Not so awesome: you have to be going into bankruptcy for a judge to force the banks to do anything...but it's a start.

Don't bankruptcy judges do that already? I thought your first mortgages were things that couldn't get wiped out by bankruptcy.

@snowburnt: No. Under the terms of the new law they can't touch mortgages.

"Everybody needs to learn to live within their means..."

Except the government, of course. :-(

"All of us have to learn to live within our means again,"

does this mean he's trading in that fancy new Cadillac-One for a bomb-proof Hyundai? :-)

I bought a home last March on a fixed 30yr at 5.6%. Had I waited I could have got $8k from Uncle Sam and a rate below 5%. Now the only waiy I'll get anything is if I start missing payments. So much for being responsible. Guess I should be thankful I'm employed.

so for homeowners who didn't read their contracts, we now have a law passed by congress who didn't read the bill. Just f'ing brilliant.

@zentex: Well they DID win car of the year...lolz

@ckaught78: True it sucks for those who can and do pay their bills. But at the same time, the more homes get foreclosed in your neighborhood, the lower your own property value will go. So it is somewhat in everyone's best interests that people stay in their homes.

@tedyc03: What if the government forces me to live outside MY means by overspending and then taxing me into oblivion?

@tedyc03: Why? They have future generations of taxpayers to count on to pay for everything. Just like the automakers had future generations of customers to count on to pay for their auto union pensions and benefits.

@ckaught78:

Amen. I dont like this. Why reward people for making irresponsible decisions? If you're going to do something do it across the board, not just those who made bad decisions.

The other problem is there are a ton of mortgages out there that are not backed by Fannie or Freddie.

I think a one time, across the board, fixed refi or loan modification to a lower rate is the only thing that would fix the mess we have now.

@zentex: Sure, if it's a highly modified (for security) $96,000 Hyundai Equus.

@ckaught78:

I'm in much the same situation as you. Some people have to keep this country running, right?

@zentex: No need for the Hyundai, he got 0% for 60 months. Not to mention he would likely get crucified for buying an import as well :-)

I wonder if they have a "presidential" 48 month plan...

I hope there's some funding for a marsh rat in Pelosi's congressional district, too.

You know what would be great (and could possibly create more jobs)?

Create a government funded program that requires new home buyers to take an entry-level basic personal finance course. Teach people what their budget [i]should[/i] be, how to save AND how to plan for the big expenses (College/Car/Home)

Um... I'd sort of think about using the term "e-stim."

[en.wikipedia.org]

Though I guess refinancing is sexy after all.

@tedyc03: While I agree that the government should be much more fiscally responsible, the time for the government to "live within its means" is not when the country is plunging into a deep recession. Government stimulus spending on debt can smooth out some of that downturn by providing a boost to jobs and such, though of course we need to pay that back eventually. While this sucks, it's better than the alternative. What IS really profoundly irresponsible is to cut taxes while dramatically raising spending IN GOOD TIMES, like George W. Bush did. Cutting taxes while launching a major war and major new domestic programs (NCLB, Medicare prescription drug benefit) = not a good idea, ever. Bush doubled our debt for basically no reason other than to rob from future generations to give rich people a tax cut. That's a bit different from spending money to actually help our economy get out of a severe slump.

So, I don't have a problem with stimulus spending in principle. I just think that a) it should be spent responsibly in a way that actually helps normal people get through this rather than giving huge bailouts to irresponsible, greedy bankers, b) it should be spent on infrastructure projects that are important to our future and politically difficult to enact at other times (maybe something like high speed rail or other radical energy efficiency changes), and c) it should be paid back once we recover a bit by jacking up taxes tremendously on the richest people, just like we did to pay down our last huge government debt, after WWII. I want us to bring back 70-80% income tax brackets for marginal income over $2 million or so. If we do that, we can start to pay this debt down in a hurry, and it won't be a problem. Reluctance to do that is why I think the Republicans are so opposed to this stimulus spending...that, and they want the country to fail even more so that they can blame the Democrats.

I've never heard so much cheerleading for a president during a speech like that. But anywho

He was placing the blame on all the different parts, but just kind of passively, mentioned the government.

Sure, all the people who he listed are guilty, but Government is definitely in the top 2.

I hope this new idea works. As a responsible home owner, feel some anger towards this. But his points about having foreclosed homes in your neighborhood are correct as well.

I'm feeling indifferent about this new bill.

@johnva: A history lesson is needed here. Higher taxes mean lower revenue. WWII and hundreds of thousand of people going to work as soldiers or to build war materials saved us last round not the alphabet soup. In fact many historians believe the alphabet soup helped to prolong the depression.

@ckaught78: Those that make good decisions are getting punished. I am sure your house has lost value. Are they going to force the bank to renegotiate your loan for the current value?

No good deed goes unpunished.

@zentex: It is nice that if he loses his job he can return it.

@ckaught78:

Same, except I have a higher rate than that. I'm sitting at 7% because I was pretty fresh out of college with some student loans and no money down and didn't want to get an ARM. I bought it about 2 years ago, so i just missed both tax credits. I also have never missed a payment so I'd imagine much like yourself, the people who made bad decisions as opposed to making well thought responsible decisions are the only ones who will get any assistance.

@johnva: I'm just glad that Obama didn't resort to the exact same fear tactics used by Bush to rush his agenda through Congress. Wait...

@ckaught78: No kidding. Those of us who scrimped and scraped and cut back to pay our mortgages no matter what get punished, while those who just said "f... it" get rewarded.

Then again, those of us who actually pay taxes always get punished.

Why are only Freddie/Fannie customers with underwater mortgages getting help refinancing?

Either way there is going to be problems. Yes it is unfair for those of us who read contracts and are responsible. By allowing people to stay in their homes does help our property values and our communities.
At the same time, I hate to say it, but I feel like people will not learn their lesson without hitting rock bottom. I hate to feel that way, but I see it happening all around me.
Like with Battlestar - there is always going to be some jerks who are messing shit up, whether they are like John - the lenders or Boomer - a borrower. Someone is F-ing everything up for the rest of us.

@timx: Good call -- the blind leading the blind. That always works!

I want a lower rate too :(

@The_Red_Monkey: I think you need to read my post again: I didn't say that the "alphabet soup" (I assume you mean New Deal programs) saved us from the Great Depression (though I disagree that it prolonged the Depression, based on my own reading). I said that we used higher taxes on the rich AFTER WWII to pay down the war debt, which is true and not an opinion. I'm saying that once we recover from this recession, we need to do something similar to pay down some of the enormous debt not just from this stimulus but also from George W. Bush's disaster of a presidency.

You can disagree that the New Deal programs had anything to do with ending the Depression, and there are good arguments either way. But you directly admit that government spending on debt (on the war) is what got us out of the Depression. So you're not disagreeing with my premise...why is military spending stimulative while other things cannot be, in your view?

Also, your line about higher taxes meaning lower revenue is just bogus. At some point, lower taxes mean lower revenue. And that Republican theory is essentially based on the idea that high taxes on the rich always retard the economy, which I think is just flat out wrong (the 50's and 60's disprove that idea). I would argue that higher taxes on the poor and middle class probably retard the economy much more, because they would directly cut into consumer spending. The rich have excess income, so taking some of that away isn't going to impact their spending so much.

@Canino: Yeah, it's those who fail to pay their taxes who get elected to the Senate and/or appointed to high government positions. ;)

One of my biggest remaining criticisms of this stimulus stuff is that it is too focused on the needs of the Baby Boomer generation. They are the ones who are now screwed because they lost so much home equity that many of them were foolishly planning to use to retire on, while simultaneously losing a ton of value in their other retirement investments (401(k)s, IRAs, etc) that they didn't save enough in in the first place. And there is a lot of clamor for the government to do something about that.

But there is a lot less focus on doing something to help, for example, younger people who don't own homes and many of whom have a crushing load of student loan debt that earlier generations simply were not saddled with. Propping up home prices artificially actually hurts non-homeowners, many of whom didn't buy because they knew that prices were unsustainably high. Home mortgages are a problem, but student loans are an equal problem.

The real problem is that a person making the median household income cannot afford to buy a median priced home. Either fix that, or be prepared for a never ending series of bailouts and stimulus packages.

"Awesome: bankruptcy judges will have the authority to modify the terms home loans so that homeowners can actually pay their mortgages."
Good god, that is NOT awesome.

@johnva: I say send all the Baby Boomers to Carousel and give them a shot at renewal.

@HIV 2 Elway Resurrected: You mean that Obama has been out there spreading lies saying that Iraq is going to nuke American soil and spread biological or chemical agents over our cities from offshore drones if we don't attack them? I must've missed that. He's been saying we'll have to declare martial law if Congress doesn't go along with his plan (apparently Paulson threatened lawmakers with this in September when the bank bailout was being debated)? I've mostly seen him talking about the terrible economic problems we're facing, which are actually real, so I guess I must've missed the part where he used the "exact same fear tactics" as Bush.

We actually are facing a really serious problem with the economy here, and stimulus is necessary or the damage will be much worse than they are already going to be. You can call that "fear tactics" if you want, but I don't see where Obama has outright lied about the problems. We're certainly facing a threat to our country that is much greater than the threat

@mrgenius:

It may be fitting from a liberal perspective.

Or even a libertarian perspective, if the perspective is bent over.

Contracts need to be abolished period. I hate contracts, they trap consumers and consumers have no say in any matters. Pay off all debts, and then tell the lenders to go take a hike. We never needed them to help the economy. I would say this, If we have to live within our means, The government needs to do the same. We need to pull out of Iraq, We need to pull out of afganistan, we need to pull out of all bases, we need to bring back the companies back into USA to put USA to work. Nationalize all businesses, boot the ceos who are crooked and otherwise bankrupting the Nation

So let's see. $75 billion divided by 5 million irresponsible homebuyers = $15K per irresponsible homebuyer. Man! I'd like $15K. Although my house value has decreased, and I've got a boatload of other debt, My retirement and savings are little affected. My saving are NOT in stocks, but govt. bonds. While everything else has tanked, my retirement savings have a 3.75% increase in 2008.

So, I'm punished for being careful and responsible. After all, that $75 billion will have to be taken from me and people like me!

@johnva: @The_Red_Monkey: Actually we stopped the recession in March of 1933 when the economy hit bottom and began to climb (GDP, the measure of recession/depression bottomed at this point). We left the Great Depression in 1936 when we set a new record for the GDP (beating the previous record in 1929). It climbed steadily until falling sharply around 1937 when FDR balanced the budget by slashing New Deal programs. The growth resumed shortly after the correction and by the time the US entered the war in December of 1941 the GDP had more than doubled over the record set in 1936.

Those "many historians" are using figures like the dow industrial values or unemployment rates which, although can indicate trouble (and for those without jobs is a major issue) tend to be lagging indicators and are not used by economists to determine the success or failure of a policy. GDP is the measure of economic strength and its growth or lack thereof is how we measure "recession/depression". By these measures, it can be shown that it was in fact the increase in government spending of the new deal that lead to the recovery from the Great Depression by 1936 and the Recession of 1937 by 1938. WWII played no role in these recoveries (rather it helped the growth in the 1940's).

@Jeremy Wentworth: I agree with you - I do think that the New Deal helped us out of the Depression. I was mostly just picking apart inconsistencies in his reasoning.

@johnva: I see you have bought in to his fear tactics. If we don't act now this ship will sink! It wasn't right when GW used it and it still isn't. This must have been the hope and change we signed up for...

@ThickSkinned: Most conforming standard mortgages over the last ten years were sold to Freddie/Fannie, so it pretty much covers everyone. In fact, there is one credit reporting agency who will tell you who bought your mortgage - the others just list the servicer as the creditor. I have a prime conforming conventional 20 year mortgage that I make payments to Citibank on, and one of my credit reports pointed out that that loan is actually owned by one of the Macs.

@ckaught78: Oh stop crying. I've been renting since I graduated college and have been waiting for years to buy a place, even though my credit score is 800+ and getting a loan would have been as easy as getting a cell phone. My responsibility - and patience - is being rewarded. I knew rates and prices would come down. The fact that they're throwing in an extra 8k just sweetens the deal.

@johnva:

You bring up some good points. I just wanted to point out that the good economy of the late 40s and 50s is not the best example for pointing out good policy, being a unique time in history. Most of the (non-US) industrialized world was devastated by WWII. These countries were all rebuilding for the next decade or so, essentially leaving the US with no global competition for goods and services. We greatly benefited from this, and there is a good argument to be made that we would have had economic growth regardless of policy.

@The_Gas_Man: I agree, NOT AWESOME. Letting the government cancel a contract spells bad news for all of us.

@ckaught78:

Go talk to your bank or lender, re your mortgage rate. In challenging times you may be surprised what they might be willing to do for you. You will never know unless you try. Good luck!

@The_Gas_Man: Not if you're a bank it isn't.

@Ira Kroll: Yep, somebody's got to supply the 'wealth' to be spread around.