Hm. Sounds like we're screwed no matter what. What else is new? :-)

Obama may not win the presidency, but the man does have some great proposals.

doesn't this seem like the whole race, writ large?
Obama: well-thought-out plan
Clinton: plan, yeah, okay, not quite what is needed
McCain: 4 more years with the rudder flopping back and forth, but CEOs can gold-plate their toilet seats!

"create a foreclosure prevention fund"

Sounds like he would create a death by suffocation prevention fund. Nobody wants it to happen, but it's going to, at some point. If a lot of foreclosures are happening, it seems to me we should look at the causes leading up to the foreclosures, not the process of foreclosure itself. (foreclosure foreclosure foreclosure)

To be more accurate, not a single one of the plans would actually address the current foreclosure "crisis." People entering foreclosure are not doing so just because they can't afford their increased mortgage, they are doing so (in general) because they could *barely* afford it in the first place AND can not afford all the other cost increases in their lives. So the claims by Obama et all are a load of BS.

@flowerofhighrank: About five sentences is a well thought out plan? I want whatever you are smoking.

Ron Paul is the only one who has the real answer. No Bail Outs for poor banks from the Federal Reserve! Let the market decide how to deal with these issues and consumers will choose who they get their mortgages from based on the FREE OPEN UNREGULATED MARKET!

@SarcasticDwarf: stop boiling all the hope out of the comment thread.

@Lucky225: Ron Paul would be better off sucking his own dick than opining about the foreclosure crisis or anything else.

And where would this extra magical money come from for a 'forclosure-prevention fund"?
I'm guessing more taxes on those of us who are paying our bills on time.

What a surprise Mc Cain stating that everything is fine

@elijah_dukes_mayonnaise:why don't you suck it too before you opine.

lawnmowerdeath: Here's the reality: Democrats raise taxes, but lower the deficit. Republicans lower taxes, but increase the deficit. Neither way is a good one.

@gamin: He's not stating everything is fine, he's stating that people are, for the most part, a situation of their own doing.

For a moment, lets say that 50% of all the subprime loans were fraudulent and the lenders tricked the borrowers. But that still means 50% of the people borrowed too much and did this to themselves. Why should we bail them those people out?

And if anyone thinks the "fraud" rate is anything close to 50% (I bet overall its closer to 2 or 3%), leave the discussion now and tighten your tinfoil cap.

@Lucky225: Absolutely! All this unnecessary 'regulation' the Administration's been pushing down all of our throats for 8 years, what with his doing something about the problem every time you turn around... I tell you. If only the government had done less...

I think it's odd that even though McCain is for a (limited) bailout for homeowners, the author complains that he's doing nothing.

@Me: Still, it's better to make sure the bills are paid. Most people who think we can create some kind of 1950s paradise on Earth with spending cuts don't realize that the only really big pot of money that might get us there without hurting a bunch of people resides in that five-sided building in northern Virginia.

It's like this: Defense budget in Clinton's second term - under $300B. Defense budget in Bush's second term, roughly twice that, and that's not counting the money we're wasting in Iraq. If the dead troops don't move you, the sheer scale of the waste and fraud associated with the so-called Global War On Terror ought to really piss you off.

the real problem is that with all these people being foreclosed on their going into apartments and rental homes.

and due to this high demand rental's are going up a lot.

address that issue, because now not only is it harder to buy a house, which denies people the right to property which is part of the issues this country had in the beginning. but it also makes it harder for people to even live in various areas making them for the rich only.

@Steaming Pile: The only problem with your argument is that if you went through the federal budget, sure that's the biggest item. But that is also specifically mentioned in the Constitution. Social Security, Government Health Care, and Endowment for the Arts are not listed, among many, many others. But you wouldn't mind having those, would you?

@flowerofhighrank: didn't you get the email that says "Obama's the anti-christ"?

@Skankingmike: Doesn’t raising rental prices actually drive the economy even further into the toilet and further upset already frustrated consumers? If demand is high, then high rental prices are not only unnecessary, they’re dangerously greedy.

Honestly out of the three McCains makes the most sense.

There needs to be the possibility of failure. If not then people who take excessive risks will always be rewarded.

I'll be renting forever and possibly paying for either a bank bailout or a home owner bail out fund.

All the two democratic proposals do is make me realize how screwed I will be for not trying to own a home at any cost or profit from it.

I can only hope that when the next president goes into office they are able to accomplish near nothing.

Given the reality of current foreclosures (People leaving homes because their equity took a nose-dive) no bail out will make sense.

Then there are the people like the "single mom with 3 kids" who fudged some numbers and signed up for an A.R.M. without bothering to think beyond the reset period.

Too many problems to address, but it isn't just the corporations (who are losing money like crazy over this) it is also a healthy dose of irresponsible consumer.

Maybe I'm not paying close enough attention to this issue and I'm missing something - but I'm tired of hearing about bailing out people who bought a house they couldn't afford.

We live in a very modest home, but it's one we could afford. Why should people who bought a house beyond their means get bailed out? Life is about consequences. I've known people who have filed bankruptcy several times in the past because they kept living beyond their means, and they were able to erase that debt while keeping the goods. This sounds like the same kind of thing.

Obama has housing plans? Oh the hypocracy. Tony rezno anyone?

@Tux the Penguin: I think what is covered in the Constitution is to provide for the common defense. Umm... Saddam is history, time to get the f*ck out of Iraq. I'll give you that Iraq *may* have posed a threat to our nation, but I don't think we are in any danger of being invaded anytime soon by anyone. We are already *owned* by many other countries through debt. There's no need to take us over via warfare when they already have done so financially.

Now all we are doing is blowing sh*t up and getting more people pissed off at us. Re-direct some of those billions of dollars to strengthen our borders (to defend against terrorism), improve actual HOMELAND security, develop some type of renewable energy sources, and we won't have to worry about what is going on overseas. Time to batten down the hatches and look out for ourselves, since no one is going to ride to our rescue.

@Lucky225: And I long to buy my rice with gold coins stamped on both sides with Ron Paul's face.

@elijah_dukes_mayonnaise: Something tells me you were the Debate Team Captain in high school.

@Tux the Penguin: Actually, sub-prime loas (where the current credit crisis STARTED) went from 2% of all mortgages in/around 2000 to 20% of mortgages in 2006/2007 (basically they increased 10x over the course of 5 or 6 years). Of those 20% of sub-prime loans, approximately 20% are currently in default with another 20%-40% (depending on which estimates you believe) heading towards default. Doing the math, that's roughly between 4%-12% of total mortgages either IN or heading for default. This does not include traditional (non-sub-prime) mortgages, which, if you understand why/how the sub-prime mess was created you'll understand that the damage won't be contained to the sub-primes only.

In brief, "letting things sort themselves out" while it sounds nice, quaint and very "free market" isn't a practical solution for the folks who didn't lie on their loan applications or didn't over-buy the house/payment? Why not? Well, at the default rates we're talking about housing prices are cratering (i.e., if you're one of the "responsible folks" I really hope you don't need to move or otherwise sell your house for the next three years) and credit facilities have literally EVAPORATED (without the packaging and re-selling of MBS banks have no outlet for generated paper and therefore have less -- read, more appropriate -- appetite for risk, in some cases, retracting past the point of prudence and to the point of "zero bad loans") resulting in even moderate to good borrowers not being able to find credit, which further craters home prices (even if someone wants to buy, they can't get a loan) and the cycle repeats. Add to that a cyclical over-supply of houses (driven by the easy credit, inflated housing prices boom cycle) and you have an extended period of housing problems that is affecting everyone in the system, not just the irresponsible ones. And that, in a nutshell is why "letting things sort themselves out" is an exceptionally poor "strategy" (if it can even be called that).

Wow! Left-wing consumer blog (not this one, the one linked to) shills for Obama.

In other news the sky is blue.

A standardized scoring system for obligations of debtors would be a very good thing, going-forward.

McCain's housing plan involves mainly keeping the dozen or so multi-million-dollar mansions that he owns, for a long long time.

Jives well with his universal health-care plan, where everyone who is a career Senator gets free lifetime health-care.

Really, it's a win-win platform for everyone, can't we all agree on that?

@AstroPig7: which is the problem, unlike the rest of the country New Jersey has been a problem realestate state for a little longer mostly due to the over inflated prices for a house.

A 2 bedroom house in a decent neighborhood is around 300 - 400 k 2 bedroom !! mind you.

I rent and a 1 bedroom small 500 sq foot apartment is 900-1200 for average rentals, this has gone up a lot.

Places are building Luxury apartments to charge these higher prices, they offer lots of amenities however they charge 1600+ for 1 bedroom places.

all I'm saying is if NJ is leading the way of the housing issues with our own economy issues, then the rest of the country should see a similar turn.

@kaycee: Maybe I'm not paying close enough attention to this issue and I'm missing something - but I'm tired of hearing about bailing out people who bought a house they couldn't afford.

These flailing overspenders, unfortunately, end up causing chain reactions and dragging down others with them. On paper and idealism, the sentiment makes sense, but in reality, without assistance, you end up with national economic byproducts and local neighborhood degradation that ends up affecting innocent people.

@Skankingmike: But then all the empty condos turn into rentals. And investors buy up REOs and rent them. And people still live in buildings. But pay much less.

Hillary- Reward the Company
Obama - Lieing companies are bad.
McCain - lieing people are bad.

No one says they all suck and deserve the bag of fail they bought.

@AstroPig7: Rent control is not an answer, unless you want to halt rental units being built and all new ones becoming "luxury" units at an even higher price. Rent control has failed miserably everywhere it's been tried.

Higher rental prices spur demand for new rental units, which then lower the price as there is more competition.

Think of it like the gas "crisis" currently going on -- the higher gas prices go, the more inclined people are to invest in alternative fuel research. Yeah, it sucks paying $4/gal for gas now, but it will lead to getting rid of our oil dependency that much sooner.

@Lucky225: A de-regulated banking and securities industry was a huge factor in the great depression. Remember, when a bank loans money it's not the bank's money. It is the money of their depositors/investors. Lots of people lost every cent they had when their bank foolishly loaned out all their money to some slick-talking con artist on a risky venture that no regulated bank today would give a second look at. Same thing is happening here although there's a safety net this time.

Banks love high risk loans because it's an excuse for them to charge higher interest rates which increases their profit margin. Low risk loans are a safe bet, but unfortunately those borrowers demand lower interest rates.

@FightOnTrojans: "provide for a common defense" can be interpreted in many ways, just like "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof" or "the right of the people to keep and bear arms, shall not be infringed" are differently viewed.

But I'll even go a step further and compromise with you: lets draw out every soldier stationed overseas and put them on our borders. I'd MUCH rather close the borders than have our troops in Iraq (assuming that us leaving wouldn't cause a tremendous loss of life).

@Hodo: First, you're using the data incorrectly. The percentages you're using is of all mortgages in that year, i.e. new mortgages. Still, I believe subprime mortgages are roughly 3-6% of all morgages, so our ranges intersect.

Your logic that subprime mortgage problems will roll over into traditional mortgages is flawed logic: if my neighbor is defaulting on his credit cards, that doesn't make me more likely to do so on my own cards. If he does the same on his mortgage, I'm unaffected. (Property values might drop, but that's a whole different animal only affecting speculators and those wanting to sell).

As for your cycle, you've got an overly pessimistic view - you can still find lending, but it will be tighter than before. Even still, last I read FHA loans were as high as 97% value of the house. So for a 400,000 house I need to save only $12,000? Wow. Even better, FHA is backed by the government - and if they go under, we've got bigger problems to deal with than home values and houses themselves.

If you want to "fix" this once and for all, don't encourage people to "spend" but rather to "save". Anyone with any economic background remembers "tax what you don't want people to do, don't tax what you want them to do." Well, right now we tax savings at a potentially higher rate than spending: if I earn $100 on my savings account, I might end up paying $30!

Joe Renter's View:

No bailouts for struggling homeowners. Can't afford it? Sell to someone who can. Can't sell it for the price you want. Lower it till someone will buy it. Someone like Jane Renter. Joe Renter doesn't want to take out a risky loan to buy a house at what you bought it at. Jane renter wants to pay less.

Why not give money to those who want to buy a home rather than those can't sell it or can't afford it? Than again why artificially inflate the price of housing with Jane & Joe Renter's tax dollars in the first place?

@Lucky225: Homelessness and famine are two examples of the market working itself out. LET THE MARKET DECIDE who gets shelter and food!

@Lucky225: Well said! I'm not huge on Ron Paul, but the market will fix this. The bad lenders are feeling the pain right now. IF we don't bail them out, then they will learn a valuable lesson. Also their costs are way up, so they will be unable to compete w/ some of the other lenders who can offer the lower rates.

I'll support any plan that results in peoPle who committee fraud going to jail. WHY were liar loans accepted. That said wouldn't a bailout result in houses remaining over valued.

@Tux the Penguin:

Question: do you know what the mortgage churn rate is? Or asked differently, what is the "average life" of a mortgage loan? According to FreddieMac ( [www.freddiemac.com] ) the median age of a mortgage was 3.4 years. Now, descriptive statistics being what they are, without knowing the standard deviation of the distribution, it's hard to say exactly how many loans were churning and how many were staying intact. But a 3.4 year median (basically implies a 2003 origination date which makes sense given what we know about the creation of MBS) would make it not too hard to believe that the majority of currently outstanding mortgages (and when I say majority, I mean 51%+, not necessarily 80%) were originated in the 2001-2007 time frame. I might end up being wrong on that one, but I doubt it. So, sub-primes going from 4% of all originated loans to 20% of all originated loans doesn't equate to 3%-6% of all loans. Why? Well, a funny thing happens when credit gets loose . . . it accelerates, meaning that sub-primes may have been 4% of 1 million applications in 2001 and 20% of 20 million applications in 2006. I don't have the data handy or quotable (but it happens to be part of my job to stay at least partially if not imperfectly informed about what is happening in this sector) but applications, loans, and dollars did indeed accelerate in that aforementioned time period, so the average of sub-primes needs to be weighted by the increase in loan application pool (i.e., more apps as the % of sub-primes went up). So while a flat 20% of total mortgages outstanding isn't correct, as you pointed out, it's likely not 3%-6% of all outstanding, either. In any case, rather than getting into a pissing contest about who's number is correct, even at the 3%-6% range you're asserting, when you consider how prices are determined in an open market, a 3%-6% swing in supply (especially when supply cannot be curtailed or shut off quickly) is a HUGE number.

In any case, you explanation of why the sub-prime market won't affect traditional mortgage default rates is somewhat simplistic in it's "bottoms up" approach. Why? Well, you're assuming a static case: person/family buys a house, gets a 30 year mortgage and stays there until the pay off their loan and die. This scenario almost never, and I do mean almost never, plays out. Even going back to more reasonable times (i.e., 1999) the FreddieMac data shows an average mortgage life of between 5-6 years. Ever wonder why the 3/27, 5/25, and 7/23 balloon mortgages existed? Because people tend not to stay in a house for very long (7 years is average) due to things like: growth in family size, moving for a job change, or increased income or desire for a nicer home. Bottom line: this "trade up", "trade out", or "move on" behavior is typical of the housing market. Your assertion seems to be that people with average credit, average income and average situations who don't lie on their loan applications should be fine. Unfortunately for them, your assertion is somewhat disconnected from the way the mortgages are originated, funded, packaged and sold. That is where the REAL damage has been done in this credit meltdown. Entire CLASSES of assets (bundles of mortgages packaged together, rated by Moody's, and sold as financial instruments) have evaporated since July of 2007. These vehicles won't be coming back, the brokers who originated them won't have the credibility they once had, the ratings agencies that rated teh various tranches of these packaged loans won't be trusted for some time (if ever) in this market space, and many investors (mostly foreign banks) won't ever trust this asset class again. Why does that matter? Because without the liquidity this mechanism provided, there won't be a home for originated paper because most banks and financial institutions don't want to hold (own) mortgage paper over time.

Its an incredibly complex financial eco-system out there that doesn't lend itself to being understood quickly -- which, ironically is one reason that the credit crisis happened . . . people (investors and investment banks) didn't have a good grasp on what they were buying.

I could go on about this topic for quite some time, but I do actually have to get some work done today and I fear that I'm completely boring the crap out of people.

@JimiSlew: That works until you want to sell your house and you pull up the comps from the last 9 months and five people (on your 10 house street) were "irresponsible" and had to sell their homes in a fire sale . . . and you find out that as a result, your house value dropped by 20%. Then the whole "no bailouts" method doesn't seem so hot. What is it they say: when your neighbor loses his job, it's a recession, when you lose yours, it's a depression.

@petrarch1608: I'm sorry, what? I'm not the asshole who raised tens of millions of dollars from credible rubes only to manage LaRouche numbers