Government Considers Foreclosure Freeze

[Ravi]

There are very few foreclosures in my area. According to realtors I've spoken with, the banks have been modifying their terms. The banks do not want to get into the real estate biz, they just want their money. But let's face it. Many of these people will not be able to pay even if the loans are re-worked. It just seems like an exercise in futility to schedule a payment plan for someone with no income. And in that case, California Girl is absolutely correct.

It's just hysterical when people blame the banks. The banks didn't force money on anyone... the fucking government (mainly the democrats but the republicans can grab a share of the blame too) forced banks to provide mortgage to people who should never have qualified. The subprime market was instrumental in the current fuck up. For that, Barney Franks and his pals at ACORN and the SEIU et al should be held responsible. ACORN actually organized sit ins at banks who refused to provide mortgages to low income and the unemployed. Now tell me the banks were irresponsible.... it was only once it was forced upon them that they started doing business this way and making profits that it got out of hand. Everyone with even half a brain could see this coming years ago and everyone ignored it..... except a few Republicans.... including President Bush.

* Disclaimer: that does not exonerate the banks. They behaved seriously badly and those in positions of decision making should be held liable.

That's just retarded and it is impossible to now take you seriously. The banks were never forced to provide mortgages to the unemployed or to people that couldn't repay them. They made that choice themselves.

 

[Ravi]

There are very few foreclosures in my area. According to realtors I've spoken with, the banks have been modifying their terms. The banks do not want to get into the real estate biz, they just want their money. But let's face it. Many of these people will not be able to pay even if the loans are re-worked. It just seems like an exercise in futility to schedule a payment plan for someone with no income. And in that case, California Girl is absolutely correct.

It's just hysterical when people blame the banks. The banks didn't force money on anyone... the fucking government (mainly the democrats but the republicans can grab a share of the blame too) forced banks to provide mortgage to people who should never have qualified. The subprime market was instrumental in the current fuck up. For that, Barney Franks and his pals at ACORN and the SEIU et al should be held responsible. ACORN actually organized sit ins at banks who refused to provide mortgages to low income and the unemployed. Now tell me the banks were irresponsible.... it was only once it was forced upon them that they started doing business this way and making profits that it got out of hand. Everyone with even half a brain could see this coming years ago and everyone ignored it..... except a few Republicans.... including President Bush.

* Disclaimer: that does not exonerate the banks. They behaved seriously badly and those in positions of decision making should be held liable.

Yeah, Einstein.

And then there are the MILLIONS of Americans who bought their homes years ago (like the man who bulldozed his home and it was 1/2 paid for). They FULLY qualified for thier STANDARD mortgages, paid their bills for years and then for whatever reason (ie, mainly JOB LOSS IN THIS LOVELY ECONOMY), they found themselves temporarily unable to pay.

The banks grab the homes, throw the long-term owners out on the street and they don't give a fucking shit they've stolen these homes and left these people homeless. Oh, and unless you're a minority, don't go expecting any financial assistance to get into a rental property or to save your home. It ain't there. Seen it happen to several people here....SEVERAL.

Obviously, since you live "in Europe" as you do, you don't have a fucking clue what's going on over here. So just shut the fuck up you limeywannabe.

Not ALL of the people being foreclosed on are "sub-prime losers", you stupidfuck.

But you just go right on believing that. You seem to enjoy fucking fairy-tales.

I had to rep you for that, for once I almost totally agree with you.

Most homeowners have at least one employed adult but with the loss of the other's income they cannot afford to make their mortgage payments. This is hopefully a temporary problem that eventually will be rectified when business starts hiring again. Until then, renegotiating mortgages can only help overall.

 

[Ravi]

Shouldn't the penalties be assessed on those that needed bailouts? Why punish all for the few?

What about Fannie and Freddie? Shouldn't their salaries been addressed?

Could you explain how working out a payment plan for people that are in over their heads is punishing all for the few?

It's certainly not going to punish me. In fact it would indirectly benefit me. Foreclosures in my state are epic and it would be great not to see any more vacant houses in the neighborhood.

I'm not familiar with the salary question but if they are earning too much then I've no problem limiting their salaries.

I was referring to your post of what I quoted. I didn't comment on foreclosures. You railed about the banks, I asked about them and Fannie and Freddie that had so very much to do with the mess in real estate. If you don't know about that or the salaries of such, why are you de facto standing up against the many banks that acted responsibly and are being punished in ways those responsible are not?

Oh, I see. You think that bailing out the big banks didn't help the ones that didn't fuck up. You're wrong, it did.

 

[goldcatt]

I'm wondering where they're going to find the buyers for a program like this? I'm on the ground in the real estate market, and even outside the foreclosure hot spots it's not pretty right now. Real estate related businesses are going under left and right. If government is going to step in to help negiotiate short sales and try to avoid a new wave of foreclosures there have to be qualified buyers, preferably first-timers, and the banks will need to accept enough of a loss to make it affordable for those who don't already have their cardboard cutout McMansion on a postage stamp. Is it workable?

 

[Ravi]

I'm wondering where they're going to find the buyers for a program like this? I'm on the ground in the real estate market, and even outside the foreclosure hot spots it's not pretty right now. Real estate related businesses are going under left and right. If government is going to step in to help negiotiate short sales and try to avoid a new wave of foreclosures there have to be qualified buyers, preferably first-timers, and the banks will need to accept enough of a loss to make it affordable for those who don't already have their cardboard cutout McMansion on a postage stamp. Is it workable?

They aren't trying to negotiate short sales, they are trying to allow people to negotiate their mortgages to keep their homes.

 

[goldcatt]

I'm wondering where they're going to find the buyers for a program like this? I'm on the ground in the real estate market, and even outside the foreclosure hot spots it's not pretty right now. Real estate related businesses are going under left and right. If government is going to step in to help negiotiate short sales and try to avoid a new wave of foreclosures there have to be qualified buyers, preferably first-timers, and the banks will need to accept enough of a loss to make it affordable for those who don't already have their cardboard cutout McMansion on a postage stamp. Is it workable?

They aren't trying to negotiate short sales, they are trying to allow people to negotiate their mortgages to keep their homes.

If possible. But from what I've read, in at least some cases the goal is to keep them in it long enough to find a buyer. In this market, that means short sale. And my question is whether the buyers are out there, I don't see it personally. Most qualified first-timers already took the tax credit.
Let's face it, most people who are coming out of moratorium still in trouble are just headed down the same path. They couldn't afford it in the first place and they can't afford it now. That's what happens when you allow DRs of 50% or higher on an 80/20 or 80/30 with no MI. Sooner or later it comes back to bite you in the ass.

 

[Ravi]

I'm wondering where they're going to find the buyers for a program like this? I'm on the ground in the real estate market, and even outside the foreclosure hot spots it's not pretty right now. Real estate related businesses are going under left and right. If government is going to step in to help negiotiate short sales and try to avoid a new wave of foreclosures there have to be qualified buyers, preferably first-timers, and the banks will need to accept enough of a loss to make it affordable for those who don't already have their cardboard cutout McMansion on a postage stamp. Is it workable?

They aren't trying to negotiate short sales, they are trying to allow people to negotiate their mortgages to keep their homes.

If possible. But from what I've read, in at least some cases the goal is to keep them in it long enough to find a buyer. In this market, that means short sale. And my question is whether the buyers are out there, I don't see it personally. Most qualified first-timers already took the tax credit.
Let's face it, most people who are coming out of moratorium still in trouble are just headed down the same path. They couldn't afford it in the first place and they can't afford it now. That's what happens when you allow DRs of 50% or higher on an 80/20 or 80/30 with no MI. Sooner or later it comes back to bite you in the ass.

That's not what I've read. From what I understand this is to help the unemployed until they are again gainfully employed.

But I've also googled around and can find no truth to the OP so I guess we are arguing for nothing.

 

[goldcatt]

They aren't trying to negotiate short sales, they are trying to allow people to negotiate their mortgages to keep their homes.

If possible. But from what I've read, in at least some cases the goal is to keep them in it long enough to find a buyer. In this market, that means short sale. And my question is whether the buyers are out there, I don't see it personally. Most qualified first-timers already took the tax credit.
Let's face it, most people who are coming out of moratorium still in trouble are just headed down the same path. They couldn't afford it in the first place and they can't afford it now. That's what happens when you allow DRs of 50% or higher on an 80/20 or 80/30 with no MI. Sooner or later it comes back to bite you in the ass.

That's not what I've read. From what I understand this is to help the unemployed until they are again gainfully employed.

But I've also googled around and can find no truth to the OP so I guess we are arguing for nothing.

That's entirely possible. I don't think anybody really knows what they're going to do yet, including them.

 

[mudwhistle]

Instead of giving $2 Trillion to Goldman Sachs and JP Morgan and other banks, the Fed should have reduced every mortgage in the USA by that amount

Starting with mine.

 

[hvactec]

Hardly fair on those who have already lost their homes... and those who continue to pay their mortage. Damn, these people are seriously stupid.

I Agree 100 Percent

 

[JenyEliza]

Hardly fair on those who have already lost their homes... and those who continue to pay their mortage. Damn, these people are seriously stupid.

I Agree 100 Percent

I fully expect lawsuits from those who've already lost their homes. If a bank had already taken your home, wouldn't you sue? If not to recover the home, to recover some or all of your equity? I would.

Bam-bam could have (and should have) acted sooner if he was gonna do this at all.

Lenders beware: A rash of lawsuits to have homes returned could be the unintended result of this latest initiative of Obammy's.

The law of unintended consequences usually comes into play at some point.

 

[eagleseven]

I don't see it, maybe I'm just misunderstanding you. The worth of the mortgages currently for people that are being foreclosed on is zero.

Yes, but they are not the ones bearing the risk...the banks carry the risk. A foreclosed home is worth precisely what the bank can auction it off for.

If banks are not legally allowed to foreclose homes, the risk of giving out mortgages, and the risk of buying mortgage-backed securities, increases dramatically. Since there is no way to foreclose on defaulting debtors, there is serious risk of never recouping the value of the loan.

In our information-age economy, this risk is allotted and priced via hedging...and so the government is effectively setting an artificially high minimum price on mortgage-backed securities (which are still seriously volatile).

Any student of microeconomics can tell you how severely de-facto price controls damage the economy. The government, in order to "protect" homeowners, would be setting us up for ANOTHER 2008-esque crash. Further, this will seriously reduce banks' ability to issue mortgages, which will send our already-battered real estate market into a tailspin.

These hidden dynamics are what wreck economies, but they are not readily visible to policymakers and voters.

 

[The Rabbi]

Mortgages are priced on risk, the risk the borrower will default and the risk the bank cannot get its money back if he does. I worked in that business for 9years.
If you stop foreclosures then you increase the cost of those mortgages dramatically as the bank will never get its money back.
How willing will they be in the future to make mortgages knowing they may never get their money back?
The gov't ought to keep its cottonpicking fingers out of this mess and let the banks foreclose or forebear or whatever they think is in their interest. The market will set a price for the foreclosed homes. People bargain hunting will buy them and the market will clear the excess.
But that is too logical and market oriented for this administration.

 

[Ravi]

I don't see it, maybe I'm just misunderstanding you. The worth of the mortgages currently for people that are being foreclosed on is zero.

Yes, but they are not the ones bearing the risk...the banks carry the risk. A foreclosed home is worth precisely what the bank can auction it off for.

If banks are not legally allowed to foreclose homes, the risk of giving out mortgages, and the risk of buying mortgage-backed securities, increases dramatically. Since there is no way to foreclose on defaulting debtors, there is serious risk of never recouping the value of the loan.

In our information-age economy, this risk is allotted and priced via hedging...and so the government is effectively setting an artificially high minimum price on mortgage-backed securities (which are still seriously volatile).

Any student of microeconomics can tell you how severely de-facto price controls damage the economy. The government, in order to "protect" homeowners, would be setting us up for ANOTHER 2008-esque crash. Further, this will seriously reduce banks' ability to issue mortgages, which will send our already-battered real estate market into a tailspin.

These hidden dynamics are what wreck economies, but they are not readily visible to policymakers and voters.

This may all be true. However, from what I understand this mythological putting an end to forclosures is temporary and specific to homeowners that have a hope of becoming gainfully employed in the near future...and not to the unemployed or people that have no hope of repaying their loans.

The law of unintended consequences...the banks happily loaned and loaned and loaned to people money that the banks couldn't reasonably expect to get back. Why? Because they split the mortgages up into little pieces and sold them to investors. They gambled with the money and they willingly took that risk...and now they are paying the consequences.

 

[RetiredGySgt]

The White House is considering changes to its mortgage modification plan that could include a freeze on home foreclosures, sources tell FOX Business.

According to industry officials who have been briefed on the plan, the administration is considering changes that would require home-loan servicing companies to push delinquent borrowers into the Home Affordable Modification Program before they consider foreclosure.

Lenders, investors and mortgage-service companies would be prevented from foreclosing on a homeowner while a home buyer is solicited, responds and eventually goes through a trial period under HEMP.

Analysts tell FOX Business that the possible changes, if adopted, effectively prevent virtually all foreclosure action in the country for an extended period.

Government Considers Foreclosure Freeze - FOXBusiness.com

Good idea?

The Federal Government has no authority to stop Banks from foreclosing. Those are PRIVATE business contracts over which the Federal Government has no authority to interfere with.

Any one that supports this illegal action does not understand how our government works or its limits. They advocate the loss of Constitutional protections and our eventual freedom.

 

[The Rabbi]

I don't see it, maybe I'm just misunderstanding you. The worth of the mortgages currently for people that are being foreclosed on is zero.

Yes, but they are not the ones bearing the risk...the banks carry the risk. A foreclosed home is worth precisely what the bank can auction it off for.

If banks are not legally allowed to foreclose homes, the risk of giving out mortgages, and the risk of buying mortgage-backed securities, increases dramatically. Since there is no way to foreclose on defaulting debtors, there is serious risk of never recouping the value of the loan.

In our information-age economy, this risk is allotted and priced via hedging...and so the government is effectively setting an artificially high minimum price on mortgage-backed securities (which are still seriously volatile).

Any student of microeconomics can tell you how severely de-facto price controls damage the economy. The government, in order to "protect" homeowners, would be setting us up for ANOTHER 2008-esque crash. Further, this will seriously reduce banks' ability to issue mortgages, which will send our already-battered real estate market into a tailspin.

These hidden dynamics are what wreck economies, but they are not readily visible to policymakers and voters.

This may all be true. However, from what I understand this mythological putting an end to forclosures is temporary and specific to homeowners that have a hope of becoming gainfully employed in the near future...and not to the unemployed or people that have no hope of repaying their loans.

The law of unintended consequences...the banks happily loaned and loaned and loaned to people money that the banks couldn't reasonably expect to get back. Why? Because they split the mortgages up into little pieces and sold them to investors. They gambled with the money and they willingly took that risk...and now they are paying the consequences.

It odesn't matter. If the banks thought they could get money out of the borrowers, they would forebear on their own. They wouldn't need the gov't telling them not to foreclose.
But every day the homeowner is occupying the property and not paying they are losing money. Those houses deteriorate and obviously homeowners don't have the money to make repairs.
Your second paragraph makes no sense. If banks off loaded the risks to others than why are they paying the consequences now? Others would be the ones bearing the risks.
But clearly when they made the loan they expected to be repaid, either by the borrower or by selling the property and covering their loan.

 

[Neubarth]

The solution is to create jobs, not force more and more small banks into bankruptcy.

 

[mudwhistle]

It's the banks fault to a large extent that we are in this mess...and since WE bailed them out, WE have the responsibility to regulate them if need be.

Or we can watch people bulldoze their homes and commit suicide and riot on the street.

You want Borg Banks.

Resistance is futile.

Obama tells them to just give loans to anyone...forget whether or not they qualify.

They ignored him of course....so now he wants to freeze foreclosures causing a shock to the banking industry.

Maybe he needs another crisis to help the Democrats in November. It helped get him elected.

 

[eagleseven]

This may all be true. However, from what I understand this mythological putting an end to forclosures is temporary and specific to homeowners that have a hope of becoming gainfully employed in the near future...and not to the unemployed or people that have no hope of repaying their loans.

Banks already do this...if you have a good credit history, and prospects, the banks are much more willing to re-negotiate the terms of your mortgage so you can pay. Remember, it is in the bank's best interest to avoid foreclosures, because foreclosed homes are almost always a net loss for the bank (mortgage >> auction price).

This is why buying foreclosed homes is such a steal.

The law of unintended consequences...the banks happily loaned and loaned and loaned to people money that the banks couldn't reasonably expect to get back. Why? Because they split the mortgages up into little pieces and sold them to investors. They gambled with the money and they willingly took that risk...and now they are paying the consequences.

Who started this policy? The Federal Government, of course! The government, through Fannie Mae and Freddie Mac, sought to expand home ownership by making mortgages easily available...both Clinton and Bush supported this policy. Thus, Fannie and Freddie began purchasing sub-prime mortgage backed securities at below-market rates.

This is why Fannie Mae was the first major institution to collapse in 2008.


The government can never leave well enough alone.

 

[Ravi]

It was stupid to push people by telling them homeownership is the American dream.

However, the banks are the ones that lent to people without checking or caring about their ability to repay the loans.