The Administration's New Subprime Mitigation Plan: Take 30 Days To Pack Your Bags

The compassionate conservatives helming our government have an ingeniously simple new plan for homeowners facing foreclosure: take 30 days, pack your bags, and then get the !@#$ out.

Could you too be eligible for this amazing offer? Probably not! Like the Administration’s past efforts, this plan is voluntary and only a handful of lenders have signed up. That won’t stop anyone from trumpeting their false charity.

The mortgage lenders are hailing the extra 30 days as “stopping foreclosures” and giving time to negotiate new loans. But there are no commitments in that rhetoric. Indeed, this is described as valuable for people who are already 90 days in default–and with whom the mortgage servicer didn’t work something out during that time.

The mortgage industry has been ferociously lobbying against changes in the bankruptcy law that would help an estimated 600,000 families refinance their mortgages at 100% of the current market value of the home. This is a solution that will be painful for many families, forcing them into bankruptcy to get some relief. But it is the only game in town right now to help families negotiate a permanent solution without rewarding the high-risk lenders.

Subprime lenders: Working overtime to put the heart in heartless.

Let Them Eat Crumbs [Credit Slips]
(Photo: Getty)

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  1. dorkins says:

    And just what is the administration supposed to do for those who gambled on rates and lost? Bail them out?

    Or enact Hillary’s idea to freeze interest rates?

  2. R3PUBLIC0N says:

    I understand this is a huge problem with huge social impact, but doesn’t it erode our faith in financial systems if everybody gets a break when things get rough? Aren’t people SUPPOSED to lose sometimes?

  3. MissTic says:

    And why should the rest of America pick up the tab via increased taxes? These “assistance” plans and “stimulus” packages designed to stave off foreclosures and a recession don’t occur in a vacuum. Anything the govt does to intervene in the free market has a ripple effect for the rest of us. If they could maniupulate circumstances for the unfortunate consequence free, then I’d be all behind it.

    Obviously the blood sucking sub prime guys need their asses handed to them. But not every loan in peril today is the fault of these lenders. Lots of people signed willingly on the dotted line with full disclosure and weren’t the victim of some slimy lender. I don’t want to pick up the tab for their greed. And we all pay when the govt decides to “help”.

  4. timsgm1418 says:

    exactly…why is this the governments fault or responsibility?@dorkins:

  5. timsgm1418 says:

    exactly…why is this the governments fault or responsibility? who forced these people to buy the mcmansions?@dorkins:

  6. sharki3232 says:

    Exactly! This is what pisses me off about airlines, every time they fail, we bail them out so they have no incentive to improve its the same thing here. If we bail eveyone out now they will expect in the future.

    “Sure I can’t afford this house, but the nice men from the government will just bail me out.”

  7. klusta says:

    For once, I can’t hold anything against these groups for lobbying. While most times lobbying is done to get their space at the trough, it seems here like it’s more to cover their financial-behinds.

    “refinance their mortgages at 100% of the current market value of the home”

    So in effect, if you bought your house at the top of the cycle and the bank financed you $600k, you should be able to refinance for a $400k loan (current value) and the bank should just eat $200k? I can’t fathom how this would be a good idea. Yes, times will be tight for individuals, but rocking the economy when banks are already hard-up for cash isn’t the brightest idea in the world — and this is just a pragmatic thought, not even contemplating the “justness” of it to families who don’t qualify for this because they were good consumers when it came to financing.

    “rewarding the high-risk lenders”

    Trust me, they’re not going to be “rewarded” when home-owners go into bankruptcy. Banks don’t like holding on to unoccupied houses — it costs money. Hence why pushing the bankruptcy deadlines back is actually a good idea. It gives time for the lender and homeowner to negotiate a balance/payment plan that works for both sides without anyone’s ox being completely gored.

  8. Steve Trachsel, Ace says:

    @sharki3232: Plus it will drive rates up for the rest of us, since forcing lenders to take immediate cash losses (thats what happens when you let people refi at current market) will shrink the number of lenders and force them to find profits elsewhere

  9. RomeoPapaDelta says:

    I don’t understand why nobody is reporting that there is very little acquistion debt being foreclosed. These people cashed out the equity and pissed the money away.

  10. laserjobs says:

    I LOVE 30 DAYS FREE RENT!!! Now that these financial wizards can go back to renting something they can afford, maybe consumption spending will get back to normal.

  11. poodlepoodle says:

    A fair number of people lied on their loans, why am I to feel sorry for them? Rather than buying I’ve lived in a rental with loud neighbors. I don’t get to deduct my rent, I don’t have the advantages of homeownership like being able to do what I want with the place.

    So again, why am I supposed to feel sorry? Heck if I robbed 400 bucks from a bank with a gun the FBI would be all over me, if I take 400,000 with a stroke of a pen apparently I get everyone’s sympathy and a government bailout!

    In 2006, the FBI studied three million mortgage loans and found that 30 to 70 percent of early payment defaults can be linked to misrepresentations in mortgage loan applications.

    The only way for this to happen was for someone to lie on a mortgage application. Some media stories have implied that it was lenders who did the lying and that most borrowers are victims of predatory lending schemes.

    The truth is that borrowers did their fair share of lying too. More than 40 percent of subprime borrowers received loans without having to document their ability to pay. The borrowers simply ‘stated’ their income on the mortgage applications.

    Almost 60 percent of stated-loan applicants inflated their incomes by at least 50 percent, according to the Mortgage Asset Research Institute.

    These people can go DIAF
    source: [tinyurl.com]

  12. ClayS says:

    @timsgm1418:
    Welcome to Consumerist, comrade.

  13. Riddar says:

    Alright, so people who can’t pay their mortgage may get a free month. Better than nothing.

  14. Riddar says:

    @poodlepoodle: Along that topic, don’t forget the other story here a little time ago where some were up in arms that not paying your utility bills might in fact damage your credit history.

  15. Wow… Why do you guys hate America? Hah. No seriously, I think only the heartless conservatives are up and on consumerist right now.

    I agree that people made bad decisions, but there was a lot more than just consumers making poor choices. A lot of people could make their payments if they hadn’t lost their job… If they didn’t have to pay such high rates for health care…

    Nothing occurred in a vacuum, and before all of you form a circle jerk with people struggling to keep their homes in the middle, maybe think about how a lot of other really shitty things have been happening in our economy.

  16. poodlepoodle says:

    Along that topic, don’t forget the other story here a little time ago where some were up in arms that not paying your utility bills might in fact damage your credit history.

    Yea that’s the reason my bill is so high. I live in Phila which has some of the highest utility bills in the country? Why? Because there are so many people here who don’t pay their bills that no company will do business here, so the city runs it. My bill subsidizes all the heat everyone else uses!

    I can’t wait for this policy to be true of a house I can’t buy because I’ve been priced out by liars! Wow, what a country.

  17. poodlepoodle says:

    @AngrySicilian:

    I have an idea, everyone who lied gets sent to jail. Then we can help out the innocent.

  18. snoop-blog says:

    @AngrySicilian: no they linked this article to the wonkette.

  19. @poodlepoodle: People are all just lazy bastards that don’t want to pay “responsible bills” and rather blow their money on rims and gold teeth caps. Right?

    I find it hard to believe that people want to ruin their credit by not paying utility bills and their mortgage payment. Maybe we should think about our goals as a society and what we really value.

    Does a CEO’s daughter need a 600k dollar sweet 16 party while people can’t even afford to pay their utility bills….

    Just a thought.

  20. @snoop-blog: Crap… you’re right, let’s hope the paultards dont’ invade :) It all makes sense now.

  21. snoop-blog says:

    @AngrySicilian: LMAO!!!!!!!

  22. milesotoole says:

    I didn’t realize that the Murrican Gubmint was in the business of subsidizing stupidity. In fact….shouldn’t submint be staying out of business, period? They can’t even manage to fill holes in the road with gravel and asphalt. that’s something my daughter could do. Why are we trusting them to bail idiots out?

    BTW, all those Evolution folks who think creationism is stupid, remember: Evolution depends on survival of the fittest.

  23. bohemian says:

    They only people that should be given help are those who could afford said home via a government backed loan instead of the sub prime one they ended up with.

    If their home falls within value limits, their income in the income limits and the home within the standards for HUD, FHA or VA then I could see giving them a break. But the house should be bought from the lender for the current devalued price plus a discount on that for all the problems it caused.

    I also have no problem with cities taking forclosed homes that are being left to rot via eminent domain and then reselling them themselves.

    The only people I really have limited sympathy for is those who bought a McCastle on an ARM or interest only loan, those who were flipping speculating or as investments.

    Instead of giving lip service to these lenders they should be under investigation.

    This whole mess started because of lack of regulation and oversight. We have regulation not just to prevent consumers from being taken but to prevent huge economic collapses such as this because when the get big enough they start dragging everything else with them.

    The unrestricted free market just doesn’t work because people can be evil and greedy.

  24. fashionablycontrived says:

    For once I would like to see people take responsibility for their actions. You buy something you can’t afford and you deal with the results, whatever they may be. Why should the responsible people be punished because of the greedy idiots among us.

  25. poodlepoodle says:

    @AngrySicilian:

    Why? My friends keep their heat at 50 degrees in the winter because they’re cheap. Why is it too much to ask that others do the same? If I’m going to be forced to pay your bills for you — then you’re something along the lines of a child and I should be able to dictate how you use those things I pay for.

    Your CEO example is ludicrous and just begging for a tu quoque fallacy. You don’t use anything you don’t need? Buy makeup, wear nicer shoes than you absolutely need? Take an extra trip, eat more food than will strictly keep you alive? I mean some poor person in India could use that food or at least use the money you use to buy that food to stay alive.

    Really how could you, you selfish, selfish person.

  26. @bohemian: Amen. I’d love to post a followup but, like most people trying to keep their home, I’m off to my second job.

  27. @poodlepoodle: Dude… I am a cheap person (and a guy who doen’t wear makeup or spiffy shoes o.O ). I’m just saying that blaming the poor people doesn’t make a whole lot of sense when the problem takes root in our society and, as a product of that, our economy.

    We don’t teach people to be frugal, in school, the media.. anywhere. Pecuniary Emulation, theory of the leisure class… though it has its problems, I think it applies. OK now I really have to go to work or i’m going to be late. Have a good weekend.

  28. snoop-blog says:

    @poodlepoodle: SAID: “If I’m going to be forced to pay your bills for you — then you’re something along the lines of a child and I should be able to dictate how you use those things I pay for.”

    communist anyone? he wants to “dictate” in america?

  29. milesotoole says:

    @snoop-blog: I agree that people made bad decisions, but there was a lot more than just consumers making poor choices. A lot of people could make their payments if they hadn’t lost their job… If they didn’t have to pay such high rates for health care…

    Nothing occurred in a vacuum, and before all of you form a circle jerk with people struggling to keep their homes in the middle, maybe think about how a lot of other really shitty things have been happening in our economy.

    Yeah, but at the same time, the horrible things that happened to people, didn’t happen overnight, either. Healthcare didn’t all-of-a-sudden become unaffordable, it’s been growing more and more unaffordable since the 90s. and people haven’t been losing their jobs all-of-a-sudden, the job base has been eroding slowly, if at all.

    do you remember when you were a little boy, and your mommy told you not to touch the hot stove? do you remember what happened when you finally DID touch the hot stove? lastly, did you ever touch the hot stove again? words to think about.

  30. poodlepoodle says:

    @snoop-blog:

    I’d say making me pay for your heat in the winter is the commi thing to do. Me? I turn off the heat when the bills get high and use a blanket.

    But what do I know, I’m a bitter renter being asked to bail out people who wanted to live like rich people.

  31. poodlepoodle says:

    I’d think forcing people to pay the bills of other people is the commi thing to do.

  32. snoop-blog says:

    @poodlepoodle: sorry, what did you say? i was too busy reading the Daily Worker.

  33. poodlepoodle says:

    Well good for you fellow traveler! Keep reading, the revolution is nigh.

  34. Islandkiwi says:

    I don’t agree with bailing out people who fell behind, but I have more of a problem with bailing out the mortgage companies. See, if the person falls behind on payments, the mortgage company gets the land. And if we bail out the mortgage company, then they’re benefitting from the stupidity of accepting all these high-risk loans.

    I believe the mortgage company has a reasonable option, and that is talking with the lender and structuring a different loan. But I don’t see that happening, I see the mortgage company pretty content to foreclose and then cry to Congress. Having their cake and eating it too? More like grabbing people’s cake and then crying to Congress that there should be more cake.

  35. mbbilder says:

    Many folks are going to lose their homes because they gambled and lost. Some gamblers have to lose.

    But what about the folks who bought homes or refinanced perfectly good mortgages with brokers who lied, misrepresented loan terms, failed to get documentation of ability to pay (who’s idea was the “no-doc” mortgage, anyway?), altered forms, etc…?

    This melt-down is the result of greed. Some of that greed was contributed by individuals who tried to take advantage of temporary conditions to permanently enrich themselves. Mortgage brokers, bankers, bond traders, investors, etc… who cashed in on artificially favorable rates (at the expense of people they had a duty to deal with in good faith) are as much to blame, however.

    Perhaps, instead of a bail-out, the role of government should be to broker a settlement so that those truly wronged by the mortgage industry can be compensated by those that did the harm.

    Unfortunately, several years of relentless gutting of federal oversight and enforcement capabilities makes this a pipe dream.

  36. snoop-blog says:

    @poodlepoodle: so you are against housing authority, and government assistance, and food stamps too right? seeing how its your tax dollars paying for that. how dare you have to help out the less fortunate like that.

    i now bid you all good day.

  37. weave says:

    In 1999 I purchased a house worth less than half of what my mortgage banker tried to convince me I could afford. I was ridiculed by some family and friends for “limiting my wealth growth potential.” My house cost $140k and now is worth around $280k. So if I had only purchased a $280k house I could have one worth $560k now, doubling my profit potential.

    What a fool I was.

    For the shame of me wanting to buy within my means and have a comfortable cushion between my monthly income and expenses.

    So now I get to share in paying for the great mortgage bailout of those who bought that $280k, who took out equity loans as it increased in value, and now are faced with high monthly payments and a house worth less than what they owe.

    And the money I saved and invested instead of pouring into mortgage payments? Now it’s earning less as interest rates are artificially lowered and stocks are losing value for fear of the great economic tanking that is bound to occur.

    Who is going to shed a tear for me? Where is my handout?

  38. WhiteTrashLegend says:

    Hey, way to not try to hide your liberal bias CAREY. You know, articles on this site would be a lot better if we didn’t have mention of partisan politics.

    On the topic at hand, I agree with most commenters. Something is better than nothing to find a compromise between both irresponsible lenders AND borrowers. However, the market is inherently risky, especially when you buy more than you can afford.

    Sorry, but I think there’s a very small minority of people that have been unjustly screwed in their mortgages. The rest took bigger loans than they could handle over the long haul by banking on a continually appreciating market. They gambled and lost. Let the market correct itself, and we’ll all be better in the long run, even if it hurts a little more now.

  39. dreamsneverend says:

    @dorkins: CORRECT.. we have enough hand holding from our govt. People must LEARN and realize bad personal/business decisions cost you money!

  40. NotMe says:

    When I financed my home back in 2003, I knew that I could get an ARM, and have a lower payment initially. I could have used lower initial payments as an excuse to buy a more expensive home that I really couldn’t afford. But I didn’t.

    I knew that interest rates were relatively low (my 30 year fixed is 5.5%), and they really didn’t have anywhere to go but up. I did the responsible thing, and limited myself to looking at homes I could actually afford.

    Why should the rest of us be forced to bail out those irresponsible enough to buy homes they could barely afford in the best of circumstances? What ever happened to personal responsibility?

  41. B says:

    I must have missed the part where Carey said the gov’ment should bail out all the poor sub-prime mortgagees. I’m of the opinion that forcing people into bankruptcy, while being “fair” will have disastrous effects on both the finance and real estate markets, and our economy would be better off if we find a way to refinance the loans, allowing the borrowers to continue making payments and eventually pay off their houses.

  42. MsClear says:

    The banks are agitating for some sort of federal bailout plan right now. I’ll be pissed if that happens. Banks don’t want to deal with the fact that their loan making strategy sucked. They didn’t want regulation, now they don’t want to deal with the mess that they made.

    Bring back regulation. Consumers can’t get in over their heads and businesses can’t fcuk over the economy with their greed.

  43. flamincheney says:

    As opposed to bickering about political sides of the argument I think it would be wise to step back and realize that any blanket statement on either side is rife with fallacy. It could be wise to evaluate the situation on a case by case basis, rather than lumping every sub-prime, predatory, forclosed on together.

    I am sure many of these are the fault of an uninformed or overly optimistic buyer, likewise I ma sure some of these are the result of questionable lending practices by lenders and/or brokers. With how epidemic this issue is it is impossible to treat every situation in the same way, and any plan that tries to handle this through simplification is no better than the flawed lending/borrowing practices that started this whole thing off.

    Ultimately I feel the lenders need to bear a good portion of the brunt, as they were the ones who risked billions of dollars by essentially giving money to any Tom, Dick, or Harry without crossing their t’s and dotting their i’s. The banks have hauge responsibility, and they failed. All they would of had to do is decline mortgage apps that were falsified, undocumented, or otherwise a poor risk factor for the lender.

    That said, did many people make short-sighted bad decisions before taking out these loans, yes.

  44. WhiteTrashLegend says:

    @MsClear:

    As much as the conservative in me wants less government intervention, you’re 100% correct. When individuals and corporations continually make poor judgements and prove themselves to be irresponsible in f-ing over the economy, it’s time for the government to lay down some more rules.

  45. johnson1 says:

    @AngrySicilian:

    Part of good financial planning is having an emergency fund for things like losing your job, medical bills, etc. If you are just a few thousand dollars or a couple months of unemployment from losing your home – YOU COULD NOT AFFORD THE HOME AND YOU SHOULD NOT HAVE BOUGHT IT

  46. flamincheney says:

    Many people borrowed more than they could afford to borrow, but do not forget the banks who apparently loaned out more than they could afford- all the while knowing what they were doing was high-risk behavior akin to daytrading or gambling in its risk to reward ratio. These bankers are/were well versed professionals lenders. Now how many borrowers are professionals at borrowing, and well versed in the nuances of mortgage lending?

  47. weave says:

    @B: Why would that be unfair. A glut of foreclosed houses on the market will make the American dream of home ownership available to many younger people who right now have no hope of owning one due to the artificially high prices, but with lower prices could then afford one and hopefully learn from idiots before them and actually buy a house for the purpose of living in it and not expecting to flip for profit in a short amount of time.

    In every market movement there are winnings and losers.

  48. flamincheney says:

    @ johnson1

    Is it not part of the banks’ responsibilities to also be adept at financial planning??? After all, that is supposed to be their business. Should they not have seen market trends, and the insustainability of the lending practices they were pushing??? Maybe saved a little cash for when the bottom fell out of their ponzi scheme??? It is a 2-way street, and failure to acknowledge this is part of the problem when trying to formulate a solution.

    Both parties are guilty, and both need take responsibility. The gov’t took care of the banks through bail-outs and rate cuts. meanwhile the consumer has to “face the music.”

  49. Xerloq says:

    @snoop-blog: I think there are some people who truly need assistance, and might need to rely upon the charity of others of the can’t do for themselves. Those who won’t do should suffer. Using taxes for these programs tries to force people to be charitable, which is wrong. I believe the line is ‘promote the general welfare’ and not ‘provide the general welfare.’ The latter is the socialist/communist belief.

    Anyone else think it wrong that the government forces you to pay more than most religions require? I’d gladly up my contributions to charity if the government cut taxes. The government needs to stay out of the charity business as that is the job of the churches. Whatever happened to the separation of church and state?

    Did you enjoy the irony of that last line? Use their own argument against them.

  50. MsClear says:

    @ White Trash Legend

    Wow, a liberal like me and a conservative agreeing on something.

    I do desperately want housing prices to fall, so my hubby and I can buy a home, but I don’t the economy to tank either.

  51. MsClear says:

    Here’s the article about the “rescue plan” being floated by the banking industry.

    [www.nytimes.com]

  52. WhiteTrashLegend says:

    @MsClear:

    It’s all good. I’m a conservative, but I respect anyone, even those that disagree with me as long as they have a rational and conducive argument. It’s nice to agree at times too though ;)

    Good luck to you guys in getting into a home! (And don’t worry, this is a great and resilient nation, and home ownership is still a good investment as long as you’re not selling in the next couple years.)

  53. NotMe says:

    @AngrySicilian:

    Apparently, you “value” the ability to stick your hand in my wallet and pull out some money.

    I don’t value that “value” at all. I value personal responsibility. It is true that the economy seems to be a little shakier than it was a year ago, and also true that it may get rougher still. Life hands all of us unwanted surprises from time to time. Responsible people look ahead, and take steps to be prepared for the inevitable economic dips and sags. They keep their lifestyle within their means, and if they’re not satisfied with that, they find ways to increase their opportunities and raise their standard of living. That’s the American way, comrade.

    I used to live in a state where the median income was well below the national average, and many people were on public assistance of some sort. I came from a low income family, but one that valued work and personal responsibility over “societal values”. In my mid twenties, I took a good look around and realized that I was never going to get anywhere if I didn’t do something for myself. I moved away from my family and friends, took control of my circumstances, and find myself in a much better position twenty years later.

    For the record, if that CEO you mention can afford a $600K sweet 16 party for his daughter, and wants to, then it’s none of your business, is it? I’m sure you have “better” ways to spend his money, but I’d rather you demonstrate your “values” with your own money.

  54. lightaugust says:

    I get the feeling that the government’s going to end up bailing out this debacle out one way or another. It’s just a matter of this: Do we do it now when we can help some who legitimately deserve it (and many who don’t, agreed) get help, perhaps keep their homes? Or do we do it later when it’s we’re bailing out the investment banks and equity firms? I’m guessing frugality would go with the first one.

  55. bglav says:

    Personal. Responsibility.

  56. JustAGuy2 says:

    When you sign a mortgage, you agree to do one of two things: make the payment or give the house to the bank. I just don’t see what’s complex about that.

    If people are going to get bailed out when they made bad real estate investments, then I want to get paid back for the dot-com stocks I lost money on.

  57. MissTic says:

    @MsClear: Oh dear God. We’re all screwed then. “Let’s foist these loans off onto the govt!” Whoo Hoo!!! *eyeroll*

  58. Islandkiwi says:

    @JustAGuy2:

    I agree completely. By the same token, the mortgage companies need to accept the risk and not ask the federal government for help either.

  59. timsgm1418 says:

    trying to figure out what that has to do with anything. If the CEO can afford, then yeah the daughter deserves it.Not my place to decide how other people spend their money I don’t think anything in our bill of rights entitles everyone to have the same amount of money. Not all CEO’s start out making millions of bucks, they work their way to it, and everyone else has a right to work towards that goal as well. IT’s all in what’s the most important thing to you. If spending time with your family is more important than working 100 hours a week, than that’s your choice. Personally it’s my choice too, I have no desire to be a CEO, I’d rather spend time with my family, but I don’t think it’s my business how rich people spend their money. you gotta figure a lot of people are making $ off a party like that, the caterers, food vendors etc, it all trickles down.@AngrySicilian:

  60. timsgm1418 says:

    @Islandkiwi: completely agree

  61. timsgm1418 says:

    @poodlepoodle: good one…actually LOL on that one

  62. ARP says:

    @JustAGuy2: So where’s your outrage at the short term lending the government offered? Where’s your outrage at their ability to “write down” their bad debt. Meaning, their tax burden is reduced because they made really dumb decisions? As others have commented, both share blame for the situation. So all this talk of personal responsibility is very true, but I see very little anger at banks who now pay fewer taxes. Which means you have to make up for it.

  63. Pithlit says:

    @snoop-blog: Hey, it might not be a bad idea. Let’s get to dictate how people who use our tax dollars live. Let’s not forget anyone who gets a tax deduction on their mortgage payments. I hereby ban homeowners from putting up those gawd awful inflatable holiday lawn decorations that end up a deflated mess after a storm blows through. I don’t want a penny of my tax dollars going toward one of them.

  64. kpfeif says:

    But what about THE CHILDREN?

    Seriously, though, the emotional reaction people get is “but they’re losing their home!” Try to separate from the emotion of it and look at the facts. They couldn’t afford it, they knew this (usually), and EVERYTHING was spelled out to them (unless it was pure fraud). So, they lose their house. How much are they really out? They lived in a house, paid rent, they lose it, and that’s it. Walk away.

    Not a bad deal, really.

  65. timsgm1418 says:

    @weave: amen…my problem is I bought a house I could afford 18 months ago, the payment was right at what I could afford, but with the housing boom my property value soared and now my property taxes went up, then our delightful dipsh*t governor decided well that’s not enough let’s raise property taxes, sales tax, and cigarette taxes (at least until he can find something else to tax)and now my mortgage payment has gone up almost $200 a month since I bought the house, and I am struggling to pay it. All I did was buy a house I could afford, but because of a lot of the investors and people buying beyond their means, my taxes go up and make it extremely difficult to pay my mortgage. Let the property values go down again or actually stand for the true value. Drives me crazy to see all the McMansions being built, try to find a homebuilder building new homes for a middle class person, good luck. I think there’s a reason Marylands unofficial motto is “if you can dream it, we can tax it” Almost makes me wish I was back in AZ (almost, but not moving)

  66. timsgm1418 says:

    @poodlepoodle: my daughter always complains how cold my house is (she’s an adult) and I tell her if you want to pay my $250 a month gas/electric bill turn the heat up, otherwise put on a sweater. Same thing in the summer complaining it’s hot in here, I seldom use the A/C, I grew up in a house without A/C and lived 5 years in Phoenix with nothing but a swamp cooler, and never had a car with A/C, yea it’s hot but what do you think people did 100 years ago? get over it already A/C is not a requirement

  67. TechnoDestructo says:

    @R3PUBLIC0N:

    The problem is when the losers take over everything and drag everyone else down with them.

  68. timsgm1418 says:

    @weave: excellent point

  69. timsgm1418 says:

    @Xerloq: I’ve never heard that said so well…excellent, promote not provide, I think a lot of people have forgotten that

  70. timsgm1418 says:

    @Pithlit: oh man if only we could ban those horrible things…sadly they have them for every holiday now, not just christmas…and I live in a neighborhood where a lot of people have them, it’s sad really to see Santa looking like Rudolph is um taking a road trip on Hershey highway, trying explaining that to your 5 year old grandson…..

  71. JustAGuy2 says:

    @Islandkiwi:

    Absolutely.

  72. poodlepoodle says:

    @kpfeif:

    Re: WHAT ABOUT THE CHILDREN!

    No kidding, many of these people committed FRAUD. They should be happy they’re not getting locked up and the FBI has decided against following up on the majority of this crimes (I’m not, I’d be way happier if they went after these people and left the pot smokers alone).

    @ARP:

    Re: outrage

    Make a thread about them. This one is about the borrowers, I’ll share my outrage for them too. Don’t worry I have plenty to go round. I’m very economical that way.

  73. timsgm1418 says:

    thank you for the good laugh this afternoon. Personally I feel if they made pot legal and taxed the crap out of it, budget deficit solved…I’d buy it, cuz it would probably still be cheaper than my cigs.@poodlepoodle:

  74. Snarkysnake says:

    Okay , give them another 30 days. Great. Then what ?

    The majority of these borrowers are so under water on their loans that it won’t make a hell of a lot of difference.The danger becomes the temptation to “give” them another 30 days after that and it all becomes another vote buying scheme in the name of “compassion”.This little game will continue until after the next election and then these people don’t make good press anymore and then , well , capitalism’s a bitch.

  75. poodlepoodle says:

    @Snarkysnake:

    The great irony here is that every stopgap measure they come up with actually makes it worse for people trying to pay off the note.

    Stop foreclosures: great banks when they feel inclined to lend will do so only to very good risks at very high rates. End result: lower housing prices, people even more underwater. Sounds like a good reason to walk away.

    Renegotiate the contracts: Good one Uncle Sam! Make banks even more unwilling to lend. Same result as above. More incentive for borrowers to use jingle mail!

    Keep on lowering interest rates: I like this one. Hey I have a lot of student loan debt, let’s inflate this baby away. Actually this one might help homeowners. IN highly inflationary times it is good to own a house as a hedge against inflation. Hopefully you also own enough land that you can grow your own food because you’re not going to be able to buy it. The third world and savers like me don’t like the option because they’re going to starve to death and well I like being able to get ahead by saving what I have not speculating on the open market (funny I know).

  76. randombob says:

    I know it’s a little cold-hearted and doesn’t take into account the fact that SOME PEOPLE are being stuck with loans in bad situations, but….

    I really feel that this crisis we’re in is due to “house-flippers” artificially inflating the market, driving up prices, selling houses to other “flippers” who bought it thinking THEY could turn a profit… It’s a vicious cycle for sure, and now the people at the bottom of the house-flipping pyramid are stuck with the majority of the bills, perhaps.

    BUT FUCK THEM. They have made it almost an impossibility for the average american to afford the “American Dream.” Mortgage costs have skyrocketed SO MUCH in the last decade it’s completely ridiculous. I, for one, am looking forward to seeing the housing market crumble further, bringing homes into an affordable range.

    Houses are places to live, ARE NOT – and should NEVER HAVE BEEN viewed as investment vehicles. That’s why we’re here now. People bought houses as investment vehicles, at prices they couldn’t afford, hoping for a 6-18 month turnaround ROI. And they got caught, and people looking to buy homes finally got wise and said “I don’t think I want to pay these artificially inflated prices.” Good for them/us/me!

    I watched the home my parents bought in 1999 go from $280K to almost $1 million in appraised value in the course of 4 years. that’s F-ing ridiculous. Nothing changed. They didn’t add a room, a second house, or anything. They lived in it, that’s all.

    Fuck the house flippers, they fucked us first. Don’t bail them out, let them suffer their fate, and let the rest of the US of A have a) lower home prices, b) lower interest rates, and c) less house-flipping in the future.

  77. JoeWoah says:

    @ poodlepoodle

    You live in Philly… the cost of living in that city is cheaper than just about any other major metro area in the entire country. In fact, I believe it is the cheapest. Yet you manage to complain about your utility bills? Boo hoo. If you don’t like it, more to the ‘burbs or Amish Country; or maybe a more expensive city like DC, Boston, NY, or even Columbus!

    You conservatives are so myopic… no one is talking full out bailout (well, maybe Nader). What we are talking about is stepping in and telling these firms to do something responsible for once. Give people a chance to catch up, lower interest rates (God knows we’ve lowered the rates for them to borrow, so why are they still increasing their rates), make sell-off’s cheaper, etc… They will still make money, and the CONSUMER (is this Consumerist, lets check the damn heading) will be able to pay their bill and continue to be a productive member of our society.

    When everyone wins, the economy wins, simple at that.

    Everyone loses on foreclosures, other than those who snatch property up on the cheap (not a bad things either)… and even they lose when there are SO MANY foreclosures (as there are now) that they have to hold on to declining investments for MANY YEARS longer than they would have to otherwise, their by reducing their buying power, increasing opportunity costs and increasing their tax burden that fed. taxes breaks wouldn’t even come remotely close to compensating (more foreclosures = less property owners = less tax revenue = higher taxes to compensate = HIGHER TAXES!!!)

    Only the Fed Government can address this issue with the lowest hit to your tax bill. 1.5% increase across the board (not ideal, but simple for ‘some’ to understand) can not only address this but also fund health care… a bit more than that and we’re on our way to a balanced budget. If we leave it to the States and local governments… which will be the most affected… they have a smaller tax pool, so they will need to increase their income, sales, excise and property taxes (among other taxes and fees) over 15% in some places to make up for what such a small increase could have accomplished.

    One way or another you’re going to pay the tax man… I’d rather pay less, wouldn’t you?

  78. poodlepoodle says:

    Hey I like name calling as much as the next person. But I don’t seem myself as a “conservative.” Let’s see: married a foreigner, OK with GLB marriage, pologamy, pot, drugs and prostitution. Man, I think I’m ready for the Christian coalition. I bet the republicans would just love to have me.

    Housing prices have trebled here in the past 5 years. A home what was 200k in 2001 now sells for 600-800k. I don’t know about you but my earning power didn’t go up that much in that time period. Phila also has a 4% wage tax, a business privileged tax and a host of other taxes you only find in this fair city. It is also the most violent big city in America so the places that don’t have a nightly murder command a premium.

    Kindly STFU when people are talking about things you clearly know nothing about.

    I live here for a good reason, moving is not an option. A bail out will only make things worse. One might assume that you have a dog in this fight to have such strong opinions. Underwater are we?

  79. poodlepoodle says:

    I left out the median house hold income is $30,000. Care to hazard a guess what the median house sold for last year? Actually I bet you don’t, actual research seems beyond you: 130,000

    OK that doesn’t sound too bad now go and look at the actual sale prices of Philadelphia’s neighborhoods. You’ll note that the only places that are affordable (well maybe you won’t, since you seem to know nothing about Philadelphia) are absolute warzones.

    [tinyurl.com]

  80. NotMe says:

    @JoeWoah:

    I love how you turn a bailout (yes, a bailout no matter how vaguely you word it) into a win-win for us all that leads to lower taxes.

    You make no sense.

    The truth is, for the most part, that people bought houses they can’t afford, and they find out that…well, they can’t afford them. Surprise.

    Advice for those facing foreclosure because they were irresponsible: Move out, move on, and learn from it. Don’t look to the government (which is really all of us) to bail you out, and don’t expect the banks to take the hit either, because in the end the rest of us take that hit, too. You made a mess of your personal finances, so you get to clean it up.

  81. chuloallen says:

    well atleast we know that the consumerist is both “Christian hating” liberal yet(!)a consumer advocacy site. Then again there has been a trend of “its not the peoples fault but big company” issues.

  82. JoeWoah says:

    Nope, no dog in this in this fight other than Politics, I bought a house I can actually afford in a more expensive city (DC). Having gone to college in Philly not too long ago, I know a thing or too about values in the city and that the city is actually declining. You could buy a pretty nice place in Center City for less than a pre-fab in Bensalem. Anyway, only the first paragraph was addressed to you, the rest was addressed to the conservatives in the crowd.

    What I am talking about is the causality of our economic situation. Some people, as I said, are completely myopic to the situation… they can only see and only care about what directly affects them in the short run of 6 months to a year and they can’t wrap their tiny minds around anything more complicated beyond that.

    Guess what, the 100,000 + or so foreclosures will have an effect on you, on me and on everyone here at some point. Maybe not today, maybe not in a year… but it will at some point if it is not addressed in a responsible manner.

    You obviously didn’t read what I wrote because I specifically said I WAS NOT TALKING ABOUT A BAILOUT. A bailout is not the answer… there were simply too many people who gamed this system (or tried and got screwed) on both sides of this. We can’t bailout everyone who signed on the dotted line nor can we bailout every bank for every investment (though we do need to protect their solvency or our economy will be in real trouble).

    Instead, I believe we need to tighten the regulations in order to insure those banks remain solvent to their depositors and investors; and make responsible investment decisions and loans until they can get their books back in order. Overall, they will shore up the backbone of our economy for the time being.

    As for the consumer, we should freeze foreclosures and interest for a short time on the most at-risk, and we should force those banks to enter into a more reasoned repayment plan at lower interest rates. There is no reason any one should be paying 18% (and much more in some cases) interest on a home loan, period!

    We already lowered Prime to 3%, there is no reason for them to charge 5-10 TIMES MORE! A more reasoned 3X multiplier could help those who could apply. If those banks sold bonds at higher rates trying to buoy themselves, that is their problem and they should have known better. That is the argument you and other use on the consumers, but the banks were in a much better position, both fiscally and academically, to know what they were getting into.

    Banks lose, on average, $50,000 per per foreclosure. As the market floods with them, buyers become scarce, and that increase. The foreclosure only helps the SHORT TERM ledger for the bank… but in the longer term, after many, many foreclosures… this loss will multiple exponentially in terms of cash, opportunity costs, lost interest and less solvency (which affects investor confidence) etc…

    Like I said, maybe not everyone can or should be able to get this kind of deal… not everyone should buy a house whenever they damn well please, but there are too many good, hard working, productive American’s who got caught up in this; including a huge percentage in the military. Why do you hate our troops? ;)

    This is not a bailout… this is a repayment plan that almost everyone wins. There will be losers, that’s life, but all we can do is give both the banks and the consumer a shot to fix this.

    If it’s not addressed by the fed’s, than some half-assed, ham-strung solutions will pop up all over the place at the state and local levels… and it WILL cost you more than if the feds do it. Also, they probably won’t be very effective.

    @ poodle again… you brought up your utilities. I know Philly, Baltimore, Columbus, etc… have been affected more so than most cities because of the percentage of lower income and minority buyers who got caught up in this mess. When up with the decision to attempt to pay their mortgage that they have no hope with but could buy them some time, or pay their utilities on time where they can legally skimp on… which do they choose? Which would you choose? See, your increasing utility bill is a product of this now. What will be next?

  83. hof1063 says:

    @randombob:

    You are 100% correct. We have three necessities in life; food, clothing and shelter. A house is shelter and only an investment if you have two. One to live in and one to speculate with. The government, banks, and realtors have hijacked the American dream. They’ve convinced the vast majority of the population that appreciating property value is a good thing. When prices go up, banks make bigger loans, the government get more tax dollars and realtors get bigger commissions. The only way to unlock the equity in your house is to sell it or take out a loan. In either case, some bank the government or both are reaching into your pocket.

    The government is only interested in a bailout because with less revenue to collect they’ll actually have to earn their pay by conserving existing resources.

    I find it interesting that in the absence of regulation in some industries we constantly fall into boom and bust cycles. I’m not for or against capitalism in its purest form but I am for consistency. If we encourage the booms we must allow the busts. If we want controlled growth then we should allow controlled failure.

  84. I am a heartfilled progressive. Hell, I work for that idiot largest employer, the Executive Branch of the US Federal Government (1.6-8 Million and counting). But, at some point, you can only bail out so many people. I suspect that a lot of the folks who are looking for a bailout were speculating, were buying dot com stocks with nice marketing approaches and no customers, and probably had their money stashed in Savings and Loans back when Reagan was president.

    I don’t want to cut them loose, but at the same time, the trust and smooth functioning of the capital markets are very important and these people are screwing it up for everyone else. How about this: Roll back bankruptcy to what it was like under the Clinton administration, with a caveat. If you declare bankruptcy, any chapter, as a non-corporation, you have to get a Fed Sponsored financial education course, with no fewer than 20 classroom hours and a curriculum focused on basic personal finance and debt management. If you miss your classes, your bankruptcy protection is removed. Obviously, folks are given a chance to make them up, but at some point, you flunk and you have to start over.

    Good solution for everyone.

  85. JoeWoah says:

    As for taxes… when the current Admin (in our current situation this applies, in others it may vary) lowers Fed taxes, lets say 3%, that is A LOT of money. Hundreds of Billions of dollars lost. That means services must be cut… health care, infrastructure repairs and improvements, Education (so children do learn) and could be productive members of society at some point, SCHIP so those children won’t die, financial aid to give EVERYONE a shot at a life outside of a factory or bathroom, etc…

    State and Local government get less money from the feds too…

    … State and Local politicians are moreover at the whim of the people than the President and Congressional members…

    … So, they need to deliver these services and infrastructure improvements regardless of what the feds are doing…

    … How do they pay for this? They increase your state and local property taxes. Your income tax. Your sales tax. Your excise tax. They increase fines for speeding and whatnot. They charge you more for services, like those at the DMV. Etc…

    …They have a lower pool of people to tax…

    … and even less that own property that they can tax, like your home…

    … and that’s why your 3% tax break from the Feds equaled a 10%+ increase on the property tax you pay on your home!

    I can go on, but if you can’t understand this simple concept, what’s the point?

  86. burbed says:

    I totally agree with Consumerist here.

    The US Government should be doing more to save the american dream. I hope Consumerist writes a post that proposes the Save the American Dream Tax – where the IRS would levy a Renters Fee to ensure that every one who owns a home can sell it at breakeven. This Renters Fee could be payable by going to Best Buy, and could be disputed through mandatory arbitration.

    I mean… how is it at all fair that this person is going to lose at least $100k by selling this house?

    [www.burbed.com]

    Bush is mean. He should be doing something with your money to help this owner. Doesn’t he realize that this homeowner was probably tricked – no – had a gun held to his head to buy?

    Realtor: HANDS UP chump. Lemme so those hands.

    Renter: What? Huh?

    Realtor: That’s right. You’re gonna have to buy this house, see? Give me your…

    Renter: Wallet? Don’t shoot me!

    Realtor: No, your social security number so my buddy here can give you a mortgage.

    Renter: Anything! Just don’t shoot me!

    Mortgage Broker: Sign here if you want to live.

    Renter: Yes, I want to live! I will buy this house even though it looks like a busted garage!

    See? Damnit Bush… do something!

  87. dorkins says:

    @PotKettleBlack: Sorry, but JoeWoah says you’re a “conservative.” So learn to live with it.

    Better you found out now than later, I guess!

  88. JoeWoah says:

    @ dorkins,

    Some people don’t read the entire post either.

    Only the first paragraph was addressed to Poodle.

    … Poodle could very well be a conservative, while not being a Republican, or a right wingerer, or a neocon, or an Ayn Rand Libertarian, or a CATO Libertarian, or a Paultard, or a Christan Conservative, or an Orthodox Jew, or a social conservative, etc…

    Maybe Poodle is a Log Cabin. I don’t know, I don’t care. The argument was a conservative argument, so I could call poodle’s argument conservative while, overall, Poodle may not be in respect to other topics. I didn’t see Poodle’s life story in the post, so I didn’t address it.

    But then again, some people can’t understand complex concepts and jump to conclusions. I feel sad for those people.

  89. B says:

    @JoeWoah: I agree with you. Start regulating the banks properly and force the lenders and the borrowers to work together to avoid foreclosures. If we have to spend some of my hard-earned tax dollars to accomplish this, that’s fine, but no bailouts. Maybe make an incentive program that gives tax breaks to banks (and borrowers) who work to avoid foreclosures.

  90. @NotMe: Actually I wouldn’t stick my hands in your pocket for any reason… I’m not a Republican congressman.

    Yes, as a matter of fact, I do have better things for that money. But, my point is the CEO shouldn’t be making that sort of money WHILE employees are getting shafted, companies are outsourcing jobs, and more importantly, not re-investing money into the betterment of the company /economy.

    I see that we aren’t going to see eye to eye on this, comrade, and Consumerist isn’t the forum for philosophical discussions… no matter how much your “picked myself up from my bootstraps” story got me misty eyed and all choked up… really.

    Zing.

  91. yikz says:

    @timsgm1418: Too many people lived to close. They kept borrowing against their equity with 3 year ARMs, or interest-only mortgages. And when their property values started dropping, they’re stuck with miserable interest rates. Why should the government (and taxpayers) bail them out? Hillary and the liberals think it’s our duty to save these people, prop them up, and slap down the evil mortgage companies. Frankly, propping up bad loans, freezing interest rates will likely drive us into a deeper recession.

    I would much rather see the investors in these bad mortgage companies take a beating. Let the poor stupid schmucks who are living on the edge lose their homes, re-group their losses, live in an apartment for a couple of years, and then re-invest when their financial situation is stronger and when market values are accurately reflected in real estate values.

    Instead, we have a bunch of socialists who want to tax the *&%$@*# out of everyone else to pay for these bad mortgages. Ultimately, it allows these gamblers to live off of credit card debt for a few more years at the taxpayer’s expense. If you want to pay higher taxes, go ahead, vote for Hillary or Obama.

  92. pauljunk says:

    We need lots of forclosures to happen so that these inflated home prices come down. Smart people have been waiting for years for the crash to happen and giving deliquents more time only delays the inevitable.

    People shouldn’t buy crap they can’t afford.

  93. Hans_Auff says:

    Humbug! Are there no workhouses, are there no prisons?

  94. humphrmi says:

    Is it too late to chime in here? I agree with the many others here that:

    - People took the risks on lower rates, and this is the downside.
    I borrowed at the outrageously high rate of 5.25% during the peak of the alternative mortgage party. Now the people who took lower rates with a quid-pro-quo that they would have to pay more later, shouldn’t have to pay? Boo-hoo.

    - People cashed out all their equity and spent the money.
    Every time I refinanced, I put more money in – meaning I lowered my mortgage every time. Others chose to cash out and spend, and now have to pay. Boo-hoo.

    - Flippers are/were evil and got what they deserve. Boo-hoo.

    The one and only reason that the politicians are falling over themselves to look compassionate and bail these irresponsible borrowers out is because it’s an election year, plain and simple.

  95. Boberto says:

    Anything that comes to the aid of homeowners will only be efforts to stem the bleeding of the banking industry.

  96. B says:

    @pauljunk: What about the people who bought houses they can afford? Are you going to sit back and let them get screwed over so you can buy a house?

  97. Erwos says:

    This is a fantastic example of the privatized gains, socialized risks scenario – except the house-buyers are the ones with that privatized gain and socialized risks.

    My wife and I have been saving like crazy so we can responsibly buy a house. Until someone comes up with a scheme that directly benefits _me_, the person who did stuff right, I’m going to consider all of these schemes to be a terrible idea.

  98. Erwos says:

    @B: People who bought houses they could afford aren’t losing them. That’s kind of the definition of “a house you can afford”. Yes, bad stuff happens (medical crises, etc.) where people lose their houses for good reasons, but that’s been happening since before the current crisis. It’s simply not relevant to the issue at hand.

  99. cmdr.sass says:

    The only bailout I support is the one that helps deadbeats move their crap out of their former homes and on to the street.

  100. 3drage says:

    30 days is too much. These greedy people thought they could make a quick buck by over-inflating house prices. They deserve what they get, and I’ll be damned if I’m going to pay tax money to bail these idiots out.

  101. cecilsaxon says:

    Why thank you Uncle Sugar!

    It seems like just yesterday I made the bestest buying decision ever when I bought a really nice house, It had that runnin’ water and a real live foundation! No Wheels at all! All I had to do was get one of them there “ARM” thingies- got me some low payments and everythin’

    Heck- it was cheap and since my credit ain’t so good, This was the only way I could get my dream house- Lord Knows I can barely afford it now- but I am sure willin’ to sacrifice- I even gave up one of them pay-per-view wrastlin’ shows.

    - seriously -
    Its not called stupid tax for nothing.

  102. poodlepoodle says:

    @JoeWoah:

    Oh please. First you call names, when called on your calling of names you’re all “yes, well what I really intended was to say that it had the elements of “blah” really, honestly!”

    Second, your saying Philadelphia is affordable because you lived here as a student is like me saying DC is affordable because when I visited it in the 90′s the crack houses (long since reformed) behind the capitol building were really cheap back then.

    Things change and I have provided you with evidence to the contrary. But by all means cling to the things you think you know.

    You buy in the last few years, how underwater are you?

  103. poodlepoodle says:

    @cecilsaxon:

    I know what you wrote was intended to be funny but why pick on the South/red necks? The epicenter for sub-prime is/was cities in CA, AZ, NV.

  104. MommaJ says:

    Let’s not act like the people losing their houses to foreclosure will be showing up at homeless shelters. They’ll end up renting apartments, condos or houses. All of us lose out when times are tough or we make bad financial decisions. We don’t get to take the vacations we want, we give up on those meals at restaurants, and oh yeah, we may have to live in a rental. Our fellow citizens have no obligation to bail us out.

  105. LazloHollyfeld says:

    Can Lowe’s and HGTV (or any of the endless effing home channels -still- scheduling 50% of their programming with house “flipping” shows) sponsor some Hoovervilles, please? Because I’m not too psyched to see my rent go any higher because of increased competition in the rental market due to foreclosures.

    I rent because I couldn’t afford to spend 200K in MA in the 90s, or 400k a few years ago, and won’t be able to spend $300k when prices “drop” in the 2teens. I’d much rather a comparatively smaller increase in my tax burden than the larger COL increase (not to mention the decrease in my urban community’s social capital) I’m bound to get stuck with otherwise.

    I’m all for punishing gamers and flippers, but I’m not going to shoot myself in the foot so I can have the satisfaction of saying “I told you so.”

  106. less_is_best says:

    Let capitalism work. The smart succeed, the stupid fail. This creates an opprtunity for the smart to look even smarter as they take advantage of the problems the stupid have created. I make good decisions and they make bad ones? How again am I or the government responsible for this? I guess they can live in their cars (until those get reposesed).

  107. Ssscorpion says:

    How is this the administrations fault? Idiot consumers look for loans they can’t afford to pay back and idiot banks make the loans. And do you blame the banks and consumers? No, you take a shot at Bush make yourselves look like idiots.

  108. olegna says:

    The replies by some of the right-wingers here is amazing. The second anyone suggests that the role of government is to ensure the private sector doesn’t screw the economy up with “creative” economic mechanisms they’re called Communists. We have seen time and again that when you deregulate you end up with stuff like the S&L crisis of the mid-80s, the energy crisis in California and the Sub Prime debacle. This isn’t just about stupid people getting mortgages they can’t afford; it’s also about brokerage houses buying and selling these mortgage debt to each other as good “AA” investments, fooling investors and the market in general.

    All these “savage democracy” tools that scream “Commie!” each time somebody suggests a little accountability or that the role of a government BY THE PEOPLE is to provide a system of checks on otherwise unregulated business are part of the problem.

    This is an asinine criticism. Why not get rid of the USDA and let the meat producer regulate themselves, too?

    Idiots. You deserve the system you defend.

  109. A brief word -

    1.) This isn’t “subprime lenders.” This is “lenders.” Subprime is a tangential discussion about an asset class that makes up a small minority of folks affected by the liquidity crisis. What’s being discussed in the bailout are prime borrowers, primarily. Subprimers are fucked unless they can demonstrate that they were lied to.

    2.) Reissuing the mortgages at the current market value is essentially asking banks to eat the cost of downward adjustments on home prices. Why would any bank do that? After all, it is the buyer that is attempting to own the property. If we’re going to be fair to consumers, also be fair to the shareholders of these banks – that means the bank deserves a warrant for the delta in the appraised value and has first rights on any profit in the sale of the home up to the amount of the warrant.

  110. Mojosan says:

    olegna,

    The “government” forced mortgages on people that they could not afford?

    I though it was the people buying the houses that got the mortgages.

    Hmm..my bad. Then the “government” (ie. responsible people who live within their means and pay taxes to support society) should bail them out. You’re right!

  111. NotMe says:

    @AngrySicilian:

    My point was apparently over your head.

    I’d take more time to elaborate, but I don’t want you to miss your next Party meeting, comrade, so I’ll be brief.

    Mind your own financial business.

  112. sketchy says:

    @olegna: We have seen time and again that when you deregulate you end up with stuff like the S&L crisis of the mid-80s, the energy crisis in California and the Sub Prime debacle

    No, none of those things has been deregulated. Those industries are still some of the most heavily regulated and/or price controlled industries in existence.

    Bailing people out skews the market, those bailed-out people will refinance at higher rates and demand higher wages using ‘cost-of-living’ as an excuse, which in turn drives more inflation. It’s a vicious cycle which needs to be stopped dead by letting some people suffer the consequences of their actions.

    Let the smart people buy some cheap real estate and rent it back to the people who used to live there. That solution requires no interference from the Government and does not penalize anyone for making rational choices.

  113. Rusted says:

    Thirty days far too generous. They had ninety days, time to give it up and move on out.

    @AngrySicilian: “Does a CEO’s daughter need a 600k dollar sweet 16 party while people can’t even afford to pay their utility bills….”

    Why not? It’s like saying I should give my broadband because some people can’t afford dial-up. Ain’t gonna happen.

    As for the crappy economy, I knew it was coming years ago. Paid off my consumer debt, car, and did the equity refugee bit and and turned a mortgage property into a fully owned property.

    If one sees a train coming down the tracks, and can’t be bothered to get off of them, the Darwin effect can be useful.

    @burbed: That house and lot is a real deal considering it’s in the Bay area. I’ll bet it will be torn down and rebuilt real soon.

  114. NotMe says:

    @JoeWoah:

    First you say:

    “You obviously didn’t read what I wrote because I specifically said I WAS NOT TALKING ABOUT A BAILOUT.”

    Then, you go on to say:

    “As for the consumer, we should freeze foreclosures and interest for a short time on the most at-risk, and we should force those banks to enter into a more reasoned repayment plan at lower interest rates. There is no reason any one should be paying 18% (and much more in some cases) interest on a home loan, period!”

    Perhaps you should consider a career in politics. I haven’t heard double speak like that in quite some time.

    Please help me out…explain the difference between “freezing foreclosures and interest” and a bail out. It looks like the same thing to me. And while you’re at it, explain how it is fair to pass the burden from irresponsible borrowers off to banks and their shareholders.

  115. deverbative says:

    This one thing bugs me, the average salary in the United States is according to BLS is approximately 40,000/yr. The average house price according is 250,000 (via the Census Bureau So you don’t want people to buy house they can’t afford, yet, the median price for a house is well above what a person can afford. Extrapolate that, 80,000/ yr for a couple (assuming both work) plus if they have kids, that income has to feed, clothe and transport four people. The whole argument of personal responsibility is ludicrous. Really. Gas went up, property insurance went up, food costs went up, if you couple that with rising interest rates, and falling house prices (so refinancing doesn’t work), you’ve got a big mess. Contrary to your beliefs, you “perfect” consumers, people really do want to pay their bills. Before this ridiculous mess, the number one reason for bankruptcy was medical bills.
    Really people, you shouldn’t throw stones because clearly, you have NO IDEA what it’s like to have really problems in your lives. Life’s a bitch. I hope none of you have the opportunity to find out how cruel the world can be to people who play by the rules.

  116. czarandy says:

    They aren’t their homes if they can’t pay for them.

  117. BigViper says:

    if you buy something you cannot afford why should you receive any kind of assistance to keep it when your money runs out?

  118. humphrmi says:

    @deverbative: Using only averages as an argument is specious at best. The BLS quotes means, not averages – minor point, the mean salary is the point at which half the people in the US make more and half make less than that number. Same thing for housing, half the houses cost more than $450k and half cost less. The people who can’t afford houses in their area have two choices: rent or move.

  119. randombob says:

    Found recently on yahoo –

    [finance.yahoo.com]

    Let the foreclosures continue to mount, baby! OH YEAH!

  120. BlueTraveler says:

    I have mixed feelings on this whole thing. My wife and I still don’t have a house (we’ve been married 7 years). We know our financial limits and were smart enough not to get in a loan we couldn’t afford. Meanwhile, many people were getting into loans they couldn’t afford which in turn drove up home prices so that we definitely couldn’t afford a loan. Now, people want the government to bail them out so they can keep their house which they should never have owned in the first place….and I still don’t have a house.

    I feel as though myself and others like me (who were smart enough to know they couldn’t afford a loan) are now being punished by government bailouts. I welcome the foreclosures because then I may finally be able to afford a home.

    I also see the downside on the economy with a failing real estate industry. However, I think that has been blown up by the media and real estate industry.

    I also feel for the people that weren’t smart enough to know they were getting a crap loan and were dupped by lenders. However, most of them knew they couldn’t afford a home anyway.

  121. Mr. Gunn says:

    All you people complaining about “being stuck with someone else’s bill” can stop already. We’re already in a recession. We’re already paying for it. What do you think will happen to the economy, and your portfolio, if your remedy – all those idiot buyers should just go ahead and be foreclosed on – is the one selected?

    It’s gonna take more than the couple hundred dollar handout your conservative govt wants to give everyone to goose the economy back to life. Yes, those people took out more loans than they could afford. Yes, it’s their fault. Now that it’s happened, we’re all screwed. There’s no point bitching belatedly. Let’s try to answer the question whether the economy will pick up faster and we’ll all be wealthier in a couple years by bailing people out or not, rather than trying to seek revenge on the idiot borrowers and lenders, because that hurts everyone.

  122. Mr. Gunn says:

    To summarize, we should all support the plan that leaves us with more money at the end of this, regardless of whether or not it’s “fair”.

  123. Mr. Gunn says:
  124. JoeWoah says:

    @poodlepoodle:

    I didn’t realize that Philly was one of the only East Coast cities not affected by the burst housing bubble and sub-prime melt down. I know you just got a great new mayor and all, but I didn’t realize just how fast he could work his magic! OMG!!!111!!! You’re so right!

    Your argument epically failed! I know how a flailing economy, RISING violent crime rates, a fleeing tax base, incompetent city government and a resentful conservative state legislature could raise your real property values… on opposite day.

  125. JoeWoah says:

    Yeah! Wonkette picked this up! No longer will I be the only one making some sense here.

  126. JoeWoah says:

    @NotMe:

    A bailout suggests that someone else will pick up the tab for you. I am not suggesting that in the least bit. The government shouldn’t pick up the tab for the consumer, nor should the bank. However, the way things are now, and will be heading towards, will require a bailout of the BANKS if we don’t act to head it off now. Regardless of what happens, we can not allow our financial system to become insolvent… not one bank, I don’t care who’s in power, that’s an unacceptable situation.

    By taking a few small steps now, that should have been done before all this happened, we can mitigate everyone’s risk.

    If we let it go, things can and will get much worse. The fix will cost much more.

    Think of this like our failure in New Orleans with Hurricane Katrina. Had we upgraded levees and done the proper preventative measure, we could have spent about $10-$15 Billion max. As of right now, we’re well over $100 Billion because we waited.

  127. forever_knight says:

    @AngrySicilian: I had to respond without reading past your comment: I agree that nothing occurs in a vacuum, but to defend the bad decisions made and attempt to help is to become a dreaded ENABLER.

    what would you do if you were suddenly out of work? you have to pay your bills, so if you don’t have an emergency fund that will get you through the downtime, you have to either go into more debt or change your lifestyle. these people just need to change their lifestyle. renting may be the best thing that ever happened to them. it’s much cheaper: no taxes, lower insurance, and zero maintenance.

  128. banmojo says:

    @dorkins: THANK you! I’m SO tired of hearing about all the ‘poor’ people who signed up for ridiculous loans and now expect the gov. to bail them out. F$#@ YOU!! Face the consequences of your bad decisions just as you welcome the consequences of your good decisions, dumbass!.

  129. trujunglist says:

    @poodlepoodle:

    Then you gotta pay for the lockup. Going to jail isn’t free.