Program Will Pay Homeowners to Sell at a Loss

[sabra]

Source: NY Times

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

“We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury senior adviser.

Read more: http://www.nytimes.com/2010/03/08/business/08short.html?pagewanted=print

[jody]

1. One issue that offends many are government handouts to people who gambled by buying a house that was

much more expensive than their income could justify.

Lenders and borrowers both knew that at the time of the sale.

I don't know how to assign culpability but I object to taxpayers that managed their budgets frugally being the scapegoat in this debacle.

[Vincardog]

5. What about the 'conventional wisdom' that you should buy all the house that you could afford? Prices...

were bound to rise. If the lenders lent more than the people could afford it is past time to look to the lenders.

[WriteDown]

9. What if you were buying more than you could afford?

:shrug:

Or buying an investment property?

[Vincardog]

12. In the first place, I didn't. In the second place who gave them the loan?

[WriteDown]

15. Huh?

So if someone robs a bank, it's solely the bank's fault for not having enough security? :eyes:

Obviously, you've never seen Flip This House

[Vincardog]

40. How can you compare people caught in a housing market downturn with bank robbers? You asked me

'What if you bought more house than you could afford" I replied 'I did not'.
You implied that the problem was that people bought houses that they did not qualify for.
I respond that, in that case the problem lay with the banks that gave them the loans they were not qualified for.
Then you go on about this bank robbery straw man.
I have seen Flip this house and thought it was a scam.

[WriteDown]

41. My analogy holds:

For this:
"I respond that, in that case the problem lay with the banks that gave them the loans they were not qualified for."

[No Elephants]

61. Oh, please. Taking a loan that the bank gives you is not robbing a bank.

Banks were paying originators MORE for risky loans than for sound ones. They were pressuring appraisers to come up with inflated home values so the banks could justify the loan to regulators--and appraisers were going along with it. The banks believed THEY were going to flip the mortgages fast and would never have to worry about whether the property was under water or not. And the fees they were making from the borrowers, plus the money they were getting from flipping the mortages, made it more than worth it.

As a general rule--repeat, general rule--banks are more sophisticated than borrowers. If anyone in a transaction was fooled, it was much more likely to be the borrower than the bank. If we were talking small business loans, I'd say pretty much the same thing. But residential mortage loans, definitely.

But, even when the borrower is slick, the bank is rarely in the dark. Fooling both the bank, which does hundreds of transactions a week (small bank) and the bank's lawyers is pretty tough. Between them, they've seen just about everything, and more than a few times, before.

Are there exceptions? Yes. That's why I'm saying "as a general rule" for the third time.

ETA: Please also see Reply #59.

[WriteDown]

70. You're confusing originators with servicers

Why punish servicers for what originators may have done? Also, EVERY set of mortgage documents lists the monthly payment clear as day. I find it amazing that it's so hard for people to look at a monthly payment and assess whether or not it's affordable. Even if it is an ARM, the docs spell out when and by what percentage the payment will rise.

[No Elephants]

72. No, I did not confuse anything. The discussion to that point was borrower and lenders, period.

Your claim was about robbing a bank, not robbing a servicer, and I responded to that claim. I mentioned payments by banks to originators only to show how that banks were eager for risky loans.

You are now bringing up servicers for the first time, and claiming I confused servicers with banks.

Who punished the servicer? The borrower, most of whom have no idea what a servicer is, let alone that their particular loan would end up in the hands of a servicer? Or the bank, that aggressively pursued "unworthy" borrowers, overinflated home values, made no income vefication loans, etc., then stuck a servicer with the deal?

We had an unprecedented set of circumstances, both as to the economy home mortgages and the economy in general. People who were able to afford their homes when they bought them ceased to be able to afford their homes for many reasons-job loss by one or both spouses. decreased income by the self-employed, etc. Few residdential mortgage borrowers were so sophisticated they could foresee that their homes would become unsalable, or saleable only at much, much less than they paid for them, along with ten other homes on their block.

BTW, what kind of diligence do servicers do when before they accept a mortgage for servicing?

[WriteDown]

93. Once again...

The terms of EVERY mortgage are on EVERY set of mortgage documents. Normally, I know what I can afford each month. Apparently, there are others who do not. Maybe there should be some sort of intelligence of competency test before taking out a house of car loan.

As far as dilligence, servicers buy securities that conform to certain criteria. They'll buy 10,000 loans that have certain UPB, FICO scores, and other criteria.

[No Elephants]

74. "Mortgage servicing became "far more profitable during the housing boom",

and servicers targeted borrowers "less likely to make timely payments" in order to collect more late fees.<1>http://en.wikipedia.org/wiki/Loan_servicing

[WriteDown]

94. Says a lot when you link to a wiki article based on a footnote with a broken link.

:)

[Sub Atomic]

97. Oh FFS.

Have you ever bothered to look at the 'References' section and click through the links on the bottom of a Wiki page?


:facepalm:

[jody]

14. IMO 'conventional wisdom' was Realtor hype. Caveat emptor still rules all sales. n/t

[No Elephants]

64. No. Conventional wisdom was quite valid until the laws and practices changed.

My husband and I never put much in the bank--but we made a heap of money just by buying all the house we could buy. Thank heaven, we stopped trading up, though, before this mess.

[jody]

79. So you gambled and won. Great but others lost. n/t

[NashVegas]

55. That's Not Conventional Wisdom, That's a Lie Told By the Industry

"All the house you can afford," refers to space, it does not mean you overstretch your budget for a more expensive home than 25% of your income.

[No Elephants]

65. No, it did not refer to space. I was told by a friend who was also a business lawyer,

to buy all the house I could get. "Leverage" was the conventional wisdom. And it worked very well for my husband and me.

[NashVegas]

96. Your Friend Was Full Of Kaka

Our parents and our parents parents knew not to spend more than 25% of their income on their living arrangements.

It worked well for you, but it fucked up things pretty badly for too many others. This is why so many people who did not take these wild risks are so pissed off at the kaka promoters: you wreck it for everyone else.

[Warpy]

21. Those people got shaken out first

and a lot of them got shaken out 3 years ago when the scam started to fall apart, bigtime.

Most of the people who used their houses as ATMs and who bought extra houses in order to make a killing in a bubble market found out quickly that it wasn't going to work and made extensive use of "jingle mail" to get out from under. Certainly the ones who got suckered by motormouthed salesmen into creatively financed McMansions are long since gone.

What's happening now is that people who have conventional mortgages they could once afford are being shaken out of their homes by a combination of declining prices and lost or reduced employment. Wages are falling quite rapidly now, usually as a result of reduced hours for people who still have jobs, and too many people just can't justify staying in a house that they're paying off to the tune of 40% more than it would bring if they could sell it.

Yes, the media are doing their jobs to protect the scumbags while encouraging people to blame current victims. Unfortunately, they're blaming the wrong people in this. A responsible media would be calling for mortgage company scammers to go to prison instead of punishing homeowners who acted in good faith but found their circumstances changed.

[qualityhashish]

23. Obama has helped the Banks, not homeowners

With rules in place that said it didn't matter. Rules authored by so-called US Regulators. Brokers, agents, banks couldn't care less as the underwriting standards were lax.
Make their commission and do another one. Who says that foreclosure isn't profitable to banks? It can be. Who says that people who bought houses weren't being frugal? The Banks of course, since they are blaming the victims for all of their fraud. No offense to the poster above, but you can't adlib through something you don't understand. Housing isn't a right in this country, unfortunately. It *was* and still is in other countries. And not crap housing like State Prisons, or Mammath 60s era warehouses like Robert Taylor Homes. Credit swaps, naked short selling, rolling up subprime mortgages with other debt selling them down the river like some perverse form of musical chairs. The Banks nearly drove this country's economy into the ground and yet we're blaming people for not having the money to pay their typically bubble inflated house price. The Banks are counting on this toughtless victimization, since it takes public scrutiny off of the damage they have done. Do not wait for this administration to help. Use a bulldozer or Chapter 7, if you can't pay, the contract is done.

[Missy Vixen]

26. It's unfortunate that those who chime in on every last one of these threads

don't bother to do some even basic reading.

As another poster below mentioned, those who bought much more than they could afford crashed and burned almost three years ago. We're into the "second wave" now, which are homeowners who bought a house within their means any time before 2008, and are now losing that house due to a combination of factors, none of which include stainless steel kitchen appliances or a McMansion.

>I object to taxpayers that managed their budgets frugally being the scapegoat in this debacle.<

I object to those who believe they know it all commenting on a situation they haven't faced yet. In other words, it doesn't matter that those who are now trying to save homes they purchased before 2008 using traditional real estate and lender guidelines have just been screwed by the trifecta of unemployment/underemployment, a cratering housing market, and the fact that President Obama isn't interested in salvaging Making Home Affordable. They're not touching YOUR tax dollars!

It is so great to come to DEMOCRATIC Underground and hear the same BS right-wing talking points.

[jody]

33. Have a blissful day. n/t

[Lorien]

62. Is that all you've got? Well, "bless your heart".

[izzybeans]

35. Scapegoating is a funny word, isn't it?

You might look it up.

[jody]

37. No need to look up, I used it correctly. Have a blissful day. n/t

[izzybeans]

39. .

:rofl:

Get a life. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4297994&mesg_id=4298218

[No Elephants]

76. I hope many good things come your way soon.

[No Elephants]

59. "Lenders and borrowers both knew that at the time of the sale."

That is your assumption, not necessarily the truth.

However, buying above one's means is not the only reason people got stuck with houses they could not afford. Two job families became one job families or no job families, and not always voluntarily.

It is not as though people had lots of options, either. Real estate prices were greatly inflated and rents were also high. If the economy had not crashed, things might have worked out.

I used to buy all the house we could afford bc my husband and I both had secure employment. With a fixed mortgage, raises to match inflation alone would ensure that our mortgage would become more affordable over time.

Throughout our history, banks would not make loans to people the bank thought could not afford them. Hard and fast rule. Full stop. So, the borrower never had to worry about whether s/he could afford to repay. If you got the loan, you could afford to repay, baring something unforeseen. And, if the unforeseen happened, the value of the home repaid the bank. So, hopeful borrowers would bring all their documentation to the bank, cross their fingers and hope for loan approval. No one ever told borrowers that all that had changed and it was now borrower beware.

Since Reagan, though, we've seen financial shenanigans on the part of lenders we've never seen before, from faking real estate appraisal values to "creative" mortgages like interst only for the first few years. So, if anything unexpected happened, from not being able to sell to losing a job, to a sharp increase in floating mortgage rates, people "screwn."

[Lorien]

63. Plus those that lost it all to medical debt

which makes up over 60% of all foreclosures.

[No Elephants]

77. Yes, thank you. I was thinking of that, but forgot it before I finished typing.

All kinds of unexpected things happen; and I am sure I could never think of them all.

But the idea that a large number of borrowers who are under water now are under water only because of "liar loans" or knowingly buying above their meeans is something even Pat Buchanan is not still saying. (He always knew better and said it anyway, but, now, so many viewers know better it would be too embarrassing for him and MSNBC)

Du's right wing may be the last to get the memo.

[jody]

80. "That is your assumption, not necessarily the truth" may be correct. Some were willfully ignorant .

[Lorien]

60. Um, that's quite a blanket statement. What about those of us who bought less home

than we could afford and the LOST OUR JOBS or got a huge PAY CUT? And the banks are responsible too; I had one approach me about refinancing to pay off medical debt. The guy was a slick salesman and fairly convincing, but the deal sounded shady to me and I passed. Many others did not and now they have been screwed in almost every way possible by the Bankster thieves. One size DOES NOT fit all here, as much as the GOP would like you to believe that it's all "personal irresponsibility", that's bullshit.

[jody]

82. I did not say all and obviously you don't fit the pattern I cited. n/t

[No Elephants]

86. Most home buyers didn't fit the pattern you cited.. Investors are another story.

[ecstatic]

99. Well almost everybody pushes up taxes somehow--like drinkers, smokers,

overweight folks, etc. pushing up healthcare costs.

[tomm2thumbs]

2. sounds to me like the foreclosure crisis is finally getting noticed in Washington

too little, too late if you ask me

and making it easier for people to 'leave' than 'stay' in their homes - how nice, given all our tax money that was dispensed sight-unseen to the banks

[No Elephants]

78. It was noticed. A law was passed, but not many could take advantage of it.

Whether the original law was cynical or just incompetent, I cannot say. But, I wonder how come Washington did not know that the outstanding amount of many mortages exceeded the market value of the home?

[Vincardog]

3. What economy’s tentative recovery? Has anyone seen any evidence of this tentative recovery?

[njlib]

4. I don't understand

How is this going to help anything? People are still going to lose their homes. From what I've heard, the banks are the ones who aren't cooperating with the program, so why don't they force the banks to negotiate with homeowners and let people keep their homes? How about an automatic drop in interest rate effective immediately? My rate is 6 3/8...having it dropped 2 points would be a big monthly savings.

[Lance_Boyle]

8. rate drop - why don't you refi?

"The govt" doesn't need to do it for you - rates below 5% are readily available now.

[jaksavage]

11. The refinance

would require an appraisal.
The appraisal might come in lower than the loan value.
The bank would require more money down to close the loan.
The person has no money to put down.

[WriteDown]

17. No skin in the game...

That sums it up. Everyone should be required to put 10% down without exception.

[Autumn Colors]

47. I did put 10% down and have a fixed rate 30-year mortgage

But the value of my house has dropped so much that it's now underwater by more than $10,000. I'm making my payments, but my business isn't as busy as it was (self-employed). I'd love to refinance, but I'd have to come up with about $25,000 to AGAIN put down so I would AGAIN have 10% equity in my house. I already had put down $20,000 when I bought this house. There's no way I could come up with another $25,000 plus the fees to refinance. My mortgage changed hands from my Connecticut bank to Countrywide and is now at Bank of America. I already spoke to a small (healthy according to bankrate.com) community bank here because I would love to move my mortgage to their bank even if it wouldn't save me a dime - just on principle - but it doesn't look like it's going to be possible unless I can tread water until the value of the house goes up enough to where I have 10% equity in the house again.

[NashVegas]

56. It's Unfortunate You're Underwater

But it shouldn't hurt you overmuch, if you bought to have a long-term home as much as if you bought as an investment.

[No Elephants]

81. Losing a lot of the value of your home and paying higher than market

interest rates while your income decreases shouldn't hurt a homeowner as much as it might hurt an investor?

[No Elephants]

69. I think you misunderstood jacksavage's post.

It was about refinancing. If the value of the home was less than the mortgage, you could not re-finance unless you ponied up the difference. That is not the same as buying a house with no money down.

I'm not aware of a lot of deals where you could buy a home with no money down and interest only payments. If you could, the interest was probably quite high. So, any way you slice it, the home buyer would have had skin in the game.

[jaksavage]

73. Some folks did get 100% mortgages

With very low rates for the first few years.
They would take out an 80% mortgage and a 20% mortgage.
Five year balloon payment, giving them time to sell and move or refinance.
It worked in the up market but not in the down market.

[No Elephants]

83. That would be two different lenders.

Usually, borrowing to pay the down payment (which the 20% mortgage would represent) is forbidden by the terms of the mortage (the 80% mortage). And the lender making the 20% loan would know that.

However, many of those borrowers were likley betting on their own futures.

Example: a lawyer just out of law school, with no cash, but a job and what seemed to be a bright future, with healthy annual raises and bonuses. The economy crashes. Business is bad, so less work for business lawyers. Raises don't come. Salary goes. Etc. And the bottom falls out of the housing market.

Still not a case where a buyer bought a house the buyer knew from the jump the buyer could not afford and would not be able to sell. But, maybe someone who violated the terms of the 90% mortgage.

In that case, I have no sympathy for the borrower or the 20% lender. But, I doubt any law is going to enable that borrower to get relief from both those mortgages.

[WriteDown]

95. Nonsense....

80/20's are very common. They're done for one main reason. To bypass mortgage insurance requirements.

[jaksavage]

71. If your home value drops 30%

you are under water.
no skin in the game.

even with 10% or 20% down.

[No Elephants]

84. If you made a down payment, you have skin in the game.

[Oregone]

19. Closing costs and amortization resets can often make a refi a losing game

No matter how I run the number, even cutting interest 2%, refing my house would set me back 5 years or so in wealth accumulation. Its only wise if you can't make the payments I guess (which will set you back further anyway).

[njlib]

20. I'd love to refinance

but I've been unemployed for 13 months! A relative was pushing me to try the program a few months ago and I had to explain over & over again that my only income was unemployment. I finally think I got throug because she hasn't brought it up since. It would be nice if lower rates were offered to the jobless, since the government and the banks have brought us to where we are today.

I'm finally done with nursing school and will be taking my licensing exam tomorrow. I have to pass on the first shot, get my license, and hopefully find a job before unemployment runs out in 3 weeks!! With what's left of my savings, I would probably be able to go a month without any income and then everything's going to fall apart.

I closed on my crappy little house Halloween of 2000. Two bedrooms, 1 bath, 34x24 for $120K, definitely not a McMansion or more house than I could afford with a regular paycheck. I've kept up with the mortgage and my truck payment, but stopped paying my B of A credit card in August. Once I get a job, it'll be time to play "let's make a deal" with them. So depending on the hit my credit's taken from B of A, I will definitely be looking into refinancing once I'm working for a time, but until then...

[wackywaggin]

25. Great post!!

You don't know how many thousands of people are in the exact same position you are. Good luck and hang in there with the rest of us doing the same thing. I only hope that the Government doesn't have something more sinister behind what is going on now.

Heretic Wack

[njlib]

43. Oh, believe me I know there are millions of people in my position

I bought a small house for me, my son, and at the time, two dogs. We've since added a few cats, but that's a story for another thread!

Anyway, I made sure I got a 30 year fixed mortgage and spent $40K less than what they said I qualified for. You have no idea how happy I am that I did that! Yes, it would've been nice to have a newer house with an extra room or extra bath, but I was afraid of not being able to pay the mortgage if something happened. Now, I've got the crappiest house on the block, it's literally falling apart inside & out, because of what happened over the past couple of years. Going to nursing school at night cost me my job because they were paranoid about me leaving them high & dry, even though I had told them SEVERAL times that I wouldn't be done with school until the end of January 2010. This all hit the fan back in 2008 and I ended up having to take a $15k pay cut from the year before because bonus money was withheld from me for being a "traitor"!

My income for 2007 was just at $70k, then went to $55k in 2008 and I was fired in February 2009. I was paid $26k from unemployment in 2009. That's a long way to fall. I took my 401k money to supplement unemployment and have about $2500 of that left. I did my taxes early this year and that's when I had to take the hit on the 10% penalty for the 401k withdrawal. I had them withhold the 20% for taxes and have had unemployment withhold tax, but it was still a big hit. So, for a little over two years I really haven't been able to do anything to fix up the house and that adds to the stress of it all.

I just got off the phone with a friend who lost his job 3 weeks ago and is freaking out about how he's going to survive. It just really sucks all around!

[Dappleganger]

29. Good luck on your exam tomorrow! nt

[njlib]

45. Thank you!

I'm the first from my class to take it and will be getting all kinds of e-mails, texts, & phone calls tomorrow asking how it went and what was on the exam.

[Demeter]

36. Best of Luck, Dearie

Got my fingers crossed for you!

[njlib]

46. Thanks!!

I'd be crossing body parts too, but my blood pressure is already through the roof! I can't be cutting off my circulation anymore than it already is!!

It's going to be 48 hour wait for the "unofficial" result, which is just pass/fail. I don't know what I'm going to do if I fail...I've got 3 long sleepless nights ahead of me!

[No Elephants]

85. I LOVE nurses. I wish you all the best.

[njlib]

90. LOL

Thank you so much!!

Hopefully by this time tomorrow, I'll be able to put LPN after my name and get a job! Once I start getting a paycheck, it'll be onto RN classes at my community college. This is my second career, I'm 43, so I have to forge ahead with my education QUICKLY!

[EFerrari]

13. It's another part of the land grab. It helps the banks. Again.

[izzybeans]

38. It would have helped my wife and I.

We were forced to relocate looking for work and could not sell our home.

We opted to rent it. After doing credit and reference checks we decided to rent to some foster parents at a substantial monthly loss. They eventually stopped paying, trashed our home, and left us with nothing.

After just coming out of the short sale process I can tell you that many people are in our situation. Our Realtor told us nearly half of all homes listed in our former hometown were shortsales and that banks were sitting on offers waiting for them to go into foreclosure. This town lost about 60% of its manufacturing jobs because of three plant closings. No one is working. The short sale option is better for the homeowner who is going to lose the home anyway, as we were. We could not pay both rent and a mortgage, with childcare, etc. It helps you if you have no other options and it helps your neighbor by not allowing the market value to drop to the level of a foreclosure (which would most likely be bought up by a speculator). We sold our home to a woman who is buying her first home, has a good job, etc. I'm happy for her and sad to see this house go. We miss it and cry about it when we reminisce about what could have been if I could have only found work there. I could not. And waiting around any longer would have been unfair to my children and my wife.

Luckily we were FHA and so Fannie Mae expedited the offer we received. We are out about $25,000 on lost rents and damages from the home. This does not count the 48% drop in equity in the three years since our home first went on the market, which took us pretty far below what we owed on the home. The banks are pretty dense when it comes to this stuff, so if it comes down to it, be prepared to make a persuasive case for why its in both your interests to do this. The person we dealt with had never even consider any other option than a foreclosure before. Our Realtor had to handhold them through the process. We even have a letter from them now stating that we had fulfilled our obligations with them and our credit dipped way less than what we predicted when we started this.

[ThomThom]

50. If ever ones loan was dropped to 4.5 think of the boon to the economy

it could turn the economy around with all that money being spent on other things

[WriteDown]

6. Wonder if they'll pay ME.

Can I negotiate my fee to leave? :)

[No Elephants]

87. You'll leave for a fee? How much--and do you have a paypal acct?

[hughee99]

7. Not the best scenario, but under the circumstances

Someone who just bought "too much house" will have the chance to get out of some trouble. They may be able to sell, downscale, and still live in a house they own. Those who have already downscaled as far as they can go will be out of luck on this program (though other programs may help).

For 75 billion dollars you could give each and every one of the 5 million home owners $15k. If we've spent this money already and only managed to help a "small slice" of them, perhaps it's time to reevaluate that program as well.

[DURHAM D]

10. Won't really work. The lenders are not staffed to manage the

process and it will still be nearly impossible to find the "decision maker".

Also, just a few short sales in one neighborhood devalues all property in the area and puts more homeowners underwater on their existing loans. And someone anticipating a move (selling their house) in the next year or two will be looking at lower value and possibly going underwater at listing time.

[Jkid]

16. Another problem, finding another place to live.

People still need to find a place to live, at least for rent. Finding an affordable apartment is difficult.

[Myrina]

18. ... are they fucking kidding?

Paying people to walk away from home-ownership instead of forcing the banking criminals to help them stay in their houses? Home ownership is supposedly the 'crux' of the American Dream, middle class values and all that. Pretty soon we're going to see that part of the Constitution re-enacted that only allows white male land-owners to vote, then those who were paid to walk away from their homes will be even closer to 3rd class citizen status.

Not to mention, people walking from ownership = reduced property tax incomes for cities and local gov'ts which will lead to additional cuts in services/schools etc.

What the hell is this Administration trying to do to this country????? :nuke: :nuke:

[jody]

22. Finish what Dubya started, bankrupt the nation so the oligarchs can buy up everything for 1cent /$.

[dixiegrrrrl]

68. Hard as it is to admit, that is the pattern I am seeing, jody.

The 5 biggest banks now own over 60% of all mortgages, btw.
and over 80% of all credit cards.

The goal is dry up the middle class.
The rich have no allegiance to living in the USA..their yachts can take them easily to whichever Island they have bought, whichever seaside they want to buy.

Karma...we are now only seen as "resources" to milk and mine, and when we die, there will be more
"consumers" on this over populated planet to buy crap from the few who own most of the things for sale.

[wackywaggin]

24. How about letting people stay in their homes

and pay what they can afford until they find a job and a true recovery is underway. These folks need a place to live and it is certainly cheaper staying put, than moving. Moving expenses are 1000.00+ so why not use that money to keep paying what you can and the bank saying OK to that. The bank doesn't really want your home anyways because that is not their business.

[WriteDown]

27. How about a moratorium on any mortgage payments for 5 years to those that want it?

I'm in.

[TwilightGardener]

53. I've said before, I think banks should be forced to accept a moratorium

on collecting mortgage for a certain period when the homeowner can provide evidence of recent financial hardship/unemployment. Give people six months or a year to get back on their feet, for many that may be all it takes to find another job or just catch up. For others, who are in hopeless positions (being way underwater and/or just having bought way too much house for their income) do short sales if possible.

[WriteDown]

66. Why deny it for anybody?

I say let everyone who wants to participate be allowed to stop payment.

[Imajika]

89. Yeah, I'm in too!

Of course a program like this would mean the end of banks writing virtually any new mortgages, housing sales would collapse, and financial institutions would crumble overnight, but meh, who cares - at least I won't have to make payments on my mortgages for 5 years! Woot!

At the end of my 5 years of living at my homes with no mortgage payment, can I reapply for another 5 year moratorium? 10 years might be more convenient for me.

[mn9driver]

28. My cousin is 300K under water.

He needs a refinance due to the nature of his current loan, but in order to do that he needs to come up with $300,000 dollars. $1500.00 is not going to help him or the literally thousands like him. This property is in the Detroit area where you can buy a very nice 4500 square foot brick mansion in an established suburb for about $299K these days.

The economic crash and the complete collapse of the auto industry (in Detroit) and US manufacturing (in general) caused this. $1500.00 checks to help pay your bankruptcy attorney bills when your bank sues you for the short sale is insane

[WriteDown]

30. How long has he been in the house? nt

[mn9driver]

31. About 12 years. Bought it for $699K, paid it down some

then took out a construction loan 5 years ago to fix some structural problems, add a sun room and enlarge the kitchen--short term loan and the work took a couple of years. The plan was to refi and roll it into the outstanding mortgage balance. No bank will touch it due to the collapse in value, and the loan is due. Now. He's basically SOL.

[WriteDown]

32. 699K?

Wow, that must be some house.

[mn9driver]

34. In 1998 that was the normal price for these homes.

My parents sold theirs just a few blocks from there at the same time for about the same price--it didn't even hit the market before it was snapped up with a cash offer. They paid about $40K for it back in 1968.

[WriteDown]

67. Wow, those are Long Island type prices. nt

[LiberalFighter]

42. Need to foreclose on the Bush and Cheney homes.

[havbrush]

44. Pay homeowners to sell

I got some early details on this plan from HP. It calls for 1,000 dollars to go to the first morgtage holder, 1,000 to the owner and 1,000 to a second mortgage holder. This is going to be another bust. $1,000 dollars is going to get sneared at by the first and second mortgage holders. I know, been there done that. After nearly a year, with a very patient buyer in hand, we finally got our first mortgage holder to agree to a short sale, but the second wouldn't agree to the $3,000 the first offered them. We came up with 3k and the buyers came up with 5k and the second was about to agree, then the first backed out of paying closing costs which they had initially agreed to, then we had to lower the offer to the second in order to pay closing costs,then they backed out and sold the loan. We had to start all over again with the new second mortgage holder, then the first threatened foreclosure if we didn't get the second to agree in 30 days. The second asked for 30k. We still have no agreement and who knows what's going to happen. So $1,000 from a government program is not going to do anything but make these greedy banks laugh. It's certainly not going to stop any foreclosures.

[Robb]

48. What nonsense.

From the article:

Major lenders seem to be taking a cautious approach to the new initiative. In many cases, big banks do not actually own the mortgages; they simply administer them and collect payments. J. K. Huey, a Wells Fargo vice president, said a short sale, like a loan modification, would have to meet the requirements of the investor who owns the loan.

“This is not an opportunity for the customer to just walk away,” Ms. Huey said. “If someone doesn’t come to us saying, ‘I’ve done everything I can, I used all my savings, I borrowed money and, by the way, I’m losing my job and moving to another city, and have all the documentation,’ we’re not going to do a short sale.”

...I'm all for helping people who are at the end of their rope. But banks seem to be requiring people be at the end of their rope. What about a little bit of preventative care? What can this administration do for people who are circling the drain, rather than in complete freefall?

Oh, I know. Get them jobs so they're not out of work so long they can't pay their mortgage.

[mn9driver]

54. Here's the best part of the deal:

If you get foreclosed on and evicted and THEN they sell your house at the Sheriff's auction for less than you owe them-------they can sue you for the difference, plus their legal costs.

[newscott]

49. Where were they 2 years ago when i sold at a loss?

[Happy Hippy]

51. Common sense could prevail?

The government should issue a standard calculation. The calculation would help determine whether or not you could have afforded the house prior to 2007. If you bought more house than you could have afforded without a huge upswing in real estate value, then you get no help.

[BreweryYardRat]

98. That's actually not a bad idea

Speculators, home flippers, investors, whatever you want to call them -- fuck 'em. You shouldn't be gambling with your home anyway, because if you gamble, it's inevitable that sometimes you're gonna lose.

[Happy Hippy]

102. Yeah, it wouldn't be hard to do either.

The industry standard in England is 4x salary for single applicants with a 10-25% deposit depending on credit worthiness. 3x salary for joint loan applicants with 10-25% deposit depending on credit worthiness. I think 3x salary across the board sounds reasonable. If you "bought" a 400,000$ house on your 50K salary, b/c you were going to sell when the house "valued" 800,000$ two years down the road - then sorry Charlie.



Now, common sense rarely exits within the minds of legislators.

[AzDar]

52. This is just beyond stupid...

:wtf:

[Joanne98]

57. This is a stupid idea. Why not just CRAM DOWN the price?

STOP TRYING TO SAVE THE BONDHOLDERS!

[CreekDog]

58. Oooooooo, I want this

I'm so sick of being HOA president! :rofl:

[Earth_First]

75. Still waiting on the program that offers the responsible buyer an incentive...

:shrug:

[No Elephants]

88. There was a tax deduciton . Up to $7500, The window to make the purchase was a year,

then they extended it. I don't know if there was another extension.

[Politicub]

91. This administration's spending priorities are bizarre

Maybe this will be a good thing, though. I guess if you're underwater with a house, this could give you some relief from the prospect of moving elsewhere.

Why does it mean that "lenders will be compelled" to accept a short sell arrangement? Is there some sort of penalty for lenders if they don't, or is this just from the goodness of their hearts?

[PSPS]

92. More rewarding of bad behavior (this time, liar's loans) by obama with my money.

If someone is in a house they couldn't afford to buy bought anyway with a NINJA, it should be foreclosed. This is just more propping up the still-artificially high housing prices. The end result would be the taxpayer making whole to the bank every short sale -- essentially gifting the next owner the house on the taxpayer's back.

Another idiotic idea from bush's third term.

[MadHound]

100. Hmm, when is there going to be a program that rewards those of us who were responsible,

Those of us who put sizable down payments on our house, who didn't get ARM's or liar's loans, or a house that was more than they could afford? When is there going to be a program that rewards us for doing all the right things?

Instead, our tax dollars bailed out the banks on one end, and now are rewarding the idiot buyers on the other end. I guess our reward is simply to pay and pay for the mistakes of others without end.

[bobo4u]

103. Yep.

They call it 'Moral Hazard.' I call it rewarding crooks at the expense of honest people.

Funny...I was raised during an era when they said that crime didn't pay. Today, the opposite is true. Why not put all the honest people in jail for being fools.

[yurbud]

101. why not give everyone an interest holiday on their mortgage until the recession is over