST August 20, 2007
Posted by: jcandelo
cgm205 -- This isn't a victim mentality, its the government's responsibility to provide services and occassional extra help, especially to the lower classes who RELIED ON LENDERS TO DETEREMINE WHAT THEY COULD AFFORD. The IRS DOESN'T take all that much money from you. Stop whining with your victim-mentality about taxes, they're much higher in other countries...but then again, they have better healthcare than we do, ours is on the level of Costa Rica. We can't even maintain bridges.
Posted 11:17 AM EST August 20, 2007
Posted by: VicenteFox
The Fed is bailing out all these risky investors. This is corporate welfare. Look up 'moral hazard'.I find it obvious that Hedgies are demonizing mortgage-holders because they can't look in the mirror. Greenspan? He is our god! Hedge funds? They make us rich. Wall Street? They were TOTALLY UNAWARE!
So, it must be homeowners. Because REGULAR PEOPLE never get divorced or have medical bills descend on them in crushing fashion or have other emergencies. Burn the witches!
Posted 5:41 AM EST August 20, 2007
Posted by: allynd
Injecting liquidity is NOT 'buying up toxic MBS'. But, it might allow some of the folks you feel so much sympathy towards to complete their pending mortgage transactions. And it might keep some regular Joe's employed while their businesses sort out problems paying the light bill and making payroll. Learn whereof you speak. Wage slaves? You must mean folks who actually have to work for a living! Imagine that. Never too late to learn a fruitful skill and improve one's lot in life.
Posted 5:01 PM EST August 19, 2007
Posted by: keynesguy
I doubt anyone in power cares what is said here. They only care about big investors.
Posted 4:02 PM EST August 19, 2007
Posted by: davezzzz
I've been living comfortably enough in a pricey-enough 3-BR apartment for the last 6 years with my spouse and four children - why? Because we knew we could not REALISTICALLY afford a house in this nice neighborhood. I am not particularly sorry for the people in the suburban castles around us who also could not really afford to 'buy' them, but did anyway. And I am not particularly interested in being part of their financial solution.
Posted 2:38 PM EST August 19, 2007
Posted by: dodgerap
Great article. I refuse to support the idea that my tax dollars should be spent to subsidize the foolish decisions of homeowners who recklessly accepted mortgages they new they would not be able to afford should rates increase. Many of these people had severe credit card debt and still rushed into mortgages that could prove perilous. Unfortunately, millions of homeowners will face foreclosure. However, that is not my fault as a taxpayer.
Posted 1:00 AM EST August 19, 2007
Posted by: richardso
Part 3I don?t hear anybody complaining of the lowering of the discount rate. That amounts to the Fed bailing out the financial institutions. Where is the outrage, why didn?t we let it crash. They were dumb enough to lend the money. There is none because it was the right thing to do just as it is the right thing to do to help the individual homeowner. Not everyone who is in trouble is an overspending, live beyond their means speculator!
Posted 12:57 AM EST August 19, 2007
Posted by: richardso
Part 2 These people put faith in the govt., financial institutions, ,etch to help them. Some of these institutions failed to execute correctly, the govt. failed to regulate against predatory and aggressive lending, financial institutions gave money to people who were not qualified to receive money and the blame goes on and on. The individual is to blame along with the institution. Yes there are individuals who abused the system and got burnt but there are in every form of organization.
Posted 12:54 AM EST August 19, 2007
Posted by: richardso
Part 1This article is a crock. Anytime the govt spends money it helps one element of society vs. another element. Corporate welfare is no different than individual welfare.
The problem with Bush and his ownership society is that not everyone is able to micromanage there economic future. So what do you want to do? Shoot the people who aren't able to micromanage there economic futures? Allow them to be exploited at will?
Posted 5:16 PM EST August 18, 2007
Posted by: VicenteFox
YOUR OX IS NOT BEING GORED SO WHY THE OUTRAGE?Hmm, perhaps it's because all you hedgies are ultimately dependent on at least SOME of those loans getting paid back, so you get 50 cents on the dollar instead of 40 cents? It's never the fault of the hedge funds for BACKING this credit bubble is it?
Where's the article EXCORIATING HELI-BEN for interfering with the PERSONAL RESPONSIBILITY of free market traders?
Posted 1:38 PM EST August 18, 2007
I Read on Smartmoney.com :
The Foreclosure Generation
By Aleksandra Todorova and was amazed.
How in the world are these greedy people taking out home mortgages with a credit card debt at the same time. I pay ALL my CC debt every month. If I couldn't pay it off, I would not buy it.
If they can't pay their CC debt, they KNOW they can't pay a big mortgage payment too.
The Foreclosure Generation
By Aleksandra Todorova and was amazed.
How in the world are these greedy people taking out home mortgages with a credit card debt at the same time. I pay ALL my CC debt every month. If I couldn't pay it off, I would not buy it.
If they can't pay their CC debt, they KNOW they can't pay a big mortgage payment too.
Posted 12:02 PM EST August 18, 2007
<<Americans have fallen victim to the scummy mortgage/real-estate broker industry and deserve a break,>>
Here we go again. On to the victim mentality and name calling. And just what is a break in your worldview? Sounds to me like it means taking my money by force(tax and IRS)and giving it to some ?scummy? borrowers who wanted more than they KNEW they could afford.
Let the problems work themselves out and keep govt out of it--on both sides!
Here we go again. On to the victim mentality and name calling. And just what is a break in your worldview? Sounds to me like it means taking my money by force(tax and IRS)and giving it to some ?scummy? borrowers who wanted more than they KNEW they could afford.
Let the problems work themselves out and keep govt out of it--on both sides!
Posted 6:24 PM EST August 17, 2007
Posted by: Parkebernet
This is not a credit crisis; it's a character crisis. The vast majority knew exactly what they bargained for. A person of character honors their commitments. I bought a condo in the 1980s at the peak of the market and paid 12.25 percent interest. I worked 24/7 to pay it off. I have no sympathy for people who walk away from their bad deals. I'm sure there was some fine print that made my lender appear to be a Scrooge, after the fact. But he/she wasn't.
Posted 2:52 PM EST August 17, 2007
Posted by: jcandelo
Enough with the politics and philosophy lectures; they're pathetic. The US Government has bailed out many undeserving industries and companies over the years, including hedge funds today. Americans have fallen victim to the scummy mortgage/real-estate broker industry and deserve a break, while the industry deserves some regulations -- like the hedge fund industry, to shed some light on it. I'm sure people would see what a rip-off hedge funds are.
Posted 1:19 PM EST August 17, 2007
Posted by: pah256
Once upon a time, bankers only made loans to people they expected could pay them back. People trusted their lending officers would set them up with a loan they could afford and they got burned. Bailing out the institutions that are equally responsible and not assisting the owners is hypocricy. Government money needs to be spent on financial education. Lesson 1 - treat all brankers/brokers like used car salesmen, always know what's in it for them. The days of trust are long gone.
Posted 11:34 PM EST August 16, 2007
Posted by: VicenteFox
Translation:CORPORATE WELFARE: A-F'in-OKAY
MORTGAGE HOLDER WELFARE: BURN THEM!
Hedgies have had a week of Bernanke dumping money from a helicopter. When you boys stop swimming laps in those pools of 'liquidity' then maybe you'll have some standing to comment on this matter. Until then you are just idiots who want it both ways.
Posted 3:49 PM EST August 16, 2007
Posted by: DollarFray
The gov't tries to give grants to small business start ups and induce economic growth, create jobs, etc. - that is different, IMO. It's part of risk in an investment. But come on --basic math tells you what you can afford and not. But as others have said, the housing mess is partially due to an entitlement mentality.
Posted 3:49 PM EST August 16, 2007
Posted by: DollarFray
I agree there should be no 'bailout' to those who recklessly and ignorantly took out a giant purchase just out of want, not need. However, the problem spreads ---not necessarily harming only those who were greedy. It harms those who have pension plans invested in MBS and CDOs. There is something terribly wrong with this morally collapsed free market economy --hence regulation. Yes the market made many flippers rich. By all means, fraud should be exposed and prosecuted. Posted 3:34 PM EST August 16, 2007
Posted by: bobcastle
Good article, however you did not go deep enough to tell us who took the moneyafter the financing was done. As per my research, 'Flippers' of the houses in '05 and '06 unjustifiably enriched themselves by buying low and selling high. I, personally know a half a dozen friends who made millions doing flipping. Why not go after them, after all they got the money and are laughing at us right now
reading such articles.
Posted 8:46 AM EST August 16, 2007
Posted by: braddu
Absolutely a great article. Spot on perfect. If you can't afford it, you don't belong there in the first place.
Posted 2:43 PM EST August 15, 2007
Posted by: tuma
Bailouts only help prop artificial values,prolong the pain. prices must fall to be sustainable in the long run for the economy and the individual. People bought as investments and people make bad investment decisions everyday. Why not bail out those whose cars are being repo'd everyday? How about bailouts for credit card?, what about those who lost their shirts in Vegas?. I don't understand the hell and gloom about losing a home. Move into a rental. What the hell is wrong with that.
Posted 1:04 PM EST August 15, 2007
Posted by: VicenteFox
OH PLEASE!Hypocrisy! Hedgies love 'corporate welfare' when it involves the Fed b 'injecting liquidity' AKA buying up toxic MBS.
If you were half as vocal about turning down government handouts yourself you might be believable. What you want is to make sure YOU can pay YOUR loans back, by collecting as much as possible from the wage-slaves.
Demand a STRINGENT and transparent accounting of what is going on right now, and MAKE IT QUICK! The uncertainty is what is killing the market.
Posted 11:39 AM EST August 15, 2007
Posted by: martian63
I don't support Hillary Clinton's idea of a bailout and I won't vote for her or anyone who goes for a bailout. Why can't the defaulters sell their 'unaffordable' homes and go to a downsized house? What is preventing them from downsizing from a benz to a chevy? You want me to pay for your greed? And who pays for MY GREED? Did the govt. bail me out when I lost my hard-earned money in the stock market bust?
Posted 11:01 AM EST August 15, 2007
Posted by: NotStupid
I know plenty people who bought McMansions, some next to the city dump, just to keep up with the Joneses. Traded in their nice homes after seeing their friend's McMansion. They didn't realize their friends bought their McMansions when the prices were more reasonable. They didn't care about the outrageous prices in 2004 onwards, just signed. Now these fools can't pay their mortgage, can't afford a nutrious meal either. All because of their IGORANCE, STUPIDIDTY and GREED. LET EM EAT CAKE!
Posted 9:30 AM EST August 15, 2007
Posted by: CasualReader
I presume the author feels the same way about government bailouts of <a href='http://www.cato.org/pubs/briefs/bp-052es.html'> hedge funds.
Posted 12:20 AM EST August 15, 2007
ncgaijin wrote:
<< I'd bet he was singing the praise of these 'innovative' financing schemes loans when his cronies were raking in the big bucks.Now, he conveniently overlooks the real culprits- >>
I would love for you to come up with any evidence of what you accuse JH.
I will bet $5.00 to a nickel you are wrong. I've never heard him advocate pie in the sky.
Again, the real culprits are the greedy ones on both sides of these loans.
Lenders and borrowers.
<< I'd bet he was singing the praise of these 'innovative' financing schemes loans when his cronies were raking in the big bucks.Now, he conveniently overlooks the real culprits- >>
I would love for you to come up with any evidence of what you accuse JH.
I will bet $5.00 to a nickel you are wrong. I've never heard him advocate pie in the sky.
Again, the real culprits are the greedy ones on both sides of these loans.
Lenders and borrowers.
Posted 12:17 AM EST August 15, 2007
Posted by: Danschnett
Oh, Please........... Anyone who turns on the tube or picks up a newspaper, magazine, etc., has seen plenty of these 'no money down' or 'interest only' mortgage adds. Did they really think that there was a FREE LUNCH for them when the rest of us were sensible enough to folow the rules and our budgets? Let them learn the hard way.........and maybe it will help keep my real estate taxes from skyrocketing again this year.
Posted 4:08 PM EST August 14, 2007
Posted by: Parkebernet
Too many people think the good things in life come with no sacrifice (unless it comes out of someone else's pocket). What really frosts me is that we have elected officials who pander to them. Maybe if Congress and the Senate felt the sting of their own policies (amazing how they exempt themselves from the very things they impose on the rest of us - and give themselves a raise, to boot), they wouldn't rush to rescue the deadbeats. America is the land of the free, not the free lunch.
Posted 3:27 PM EST August 14, 2007
Posted by: atticus176
Okay, does anyone else think that if you're going to limit posts to 500 characters maybe TELL US??!!?
Posted 3:26 PM EST August 14, 2007
Posted by: atticus176
Quite frankly I say f 'em. To everyone sitting there waiting for that last reset that puts them over the edge, well boyos, take a good long last look at that new Escalade, play a last game of 9 ball on that new Brunswick pool table, even pull out the pictures of that 3 week trip to Europe; you probably won't have room for any of it on your new apartment / homeless shelter, and it will be a long damn time before anyone finances you in another debacle like this last one. Or so I hope.
Posted 1:57 PM EST August 14, 2007
Posted by: ncgaijin
Hoening's condemnation of individuals saddled with unwisely purchased mortgages is about what one would expect from a myopic advocate of unbridled laissez-faire capitalism. I'd bet he was singing the praise of these 'innovative' financing schemes loans when his cronies were raking in the big bucks.Now, he conveniently overlooks the real culprits- those greedy financial gurus who pocketed billions by foisting a sham on the public. So take your moral indignation and put it where it belongs, Jon.
Posted 12:44 PM EST August 14, 2007
Posted by: mightymoney
I think the goverment should bail these guys out the same way the Govt bailed out the airlines. But certainly put a lock on it afterwards. If the Gov't does not do something such as lower rates, these guys are gonna foreclose then lose money and jobs and the salary of the Gov will suddenly drop. READ TAXESwhy should the rest of us suffer for these bone heads? one act of forgiveness then never again.
Posted 12:12 PM EST August 14, 2007
Posted by: edwka
I am against a goverment bailout of failed mortgages. BUT, if it comes to pass, place a property lien with first priority and which doesn't expire on the land records for the amount of the bailout plus accumulated interest. This will prevent the owner from getting a windfall when he sells the property.
Posted 10:44 AM EST August 14, 2007
Posted by: sosorry
I worked in home mortgage/equity & foreclosures of a major bank for 5 yrs. in the 90's. They deserve what their greedy hearts got them into - foreclosure and eviction! They wanted to be bigger than the Joneses. In the 90's it was renters who bought thier apts that turned coop or condo. In the NY area they often ended up in F&E and went back to renting. The same will happen again with the McMansion owners. I can't wait to see the foreclosure deals I will pick up about this time next year!
Posted 10:25 AM EST August 14, 2007
Posted by: sosorry
One more thing... Jonathan Hoenig for President!
Posted 10:24 AM EST August 14, 2007
Posted by: sosorry
Hillary shows her true color of a pink socialist.That gov?t is liable for personal debts of citizens and their housing is beyond reason.She?ll say anything that her focus groups & groupies tell her to get votes.She doesn't expect to get votes from hard working,money-saving,financially responsible,charity-giving people who don?t need gov?t handouts to pay their bills.This is WELFARE FOR YUPPIES. Please vote for anyone but HER.She has embarrassed NY long enough.And now she wants to be president?
Posted 8:20 AM EST August 14, 2007
Posted by: dbasler
I will say one thing, if the government does offer some type of financial aid for homeowners who have overextended their budgets, I am going to invest in consumer products such as beer, cigarettes and home elctronics. I am willing to bet the same people whose eyes were bigger than their wallet will take that money and feed the cumpulsory urge to spend rather than pay down debt.
Posted 2:10 AM EST August 14, 2007
Posted by: morpheus9
Great article and right on the money.For years, I have seen new subdivisions pop up with McMansions. My wife and I work hard, and make a very good income between us. When we purchased our current home, we bought the house we needed, not the house the bank told us we could afford.
As we drive around these neighborhoods of huge homes, we often say 'what do these people do'? I now know - they PRAY.
Posted 1:10 AM EST August 14, 2007
Posted by: whitesites
We live in a great country. We have the freedom to make our own choices, and therefore we have the freedom to F@#K UP. I blame our education system for not making it mandatory for young people to fully understand what an amortized mortgage really is.
Posted 1:08 AM EST August 14, 2007
Posted by: whitesites
We live in a society of lust. If you look at the media and culture it has changed over the past decade. Young people care more about bling, and feeding their ego than living within their means. What keeps others behind ( their own stupidity ) gets me ahead in the form of investment opportunity.
Posted 12:51 AM EST August 14, 2007
Posted by: taxpartner
If the government feels the compulsion to do something, they can post articles on how to avoid being the target of predatory lenders. Throwing resources at the problem is rarely ever a good idea (when it is it is still very inefficient). As a wise man once said, if it sounds too good to be true (in the case of temporary low interest rates), then it probably is. It is ultimately up to the consumer to determine whether or not he/she is getting a fair shake.
Posted 12:50 AM EST August 14, 2007
Posted by: taxpartner
I agree with the moral hazard comment posted earlier. A government bail-out would create an unfortunate incentive for similar behavior in the future. I will say, however, that to the extent that the lenders were intentionally misleading the consumers they are somewhat at fault. But for the lack of education on the behalf of the borrower, there is no excuse.
Posted 12:34 AM EST August 14, 2007
Posted by: PappyBlueRibs
I hope you didn't get a loan to attend college...
After all, we wouldn't want to reward your parents for doing a bad job of saving for your education, would we?
In fact, isn't a mortgage just a reward for those who are bad income producers and savers? Do away with ALL mortgages, and make the scum REALLY work for a house!
Posted 11:40 PM EST August 13, 2007
Posted by: dafaulk
I love it when people state that the government shouldn't act against the market...and then you look at a tax system which rewards people for buying houses if they do so by going into debt. The system is not a free market, it is a manipulated market. I would love to see a really free market, but as long as the rich can hire people to write tax laws that benefit only a small sector of the economy, then those too poor to afford a lobbyist should get the same distorting perks.
Posted 11:32 PM EST August 13, 2007
Posted by: jimcarroll
Hillary knows that the newest victim class, unwise borrowers facing foreclosure, won't sell their votes cheap. Her largesse is limited only by the taxpayers' capacity to pay.Popcorn? Hell, let's have S'mores.
Posted 11:23 PM EST August 13, 2007
Posted by: Ellwood
Well said, you couldn't be more correct. Now you shoud take the next logical step and denounce the 100 Billion dollar bailout of Wall Street last week. The Stock Market gets a little shakey and Bam Here comes a boat load of freshly printed cash to make the boo-boo all better. Who is more irresponsible? The manager of a hedge fund that sells bad loans to savvy investors or someone who just wants the (american) dream?
Posted 10:44 PM EST August 13, 2007
Posted by: DKP50
1. The vast majority of those Subprime loans were NOT in minority Neighborhoods, but in wealthy ones.2. The home values DID increase and when they forclosed on them, the Banks/Mortg. co.'s and RE agents make the money..
3. The Homeowner lived in that place by paying only Interest only, like a king for 2-5 yrs...now has to go back to renting... Too many Homes being built for too few people qualified to buy them at outrageous prices..
Posted 9:59 PM EST August 13, 2007
Posted by: twokuntry
'People are smart!' Or so a current commercial for a certain mortgage company states twice in one sixty minute commercial. Well, if they are so smart, then they will find a way to bail themselves out. I choose to live within my means. Why should my tax dollars be spent to bail them out? Let Hillary bail them out with her excess funds!
Posted 9:34 PM EST August 13, 2007
Posted by: jkbritton
I agree with Mr. Hoenig. His words ?a bailout of homeowners facing foreclosure would be an immoral violation of the property rights of the millions of citizens who live within their means and pay their bills on time? are exactly how I feel. I?ve seen professional people who should have known better borrow to the hilt so that they could live in a McMansions just to keep up with the Jones?s. Shame on them.
Posted 9:16 PM EST August 13, 2007
Posted by: henryjoe
Let the home owners & all those responsible for the financial transactions pay for their folly. What we have here is a classic example of several of the seven deadly sins in action. Let the sinners pay for their sins! Leave the tax payers alone. Besides we'll have our hands full with the coming recession (depression). OPPS! Did I let the cat out of the bag too early?! Sorry about that WS. Ye-ouza, ye-ouza: Spin, spin, spin. LOL
Posted 8:58 PM EST August 13, 2007
Posted by: hayekcapitalist
Preach on JH: Can anyone say 'moral hazard?'
Posted 7:34 PM EST August 13, 2007
Posted by: riskchancer
Many deals that I have seen have zero equity. In minority neighborhoods, especially, the borrower got a 80% 1st and a 2nd for the 20% balance of the purchase price that was due in a balloon payment in 24 months. There was no way they could pay the balloon without a refi. Prices dropped, no refi. Typically the mortgage brokers writing these deals were 'trusted' members of the minority community.
Posted 6:15 PM EST August 13, 2007
What I find amazing is that I continue to see ads -- Borrow 'x'$ and only pay 'x' per month......where a quick calculation shows that the payment won't even cover the interest yet alone pay down the principal...
The borrower can claim stupidity but what about the lenders?
The borrower can claim stupidity but what about the lenders?
Posted 5:36 PM EST August 13, 2007
Posted by: bigbird2
You could wind up with ten or so articles in this column with a few simple changes and simply inserting 'medical care', 'food','education','home energy assistance','child care','disability assistance','unemployment assistance',or any of the other 'entitlements' you care to choose. Hell, why don't we just go ahead and include Dish TV, a VCR (or DVD) and a lifetime paid membership to Blockbuster or Movie Gallery as part of the overall package. Don't forget the popcorn!
Posted 4:58 PM EST August 13, 2007
Posted by: runthenet
Jonathan.... Right again as usual. If greedy companies got burned on lending to greedy want-to-be homeowners, they both get what is deserved. Bankruptcy and a forclosure. Bad business preceeds better business practices and decisions. You either learn form the mistakes, or fail (again). The world is not the PC place the liberals want us to believe. We are not all going to receive the blue ribbon. The rest swim in a pool of ignorance. We should not reward ignorance.
Posted 2:20 PM EST August 13, 2007
Posted by: fwsports
Sounds like greed and that is where the borrower met the lender, they deserve each other...NO bailout.........these homeowners need to learn a lesson, then next time they will spend within their means and not expect others to take care of them.Many of these homeowners are also the ones who have 2 new cars (not paid), and want everything their parents have without hard work, saving, and then only buy what you can afford to pay for.
Posted 12:43 PM EST August 13, 2007
sorry to keep on but this one stirs me up.
artisan%9,
why do you think only the originators were greedy? Come on now, weren't the borrowers greedy too? Why should govt punish lenders? Why should govt be involved at all? Why is someone a 'crook' cause they offer a contract to a greedy person? They did not hide one thing. If the buyer could not afford a 400k house in 2003, why did they magically think they could in 2005 with no more income?
artisan%9,
why do you think only the originators were greedy? Come on now, weren't the borrowers greedy too? Why should govt punish lenders? Why should govt be involved at all? Why is someone a 'crook' cause they offer a contract to a greedy person? They did not hide one thing. If the buyer could not afford a 400k house in 2003, why did they magically think they could in 2005 with no more income?
Posted 12:33 PM EST August 13, 2007
Why are lenders the only 'predatory' participants here?
The borrowers certainly were preying on the lending institutions too.
They wanted something(an unaffordable house) for nothing just like the lenders wanted something(an easy profit)for nothing.
As dac122 said it has to be win-win for both.
I have been in debt most of my life and now own a lot of real estate because I paid my debts.
The borrowers certainly were preying on the lending institutions too.
They wanted something(an unaffordable house) for nothing just like the lenders wanted something(an easy profit)for nothing.
As dac122 said it has to be win-win for both.
I have been in debt most of my life and now own a lot of real estate because I paid my debts.
Posted 12:30 PM EST August 13, 2007
Posted by: artisan%9
I agree with Mr. Hoenig. Investors don?t receive gov. bailouts. In fact, If a mutual fund gives a capital gains distribution, I have to pay tax on it, even if i never realize a gain. The really bad loans are more due to the financial crooks giving these loans, so they should bear some responsibility. The government should pass a law that forces the originators to cover the costs of refinancing to a lower fixed rate. This will both help some of the people (not all) and punish the greedy.
Posted 12:27 PM EST August 13, 2007
I borrowed ~250K, but mortgaged my land as collateral. When I saw all the loans being forgiven, I asked 'Why don't yu forgive mine?' I was told,'Mr. Montgomery, we're going to get our money from you'. I said, Why just me? Response,'Because you've got collateral'. I had to sell my cattle and equip.
I paid it all back. Luckily(love that word) I had a degree in physics and could get a good job. Moral, when yu borrow money, expect to pay it back or pay the piper.
I paid it all back. Luckily(love that word) I had a degree in physics and could get a good job. Moral, when yu borrow money, expect to pay it back or pay the piper.
Posted 12:22 PM EST August 13, 2007
Posted by: tcraw
I don't think we should give a bailout to people that cannot afford the home they bought. However, if there was predatory lending involved which the govt. should have regulated in the first place, the govt. and the financial institutions involved should be helping to refinance the homeowner into a reasonable fixed rate loan. The cards will fall where they may after that. At least they are given a fair chance.
Posted 12:18 PM EST August 13, 2007
Posted by: dac122
Right on! Many of these people had a long history of bad financial decisions before they were mortgaged to the hilt. However, I do think there were some predatory practices out there.
So let these companies lose billions, let these homeowners lose their homes, wait for the dust to settle, and let the correct arm of the government stiffen lending practices like before. Remember when a mortgage was a long-term win-win between you and your Savings and Loan?
Posted 12:13 PM EST August 13, 2007
The saddest part is that you had to write this article at all.
Back when I farmed, the Farmers Home Adm and SBA were making agricultural
'disaster' loans to young people who just wanted to rent land, buy big equipment and farm(a game to them). After a few years and 300K to 800K of debt, the lenders forclosed and sold the worn out equip and forgave the balance.
Guess who paid that balance? Right Ho. The good old tax payers.(contd)
Back when I farmed, the Farmers Home Adm and SBA were making agricultural
'disaster' loans to young people who just wanted to rent land, buy big equipment and farm(a game to them). After a few years and 300K to 800K of debt, the lenders forclosed and sold the worn out equip and forgave the balance.
Guess who paid that balance? Right Ho. The good old tax payers.(contd)
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Another reason to expect massive downward price revision is the fact that we no longer have a manufacturing segment in our economy. Since construction has come to a halt we don't have any growth engine at all. In simple terms people's salaries are not adequate to buy houses.
This reason, as much as the first reason, dictates continued sharply falling housing prices.
Thus government created the mechanism for housing prices to rise way beyond the natural equilibrium level by establishing p...(Read more of this comment)