Bail out of mortgage holders

[81artmonk]

Bush to outline aid to mortgage holders

By DEB RIECHMANN, Associated Press Writer 36 minutes ago

WASHINGTON - Offering federal aid for strapped mortgage holders, the White House outlined proposals Friday to help borrowers hard hit by credit problems and the housing slump.

The initiatives, to be formally unveiled by President Bush, were intended to help homeowners with risky mortgages keep their homes. Bush also was to discuss efforts to prevent these kinds of problems from arising in the future.

It was the administration's first efforts to deal with an expected wave of mortgage defaults fueled by the subprime-mortgage crisis.

White House press secretary Tony Snow said he could not provide an estimate of how much the proposals would cost taxpayers or what affect they would have on the housing market. He bristled at questions about why the measures had not been taken sooner. "I'm sure we'll have plenty of time for backseat driving," Snow said.

The White House said the plan was not a bailout for lenders or speculators.

http://news.yahoo.com/s/ap/20070831/ap_on_go_pr_wh/bush_housing_slump

Now why are we bailing out people and companies who made poor choices?? Doesn't that punish those of us who didn't make those poor choices?? Now it's our tax dollars going to help the stupid.

[PleaseBlitz]

Now why are we bailing out people and companies who made poor choices?? Doesn't that punish those of us who didn't make those poor choices?? Now it's our tax dollars going to help the stupid.[/b][/size]

So that the effects dont spread to other aspects of the economy. Any more brain busters?

[ntotoro]

So that the effects dont spread to other aspects of the economy. Any more brain busters?

Exactly.

While it does present somewhat of an ethical quandry, more foreclosures, bankruptcies, etcetera will probably hurt the economy more than this solution.

[Rocky21]

So the President wants the Federal Housing Administration to insure the mortgages of those who can’t make their house payments and wants Congress to reform the tax code to help troubled borrowers rework their loans.

Anybody remember when the Republican Party was supposed to be the party of less government?

[SkinsHokieFan]

Thumbs down to this

[Destino]

Where does it say your tax dollars are going anywhere? From what I read he wants clear some restrictions blocking those facing forclosures from gaining access to FHA programs. That's not a give away, that a temporary change in guidelines so people can avoid losing their homes when their loans reset(but still have to pay for them).

Also people keep saying poor choices but I wonder how many of you are familiar with the range of problems that are actually happening?

- Home values decreased. A pretty standard plan to refi in three years suddenly becomes increasingly difficult because the home is no longer worth enough to get refinanced.

- Standards for getting loans increased. The same people that qualified before have the same qualifications as they did before and have made their mortgage payments.... but now can't qualify.

These are just a few examples, and don't tell me that simply getting an ARM is an act of such irresponsibility that they deserve to lose their homes. ARM's make sense in certain situations and predicting a market drop isn't exactly a skill average Joe home buyer can be reasonably expected to have. I'm not saying people didn't make bad decisions, but some people didn't act as irresponsibly as people think. There a many good reasons to help refinance people out of trouble and they don't cost tax payers anything.

[ACW]

So the President wants the Federal Housing Administration to insure the mortgages of those who can’t make their house payments and wants Congress to reform the tax code to help troubled borrowers rework their loans.

Anybody remember when the Republican Party was supposed to be the party of less government?

Please, even before Bush (which was the final nail of repubs wanting small gov't), even Reagan didn't walk the walk: http://www.harrybrowne.org/articles/Reagan'sLegacy.htm

[Destino]

So the President wants the Federal Housing Administration to insure the mortgages of those who can’t make their house payments and wants Congress to reform the tax code to help troubled borrowers rework their loans.

Anybody remember when the Republican Party was supposed to be the party of less government?

How is this more government?

[Larry]

So that the effects dont spread to other aspects of the economy.

I think a more accurate way of phrasing that would be:

So that the predicted consequences of an intentionally created credit-based economy won't show up until said consequences can be blamed on somebody else.

But I guess that's just a matter of perspective.

[Rocky21]

How is this more government?

A branch of the federal government insuring mortgages held in the private sector. Changing the federal income tax code to assist private mortgage holders in fulfilling the terms of loans held in the private sector.

What part of that don't you get?

[Gary Clark Fan]

So for people like me who make there payment on time.......what benefit do i get from this? I mean if they are bailing out those in need...that need to offer some type of incentive or reward for those who play by the rules and make their payments on time......Im sick of the weak benefiting from their ignorance.

[stevenaa]

Exactly.

While it does present somewhat of an ethical quandry, more foreclosures, bankruptcies, etcetera will probably hurt the economy more than this solution.

Which would cause a natural correction to the ridiculously inflated housing market. Bring it on.

[Destino]

So for people like me who make there payment on time.......what benefit do i get from this? I mean if they are bailing out those in need...that need to offer some type of incentive or reward for those who play by the rules and make their payments on time......Im sick of the weak benefiting from their ignorance.

Great logic. Those that aren't in need should be given help! You should start a non-profit.

[endzone_dave]

It looks like I should have bought more house than I could afford and let the government bail me out with a favorable loan.

I thought being responsible when I purchased my house was the way to go. That'll teach me.

[Destino]

A branch of the federal government insuring mortgages held in the private sector.

The FHA already does that. They started doing so in the 1930s.

Description of what the FHA does commonly found on the internets:

FHA insures lenders against loss in the event that borrowers default on their loans. In this way, FHA encourages lenders to make loans that they might otherwise view as too risky. FHA began operations in the depths of the depression of the 1930s when lenders had stopped making new loans altogether because a sizeable proportion of existing loans were in default. As the country worked its way out of the depression, the FHA settled into the principal role it has today: helping a segment of the low-and-moderate-income population become homeowners who otherwise might not make it because they have shaky credit or can't come up with the cash needed for the down payment.

How is what Bush announced today out of line with that which they have been doing?

Changing the federal income tax code to assist private mortgage holders in fulfilling the terms of loans held in the private sector.

What part of that don't you get?

Tax codes are commonly used to influence the economy. Huge tax cuts are being given for real estate in the gulf area affected by katrina for example. This is nothing new and certainly not bigger government.

[ACW]

Gov't shouldn't bail out the lenders OR borrowers.

[PleaseBlitz]

So for people like me who make there payment on time.......what benefit do i get from this? I mean if they are bailing out those in need...that need to offer some type of incentive or reward for those who play by the rules and make their payments on time......Im sick of the weak benefiting from their ignorance.

Here is how it benefits you: The housing market doesnt collapse, so you wont have to come up with cash out of your pocket just to sell your house.

[Destino]

It looks like I should have bought more house than I could afford and let the government bail me out with a favorable loan.

I thought being responsible when I purchased my house was the way to go. That'll teach me.

That's not the case. The only thing this will do is allow more to qualify for refinancing to get out of ARMs. They aren't reducing their debt and the interest rates won't be any better then what well qualified buyers are getting.

[PleaseBlitz]

I think a more accurate way of phrasing that would be:

So that the predicted consequences of an intentionally created credit-based economy won't show up until said consequences can be blamed on somebody else.

But I guess that's just a matter of perspective.

PB perspective: Economics

Larry perspective: Political.

[PleaseBlitz]

Maybe everyone should actually READ what the article says instead of forming an opinion based on the thread title created by a poster that is clueless on the subject. :2cents:

This is not a bailout.

[Destino]

PB perspective: Economics

Larry perspective: Political.

Destino Perspective: INSANE.

[alexey]

So that the predicted consequences of an intentionally created credit-based economy won't show up until said consequences can be blamed on somebody else.

Can you expand on the "intentionally created" part?

[endzone_dave]

That's not the case. The only thing this will do is allow more to qualify for refinancing to get out of ARMs. They aren't reducing their debt and the interest rates won't be any better then what well qualified buyers are getting.

That's not exactly true. The reason people got into these ARMs in the first place is so they could purchase homes they couldn't have afforded using standard loans.

[jbooma]

Maybe everyone should actually READ what the article says instead of forming an opinion based on the thread title created by a poster that is clueless on the subject. :2cents:

This is not a bailout.

:applause: :applause: :applause: :applause: :applause:

Exactly everyone needs to read before speaking. What the government is doing is they are going to try and help those in bad situations get out so it doesn't cost all of us. No where in the article did it say it will just let people stop their loan and walk away.

What I especially like is the part about going after lenders and making sure they are following the regulations correctly.

A key element of Bush’s plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

Earlier this month, Bush predicted that the ongoing decline in the housing market wouldn’t become precipitous, but would result in a “soft landing.”

He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms

“Anybody who loses their home is somebody with whom we must show enormous empathy,” the president said at an Aug. 9 news conference. “The word ‘bailout,’ I’m not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don’t support that.”

On Friday, Bush:

Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages.

Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans.

Called for rigorously enforcing predatory lending laws and strengthening lending practices.

[Destino]

hooray reality!

The FHASecure initiativewill operate under the same safe guidelines as the FHA's existing mortgage insurance program without affecting FHA's financial health. Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer.

The risk-based insurance premium structure will further expand FHA's reach to additional underserved borrowers, particularly minorities and first-time homebuyers who have been disproportionately lured into exotic mortgages, and enhance the FHA's overall risk management. The move to risk-based premiums ensures that FHA remains on solid financial footing as a self-financed agency for the long-term.

FHASecure, like all FHA products, will be underwritten to ensure the borrowers have the ability to repay the loan, will require escrow for taxes and insurance, and will continue to offer unprecedented foreclosure prevention assistance. The FHA has never permitted and will not include pre-payment penalties or teaser rates that are common in exotic mortgages and have caused much of the current market troubles.

To qualify for FHASecure, eligible homeowners must meet the following five criteria:

A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;

Interest rates must have or will reset between June 2005 and December 2009;

Three percent cash or equity in the home;

A sustained history of employment; and

Sufficient income to make the mortgage payment.

"FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates," said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery. "These homeowners, many of whom are minorities, need a safe, affordable mortgage product that will help build wealth. All FHA borrowers pay mortgage insurance premiums to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer."

http://www.fha.gov/press/2007-08-31release.cfm

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