Here is a real solution to the housing foreclosure problem.

[county worker]

The $15,000 tax credit doesn't do anything to fix the housing problem. It is another give away to people who are not hurting. You'd have to have a down payment and good credit to buy an house at give away prices.

But, if you took people who are about to lose their home in foreclosure, turn their mortgage into a lease option where they are paying an affordable amount each month as a lease and let them remain in the house. When the market is stabilized turn the lease option back into a mortgage and an affordable rate.

The lender will not have to foreclose and take a house back, home values will not drop as drastically and the lenders get lease payments to add to their cash flow.

[Dawgs]

1. Not bad. The problem is with foreclosures and short sales.

If you're trying to sell a home (like me), and aren't in one of those two categories, you can forget it. We just sit back and watch the value of our home drop, while others sell their homes at a fraction of the purchase price.

[county worker]

6. I'm in the same boat as you. I have rented out my house and moved elsewhere.

I pay rent and rent my house to someone else since I moved to another city. I will not sell my house at a loss if I can do it.

My plan slows the decrease in house values I think.

[sarcasmo]

2. Exactly, that 15,000 tax credit does nothing to help the current situation.

[MannyGoldstein]

3. Give Away Prices?

Historically, houses are still at very-high levels. Prices may drop another 30% or 50% or more before they stabilize.

[county worker]

7. If you are a home owner the drop in prices is a negetive thing.

[MannyGoldstein]

15. Yes, And It's Awful

Just as it was awful for those non-home-owners for whom ownership became unaffordable over the past 30 or so years.

I don't know that there's a way to do this that damages nobody.

[Dawgs]

10. "30% or 50%" - I'm sorry, but that's ridiculous.

Either you live in California/Florida, or you just don't get. It's already gotten much worse.

If it drops 30% to 50% then we are fucked.

[MannyGoldstein]

12. In 1970, An Average House Cost 1-2 Years Average Salary

I'll let you figure out how many years salary it costs today. Then think what happens if we go back to 1-2 years average salary.

[Dawgs]

20. What the fuck does 1970 have to do with it?

I agree that home prices should be much lower, but that's not the world we live in now.

Asking homeowners to lose $50,000 to $100,000 in the value of their home will destroy us.

You can't believe that this is a good idea.

[MannyGoldstein]

22. I'm Not Saying It's A Good Idea

Merely that it's a historical precedent, and history often repeats itself.

It is what it is.

[Dawgs]

25. You can't use history to predict future home prices, since we've never seen anything like this.

You're wrong.

[MannyGoldstein]

45. Two Comments:

http://en.wikipedia.org/wiki/Regression_toward_the_mean

"The only thing new in this world is the history that you don't know" - Harry Truman

[dysfunctional press]

42. where do you get that figure from?

:shrug:

[MannyGoldstein]

46. I Did Some Research A Few Years Back

I used stats from Statistical Abstracts of the United States, and possibly from NAR.

You can easily test this yourself: find some people who purchased houses around that time. Ask what the house cost, and how much they made a year. The answers will be startling.

[joeunderdog]

11. I see it your way. My wife and I are looking to buy

and we are people of means with a substantial savings. But housing prices in the Northeast mean that we'd have to owe a big ass mortgage payment each month if we get the house we want (2200 sq/ft in a decent neighborhood.) I look at these $5-600,000 price tags and ask "Who can afford to buy these kinds of houses now??" Even if you are willing, what are the odds that the bank will lend you what you need?

[Dawgs]

23. You obviously don't own a home if you think a drop in home prices is a good thing.

Sorry.

[flvegan]

4. Turning fee-simple ownership into leasehold?

No way. It's a great way to screw up the title to real property though.

Why not just adjust the rate of the mortgage? Make it mandatory. Before any lender can file a Lis Pendens, they must drop the rate to say prime plus 1 or something, and kick the default to the back end of the loan, starting fresh. In six months, if the borrower defaults again, you can file your Lis Pendens. Otherwise the rate stays there for a determined amount of time.

[county worker]

8. The ownership would go to the lease holder and if that were the original

lender it would be the same in a foreclosure. Either case the ownership would change hands the same number of times.

[flvegan]

13. As I said, an excellent way to screw up title, and damn near impossible.

See, not it's not just a note that's going to get bought and sold on the secondary market (most often electronically tracked, not in the public records) but the deed. The fee simple owner also has to insure and pay the taxes, so every loan is now going to have to have PITI terms. Not going to happen with the borrowers interests in mind. That title may transfer ownership 8 or 9 times.

Now, even worse scenario. All these lenders going belly up, remember? Bankruptcy...getting sued left and right. Lets say one of the lenders that gets your property and note and starts having problems. They get sued and have a multi-million dollar judgment against them. This judgment gets recorded in your county/municipality. That lender sells your property to another lender. You then try to get your fee-simple interest back. Guess what...that judgment is now against your property. Good luck ever selling it.

Thing with a foreclosure is the lender gets title and it goes as an REO to sale to someone else. You're not in the picture again.

I'll repeat. Change the terms of the note in regards to the rate. That will at least save the homes of folks that COULD afford their homes if the payment was a bit lower.

[we can do it]

14. There You Go Talikng Sense - Some Banks Are Lowering Interest on Loans

You would have to call them and ask them to do this, they won't do it on their own.

[flvegan]

18. The smart lenders are.

A simple call to their retention department explaining you'd like to keep their loan performing can generate a good amount of interest. Banks are NOT in the residential real estate business.

[we can do it]

26. It Can Work with Other Debt Too

[liberal N proud]

5. In many cases the payment would have to be much much lower

than the mortgage payment currently it.

The reason people are losing their houses is they can no longer afford the payment. Ballooning interest rates or loss of job the reasons vary. But they can't afford the payment.

[we can do it]

9. You Really Need a Clue- It Helps Low End Home Buyers

You can buy now CHEAPER than renting in a lot of states (Ohio for one) - the amount needed down is less than security deposits and 1st -last months rent. So stop spewing until you get some facts. It could help those going into foreclosure by being able to short-sell their homes. Only selling or getting a job will help foreclosure folks.


http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=2&oref=slogin&oref=slogin
http://moneycentral.msn.com/content/Banking/Homebuyingguide/P72655.asp
http://www.dinkytown.net/java/MortgageRentvsBuy.html

[county worker]

16. I'm trying to keep people in their homes. How does someone with

poor credit due to foreclosure buy a house no matter what the price and where do they come up with the down payment?


You get a fucking clue!

[we can do it]

19. Try Reading Dude - It Helps In Understanding

It Helps Low End Home Buyers (who are not owners) buy a home.

You can buy now CHEAPER than renting in a lot of states (Ohio for one) - the amount needed down is less than security deposits and 1st -last months rent.

It could help those going into foreclosure by being able to short-sell their homes. Only selling or getting a job will help foreclosure folks.

If someone wants to get out from under their mortgage without foreclosure - short selling is less damaging to their credit in the long run.

[Dawgs]

21. Nobody is buying anything right now; because of risk.

It doesn't matter how much of a break you give them.

This is not a good idea.

[we can do it]

28. A Good Paying Job Is About All That Will Help People Stay In Homes They Own

Giving 10% credit to someone needing a place to live is a big thing if you are in their position. And first time buyers are the main people buying right now.

[Dawgs]

29. Yes, but are people willing to take on risk right now.

Until people feel confident about the economy, they are not going to buy; no matter how much you give them.

[we can do it]

32. Young People and Renters (Who can lose their home if its foreclosed, btw)

Are buying, they can own for what they rent (less in some states like Ohio) for about the same initial costs. People who are downsizing or trying to get out from under huge mortgages are the ones hurt by this mess. It will help if lower end homes sell, that's the point I wanted to make.

[Dawgs]

17. FAIL.

There is no guarantee that a $15,000 tax credit will increase home buying, even if it costs less to buy than rent.

Fear is what's driving this economic crisis. People are not going to spend money, or take on a risk of home ownership, unless they think the economy is going to get better.

Not one of those articles addresses the situation we are in now.

Your "facts" prove nothing.

[we can do it]

24. Keep Spreading the FEAR FEAR FEAR!

There is no guarentee for anything. People need a place to live - and those newly married and getting out of school will probably not stay home with their parents. Some people do have recession proof jobs police fire hospital etc.

Calm down

[Dawgs]

27. I'm not spreading fear. I'm telling you the way it is.

I think there are much better ideas to stop foreclosures, and get people buying again. This $15,000 amendment is not one of them.

And, you're delusional if you think the police, fire, and hospital jobs are recession proof.

http://www.pe.com/localnews/politics/stories/PE_News_Local_N_nbudget04.4418614.html

I'm very calm.

[we can do it]

30. I Didn't Say It Would STOP Foreclosures, It Can Help People Buy a Home

Pending home sales post increase of 6.3 pct By ALAN ZIBEL – 2 days ago

WASHINGTON (AP) — An index that tracks signed contracts to purchase existing homes rebounded in December, as buyers snapped up properties at deep discounts, especially in the South and Midwest.

It was the second positive sign in the past two weeks for the troubled U.S. housing market, and may indicate that a bottom is forming — at least for home sales. Analysts, however, caution that prices are likely to keep falling through 2009, and say the outlook for home sales is highly uncertain, especially as layoffs mount.

http://www.google.com/hostednews/ap/article/ALeqM5jYhsxaJOLCURko2JR8R6NUDHRW2wD9646SOO0


Ok then! anarchy is on the way NO ONE will have a job - last one out turn out the light - oh no there's no one working at the electric company, just forget it.....

[alstephenson]

31. So I guess you have a job.

[we can do it]

33. Luckily, Yes

[Dawgs]

34. What the fuck are you talking about?

I'm very confident that the economy will turn around, but that has nothing to do with the argument we are having here.

My argument is that people aren't interested in buying a home until they know the economy will be getting better in the near future. The reason people bought homes in December was because of the deep desperation by home sellers and banks to sell something.

I will guarantee that January was much worse than December. I see it in my own neighborhood. There were 3-4 home sales in December. There were zero in January.

People are a lot more scared now than they were even a month ago.

Your inability to comprehend my argument explains why you think I'm spreading fear.

[we can do it]

35. You Said No One Is Buying

I pointed out who is - who has the comprehension problem?

[Dawgs]

37. I said no one is buying NOW!!!!!!!!!!!!!

You showed me an article about people buying in December. It's February now.

I explained all of this in my last post.

And, you're questioning MY comprehension skills.

WTF!!!

[we can do it]

39. Jeez A Little Too Much Caffeine This Morning?

When do you suppose they compile figures for the month? In advance? Home sales are traditionally slow in January and February - and yes I am well aware that people are nervous - that does not change the fact that people who need a place to live are buying, which has benn my point all along.

[Dawgs]

40. "Home sales are traditionally slow in January and February", "people... are buying"...

So, what is it? Are they buying or not, because your original comment expressed that they are not?

And, one "descent" month(Dec. 08) out of the last 24 does not prove that people are buying.

[we can do it]

43. Why Are You So Argumentative - I Never Said People Aren't Buying

[Xithras]

36. Actually, the solution is "Refi and Lien"

It's been proposed several times, and it would work fine, but nobody has done anything about it yet.

Lets say you bought a house for $400,000 in 2006, and that house is worth $200,000 now. Your mortgage is about to reset, and you will default soon after.

In a "Refi and Lien", the bank would refinance the home using a conventional loan for the $200,000 the home is worth today, and place a non-expiring lien against the home for an additional $200,000. When the home is sold or transferred, the bank gets to utilize that lien to collect the outstanding mortgage amount AND the first $200,000 of proceeds. If you sell the house for $300k after paying it off over 30 years, the bank gets to take $200k, and the owner takes the balance. The banks still maintain the option of getting their money, and home owners get to keep their homes at an affordable rate.

[Phoebe Loosinhouse]

44. That works IF someone stays in the house full term, pays off the mortgage

and sells at a price that pay off the lien. But, most Americans stay in a home somewhere between 3-7 years, so it wouldn't help most in that situation.

I would suggest taking the amount of negative equity and converting that into a "silent second" mortage at 1% interest that gets folded into the payment with the primary mortgage. I can't see why this wouldn't work.

[Xithras]

47. No, it helps in any case. Both sides profit from the plan.

Let's say a house is in danger of foreclosure with a $300,000 mortgage balance on a residence worth $150,000. The bank refinances the home for $150,000, places a $150,000 levy against the home, and lets the owner keep it. 10 years later, with $100,000 still outstanding on the mortgage, the owner sells the home for $150,000.

If they repossess today, they recover $150,000 of the original loan and take a $150,000 loss.

If they refi and lien, they recover the $100,000 outstanding on the mortgage, PLUS the $50,000 & interest paid during the intervening 10 years, PLUS the $50,000 in excess monies generated during the sale. They have gained $50,000 in profit by deferring collection activities. By keeping the loan active throughout the downturn, they also stand a much better chance at realizing even higher profits if the market recovers some of its lost value.

The homeowner will walk away with no money in his pocket, but his credit will be unharmed and no losses will be incurred during the sale. The bank would still take a loss in this example, but it would be a 33% smaller loss than they would have otherwise realized, and could be much smaller than that. More importantly, it would end the glut of bank-owned homes on the market, stopping real-estate depreciation in its tracks.

The problem with your suggestion is that the homeowner is still paying on the original mortgage amount, even if it's "silent" and has a low rate.

Lets say the original loan adjusted to 8% with a $300,000 principal.The mortgage payment in this case would be $2,201 a month.

In my example, the refi and lien of $150,000 at the current 5% rate with a 30 year fixed would give the owner a payment of $805 a month.

In your example, the positive value at current rates would give them the same $805 a month payment, but with an addition $150,000 tacked on at 1% to cover the negative equity. This "silent second" adds $482 a month to the loan and results in a final payment of $1287 a month. That's nearly $900 a month off their original loan, but it's still $500 a month more than a "forgiveness lien" would cost them. Both ideas work, but mine helps more people. In addition, that silent second would still be due, IN FULL, when the owner decides to vacate the property. Since homes probably won't recover their 2006 values for a few decades, this will result in a huge amount of financial hardship later on. The lien concept limits homeowner liability to profits seen during the homes actual sale.

[Javaman]

38. Here's an even simpler solution that I proposed about 2 1/2 years ago.

freeze all the rates then reset them to the original offered rate before it reset.

the banks would still make money (not as much) and the people would be able to stay in their homes.

now for those who lied about their income on their mortgage loans, can't help them, they are frauds.

[we can do it]

41. They Would Still Make a Ton of Money, Which Is Why Some Do It

They lose by foreclosing - and I agree about people who lied (as well as those who bought all kinds of shit on second mortgages and want to be bailed out).