Should the government bail out people who's variable rate mortgages are foreclosing?

Question

I keep hearing about how the government needs to help people who signed variable rate morgages. They knew what they were getting into when they signed. Now their rates are rising and the mortgages are foreclosing because these people irresponsibly bit off more than they could chew. These buyers drove up home prices to the levels they are at now in the first place. Levels so high, that someone like myself who is financially responsible and realizes their litmitations can't possibly afford housing (I live in NYC). Now the gov't is supposed to bail these people out? Who's going to bare the burden of that cost? I have a guess... John Q Taxpayer. Does anyone else think this is crap? Does anyone else think we should let all these mortgages forclose to bring the cost of housing back down to a reasonable level?

What's your opinion?

Answer 1

They are adults and should have made sure they knew exactly what they signed.

Answer 2

The government that robs Peter to pay Paul can always count on the support of Paul.

I personally told at least 100 people what was going on with the loans that my competition was using to put them into properties they couldn't afford. All but a very few went ahead and did it, as if all they had to do was click their heels together and say, "There's no place like Oz!"

I do feel a certain amount of sympathy for the borrowers, nonetheless. Here were two professionals, an agent and a loan officer, who were supposed to have a fiduciary responsibility to these people, advising them to buy this property and get this loan. However, the information was out there, had they done any significant investigation. For the biggest investment of their life for most folks, wishful thinking is not due diligence.

Furthermore, the House Bill expanding FHA programs was essentially a great big taxpayer bailout. I read it, in its entirety. The CBO analysis was political whitewash. If these folks can't make their payments *NOW*, the FHA program is unlikely to save them in the long run. I can't pretend it wouldn't help my business, but what about the 90% plus of taxpayers that aren't affiliated with real estate or construction? The Senate version was not significantly better.

As for the lenders whose lax loan policies encouraged it, and the agents and loan officers who actively aided and abetted, I think the best solution is "leave them to twist, slowly, in the wind." Maybe that will stop a few future iterations of this.

Answer 3

I understand, I had a preditory lender, (BRKR) in both real estate and mortgages take my wife and I on a real bad ride, I have yet to get out of and might even be prosecuted as he is my dad, and I should never have trusted him with such a thing, I now know! we could all have a revolution, but a few letters a day to congress and president may get the point accross. I think they should give amnesty to the homeowners , as their credit is most likely ruined now, and having a roof over head is important, not to mention food & job. do what I did you like the great out doors you can cut some wood and place it accross the beams under the bridge and make a makeshift house, battery operated lights etc. just remember to close the end near the stinky river, I'll never get used to that . as for pc use, sneak into the local library and use their system at night after they close, I do no one is the wiser and I don't do any harm, however if you have a son(my three year old leaves some books always out) keep it in check

Answer 4

No one is talking about bailing those borrowers out, but merely allowing them to refinance through FHA. I don't put all the blame of the rising housing costs on the adjustable rate buyers, but they were a contributing factor. You are right that John Q. Taxpayer shouldn't have to suck it up, but the federal government has always picked up the slack for the sake of helping the economy much like it did when it bailed out Chrysler years ago. I don't think you have anything to worry about because the foreclosure rate hit its bottom in August and there is no legislation even written to bail out those who are at risk of losing their houses.

Answer 5

NO!! The government shouldn't help. They weren't forced to sign those papers. Live and learn I say. I've had more than one house and I never ever had an ARM. It's stupid.

The banks are being more careful now because of all the foreclosures. Of course that means it will be harder for the rest of us to get a mortgage. Thanks!!

The prices have to come down though, house prices are ridiculous!!!!! I live in Oregon, and prices are more than doubled what they were just years ago.

Answer 6

No. While I am sure that a lot of people got into mortgage situations that they did not fully understand, it should not be the responsibility of taxpayers to pay for their mistakes. Rather, any of the lenders who offered the packages that have since been shown to be the cause of the bulk of the problems should be required to work with their clients to refinance at a rate that is more in keeping wit the buyer's income, and foreclosure should be a last resort.

Answer 7

This is a continuing symptom of today's society. Every time something bad happens to any group of people they believe that the government should make it better. People need to be responsible for their own actions. Those that bought houses they couldn't afford should sell them at a loss to get out of their situation. The same for people who have their houses destroyed in hurricanes but don't have flood insurance. They know the risks they are taking. They shouldn't expect someone else to bail them out when it happens.

Answer 8

I don't believe that most people knew what they were getting into and here's why; most of them were less educated, already had credit issues and loan officers took advantage of that. Only hyping what the payment would be at first, not really making them understand the full consequences of the loan fully adjusted. Second, I think they took advantage of some elderly folks on fixed incomes with hype about money to fix up the house, when the it was an interest only loan and they weren't fully aware and now after several years they are upside down in their loans and have to sell! Makes me sick!

No I don't think helping them is crap. If we don't the values of our own property will continue plummet. We've already lost a great deal of equity and value, let's do whatever we have to stop this bleeding!

I have good credit, I have paid my bills, I have worked hard and managed my money carefully, but still due to this market I am faced with having to sell my home and won't be able to obtain a mortgage because I have no income as a Realtor.

If anything, I think what they are doing is a little to little to late!

Answer 9

NO!!! They never offered to pay my high a** mortage that I had when I had one. Who cares if there was a mortage crunch then or not. You buy, you pay. You play with fire, you get burned. A lot of people overextended themselves as did the banks when rates hit the bottom. People were not dumb when they knew they could not afford the big mortages they were taking out. A lot of them were first time home owners taking on way too much. Their pocketbooks told them and then the banks should have told them.
NO!!!!!! NO!!!!!!! NO!!!!!! And what about those of us who paid off our homes? What do we get NOTHING???????????

Answer 10

I don't think it is the governments problem to bail out people who made mistakes, but I think it is a governmental function to help educate people on financial mistakes.

Answer 11

NO ! I don't think we should bail them out.They knew what they were doing,even if bad advise about the loan,they had other life experience so should have known.No taxpayer bail out.