Should tax payers bail out the sub prime mortgage borrowers?

Question

I live in a neighborhood with many sub prime homes and in my opinion are low class people. They have moved in and the once great school system is already struggling. Now I hear the government talking about letting them stay and fixing their mistake and actually offering a better deal than people who were responsible have gotten.

Why do we reward the losers and punish the responsible people in this country?

Answer 1

Actually they need to bail out the sub prime mortgage HOLDERS but only if they make enough campaign contributions! Isn't that how it works?

Answer 2

No but this problem goes much deeper than most people think.
The people that took the loans had a lot of help from ALL the others involved in order to make this happen.
only need three pay checks to qualify as a permanent job.
No real check to make sure that what they put in the debt already incurred was as claimed
And telling the borrower up front they will not be checking to encourage them to lie.
And a lot of other borderline and a lot of over the borderline practices by the Real estate agents, brokers, companies in collusion with builders have brought this about.
I've been in the construction business for over 35 years and I have never seen anything like the last 5 to 10 years of so called help to first time home buyers that bent or broke all rules and set this fiasco up.
When I bought my home almost 5 years ago now they tried to put me in an ARM and I told them to set up a set rate or keep the house.
Now I've been unemployed going on 5 months and if I had gone with that ARM God only knows where I would be living now. Probably a card board box in YOUR backyard.
ALL this is only to point out that those people that should have known better might have been led astray by some people whom damn sure knew better.

I watched the feeding frenzy one Saturday when I happened through our sales office and it was like something from the discovery channel on Shark Week.
The next Monday I remarked to one of the agents that I honestly thought they could finance a trash can to buy one of our homes and was told to get a Social Security number for my trash can and bring it on by.
We need to get the real culprits this time and give them some real time like 20 years and up along with taking every penny they ever saw to help straighten this mess out.

Answer 3

I don't think you are getting all the facts. The plans being discussed involve proper repayment, but at extended terms. For example, if someone has a 8% loan after the initial period, they still have a balance of 100,000. Now, if that loan percent were dropped to a more manageable 6%, they would still owe the 100,000 plus the fees necessary to to alter the loan, probably an additional 10,000. That is no different than you re-financing your loan. No one gave them any free money. The only difference is that the bank gets paid, they have a home, and our economy does not collapse and cause unemployement, higher inflation, and increased taxes.

Answer 4

I think the government should instruct lenders to rework the individual sub prime mortgages to fixed rates, maybe extend amortization from 30 to 35 years to make this possible.

The big banks and lenders should not be bailed out they devised these crazy terms and they should pay the price.

Answer 5

The government has bailed out S&Ls, failing airlines, Chrysler Corporation and many others. Why shouldn't they help some of the average working people who were sold houses by unscrupulous lenders? Would you prefer a bunch of vacant and boarded up houses occupied by the homeless, squatters, and drugees in your neighborhood?

Answer 6

No I don't think we should bail them out, we obviously as a whole not able financially to help our selves let alone others. But you a e being a little harsh, I wouldn't consider them "losers" what has become apparent is these families where sold a chance at the American dream, to own their own home, and shady brokers, wanting to make a quick buck sold them loans that they couldn't afford and should have never made. I blame the brokerage firms, they should be held accountable.

Answer 7

what you had better realize is that they are in effect bailing out the lenders, who push these ill advised loans. countryside bombards us with most stupid of loan offers. interest rates 2-3% higher to combine all my debt(car loans, student loans, etc) in an arm. then after a year they want us to do another refi into a fixed 30 yr loan. we have a 15 yr bi weekly payment loan that we pay extra on, and will have it paid off in 9 more yrs. i am 60, and would like to pay it off.

again, i think somebody in the government has friends in the lending business. with all the trouble countryside is in, they came with another 150 mill to lend.

Answer 8

Exactly!

Here is the ONLY answer to the mortgage crisis.

GREED. Greed by lenders, buyers, investors and sellers.

People go in over their heads with interest only loans while trying to flip properties.... and then suddenly there was a glut of homes in the market and it ground to a halt.

Now all of these investors are stuck with the property.... They bought high and can't get out. Now the interest only loans are coming due and they can't afford it.

And buyers did the same.... and they can't afford it.

It is NOT the government's fault. Its not MY fault.

Its like my neighbor going to Vegas and losing all of his money. Should I then be reqired to pay his bills until he gets back on his feet?

Negative

Answer 9

The taxpayers should not have to assume that burden. The subprime problem was primarily caused by low income buyers overextending themselves to puchase more home than they could afford over the long run. They were adults when they took out those ARMs and should have known better. It's up to them to accept responsibility and move back down to something in their income range, or rent.

Answer 10

They just lowered the sub prime by a quarter.