Personal Responsibility Is For Chumps
And I'm one of them. Not living beyond my means, never getting a wild real estate loan, paying my bills (including the credit card I use like a debit card) in full every month. And I'm making out like WSJ commenter Edward G. Stafford:
"Now that those of us who have been making steady, on-time payments on our mortgages for years will be paying off others' mortgages through our taxes, can we claim a tax-deduction for our neighbors' mortgage interest too?"-- Edward G. Stafford, responding to "Dukes of Moral Hazard."
So, all the jerks get bailed out, and the rest of us get...a bigger tax bill? And a country in economic shambles? Hey, thanks!
Here's an excerpt from the editorial he's commenting on:
President Obama yesterday announced his plan to prevent home foreclosures, saying he wanted to be "very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans . . . And it will not reward folks who bought homes they knew from the beginning they would never be able to afford."We really do wish he were right. In fact, the details released yesterday suggest the President's plan will do all of the above. The plan will help some struggling homeowners. But by investing in failure, the Administration will also prolong the housing downturn and make financing a home purchase more difficult for future borrowers. Meanwhile, the plan isn't likely to slow the continuing decline in housing prices.
Let's focus on the plan's effect on the individual borrower. Anyone with mortgages owned or guaranteed by Fannie Mae and Freddie Mac will be able to refinance to lower rates if his mortgage is between 80% and 105% of the value of the home. This is a sweet deal that is not available, for example, to many renters looking to buy homes now. Sadly for those who deferred the gratification of homeownership, the 20% down payment has now become industry standard. But at least their taxes will allow other people to stay in homes they can't afford.
Existing borrowers who may not qualify for Fan/Fred refinancing can still receive loan modifications that move their mortgage payments down to 31% of monthly income. In either case, no effort will be made to verify that recipients of aid were truthful on their original mortgage applications. Given that mortgage fraud skyrocketed during the housing boom, and that the Obama Administration intends to assist up to nine million troubled borrowers, we can say with certainty that the unscrupulous will be among those rescued.
"Anyone with mortgages owned or guaranteed by Fannie Mae and Freddie Mac will be able to refinance to lower rates if his mortgage is between 80% and 105% of the value of the home."
Sweet be-jebus. Does that not describe at least 50% of home owners?
Why should I pay my mortgage? I should just stop, go into foreclosure & refinance!
Yea stimulus!
Snoop-Diggity-DANG-Dawg at February 20, 2009 5:38 AM
Not just Fannie and Freddie but banks that took bailout money will be required to make this pipedream come true as well. It all sounds good until you take a look at GIC rates and realize that the Great One will be forcing banks that are either bankrupt or on the verge of bankruptcy to make unprofitable loans.
Charles at February 20, 2009 5:48 AM
Those mother fuckers who took out these crazy loans drove up housing prices to astronomical numbers. Houses are STILL overpriced. Please, please let them come down...
NicoleK at February 20, 2009 6:11 AM
So, let me get this straight. I get to refinance my loan? Or is it only for people behind in payments? I am against all this bailout crap, but since my taxes will be hiked for it I'm damn sure going to take every penny I can get out of this, as a prepayment on my future taxes. Why let just the bums benefit?
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Pirate Jo at February 20, 2009 7:22 AM
"but since my taxes" You get a huge tax credit for children so nice try.
"refinance to lower rates if his mortgage is between 80% and 105% of the value of the home." These are mainly the poor shucks who got reasonable loans (20% down)at a bad time. The ones who go the option arms and no down loans would be more then 105% under. If your house price dropped 30% which wasn't unreasonable and you paid 20% down your mortgage would be 115%. The ones getting the crazy loans would be much deeper under water.
vlad at February 20, 2009 7:53 AM
I'd love to refinance my loan. If I moved from the 6.25 I have now to a 4.25, I'd save $200 a month.
However, since I've not been so much as a minute late on a payment for two years, that's not likely to happen.
brian at February 20, 2009 8:09 AM
We might refi ours, but not through the bailout program. (We have an FHA loan, but we didn't lie on our applications, we bought something we can afford, we make our payments, and we make significantly more money than when we bought the house in '04.) I looked into rates at my credit union, and if we refinance with them, and combine the HELOC with the mortgage, we'll be saving $200 a month. I'm kinda waiting to see if rates go down any more, though.
ahw at February 20, 2009 8:28 AM
Since when America is a culture where no-one is allowed to fail? I never saw the change...
Toubrouk at February 20, 2009 9:11 AM
"However, since I've not been so much as a minute late on a payment for two years, that's not likely to happen." Actually I get offers weekly from banks about a 4.75 percent refi. There is also some things at the local credit union we'll be looking into. If your credit is good you will be able to refinance easily.
vlad at February 20, 2009 10:06 AM
NicoleK,
So who put all that money in those MF's hands and prevented rates from rising and naturally cooling off the housing boom? Just saying ...
And of course let housing prices fall! Why is everyone so eager to screw over all those who don't have houses?
Charles at February 20, 2009 11:52 AM
There's a simple solution to the housing problem. Every single property on the market today would sell tomorrow if the owners did 1 thing.
Drop the asking price.
That's it. Housing crisis solved. Realtors go back to work, moving companies start hiring, home improvement industries come back to life as people fix up their new homes, attorneys + mortgage brokers start working again, banks start making money on new loans, etc. etc.
The Messiah can propose as many "bailouts" as he wants but until people can afford the prices of homes, they won't be buying. Although lower mortgage rates do address affordability which you'll notice are not available to anyone who is not in trouble financially in The Messiah's program. Home Prices are coming down and pretty soon if The Dear Leader doesn't fuck it up, I'll be able to afford a vacation home.
sean at February 20, 2009 2:12 PM
Charles, I don't even know who put the money in. On the one hand, I hear that the "housing for the poor" folks pushed for more money for them, on the other hand I hear, no, those folks for the most part are paying their loans, its really people who already owned their homes who refinanced. The people I know who got a crazy loan were white and upper middle class. No idea what happened to their loan. In any case Charles, I don't know whose fault it is, I'm hearing different things from different people... I don't know who to believe.
I do know Deval Patrick, as part of his platform in the MA gubernatorial race, wanted to extend easy credit, which was one reason I didn't vote for him... I was in the market to buy a condo at the time and didn't want the already astronomical Boston prices going up any further. I bought my condo. It was slightly higher than comfortable... so I cut back on luxuries so I could pay my mortgage. I no longer live in Boston, and my husband and I would like to buy a house when we figure out where we are settling (depends on where he gets tenure). Prices are still insane in the places we are looking.
And yeah, Sean, that's my whole point.Good luck on your vacation home!
NicoleK at February 20, 2009 6:50 PM
I trust you're all familiar with this video ?
Others are clearly fed up with this government sanctioned lack of responsibility of people wide and far.
One has to wonder if Obama cares how far the markets drop? Or is it his ultimate plan to let the markets completely collapse and then declare himself Czar of the Socialist State of Americastan?
Robert W. at February 20, 2009 9:58 PM
What is missing from Obama's plans for home mortgages? The same thing that is missing from all of his plans, and all of the plans of government going back through the administrations of both parties.
They announce "what" they are going to do, but not a bit of "why" or "why this and not that". We should know:
- What is the problem being solved, and for what further purpose?
- What is the basis for the rules and policy?
- What are the supporting facts and references?
- What are the estimates of cost and use, and based on what?
- How will we be better off, and compared to what?
- What other choices were considered and discarded?
- What are the legal and societal problems and their resolution.
In other words, the government should present the results of its thoughtful and detailed analysis for investigation, support, and criticism. This is the government. They have vast resources. They are supposed to be serious people affecting the lives of millions. They owe a detailed explanation of why this policy is good, and why it was the best of a range of options.
We need something, anything, to allow thoughtful criticism of important actions. And something to convince us that the plan is more than notes written on a cocktail napkin, expanded to legalese by staff.
Andrew_M_Garland at February 20, 2009 10:31 PM
Andrew, really! You want the government to explain it's reasoning and actions to us? That would be the end of the nanny-state! The very idea that voters might understand such difficult stuff!
More to the point: that would make it much more difficult to hide the fact that the reasoning includes a good dosage of paying off special interest groups and looking out for the good-ole-boys network.
The single best, most effective action the government could take is very simple: cut government spending in half. But that would reduce the power of the politicians, so it would never even occur to them as an option.
bradley13 at February 21, 2009 12:58 AM
Nicole, my condolences on your Mass. citizenship. I live here too. One thing on Obama lite Gov. Deval. Don't forget that he was being paid $350K per year to be a board member of Ameriquest before he ran for gov. Ameriquest made Countrywide look like responsible lenders. And as Governor, when Countrywide was in the process of crashing + burning he made a call to Clintonite Bob Rubin who was on the board of Citi and asked him to cut Ameriquest some slack on their debt payments to Citi. Citi does business with the state of Massachusetts and Deval made the call from his office in the state house but it was all innocent you see. Deval said so. Ameriquest was one of the worst "predatory lendors" and Deval got rich from sitting on their board but you won't hear about that in the MSM.
sean at February 21, 2009 5:06 AM
To bradley13,
I completely agree. We both see what the government should do, but much of the population doesn't.
We should call for transparency and explanation, because that is understandable to everyone. And, of course, that explanation is impossible when it attempts to cover up the hidden purposes of the legislation.
A simple lie is easy. A detailed lie is impossible.
Andrew_M_Garland at February 21, 2009 7:46 AM
I no longer live in MA, Sean, though I wish I did. Unlike you, I loved it there. I would move back in a heartbeat, but my location depends on my husband's job. So it's Philly for now, and within the next year or so it will be Baltimore or Canton Vaud, Switzerland. I'm hoping for the latter.
I don't like Deval, but I do like Boston. It's fun. And expensive. I didn't like him because of the housing thing. And also, in a confession that will make the pragmatic readers of the board roll their eyes, I had a negative gut feeling about him. I went with Mihos. I really don't care for the Dems and Reps anymore. The Dems pissed me off with FISA. The Reps are too bossy about people's personal lives, always have been, what with them shoving religion down our throats and such.
NicoleK at February 21, 2009 9:18 AM
From todays NY Post a Cato institute fellow checks in with some common sense. The column is about the housing problem not being a national crisis. It's a crisis in just 5 states, CA, FL, MI, NV, AZ:
So what's happening now? By looking at sales, you can see the free market is working very well. Sales of existing homes over the past year have soared in four states where home prices fell the most. Reducing the inventory of unsold homes, foreclosed or not, makes it easier to sell remaining homes and thereby works to arrest falling home prices. Falling home prices are not the problem, they're the solution.
...
Boosting the Obama team's selective mortgage subsidies, Mark Zandi of Moody's Economy.com recently told NBC, "either you can help your neighbor, and help them so they can stay in their home. Or don't help them, and they'll lose their home, and it will cost you money, because . . . your home will have just dropped in value." On the contrary, federal subsidies for over-indebted homeowners will not often involve helping "neighbors" but rather those who live thousands of miles away, mainly in just five states.
In reality, the "Homeowner Affordability and Stability Plan" compels taxpayers in most states to help those in just a few. Aside from Michigan's unique dependence on autos, the other four states' problems are already being solved the old-fashioned way: If something becomes too expensive, cut the price. Or move.
sean at February 21, 2009 12:53 PM
This is for the dick weeds complaining about people who bought homes in peak. Most of us owned other homes that they sold and bought into a larger home. I built mine and while i was building it property taxes doubled you can not lock your taxes during construction. I would rather the value didn't increase as much of you renters may think because it forced me out my home monthly payment increased by 650 dollars a month destroying me financially that is not an arm or teaser loan either for those with a smart remark merely the increase in value of the home applied to taxes and insurance premiums. We put our home up for sale withing first year. It was our dream home. But because of the fake market value increases we very real escrow increases plus a so called cushion imbalance that caused us to refi to save our home thus adding more principal near 15 k in closing costs. And then trying to sell the home as my money disappeared. Not everyone is a sub prime story the market itself and its ridiculous inflation caused us to lose our home which i put 38k down on. And have invested near 275k in total payments over the last five years. This is not fair for people like me. I did nothing wrong but build a home never do that buy it used. Because there are to many problems that can occur like increasing escrow that can also screw you out of your home. We had the increase in as little as 5 months from promised payment from 3,200 to 3,850 on a fixed 30 year mortgage. Principal reduction is only fair to someone like me that has incurred over 65k in banks fees trying to save my home this paper work doesn't cost the bank this much money and it is criminal to keep inflating my principal while attempting to bail me out of a mess the BANKS created not homeowners. So if you are renting lucky you and if you own a home you ain't bailing anyone out you are saving your own equity or watch homes around you short sale until your upside down too. And I own a home so quit complaining like you are paying someone else property taxes you are paying less then before from the declining value you can't fool me I got the tax statement I know. Quite your gripping and get this thing over with demand they give these principal rate reductions or you will not save your home it will carry out passed 2020 because mods will reset under the plan in five years and back to a crash you will a go. You will be trapped in your homes. Never being able to sell or move. Wake up morons this thing has grown bigger than a couple bad mortgages. Just walked from a modified payment half of what I was paying. Why? They did nothing to cut the upside down mortgage I would rather pay more a month and get a write down than live there for free and owe more. You people will never get it and I made my payments have no cc debt and own a biz that has crashed along with the housing market so know what your talking about before you make stupid its the homeowners fault bs statements. Banks greed and people that wrote loans are the true culprit. Give a monkey a banana he will eat it promise someone a home they can afford and promise of increasing value this is sub loans they will take it too. They approved these loans knowing that people couldn't afford it. My story has nothing to do with sub prime though I am a victim of greedy county taxes and insurance fraud claiming huge values on insurance that was not necessary.
john at August 31, 2009 10:46 AM
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