Bailing out the deadbeat lenders

[kallend 2,184]

online.wsj.com/article/SB121055143706183847.html?mod=googlenews_wsj

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The only sure way to survive a canopy collision is not to have one.

[Unstable 9]

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The Massachusetts Democrat's housing bill passed the House Thursday, and it makes us wish we had splurged like so many others. In the name of helping strapped home buyers, Mr. Frank is giving lenders a chance to pass their worst paper onto Uncle Sugar. If both borrower and lender agree to participate, lenders can accept 85% of the current appraised mortgage value and in return get to dump up to $300 billion of those loans on the Federal Housing Administration (FHA). Guess which loans they are likely to dump?

Another sign that the country is going to the dogs. Heaven forbid people actually pay the consequences for buying a home they can't afford, or for bankers who give out loans they KNOW they won't be able to pay back.

I think we can look at this on a broader term - it comes down to responsibility. People believe that the government is there to bail them out - just like an insurance policy for bad decisions.

=========Shaun ==========

[Trent 0]

Bailouts are a terrible idea. Unfortunately there isn't a politician out there that will stand up and say that since the whiners would talk about how he hated people who have been broken by economic conditions instead of their own greed and poor decision making. It's ALWAYS been popular to promise handing out money.

Some people are just realizing how bad the culture of the "I'm-Always-The-Victim" has become in this country. No worries, there will always be the responsible people around to pay for everyone else's mistakes, healthcare, welfare, etc... right?

Oh, hello again!

[NWFlyer 2]

Sigh.

Just over a year ago, I refinanced my mortgage. I originally had a 5/1 ARM in late 2002 (at the time I didn't expect to be in the house longer than 5 years). I was shocked at how much money I was originally approved for, but I stuck to my original budget, and bought a house I could afford. When the ARM came up for adjustment and I wasn't ready to move, while I could have afforded the adjustment, I was better off locking in a fixed rate so I refinanced.

In the time since I'd bought the house, the market had, of course, skyrocketed. Seattle, and my neighborhood in particular, was red hot. The lender looked at me and said "how much cash do you want to take out?"

"Nothing."

He seemed shocked. I was sitting on all this "value" and he couldn't understand why all I wanted him to do was pay off the existing mortgage and write me a new one.

Funny, a year later, some of that "value" has evaporated. Granted, even with the decline I could still sell my house today and make a good profit, but until I sell it, I don't consider it real money. The only thing I really consider equity is what I've paid into the mortgage every month.

And now I have to help bail out the dumbasses?

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[superwoman8433 0]

This is the biggest load of BULLSHIT I have ever read!! I agree with everyone before me....Why the hell should I, as a taxpayer who didn't buy a house because I knew I couldn't afford it, bail out dumbasses that bought when they couldn't??? Nothing pisses me off more then taxpayers having to bail these dumbasses out!!!

[krabberkris 1]

My favorite blog for the past three years ! I saw this crap coming way back. Visit HousingPanic.com

Barney, Chris, Hillary and Friends,

If you spend one penny of direct taxpayer money, or expose the American taxpayer to any more risk than we already have (Fannie, Freddie, FHLB, FHA, etc) THEN WE WILL HOUND YOU, WE WILL TAKE OVER YOUR OFFICES, WE AND WE WILL VOTE YOU OUT THE NEXT CHANCE WE GET.

WE ARE THE MAJORITY. The vast majority of Americans who rent, who OWN, and who didn't treat homes as lottery tickets these past few years. WE ARE THE HONEST ONES, THE RATIONAL ONES, THE SANE ONES. And we not allow you to bail out fools, flippers and fraudsters with our money. Period.

It was rampant fraud and wild speculation you corrupt monkeys. And we're pretty sure you know that. So why the rush to bail out Housing Gamblers? Is it your REIC masters, calling the shots? Is it because you "own" homes yourselves, and don't want their values to go down further? Is it because you feel propping up artificially high housing prices is good for America, or for future generations? Or is it because you are simply misreading the will of the people again, which would be par for the course since you've done such a terrible job serving the people these past few years?

One final message that we want you to hear today, on No Housing Gambler Bailout Day, loud and clear: PEOPLE WHO PUT LITTLE OR NO MONEY DOWN ARE NOT LOSING 'THEIR' HOMES. THEY ARE NOT THEIR HOMES, THEY NEVER WERE THEIR HOMES, THEY LIKELY NEVER WILL BE THEIR HOMES. And most likely they're better off renting (and not watching MTV Cribs ever again).

No Housing Gambler Bailout. WE'RE WATCHING, WE'RE THE MAJORITY, AND WE'RE PISSED.

The man who smiles when things go wrong has thought of someone to blame it on.

[lawrocket 3]

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This is the biggest load of BULLSHIT I have ever read!! I agree with everyone before me....Why the hell should I, as a taxpayer who didn't buy a house because I knew I couldn't afford it, bail out dumbasses that bought when they couldn't??? Nothing pisses me off more then taxpayers having to bail these dumbasses out!!!

And I'm considered uncaring because I want to knwo why I, as a taxpayer, should bail out dumbasses who do all kinds of other thdumb things.

Of course, an attitude like yours means that you are uncaring. You SHOULD do everything to help these sad and timid souls who got in over their heads.

My wife is hotter than your wife.

[kallend 2,184]

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This is the biggest load of BULLSHIT I have ever read!! I agree with everyone before me....Why the hell should I, as a taxpayer who didn't buy a house because I knew I couldn't afford it, bail out dumbasses that bought when they couldn't??? Nothing pisses me off more then taxpayers having to bail these dumbasses out!!!

And I'm considered uncaring because I want to knwo why I, as a taxpayer, should bail out dumbasses who do all kinds of other thdumb things.

Of course, an attitude like yours means that you are uncaring. You SHOULD do everything to help these sad and timid souls who got in over their heads.

Interesting piece on the radio on Sat. as I was driving home from the DZ, about how the lending practices got so sloppy (NINA loans, for example) that shady mortgage brokers were able to operate in a manner that may well turn out to be fraud in getting people to take these loans.

While I have no desire to bail out any of them, I have more sympathy for first time home buyers than I do for the speculators, banks and brokers.

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The only sure way to survive a canopy collision is not to have one.

[lawrocket 3]

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I have more sympathy for first time home buyers than I do for the speculators, banks and brokers.

Me, too. I have more sympathy for an individual losing money than a business losing money because that's just part of business.

BUT!!!

There are several other factors in this:
1) From what I've seen, at LEAST half of foreclosures are from people refinancing. The vast majority of these were those who got greedy and used their homes as ATMS.
2) Many of these first-time home buyers KNEW they couldn't afford the loans, but _speculated_ that the home would appreciate in value so that they could refinance or sell for a profit. They speculated. My understanding from the couple of hundred or so people I've spoken to throught work what that a bunch of brokers represented to them that they could refinance if the property values went up and get a fixed loan, once they've established a good, on-time payment history. So they KNEW they couldn't afford these rates in the future.

But who the hell thinks of the future, anymore? Why save when Social Security is there? Why worry about paying for something in the future when I want it now?

John - in that market, speculators were all over the place. Buyers. Sellers. Brokers. Lenders. Servicers. All of them.

My wife is hotter than your wife.

[kallend 2,184]

You snipped the part where I wrote:

"While I have no desire to bail out any of them"

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The only sure way to survive a canopy collision is not to have one.

[lawrocket 3]

I didn't mean to snip it out. In fact, I agreed with you.

My wife is hotter than your wife.

[Casurf1978 0]

What's your take on the Bear Stearns bailout? I too am against most bailouts, but where do you draw the line. If we bailout Bear, then why not these lenders. The CEO of Stearns net worth is over 900M and he walked away from this fiasco with a hellof a nice golden parachute. I just don't understand why people make a huge fuss over this, your article, when look what the fed did for Bear and its execs who walked away w/o even a slap on the wrist.

[kelpdiver 2]

Interesting how you title it as bailing out the lenders, but nearly all of the respondents viewed it as bailing out the homebuyers, and with the same level of opposition. Of course, any bill that serves one tends to serve the other as well.

I'd prefer neither be bailed out, as both a renter and as someone that wants us to eat all our medicine now and not drag out the recovery.

Perhaps one category of loans deserves more support - original mortages and no cash out refinances. But that category does include a lot of fradulent loans where the amount was higher than the actual sale price.

[TankBuster 0]

Someone help me to a chair. A thread authored by Kallend, where everyone agrees that personal responsibility and smaller government is the way to go. I'm going to go grab a beer and declare victory.

The forecast is mostly sunny with occasional beer.

[billvon 3,132]

>WE ARE THE MAJORITY. The vast majority of Americans who rent, who
>OWN, and who didn't treat homes as lottery tickets these past few years.

I wish that were the case. But the more I see people's reactions to the economy, the "economic stimulus", the gas tax holiday and the various mortgage crisis bailout plans, the more I think that the only thing most people care about is government handouts. If the subject has to be summed up in more than three words, and it doesn't involve "free money" - the channel gets changed.

[rehmwa 2]

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>WE ARE THE MAJORITY. The vast majority of Americans who rent, who
>OWN, and who didn't treat homes as lottery tickets these past few years.

I wish that were the case. But the more I see people's reactions to the economy, the "economic stimulus", the gas tax holiday and the various mortgage crisis bailout plans, the more I think that the only thing most people care about is government handouts. If the subject has to be summed up in more than three words, and it doesn't involve "free money" - the channel gets changed.

and thus the drift of both parties to more and more socialistic philosophies - in direct contradiction of the original philosophy of what really got this country going

the entire society is going to laze and greed themselves into a dark hole of poverty and sewage and it'll only take about a fourth of us to do it to us all

I bet that isn't a great direction this 'normal evolution' of the US society that we speak of

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[kallend 2,184]

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Interesting how you title it as bailing out the lenders, but nearly all of the respondents viewed it as bailing out the homebuyers, and with the same level of opposition. Of course, any bill that serves one tends to serve the other as well.

I'd prefer neither be bailed out, as both a renter and as someone that wants us to eat all our medicine now and not drag out the recovery.

Perhaps one category of loans deserves more support - original mortages and no cash out refinances. But that category does include a lot of fradulent loans where the amount was higher than the actual sale price.

As I wrote previously, I'm not in favor of taxpayers bailing any (adult) out of a problem of his or her own making. However, I have a lot more sympathy for a young first time buyer who genuinely wanted to get a home and was not sophisticated enough to recognize a predatory loan than I have for any speculator or banker who helped precipitate this crisis just to get richer quicker. Apparently brokers were pushing the ARMs and NINAs on account of the higher commissions these loans produced.

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The only sure way to survive a canopy collision is not to have one.

[mnealtx 0]

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>WE ARE THE MAJORITY. The vast majority of Americans who rent, who
>OWN, and who didn't treat homes as lottery tickets these past few years.

I wish that were the case. But the more I see people's reactions to the economy, the "economic stimulus", the gas tax holiday and the various mortgage crisis bailout plans, the more I think that the only thing most people care about is government handouts. If the subject has to be summed up in more than three words, and it doesn't involve "free money" - the channel gets changed.

and thus the drift of both parties to more and more socialistic philosophies - in direct contradiction of the original philosophy of what really got this country going

the entire society is going to laze and greed themselves into a dark hole of poverty and sewage and it'll only take about a fourth of us to do it to us all

I bet that isn't a great direction this 'normal evolution' of the US society that we speak of

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"A perfect democracy, a 'warm body' democracy in which every adult may vote and all votes count equally has no internal feedback for self correction. It depends solely on the wisdom and self-restraint of citizens...which is opposed by the folly and lack of self-restraint of other citizens. What is supposed to happen in a democracy is that each sovereign citizen will always vote in the public interest for the safety and welfare of all. But what does happen is that he votes his own self-interest as he sees it...which for the majority translates as 'Bread and Circuses'


"Bread and Circuses is the cancer of democracy, the fatal disease for which there is no cure. Democracy often works beautifully at first. But once a state extends the franchise to every warm body, be he producer or parasite, that day marks the beginning of the end of the state. For when the plebs discover that they can vote themselves bread and circuses without limit and that the productive members of the body politic cannot stop them, they will do so, until the state bleeds to death, or in its weakened condition the state succumbs to an invader--the barbarians enter Rome."
(To Sail Beyond the Sunset, 227) - Robert Heinlein

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[billvon 3,132]

>and thus the drift of both parties to more and more socialistic philosophies . . .

Yep. Although it's not quite parallel to socialism, more to mom-ism. People want a mom to give them money when they're broke, a room to stay in when they get kicked out of their girlfriend's house, someone to pay for the dentist etc. Without all the nagging of course.

[thirdworld19 0]

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And I'm considered uncaring because I want to knwo why I, as a taxpayer, should bail out dumbasses who do all kinds of other thdumb things.

Of course, an attitude like yours means that you are uncaring. You SHOULD do everything to help these sad and timid souls who got in over their heads.

Would this include rebuilding houses in an area where the risk of natural disaster is higher - floods, hurricanes, wild fires? New Orleans - a city built in a hurricane prone area where 49% of the city is below sea level. Not saying it's not sad, but should I bail them out? People take risks in everything they do - should I be responsible when the choice they made doesn't work out as they wanted?

[thirdworld19 0]

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"A perfect democracy, a 'warm body' democracy in which every adult may vote and all votes count equally has no internal feedback for self correction. It depends solely on the wisdom and self-restraint of citizens...which is opposed by the folly and lack of self-restraint of other citizens. What is supposed to happen in a democracy is that each sovereign citizen will always vote in the public interest for the safety and welfare of all. But what does happen is that he votes his own self-interest as he sees it...which for the majority translates as 'Bread and Circuses'

"Bread and Circuses is the cancer of democracy, the fatal disease for which there is no cure. Democracy often works beautifully at first. But once a state extends the franchise to every warm body, be he producer or parasite, that day marks the beginning of the end of the state. For when the plebs discover that they can vote themselves bread and circuses without limit and that the productive members of the body politic cannot stop them, they will do so, until the state bleeds to death, or in its weakened condition the state succumbs to an invader--the barbarians enter Rome."
(To Sail Beyond the Sunset, 227) - Robert Heinlein

Heinlein should be required reading/study in school.

[nerdgirl 0]

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Heinlein should be required reading/study in school.

Concur. Start with Stranger in a Strange Land then Starship Troopers. Include For Us, The Living and Misfits.

From Time Enough for Love:

“If you are part of a society that votes, then do so. There may be no candidates and no measures you want to vote for ... but there are certain to be ones you want to vote against. In case of doubt, vote against. By this rule you will rarely go wrong.”

“Violence, naked force, has settled more issues in history than has any other factor, and the contrary opinion is wishful thinking at its worst. Breeds that forget this basic truth have always paid for it with their lives and freedoms.”

“Belief gets in the way of learning.”

From Take Back Your Government:

"Democracy is not an automatic condition resulting from laws and constitutions. It is a living, dynamic process which must be worked at by you yourself - or it ceases to be democracy, even if the shell and form remains."

"Democracy is the most efficient form of government ever invented by the human race. On the record, it has worked better in peace and in war than fascism, communism, or any other form of dictatorship. As for the mythical yardstick of 'benevolent' monarchy or dictatorship -- there ain't no such animal!"

From Starship Troopers:

“But does Man have any right’ to spread through the universe? Man is what he is, a wild animal with the will to survive, and (so far) the ability, against all competition. Unless one accepts that, anything one says about morals, war, politics, you name it, is nonsense. Correct morals arise from knowing what man is, not what do-gooders and well-meaning old Aunt Nellies would like him to be. The Universe will let us know - later - whether or not Man has any ‘right’ to expand through it."

“‘Value’ has no meaning other than in relationship to living beings. The value of a thing is always relative to a particular person, is completely personal and different in quantity for each living human—‘market value’ is a fiction, merely a rough guess at the average of personal values, all of which must be quantitatively different or trade would be impossible. [...] This very personal relationship, ‘value,’ has two factors for a human being: first, what he can do with a thing, its use to him… and second, what he must do to get it, its cost to him.”

“A generation which ignores history has no past; and no future.”

[Some districts might have trouble with some of Heinlein's writing (nevermind his socialist political activities).]
From the Notebooks of Lazarus Long:

"The most preposterous notion that H. sapiens has ever dreamed up is that the Lord God of Creation, Shaper and Ruler of all the Universes, wants the saccharine adoration of His creatures, can be swayed by their prayers, and becomes petulant if He does not receive this flattery. Yet this absurd fantasy, without a shred of evidence to bolster it, pays all the expenses of the oldest, largest, and least productive industry in all history.”

Random Heinlein words of wisdom:

“‘Love’ is that condition in which the happiness of another person is essential to your own... Jealousy is a disease, love is a healthy condition. The immature mind often mistakes one for the other, or assumes that the greater the love, the greater the jealousy.’

“May you live as long as you wish and love as long as you live.”

“Women and cats will do as they please, and men and dogs should relax and get used to the idea.” [Twice divorced, Heinlein's third marriage lasted over 40 years, until his death. His third wife is taken to be the inspiration for his typically fiercely intelligent and independent female characters.]

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[lawrocket 3]

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but should I bail them out?

No. Why should you? Where I grew up, we were contantly pissed off at these folks in Malibu who get relief funds, etc., when their house just burned down for the third time in ten years. And why? Because they didn't care enough to clear the fucking brush out a safe distance. They get bailed out to build again.

Come on, folks! Wood shake shingles are on sale! Tile roofs are SOOOOOO unglamorous.

My wife is hotter than your wife.

[kelpdiver 2]

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Heinlein should be required reading/study in school.

Concur. Start with Stranger in a Strange Land then Starship Troopers. Include For Us, The Living and Misfits.

But he is *so* contrary to the concept of government/society that is barely taught at the high school level. And I went to a school that offered nearly all AP level courses at the senior year, along with a poor semester of government, and then of economics. And philosophy...there is a small helping in English, but it's presumed to be beyond the capability of the teenagers.

It's not till college that the sugarcoated version of American history/politics are wiped away. I think that's one reason why many find Heinlein so interesting to read - his is a strongly different frame of reference. Have Spacesuit, Will Travel is the only one I read in youth ... and 25 years later, I still remembered it well, was a bit surprised to find out he was the author.

[kallend 2,184]

Good news!
www.nytimes.com/2008/05/15/business/15countrywide.html?ref=business

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The only sure way to survive a canopy collision is not to have one.