I realize we need to do something to help out, and I have no problem with the government acquiring “bad” mortgages and re-negotiating interest rates.

But when it comes to a re-value of mortgages based on current home values, there is something that nobody is talking about. Suppose my neighbor and I buy our houses at the same time for $400k. I am responsible, pay 20% down and get a fixed rate. My neighbor is reaching, pays 2% down and gets an ARM that he really can’t afford. Now, prices drop 25%, our houses are worth $300K. I have lost $80k, my neighbor is only out $8k. I can still pay, he can’t. The government comes in, buys his mortgage, writes it down to $300k instead of $392k, and gives him a very low interest rate. I get nothing, because I have been responsible.

Here is what no one is talking about: once this occurs, what happens in 6 years or so when housing prices rebound? Now say our houses are back to what they started at: $400K. If I sell mine, I actually lose money when I pay the realtor’s fee. My neighbor? He now gets a windfall, financed with my tax dollars.

I am happy for the government to help folks out here, but this should be just like the financial institutions — no windfalls for people that take this help. If they make a profit under this scenario, they need to pay it back.

There still have to be consequences for poor choices.

I’m not for a home bailout. If they have to walk away from their home, give them some assistance to find temporary shelter or something like that, but my wife and I saw this coming, and chose to rent. Who’s helping us?! Is this socialism for the rich and irresponsible? The housing market needs to correct itself and propping it up is just wasting tax money…

CB15 has a good point. Maybe there should be a contract that stipulates that they can not profit from the sale of a home if they get a bailout, for 15 years or more. That’s not saying they can’t sell it — it just means any profit will go back into a affordable housing fund.

Should we bail out stupid lenders and borrowers? My answer is not just no, it’s hell no!!! What in the world is wrong with lower home prices? Isn’t this what we want? Has this country gone mad? On one hand we complain about need for affordable housing and on the other hand we keep these ridiculous prices up. Get the government out of here, kick the deadbeats out of homes that they do not deserve and let prices return to normalcy so that deserving responsible people can start buying.

My wife and I went to school to get professional degrees, worked hard and saved. We did not want to overextend ourselves by buying a house we cannot afford. I saw many people living in giant homes they could never afford, and using their homes as ATMs. NOW, they are getting help and people like me - even with good credit - cannot get loans. How is this fair?

These people already got a free ride from living rent-free for so long. These homes don’t belong to them in the first place so stop saying we are kicking them out of their homes. Don’t bail anyone out

My wife and I went to school to get professional degrees, worked hard and saved. We did not want to overextend ourselves by buying a house we cannot afford. I saw many people living in giant homes they could never afford, and using their homes as ATM’s. NOW, they are getting help and people like me-even with good credit- cannot get loans. How is this fair?

It’s not, now that I think about it, let them fail.
I have done the right thing and have a 30-year fixed.
If you bought something you could not afford you deserve what you get.

Are you kidding me ? Of course we should not bail these people out! I’m gonna start defaulting on my mortgage too. Hey I want a free ride too. There is absolutely no more incentive for anyone to be responsible and pay their mortgage.

Do the Mortgage servicers have the legal right to comply with the Freedom Plan without risking liability to the owner of the mortgage?

The housing crisis was easily foreseen by financial analyst web sites such as http://www.dailyreckoning.com This was no surprise.

Now there is going to be another crisis in the offing, maybe 5 years, maybe 10, maybe 20. But this crisis is real: the food crisis.

Industrial Agriculture requires 10 calories of oil per calorie of food. IA also requires large amounts of fresh water to dissolve the chemical fertilizers. There is also serious soil erosion in the Midwest. The average topsoil level in the Midwest was 12 feet only 60 years ago; now it’s 6 feet (Wendell Berry and Michael Pollan are my sources on this).

So if any single one of these three resources, oil, water or soil fails, then all of Industrial Agriculture fails and there is mass starvation.

First, let people stay in their homes on the agreement that they’ll rip out their lawns and plant vegetable gardens and fruit trees and berry bushes. Second, provide food processing plants at the County Agricultural Extension offices. The extension office goes around with a truck and collects garden surpluses from homeowners, in return for vouchers against their homeowner debt and/or some cash.

Also, for sources of manure for the home gardeners, we do need to bring back sustainable, pasture-fed livestock farms all over New England. Build train lines so you can distribute composted manure by rail. Also, bring back passenger rail for that matter, so people can get jobs on these livestock farms.

In this way we massively relocalize agriculture via millions of home gardens. It will actually be a LOT more efficient than Industrial agriculture, and it will create local sources of wealth. Also, we can stop importing food from developing countries, which, by the way, is causing mass starvation in those developing countries.

Of course it requires that Americans do REAL WORK. But home vegetable gardening is not rocket science, and I have systematized it. I dig out a hole about 3 feet in diameter and 6 inches deep, put the native soil in a heavy duty wheelbarrow while sifting out the sod and rootballs and other junk, put a dryer drum from a dead clothes dryer in the hole, and then mix in layers of horse manure and native soil in the dryer drum, pull up the dryer drum and I have a mound. I make a row of mounds in this way and rake them together into a raised bed. I don’t walk on these raised beds, and they produce well for about 2 to 3 years before I need to add manure again.

So remember this comment in 2018 when we are talking about the food crisis.

That caller named Rene deserved to lose her house. Why can’t she rent like the rest of the world? I rent and I live very well. It’s not my problem if she wants to live beyond her means.

People need to stop repeating these statements about how it’s a birthright own a home.

When you buy a house you need to factor in the possibility of losing your job before you go through with it, so suck it up

A family I am working with just received a 48-hour notice from a constable. They have been asking the bank to accept rent or let a family member buy the property at the appraised market value. The banks response: a 48-hour notice to vacate.

We have already had a successful eviction blockade at this home. We (City Life) will be back at the home on Friday.

Who maintains the house if the former owners lose the deed and are now renting it? Couldn’t the level of maintenance affect the cost of rent and the value of the house at the end of the rental period?

What happens to the payments that the former home owners made before if they choose not to buy after the rental period? In effect, it would be like as if they were always renting. Do they get refunded the difference between the prior mortgage rate and the rental rate?

If they can’t afford the rental rate when it rises, then they still lose their home after all the payments they made prior even after becoming more responsible. Where’s the love, man?

It sounds to me like those debtors who lose their homes to creditors lose everything that they previously invested into their homes. In addition, the creditors get to keep what the original owners paid for & maintained - AND the creditors get to rent out or sell the homes for the whole unpaid price. Creditors get to profit tremendously from this - unfairly in my opinion.

I think this is a scam window-dressed as “tough love.”

Give up deed to rent back…..no

Why not just renegotiate the mortgage and do interest only to get payment down with a time limit on how long they can do interest only?

Way better than new agency to oversee process in deed concept.

Just mandate banks to negotiate with people in trouble!

Alpert’s plan is nothing more than the equity-stripping mortgage scam that has been practiced for a few years here in Michigan. The only difference is that he proposes to legalize the scam.

As the scam works now, the “bank/broker” has the troubled homeowner deed the property to a third party with good credit. The party with good credit gets a mortgage on the property, usually arranged by the “bank/broker” at a hefty commission equivalent to the equity that the homeowner had built up in the house by paying down the mortgage. (Remember, looking not at the market value of the home which is dropping, instead looking at the principal of the original mortgage that was paid back the homeowner did have that paid back principal amount as equity.)

The homeowner then has to pay “rent” to the third party to “buy back” into the house. As a practical matter the issues that put the homeowner in trouble originally will probably still exist and the homeowner will never “buy back” into the house.

People who did “the right thing” by not having a mortgage!?

I certainly don’t understand that comment. Am I so uninformed as to believe that a properly managed mortgage is (or was) a decent, fiscally sound, investment?
Please clarify.

Who, other than the homeowner or consumer, will profit from these plans and how can it be misused in a way that got us into this mess in the first place??? EVERY plan has a way to be co-opted for greed and these new ideas do too.

We never ask that question, but we keep getting the answer, as is the case with the current bailout, 10-20% of which will be redirected to bonuses and dividends for those who created the crisis in the first place.

The real travesty is that we never learn from these situations because we don’t ask the fundamental questions and keep coming up with new catch words (e.g. “credit default swaps”) to obfuscate the issue.

I think that there needs to be remedy for the home owner and bank. One of your speakers talked about there not being any incentive for them to rewrite the loans. They’re getting government $$$. They’re adding to the demise of intercity communities. Further, the value of ownership provides a tax incentive.

I have serious concerns about bailing out people building 3 or 4 times over in areas like Galveston or the Florida Keys where it is clear that we are not supposed to be living. Also what about areas like Phoenix, AZ where water is a scarce resource? These people need to relocate and allowing them to continuously rebuild in these areas is irresponsible.

ALSO, why are we not calling out Alan Greenspan? How does he explain his actions?

We have to stop saying that people who are losing value in their houses are irresponsible. Some were and some weren’t. Some bought homes that they down right could afford. However, they bought houses that were way over valued. Or, they refinanced based on a value that their home wasn’t worth. Now, some of them can still afford to pay, but the boo-ga-boo man in this show is saying that yes they can but they’re gonna walk away and our economy is going to tank.

Anyway, whenever we say that these were irresponsible people we’re going to lose the argument, because there will always be someone to say say “oh but I (or my neighbor, or my aunt) could afford it”. I think it’s simpler to stick to the argument that home buying is an investment, as it can go up or down. When it goes down enough, there are people waiting on the side lines to buy them. The only problem here is that houses are over priced. So tell me again, why should I be paying for the risk someone else took? People, I rent. It’s not the end of the world, trust me.

The major problem seems to be houses whose current value is less than the mortgage (i.e. under water). What about this? Have the government assume the difference between the mortgage amount and the current value of the house and let the homeowner continue to live in the house and make mortgage payments for that value (at reasonable interest rates, not highly inflated ones). As the house value increases in future years, the mortgage value would increase until the government eventually gets its money back.

Edit as y0u see fit.

Here is an outline of what went has gone on during the past eight yewars. The American public has been used to experiment using Objectivism and Ayn Rand with Allen Greenspan, Martin Fieldstein, and Senator Phil Gramm as our guides. An article in Conde Nast Portfolio for October 07(Page 68) by John Cassidy says it best.

Greenspan allowed a derivative market to form with insured and guaranteed investments (Janet Morrissey, Time Magazine March –08) bought on leverage with 1/30 as a high 1/10 as a low. He moved our nation and much of the world into bankruptcy, shifting over 62 Trillion dollars to these Credit Default Swap Bonds. And other dangerous derivatives.

The moneymen have tricked and lied, the Democrats and Republicans fell for it, and when the real money hurricane hits, the victims will be small business people around the country along with the poor and middle class.

Here is a short TIME LINE:

From 1931 to 1953, Republicans grow to HATE FDR and Truman In 1933; Dupont hired General Smedley Butler to lead a veteran’s march on Washington to overthrow FDR. Run his name on Goggle, and Senator Whitehouse’s office has found his whole testimony before the House un-American Committee, formed to stop Nazis. They have never stopped, and that is why they want to replace FDR on the dime with Reagan. I have a copy of his testimony before Congress if you need it.

After the depression, laws limiting bank risks were passed. In 1999, that all changed. In fact, the legislation suggested recently forms Banks exactly as they were before the depression.

1. In 1999, Martin Feldstein, Allen Greenspan, helped write Phil Gramm’s Banking reform bills. Greenspan is a true believer of Ayn Rand, and with this legislation, they allowed the most nefarious scheme in the history our history. We became lab rats fro these monsters. Feldstein said on Tom Ashbrook on Point that the failure was in regulatory failure, but he knows as well as anyone else that Gramm removed ALL regulatory actions.

2. Using Clinton’s plea for minorities and poorer citizens, they created the sub prime mortgage programs. No one noticed that these mortgages were being sold to bond salesman who were selling Credit Default Swap Bonds. Modeled after guaranteed and insured municipal bonds, these bonds can be bought on 1-10 or even 1-30 margin If you go to Janet Morrissey’s article in TIME for March of 08, you will find that at that time, there were 45 Trillion dollars in this derivative, unregulated, and unrecorded. The attraction of these vehicles is that they are insured and guaranteed. That means that when the bond sellers went out of business, the bondholders are legally owed 10 to 30 times their investment. This was used for cities over the years, but Gramm’s legislation made it legal for anyone.

3. No one is talking about this. When Credit Default Bonds were mentioned in the Bernanki/Paulsen testimonies, the stations went to commentary.

4. They say that over 60 Trillions dollars are now obligated in the bonds. If you look at Senator Reed’s and Hatch’s interview yesterday on Hardball, you will hear Hatch say, in response to the question that of will all be well? Hatch said”..we will have to see what liabilities on in the derivative market.” He was lying–he knows exactly what these derivatives will cost us.

4. The sub prime loans were designed to remove people from redlined neighborhoods. You will notice that there is money on the federal money for cities to buy AND BULLDOZE houses in our poor neighborhoods.

5. Every sub prime mortgage closed by a loan officer gave them a $2,000 to $15,000 Yield Spread Premium (YSP) These were off the closing document payments considering the future trillions that each loan represented when they wore invested into the Credit Default Swap bonds. Loan officer could make between $20,000 to $150,000 a week, nontaxable income if they closed 10 loans each week.

This is the largest, and most extreme rip off in our history. If the minority Republicans get their “insurance” for the bad mortgages, they will double the profit that these bond holders and banks hold.

I have talked to Reed’s Office, Whitehouse’s Office, and Patrick Kennedy’s Office. They know about this, but do not want to do anything about it. Get a copy of Fresh Air for last week, and you will hear Terry Gross interview a professional in this market, and if you listen, you will realize that I am right—I cannot sleep at night, and I know that no one plans to do anything.

At least, Greenspan is honest. On Monday, he said that the rescue plan is “drop in the bucket” for what we need. The derivative bond liability will bankrupt this nation, and make many investors and hedge fund mangers trillionaires

Here’s what needs to be cone:

1. Greenspan and Felstein sghould be required to tell the truth about their removal of all bank reghulations as the Portfolio article escribes, and if Feldstein calims on ONpoint as he ged last month that it was the “lack of regulation” that caused this crisis, Tom will have to ask him to tel the truth.

2. All YSPs should be paid back, and or taxed.

3. All demolitions of red-lined neighborhoods should be outlawed immediately.

4. Greenspan, Feklsdstein, Gramm and Bush should be arrested for bank fraud.

5. Alpert’s plan is to turn all foreclsures into Lease with purchase without the rent payments going to lower the price of the house–theft? You bet it is.

6. Tell us the truth, and stop allowing the 2000 bank revoluition succeed in destroying Amerixa’s and the world’s fances. Nationalize the whole ferivative market, and freeze today.

Here is what no one is talking about: once this occurs, what happens in 6 years or so when housing prices rebound? Now say our houses are back to what they started at: $400K. If I sell mine, I actually lose money when I pay the realtor’s fee. My neighbor? He now gets a windfall, financed with my tax dollars.

I agree completely. We made almost a 50% down payment on our current house and it’s almost paid-off, but I’m sure the price has fallen back to something close to the original purchase price. So absolutely any individual homeowner bailout must be contractually structured so if there are windfall profits to be made at the later sale, it’s the taxpayers who enjoy them, not the homeowner.

Should we bail out stupid lenders and borrowers? My answer is not just no, it’s hell no!!! What in the world is wrong with lower home prices?

and

These people already got a free ride from living rent-free for so long. These homes don’t belong to them in the first place so stop saying we are kicking them out of their homes. Don’t bail anyone out

and

NOW, they are getting help and people like me - even with good credit - cannot get loans. How is this fair?

and

Are you kidding me ? Of course we should not bail these people out! I’m gonna start defaulting on my mortgage too. Hey I want a free ride too

. . . etc.

These posters, and others who are making these emotional outbursts seem somehow unable to grasp the basic point. The REASON why people are focussing on foreclosures and defaults is because they are threatening to drive the whole economy into a very deep, long recession, and maybe even a depression like the 1930’s! Millions of innocent people who did nothing wrong are already losing their jobs and soon it will be 10’s of millions. The goal is to fix the economy, not to bail out stupid homebuyers. There are many respected economists who think that going after the root problem - massive mortgage defaults - is what’s necessary.

What part of this don’t you people get?

People commenting here would do well to read Daniel Alpert’s original documents which answer much that his radio appearance this morning may not have.

One thing which needs underlining is that while the first-in-line target here is mortgages ready to fail, it’s these mortgages that is at the heart at the financial markets’ current cardiac arrest. No one knows how many there are, in which securities they’ve been bundled, and how soon they’ll go bad.

The mortgage mess is the ground floor (the foundation) of a rotten house, and the securitizations, the exotic derivatives, the hedge bets, and dubious bond ratings issuing from these mortgages are all on the second floor. What is needed is to sort the non-viable mortgages out from the good, so that the bad mortgages can have a mark-to-market not based on a plummeting home-ownership market, but the more stable rental market.

With these mortgages now pegged at something more solid, less distorted than the housing market, the securities markets can sort out the bubble-wrap from the gold.

Mr. Alpert’s plan handily straightens out the foundation of this mess, and does it without the socioeconomic dislocations of wide-spread mortgage foreclosures or the need for tax-payer subsidy. His plan gets my vote, but do read his and Joe Nocera’s original documents before voting.

I think it’s simpler to stick to the argument that home buying is an investment, as it can go up or down.

Actually, that’s how we got into this mess!

Houses are not investments! They are shelter.

The “investment” mentality is why people were willing to get so leveraged to buy a house, why they expected prices to go up and up, why people flipped houses, why competitive bidding drove up house prices, and why Americans devoted so little resources into real investments. Study after study in the 1990’s and early 00’s showed that for 10’s of millions of Americans their home was their biggest store of savings, and that Americans saved very little in conventional savings and investments compared to people in many other industrial nations.

If you buy a house and sell it later at a profit, great, but that should NOT be a major reason to buy a house. The decision to buy a house should be based on its utility as shelter, or other benefits such as predictible monthly payments with a fixed-rate mortgage, competitiveness with renting, having the right to modify it as you see fit, use of the land its on, not having to deal with a landlord, and other practical concerns. But a house is not an investment.

People seeking investments can buy stocks, bonds, gold, fine art, or, if they insist on real estate, they can invest in commercial real estate, rental property or REITs. But creating a cultural value that equates one’s personal home with an investment is how we got here.

To Peter Nelson. If you really want to fix the economy, preventing
foreclosures and bailing out banks and irresponsible borrowers is the last thing you want to do. These groups are parasites sucking valuable resources from our economy thereby making it as weak as it is now. Bailing them out will only make things worse. You don’t
cure alcoholism by giving alcoholics more booze, which exactly what you are proposing. We should take the money and invest in productive projects such as rebuilding infrastructure and energy independence (which will create lots of meaningful jobs!!) Not giving lazy people and criminal financial engineers a free ride

The current credit crunch may go well beyond the short term crisis implied by all we see and hear: it may force fundamental changes in our financial system.

Take a look at “Will the Financial Crisis Change the Game?” at http://whatsnotso.blogs.com

The two videos linked to in that entry provide the most meaningful diagnoses of the present situation I have found. I suggest watching “moneyasdebt” first, all 47 minutes of it. The other is over three hours long, but full of fascinating history. It is quite chronological; if you are pressed for time, skip down toward the end to see where we are now and also the exposition of their proposed change. (Which you can also find on their Web site.)

Their prescription certainly represents a profound change in the banking and money system: elimination of the fractional reserve banking system (and therefore the Federal Reserve Bank) and paying off the national debt with fiat currency.

Praised by both Milton Friedman and Elizabeth Kucinich, this is an idea we may be forced to look into whether we like it or not.

We should take the money and invest in productive projects such as rebuilding infrastructure and energy independence (which will create lots of meaningful jobs!!) Not giving lazy people and criminal financial engineers a free ride

That’s just an emotional reaction. The current problem is due to a freeze-up of the credit markets due to so many bad loans out there. We’re not going to get out of this mess until we somehow fix that.

Infrastructure investment may or may not be a good idea, too, but you’ll find very few responsible economists who would agree with your idea that we can solve this by ignoring the credit mess.

If you didn’t already have so much money in the
bank that you didn’t have to risk your well-being
on an adjustable rate mortgage, in the first place,
“Why did you do it”?! - and why should the rest of us
have to pay for your miss-step”?!

YES! We all know that their whole business is a matter
of throwing up enough financial “mumbo jumbo” to humble
and confuse you so they can steal from you. But you
should have known that. Has it every been otherwise?
What are we to believe about you? (And it is all about you) That you weren’t home that day when Home
Schooling would have taught you otherwise?

Admit it. You trusted somebody or something in a
world where that just doesn’t fly. When will you
learn?

Just don’t ever give it up that the rest of us hoped
to benefit also from all that cash you promised with
your loan. They call it “MORE MONEY” when you borrow
to buy a house. When things go well it’s our “Great
American Economy”. When they go wrong, it’s all about
you and your personal hap hazard ways. Someday we
will have you on a public listing so our children
don’t have to play near your house. (Abandoned one).

Peter Nelson,

One one hand, you clamor for bringing “reason” to discussions and express bewilderment bordering on contempt of people having “emotional outbursts”; and on the other hand, you talk about politics as theater where there’s little to no reason, facts don’t matter much and it’s all drama based on emotions.

You tell others that a certain person/entity - when criticized - is not obligated to act a certain way, yet you yourself write about what ought to be or what should be done.

Are you trying to have your cake and eat it too? Or are you simply confused? Seems to me you like to talk through both sides of your hat, and Michael has your number.

Their prescription certainly represents a profound change in the banking and money system: elimination of the fractional reserve banking system (and therefore the Federal Reserve Bank) and paying off the national debt with fiat currency.

I’m an engineer (at least as long as I still have a job) so I believe in building working prototypes to investigate bugs and design flaws before scaling up to full production. With that in mind, I’d be curious to see some other successful industrial economy that functions well without a central bank, since central banks serve important functions within an economy and WRT maintaining a stable currency value OUTSIDE that economy’s borders with its trading partners.

So we don’t have to turn 300 million Americans into human guinea pigs, what are some other contemporary nations you can point to as models for this?

Could someone get some detailed statistics on this issue?
I’m tired of general across the board orientation of the discussion of who gets and how it is gotten.
1. How many mortages in default are actually PRIMARY RESIDENCES?
These are the only ones which should even be considered for assistance.

I also agree with CB15 and others who say there should be no windfall for those who receive bailout assistance.
They must somehow pay it back.

How many are underwater due to speculation/investment buying? These debts should not be forgiven.

Let’s assist but let’s be judicial about who gets assistance.
Mortages require so much personal data that it should be no problem to assess who is losing their HOME and who is losing a GAMBLE.

One one hand, you clamor for bringing “reason” to discussions and express bewilderment bordering on contempt of people having “emotional outbursts”; and on the other hand, you talk about politics as theater where there’s little to no reason, facts don’t matter much and it’s all drama based on emotions.

So? One is a discussion among individuals and one is a political campaign. Two different environments - two different standards. Apples and oranges. As an artist I expect my model to be nude; not so my lawyer. I also “clamour” for powering my sailboat with wind and my car with gasoline and electricity. Courses for horses, you know.

In short, this is not theater; it is a discussion where we are judged by the merit of our ideas. Politics IS theater where politicians are judged by the show they put on.

1. How many mortages in default are actually PRIMARY RESIDENCES?
These are the only ones which should even be considered for assistance.

Why?

How many are underwater due to speculation/investment buying? These debts should not be forgiven.

Likewise, why?

Again: keep your eyes on the prize. The GOAL is to fix the economy, not to grandstand on some sort of moral principle. The credit system is currently broken because there is too much bad debt flooding it, so we must fix that to fix the economy.

What if it turns out that much of that bad debt IS due to speculators and flippers? Bad debt is bad debt; if that’s what’s sending us into a recession/depression we can’t just ignore it out of a feeling of self-righteousness. That’s just cutting off your nose to spite your face.

Joe Silva–
I am in agreement with your points, but I can foresee at least 2 problems (I’m not arguing with you, just pointing out potential problems):
1. Homes bought on speculation or as second\vacation homes do not exist in a vacuum. They are mixed in with homes that are primary residences for other people. The idea here is to put a floor under the RE market and get it stabilized, as Peter Nelson mentioned earlier. Failing values and foreclosures on homes that are second\vacation homes or spec houses drags down the values in a town or neighborhood the same as failures on primary residences. You have to buck them all up, or you end up penalizing folks with primary residences in areas that are vacation worthy (like Cape Cod, etc).

2. You said “Mortages require so much personal data that it should be no problem to assess who is losing their HOME and who is losing a GAMBLE”. Again this is actually part of the problem. The de-regulation of lending, and creation of “low-doc” and “no-doc” loans means that there are a lot of mortgages floating around where that information is not available. So, we might need to have people sort of “re-apply” and actually produce all the documentation they used to have to provide.

If we are only for ourselves who are we? as individuals, and country.

We have bailed out Wall Street and the Banks. Does their greed need to be rewarded? NO

there are ways to prevent these foreclosers that could help the homeowners, the banks and the communities. We gave Wall Street and the corporations the funds to bail out so they could have a $250,000 party. Can’t we help our neighbors to renegotiate.

It will serve us all

Peter,

Except you forget that politics and economics are inextricably intertwined, and both do not follow logic or reason.

Here’s a cartoon that sums up one aspect of our economy:
http://farm4.static.flickr.com/3043/2867609321_7a821a4099.jpg?v=0

If during a famine you distribute equal amounts of available food to everyone regardless of need until it runs out you will starve some people to death and over feed others. My point is that assistance must be focused. For instance the fact that the institutions have been given all this money to start loaning with no requirement that they do.
As stated by some this is a serious situation. It must be addressed. That said let’s try to limit the profiteering that will inevitably result ( the rich get richer etc)
CB15 thanks for that incite. If that’s what it takes (reapply) do it. Sorry but I have little compassion for the bracket that has rec property in Cape Cod, Malibu,
etc. I doubt many of them are much more than inconvienced. If they are then they have overleveraged themselves and we have come full circle.I am pretty sure those properties will be picked up by someone and keep those markets up.

What are we reinforcing with this bailout? Is it okay to live beyond our means, and for financial institutions to be greedy? My husband and I both have professional degrees and are struggling to put our four children through college. We’ve paid all our bills and have forgone vacations, nice cars, private schools, even going out to dinner and exhanging gifts. So while our pride and integrity are both intact, I can’t help but wonder what lessions are being learned.

Except you forget that politics and economics are inextricably intertwined, and both do not follow logic or reason.

What’s the matter with you? Did you see any place where I said politics and economics are not intertwined?

The different standards we are discussing are the result of the fact that this is a discussion forum and a presidential campaign is a show. In a discussion, especially on an NPR program hosted by a university, we can interact with each other, questioning each other’s logic, data, or conclusions. If another poster makes a nonsequitur I can point that out, for instance. If I claim that the goal in a financial rescue package is to unclog the credit markets to avoid an economic catastrophe, someone else can disagree and say what he thinks the goal is. It’s interactive.

So we win debates here by making the most logically and factually persuasive arguments.

But political campaigns are not won by logic and facts. And again, this is not just my opinion - there is plenty of good research showing that emotion, identity, themes and symbols, affect voter preference far more than logic and facts; infact most voters can’t even name important facts and data about the candidates and their positions. You might WANT a political campaign to be fact-and-logic-based but it just isn’t. That’s not how most people make political choices.

So complaining about double-standards is ridiculous - I apply the appropriate standard to the context. Do you evaluate a peer-reviewed research article by the same standards you evaluate an opera? This discussion is more like a research article where we persuade people with facts and logic; a presidentail campaign is more like an opera where the audience is moved by presentation and emotion.

“Just mandate banks to negotiate with people in trouble!” -quote from John

That’s what got us into this mess in the first place!!!

If during a famine you distribute equal amounts of available food to everyone regardless of need until it runs out you will starve some people to death and over feed others. My point is that assistance must be focused.

Well, that’s a little disingenuous - you clearly wanted to focus it on some kind of moral basis - primary residence, not speculators, for instance.

No one is saying that it shouldn’t be “focussed”, but the GOAL is to prevent an economic catastrophe, not to make some sort of preacherly point about good and evil. So the “focussing” should be based on the ECONOMIC results. If it makes more economic sense to “rescue” a $500K flipper than a $50K primary residence (because a $500K default would do more damage) then so be it.

We can round up and punish the perpetrators after we fix our economy, if that would make you happy.

Just curious.

Why are all of ignoring my post.

This crisis was designed and carried out for the purpose of shifting as much wealth as possible into a small group of derivaitve bond owners.

Millions of Americans were lied to. Thousands of mortgage officers made millikons of dollars in Yield Spread Premiums.

It is too late to do anything.

If y0u do not freeze the derivative market NOW, it will get worse much woprse.

Picture the derivative market as a great big vacuum, suckling every dollar available. The insturments purchased are bioth guarenteed and insured. You can put up one billion dollars, and own 10 Billions dollars of bonds.

There is no credit crisis. All the money has gone into derivative bonds.

After 1492, inflation in Europe escal;ated beyhond imagionation because any Spaniard could pay more for any goods or services made in Europe.

The difference here is that the “derivative market” has NO real gold–only the value of what lies in the future which the buyer and seller have agreed to pay each other out of future contractually enforced insturmentas. These instyruments have no value except that we all agreed that you(The derivative market). In the end all and any bailouts will bailout the trillions created by these sderivative bonds.

Everything else is a joke. They wnated to destroy red-lined neighborahood. They went after refinances. thye have suxcceeded and unless value is denied to this derivative market, then the whole world will be in hock to these Hedge Fund Money Magnates.

Polite or nopt. Right or qwrong, the mortagges were written in order to go under so the bonds would have their insurance flip into place.

No, not manna from heavsn, money from atheist Ayn Rand and her buddy, Alan Greenspan.

What are we reinforcing with this bailout? Is it okay to live beyond our means, and for financial institutions to be greedy?

From an economic standpoint this is a major concern. We got into this mess by inflationary Fed policy by a series of interest-rate lowerings over several business cycles which made everyone feel flush. Anyone who doubts this need only look at the M2 over recent years. When that happens the you WILL get a bubble, someplace.

A few weeks ago I said that we should have had tighter lending standards. This would have prevented the housing bubble. I’ve had economists tell me since then that, while this is true as far as it goes, we would have simply ended up with a bubble in something else.

So the point you raise is important. The government seems to be trying to pump money into the system to fix this. If it “works” it might only do so by reinflating the bubble, which will provide temporary relief but also set the stage for more pain later.

What’s really needed is a complete change in our fiscal culture from ordinary people to the government. We need to rely less on debt and live within our means. But the politicians aren’t talking about that because it’s an election year and that’s not in the script, so we’ll just keep this between ourselves.

Just curious.

Why are all of ignoring my post.

Two reasons:

1. It was too long and you asked us to edit it.

2. It makes you sound like a conspiracy wacko. You said you called the White House?! Did they talk to you? I’m surprised you didn’t blame the Illuminati, the Freemasons, the Trilateral Commission, or everyone’s favorite euphemism, the “international bankers” (and we all know who they are!) The black helicopters will be coming for you any moment . . .

Peter,
Go back to my first post.
Don’t let the “500K flipper” go!
Extend their terms, renegotiate, whatever. As you say save the economy.
BUT!
No free lunch, the debt is still there plus a bailout assessment.
Banks, loan the money or give it back.

“You said you called the White House?!”

I think he was referring to Senator Whitehouse (from RI?).

Speaking of Greenspan and Rand, here’s an exercise - “Demonstrate superiority of Objectivist understanding of economic and political forces by becoming rich.”

The answer can be found here:
http://andrej.com/objectivism/#step8

Speaking of Greenspan and Rand and gold, here’s an exercise - “Demonstrate superiority of Objectivist understanding of economic and political forces by becoming rich.”

The answer can be found here:
http://andrej.com/objectivism/#step8

“You said you called the White House?!”

I think he was referring to Senator Whitehouse (from RI?).

OK, I can buy that - although my question still stands - did anyone there actually talk to him?

But the picture he paints - a cabal of Randian conspirators (I suppose they had a poster of John Galt on the wall of their secret hideout) plotting worldwide subjugation is laughable. How did they keep the press from nosing around - did Andrea Mitchell pull some strings?

Still, I’m grateful for his post because I’ve always enjoyed conspiracy theories. I’ve been trying to construct a sort of grand-unified-field conspiracy theory involving Area 51 and the Church of the Subgenius, Davos, the Rockefellers, cattle mutilation, Queen Elizabeth, a faked moon-landing, the UN, the Protocols of the Elders of Zion and all the other usual suspects and yet somehow it was missing something. But I’m thinking that Ayn Rand and the Objectivists (this would be a good name for a band) might fill in the missing gap.

Ofcurse, I meant Sebator Whitehouse.

I live in Rhode Ilsand. Actually, turns out that the missing pasges from the House Un-American Activities Committee for the Smedley testimony was cut short because the fist seven pages are another person testifying. So, I will contact Senator Whitehouse’s office again, and try to get the whole testimony.

I have not read it, but apprently PJ O’Rourke makes fun of this whole plot in a recent book where he jokes about the Hobo’s plan to assisnate FDR. For those who know the Butler story, it must be truly entyeertaining to see an actua; government voup truned inside out.

No, I am not a conspiracy nut, and you can look at the articles in Time and Portfolio if y0u do not belive me. Also, Rand was a nut. Fountainhead was a fight between elites–business corporations and architects. Atlas Shrugged was a joke–whenever Atlas shrugs, we invent new a new one. In Amrticas’s case the right wing invents a Terroist Obama. Anthem was equally riduculous–a young couple leaves the “commune” for a totally mechanized house designed just for their comfort. They were exactly what Rand hoped for the world–uneducated free loaders, or better yet, the children of the rich.

Will someone check out Fresh Air for early September. I do not have the date. but it was on her show that an expert described the safety, security, commonsense, and wealth that these bonds had created for their shared buyers. Terri questioned him over and over again–THE ANSWER WAS STILL THE SAME–No, there was nothing anyone could do to stop this “gold” from draining all the money out of the REAL marketplace.

Who, exactly do you know who would not invest one dollar to get $10 guarenteed–especially if the failure of the underlying asset HAS to fail for you to get your money? And, you have paid out millions in YSP payments to guarenette that only the worst of the worst get bad loans, were not told that the loans would go to 10-13%, and 60% or more of these borrowers could have gotten regular fianacing. The issue is that regualr fianacing did not pay the loan officer his under the table kick-back.

Speaking of Greenspan and Rand and gold, here’s an exercise - “Demonstrate superiority of Objectivist understanding of economic and political forces by becoming rich.”

The answer can be found here:
http://andrej.com/objectivism/#step8

I love it!

“But creating a cultural value that equates one’s personal home with an investment is how we got here.”

No it’s not. Property is a legitmate asset on a family’s balance sheet, and it’s often the largest asset. To say that one’s largest asset is not an investment defies accounting principles and common sense.

Easy credit is how we got here, not the idea that a home is an investment.

By the way, you wrote about how this is a discussion forum where we challenge each others ideas. But you don’t discuss, you condescend.

Some tidbits just from this thread:

“These posters, and others who are making these emotional outbursts seem somehow unable to grasp the basic point.”

“What part of this don’t you people get?”

“That’s just an emotional reaction.” (it wasn’t)

“Again: keep your eyes on the prize. The GOAL is to fix the economy, not to grandstand on some sort of moral principle.”

“Well, that’s a little disingenuous” (it wasn’t)

Your insights aren’t so great that you should be talking to people like this.

Hey Jon,

You wrote “We should take the money and invest in productive projects such as rebuilding infrastructure and energy independence (which will create lots of meaningful jobs!!)”

Go look at Tom Friedman’s column in the NY Times today. He makes this very point and doesn’t come off as “emotional” at all.

I heard your broadcast today and I like idea of a mandatory programs that your speaker was referring to. However, the program he proposed is too complicated to implement and it will take too long. There is a far more simple way to stop foreclosures and reverse price declines.

Remember when the Fed lowered the rates last year they were expected that bank will reduce their lending rates also. But one year later the mortgage rates have remained pretty much the same. Congress can easily impose a profit cap on a spread between the fed rate and the mortgage rate. If the mortgage rate will go down as initially anticipated, the situation will improve immediately.

However, now that government is investing in banks and buying “bad” mortgages, they can implement rate caps as condition of bailout. Once interest rates go down and through refinancing mortgages become more affordable it will benefit not just the troubled mortgage holders, it will benefit everyone. It will reduce cost of housing significantly for vast majority of people, making more money available to purchase other goods and services thus stimulating broader parts of the economy and promoting job growth. It will bring new buyers into the housing market increasing demand for homes and reversing price decline. Reduced mortgage payments, reversed housing price declines, and increased employment will finally bring the foreclosures rate down.

I think Paulson and Bernake think that bailout will cause banks to lower interest rates voluntarily. However, if I was putting up this much money, I think I would be entitled to a guaranty that it will actually happens immediately and not at some future point and at bank’s discretion. In fact from what I hear, banks are having no intention to help alleviate this crisis other than lip service.

I think temporary interest rate caps which will bring mortgage rates into 3-4% range will imideately provide the needed relief.
robdubik.blogspot.com

Property is a legitmate asset on a family’s balance sheet, and it’s often the largest asset. To say that one’s largest asset is not an investment defies accounting principles and common sense.

That doesn’t make it an investment.

An investment is something bought for the purpose of extracting value from it, either as cash flow or through appreciation in its market value. Whether and when you buy, sell, or hold it is based on its performance and your expectations of its performance.

You’re an investment professional so you should know better than most that you cannot make good investment decisions about anything you have an emotional relationship with, but it’s impossible to not have one with the house you live in. To be consistently successful you need to make investment decisions based on the performance and qualities of the instrument dispassionately.

I’ve been an investor for almost 40 years and I’ve invested in stocks, bonds, currency, art, gold, and a variety of other vehicles. I’ve also owned 3 houses, all of which appreciated in value but none of them were investments.

I agree that most Americans keep most of their assets in their house but that’s not a good thing for them. Good investments should be diversified across many axes - risk, liquidity, exposure to different markets, exposures to different parts of the business cycle, tax consequences, etc. Putting most of your money into a house defeats the principle of diversification and it’s highly illiquid to boot.

Also, last year the Wall Street Journal reported that most homeowners put more money into their house in taxes, maintenance and improvements, insurance, and other costs than any profit they realize when selling it, so it’s questionable how many people are even making a profit on their house when total expenses are taken into account.

So I agree that a house may be a store of value, but it’s not an investment they way most serious investors would use the term.

There is a far more simple way to stop foreclosures and reverse price declines.

I disagree that reversing price declines is a desirable goal. With the exception of a few local markets, houses are still overpriced by virtually all reasonable metrics - rent comparisons, income percentages, trend-lines, and others.

I think prices need to fall maybe another 10-20% before they’re reasonable. We’ve had a HUGE bubble in house prices and it hasn’t fully deflated.

Our goal should be to allow it to finish deflating while trying to minimize the damage to the overall economy. Because so many Americans foolishly put their whole net worth into their house there is no way to avoid serious carnage and a deep prolonged recession, but we MIGHT be able to avoid an outright depression.

Trying to re-inflate a bubble is just asking for more trouble later.

Peter Nelson, stop panicking, you are being too emotional. Relax so you can think clearly. Fear is clouding your judgement. The US economy will do alot better if we don’t bailout these idiots on wall street or main street. Don’t buy the garbage they are trying to sell us. These groups just want to use fear to scare us into going along with any goofy plan that transfer wealth from the responsible to the incompetent/criminal groups. Think of the USA as a company. If you have a division that is underperforming or made stupid mistakes, you don’t reward it with resources taken from a good productive division. Its a sure way do get a company bankrupt. Stop reacting to fear, calm down and think clearly

“it’s not an investment they way most serious investors would use the term.”

Are you suggesting that I’m not a serious investor? Because based on some of the stuff you’re writing, I’m pretty sure I know more about investing than you do.

“Property is a legitmate asset on a family’s balance sheet, and it’s often the largest asset. To say that one’s largest asset is not an investment defies accounting principles and common sense.

That doesn’t make it an investment.”

First, having an asset on your balance sheet, especially a large capital asset like property, is by definition an investment. One of the top metrics used by value investors is ROIC - return on invested capital. So you buy a home, when you sell it you realize a capital gain or take a capital loss. Sounds like an investment to me, and most “serious investors” would agree.

Second, I’m going to combine two things you wrote to point out another place where I think your argument falls apart.

“An investment is something bought for the purpose of extracting value from it, either as cash flow or through appreciation in its market value.”

“You’re an investment professional so you should know better than most that you cannot make good investment decisions about anything you have an emotional relationship with, but it’s impossible to not have one with the house you live in. To be consistently successful you need to make investment decisions based on the performance and qualities of the instrument dispassionately”

Both of these are correct, but you draw the wrong conclusions. First, many people are dispassionate about the financial aspects of home ownership. So to say it’s “impossible” to be so is an exaggeration. And people become irrational about all kinds of investments (remember the Internet bubble), but that doesn’t mean they aren’t investments.

And homes are investments where one hopes to extract value through an increase in market value. It’s worked for years. The recent problem was partially created because people became increasingly irrational in the belief that house prices always go up. Those of us that are prudent investors knew that this wasn’t true (I futilely tried to convince some of my family members). Just because there are periods where asset values go down, doesn’t mean that the whole asset class isn’t an investment.

“Good investments should be diversified across many axes - risk, liquidity, exposure to different markets, exposures to different parts of the business cycle, tax consequences, etc.”

As an accomplished investor whom I respect once told me, “diversification is for people that don’t know what they’re doing.” It reduces risk, but really good investors, like Warren Buffett, buy good businesses and don’t diversify just for the sake of it. There is a lot of debate amongst professional investors about this, and both approaches have worked for those investors that are good. But to state as fact that ” Good investments should be diversified across many axes” as an everywhere and always proposition is just plain wrong.

“Also, last year the Wall Street Journal reported that most homeowners put more money into their house in taxes, maintenance and improvements, insurance, and other costs than any profit they realize when selling it, so it’s questionable how many people are even making a profit on their house when total expenses are taken into account.”

This is not an argument on whether a home is an investment, it’s only an argument on whether a home is a GOOD investment.

If your philosophy is that your home is not an investment for you, fine. But to extrapolate that philosophy to everyone else when there is a VERY strong case to be made to the contrary is not right.

Peter Nelson
“I’m an engineer (at least as long as I still have a job) so I believe in building working prototypes to investigate bugs and design flaws before scaling up to full production. With that in mind, I’d be curious to see some other successful industrial economy that functions well without a central bank, since central banks serve important functions within an economy and WRT maintaining a stable currency value OUTSIDE that economy’s borders with its trading partners. ”

Budy read your history books, look at the USA pre federal reserve. We did just fine without the fed

I’m sorry many of you feel those who are struggling are looking for a bail out. Isn’t that what’s wrong with everything now? You’re scared your neighbor stands to profit more than you. This is nuts and while I understand both sides of this, I offer the following.

We are one of those being accused of taking on an irresponsible mortgage. Yes, we bought our home 100% with an 80/20 with the 80 on a ARM because we were not given any other option.

While we did have money to put down, the lender provided no incentive to do so and we weren’t given an option for a fixed rate as our credit scores while not bad by any means, weren’t perfect. And if you didn’t have perfect credit, the only loan you could qualify for was the ARM. That’s because the lenders were making a killing off ARM loans.

Our reason for going through with it was the intent to refinance in two year, which was completely reasonable two years ago. If the economy hadn’t tanked, we would have been able to refinance. End of story.

So, here we are two years later and no one will refinance us. And we’re not asking to be bailed out. We’re simply asking for a reasonable FIXED interest rate - just like the one you have. We don’t want to redo the loan based on a devalued price either, we simply want a reasonable rate for the price we bought it at.

I would like to understand how we stand to gain more than others? We also pay enormous taxes to help those very banks that were supposed to help us all.

At the very least, not everyone in this situation was trying to make a buck. Some of us simply wanted a home - just like you.

I am a Real Estate Broker of 25 years. I know first hand that there should be NO buyout of homeowners. Many buyers stopped buying 4-6 years ago because home prices were too high due to, too low interest rates. Many buyers will not be able to buy until homes fall at least 20-30% more. Buying out homeowners who should never bought in the first place will only make things worse. The only way prices will fall,and they need to, is if the market is allowed to correct itself.

[...] you listen to nothing else this week, listen to today’s episode of On Point with Tom Ashbrook as he discusses the mortgage crisis and what we should do about [...]

PJZ is a perfect example of a speculator who bet on the appreciation of his house in two years. I don’t see any other exit strategy he had. A 100% leverage? Just a pure speculation. “End of story”

PJZ - will you explain what your losses are now since you did not invest any of YOUR money upfront in the first place? In what way are you worse off than any renter out there?

I think, if anyone should be helped it is people will real losses, i.e. you put 20% down, the house plummets in value and your income situation changes so you can no longer pay your mortgage. PJZ does not qualify.

Many of the above comments involve “should have”. Yes I agree with many but lets deal with what’s happening now. Mortage over-extension is democratic and found everywhere, so if you get defaults in your neighborhood it will effect your home value no matter how diligent you’ve been.

Here’s my idea and what I’d like to see explored by bankers, mortgage companys, and the goverment. What if a person that can no longer afford his/her loan goes to the bank and says I can’t afford $2000 a month but I can only afford $1500 on my $300k mortgage. Now the bank is obliged to lower the primary mortgage to $200K that the owner pays on now (and he/she takes a credit hit so everyone doesn’t use it as a dodge). The remaining 100K is deferred so the bank has an asset but will come due after the first loan is paid or once the equity in the home reaches some specified point (due to the cyclical nature of housing). This allows the banks to keep the asset on the books, the homeowner to stay in the home, and the goverment to avoid spending all this money. The homeowner pays in additional interest & a credit hit and the banks pay for loose & sloppy lending practices. Call it “trailing mortgage” that is paid on the back end used to counteract all of those 2nd (up front) mortgages used by many to make the initial downpayment.

I’d like to see if this could work.

Daniel Alpert is lame. The price of renting is also a market and related to the inflated housing prices. Home prices at peak were not inflated by 30%. They were inflated by far more. The median home price should be roughly 2.5 times the median income. This level will be restored eventually.

PJZ here in response. I’m story you still don’t get it. Our losses will be everything we have along with a mark on our credit score that will prevent us from ever being able to do anything ever again.

To those who saved and put 20% down, they have 20% less to pay with a low fixed interest rate on reasonable terms. We were not granted either because our credit wasn’t “perfect” and the lender knew they could make 100% interest off of us for two years.

I guess what you still don’t understand is this and maybe we are in the minority, but we are not asking for a devalued mortgage, we are asking for our interest rate not to skyrocket to unreasonable measures.

I repeat we are NOT asking for anyone to bail us out. We are simply asking for reasonable terms - and not 2% or 3% interest. Something fair and equitable to both parties, but certainly not 9% and up. And for the record, the past two years our interest has been 7.7% and 11% respectively.

Like the person who put 20% down, we also have taken a huge hit - our home has also depreciated but we’re not asking for anyone to take a hit on that. All we’re asking for is the opportunity refinance because we can pay a normal rate loan.

As for why we did this initially? Well, after seeing nothing but a healthy housing market for years and years, it was reasonable and logical to believe that in two years, we would refinance. This was not an investment or a flipping opportunity - this was a home. Plain and simple.

PJZ - you are right. I still don’t get it. Your home has depreciated, but since you have not invested almost anything into it, it is not really your home. It is bank’s home. I too want reasonable interest rate and a reasonable price for a home I would like to buy for my family. If the US government is willing to provide me with both I say let’s have it for everybody. You, me, Peter Nelson, etc. But looks like I am out of luck, while you have a shot at it. I it is a discrimination based on whether you are subprime borrower or not. It should be against the very spirit of this society.

I immigrated from Belarus and I am amazed that this topic is even discussed. You made your bet you live with the consequences. Maybe my flight took a wrong turn over the Atlantic on the way here and I ended up in Venezuela or something. Feels weird.

PJZ said: “To those who saved and put 20% down, they have 20% less to pay with a low fixed interest rate on reasonable terms. We were not granted either because our credit wasn’t “perfect” and the lender knew they could make 100% interest off of us for two years”.
response: If your credit wasn’t good enough to get a fixed 30 year loan, you should not have bought. If you knew that you could not afford the loan once it adjusted, you had no right buying.

PJZ said: “I guess what you still don’t understand is this and maybe we are in the minority, but we are not asking for a devalued mortgage, we are asking for our interest rate not to skyrocket to unreasonable measures”.
response: What you don’t seem to understand is that you signed a contract and accepted that rate and you will have to live with it. You put nothing down so you didn’t lose anything, you never owned the house, the bank did. Sell the house and let someone buy it who can qualify to buy it. I am a realtor who has been telling her clients not to buy for over 4 years. People had to be living on another planet not to see this happening back in 2003. And it amazes me how many people never learned that what goes up, must come down!

Whatever program(s) is/are adopted, we can be certain of winners and losers, and under our current system, I’m convinced the winners will consist of folk who failed 5th grade math as well as the derivatives geniuses and those who bought them….including my retirement fund.

Those of us who waited, and saved, feel furious. The something-for-nothing mindset so prevalent in our culture is killing us all…..our economy specifically.

The mantra I hear is “saving the system.” In my opinion, and I’ve been immersed in this horror show for the past 5 years, waiting, is that the system should be allowed to implode in on itself, and quickly. The second ridiculous remark is “putting a floor under housing.”

The only floor possible under housing is affordability, as in median income no less than 3X house. We not only have bloated R.E. valuations, but income for workers has not actually grown for 3 decades. Either housing still has a substantial way to fall, or wages must rise. Not tough to guess the probabilities there.

From the rubble of a collapse, perhaps we’d find the motivation to build an economy which works for all of us. Saving this system is slow suicide for working people.

Politics coming to the rescue? You must be kidding me.

Over time, housing has simply kept up with inflation. This does not mean your house is worth more over time. It means your dollar has shrunk in value so much you need a larger number of them to equate to the earlier purchasing power.

PJZ: Who in their right mind would lend you at less than 9%? You are basically asking for a bigger fool who knows nothing about risk and inflation. By asking some lender to lend you money without the incentive of getting a reasonable reward for taking a risk on you is
very unrealistic and unreasonable. There are plenty of investments out there that could net investors over 10% a year, you need to compete with those investments if you want the loan. So get in linne. Find someone stupid enough and I’d like to sell them a bridge.

You people are amazing. Most of you bought your homes at the height of the housing boom. My parents for example bought their house for 45k in the mid 70’s in a nice area of Boston. In the 90’s it sold for 850k. Those days are over.
And climbing all over PJZ who simply wants to pay a reasonable interest rate for a home is precisely the disgusting attitude that caused this problem. That you’re more qualified for the American dream than someone else is unbelievably self absorbed. Did any of you try getting a loan 2, 3, 4 years ago? Whether you had money to put down or not, 100% loans were being offered to everyone.
Look at PJ, the benevolent realtor’s, idiotic comment for example, “I am a realtor who has been telling her clients not to buy for over 4 years.”
Really? And you get paid for that advice? Or are you independently wealthy and have 3 homes that you rent to people you talked out of buying homes?
I would be surprised if some of the things you say here would be the same things without the anonymity. I don’t see PJZ asking for a handout, or for the value to be re-accessed, or to be helped. Seems to me he’s asking for a reasonable rate on the original price of the home. What he was told, by realtors and brokers and banks and economists would be a perfectly attainable goal.
Those of you claiming that you would have been made a smarter move are Monday morning quarterbacks and nothing more.
Have any of you seen salaries rise with inflation? Gas prices? Food prices? Even with a good salary the ability to save has been diminished. Take that and then be offered a chance to buy a house for slightly more than what you’re paying in rent? Why not?
20% down? Really? Alex? Banks were only asking for 5% if your credit was under 600. If you were over 600 you could get 100% financing. You got really good rates when your credit was over 750. The credit scores are so arbitrary and subject to change if you sneeze or are 2 minutes late on a payment that qualifying for a loan was next to impossible. I believe PJZ made it pretty clear that he originally had money to put down and it was inconsequential. That he was told it was a good risk. That he isn’t asking to be bailed out. That he just wants a reasonable interest rate that he will continue to pay. I don’t know the guy, but I am, and friends are, in the same situation or similar.
Being as nasty as a lot of you have (anonymously I might add) simply to feel superior attests to your character. Which is apparently defective and flawed. I’d be willing to bet you’re the same self righteous dolts that scream “unfair” to more taxes, but hide all your money in loop holes and mortgages.

As for Marc Kohler and his conspiracy posts higher up on this thread. Dude, please learn how to type or spell. Use spell check then bring it in here. You sound and look like a nut job.

I personally think reading skills are more important than writing, maybe if those borrowers such as PJZ had any , he would be able to understand the contracts they were signing.

Then they wouldn’t be in the position to sink this country into a financial meltdown, and the rest of us wouldn’t have to bail him out. We all have to bear the consequences of our actions, thats what being an adult is all about. Asking for a lower rate is being
unreasonable. If you are so understanding Why don’t you RichardL lend PJZ the money, leave the rest of us out of it.

As I read this inflating discussion, I don’t see much sign that Alpert’s original documents have been read. Certainly it has raised much finger-pointing about who doesn’t deserve help. A couple of points from Alpert’s plan:

1.) The program is voluntary for distressed owners, but mandatory for mortgage lenders. That means that each homeowner makes their own decision as to whether they’re better off in the current situation for mortgages-at-risk, or with a five-year period making payments to their lender which do not increase their equity, but which at least are based on the more favorable rental market instead of the ballooned payment size of their current mortgage.

2.) The mortgagee considering this option has clear eligibility standards to be met, above all that a.) they themselves made no material misrepresentations on the original loan application, b.) the mortgage in question is their primary residence, and c.) they are not three payments behind on the original mortgage. Following this, other eligibility requirements are based on interest rate, outstanding principle, the drop in market value of the property since the original mortgage, the mortgage payment’s % of family gross income, any extenuating circumstances. A lender’s Notice of Default and Intent to Foreclose is its own qualification (given that a.), b.) and c.) are met). This is the filter which determines which homeowners should even consider Alpert’s option.

3.) Should the mortgagee choose this option, his lender (the bank) is compelled to
follow suite. Maybe this is the heavy hand of the government on the marketplace, but consider the advantaged to the bank of this option. a.) Foreclosures (with all their attendant expenses) are an outcome that any bank would like to avoid. 2.) regular payments on the mortgage would resume and continue through the 5-year term. These payment of course would not be as profitable as those with the ballooned rates of the original mortgage (which in the qualifying cases, would be history anyway). However these new payments would be based on something solid (the local rental market) as opposed the still plummeting housing market. One thing the lenders (and anyone holding the resulting securitizations and derivatives) really need is a solid assessment behind all this paper. That’s what the financial world is waiting on.

The banks would also be acquainted with the warm fuzzy feeling of altruism, as their investment in these mortgages does a 5-year tour of duty in service to our nation’s economic recovery.

4.) When a mortgagee and a bank embark on this 5-year plan, it can result in two outcomes. Either the mortgagee will succeed in making these payments for five years (while getting their own households in fiscal order), after which they recover the deed (Right of First Offer) and the payments now go towards their equity (as a mortgage is supposed to). Or, if the mortgagee misses a payment, the arrangement is cancelled and they are out on the street (as they