Assume I'm an idiot....

[teenagebambam]

....an explain the coming housing rescue plan to me in clear language, please? And whether or not there's anything in it for me?

To wit: I am NOT in foreclosure, I pay my mortgage on time every mointh, BUT:

I bought the house I could afford, found several problems that were hidden from me at the time of sale, and now have maxed out my HELOC fixing said problems.

Not ALL the problems are fixed, but the Bank (Bank of America) just reduced my available credit based on the falling value of my home.

I have tried and tried to negotiate with the bank only to be told that the only way I can "appear" to need help is to STOP PAYING MY MORTGAGE and initiate foreclosure, which I'm not willing to do. (Yet.)

Nonetheless, I have cut every corner I can cut, am living paycheck to paycheck, have used up my savings and if anything else goes wrong with the house or the car I'm screwed. (Maybe I should count myself lucky - I have NO credit card debt, so by "screwed" I mean I would have to start living on credit.)

[liberalmuse]

1. Well, I'm not too bright, either, but the way I see it...

Fannie and Freddie will be bailed out with our tax dollars, our children's tax dollars, their children's tax dollars, and so on and so on to the seventh generation. The good news is, the global economy won't take a big hit, the CEO's will still get to keep their vacation homes and bonuses, and investors around the world won't feel too much pain. If you are one of the many Americans struggling to pay your mortgage, you are still fucked. No soup for you!

[Uben]

2. It's cheaper to pay rent

No property taxes, no overhead expenses, no insurance. When the place gets trashed, just move!







(Yeah, I'm a landlord. I own apartments and lease houses. It's getting increasingly hard to make a living doing such.)

[Skink]

4. Renting is just paying somebody else's property tax.

[CrispyQ]

3. Would you consider taking in a renter?

That would be last on my list of things to try, but I've lived paycheck to paycheck & it sucks -- possibly even worse than having a renter.

We were caught in the S&L crisis in the late 80s & they would not negotiate with us at all.

Good luck.

[Warpy]

5. There's nothing in it for you, not now

Right now the focus is on making sure the institutions that get your money every month remain in business. This isn't entirely a bad thing; Fannie and Freddie were set up primarily to benefit us, and only later were privatized to get our debt off the government's books while they were squandering billions in Vietnam.

Non disclosure is a pretty big deal. What you can try to do is go after whoever failed to disclose obvious problems. If the problems were serious structural problems that a seller should have known, you might have a case.

Good on you for staying out of credit card debt. That's what's going to sink people who haven't been sunk by predatory mortgages.

Good luck. As someone who has spent years below the poverty line, I can tell you it can be done if you're willing to make some unpleasant decisions and resign yourself to boredom.

[On the Road]

6. At This Point, There is Plenty of Money in the System to Lend

but there are too many houses on the market at too high a price, fewer investors, and fewer buyers with means and motivation to buy. Lenders are overcompensating for past mistakes by clamping down on existing borrowers and new applicants. However, houses are still selling and it is still possible to get a loan with good credit.

The situation with the bailout can be summarized as:

-------------------

- Less than half the mortgages written are kept by the bank or lender. The rest are sold in the secondary market. FNMA and FRMC hold approximately half the mortgages the country.
- Like other lenders, FNMA and FRMC depend on a certain percentage of people paying their mortgages to pay their own obligations.
- Since more borrowers are missing payments, FNMA and FRMC are at risk of defaulting on their own obligations, which normally means they would file for bankruptcy.
- Bankruptcy could proceed to the point where FNMA and FRMC would cease operations or stop buying new mortgages.
- In this event, banks and mortgage companies would have to cut the mortgages they write by about half.
- This would make it much more difficult to buy a house and lead to a further drop in sales, home prices, foreclosures (because owners have no one to sell to), and generally make all the current problems much worse.
- This could easily lead to a complete collapse in housing, lending, and the economy -- in other words, lead to a new depression. This is a very alarming possibility.
- The real possibility of this scenario had led to panic in the financial industry, which in itself makes things worse.

- To prevent this, the federal government has promised to guarantee that FNMA and FRMC will be able to keep paying their own obligations and keep their operations running.
- If FNMA and FRMC do not fail, the government will pay nothing.
- The theory is that if these institutions can keep running, the housing and financial markets will eventually work through the high prices and excessive stock and the economy will recover.

--------------------

Personally, I think this is a reasonable idea, and something that absolutely has to be done. I do think the government should benefit from a bailout, for example by receiving stock in the bailed out companies. (This may be part of the plan; I haven't followed that closely.)

What's in it for you is that your house retains most of its value, the economy doesn't' collapse, and that if you ever need to sell, you will be able to.

[DailyGrind51]

7. Hey, I'm with you on this deal!

My house is paid off only by "doing without". I don't have a cell phone or subscribe to cable or satellite. I only buy used cars, pay cash for them, work on them myself, and keep them until they stop running. Do my own concrete, plumbing, and electrical repairs. Pay cash, whenever possible. My idea of "eating out" is the daily sandwich special at Subway. If I ever lose my group health insurance and become ill, will anyone offer ME a bail-out? Hell, no! However, I have already paid for my cemetery plot and head stone!

[teenagebambam]

9. Maybe I'm just whiny

Yeah, on second thought, not maybe. My partner and I are mostly in debt due to student loans (our combined payment equals our monthly mortgage payment) and the two of us make enough money on paper that it seems like we should be socking away several hundred dollars into savings every month. But we're barely scraping by. And we're not extravagant either. (To answer CrispyQGirl, the topic of renters has come up, but it's a last resort - mostly because it would suck for the renter. They'd have very little privacy.) The last "luxuries" we have left is cable and internet access, and I think they're not long for the world. I shudder to think what happens when our paid-off car dies, we couldn't afford a payment even on a used one. I'm SURE I make more than my parents ever did, and THEY raised four children! Okay, I'm done venting. Carry on.

[Warpy]

10. I kept internet access

as my entire entertainment and mental health budget. I was grandfathered into cheap DSL from Qwest and it saved what goes for my sanity.

I never had anything but rabbit ears until 2 years ago. If I have to go back to them, it's no big deal for me.

Cheap dialup is ten bucks a month. I'd skip meals to afford that much.

[DailyGrind51]

12. Internet access is my "luxury of choice" for both mental health and

finding teaching and consulting gigs. After an employer closed my office in 2000, I retrained for a new field by going back to grad school to get teaching certification and another masters, only to find out that school districts aren't interested in hiring 50-year-old new tenure-track teachers when there are so many perky 23 year-olds looking for teaching jobs in my state. I did get a substitute teaching position with health coverage, but lousy pay.

[valerief]

8. I don't think anything is passed to help people. It's all to help the ruling class.

Teevee says they're to help us so that we won't revolt. That's all. Never expect help, because you'll never get it. Unless you're a billionaire. It's their ball and their game and they don't share.

[notesdev]

11. Another desperate attempt to support unsupportable housing prices

and a bailout for banks. Housing wouldn't be nearly as expensive as it is without the mortgage interest deduction, that doesn't come down to savings for the borrower, it comes down to higher prices for houses.

Banks that staked their business on making bad loans ought to go under - and the same goes for other financial institutions, even Fannie Mae and Freddie Mac. Bailouts create the moral hazard that the next time around the same exact things are going to happen for the same reasons, and people will do so on the belief that once again, if the shit hits the fan, the taxpayer is going to suck up the losses.

[DailyGrind51]

13. Housing prices were inflated by the real estate industry to pump up commissions.