Bend over for the housing bubble

Published: May 20, 2008, 10:28 am

Many of you older folks thought you were being hardworking and respectable for slogging through that 30 year mortgage. You got a loan small enough for you to handle, not a "liar loan", or a ka-boom... oops... balloon loan. Maybe you made an extra payment every year or you got real clever and did the "two-half-payments" trick your hotshot college kid showed you. Knocked 10-12 years off your loan for all of an extra $5 per year. Nice, eh? Wink

You knew people were going to be hurt buying more house than they could afford, when this housing boom went bust. No surprise there, booms and busts have been around for centuries. You were just glad it wasn't going to be you getting hurt. Well, surprise... this is the party of life and you get to be the designated driver in the good ol' Usually Shaft the Ambitious.

The latest "buy the vote" effort comes from the FDIC (p.r. wing of the banking cartel) - proposing that Congress authorize the Treasury Department to make loans to borrowers with "unaffordable" mortgages to pay down up to 20 percent of their principal. Home Ownership Preservation (HOP) "loans".

They say "This proposal is designed to result in no cost to the government:" Well, hmm, since nothing is free... "Funding: A Treasury public debt offering of $50 billion would be sufficient to fund modifications of approximately 1 million loans that were "unsustainable at origination." <-- which would, in english, mean it was a loan that should have never been made.

That's right. The banks want Congress to create anotherprogram where the power to tax you secures restructuringloans that never should have been made to other people so thatthey won't have to eat the loss. They will get paid principle plus interest.

Public = you = no cost to the government.... oh, there it is. In other words, since you were so good at paying your house note, now you can pay someone else's too, schmuck. Reminds you of a thankless job with incompetent co-workers. Also, no chance of cost-overruns, right?

"Mortgage investors would pay the first five years of interest due to Treasury on the HOP loans." Aw, see if you had only known that when you worked those extra shifts...

Eligible Mortgages: owner-occupied residences that are (among other things) "unaffordable" – defined by front-end DTIs (Debt-to-income ratio) exceeding 40 percent at origination. <-- which would (again!) mean it was a loan that should have never been made.

http://www.fdic.gov/consumers/loans/hop/

(Locked)

Entry #102

Comments

time*treat - May 20, 2008, 4:24 pm

http://m.usatoday.com/detail.jsp?key=848022&rc=ne (gee, all the talking heads told us the problem was "contained") You might have to cut the grass of the abandoned house next door to you, to keep your own property value up.

Todd - May 20, 2008, 9:44 pm

If Obama is elected, expect to hear about a new program like this every week for four years. After 4 years, even the brainwashed among us will "get it", like they did with Carter. (They are so much like each other it's scary.)

justxploring - May 21, 2008, 12:23 pm

Many people were hurt by unscrupulous lenders, but I also know people wanted "more house than they could afford" and refused to take good advice from brokers who were concerned. What about the people with credit card debt? There will be more programs to eliminate debt that we'll end up paying for too. I'm a die-hard Democrat, but I am also concerned about some of these too liberal programs. This election is very frustrating for me and it looks as if I'll have no choice in Nov. I want to see our men & women return home safely. I want the government to stop eroding our freedoms and operating in secrecy. But I also want to live in a free, democratic society, not a socialist republic.

time*treat - May 21, 2008, 3:31 pm

A couple months ago, I had a conversation with someone and we were discussing the possibility of them doing a 'lender bailout' with car and boat loans, too. I've since seen it hinted at, but nothing official. IMO, it has moral hazard and conflict of interest written all over it.

spy153 - May 21, 2008, 9:23 pm

Justx, some things need to remain secret. It is just the way it has to be for our own good. Haven't you ever had to keep a secret from someone so they wouldn't do the wrong thing? Some people just have that built in "wrong choice mode" that you can't do anything about.

justxploring - May 21, 2008, 10:53 pm

Hi, Spy! This isn't my blog so I won't start a whole new subject. It would also take up a lot of space to discuss my feels about the difference between national security and a government that keeps its citizens in the dark. Let's just take one example, however. If you bought a 9 room house for and were only able to use 5 rooms, you'd want to know why, right? If the real estate agent said "I know it's your money & your home, but I can't tell you. It's for your own good" would you just accept that answer? What if a family of strangers moved into your house for free? As stupid as that sounds (I can't always come up with inventive analogies :-) it isn't much different from being taxed with little or no accountability. Also, if I go on a job interview or apply for loan, I have to reveal lots of sensitive info about my life (credit, criminal history, work history, etc.) So shouldn't public servants be held to a higher standard? That's the problem with this country. We forget politicians are elected to serve us and not members of an elite, secret society. Well, I wrote more than I planned, a bad habit of mine. Sorry, time*treat.

jim695 - May 22, 2008, 9:46 pm

justx said:
"... shouldn't public servants be held to a higher standard?"

Yes, they certainly should, but that's what the problem has been for decades. Our police and elected officials hold us, the general public, to a higher standard than that to which they are held. WE are accountable for every mistake we might make in public (and sometimes in our own homes), but they're not mistakes, they're crimes. Public officials commit crimes on a daily basis, but they're exempted from ANY type of accountibility. The more serious the crime, the more quickly the state will circle the wagons to protect the party member who was caught red-handed.
Most states have a mandated exemption statute in place, but I'd be willing to bet that none were approved by a referendum vote.
This is quickly becoming a game of us vs them, us being the citizens, and them being our own government. I'm not sure how it happened, or even when, but it seems to me that the American Republic was overthrown by terrorists several years ago, and we're just beginning to find out that we've been electing them to represent us and our interests.
Jim

spy153 - May 23, 2008, 11:46 am

lol! I wouldn't expect anything less from you, Justx. That's what I like about you.

IMHO, I don't think they really make us pay for our mistakes more than they do themselves. I think they just have a job to do and sometimes it requires some ugly business we (the citizens) don't really need-nor really want- to know. What good is it going to do our men and women in battle to have newly developed technology to blow the opposition away and tell the public every last detail about it? The opposition will build one just like it, maybe even better. And then where will we be? We have to have some cards of our own to pull out at the last minute. It may not be fair, but it works. And how sane is it to have the media alert the very targets we are after on national tv that we are coming for them, when, where and how? And if an investigator of a murder tucked tail and run everytime someone got upset because he was breaking privacy laws, we'd never get anything solved and the bad guys would run amuck even worse than they are now. I'm not willing to give up every freedom I have, no more than you, but if they peek in on me and listen to phone calls and so forth occasionally to see if I'm up to no good, I have no problem with it. I don't want my sex life to be their passtime, but you get my meaning.

About those mortgage issues: Well, I knew we were in trouble, as did probably a lot of people, when I saw people getting mortgages that far out weighed their incomes. Good credit, bad credit, no credit... It doesn't matter. If you don't have the money to pay it back, don't sign the dotted line. A $200,000 loan on a house for someone making 50,000 (combined household income) a year may look good on paper, but in reality it doesn't work. We Americans like to spend money. And the debt to income ratio formula isn't a very good idea, either, when inflation is skyrocketing., because they everyday expenses aren't figured into the equation. And it's the everyday expenses that are eating America up right now.
I don't like the idea of a bailout program for those who have defaulted on their loans, either. It just doesn't motivate people to manage their money right. I think we should take our losses and stop giving out the loans like the above mentioned.

Bend over for the housing bubble

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