I am paying my neighbor''s mortgage and he didnt say thanks

[stone_seeker]

There is a pretty large group of people that are outraged by this mortgage bailout plan. Most of it has to do with its fairness but also its effectiveness. It basically comes out to be $1600 a year per troubled household. Granted I live in NYC so my idea of value may be distorted but can $1600 a year per home really solve the housing mess? Further, why are we giving money from the people who saved to the people who have proven to be the most irresponsible with money? Also, let''s say a home is now worth $500K - If we lower the principal on someone''s mortgage on that home say from $600K to $500K, and the house in 30 years is worth $600K again - who gets that gain? I see nothing in this plan that says taxpayers should reap that benefit.

At the Obama pep rally yesterday there was a tremendous amount of cheering going on and I am not sure why. The market is betting that this plan will fail and further, actually create some very bad unintended consequences. What does it tell future generations about getting in over your head in terms of debt? When and who pays this bill?

Would love the thoughts of some people here since I am surrounded by generally conservative people and since this website skews democratic, am interested in the other side of this debate.

 

[Cleopatra]

My husband is the financial guru in our household, so I don't really understand everything that's going on with this mortgage bailout plan. But what I do understand, it very much bothers me...

My husband (fiance at the time) and I bought our first home (a small condo) about 2 years ago - we were 23 years old and right out of college - the bank approved us for a $450K loan!!!!! Can you imagine that?! We obviously weren't stupid as we purchased a modest $130K condo - with a 25% cash downpayment - and with a low mortgage that we could afford to pay even if one lost their job.

My question is, because we were responsible, unlike half of America, why is it that MY tax dollars go to bail out the idiot next door who bought too much house? It's just encouraging people when the government bails you out of the mess you put yourself in. What kind of message does that give the next generation?

This whole bailout mess just really bothers me...

 

[stone_seeker]

Date: 2/19/2009 1:07:25 PM
Author: Cleopatra
My husband is the financial guru in our household, so I don''t really understand everything that''s going on with this mortgage bailout plan. But what I do understand, it very much bothers me...

My husband (fiance at the time) and I bought our first home (a small condo) about 2 years ago - we were 23 years old and right out of college - the bank approved us for a $450K loan!!!!! Can you imagine that?! We obviously weren''t stupid as we purchased a modest $130K condo - with a 25% cash downpayment - and with a low mortgage that we could afford to pay even if one lost their job.

My question is, because we were responsible, unlike half of America, why is it that MY tax dollars go to bail out the idiot next door who bought too much house? It''s just encouraging people when the government bails you out of the mess you put yourself in. What kind of message does that give the next generation?

This whole bailout mess just really bothers me...

Exactly - even though you could have bought much more house - you acted responsibly. There are many of people who saved and rented and they get left out of this. The plan essentially creates 3 types of people - bad owners, good owners and no owners. Too many people get the shaft and further, while it may put a band aid on the issue, its hard to band aid a huge gash.

What is wrong with letting supply and demand work itself out - it eventually will so let''s not prolong the issue. There are buyers for these homes at some price. Maybe its 75% below what someone paid. Who cares. Find out what that price is and the troubled, irresponsible homeowner can rent it from that buyer at a reasonable rate. This way the people are paying what they can afford in rent and the buyer can make a profit if things work out in the future. I see it as win-win. What''s the downside? maybe the whole neighborhood lowers in property value but at least that will reflect the actual market value and not some bogus inflated, government subsidized price. Until this floor is reached, the US economy will not recover.

Call your congressperson and let them know how you feel.

 

[Dancing Fire]

i agree with SS and cleo.

yeah, why should taxpayers get stuck with the tab?

if they want lower monthly payments, just change them into a 50-60 yr mortgage

 

[Hudson_Hawk]

The article I read stated that this bailout would only help people who''s property value has decreased due to market conditions, and not people who were irresponsible and took more than they could afford. While I agree, it sucks that our taxpayer dollars are going to this, if it helps to stop the erosion of the market, I''m game. We can afford our mortgage, but our property has dropped in value by a pretty significant amount in the past year due to the overall economy in RI and the high rate of foreclosures in our area. While we don''t need help necessarily (we understand that property values, like stock values can fluctuate over the lifetime of the loan), I''m concerned that if things keep going the way they are, we (collectively) will be up $hit creek. We need to do something, and if my tax dollars are going to go into a black hold of the deficit, I would rather they go to a program that could help me in some way shape and form down the road and NOT into the pocket of unscrupulous bank execs!

 

[tlh]

I was in the restroom the other day... at work. And two ladies came in, and did the stall poop and talk. Ok gross, I know. Now, I am a prolonged handwasher, and I must say I was appalled at what I heard them discussing. One lady is intentionally NOT paying her morgage so that she too can get bailed out. "i want my piece too...." I was very sick at their discussion... she is also talking about maxing out her credit cards, so that when she files for bankrupcy she can get more bang for her buck.

I was very disturbed. Now granted I only heard a fraction of their conversation, so I might have missed something, so I cannot judge.

But I do wonder, how can we fix this? What we are doing is not working. We are trying to put a bandaid on a severed head... and I just don''t know what to do, and I don''t have faith in our government either. A stimulus didn''t work. The bailout of the banks doesn''t seem to work when they aren''t lending... I don''t have the answers, everywhere I look people are affected by this... in soo many ways.

 

[Hudson_Hawk]

Date: 2/19/2009 1:24:10 PM
Author: tlh
I was in the restroom the other day... at work. And two ladies came in, and did the stall poop and talk. Ok gross, I know. Now, I am a prolonged handwasher, and I must say I was appalled at what I heard them discussing. One lady is intentionally NOT paying her morgage so that she too can get bailed out. ''i want my piece too....'' I was very sick at their discussion... she is also talking about maxing out her credit cards, so that when she files for bankrupcy she can get more bang for her buck.


I was very disturbed. Now granted I only heard a fraction of their conversation, so I might have missed something, so I cannot judge.


But I do wonder, how can we fix this? What we are doing is not working. We are trying to put a bandaid on a severed head... and I just don''t know what to do, and I don''t have faith in our government either. A stimulus didn''t work. The bailout of the banks doesn''t seem to work when they aren''t lending... I don''t have the answers, everywhere I look people are affected by this... in soo many ways.

That''s gross on so many levels...

 

[Cleopatra]

Date: 2/19/2009 1:24:10 PM
Author: tlh
I was in the restroom the other day... at work. And two ladies came in, and did the stall poop and talk. Ok gross, I know. Now, I am a prolonged handwasher, and I must say I was appalled at what I heard them discussing. One lady is intentionally NOT paying her morgage so that she too can get bailed out. ''i want my piece too....'' I was very sick at their discussion... she is also talking about maxing out her credit cards, so that when she files for bankrupcy she can get more bang for her buck.


I was very disturbed. Now granted I only heard a fraction of their conversation, so I might have missed something, so I cannot judge.


But I do wonder, how can we fix this? What we are doing is not working. We are trying to put a bandaid on a severed head... and I just don''t know what to do, and I don''t have faith in our government either. A stimulus didn''t work. The bailout of the banks doesn''t seem to work when they aren''t lending... I don''t have the answers, everywhere I look people are affected by this... in soo many ways.

That makes me sick to my stomach. I am so tired of people working the system in a way that it benefits themselves and leaves the rest of us poor (responsible) souls taking care of their mess.....I hope she declares bankruptcy - do these people have no idea what it does to their credit? It''s just plain idiotic to think that this is benefiting themselves in anyway...

 

[steph72276]

Date: 2/19/2009 1:24:10 PM
Author: tlh
I was in the restroom the other day... at work. And two ladies came in, and did the stall poop and talk. Ok gross, I know. Now, I am a prolonged handwasher, and I must say I was appalled at what I heard them discussing. One lady is intentionally NOT paying her morgage so that she too can get bailed out. ''i want my piece too....'' I was very sick at their discussion... she is also talking about maxing out her credit cards, so that when she files for bankrupcy she can get more bang for her buck.


I was very disturbed. Now granted I only heard a fraction of their conversation, so I might have missed something, so I cannot judge.


But I do wonder, how can we fix this? What we are doing is not working. We are trying to put a bandaid on a severed head... and I just don''t know what to do, and I don''t have faith in our government either. A stimulus didn''t work. The bailout of the banks doesn''t seem to work when they aren''t lending... I don''t have the answers, everywhere I look people are affected by this... in soo many ways.

This pretty much says it all. This is why we are in such a mess...irresponsible greedy people like this. And it leaves those of us who were responsible with our finances to pick up the pieces. Sickening....

 

[Dancing Fire]

Date: 2/19/2009 1:07:25 PM
Author: Cleopatra
My husband is the financial guru in our household, so I don''t really understand everything that''s going on with this mortgage bailout plan. But what I do understand, it very much bothers me...

My husband (fiance at the time) and I bought our first home (a small condo) about 2 years ago - we were 23 years old and right out of college - the bank approved us for a $450K loan!!!!! Can you imagine that?! We obviously weren''t stupid as we purchased a modest $130K condo - with a 25% cash downpayment - and with a low mortgage that we could afford to pay even if one lost their job.

My question is, because we were responsible, unlike half of America, why is it that MY tax dollars go to bail out the idiot next door who bought too much house? It''s just encouraging people when the government bails you out of the mess you put yourself in. What kind of message does that give the next generation?

This whole bailout mess just really bothers me...

i feel sorry for the ones that play by the rules,people like you and your husband.the rest of them can go live out in the streets.

 

[JulieN]

Date: 2/19/2009 1:18:35 PM
Author: stone_seeker

Date: 2/19/2009 1:07:25 PM

Author: Cleopatra

My husband is the financial guru in our household, so I don't really understand everything that's going on with this mortgage bailout plan. But what I do understand, it very much bothers me...


My husband (fiance at the time) and I bought our first home (a small condo) about 2 years ago - we were 23 years old and right out of college - the bank approved us for a $450K loan!!!!! Can you imagine that?! We obviously weren't stupid as we purchased a modest $130K condo - with a 25% cash downpayment - and with a low mortgage that we could afford to pay even if one lost their job.


My question is, because we were responsible, unlike half of America, why is it that MY tax dollars go to bail out the idiot next door who bought too much house? It's just encouraging people when the government bails you out of the mess you put yourself in. What kind of message does that give the next generation?


This whole bailout mess just really bothers me...

Exactly - even though you could have bought much more house - you acted responsibly. There are many of people who saved and rented and they get left out of this. The plan essentially creates 3 types of people - bad owners, good owners and no owners. Too many people get the shaft and further, while it may put a band aid on the issue, its hard to band aid a huge gash.


What is wrong with letting supply and demand work itself out - it eventually will so let's not prolong the issue. There are buyers for these homes at some price. Maybe its 75% below what someone paid. Who cares. Find out what that price is and the troubled, irresponsible homeowner can rent it from that buyer at a reasonable rate. This way the people are paying what they can afford in rent and the buyer can make a profit if things work out in the future. I see it as win-win. What's the downside? maybe the whole neighborhood lowers in property value but at least that will reflect the actual market value and not some bogus inflated, government subsidized price. Until this floor is reached, the US economy will not recover.


Call your congressperson and let them know how you feel.

I agree with this. No one's going to be living on the streets because they can't afford a house, because there is a supply of houses (already built) and demand (few people are willing to be homeless.) Houses should be revalued, and new loans reflecting that issued. If the bank takes a hit, let them. If a consumer can't afford the house at the new level, they will find a different house! Or rent, like all the other poor schmucks who know you can't spend 40% of your income on housing.

 

[Dancing Fire]

Date: 2/19/2009 1:18:35 PM
Author: stone_seeker

Date: 2/19/2009 1:07:25 PM
Author: Cleopatra
My husband is the financial guru in our household, so I don''t really understand everything that''s going on with this mortgage bailout plan. But what I do understand, it very much bothers me...

My husband (fiance at the time) and I bought our first home (a small condo) about 2 years ago - we were 23 years old and right out of college - the bank approved us for a $450K loan!!!!! Can you imagine that?! We obviously weren''t stupid as we purchased a modest $130K condo - with a 25% cash downpayment - and with a low mortgage that we could afford to pay even if one lost their job.

My question is, because we were responsible, unlike half of America, why is it that MY tax dollars go to bail out the idiot next door who bought too much house? It''s just encouraging people when the government bails you out of the mess you put yourself in. What kind of message does that give the next generation?

This whole bailout mess just really bothers me...

Exactly - even though you could have bought much more house - you acted responsibly. There are many of people who saved and rented and they get left out of this. The plan essentially creates 3 types of people - bad owners, good owners and no owners. Too many people get the shaft and further, while it may put a band aid on the issue, its hard to band aid a huge gash.

What is wrong with letting supply and demand work itself out - it eventually will so let''s not prolong the issue. There are buyers for these homes at some price. Maybe its 75% below what someone paid. Who cares. Find out what that price is and the troubled, irresponsible homeowner can rent it from that buyer at a reasonable rate. This way the people are paying what they can afford in rent and the buyer can make a profit if things work out in the future. I see it as win-win. What''s the downside? maybe the whole neighborhood lowers in property value but at least that will reflect the actual market value and not some bogus inflated, government subsidized price. Until this floor is reached, the US economy will not recover.

Call your congressperson and let them know how you feel.

nothing,couldn''t agree more with your post.

 

[Harriet]

Stone Seeker,
How do you think the plan will affect the market? I have no problem helping the underprivileged. I do, however, balk at helping the irresponsible.

 

[stone_seeker]

Well, our kids now see that if they get in over their head - Uncle Sam will be there. So no need to be responsible. Just go for broke since it pays - if things work out you can get rich and if they dont, someone will fix it for you.

The moral hazard of baiing out these people and the banks that made these loans will bite us in the arse soon enough. Once again, America goes for the quick fix rather than fix the structural problem which is why our debt never stops growing.

What is even funnier is that the banks are making plans to repay the Tarp loans so they dont have to abide by these rules and be forced to accept lower interest rates. Plus then they can pay themselves more than 500k again.

What a joke.

 

[jcrow]

Date: 2/19/2009 1:07:25 PM
Author: Cleopatra
My husband is the financial guru in our household, so I don''t really understand everything that''s going on with this mortgage bailout plan. But what I do understand, it very much bothers me...


My husband (fiance at the time) and I bought our first home (a small condo) about 2 years ago - we were 23 years old and right out of college - the bank approved us for a $450K loan!!!!! Can you imagine that?! We obviously weren''t stupid as we purchased a modest $130K condo - with a 25% cash downpayment - and with a low mortgage that we could afford to pay even if one lost their job.


My question is, because we were responsible, unlike half of America, why is it that MY tax dollars go to bail out the idiot next door who bought too much house? It''s just encouraging people when the government bails you out of the mess you put yourself in. What kind of message does that give the next generation?


This whole bailout mess just really bothers me...

big ole DITTO.

 

[Harriet]

Perhaps mortgages should be structured as recourse debt?

I''m in complete agreement with you. It''s appalling to see how some people spend.

 

[steph72276]

Date: 2/19/2009 2:01:13 PM
Author: Harriet
Stone Seeker,

How do you think the plan will affect the market? I have no problem helping the underprivileged. I do, however, balk at helping the irresponsible.

My thoughts exactly, Harriett. I have no problem whatsoever helping out the less fortunate, but to those greedy, irresponsible people that built these McManions, bought the 60" tvs to go in them and have a beemer in the driveway and suddenly can''t keep up minimum payments, I say get a second job flipping burgers and sell some of your "stuff". People need to start realizing we''re not in congress, we actually have to live below our means.

 

[HollyS]

Date: 2/19/2009 12:57:37 PM
Author:stone_seeker
There is a pretty large group of people that are outraged by this mortgage bailout plan. Most of it has to do with its fairness but also its effectiveness. It basically comes out to be $1600 a year per troubled household. Granted I live in NYC so my idea of value may be distorted but can $1600 a year per home really solve the housing mess? Further, why are we giving money from the people who saved to the people who have proven to be the most irresponsible with money? Also, let''s say a home is now worth $500K - If we lower the principal on someone''s mortgage on that home say from $600K to $500K, and the house in 30 years is worth $600K again - who gets that gain? I see nothing in this plan that says taxpayers should reap that benefit.

At the Obama pep rally yesterday there was a tremendous amount of cheering going on and I am not sure why. The market is betting that this plan will fail and further, actually create some very bad unintended consequences. What does it tell future generations about getting in over your head in terms of debt? When and who pays this bill?

Would love the thoughts of some people here since I am surrounded by generally conservative people and since this website skews democratic, am interested in the other side of this debate.

No, $1600.00 a household will not buy anything but a few months time for those saddled with a mortgage they cannot afford. So, once again, we are throwing money at a stop-gap measure. Fixes nothing. But sounds good -- to people who don''t understand the problem. Hence the cheering.

And by the time the market rallies, and that $6ooK house climbs from $500K back to $600K, the government will probably own a fair interest in the house, ''cause more money will have been shelled out, the original owner will be long ago foreclosed upon, and the mortgage company will probably be suffering from the loss of the $100K, which will be bailed out, again, by you, the taxpayer. Now, that''s kind of a silly (snarky) scenario I''ve painted here -- or is it?

 

[stone_seeker]

Date: 2/19/2009 2:01:13 PM
Author: Harriet
Stone Seeker,
How do you think the plan will affect the market? I have no problem helping the underprivileged. I do, however, balk at helping the irresponsible.

Well the market hasnt reacted too favoraby because of the questions that have risen. Granted its only been a day since its announcement and perhaps the market has underestimated its effectiveness which will take some time - and that assumes the economy doesnt deteriorate further.

I also dont have an issue with helping the underprivileged but I dont think that is who this is helping. These are, by and large, folks that bought too much house or assumed they could still pay a mortgage even if they lost their job. Both cases being somewhat irresponsible.

 

[Harriet]

Stone Seeker, I''m as troubled by the ''solution'' as you are. What is the alternative, though?

 

[Dancing Fire]

Date: 2/19/2009 2:36:17 PM
Author: Harriet
Stone Seeker, I''m as troubled by the ''solution'' as you are. What is the alternative, though?

a 60 yr mortgage for these people. that should cut their payments down to were they can afford.

 

[tradergirl]

Harriet, the solution is to let the free markets find value in these properties. In any asset, there will be a price where buyers WILL step in. I've seen it already in some markets. It's called "price discovery."

This video is all over the place today.

http://www.businessinsider.com/rick-santelli-incites-a-riot-in-chicago-video-2009-2

 

[stone_seeker]

Date: 2/19/2009 2:36:17 PM
Author: Harriet
Stone Seeker, I''m as troubled by the ''solution'' as you are. What is the alternative, though?

As I wrote above, find the price at which capable buyers can step in and buy these homes and the people in them can rent them out.

There is a price where buyers, with cash, can buy property. If someone bought a home for $500K and they cannot make the $2K a month mortgage, I will buy that home from them at $200K and give them a lease at $1K a month rent. If the existing family can afford to buy that house at a lower price without government aid - thats fine also.

Do you know here in Manhattan apartments in 1999 went for about $500-700 per sq foot. They are currently $1000-1300 a square foot.

There is no universe where a home should double in 9 years time. This is true all over the country and prices just havent fallen to meet demand and now we are propping them up.

 

[JulieN]

basically, I see this as a step towards a "socialist state." And I don't really mean Socialist, but, you know, what is popularly known as Socialism.

Inflated prices on a good that everyone needs, and a huge tax burden to sustain those inflated prices. Great.

 

[NewEnglandLady]

The problem is that if a person is looking towards the government to fix their own financial problems, that person is simply not going to wake up and say "You know what I need more than a check from the gov''t to pay my bills? Personal responsibility!" I really that the only hope for those kinds of people are if they hit rock bottom, struggle, and find a way to pull themselves out. Yes, people absolutely do fall on hard times, but the problem is that those people are getting lost in the crowd of people who are simply irresponsible and want to "milk" the system.

I dont'' know when rent got such a bad name. Should somebody rent their entire life? No, but just because a person breathes does not mean he/she has a right to home ownership. The only reason it''s so difficult to save at least 25% now is because the prices of homes have inflated beyond true market value.

 

[AllieGator]

I''m as horrified as everyone else about people trying to rip off the government by lying/cheating, but I think it is easy to forget that there are some very responsible people who got caught in the housing bubble.

For example, I grew up in a very destitute, rural area. My parents were both teachers, and were able to buy a house for a good price, and are doing fine on their mortgage payments.

Property values are traditionally very low in my hometown, and the jobs that most people have, aside from doctors and teachers, do not pay very well.

In comes the expansion of the military base near my house, which caused an extreme housing crisis. Tenants were kicked out of their apartments, because people in the military could pay higher rent, due to their housing stipend, and were left without housing due to the lack of housing.

In come the contractors who are able to build homes that are extremely overpriced, due to the demand for housing.

The people who are out of apartments are practically forced into buying these homes, because there are no other options. Now that the economy is falling, these people are losing their jobs and are unable to make their mortgage payments, and the renting market in my area still has either A) almost nonexistent vacancies, or B) overpriced rent. And, unfortunately, wages in my area have not improved.

For people like this, I feel that this plan will help them. Are there those who will abuse the system? Yes. But should we punish the people who really need the help, such as the people in my area who were practically coerced into buying these higher priced homes? No.

I don''t think this plan is foolproof, and I have my concerns about it, but until someone can come up with something more effective, I will support this measure.

 

[CrookedRock]

I don''t even know if i want to approach this subject on PS bc it gets me so worked up! They should have never bailed anyone out! WTH do the people who were responsible and didn''t saddle themselves with a lifestlye they couldn''t afford have to pay for those who did! I''m in the same boat as Cleopatra, where my FI is the guru on all of this, but I have made a point to understand it and I don''t like it one bit!
Ironically, just today FI forwarded me this clip. It''s great! http://www.cnbc.com/id/15840232?video=1039849853&play=1

 

[CrookedRock]

Date: 2/19/2009 2:12:37 PM
Author: steph72276

Date: 2/19/2009 2:01:13 PM
Author: Harriet
Stone Seeker,

How do you think the plan will affect the market? I have no problem helping the underprivileged. I do, however, balk at helping the irresponsible. Exactly!

My thoughts exactly, Harriett. I have no problem whatsoever helping out the less fortunate, but to those greedy, irresponsible people that built these McManions, bought the 60'' tvs to go in them and have a beemer in the driveway and suddenly can''t keep up minimum payments, I say get a second job flipping burgers and sell some of your ''stuff''. People need to start realizing we''re not in congress, we actually have to live below our means.

The most amazing part is that we aren''t being given the choice on who to help! That my friends is Socialism.

 

[bebe]

This entire issue sickens me. What is wrong with this country? My blood is boiling.

Ya know, we are honest, we pay our bills, we own our home and we worked darn hard for it.
We all played by the rules, why do we have bail out those who didn't?

This is like telling your child to study hard for his test. Then when he gets his "A", he has to share some
of his grade point average with little Johnny in the next desk because little Johnny didn't want to study!!

 

[Haven]

I''ve been wondering about this issue, and I must admit that I am still not clear on all the details.

I do, however, know that my husband and I were approved for an insane amount of money when we bought our house back in June. All I kept hearing was that it was going to be soooo hard to get a mortgage because banks were tightening up, and what do you know? We were approved for nearly three times the amount we felt comfortable spending. It was ridiculous.

If I may, here''s my question about the refinance part of this plan and how it would affect me, personally:
We bought our home for $350,000 and put 20% down, so we mortgaged $280,000. Let''s say the value of our home has come down to $300,000. Will we be unable to refinance because we put so much down, and thus still owe less than the value of the home? Does that mean we would have been better off holding on to more of our cash because now we''d be able to refinance at a better rate? If so, I find that irritating.

Please don''t flame me if I have this totally wrong. I am definitely not up to speed on the details of this plan.