Is Obama about to forgive billions in mortgage principal?

Hot Air ^ | 8/5/10 | Ed Morrissey

[Anti-Bubba182]

They won’t be happy to see people get free houses! They will join all the chumps who paid their mortgages.

[paulycy]

SO help me out here, please:

1) Someone just recently finished buying a $240,000 home in time to qualify for the $8000 obama homebuyers credit.

2) With 20% down, the loan amount is $200K. It is NOT a Fannie/Freddie loan so doesn’t get paid off by the feds.

What happens to this new homebuyer under these circumstances?

What happens to home values in general?

Would the feds have to pay off everybody equally or just Fred/Fan mortgages?

[musicman]

[wolfman23601]

So if you are underwater and your mortgage is not held by Fannie/Freddie, you can go ahead and grab your ankles. If this goes through, I am strategically defaulting.

[Fawn]

S O a B!!!!!!

[Scott from the Left Coast]

Bingo! This is going to piss off a lot more people than it will help. And I mean revolt piss off.

Most of us have conventional mortgages with banks. I put 160K down (1/3) on my house that I had to buy in August 2006 (because I had moved to take a new job 1,400 miles from my old job, and sold my house in my old location). Conventional fixed mortgage. Make every single payment on-time...always. The 160K is gone and I'm now about 75K underwater. This does squat for me...except piss me off more than I already was.

They want to really help? Suspend payroll taxes for a year.

[palmer]

You are right, it is not irresponsible to overpay. I argued with people here in 2005 about that, but didn’t call it irresponsible, just inadvisable.

[OldGoatCPO]

Away from areas like Ft Bragg, Camp Lejeune and Seymour Johnson, I have heard the NC economy is in the tank. Loans from the Feds are essential keeping the State afloat. Unemployment will drive down State revenue and increases in taxes will just push people south. The area I am in is heavily populated by retired military that pay no State taxes. Yet, the recession has impacted this area less than surrounding counties. I don't know, maybe it is all that extra disposable income in the area.

[BelegStrongbow]

What you say is what is so. 16% unemployment in my home county of Lee. Not much better in any of those around it.

The problem is high state taxes and worthless state employees. You could cut half of the state staff and nobody would notice. No, I take that back: every company in the state would instantly do 10% better and that’s all it would take for the state to rebound from the doldrums.

[Lichgod]

I though any amount forgiven is considered income that is taxable. Would this also create a lot of tax dead beats come next April?

Example: House appraised at 250k, loan at 450k, forgiven equals 450k - 250k = 200k. Income was 75k now the IRS will say it is 275k which is above the 250k for any tax break so will be looking for about 40% in cash or 110k. Kind of hard to do with an income of only 75k.

I can see lots of exceptions and loop holes if this is done. One would be: banks included in the forgiveness that would instantly balance their bad loan books.

The whole idea is bad.

[Hulka]

I guess Peggy Joseph was right. . . .and we laughed at her ignorance. Appears she may be right. . . .

http://www.youtube.com/watch?v=P36x8rTb3jI

[Republic of Texas]

Is this even a question? Of course he is. It’s what he does. It’s ALL he does!

[screaminsunshine]

Is there a convenient re-education camp I can attend to be able to understand this logic?

[Grumplestiltskin]

“anyone who takes a free cheese mortgage buydown- is rendered powerless to protest govt overspending
clever, eh? The more people you make part of the problem, the less people you have who can resist or protest the problem”

Something whispers in my ear that when the fine print on this bailout is read, there are gonna be “strings attached” for anyone who takes the bait... er.... payoff.

[screaminsunshine]

I am wondering why I bother to go to work? Anyone know where Galt is? I hope he comes soon.

[screaminsunshine]

This will only be for the stupid minority sub-prime products of socialist devolution.

[StAnDeliver]

Trial balloon so they can test focus group reaction over the weekend.

[Mike Darancette]

I have never taken government assistance on anything. But the idea of getting back above water on my mortgage is very attractive.

But what will happen when you poor underwater folks sell your house for a profit? The government will be your partner and take theirs back and tell you how you can spend yours. All the while your real estate "partner" will be telling what to do.

[TheDailyChange]

Smoke and Mirrors from the Black House, don’t buy it.

If you are considering walking away and starting over, many contend that this is the BEST method.

The banks are flush with TARP CASH and could care a less if you walk away. Many times they don’t even come after you for a deficiency judgment even in recourse states.

Credit can be rebuilt.

Getting too close with the Black House could forever BURN YOU!

Don’t bite the carrot about to be dangled in front you.

[itsahoot]

There are plenty of people in California that fall in that category. Never planned to live here permanently. Put hour flame retardant suit on because you are about to get it heavy.