Post by: The Rabbi on August 31, 2007, 10:26:41 AM
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WASHINGTON - President Bush outlined ways the federal government can help troubled borrowers keep their homes Friday in an effort to address rising foreclosures fueled by the mortgage crisis.
The administration's first attempt at dealing with a wave of defaults is not aimed at bailing out lenders, however.
"It's not the government's job to bail out speculators or those who made the decision to buy a home they knew they could never afford," Bush said in the Rose Garden. "Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or a little help from their government."
The U.S. economy enjoyed a strong revival in the spring but since then has been threatened by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller coaster ride.
...
"This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."
Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes.
Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.
Bush said the Federal Housing Administration, a government agency that provides mortgage insurance to borrowers through lenders in the private sector, would launch in coming days a program called FHA Secure. The program would let homeowners who have good credit histories but can't afford their current mortgage payments to refinance into mortgages insured by the FHA.
"This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes," Bush said.
Bush also urged Congress to modernize and improve the FHA so more homeowners could qualify for the mortgage insurance provided by the agency. Last year the House passed legislation to modernize FHA, but Congress has not yet sent a bill to the White House. "I look forward to signing a bill as quickly as possible," Bush said.
Bush also pledged to work with Congress to reform a key housing provision of the federal tax code, which will make it easier for homeowners to refinance their mortgages.
"Let's say the value of your house declines by $20,000 and your adjustable rate mortgage payments have grown to a level you cannot afford," Bush said. "If the bank modifies your mortgage and forgives $20,000 of your loan, the tax code treats that $20,000 as taxable income. When your home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes."
Bush also said the administration would launch a new foreclosure avoidance initiative to help homeowners figure out a way to refinance. He said Housing Secretary Alphonso Jackson and Treasury Secretary Henry Paulson would reach out to groups that offer foreclosure counseling and refinancing assistance for homeowners.
And he said the federal government was taking actions to make the mortgage industry more transparent, more reliable and fair to reduce the likelihood of these lending problems happening again.
Sen. Charles Schumer, D-N.Y., said he was pleased to hear Bush and Federal Reserve Chairman Ben Bernanke address the escalating crisis in the mortgage market. "The current situation is simply out of hand. It's bad and it's getting worse," he said.
He said Bush's proposals increasing FHA loans, reducing down payment requirements on loans to be insured by the FHA, eliminating tax liabilities for foreclosure victims were all Democratic proposals.
Schumer said additional steps must be taken increased funding for non-profits that help people facing foreclosure to refinance, allowing Freddie-Fannie to spend more, federal regulation of mortgage brokers.
John M. Robbins, chairman of the Mortgage Bankers Association, said the president's attention to turmoil in the mortgage markets and the plight of homeowners facing foreclosure will help push Congress to reform FHA.
"It is essential that the Federal Housing Administration have the tools and flexibility to adjust its products and programs to meet the evolving needs of borrowers," Robbins said.
The administration's first attempt at dealing with a wave of defaults is not aimed at bailing out lenders, however.
"It's not the government's job to bail out speculators or those who made the decision to buy a home they knew they could never afford," Bush said in the Rose Garden. "Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or a little help from their government."
The U.S. economy enjoyed a strong revival in the spring but since then has been threatened by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller coaster ride.
...
"This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."
Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes.
Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.
Bush said the Federal Housing Administration, a government agency that provides mortgage insurance to borrowers through lenders in the private sector, would launch in coming days a program called FHA Secure. The program would let homeowners who have good credit histories but can't afford their current mortgage payments to refinance into mortgages insured by the FHA.
"This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes," Bush said.
Bush also urged Congress to modernize and improve the FHA so more homeowners could qualify for the mortgage insurance provided by the agency. Last year the House passed legislation to modernize FHA, but Congress has not yet sent a bill to the White House. "I look forward to signing a bill as quickly as possible," Bush said.
Bush also pledged to work with Congress to reform a key housing provision of the federal tax code, which will make it easier for homeowners to refinance their mortgages.
"Let's say the value of your house declines by $20,000 and your adjustable rate mortgage payments have grown to a level you cannot afford," Bush said. "If the bank modifies your mortgage and forgives $20,000 of your loan, the tax code treats that $20,000 as taxable income. When your home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes."
Bush also said the administration would launch a new foreclosure avoidance initiative to help homeowners figure out a way to refinance. He said Housing Secretary Alphonso Jackson and Treasury Secretary Henry Paulson would reach out to groups that offer foreclosure counseling and refinancing assistance for homeowners.
And he said the federal government was taking actions to make the mortgage industry more transparent, more reliable and fair to reduce the likelihood of these lending problems happening again.
Sen. Charles Schumer, D-N.Y., said he was pleased to hear Bush and Federal Reserve Chairman Ben Bernanke address the escalating crisis in the mortgage market. "The current situation is simply out of hand. It's bad and it's getting worse," he said.
He said Bush's proposals increasing FHA loans, reducing down payment requirements on loans to be insured by the FHA, eliminating tax liabilities for foreclosure victims were all Democratic proposals.
Schumer said additional steps must be taken increased funding for non-profits that help people facing foreclosure to refinance, allowing Freddie-Fannie to spend more, federal regulation of mortgage brokers.
John M. Robbins, chairman of the Mortgage Bankers Association, said the president's attention to turmoil in the mortgage markets and the plight of homeowners facing foreclosure will help push Congress to reform FHA.
"It is essential that the Federal Housing Administration have the tools and flexibility to adjust its products and programs to meet the evolving needs of borrowers," Robbins said.
Post by: Manedwolf on August 31, 2007, 10:45:35 AM
This also makes a mockery of people who bought within their means, or saved instead of buying. The people who were foolish get to keep their luxurious homes they couldn't afford, while the responsible spendthrifts suffer in a small box.
Way to reward responsibility, huh?
Post by: The Rabbi on August 31, 2007, 10:59:55 AM
He is making a mockery of the taxpayer who will be forced to support this middle class welfare project.
Post by: Paddy on August 31, 2007, 11:30:44 AM
Take a look at what Ben Stein has to say:
http://www.cbsnews.com/stories/2007/03/18/sunday/main2581859.shtml
Post by: Perd Hapley on August 31, 2007, 12:25:49 PM
Post by: Paddy on August 31, 2007, 12:41:25 PM
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By allowing them to refi into an FhA product he is shifting the risk to the gov't and away from the lenders.
He is making a mockery of the taxpayer who will be forced to support this middle class welfare project.
He is making a mockery of the taxpayer who will be forced to support this middle class welfare project.
How so? FHA is self funded by insurance premiums paid by borrowers, correct? No 'public' funds are at risk, as I understand it.
Post by: Headless Thompson Gunner on August 31, 2007, 01:28:14 PM
Bush and Bernanke seem way too eager to meddle where they oughtn't meddle. This current scheme to force responsible borrowers to subsidize insurance to high risk borrowers is shortsighted and foolhardy. It's abhorrent to the concept of a free market.
Post by: Tallpine on August 31, 2007, 01:49:41 PM
Post by: RadioFreeSeaLab on August 31, 2007, 02:00:10 PM
Post by: Standing Wolf on August 31, 2007, 03:08:42 PM
Post by: roo_ster on August 31, 2007, 04:09:31 PM
Post by: Paddy on August 31, 2007, 04:25:17 PM
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Remind me again why I'm supposed to be a Republican ... ?
Uhhhh....the lesser of two evils? That's all I got.
This is not as bad as everybody is making it out to be. Because the 'subprime crisis' is more hype than substance, the perception can be damaging to the economy (as we've seen recently). This merely (as I understand it) provides a way for the small number of people in foreclosure to re-cast (renegotiate) their mortgages, which will allow them to keep their homes and prevent losses, right? What's the beef? Your tax dollars are not going to 'bail out' 'high risk borrowers'. Any mitigation will come from mortgage insurance premium dollars. How is that any skin off your b**ls?
Post by: Paddy on August 31, 2007, 05:07:28 PM
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And he said the federal government was taking actions to make the mortgage industry more transparent, more reliable and fair to reduce the likelihood of these lending problems happening again.
Translation: More government regulations and controls as a result of the failure of the 'free market' (yet again). Yeah, the 'free market' works great, doesn't it?
Post by: Antibubba on August 31, 2007, 07:23:59 PM
He has his legacy to consider, after all.
Post by: RocketMan on August 31, 2007, 08:42:47 PM
Translation: More government regulations and controls as a result of the failure of the 'free market' (yet again). Yeah, the 'free market' works great, doesn't it?
Actually, the free market works quite well when it is allowed to. Government is short-circuiting the free market in this case, not allowing it to work by punishing stupid borrowers and the even more stupid lenders.
Post by: Paddy on August 31, 2007, 09:44:51 PM
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Actually, the free market works quite well when it is allowed to.
Give me one example of a 'free market' that 'works well'.
Post by: Manedwolf on August 31, 2007, 11:33:37 PM
This merely (as I understand it) provides a way for the small number of people in foreclosure to re-cast (renegotiate) their mortgages, which will allow them to keep their homes and prevent losses, right?
Why should they get to keep their houses if they were stupid about buying more than they could afford? If stupid hurts, you're less likely to do stupid again.
Instead, the government is rewarding stupid, and letting stupid people continue to enjoy their out-of-their-price-range homes, while those who were fiscally responsible get...nothing.
In other words, why even try? If you're stupid, the government will bail you out. If you're responsible, you get nothing and don't get to enjoy life as much.
Great lesson.
Post by: Perd Hapley on September 01, 2007, 02:48:35 AM
Post by: Stand_watie on September 01, 2007, 03:56:44 AM
I'm still trying to figure out what happened here. We've got Rabbi calling Bush a patsy and complaining about some legislation he supports. Then we've got Riley saying, "Nah, it's not so bad." Isn't that completely backwards?
Not exactly.
You have to take into consideration that neither Rabbi or Riley are (either Republican or) George W. shills. As such they don't really give a *expletive deleted*it if they match up exactly. Riley is without doubt to the right of Rabbi on some issues. Rabbi is without doubt to the right of Riley on some issues. Conservatives don't always match up as expected..
Post by: Perd Hapley on September 01, 2007, 03:59:52 AM
Post by: Paddy on September 01, 2007, 07:08:56 AM
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Why should they get to keep their houses if they were stupid about buying more than they could afford? If stupid hurts, you're less likely to do stupid again.
Instead, the government is rewarding stupid, and letting stupid people continue to enjoy their out-of-their-price-range homes, while those who were fiscally responsible get...nothing.
In other words, why even try? If you're stupid, the government will bail you out. If you're responsible, you get nothing and don't get to enjoy life as much.
Instead, the government is rewarding stupid, and letting stupid people continue to enjoy their out-of-their-price-range homes, while those who were fiscally responsible get...nothing.
In other words, why even try? If you're stupid, the government will bail you out. If you're responsible, you get nothing and don't get to enjoy life as much.
Yeah. Like all those stupid people who lost their money because it was in banks back in October 1929 (there's a free market example for ya). Or those dumbasses who bought homes at Love Canal or near Three Mile Island. And how about those doofuses who had money invested in Enron or dotcom stocks? Or who counted on promised pensions from hundreds of companies who failed to fund those pensions? It's a dog eat dog world and only the strong survive. Let 'em eat cake.
Post by: longeyes on September 01, 2007, 07:28:14 AM
The idea is to keep the "economy" going. If that means feeding the cheap money addiction, at the expense of the sober virtues that made America great, then so be it.
Post by: Tallpine on September 01, 2007, 10:45:49 AM
When I finally got a really good paying job, we went down and bought a nice used vehicle. Didn't want to completely drain our savings acct, so we paid half in cash and financed the rest. The dealer was infuriated when I put down my salary on the loan app - they wanted me to buy a brand new Suburban, not a 10 year old one.
Then we saved up some money for a down payment on a house in the country. We could have at the time qualified for three times the mortgage payment. Couple years later I get laid off and work has been touch and go since then.
We still have our home and we still have our Suburban
Post by: BozemanMT on September 01, 2007, 02:56:33 PM
This merely (as I understand it) provides a way for the small number of people in foreclosure to re-cast (renegotiate) their mortgages, which will allow them to keep their homes and prevent losses, right?
Why should they get to keep their houses if they were stupid about buying more than they could afford? If stupid hurts, you're less likely to do stupid again.
Instead, the government is rewarding stupid, and letting stupid people continue to enjoy their out-of-their-price-range homes, while those who were fiscally responsible get...nothing.
In other words, why even try? If you're stupid, the government will bail you out. If you're responsible, you get nothing and don't get to enjoy life as much.
Great lesson.
Yeah, pretty flipping sad huh?
makes me just burn inside.
one day, all of us responsible folk are just going to stop, I mean, what's the point?
Post by: The Rabbi on September 01, 2007, 04:47:28 PM
I'm still trying to figure out what happened here. We've got Rabbi calling Bush a patsy and complaining about some legislation he supports. Then we've got Riley saying, "Nah, it's not so bad." Isn't that completely backwards?
Not exactly.
You have to take into consideration that neither Rabbi or Riley are (either Republican or) George W. shills. As such they don't really give a *expletive deleted*it if they match up exactly. Riley is without doubt to the right of Rabbi on some issues. Rabbi is without doubt to the right of Riley on some issues. Conservatives don't always match up as expected..
Well, actually I am a (Reagan) Republican. I have been since 1980. This is why I oppose Bush's actions here (as I opposed them on the medical benefit for Medicaid). More gov't involvement is not going to help this. It will make it worse and cost everyone a lot of money.
Almost all problems in the economy come from government involvement. People losing their investments in Enron or whatever are examples of "market discipline." It's called risk. Risk means you can lose your investment. That's investing 101. People who bought Enron took risk and lost. I also looked at the stock in its heyday and couldn't figure out what was keeping it up. I passed on the investment.
Market discipline needs to sort out the subprime mess and the whole housing bubble. There need to be consequences to bad decisions.
Post by: RevDisk on September 01, 2007, 08:07:16 PM
Or those dumbasses who bought homes at Love Canal or near Three Mile Island.
Ah, that'd be my parents.
I grew up on a hill overlooking TMI. For roughly 10 years, I saw the entire complex at the morning bus stop. The ironic thing is that my parent's place is worth bare minimum twice what they bought it for. Probably thrice. Housing costs are not cheap in Central PA, even near the 'worst' nuclear accident in the US.
Post by: The Rabbi on September 02, 2007, 04:23:49 AM
Post by: Paddy on September 02, 2007, 10:40:37 AM
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And another argument bites the dust.....
pfffft. Hardly. You've made a number of statements in this thread, most of them simply untrue.
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Yet another new initiative to bribe people with their own money.
and
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By allowing them to refi into an FhA product he is shifting the risk to the gov't and away from the lenders.
andQuote
He is making a mockery of the taxpayer who will be forced to support this middle class welfare project.
until it was explained that FHA is supported solely with mortgage insurance premiums paid by borrowers and not with tax dollars. Undaunted by facts however, you continued
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More gov't involvement is not going to help this. It will make it worse and cost everyone a lot of money.
then you proceed to make two contradictory statements
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Almost all problems in the economy come from government involvement. People losing their investments in Enron or whatever are examples of "market discipline." It's called risk. Risk means you can lose your investment. That's investing 101. People who bought Enron took risk and lost.
Enron happened as a result of government 'involvement', yet it's an 'example of market risk'? Enron happened because there was insufficient oversight by anybody. (That's why we now have Sarbanes-Oxley
btw)
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If they can't afford their house, how is letting the gov't guarantee the loan going to help them? It wont.
Well, yes it will and once again, the 'gov't' is not guaranteeing the loan FHA is, with private insurance premium dollars. A refinance of these mortgages under FHA will lower interest rates (and payment amounts).
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But people having trouble paying are foreclosures waiting to happen.
No, they're 'foreclosures waiting to happen' right now. That's the reason for refinancing under FHA in the first place.
Then of course, followed more knee jerk hysteria about 'irresponsible stupid people being bailed out by gubmint..........' yackety quack yada yada. I wonder how many of these critics have FHA mortgages of their own? Maybe some hypocrisy here, eh? Like Limbaugh on drug addiction or Larry Craig on homosexuality.
Post by: Manedwolf on September 02, 2007, 11:10:33 AM
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No, they're 'foreclosures waiting to happen' right now. That's the reason for refinancing under FHA in the first place.
So they should be allowed to happen!
It's not the government's job to protect people from their own stupidity. And if something hurts, someone is less likely to do it again.
Post by: The Rabbi on September 02, 2007, 12:15:10 PM
It depends on what you call "Enron." If you mean Enron the company that cooked its books, that's fraud. You cannot eliminate fraud by gov't action. Many of the principals in the company are or were in jail and subject to hefty fines.
If you mean "Enron" the company that people invested in and lost money, that's called market discipline. Anyone looking at it should have known it was a bad investment before it crashed. I did. If people took risk and didnt know about it, their tough noogies.
A refi with FhA will likely not lower interest rates. And with the premiums added to it people's payments may be higher. The advantage (to the borrower) is that the rate will be fixed for 30 years rather than variable.
And charging hypocrisy if people have FhA mortgages is just nonsensical. About like all the other points you've tried to make.
Post by: Paddy on September 02, 2007, 08:04:42 PM
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A refi with FhA will likely not lower interest rates.
Of course they will. When you go from a subprime to an FHA insured loan, interest rates will decrease. It's all about risk, remember?
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And charging hypocrisy if people have FhA mortgages is just nonsensical
Really? Explain why those borrowers sought 'government assistance' in the form of FHA guarantees and are willing to pay premiums for it. Why didn't those people just stand on their own in the 'free market', eh?
Post by: The Rabbi on September 03, 2007, 03:12:14 AM
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A refi with FhA will likely not lower interest rates.
Of course they will. When you go from a subprime to an FHA insured loan, interest rates will decrease. It's all about risk, remember?
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And charging hypocrisy if people have FhA mortgages is just nonsensical
Really? Explain why those borrowers sought 'government assistance' in the form of FHA guarantees and are willing to pay premiums for it. Why didn't those people just stand on their own in the 'free market', eh?
It will depend on the sub-prime loan. FhA insurance premiums are hefty and I have sold plenty of alt-A loans with lower rates than FhA.
The people clamoring for relief for borrowers (i.e. politicians) are not the ones who have those loans to begin with.
Post by: Paddy on September 04, 2007, 07:22:02 AM
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The people clamoring for relief for borrowers (i.e. politicians) are not the ones who have those loans to begin with.
No, you've missed the point. How many of (you) critics of this announcement have FHA loans yourselves?
Post by: The Rabbi on September 04, 2007, 08:12:57 AM
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The people clamoring for relief for borrowers (i.e. politicians) are not the ones who have those loans to begin with.
No, you've missed the point. How many of (you) critics of this announcement have FHA loans yourselves?
I dont. I never have. But even if I did, it would not amount to FhA bailing me out of a bad spot because the rules were the same for everyone when I (theoretically) applied. That is the objection: the rules will be changed not for any business reason but as a political sop to boost Bush's popularity (which it won't do anyway) and show the pols are "doing something" about foreclosures (which will be expensive and not effective).
Post by: MechAg94 on September 05, 2007, 02:59:46 PM
I agree you might need some regulation, but too much govt is normally a bad thing. Govt is inherently inefficient and wasteful. Part of the problem with some people these days is they want free market growth, but they want the govt to limit free market consequences. It doesn't always work.