Another great idea from the Kenyan and his minions
Posted on 06/28/2009 3:25:45 AM PDT by Zakeet
Some housing experts believe there is no alternative but outright forgiveness of a substantial chunk of mortgage debt for many people who are at risk of foreclosure.
Government and private-lender attempts to stem the home foreclosure crisis so far have mostly focused on loan modifications or refinancing -- giving borrowers a temporary or permanent reduction in their monthly payments.
But some housing experts say the next wave of help will have to address the core problem for many homeowners: negative equity.
This camp believes that there is no alternative but outright forgiveness of a substantial chunk of mortgage debt for many people who are underwater in their homes and at risk of foreclosure.
If your mortgage is worth significantly more than your house, your incentive to walk away may rise even if your monthly payment goes down. The decision to walk becomes a matter of simple math: If you have no hope of having an equity stake in the home for years to come -- if ever -- trading your mortgage payment for a much cheaper rent payment may be an economic no-brainer.
Right about now, many readers' outrage meters no doubt are in the red zone. Forgiveness? Let them off the hook, permanently, for some piece of a debt load they shouldn't have taken on in the first place?
The response from proponents of forgiveness is the same just-suck-it-up justification offered for every housing bailout program: The rest of us will pay, one way or another, if home prices keep falling because more foreclosed properties end up dumped on the market.
Given the alternative, the argument goes, why not try to sustain as much owner-occupied housing as possible?
(Excerpt) Read more at latimes.com ...
Another great idea from the Kenyan and his minions
Personal responsibility doesn’t seem to have a place in the US anymore, except for those whose efforts provide funds to the government for redistribution. What a great concept.
I read this pile of bull squeeze yesterday. Back when this idea was floated in February, it was, in my opinion, the catalyst (along with Rick Santelli’s Rant) for the Tea Parties.
Is it too late for me to get one of them 110% mortgage loans that used to be highly touted?
Before everyone gets all huffy n puffy over this, remember this also includes non-sub prime borrowers who were recently laid off and in current modification.It is all WRONG but let’s say both people in a household got laid off and are in reduced pay jobs fighting like hell? A common sense solution would be permenent modification plans.
A common-sense solution would be to short-sell and get an apartment or other foreclosed home that you can afford.
No f**kin’ way.
Hell no!
Forclose and kick them out on the street if they don’t keep paying!
I was not speaking about myself but about massive layoff states like Michigan and Ohio. Kindly think about what you just said in comparison to an upper or middle class couples /laid off/reduced pay leaving even more empty homes. Why not just let a modification plan/reduced payments, stay and no one bails anyone out. As far as the sub-primers, too bad so sad they can move to an apt.My bottom line is if anyone should PAY and suck up some loss it should be the banks NOT taxpayers.
There was, in the past, a time honored concept known as the “Jubilee” from the Book of Leviticus in the Old Testament. After seven cycles of seven years, in the 50th year was held a Jubilee. All debts were forgiven and all sins were atoned.
After seven cycles of sabbatical years, a total of 49 years, the fiftieth year was proclaimed a jubilee (Leviticus 25:8-12). Again, the land was to rest from cultivation (verse 11), and all families that had become poor and had mortgaged their land could return to their possession (verse 13).
These were major economic laws given by God, designed to prevent undue wealth acquired through acquisition of farm land from accumulating in the hands of the rich while the poor become further impoverished. God repeatedly emphasizes that people are not to oppress one another (Leviticus 25:14, 17). Deuteronomy 15 says that following these economic laws would bring God’s blessing (verses 4, 6, 10). God wants people to learn to be generous and compassionate—to have a “give” attitude rather than one of “get.”
What happens if you “modify” their mortgage (i.e. steal money from the lender and/or taxpayers) and the housing market improves so they suddenly find themselves with a hundred thousand dollars equity?
Do you think that Uncle Sugar will demand that they sign that equity over to the taxpayers or the bank as repayment for their modification?
Or will they be allowed to take their windfall and go buy a bigger McMansion with it so they’ll be primed for another bailout the next time there’s a slump in the economy?
Its time that Americans begin to learn some hard lessons in personal responsibility.
This might make sense for the holder of the mortgage, better to take a cut today and reduce the risk of losing more in the future. But I am vehemently opposed to more gov’t guarantees and interference. Over half of loans modified have gotten back into serious trouble in less than a year. The fundamental problem is the borrower esp in the states hit hardest are seriously underwater with no expectation of any price appreciation for several years at least. I think the “debt-for-equity swap” might make the most sense. As with bankruptcy, the stigma attached with a homeowner sinply walking away from the house is gone.
As I said at first if any such program is done it is the note holder who should not it without any more interference from the gov’t.
There are some legitimate “upside down” owners who just got in the market at the wrong time, and I feel for them. On the other hand, there are many upside downers that spent their equity...used it for consumer goods. When that’s the case what makes them think that giving folks back equity in their homes won’t just be a repeat of the first go. Won’t they just use the “new” equity to go out and buy more stuff???
Exactly. Well said.
All I want to know is...as a hard-working, tax-paying (38.5% of gross) citizen that is living in a 1500sf 35 year-old house because I didn’t want to overreach...WHERE IS MY FREEBIE?! My “buy-down”, my interest reduction on my mortgage, my principal reduction? All I got was a 40% hit in the value of my house, while the irresponsible knuckleheads are living in new 2500sf homes with granite counter tops, getting bailed out using my tax money!
They are also getting free cell phones, all their bills paid and their gas in their freaking caddie escalade vehicles as I work my ass to the bone. I hear ya. All’s Im trying to say is there are people out there who lost their jobs, that WON’T qualify for all the freebies, they may not even have the money for down payments for an apt. by the time the brunt of this eff up of a mess hits. I am watching skilled trades slide down. The upper/middle class will pay the piper I suppose...
FREE MONEY!!!!!!!!
I was not speaking about myself but about massive layoff states like Michigan and Ohio.
I’m sorry but it’s the liberal policies of these states and the burdensome overhang of corrupt labor unions that’s killing not only the economies there but nation wide as well. Why the hell should others be forced to pay for these bad loans?
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