Edwards proposes "National home rescue fund"; help Americans about to lose homes on predatory loans

[Bluebear]

Regardless of our nominee I would love to see this explored.

====

Edwards called for a higher, indexed minimum wage, stronger labor laws, limiting what drug companies can charge, an end to construction of nuclear power plants, coal-fire power plants and to tax breaks for American companies going overseas. He said he was against new carbon-based fuels, and for a "national home rescue fund" to help Americans on the brink of losing homes from predatory lenders. Edwards didn't promise to solve all of the issues, calling such talk a " fantasy." "What I will tell you is I will fight with everything I've got ... to bring about the big, bold change that America needs," he pledged.

http://www.fosters.com/apps/pbcs.dll/article?AID=/20070827/FOSTERS08/708270073

[FrenchieCat]

1. I agree. This predatory business is not good, and it shouldn't have happened.....

in particular considering that the bankrupcy laws have been changed.


Edwards, Foreclosure Critic, Has
Investing Tie to Subprime Lenders

The Wall Street Journal has identified 34 New Orleans homes whose owners have faced foreclosure suits from subprime-lending units of Fortress Investment Group LLC. Mr. Edwards has about $16 million invested in Fortress funds, according to a campaign aide who confirmed a more general Federal Election Commission report. Mr. Edwards worked for Fortress, a publicly held private-equity fund, from late 2005 through 2006.
http://online.wsj.com/article/SB118728685546999884.html

Guess this is the "help" he was talking about......

Asked about the matter, Mr. Edwards yesterday pledged that he would personally provide financial assistance to New Orleanians who are facing foreclosure by Fortress-affiliated businesses or have lost their homes already. "I intend to help these people," the former North Carolina senator said.

[Bluebear]

2. Can anything be about policy on this board, or are you just on an anti-Edwards kick?

[saltpoint]

4. Your second guess is the correct one, IMO.

Howdy, Bluebear. Always good to see you on DU.

We're only days away now from SHINE -- Joni's latest.

[Bluebear]

5. Thank you OC!

I haven't been on GDP much before, I think I will cool it until we settle on a nominee lol!

Can't wait for SHINE!

[saltpoint]

8. SHINE is going to light our path this fall. I can feel it in my blood & bones.

She's tops, she is.

[waiting for hope]

6. No kidding....

God forbid anyone said anything (aghast) about Clark.....I just think someone pees in her cornflakes every morning just to set the tone.

[FrenchieCat]

15. So it is ok for you to insult me and make it personal?

While I'm talking about a politician running for the highest office in the land who appears to be proposing some restitution for those victimized via subprime predatory lending...which happens to be something the politician was linked directly based on his employment with Fortress, the Hedgefund during the time the subprime lending was being predators?

OK. I see how this forum is supposed to work now.

Talk about the issues, but not really...then insult DUers...talking about someone peeing in theircornflakes, and that's just super dandy. Got it. :thumbsup:

[FrenchieCat]

12. I believe that my post was relevant. to the OP.

Should I have only used a one line praise or something?

I stated that this must be his answer to an issue that has dogged his campaign.
http://www.msnbc.msn.com/id/20321742/
http://blog.washingtonpost.com/the-trail/2007/08/17/post_27.html
http://www.salon.com/tech/htww/2007/08/17/subprime_edwards/index.html
http://vatul.net/blog/index.php/1438/
http://www.iht.com/articles/ap/2007/08/17/america/NA-POL-White-House-Edwards-Foreclosure.php
http://news.yahoo.com/s/ap/20070818/ap_on_el_pr/edwards_foreclosure
http://www.thetowntalk.com/apps/pbcs.dll/article?AID=/20070817/NEWS01/70817052
http://busmovie.typepad.com/ideoblog/2007/08/john-edwards-co.html

Should I be putting a gag over my eyes too and just become an Edwards' bot? :shrug:

[Bluebear]

14. Not everything is about campaigns. This issue is about PEOPLE.

[FrenchieCat]

17. So Even if Edwards is the one that proposes a process .........

that can't happen till he is president, I can't talk about him or his campaign in reference to it....only people?

Didn't realize that there was a script somewhere on how to respond appropriately to Edwards Presidential campaign proposals as opposed to those of other candidates. My faux pas.....

[Bluebear]

18. My but you're excitable!

[FrenchieCat]

19. Thanks!

Must be the exclamation points, the bold and underline and the all caps or something! :shrug:

My hubby of 28 years says the same thing! :)

[Bluebear]

20. No, it's the manic "Ah I see how it is! I see! So this is how it works around here!"

Holy schneikies!

[FrenchieCat]

22. Well then, I'll just stick to the issue, and allow you to continue to judge me!

Thanks for your counsel on me.

Now, I'll get back to discussing politics on this political forum and post about what politicians are saying, and how much of it is simply bullshit for the purpose of getting to the throne. K? :hi:

[Bluebear]

23. Mm-hmm. "K."

[Skittles]

64. YES

[Name removed]

49. Deleted message

Message removed by moderator. Click here to review the message board rules.

[madrchsod]

25. do you have any institutional investments?

401k or other investment plans? if you do you may have invested in a fund that has sub prime funds in it`s portfolio...

[FrenchieCat]

26. I am a self employed accountant.......I know exactly what I am invested in......

and we (my husband and I) also do real estate purchase loans and refinancing, but we never did subprime financing. Most who needed subprime were those with low credit scores....and we decided early that subprime loans could and most likely would become problematic.

[madrchsod]

27. my savings and loan officers saw this coming also..

last year they cut equity loans from 100 thousand to 50 thousand and started in january of this year limiting consolidation loans to 5000. they won`t sell the mortgage and won`t go over 7.5 over the life of the mortgage so they have to be "responsible" to us shareholders.

[1932]

29. You are an accountant and you didn't know how much the child care credit was?

I guess if you're criticizing Edwards, facts aren't so important. What matters is impact.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=3404565

[FrenchieCat]

38. Sorry, but you were wrong then, and you are wrong now about

Child care credit. The Expense to be used to "figure" the credit is the figure that you mentioned in that post. HOWEVER, the actual child care credit is based on a percentage of that expense and one's income bracket.

To make it simple, how much of an expense one can take (what you concentrated on) does not equal the actual credit you will receive (what I was taking about), since you will only get a percentage of the expense based on how much you earned; see table showing what percentage you will be allotted on that page 10. Those are the important facts.

For more education on these facts, please go to the link below which will takes one to publication 503. First read page 8, chapter titled "how to figure your credit", which clearly states, "your credit IS A PERCENTAGE of your work related EXPENSES..." and then go to page 10, and read paragraph labeled "Amount of Credit" - and then next page titled, "worksheet to figure the credit".

http://www.state.nj.us/treasury/pensions/epbam/exhibits/non-dpb/irspub503.pdf
The link is for a 2005 publication soley because that is the publication link you used to attempt to refute my post at the time.....but unfortunately for you, your refutiation was not only incorrect but it was also misleading.

[1932]

58. You need to read Form 2441

Thanks for encouraging me to look up the current form, because the credit has been increased to $6000.

http://www.irs.gov/instructions/i2441/index.html

[FrenchieCat]

65. I hope you are not preparing taxes or giving advise........cause it won't work out well

for those who listen to you....

Example noted below--
$6,200 was the married couple's child care expense.
They can claim up to $6,000 as their expense (as the amount they spent was over the limit by $200.)

HOWEVER, it is Line 11 that is the credit they can take

What I'm talking about = The Credit ends up being a fraction (percentage) of the actual expense based on either a percentage on the smallest of the two earned income or the only income for a Head of Household OR it is limited to NOT MORE the actual Tax liability.....

IN CASE YOU NEED A PICTURE! :hi:

[1932]

66. Frenchie, anyone who can reduce their taxable income by $6000 is doing pretty well

Which is what you're doing if you fill out part III on the back for people who get dependent care benefits -- those are people who have their taxable income reduced by $6000, but recover that amount be submitting their receipts to their employer or a third party company that has a contract with your employer. And that's also what that formula is calculating.

Thanks for the 1040A form. What if your total tax (ln 28) is greater than the credit? You get the full credit!

How many opportunities are there for working people to reduce their taxable income by that much?

This is good. How can you deny that?

Don't you feel like it's a good thing if you can still get the credit even though one spouse didn't work?

[1932]

67. By, the way, more about Dependent Care Benefits (are you familiar with form 2441?)

Dependent Care Benefits

These include amounts your employer paid directly to either you or your care provider for the care of your qualifying person(s) while you worked. These benefits also include the fair market value of care in a daycare facility provided or sponsored by your employer. Your salary may have been reduced to pay for these benefits. If you received dependent care benefits as an employee, they should be shown in box 10 of your 2006 Form(s) W-2. Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with
code N.

Who Can Take the Credit or Exclude Dependent Care Benefits?

You can take the credit or the exclusion if all five of the following apply.

Your filing status is single, head of household, qualifying widow(er), or married filing jointly. But see Married Persons Filing Separate Returns on this page.

The care was provided so you (and your spouse if filing a joint return) could work or look for work. However, if you did not find a job and have no earned income for the year, you cannot take the credit or the exclusion. But if your spouse was a student or disabled, see the instructions for line 5.

The care must be for one or more qualifying persons.

The person who provided the care was not your spouse, the parent of your qualifying child under age 13, or a person whom you can claim as a dependent. If your child provided the care, he or she must have been age 19 or older by the end of 2006.

You report the required information about the care provider on line 1 and, if taking the credit, the information about the qualifying person on line 2.


Now, do you understand? Edwards is saying that couples should still be able to take advantage of this pretty significant credit (reducing your taxable income) even if an unemployed spouse is the care giver and is not a student and is not looking for work. Most people make this choice because a job still doesn't cover the cost of decent day care, plus it isn't worth not seeing your kid for 40 plus hours a week. Why take a job for 15,000 a year in order to qualify for a 6000 tax credit to offset 10,000 to 15,000 in day care expenses? Spending time with your child is priceless. But it also has opportunity and actual financial costs. A credit to cover those costs (and to not force parents into crappy jobs) would be nice.

Next time you advise one of your clients about this credit which you apparently didn't understand until now, can I get a part of your fee?

[FrenchieCat]

69. This is the bottomline.......aka, the facts:

The credit is not $6,000......although the maximum expense to get the credit is.

In reference to employers paying you or your provider for child care......nice thought, but not common at all among the working poor.

In 2006, A couple making $50,000 (with each making $25,000) who have an expense of $125 per week in childcare expenses (a reasonable amount) for 48 weeks for one child end up paying $6,000 in child care expenses per year and what they will "get" for that expense is a $600 Childcare (directly reducing their tax liability) credit. If they paid over $6,000 in child care expense, the credit doesn't increase.

Based on my calculation with my Lacerte professional tax program, this couples' Federal Income tax liability will be $3,719 if they do not itemize.

What they owe or get as a refund in income tax will be solely based on what they paid in income taxes plus they will be given the $1,000 child tax credit (which is not the dependent child care credit) plus the $600 Dependent child care credit. And so.....they will realize a net credit of $1,600 to add to what was withheld from the paycheck in Fed Income taxes as "paid in" on their tax liability. In other words, the $3,719 tax liability they have will NOT be reduced by the $6,000 in childcare expenses they spent.

Finally, I understand the proposal that Edwards has made, and certainly it is better than how the credit works now. I never denied that part; simply the part where you talk about a $6,000 credit because it doesn't exist in reality.

You called me "wrong" in how I interpreted the bottomline tax credit available to taxpayers in this thread, and you also attempted to call me wrong in the other thread......but I wasn't. You are the one that was wrong. It's that simple.

The more you try to spin how right you are, the more wrong you will be....because the facts and the calculations are what they are, not what you would want them to be.

The end.

[1932]

71. Never heard of SHPS?

[Donnachaidh]

33. I see -- the problem is that you have a smaller financial *ball* to play with

And anyone with a larger amount of wealth to invest is automatically suspect. Then of course, you'll go on a tirade for all the Dem candidates who hire others to do their investments? When can we expect the same sort of tactics to be applied to the others? :eyes:

[saltpoint]

3. That damn John Edwards.

Why can't he just be satisfied with the president's tax cuts?

How it works is, the president and Dick Cheney arrange for massive boulder-chunk tax cuts for all the people in the ruling class who don't even NEED the tax cuts, and in turn, those ruling class owner-types will create jobs for poor people.

It worked for Reagan, it'll work now, if only these liberals like John Edwards would get a clue and stop criticizing our president. Our economy's in great shape, and we're bringing democracy to the Middle East. And all Edwards does is caterwaul about economic justice and fair play for everybody. God, he's such a pest.

Now here he is AGAIN, pissing and moaning about people being able to have a decent standard of living. The Bush administration has worked over half a decade now to eliminate the sheer notion of economic democracy. It's put neglect and abandonment back on the map as signature traits for the GOP. Edwards is clearly a threat to that -- a damnable liberal who wants to take 6-8 years of neglect to the poor and working classes -- real gains against their chances and their dignity, mind you -- and throw it all away. I don't trust him for a minute. People who cry out for economic justice and basic dignities make me nervous.

Damn that John Edwards anyway.

[Bluebear]

7. Bravo! nt

[waiting for hope]

9. You've got that right -

giggle - you are the KING OF SNARK! I dub thee Sir OC!

[saltpoint]

10. waiting for hope, you always come up with that bumpersticker there

in your sig field.

How do you round up cool stuff like that? I like the dark background really well. Maybe I should try out some of the Dem stores on line and see if they have one? I know an old car out in the driveway that's just achin' for a good bumpersticker to kick off the election season!

[waiting for hope]

13. Just copy and paste this:

http: //johnedwards.com/assets/downloads/oac-ad-118x61.gif The Edwards Bounce :bounce: :bounce:

I put some spaces between the http: and the rest so you got the whole thing -

I got the pic from Edwards site: http://www.johnedwards.com/media/downloads/ and the bouncy things are from here :)

Actually, w4rma put the Edwards bounce up first - It started when there were a ton of Edwards vids up and we were all getting a bit inspired...Monkeyman even got on board with that one :)

[saltpoint]

16. Well, hell -- I'm way behind as usual. THANK you for those links

and the good stuff.

I keep an Edwards file and will add these proudly to the collection.

Also I love Bluebear's point in this thread. I like it very much that this proposal is now out there. An Edwards presidency would rescue the people Bush has abandoned.

[CTyankee]

41. dumb question but how do you copy the Edwards logo to appear on your email?

I went to the Edwards site but they didn't say how to do that. BTW, I signed up, thanks to your post! Sometimes, you have to make it easy for folks...

[waiting for hope]

42. Just copy the picture and paste -

Right click on the picture and then click on copy. I just did a test with my email and it did fine.

Congrats on signing up! That's great - you will now receive all the good emails from the campaign and be able to blog as well. I also signed up for my area's One Corps chapter.

[CTyankee]

43. 2nd dumb question. Does the picture just appear on subsequent emails?

Also, is that the way you do it for posting on DU?

[waiting for hope]

44. It depends on what email

system you are using - if it has a signature feature, then that's where you would copy it to. The signature feature is usually under an options heading. On DU - go to Options and edit your Profile. Under signature, use the http:// address for the picture - right click on the picture, go to Properties and copy the Address. Paste that in your signature line (don't forget to Update) and the picture will appear every time you post.

[CTyankee]

45. Great, thank you! I have AOL and I'll try it. I know how to do it on Yahoo so maybe it's as easy on

AOL.

I hope to get involved here in New Haven with the Edwards campaign. There is apparently a group already here, the oldest in the state. That's a GOOD sign as New Haven is a very progressive city.

Now that I'm fully retired I need to find an outlet for my interests and politics is certainly one big one with me! I worked on Ned Lamont's campaign last year as just a foot soldier making calls to Dems from Lamont HQ in downtown New Haven. But I'd like to be more involved with people than just phoning.

Are you involved in the Edwards campaign locally? If so, what do you do?

[waiting for hope]

46. So far we haven't

done anything locally for the campaign - we have been involved in food drives and clothing donations. I'm sure we will gear up for the campaign soon since we are in his home state. Ned Lamont! How envious - he would have been a great addition to the Senate, I hope he thinks about running again.

[CTyankee]

48. Yep, Ned is great. So is his wife Annie.

They volunteered their house for Planned Parenthood of CT's Greenwich fundraiser in 1998, the first of the series (I worked as the agency's Major Gifts Officer). Knew her slightly and only chatted with him a couple of times.

I should update dU folks on what Ned is doing. There's a nice article on him in the most recent NH Advocate that I can link folks to.

I'm so glad that you are working for Edwards in North Carolina. What chances do you think he has this time around with NC? Any changes in the politics of the state since the 04 election?

[AtomicKitten]

11. good on Edwards

This should never have happened to begin with, and families are suffering as a result.

No worries though because the banking industry had all kinds of fun during their crime spree.

[Lint Head]

21. Right now Edwards will get my vote in the primary.

Unless I am convinced otherwise. :dem:

[madrchsod]

24. john just sealed his fate.....

i`ll vote for you john but there is`t enough people will....

[Yukari Yakumo]

28. Excuse me... but how does any of this help people under the credit crunch? {nt}

[Bluebear]

30. Is he an "attention whore", as you frist labelled Ms. Sheehan? nt

[Mythsaje]

31. How unusual is THIS for a candidate?

Not promising to solve all the issues, calling such talk "a fantasy." "What I tell you is I will fight with everything I've got...to bring about the big, bold change that America needs."

Not promising to solve all the issues? Isn't that what candidates do? Promise to accomplish things they're not sure they can deliver?

Now THAT'S a HUGE departure from what I understand is pretty common for candidates. He keeps saying things like that where people can hear them, they might begin to catch on that he's different than what we've seen before.

[Cronus Protagonist]

32. I have no sypmathy for people who signed predatory loans

Greed has its costs. They agreed to pay. Why should my tax money bail them out and be given to the banks? Why? Why don't I get a renters tax credit for being smart enough or poor enough to avoid the greed?

[MadHound]

34. Especially since many of these borrowers weren't buying a home to live in,

But were instead buying them as investments, chasing the quick cash of easy credit and a hot market, flipping homes as soon as they could get a fresh coat of paint on the walls.

I've lived a good life, played by the rules, used my head and was not overcome by greed. But now I'm expected to pay for other peoples' greed and foolishness? Gee, where's my reward for doing the right thing?

[Cronus Protagonist]

50. Exactly

And even if they are living in their home, that's a tad better, but nonetheless, they bought a home priced WAY over their financial capabilities. Why should I have to pay for that? Why should we all have to pay for that person's dumb or greedy financial move?

[Bluebear]

35. You are assuming it's greed.

There are people out there who 'agreed to pay' because some new home salesman for instance said "no problem!" I can get you into this house for XXX dollars a month! And they clearly did not know what the term negative amortization meant or what interest-only implied: that they would never own their homes and the payments could go up by hundreds and hundreds of dollars.

[CTyankee]

39. Actually an interest only loan can be an OK thing in certain circumstances.

My spouse and I will be retired (I am already but he has a few years to go before vesting on his retirement)in about 5 years. We needed to get our monthly bills down and also plan on selling our house and probably renting. But we also need to have cash on hand to fix the house up in the mean time. We've done a lot already but will certainly face more repairs, updates, etc. We recently took an interest only loan with those facts in mind. We have plenty of equity in the house now, but no way could we pay it off in 5 years. So this works well for us.

I see your point tho. It seems to me that there are so many people who don't have a budget and have no idea how much money they are spending and on what. I do a budget every year, keep records and pretty accurately gauge what it costs to live. I also don't spend at the top of my income because I keep a "sinking fund" for those unforseen events....the only way you can do this is to live beneath your means.

[Cronus Protagonist]

52. Congratulations

It sounds like you're doing well. None of this stuff applies to people like you who are fiscally responsible. I wish I were in a position to do that too :P

[CTyankee]

53. Well, it took time. You may be too!

I tell my kids (grown), start with a yearly budget. Just write down everything you spend money on, including coffee at Starbucks. I average out monthly bills between summer AC bills and winter heating bills.

Everybody can do this, if nothing else. People think it is intimidating. But actually, it is liberating! Try it, you'll see!

[AZBlue]

56. This is a total tangent, but

writing down a log of every penny you spend is EYE-OPENING! I started this year and it's been a revelation - and an easy way to find a little money here and there that I can use for better things!

[CTyankee]

62. With me it was the credit card interest payments I was making.

I thought to myself, "This is totally unnecessary and the money is going for nothing." Fortunately, I was in a position to pay my credit card bills in full each month, but it was a discipline nevertheless. But I do understand how people can get caught up in credit card debt due to high medical bills or extended periods of unemployment.

I've also whittled my credit cards down to just 2. One gives me credit on LL Bean merchandise where I tend to shop. The other gives me credit on gasoline and I keep it also to keep an eye on my gas (and my auto maintenance) costs. I buy my gas at the supermarket and use coupons and my supermarket card to reduce the price.

[Cronus Protagonist]

51. Oh, I see, it could have been stupidity

Nonetheless, why should I pay?

[mike_c]

36. a contrarian view....

I've got no love for the mortgage lending business, and in particular the predators that devised the ARM to ensnare people who should never have been taking on the burden of mortgages in the first place, but no one twisted those folks arms-- the recipients of those predatory loans showed terrible judgment. I'm not certain I agree that society has an obligation to "rescue" them from their own stupidity. This is not like taking care of the sick or folks who've lost their jobs, etc. It's very much like taking away the consequences of acting irresponsibly, so what's left to guide peoples' behavior?

Too often we think we really can have it all, and that the folks who prey on that attitude are evil and unscrupulous-- well, they are, but they cannot act alone. They depend upon the poor judgment of folks who ought to know better, and if they didn't, ought to learn.

Full disclosure-- I'm saying this from the position of someone who did NOT take on a mortgage that I couldn't afford, and so I've been a renter all my life. Yes, I'd LOVE to own a home or some property, but not by mortgaging my future.

[MUSTANG_2004]

70. I agree completely n/t

[dajoki]

37. The more I see...

from Edwards, the more I like him. Although I still haven't decided who I will support, Edwards is moving up on my list.

[CTyankee]

40. Same here. I really don't know what the fuss is about. He said he'd personally assist Katrina victim

who were mixed up in the Fortress thing. I mean, what more do people want?

Edwards strikes me as an OK guy. I don't see anything that he's done or said that raise red flags for me, and I have VERY sensitive antennae when it comes to politicians.

I can see this guy becoming president. I can see how his presence would be more than up to the task with foreign leaders. I can see him being a leader but also working with Congress. And I can see Elizabeth as the kind of First Lady we have dreamed about.

Unless there are things that we don't know about, Edwards looks like a winner to me.

[Milo_Bloom]

47. This is some powerful hypocrisy from him.

While in the Senate he voted for... the bankrupcy bill, sending nuclear waste to Yucca Mountain, bush's energy policy which included subsidies to gas and oil and he voted to reduce liability on nuclear power plans in case of accident.

http://www.mentata.com/ds/retrieve/congress/person/John+Edwards


Many of the "problems" can actually be solved really easily if they simple distinguish between secured and non-secured home loans and define criteria of "predetory loans" as unsecured, so companies can still offer them, but with the caveat that they don't get to "foreclose" to get paid. They may be able to attach a home, but not force the people out if they signed them to a predatory loan.

What sickeningly funny is that this "crisis" (which anyone with half a brain saw coming 7 years ago), is currently hurting the mortgage industry as much as the consumers and if anyone was intelligent they would pitch a bailout as saving the mortgage industry, instead of trying to sell it as "saving consumers", because in the end, the GOP and their ilk are not going to go for "saving someone who got in over their head", but they will work to save "employers", so by offering to subsidize some of these loans, they can save the "industry" and allow people to keep their homes at the same time.

Its works this way.

Idiot Lender offered Idiot Consumer 5 year interest only $300,000 1st and a $60,000 2nd on their $360,000 house (which was overvalued to begin with). The Idiot Consumer paid $60,000 in interest for 5 years and during that time the "bubble burst" and the house is now only worth 275,000 and the Idiot Consumer never thought the payments were REALLY going to go up and listened to the Idiot Lender, who also believe that the value of homes was going to keep increasing forever. The Idiot Lenders don't want the house back, because they spent $360,000 on it, got $60,000 back and now will only get an asset worth $275,000... a 25K loss over 5 years ain't good. This is why mortgage companies are going under nearly everyday and the entire industry is crunching, as major lenders are shutting down all their second mortgage and equity programs (Ditech now only offers 80% value on stated income) and Citibank shut down their entire stated income program.

The reality is that MOST people just don't care about someone else getting themselves into financial trouble. They think, "well, they got themselves into it..." HOWEVER, if you explain to them that THEIR ability to borrow in the future will suffer, THEN they want action.

So we can save people's homes, but frame it as a bailout of the mortgage industry.

I suspect Edwards knows this, but he wants to be the "liberal warrior" and "anti-corporate" so rather than actually propose a possible solution, he just want to blather on with to those who just want to dine on red meat, with no real substance to it.

[Cameron27]

54. Thanks for the counter-point Milo

I appreciate the info.

[AtomicKitten]

55. best explanation I've come across

I appreciate the info and I too have trouble squaring it.

[Adelante]

57. Thanks, I've been trying to make sense of it

Something was wrong somewhere, I knew, but I didn't quite recognize what was bothering me, finances not being my strong suit.

[AZBlue]

59. I'm not financial genius.

I have to say that up front in case this is a really stupid question. But, if we help the consumer and not the lender, won't that help the economy, save the lender from foreclosure and teach the predatory lender a lesson? Except for its effect on the economy, I won't cry if predatory lenders lose. But, helping individuals would offset the effect on the lenders, no?

(thanks in advance)

[Milo_Bloom]

60. Yes, but...

There are two problems. First, "predatory lending" is truly an unfair term which has been used in hindsight to apply to situation that "Idiot Lenders" really didn't see coming.

They didn't WANT to lose investments, they didn't WANT to lose money. Unfortunately, when the good times get going, people actually believe they will never end. The idea was if we give people 5 year ARM's now, they will be able to refinance in 5 years due to increased value in the home. However, that only happened in some areas. Other areas saw prices drop because there were less and less offers for comparable homes.

Companies don't want to forclose. They lose money doing it. Usually they pick up a house worth less than what they paid out and then have to take even less for it in a foreclosure sale. No one wins. Predatory lending suggests a strategy that really wasn't present. Shortseighted lending is probably a better term (I call it Idiot Lenders, because they had to actively ignore history to believe it wasn't going to happen).

IN the end, I think you have a perception problem and the fact that it really took 2 to tango. Perception wise people just don't want to think that the government is bailing out an individual consumer who got in over their head. I don't agree with that, I am all for bailing out the consumer, but I know the GOP will spin it to make it sound like welfare, so realistically, we aren't going to get that through. If we are bailing out the "lenders" who are suffering because of the actions of these irresponsible buyers, we can have the same effect of helping people AND make it seem business friendly.

The 2 to tango part is the fact that you needed the lender to extend someone credit who really didn't deserve it and the consumer who didn't realize that the day would come they couln't afford the payments.

About 5 years ago a friend of mine was going to buy a house on one of these deals. I jumped up and down and screamed that he shouldn't do it. His "mortgage broker" used all the lines (Just refinance in 5 years, property always goes up, etc...)... and the sad thing is they weren't lying to him per se, they REALLY BELIEVED THAT CRAP. Thank God he listened to me, because he is no better off financially now than he was 5 years ago AND his payment would have nearly doubled this month and he would have been homeless in no time.

If we want people to keep their homes, we need to work from the lender side and term it a bailout and THEN rewrite the rules under which lending can take place. Don't take away the ability of companies to write these loans, but INSTEAD, don't allow them to attach a home as security upon which they can forclose (essentially the loan becomes unsecured). So that way if a lender get stuck, they have an interest in the property, but no right to force the sale of the property to satisfy the debt, they just get paid if and when the consumer decides to sell.

[AZBlue]

63. Thank you!

I see it much more clearly now. I agree with you too - we need to prevent a massive loss for everyone's sake but then we MUST rewrite the rules - and in a way that neither side takes a huge loss. Because, in the end we all will pay.

Thanks again for sharing your wisdom!!

[calteacherguy]

61. I disagree strongly. People need to learn to be responsible for themselves.

I get really turned off by this level of "mommy" government. Edwards plan would be unfair to taxpayers, especially those who chose to rent, not own.

[1932]

68. How's that?:

[MUSTANG_2004]

72. I believe the unfairness he's referring to is this...

Two homebuyers both have a salary of 50K/yr.

Smart buyer says - "Hmm. I can safely afford a small house that costs 100K. I'll get a 30yr fixed rate mortgage and have no trouble making the payments even if my salary doesn't go up much."

Idiot buyer says - "Hey, with a low-rate ARM I can swing a big 200K house. I'll get a low rate ARM that explodes in 2 years, but by then I'll be making way more money and will easily re-finance."

Two years later - "Smart buyer" is still safely in his house, making his payments with no problem. "Idiot buyer's" loan went up three points and he can't make the payments and is about to lose his house.

So in steps John Edwards who says -"Here's a government bail-out. Idiot buyer, so that you don't have to lose your home, the government will give your lender money at a very low rate. Now the lender can re-finance you for another 3 years at your original low rate. This will give you additional time to figure out how to handle the situation and stay in your home." And Idiot Buyer goes off happy to be able to pay his mortgage again.

What this has done is meant that Idiot Buyer, by making a foolish decision, is rewarded with a large home, while Smart Buyer is stuck in a smaller one. To make it worse, smart buyer pays more federal taxes (because he's paying less interest, so has a smaller tax write-off) which are going toward the mortgage bail-out. So smart buyer ends up with a smaller home and is paying a larger chunk of the bail-out.

Now, a reasonable argument could be made that a bail-out will help keep the housing market stable, which in turn will help keep the entire economy stable which benefits everyone, but it is also reasonable to be resentful that we're going to end up bailing out people who bought more house than they could really afford.