Posted on 02/26/2009 11:42:59 AM PST by Turret Gunner A20
The Heritage Foundation has issued a report on Obama's mortgage cramdown bill, officially known as The Helping Families Save Their Homes Act.
www.heritage.org/Research/Economy/wm2310.cfm
This is the one that would allow bankruptcy judges to reduce the principal owed on a mortgage. Just call this a wealth transfer from mortgage lenders to irresponsible home buyers. Irresponsible home buyers, it seems, vote Democrat. You know this is a lousy idea, I know it's a lousy idea, Rick Santelli knows it's a lousy idea .. and here comes the Heritage Foundation to assure us that .. yes .. it is a lousy idea. Here are just a few ways they believe this cramdown bill is going to actually hurt the housing market:
Raise mortgage costs. Cramdowns would add additional risk that mortgages will not be repaid as the contract requires. Lenders must charge for that added risk, and experts estimate that the additional costs would raise mortgage rates by as much as two full percentage points or substantially increase required down payments. (This, by the way, is exactly what I was telling you earlier this week). These added costs would fall hardest on moderate-income and first-time homebuyers, who have a higher risk of defaulting on a mortgage. This will price many families out of the housing market. Obama will blame the lenders, and the people who can't buy homes will continue to vote Democrat.
Further undermine the value of mortgage-backed securities. Banks and other investors are already facing heavy losses because mortgage-backed securities have lost much of their value because of uncertainties about whether the mortgages will be paid. The language in H.R. 1106 increases this uncertainty. Investors will be at risk of both foreclosure and cramdowns that reduce the earnings of these securities. Many (if not most) cramdown mortgages will later go into foreclosure. Since investors have no idea what this new provision will do to the value of their securities, prices will drop further.
Fail to help many homeowners. Only one-third of all Chapter 13 filers complete the process successfully and get the fresh start that bankruptcy promises. The other two-thirds "pay court fees, pay attorney's fees, pay fees to the bankruptcy trustee, invest time and money to restructure their financial affairs, and then wind up with nothing more than temporary relief. It is therefore not surprising that a substantial number of Chapter 13 filers--nearly one-third--go on to file for bankruptcy again." Once a deadbeat always a deadbeat. But .. and this is important ... they will continue to vote Democrat.
That's because they're ignorant.
“Where is your money going? on Obamas Website”
Where is the mortgage bailout on this page? (Note the pretty bubbles!)
http://www.recovery.gov/?q=content/investments
Tonight's Headline: Racist Boortz Uses Racist Codeword
Isn’t it specifically in the Constitution that the fedgov may not alter contracts made in the states?
I know that that has very little to do with them actually doing so.
Let it come -- Neal loves it.
Actually, I have a different take on how the cramdowns will work. It will be similar to how sub-prime mortgages became so ubiquitous.
In the case of subprimes, the Dems started way back in the 80’s ginning reporters up about “red lining”. There were even several series of “public interest” ad campaigns about it. ACORN and “community groups” geared up to pressure banks. Their supporters in Congress tightened regulations, forcing banks to make more and more of these loans. Then it all backfired when it turned out these weren’t victims, they were bums who don’t pay their bills or read contracts before they sign ‘em.
Cramdowns will work much the same way. As judges around the country begin adjusting mortgages, ACORN types will “notice” that people in Pasadena are getting bigger cramdowns than people (of color) in South Central LA. Or NYC people are getting bigger cramdowns than people (of color) in New Orleans. Never mind that their mortgages are bigger. Racism can be the only explanation for the “disparity”. ACORN will get BILLIONS to go in and “counsel” the poor victims. ANd, eventually, it will be legislated that those previously “red lined” areas will get a “bonus” cramdown. And so on, until their mortgages are forgiven entirely.
THAT is how it will work.
As an officer of a small, independent bank, this bill, and the “Homeowner Affordability and Stability Plan” to be administered by the federal banking regulators, are truly frightening, anti-capitalism measures. These evil kooks in Washington are going to wreck our country in double-time.
Yep. I know that that has very little to do with them actually doing so.
They're democraps, aren't htey?
Back on topic, this "cramdown" violates the concept of contract law. A principal reason for having a government and judiciary is to enforce contracts between individuals. Absent the concept of enforceable contracts, we have little reason for a judiciary or contracts. It is one of the only justifiable reasons for government to exist.
/ That's their prime motive.
Nothing much I can see, unless the FairTaxers all join in the revolution which should follow if the traitors in Wshington keep going this way.
Back on topic, this "cramdown" violates the concept of contract law. A principal reason for having a government and judiciary is to enforce contracts between individuals. Absent the concept of enforceable contracts, we have little reason for a judiciary or contracts. It is one of the only justifiable reasons for government to exist. Very true.
The United States of America exist as a Nation of Laws, not a nation of blood-related descendants, as many other countries are. If we cease to respect the binding nature of a contract, we are no longer the same country. We will have become just another Venezuela or Cuba.
I fear that you are correct.
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