Obama's New Housing Plan

[HHM]

The Bankruptcy aspect of this issue is in the chapter 13 forum.

[FLBK7]

Thanks, HHM. I just think there should be a thread on this subject under "General Talk" (non-BK-related) because many of us who already went through BK, are interested in the subject.

[fltoo]

That should read "up to 50% of loan mods have kept families in their houses, propped up neighborhood home values, and prevented banks from insolvency", but I guess those things aren't important.



False.
http://www.federalreserve.gov/newsev...r20081203a.htm

I am fully aware of all the pros and cons of the CRA. Do you even understand why that study was initiated? I guess reading comprehension is not important.

I will correct my mistake in my statement.

The government, when it forced the secondary lender to lower mortgage qualification standards, created a free for all for ALL lenders.

A person making 10,000. a year should not qualify for a 100,000. house.
A person making 80,000. a year should not qualify for a 10 million dollar house.

With a secondary lender, qualifications are set in place so that banks call sell their loans to raise capital for more lending. Investors buy these packaged loans trusting the secondary lender has standards in place.

Now, a bank who inhouses loans can do whatever they want and use whatever qualifications they want to. They can give you a million dollar loan even if you are unemployed if they want to. They take the risk and don't pass it on.

I could drag up tons of articles on faulting and not faulting the CRA, all slanted to the intent of the study. Who cares? Why bother?

Our "politicians" are more concerned with getting elected, re-elected,
and re-re-elected. Common sense is out the window.

I am so sick of right and left wing, conservative and liberal slants and how the politicians have pigeon holed the American people. "We" the people was intentional because "we" used to be smarter than this.

Run to the middle where common sense prevails and no politicians are present.

Oh my, sorry, I went off on a tangent. Must be all that nightly switching back and forth from FOX to MSNBC.

[eddiep]

Sounds like I will fall through every crack in this plan.
1. not in foreclosure - no chapter 13
2. have more than one mortgage that needs modification - no modification
3. not creditworthy - no refinance

Am I right?

[JRScott]

Much like his economic plan this comes up short.

If it saves even half the numbers they claim from losing their homes I'd be surprised.

It would have been more effective to have forced a cramdown to current value of the home and refinanced at a fixed rate equal to the current market amount. Basically what his plan does is just move the pea around the shells and eventually the pea still comes up.

[reset]

has anyone heard of non-reaffirmed mortgages? I am with CW and I do not think they reaffirm.... their choice not mine.

[Overmylimit]

I am a tad confused, is this plan the same as the Senate Bill 61? I know there are like 3 different threads going on as to Obama's foreclosure plans. Or is the Bill something seperate?



Somedays I'm not the sharpest knife in the drawer...

[fltoo]

Somedays I'm not the sharpest knife in the drawer...
------------------

LOL, I know that feeling well.

[BigJohn]

Much like his economic plan this comes up short.

If it saves even half the numbers they claim from losing their homes I'd be surprised.

It would have been more effective to have forced a cramdown to current value of the home and refinanced at a fixed rate equal to the current market amount. Basically what his plan does is just move the pea around the shells and eventually the pea still comes up.

I am with you on this one. The practical solution does not seem to be in the mix.

[danaf]

I wish I woulda heard in his 'BIG PLAN' that those recently discharged would be able to qualify a lot sooner than the old standard. Oh well. Hope his vision at least helps some folks out there.

[blindsided]

The government, when it forced the secondary lender to lower mortgage qualification standards, created a free for all for ALL lenders.

These words, "force", and "create", I am not sure you understand what they mean. This is a widely held political position, but it does not seem to be understood to be the case outside of cable news (the source, perhaps, of your confusion).

If you want my rewording:
The government, when it decided not to regulate secondary derivatives markets, allowed lenders to engage in a free-for-all where they ignored risk, because it was theoretically transferred to other parties. Now they want to claim that the victims of this free-for-all are the ones responsible for a moral hazard.

I just heard CNBC and a roomful of traders -- all of them more responsible for this mess than any one individual mortgagee, because they spent all day doing things that consumers do once or twice in a lifetime -- actually booing the Obama plan and calling those it's trying to help "losers". These people are crass criminals and ideally would be locked up in a small cell to contemplate the gross error of their ways.

[JRScott]

I am a tad confused, is this plan the same as the Senate Bill 61? I know there are like 3 different threads going on as to Obama's foreclosure plans. Or is the Bill something seperate?



Somedays I'm not the sharpest knife in the drawer...

This is the plan Obama revealed earlier, it is not I don' t think the same as Senate Bill 61

[Overmylimit]

Ahh thats what I've been wondering, so does anyone know if and when the Senate bill is going to be put back on the table?

[fltoo]

These words, "force", and "create", I am not sure you understand what they mean. This is a widely held political position, but it does not seem to be understood to be the case outside of cable news (the source, perhaps, of your confusion).

If you want my rewording:
The government, when it decided not to regulate secondary derivatives markets, allowed lenders to engage in a free-for-all where they ignored risk, because it was theoretically transferred to other parties. Now they want to claim that the victims of this free-for-all are the ones responsible for a moral hazard.

I just heard CNBC and a roomful of traders -- all of them more responsible for this mess than any one individual mortgagee, because they spent all day doing things that consumers do once or twice in a lifetime -- actually booing the Obama plan and calling those it's trying to help "losers". These people are crass criminals and ideally would be locked up in a small cell to contemplate the gross error of their ways.

Cable news is not the source of my confusion, since there is no confusion.
There is no straight "news" anymore, prime time or cable, hence the need to switch stations frequently. Then, what is left is to glean all perspectives and form your own opinion.
There is no black and white and just as people going into foreclosure are not all losers, so are all traders not crass criminals. "Scum" seems to be a favored word these days referring to both the creditors and debtors. Name calling used to be thought sophomoric, now it is praised.

We have been manipulated by politicians to take a side and have resorted to blaming and pointing a finger at the opposite side. The bandwagon on both sides is crowded like never before. Common sense is out the window....such a lovely legacy we leave for our children.

[treehugger1]

Bottom line: You (senate/House) can pass what they want in terms of helping homeowners. Part of the real issue is related to an attempt to drive the current new-housing and first-time homeowner economy forward. This is isn't going to happen. Unfortunatley, I believe there will be little "help" for those in current distress.

Witness the tax credit of $8K for those purchasing a home before the end of 2009. I doubt this will increase home sales in a manner that saves the housing market! Folks are learning to hang on to their money, and they will wait until they have an appropriate 20% - 30% down payment. A tax credit won't really help the majority of consumers. The long-term payments of $1100 - $1500 per month for housing worth $200K is creating a new thought process among consumers. Keep in mind that the baby-boomers are the largest class of consumers (low-upper income,) and they will not buy into the credit-based economy; been there, done that. The result will be the majority of the consumer economy (baby boomers) will no longer contribute to credit-based buying. In the long term, prices will come down and eventually our children will be able to afford housing. But, this will not happen overnight.

In my opinion, the economy will need to wait out the ability of the majority of consumers to pay cash for items or 20% - 30% down-payments on houses/autos. Eventually, this WILL happen, but its going to take 3 - 4 years. You cannot force people to borrow money if they think they are better off hanging on to their liquid assets (cash.) I think the banks are doing the same.

This reminds me of the early 1980's, where 12%- 16% financing for homes was a godsend, until the recession hit. You can't sell what folks don't want. The magnitude of this is much greater, but I believe folks will retrench and sit this out. As proof, the savings of consumers is quickly growing in compared to any "new" debt.

The economy based on consumers buying on credit is grinding to a halt. Those caught in the previous economic model will continue to pay the price for what used-to-be.