Subprime bailout? $120 billion

[Carbonics]

that is the estimation.

now, not to get political, but this fecal matter #@$%! me off, why should we have to pay for other people's irresponsible financial management?

most people bust hump to pay for their homes, why should responsible folks have to pay because some greedy lenders loaned money to people with 600 and under FICO's who have no business borrowing money anyhow? isn't that the entire point of a FICO, to determine one's ability to handle credit? if you are going to start handing out houses with massive mortgages to everyone who asks then why look at a FICO at all?

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NEW YORK (Money) -- Want to pick up the check for every homeowner who got saddled with a risky mortgage? It's a big one - on the order of $120 billion.

Lawmakers and consumer groups in recent weeks have been calling for assistance for those at risk of defaulting on their mortgage.

On Wednesday, Congressional Democrats led by Charles Schumer (D-N.Y.) advocated steering hundreds of millions of dollars into nonprofits to help the growing number of homeowners who are having trouble paying their mortgage.

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this really really blows my top... I've been called pretty left, but even I cannot go for something like this! it is completely unfair to EVERYONE to ask people to pick up the tab because other people were too stupid with their money/credit.

even if they have lenders foot the bill as the article suggests, who in their right minds honestly believes that those costs won't be passed onto homebuyers?

the poll says it all, 89% believe subprime borrowers should NOT be bailed out.

if we ran around and fixed everyone's f-ups there would be no incentive to do it right, why should anyone pay their own bills? just wait until it becomes a problem and someone will come bail you out and make it all better for you.

let's bail out the greedy lenders who would lend to anyone willing to sign a piece of paper, and the irresponsible borrowers who couldn't afford what they bought...win win for everyone but us.

http://money.cnn.com/2007/04/13/real_estate/subprimebailout_cost.moneymag/index.htm?cnn=yes

 

[Carbonics]

"predatory lending"

"people didn't understand the terms of the loan"

why is it that every arrticle has to paint borrowers as victims? they are victims of their own choices... if you don't undertsand the loan terms then DON'T SIGN IT FOOL!

predatory lending - the act of hiding in the bushes and waiting for a passerby, tackling them and holding them at knifepoint to take your money.

 

[Aldaris]

pandering to the bottom class to get votes.

 

[Footpounds]

Now,now. You guys are just being too hard on the sub-prime borrowers. FICO scores? Please! That's old school thinking there. If people have to "qualify" for a loan, well, that just creates the haves and the have nots. Everyone is ENTITLED to a home...and a NICE one at that. You guys must be new to this country.

 

[Vilan]

Remember, there must be No Borrower Left Behind.

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if we ran around and fixed everyone's f-ups there would be no incentive to do it right, why should anyone pay their own bills? just wait until it becomes a problem and someone will come bail you out and make it all better for you.

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Wasn't there some kerfuffle with the IMF about that a while ago? Countries taking out risky investments knowing that if they tanked, the IMF would bail them out to avoid economic instability?

 

[Kestas]

What ever happened to banks requiring 30% down on a home loan, or else you were considered a bad risk?

I said this before, that the government will find some way to bail out those people who are spend-crazy, and it'll somehow come out of the pockets of those who make sacrifices and are financially disciplined.

Even a more disturbing trend, companies use bankruptcy as a business tool instead of the "means of last resort" that it used to be.

 

[Laminar Lou]

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What ever happened to banks requiring 30% down on a home loan, or else you were considered a bad risk?

I said this before, that the government will find some way to bail out those people who are spend-crazy, and it'll somehow come out of the pockets of those who make sacrifices and are financially disciplined.

Even a more disturbing trend, companies use bankruptcy as a business tool instead of the "means of last resort" that it used to be.

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Well, it's 20% to be a "no qualify". I had trouble as a first time home buyer trying to get 5% down in southern california. If I were asked to come up with 120K just to get the 1500 sq ft house that I am in there is just no way.

This usually isn't a problem if property values continue to increase. The bank still has an asset to sell and it usually is worth more than when they first bought it. But it's a problem when it is not.

 

[Sparkman]

Someone needs to take the fall for all of the questionable lending and foolish buying, I would much rather see it be the lenders and buyers rather than the taxpayers.

 

[Carbonics]

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Well, it's 20% to be a "no qualify". I had trouble as a first time home buyer trying to get 5% down in southern california. If I were asked to come up with 120K just to get the 1500 sq ft house that I am in there is just no way.

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no offense to you personally, but prices will continue to be sky high in so-cal and other select areas so long as people are willing to sell organs and children to buy there.... the mere fact that there is no possible way you could come up with 20%, actually having trouble getting 5% shows that these areas are for those in the upper income brackets, maybe I'm a socialist or something but if you let these areas go and live elsewhere and let the rich take them over they might just collapse seeing as no grocery baggers, starbucks employees, dry cleaners, gas station attendants, mcdonalds workers etc would live there and either the wealthy would go without or people would be paid $40 an hour to flip burgers....maybe it's my simplistic thinking, I don't know.

they always say that if people don't buy at the price you are selling then that means you are asking too much, didn't hold water during this so called real estate market crash... you always hear the news talking about sellers having to slash prices blah blah but you look at any home for sale and they are the same price they were 8, 10 months ago. Doesn't apply to real estate I guess.

 

[eljefino]

There are ads on the TV for this stuff:

"Even if you closed on your home yesterday, we can use a new appraised value to get you the cash you need". Note they don't even pretend your house is actually worth more, they just stretch the appraisal. Then they mention you don't need tax records or income verification. Well jeez louise if all the banks downtown want this stuff shouldn't you smell a rat if the guy on TV doesn't?

Instead of a 2nd mortgage/home equity loan, they usually refinance the entire thing because as mortgage brokers they get a bigger commission. This goes against the borrower's better interest.... but they sheepishly sign on the dotted line.

If you're a dumb tool, ESPECIALLY a dumb tool, get a low budget lawyer from the mall when you buy a house or refinance. Couple hundred bucks well spent. Everybody else at the table represents the lender.

 

[obbop]

Is the bailout truly for the individual borrower or is this yet another semi-disguised form of corporate welfare?

 

[JHZR2]

Disgusting...

Im 26, own my own home in a relatively pricey neighborhood, and busted my butt with schooling, work, etc., to earn what I have.

Not all may have the mental ability to be in a position such as mine. Im sorry, but I worked hard and feel at liberty to make such a comment. And if that is the case, that is fine. But so long as they are creating their own destruction (i.e. keep up credit card debt, not to pay for food, but to buy that coach handbag) let them foreclose and let these folks' credit be permanently scarred, with repayment still permanently in the cards.

For someone like myself, whose parents had the be the hugest cheapskates alive to keep out of debt, and who worked themselves from nothing to something, and for myself, who learned from their hard work and effort to make something for myself, to have to essentially foot the bill for the stupid decisions of others is terrible. What makes it really horrble is that you REALLY don't need to buy a super high-priced house. really. To make stupid decisions and buy too expensive a car, clothes, etc. is one thing. You can waste a LOT of money, and get yourself into a lot of debt, and screw up really bad... but what does it really come to in the end? $30k? $50k? But extend it to the homes that these people bought, namely overextending themselves to show off, and they should be helped why?

I bet most of the people that need help are in homes far 'showier' than mine, and they are people trying to prove that they are much 'better' than I, based upon what they have, how they look, etc. And I'm essentially helping to foot the bill???!?

UGH!

JMH

 

[CivicFan]

This looks like another way of subsidizing the lending corporations. They may disguise it as a bailout for the borrowers but ultimately it benefits the lenders as they are being rewarded for their questionable lending practices.

I have nothing against subprime lending as it has helped quite a few people to buy houses which they otherwise would not have been able to. It's the small minority of these borrowers that are risky loans. My guess is that these lenders are protected with derivatives such as insurance against bad loans. I wonder what would be more profitable - the loans going bad and the derivatives kicking in, or some sort of government subsidy. I would assume that the bad loans would be more profitable for the lenders. (they get their cash now instead of servicing mortgages).

As most of the times, this looks like populist B..S.. by the politicians.

 

[Texas Aggie]

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Well, it's 20% to be a "no qualify". I had trouble as a first time home buyer trying to get 5% down in southern california. If I were asked to come up with 120K just to get the 1500 sq ft house that I am in there is just no way.

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Yeah, but they've been taking out loans like 5 year interest only, ARM loans.

no offense to you personally, but prices will continue to be sky high in so-cal and other select areas so long as people are willing to sell organs and children to buy there.... the mere fact that there is no possible way you could come up with 20%, actually having trouble getting 5% shows that these areas are for those in the upper income brackets, maybe I'm a socialist or something but if you let these areas go and live elsewhere and let the rich take them over they might just collapse seeing as no grocery baggers, starbucks employees, dry cleaners, gas station attendants, mcdonalds workers etc would live there and either the wealthy would go without or people would be paid $40 an hour to flip burgers....maybe it's my simplistic thinking, I don't know.

they always say that if people don't buy at the price you are selling then that means you are asking too much, didn't hold water during this so called real estate market crash... you always hear the news talking about sellers having to slash prices blah blah but you look at any home for sale and they are the same price they were 8, 10 months ago. Doesn't apply to real estate I guess.

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[Al]

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This looks like another way of subsidizing the lending corporations.

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Just the opposite. Aldaris has it right: "pandering to the bottom class to get votes."

 

[oilyriser]

Count up all the people and their kids who over-bought. Multiply that by 200 ft^2. Divide that by 2000 ft^2, and you get the number of homes these people really need. I bet there will be enough homes left over to pay off all the unmanageable debt.

 

[Kestas]

I hear a lot of talk about lending programs that allow people to buy a house they would otherwise not afford. If a unique lending program makes it easy for one person to buy a house, then it makes it easy for everyone to buy a house. Hence, the competition remains the same, only the housing prices climb upward.

Has anybody considered that it is because of these programs that housing prices have skyrocketed? Look at it conversely... if the programs were unavailable and it was difficult to buy houses, there would be pressure to lower housing prices for the sellers to match the available money lent to buyers.

All these new risky programs over the past number of decades has raised the price of houses, and means more profit for the lender, realtor, and tax assessors. Drop these programs, and instead of having the wholesale population without a house, you'll see housing prices at a sane level.

 

[Crashbox]

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Someone needs to take the fall for all of the questionable lending and foolish buying, I would much rather see it be the lenders and buyers rather than the taxpayers.

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I fully agree.

 

[Al]

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I hear a lot of talk about lending programs that allow people to buy a house they would otherwise not afford. Has anybody considered that it is because of these programs that housing prices have skyrocketed?

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Ummmm..have uyou considered they should buy what they can afford. Remember this country is not supposed to be a socialistic welfqare State. But it is getting close with ideas like this.

 

[JHZR2]

Right. I bught what I could afford as a single person. I am lucky because I worked hard in school and work hard now and make a very decent wage, but I still bought within my means.

It is quite obvious that the rule, rather than the exception, os for my peers to live beyond their means. Easy credit and loans are just a convenient excuse to do so, and so long as one is able to finance their lifestyle adequately via loans, then why should they care how expensive anything is, just borrow a bit more.

Disgusting.

JMH