And why should the government or companies help people that can't pay their mortgage?

FWIW, I'm opposed to bailouts for homeowners, but I'm even more opposed to bailouts for Wall Street firms that traded in mortgage-backed securities.

No bailouts for anyone. Haircuts for Main Street AND Wall Street.

The help isn't for the homeowners, it's for the banks and the investors, duh.

Well which homeowners are we talking about? If we're talking about the ones who lied on their applications then I say screw them.

Why should those of us who didn't screw up pay for those who did? That doesn't seem very "fair" to me. I continued renting because I knew I would be unable to afford buying a house, so now my tax money should be used to help people who didn't make the responsible decision. No.

Amerika - EPIC FAIL

My $0.02...our credit score has continuously improved over the past few years, but wasn't so hot in 2005 when we took out a 2nd mortgage which put us in the subprime category. Even with both loans we had an LTV of 72% and the plan was to refinance the second into a HELOC once our finances improved. Fast forward and now our LTV is 102% and we don't have the cash to buy down the refinance in order to bring this down to 90%. I am not looking for a bailout, but I hoped that my lender would refinance the existing loan at a more appropriate rate given my current situation. It appears, however, that they are only willing to entertain this once I am seriously delinquent which will drive my score back down.

Oh no! 70% of people who were irresponsible are still being irresponsible! Whatever shall we do? Please, someone tell me how I can pick up their slack!?

@vision646: Thank you ... I'm in the same boat, and hoping to finally buy later this year. It will be disappointing if I get screwed over to help people who made poor financial decisions.

I'm not a big fan of this whole bailout thing. My husband and I are in the process of buying a house and, although we qualify for an UNHOLY amount of money with which to buy this house, it doesn't mean we can afford to make the payments. We've never bought a house before, yet nobody has had to explicitly tell us that, just because we qualify for a $400,000 mortgage with no down payment doesn't mean we have to go buy a $400,000 house.

I have absolutely no sympathy for people who got in over their head through sub-prime lending, ARMs, and 80/20 loans that made it possible to buy McMansions with limited monthly income. On the part of the consumer AND the lending companies, it's an expression of unabashed American greed.

On the other hand...what do we do with the folks who bought within their limits, but are suffering the substantial effects of this economic downswing? Maybe someone lost a job, or became disabled? Should that person be subject to the same scorn and finger-wagging as those who succumbed to greed and an "I deserve this" mentality? I don't know how to feel about that...

I guess one of the REAL problems I have is this: should the government mandate that lenders assist their sub-prime borrowers if said borrowers don't seem to care about the mess they're in? Why should the lenders be forced to help if Joe Forclosure can't be compelled to pick up the phone and call for some help himself? Although I rarely come down on the side of big business--especially big corrupt business, if you're buying a home, you better know a thing or two about your finances, and you better make yourself informed about lending practices. The lenders can't talk all the blame, nor shoulder the full responsibility, when the buyers are at least partly culpable in their ignorance.

Amerika - EPIC FAIL = mrk?

if this is an example of our lawmakers' and mortgage-service companies' "best efforts" then we are totally screwed.

No more tax-funded bailouts for people or companies. I'm tired of this all being blamed on "predatory lenders." I'm sure there are anecdotal cases of fraudulent companies who misrepresented terms to fool people into loans. However, the vast majority of bad loans were honest agreements made by irresponsible people and greedy lenders that willingly disregarded the large risks involved with sub-prime loans. Both these people and lenders should face the consequences. We're already over-taxed and have massive national debt - It has to stop.

screw you guys. seriously. we've already seen washington basically bend over & drop its pants in response to the bawling on wall street. it's ok to screw over average americans, but not investment banks (& in turn investors)? bullshit.

the fed underwrites $30 billion of the riskiest "securities" as bear stearns folds into the 3rd largest BHC in america, but we're not willing to work with the owners of those homes so that we don't end up paying out that $30 billion to an institution with $1.5 trillion in assets?

that's just garbage.

There seems to be two basic of groups of people involved in this "meltdown": those who were straight up lied to by the banks/lenders and essentially tricked into their loans and those who knew what they were getting into and/or didn't fully do their homework before signing on the dotted line.

I have ZERO sympathy for the latter. Why should the banks be sued by the states into helping these people? They knowingly entered into a contract with another party and are now reneging on said contract. If I went to the local Lambo dealer and bough a brand new car quit making payments I sure as hell wouldn't be surprised when the repo man showed up.

These bailouts are frustrating to the people who live within their means and pay their bills. I would love to own boats and 4-wheelers and motorcycles but I can't afford all that stuff and a house and my used car.

The moral of the story seems to be borrow yourself into oblivion, stock up a mountain of crap you bought on credit, spend like there's no tomorrow and the government will bail you out.

For shame...

Loan modifications are not bailouts. They would prevent a ton of financial waste that affects the entire economy. But with the morass of securitization, loans are nearly impossible to modify. Instead, foreclosures continue to go forward, keeping the economy on a downward trend.

@tkozikow: You know, without knowing WHY you took out the second mortgage, we all sort of have to assume you did it for the usual reasons - pay off credit card debt, buy new jetskis, get that new flatscreen.

Poor you - you spent and spent and spent and used your house as an ATM. Now we're all supposed to feel bad that your perfect world didn't happen, and what did happen was reality?

kittenfoo, no the folks who took loans they could not repay were screwed the day they signed them.

A good smell test for whether a loan was 'acceptable' would be if the borrower put 10% and no other assets would they have qualified for either a FHA or conventional loan? If they could not pass that then more scrutiny is required against the lender. Otherwise it was a bogus loan. Considering that mortgage brokers are falling like flies that has to tell you that there were some bad deals cooked.

But it was incumbent upon the borrower to know their limits. And yes I am against any sort of bail out.

"Loan modifications are not bailouts. " It is when the visible hand of government coercion is involved.

Y'know, I bought my house at a not-great time. It hasn't plummeted in value, but it is slipping, especially with all the for-sale signs going up around us. But I have a fixed-rate mortgage and am responsibly paying my bill.

WHERE THE HELL IS MY BAILOUT?! You wanna stimulate things? Give me a $3000 "not a financial asshole" credit!

Why should they get help???

They bought a house they knew they could not afford.
The lenders gave money to those who they knew could not afford it.

@mac-phisto: What kind of an argument is that? Two wrongs don't make a right ...

Probably folks would be interested in this:

Backlash grows against the housing bailout

The relevant petition is here:

Angryrenter.com

I've signed, and everyone else should too.

Boo Fin' hoo ...

Too many people bought homes on the belief that property values were going to constantly rise and they could use their homes as ATM's.

Many of these people had no business buying a home in the first place.

As an earlier poster stated, I too am approved for an UNHOLY amount of credit but I CHOOSe to live in a modest home that I know I can afford ... even if I have to go work @ Micky D's to make the payment.

Perhaps I just shouldn't pay the mortgage for 6 months and whine that someone needs to bail me out ...

I'm tired of this " No Fault " attitude that most Americans have.
Take responsibility for your actions and don't sign on the dotted line when you don't know what in the hell your signing.

Well the number should read 100% - but there also shouldn't be any money for the big guys either- both types of bailouts are unethical and fundamentally unfair to taxpayers.

I'm sickof people getting bailouts for their poor decisions. You know what? I say "too bad". And I think it's time we all started saying "too bad" to people who make poor decisions instead of bailing them out. It's time for Americans to accept resposibility for what they choose to do. I'm sure no one had a gun to their head when they were signing their loan paperwork. I managed to buy a home when I was 22. I was approved for a loan that was worth substantially more than I could afford because of my credit and lack of debt. I made the right decision and stuck to my budget. Shouldn't I get something for not being an idiot?
I understand that some people were out-and-out lied to by their brokers, but no one told them they couldn't read what they were signing. I know I had to sign and initial by my interest rate and loan term several times, so I knew what specific terms I was agreeing to when I signed my mortgage loan. If someone chose to not read their loan or not ask questions, guess what I say? "Too bad!"

@TourPro: Thank you for the article. I doubt the usefulness of petitions, but I'm glad to see some people have their heads on straight!

I think at this point it's looking like I missed the "investment opportunity" of buying a house a couple years ago. If I knew I would be getting a coupon fron the govt a few years later I might have taken the plunge.

Something a lot of folks don't seem to appreciate is that their homes can quickly start to feel the effects of all those "irresponsible" people they look down upon. Don't believe me? Just wait until enough houses near yours get sold at auction and drive down the value of the houses in the neighborhood.

Our homes' values are only as much as whatever the houses near ours sell for so we all benefitted from folks buying beyond their means (our house values went up) and we all face some tough times if enough people can't afford to make their payments. So do you want us to look at you and say "suck it up" if your home value slips enough that you can't sell it next year or the year after that?

I had an ARM loan when I first bought my house and looking back know, it's a bit frightening to realize that there was absolutely no way to know what it would reset to 3 years later when the original interest rate expired. Given that I got the loan when interest rates were near their lowest, I knew the payments would go up, but I remember noticing that when I asked for more details prior to closing, there were none to be found.

It was also surprising how flexible the mortgage broker I dealt with was wrt factual statements on the loan apps. I knew what I could actually afford so I made her stay honest and I didn't buy beyond my means, but I could easily see how she could have talked someone else into doing some unscrupulous things.

After all she only cared about making the deal in the first place. Once she got her money, how you pay for the house 3, 4, 5 years later is not her problem.

I thought about refinancing earlier, but the original note had a prepayment penalty if I refinanced in less than 3 years. Effectively that meant once in, I only had a 2-3 month period to move to something more stable without getting hit for some substantial costs. I talked to my mortage company at the time (Countrywide) and they refused to consider waving the prepayment penalties even if I refinanced through them.

It turns out that I was one of the lucky ones. My ARM loan reset before the bubble burst, but I was ready for it and I refinanced (taking no money out) into a fixed interest rate loan that was better than I could have gotten three years earlier. My house (a real fixer-upper) is now worth almost 2x what I paid for it (and more than 2x what I owe on it) and it's likely to increase more as I finish more projects.

However, it wouldn't have taken much to end up in a bad situation and it seems clear to me that some mortgage companies are too focused on wringing money out of their vict... "clients" to consider that their actions may be detrimental to themselves and those same clients

Look at Countrywide now, given how they treated me, I'm not surprised that they're in the situation they're in now and as a semi-amusing anecdote. When they weren't interested in working with me to refinance my house at a good rate with better terms, I went back to my mortgage broker who got me a really good mortgage and guess who bought it before I made my first payment? Yup, Countrywide.

Also, how come Realtors® get a free pass on all of this? They're just as responsible as the brokers and buyers in this whole mess. What kind of irresponsibility is it to keep advertising the soundness of a housing "investment" when anyone with half-a-brain could see the impending meltdown?

I'm tired of this all being blamed on "predatory lenders."

The other option is for politicians to blame individuals for being dumb. This does not improve his chances of being re-elected.

@TourPro: Not trying to be rude or anything, but I just don't get the point of this website angryrenter.com. What is it exactly that it is requesting?

@giggitygoo: It's more than anecdotal -- there are plenty of genuinely predatory lenders out there. Are there people who should never have gotten a loan? Yes. Are there people who did not see a change in their circumstances coming, and now have to deal with wildly panicking banks? Yes. And it's the bank's JOB to make sure that people who say they qualify for loans do qualify; anybody who doesn't doublecheck that stuff deserves to go down in shrieking flames.

For people who made stupid errors, yeah, ITA, the idea of a bailout grates. But it grates a lot less than the idea of your property values plummeting because suddenly there are all these empty abandoned houses around you.

@ChuckECheese: Duh, we're renting, and we're mad! :P

I'm on board with the cause but I'll side with you- that site doesn't really resonate with me.

@ChuckECheese: Well, just to be fair, they are funded by a conservative group. They are saying that certain groups like renters shouldn't pay for those others that made bad decisions.

Let's say your neighbor bought a Porsche, when he should not have. Now it has been repo'ed. Too bad, now you have to give him a free ride to work everyday, plus you have to buy lunch for the lender because the car is not worth what they thought is was.

So, while we're you're all pointing the finger at each other for being so financially irresponsible, big banks will be laughing ALL the way to the Fed when it's bailout time. Do you seriously think when the Fed needs to start bailing out investment banks to keep the whole thing from collapsing someone's going to stop to think about who was being responsible?

Don't even start to kid yourself about how much cheaper and better for the economy an individual bailout will be than the investor/ bank bailout (not to mention how it would keep the value afloat for all the houses that are dropping because of all the foreclosures). I got shouted down last time I said that, and then Bear Stearns came the next week, and I got to feel mighty self- righteous.

In the meantime, careful up on those high horses!

fine. you know what? fuck em all. just on principle. b/c that's always the sign of a rational, functional government.

i think some of us need to read about the home crises of the 1930's to fully understand the gravity of the situation.

it starts with people who can no longer afford to own their homes. banks foreclose (already happening). as banks' equity becomes tied up more & more in non-liquid investments, they face insolvency & fail (already happening). as more banks face the danger of failing, they begin to call loans due (starting to happen with closure of equity lines).

then one day, the man from the bank knocks on your door & hands you (a customer with a modest mortgage who has NEVER, EVER made a late payment) a NOTICE OF PAYMENT IN FULL.

& b/c you can't get a loan anywhere (since the banks have no liquid funds to give you) & you can't raise the money needed to pay off your house, you start packing your things, wondering how it came to this. how a responsible person could lose their home when they did absolutely nothing wrong.

i'll bet you'll wish they didn't let it get so bad when that time comes...

@mac-phisto: Uhm ... or you could not trigger something that would allow a bank to call your mortgage? Or not sign a callable mortgage at all? I'll take my chances, thanks ... those of us who know how to read fine print will make out just fine unless the government starts helping out the hyper-sensitive.

& to the renters in the room - don't be so naive to think you're immune. when your rental agency goes belly up & the bank seizes their assets, or when your landlord can no longer afford his rental property, guess who else will be on the street looking for a new place to live in a market flooded with prospective renters & inflated prices?

@TourPro:

Let's say your neighbor bought a Porsche, when he should not have. Now it has been repo'ed. Too bad, now you have to give him a free ride to work everyday, plus you have to buy lunch for the lender because the car is not worth what they thought is was.

This seems perfectly reasonable to me. I wonder if the lender would prefer sushi or Mexican.

The thing is, is that the *shenaniganization of the mortgages will most certainly have an effect on rents; indeed I think it already has. People forced out of their homes will enter the rental market, constraining supply (and driving up prices). Moreover, I've seen that many an upside-down homeowner and/or mortgagor tries to rent out their property at nearly the same rate as the original mortgage, which is just silly. El Paso is full of 30-year old mediocre homes stripped of appliances, available as "rental homes" for $1200/month--people just want you to make their mortgage payments for them. (BTW, the average home price in this city is only about $100K, which I think is an exaggerated Realtor® fantasy). So in a way, renters will subsidize this meltdown.

*What do you think--should this be shenanigization or shenaniganization?

@mac-phisto: You're right. But back in the early 90's during that real-estate meltdown (remember the RTC?), my sister was renting an apartment in Scottsdale AZ where this exact thing happened. The investment/property management company folded, but then just a few weeks later, the S&L holding the note folded too. She got about 6 months of free rent out of the deal before anybody was able to get the place back on track.

@giggitygoo:
How about a pandering Congress?

They bitched and moaned about "poor people not being able to afford a mortgage" and pressured the banks into lending these people money.
And then what happens?
They're outraged that the people who couldn't afford a mortgage can't pay them.
It must be somebody else's fault.

I see people on this board all high and mighty because they knew better and then I see people in my neighborhood at the opposite end (foreclosed, repoed, etc.).

Both have a similarity. Bankers

Oh sure you with the spotless credit record did the right thing and the common sense to not loan more that what was in front of you.

Meanwhile, your bank didn't care. They lobbied the government to allow spinnoffs of shady loan companies and took a lazzez-faire approach to lending practices and policies. Just because you got a better education doesn't mean you can thwack the poor.

@ChuckECheese:

shenaniganization +1

We have to go with that because I just added it to my dictionary.

@Throtex: residential mortgages aren't callable anymore. i was giving a brief synopsis of depression-era home loss to illustrate how the snowball gets bigger the farther down the hill it rolls.

@chicagocooper: To save the economy. Those people who can't pay their mortgages will lead to YOU losing your job eventually.

Good.
Is there any way we can rip the rug out from under the other 30%?

I didn't tell them to buy things they couldn't afford or fail to read what they signed.

@ChuckECheese:

"*shenaniganization"

Quick, someone call the people who publish the Oxford English Dictionary. Consumerist has a neologism for them.

mac-phisto:good comments. There are still some mortgages out there that can be called when the value of the asset drops below the value of the loan. No smart bank would do it, but they could.