GOP Wants to Drop Mortgage Rates Down to 4%, Democrats Should Agree and Do It Better.

[David Zephyr]

Democrats have got to move faster to keep people from losing their homes and to lower their mortgage rates. It appears that the GOP is moving quicker than we are with an "idea" that is hardly Republican, but because they are getting out front with it first, Americans will give them credit for it. And it is a very good idea. Democrats need to move on this. It's a winner for the economy, it's a winner for American homeowners and families.

"Officials said the GOP was coalescing behind a proposal designed to give banks an incentive to make loans at rates currently estimated at 4 percent to 4.5 percent. Fannie Mae and Freddie Mac, which were seized by the federal government in September, would be required to purchase the mortgages once banks have made them to consumers. Officials said loans to credit-worthy borrowers on primary residences with a mortgage of up to $625,000 would qualify, including those seeking to refinance their current loans." http://news.yahoo.com/s/ap/20090203/ap_on_go_co/congress_stimulus

[Zynx]

1. Since when were Republicans in favor of setting interest rates?

That's wanton market interference by their standards.

[David Zephyr]

2. LOL! It's sheer pandering on the GOP's part, but it's good for the country.

You made me laugh because you corretly point out that they are throwing their "principles" away, but still it is a very good idea and would be a fast shot in the arm to the economy and most of all to families.

[Zynx]

4. Seriously though. Congress setting interest rates? Good Lord!

That's central planning right there.

[David Zephyr]

7. I think it should be 3% and it should be government direct.

Let the public get the 3% return instead of the banks and keep Americans in their homes.

[dysfunctional press]

35. yep. nationalize consumer banking.

ALL of it.

[notadmblnd]

3. Since the government went into the banking business?

Now that they're backing loans, the should have input into setting the rates.

[Zynx]

5. Oh I agree. It is Socialism though.

Make sure we let the Republicans know this.

[northernlights]

23. since it dawned on them that they're seen as irrelevent obstructionists

who, given total control of 3 branches of government for 8 years, managed to totally empty our treasury, destroy our economy and stick us with 2 unwinnable wars.

They're in danger of total annihalation. Obama reached out with an open hand, and the moronic hard right rethug reps responded with a clenched fist.

And so, for the sake of survival, the senate moderates were forced to compete with the dems to see who could out-stimulate whom. That is true bi-partisanship, and thank you Obama for backing them into this corner.

They're all pandering now. And it's to the benefit of all of us.

From what I read, they also want to double a tax credit for either new home buyers, or buyers of new homes, from $7500 to $15,000...and extend it to *everybody.*

The capped interest plus the credits should put a floor under the housing market. And not a minute to soon for me!

[movonne]

28. If people don't have jobs they can't buy homes or keep the ones they have...

[OhioChick]

30. Bingo!

No Job=No Recovery....or mortgage for that matter.

[mzmolly]

37. Why isn't that "regulation"?

:crazy:

[NOW tense]

6. I say offer 3.5%

see what they say. It is kinda like a poker game. See if we can find out what cards they have.

[David Zephyr]

8. That's what I'm saying. Absolutely.

People power.

[Oregone]

11. And how about making them low-cost/no-cost?

Damn, Im getting quoted $4.5K to refi $100 K

You gotta be kidding me

[David Zephyr]

14. $5K to refinance is criminal. Yes, here's another place where Democrats can do better.

Low cost and / or no cost. Great idea!

[JayMusgrove]

20. Yes, re-fi's are the ways banks make a lot of money up front

It's a scam, no matter how you look at it.

Re-fi's should be free to those that can qualify, have qualified before, and are good credit risks.

Also, a 3 month or 6 month "interest free deferment" for anyone who loses their job, can find a new job, and pay nothing for a few months, and resume the mortgage on the same terms, not lose their house, not suffer credit rating loss, etc. It's only fair. The Feds can pay the interest on the mortgage for a few months once or twice over the life of the mortgage, for a total of 6 months of deferments, keeps hundreds of thousands in their own homes, keeps prices more stable in areas losing employment.

Just an idea floating around in my mind.

[Parker CA]

9. Problem is that this won't help people facing foreclosure or other potential

home-loss issues, as it only will apply to homeowners who are "credit-worthy." If you're facing foreclosure or have had a significant drop in value of your home, your income, your financial standing or other unforeseen problem, you will not qualify for this rate.

[David Zephyr]

15. 3% for good credit history; 4% for OK credit; 4.5% for troubled credit.

The thing is to keep homeowners in their home with affordable payments. Hell, take the loan out to 50 years, but let's keep families in their homes where their kids can still go to the same schools and have their same neighborhoods.

[dysfunctional press]

36. interest rates should vary based on the term of the loan as well..

they should all be fixed rate, 15, 30, or 50 year terms. i'd even support some type of 'generational mortgage' with a term of 75-100 years, with a certain minimum dollar amount required.

[JayMusgrove]

21. See one of my posts on this thread a couple up from yours.

We can build in some "insurance" for those people, and save hundreds of thousands of homeowners.

[DJ13]

10. They could say 0% and it doesnt help if

.... banks wont loan, and people dont have enough job security to take on a 15 or 30 year mortgage.

[David Zephyr]

16. Forget the banks. Government direct loans.

It's good business for the goverment, too. Cut out the middle men taking the profit.

[Oregone]

27. Not to metion, the government is in a position to nationalize many branches

So, it isn't like they don't have the instant infrastructure available to do this. They only need to nationalize a single bank (CITI for all I damn well care), and allow the private market to flounder attempting to compete.

[Waiting For Everyman]

12. Nope. Sorry. Hold it. A bunch of DUers have told me that's impossible.

:eyes:

[David Zephyr]

17. Isn't that the sad truth?

It's terrible that the GOP seized upon this before we did.

[ContinentalOp]

13. I don't get why Obama hasn't addressed this and why DU isn't all over this.

I made a post about it last week and it sank like a stone. This would be great for the economy and a totally smart move politically. What's the downside?

[David Zephyr]

18. I'm soo with you. This should be Democratic proposal.

This will be a winner with the American public and it is easy to explain and to understand. And it will work. I've been away from the DU for a month, but I would have kicked up your thread, ContinentalOP.

And I agree, we need to be all over this.

[Oregone]

26. I was told its only Obama's first week

I was told to the magic TARP funds will do it.

[sendero]

19. I'm sure you know this..

... but the government has limited ability to actually control interest rates. With all of the printing that's going to have to be done because of the bailouts and stimulus, interest rates on Treasuries will have to rise go get them sold.

Nowhere is better than economics to demonstrate the axiom that "there is no free lunch".

[Oregone]

25. Unless the government offered a direct to consumer loan with no middle man scooping profit

[hadrons]

22. Doesn't this just encourage more debt???

Seems like it feeding the debt racket

[Oregone]

24. Not at all

6% loans can cost 1.5 to 2 X to borrow than what you actually want to borrow (for example, if I borrow 125 K at 6%, I will have to pay back close to 300 K in all, so essentially, I have a debt load of 300K counting interest for a meager, small home).

If you shift the interest down, it instantly eliminates "potential debt" (debt load including interest). It would instantly make it where home payments of 25% principal/75% interest would shift to 50% principal/50% interest.

To be able to pay down ones debt quicker would instantly build wealth and reduce debt nation-wide.

If anyone is concerned, make them non-cash-out loans, and eliminate no-doc (liar) options.

[wiggs]

29. I can tell you what will happen...same thing that's been going on for a couple

of months. People with large equity in their homes and/or steady high-paying jobs will refinance. I've been told that loan brokers and banks are very busy writing loans...for people who have homes and who are looking for a better deal.

[ContinentalOp]

39. Well, that's kinda the whole point.

Get some money into people's pockets so they can keep spending and keep the economy going. If I can refinance from a 6% to a 4.5% I would save a few hundred dollars a month. That's a few hundred dollars that's not going to banking industry profits and benefits me for 30 years, rather that BS tax cuts that directly impact federal revenues and only help me out to the tune of $1000 for one year. Big f'in deal.

I'm in a house that I really can't afford but we scrape by and have never missed a mortgage payment and have no other debt. But yeah, let's only offer aid to people who are already in foreclosure or have racked up huge credit card debts!

[cascadiance]

31. The problem is that this hurts with the value of the dollar and the cost of imports...

... if one is needing to also drop the prime rate to drop mortgage rates.

And right now we're depending on a lot of loaned money from the likes of China, etc. If interest rates drop too much, they might divest, and we'd bein for a world of hurt.

The ultimate solution isn't lower interest rates, but raising our take home pay vs. that of the wealthy so that the wealth gap closes, and we are able to afford higher interest rates. Dropping them more just masks the fact that we're getting poorer and poorer each day by these Rethugs...

[killbotfactory]

32. drop credit card interest to 4%

Oh wait, that would help people. Nevermind.

[ContinentalOp]

40. Does nothing to help the people who have no credit card debt and pay their mortgage each month.

Oh that's right, we're a bunch of fatcats rolling in cash. The looming depression doesn't effect us in the least. If you prick us we don't bleed, etc.

[SoCalDem]

33. 4% on first $250K..and mortgages MUST be reset at CURRENT devalued principal

no re-fis necessary...just send everyone with a mortgage a certified letter that they staple to their loan papers..

Mortgage companies & banks that cannot "do this", just fold up and go away...reputable banks will step into the void..

amounts over 250K could be at 6%..

Loans would be 30yr FIXED, and non transferrable..new buyers would have to qualify like we always USED to have to do..

If you bought your house for $500K and it's now worth 300K, your loan would now be for the lower amount, (most of what you paid so far would be interest anyway)

[David Zephyr]

38. That would be nice, but it won't happen.

It has gotten some lip service, but don't expect to see it. Too much resentment by homeowners who paid their homes off and kept out of debt. Right or wrong, it's enough to kill write downs.

[ContinentalOp]

41. So many problems with your idea...

"Mortgages set at current devalued principal". So I'm penalized for buying in an area where prices haven't fallen too far?

"amounts over 250K could be at 6%.." Uh, thanks? So I get the same interest rate that I already got 3 years ago at the height of the bubble? But now we're supposedly in a depression? How does that even make sense?

And who assesses the "value" of the home? The appraisal process would be so crooked. Would our property taxes get assessed at this lower value too? Sounds like a totally unworkable plan to me.

[taught_me_patience]

42. So you are saying

that most people who bought homes in the past several years would enjoy unlimited upside if they sold their home and made profit and have absolutely no downside risk, while the taxpayer shoulders the burden?

Keep dreaming man...

[SoCalDem]

43. don't worry.. nothing will happen

everyone wants a resolution that requires no "pain", so we'll limp along and people who end up having to sell for $180k (owing 250k) will just have to deal with it..or just "walkaway" and tank the values of the homes "being paid regularly by upstanding citizens brigade members" It's what americans do best these days.. (IGMSFU)

but it's all good..most people here right now will all be dead and gone within 50 years ..give or take.. so it;s no biggie:)

[Rage for Order]

34. And cap all closing costs at 0.5% of the loan amount

Inclusive of ALL fees - title policy and escrow fees, underwriting fee, flood cert, appraisal, tax cert, doc prep, discount points, origination fee, and prepaid interest (not a fee, but still a cost) - the total of all fees charged can amount to no more than 0.5% of the loan amount.

Of course, funds to create the tax and insurance escrow accounts are not fees, so they don't fall into this category.