Senate votes 93-1 to bailout home owners?

Question

http://biz.yahoo.com/ap/071214/congress_mortgage_crisis.html

How serious do you think the credit problem is when a bill for a bailout passed the Senate on a 93 to 1 vote and the president is asking the House to have the bill on his desk before year end for his signature?

Seems like an awful lot of urgency on this matter.

Answer 1

One of the hardest hit areas is Michigan and Detroit where the automakers are laying off thousands 1 in 33 homes is in foreclosure, they say you can look down a neighborhood street and see nothing but forclosure signs, whole neighborhoods wiped out. Our economy is a facade, its a big credit bubble. No one owns anything its all credit, its all fake money pulled out of the air and passed around so people can obtain more stuff, but no money ever exchanges hands..its crazy. Another sign of our horrible economy is that foreign countries are buying up US companies like never before, LUfthansa jsut bought a large stake in Jet Blue and Citi-Bank had a large percentage purchased by ABu Dahbi. Thge Euro is worth more than the US dollar. Even the Canadian loonie for the first time is worth more than the US dollar. They are considering taking oil off of the dollar standard because of its losing value so quickly.

I smell defeat- WTF?? you think illegals are the ones losing their homes? Are you kidding me? You think that many illegal aliens are homeowners and are causing the credit issue? How many illegal aliens are going to go through processing govenremnt papaework telling the govenrment they are hear, and obviously illegally and buy property that it is ilegal for them to own.The bank and credit companies, acting like crooked car sales men talked people into loans that they couldn't afford. They had a low % rate to start and then it adjusted out of their range. The lenders did this to make a fast buck without considering the long term consequences. When thewse adjsutable rates adjusted it doubled the homeowners monthly payment. One lady purchased a $125,00 home 10 years ago and refininced it so many times she now owes $600,00o on that home. And yes people need to be more responsible, but lenders alos own a fiduciary duty to the consumers and our economy when making these loans

Answer 2

What kind of an idiot would buy a house where years later a 2% interest increase would result in foreclosure? This is people living beyond their means. And the normal result is???? I don't have a huge problem with it except why can't the banks accept a slightly lower interest rate and refinance them at the rates the government is suggesting. I have a rate under 6% on a fixed mortgage, why don't they just accept the cash flow and remain solvent? Foreclosures are not necessarily a bad thing, as it makes for higher inventories and therefore lower prices for homes that new home buyers will then take advantage of??? I would like michelle to give me a no interest loan for being RESPONSIBLE. Can you imagine actually rewarding this type of bad behavior and financial irresponsibility? I would never suggest giving anything less than a 6% 30/yr fixed. If you can't afford that, find a nice trailer park......... That too is a home...... If Fanny Mae and Freddy Mac are that deep, have the government buy it off and then sell it off, in pieces if necessary.

Answer 3

It reminds me of the 70s when Nixon froze prices because the greedy were getting more greedy and we needed wages to catch up with the costs of ordinary items. Nobody cares if a luxury yacht goes up 20 thousand dollars but everyone should be concerned at the price of milk, bread or flour going up. The same sort of thing has happened with the below prime mortgages. People have hopes and are gambling on a future of prosparity not realizing the stagnation that is occuring. The preditory lenders are more than happy to lend them the money because even if they default those guys make a bundle. All this law will do, by the way is give both sides a cooling off period of 5 years and that is only for those who have never missed even one payment and only for those who got loans after a certain date. It is really quite restrictive. In the end there will still be plenty of people losing their homes but it will simply spread it out over a longer period so the immediate impact on the economy will not be felt.

Answer 4

Follow the money and see who benefits in the end. This should provide all the answer you need, but I found a statement in the text which is very telling.

"The wave of resets could crest during the presidential and congressional election campaigns next year, and the issue has brought politically charged debate in recent weeks over possible responses by the government."

The simple fact is taking a sub prime rates a bad idea. Yes they allowed lenders to back more loans, but they did so expecting that the rates would increase. Meanwhile people who don't bother to look ahead to the potential future were quick to jump on the bandwagon and in many cases buy houses which would have otherwise been out of their price range. Frankly I have no sympathy for them and consider it not only bad planning, but a lack of foresight. I am against the bailout.

To your last point. The problem is very serious, but who is really responsible? The mortgage companies, or the buyers who thought they were getting some kind of sweetheart deal?

Answer 5

The bill is bailing out home owners ,but really helping the banks that gave the high risk loans. They knew these people weren't going to make there payments, but they approved them anyway. The risk on these loans was so high, the banks couldn't get insurance on the loan. Whats that tell you? They gambled that the housing market would stay strong and they could make some quick money. They were wrong, why should we pay for there poor judgment? The govt. shouldn't be bailing any one out, sets a bad precedent.

Oops, it's already been set.

Answer 6

I’m torn. There is $1,000,000,000 (yes, that’s one trillion dollars) of sub prime ARM’s scheduled to reset by the end of 2008. The first 300 Billion of these loans that reset this year have drainied the liquidity from the biggest lenders in the world. Half the lenders who originated them are bankrupt (nearly 200 YTD have gone bye bye), and a quarter of the bond funds secured by them are BK (hello Bear Stearns!). OK, so I get it. If we let 3 times this amount reset in 08, we’re looking at a shock our economy will take years to recover from..so overall this plan makes sense. But the crumballs who originated these loans have cashed their commission checks years ago, and the buyer’s who used these loans to leverage home purchases way over their heads get off with a freeze? That rubs me the wrong way.

Answer 7

It's urgent because banks and other financial institutions suffer from huge numbers of foreclosures. But they can't unilaterally decide to "undo" financing contracts that require the reset. So government steps in to help mitigate the crisis. I have no doubt that if all these people were facing foreclosures but the financial market wasn't at risk, the government wouldn't have done anything.

Answer 8

The government has to make sure that businesses and consumers keep borrowing and consuming with out any consequences. Just wait until the fed comes callin in all their loans then sh@t is really gonna hit the fan.

Answer 9

The bill does not "bail out homeowners" in the least. It is written for the benefit of the subprime mortgage industry and all the filthy greedy bastards who have been buying and selling the "paper" for YEARS and making BILLIONS off of the poor suckers who couldn't get a loan with decent interest rates.

I find it fvcking HILARIOUS that billions upon billions have been made off of these predatory lending practices and everybody was hunkey-dorey with it.

But when the economy TANKED under bush (for real people, not for Wall Street) and the JOBS went overseas and the price of living skyrocketed while WAGES remained stagnant, then all of a sudden people aren't able to MAKE those astronomical interest payments.

All of a sudden "it's a problem" because the BIG FINANCE COMPANIES are losing money.

Whatta crock.

"free market" my as$.

Answer 10

Terrible idea in principle...amounts to nothing more than government support of irresponsible practices - on the part of the consumer and the lender both. However, its necessary in reality...without it, discretionary income and consumer confidence (CCI) would plummet and exacerbate the problem. Still, freezing rates is enormously interventionist...hate it (this coming from a conservative Democrat).