Should people who mortgaged more than they should have (and they knew it) be "bailed out" vs. bankrupcy?

Question

I've always wondered how people who are just starting are miraculously able to afford a $300,000 house.

Well, of course, they went for the extremely risky loans that were being offered to them left and right, no income verification, interest only, variable rate, etc., when interest rates were really low.

So is it now OUR FAULT and we're supposed to "bail them out" or else it will affect the economy?

NONSENSE. They took and knew the risk. And recent 1980's history warned them what could happen, and they ignored it. I mean, am I the only one who opens a history book any more?

But then there will be a glut of overpriced houses on the market! So? It will be a temporary thing. Believe me, people who really CAN afford it will buy up those houses at discount prices and reap the rewards, AS THEY SHOULD.

Should people who live beyond their means expect sympathy from those of us who play by the rules, sacrifice, wait, and save up for things?

What do you think?

Before I weep for any banks, let them sell the pricey properties that they own, huge mega-skyscrapers in the most expensive acreage in major cities.

There's no reason, in today's electronic age, for ANY bank to occupy a mega skyscraper in Manhattan, Chicago, L.A., Miami, or any other major city. They could have a building out in Dogpatch Kansas and consumers could care less.

In fact, they OWE it to their customers to do just that! SAVE money by moving to depressed areas, thereby helping that local economy AND cutting their bottom line costs, passing higher interest rates along to their depositors.

Answer 1

I agree completely.

No bail out for the customers or the lenders. Let them all sink for making bad decisions.

It's called personal/corporate responsibility.

Answer 2

It's not entirely their fault, the boom and bust cycles, combined with massive levels of economic uncertainty, inflicted through massive monetary inflation (it's so high it's not even public anymore, it's in the double digits) to improve "liquidity" by the Federal Reserve, can easily turn a barely reachable deal into one that quickly implodes. Blaming the mortgage industry really is blaming the symptom for the cause. However, people should do what they can, being aware that their savings will be steadily whittled away and the economy buffeted my macroeconomic shocks due to the machinations of the Federal Reserve, and behave in an appropriately conservative manner to lessen the probability they will be pulled under due to mangled policy at the Federal Reserve. They should not be bailed out. If they are intelligent, they will turn against the Federal Reserve, not go after the hapless sub-prime mortgage industry, which is only trying to help the least well off by offering services no one else would, with pitch forks. If the sub-prime mortgage industry didn't exist, Congress would issue legislation forcing lenders to lend to people with less than good credit anyway, no doubt on the premise the lenders are racist and hate poor people.

Answer 3

The only people getting bailed out in that scenario is the lenders. The borrowers can walk away. It is not illegal to default on a loan. Get some boxes pack up your stuff and mail the keys to the bank.

The banks made the loan if they are not getting paid and the gov bails out the brrower the lender wins.

Answer 4

Currently there are NO BAIL OUT programs available to consumer borrowers. there only answer is BANKRUPTCY which with the new bankruptcy laws in place only offer some relief. I can and offer advice and reorganization help on ones personal financial situations. Your question isn't quite a valid one or a valid statement. Currently and in the past the same situations have come about with reference to consumers. What your witnessing now if your watching the bond markets is something entirely different. Which is not the consumer borrowers fault. Yes there is and was MARKET HYPE and a huge increase NATIONWIDE in home prices and is cyclic as it will continue as it has done in the past a reduction in value. So I find some of your questions and statements somewhat conflicting. feel free to contact me and I can further explain.

Answer 5

Well I hate this trickle down effect as much as the next guy. What it amounts to is all of us are to blame. We all wanted more and more equity from our investments and we got it. Then when things got tough, the big wigs decided that there weren't enough AFFORDABLE housing and in comes the loan companies to save the day. Only they took advantage of the situation by not qualifying folks for a full payment, but only for an interest only payment and BAM! Here we are. So I take as much blame for this as I place on others. I've been in the business nearly 20 years and right now I'm trying to decide whether to sell my home or get a job wherever I can to keep paying for it. While I've managed my money pretty well in the last 3 years, very few sales transactions is beginning to take it's toll. So please pass this along: If you know someone who is having trouble making their payments, please please please have them call 888-995-HELP. It is a HUD approved counseling service to help. Good Luck to us all!

Answer 6

You raise an extremely important question, especially today after our whole stock market plummeted because of exactly what you're talking about. It angers me beyond measure that people who don't "get" living the American dream...like it just should be handed over to them. So they borrow money they don't have and think "OK now I'm ok" I'm angry about that. But there's a two tiered thing going on, because once credit card companies sense the vulnerability, then they strike. Next what will happen is these cc co.'s are going to have to have to account on preying on the vulnerable and then it will be the check and co companies etc.... You are right, but it just the tip of what's about to happen

Answer 7

so are you watching the media? cause today the fed reserve deposited $30 billion into banks in order to assist them with their reserves during this crisis.
do you know what happens to your money if your bank closes? do you remember history?

the money that was deposited today is to assist those that can refi to refi. The monies are not to bail out anyone. those whose loans outvalue their property value are not eligible. they are not to bail out the sub-primes or ARMs...and there are to be no more "creative or zero down or sub prime or whatever you want to call it" loans. all loans going forward with this $30 billion are traditional.

in response to should we wait and sacrifice for what we want...sure we should ...but we have raised people (our children 40 years and younger) in a society of want it now, need it now, get it now...and they do.....i guess if you go back in your history lessons it was called "the American Dream"...hurry up, grow up, get into debt.

thanks for asking ...good luck :)

Answer 8

I am with you. I will be seriously pissed if my tax dollars go to support some bums desire to live a life style beyond their means. That is disgusting, and totally opposes the American Free Market. I pay for my and my families life style, and expect no one, especially not my fellow citizens to support me.

I am appalled at the greed so many people have.

Answer 9

WE should pay for THEIR stupid mistakes? WHY? The banks were really stupid to lend them the money.

This is where BofA account people will get hurt since they did all those loans to illegals that will now skip out of town!

Answer 10

No , the taxpayers are NOT going to bail them out and
Bush has already said that is not an option .