Hooray - Help for Homeowners is on the way!

[JoeH]

So some few have large homes, etc. and you extend that to all? The reality is not many are in that "boat", and do not have another home to move into or the equity to leave and move into a rental. Maybe you will be lucky and not have that glut of vacated homes in your area, but that does not apply to everyone else.

[kj]

All the empty homes (some subdivisions sit nearly empty) around here are large homes (3000sqft+). I would have to say a lot of them never sold at all, though. You need equity to move into a rental? I've never heard of that. kj.

[kj]

I'm having a hard time finding much that changes my opinion.

"Mr. Obama's housing plan may keep millions in their homes, but is unlikely to help the housing market stabilize, analysts warned yesterday."

"This bailout is likely to simply delay a day of reckoning for the banks, at great cost to taxpayers and little obvious benefit to homeowners," warned Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

Staving off foreclosures could actually get in the way of the market's stabilization, some economists suggested. "The mad attempt to avoid any and all foreclosures is counter-productive," said Barry Ritholtz, director of equity research at forecaster FuisonIQ. "The foreclosure process is how an overpriced market returns to normalcy ... and excess interference will only slow down the eventual return to a healthy economy."

Oops, I almost left out the inspirational counterargument:

"While this crisis is vast, it begins [with] just one house and one family at a time," Mr. Obama said in Mesa, Ariz., where he unveiled the plan.

Contrary to the "gov't must find a solution now" attitude:

"Economists do see a glimmer of hope in two trends: Homes are getting cheaper, making them more affordable to average Americans than they been in years, and secondly, the inventory of unsold homes is slowly shrinking to normal levels."

All this is from one article, but at least it's something. kj.

[JoeH]

kj wrote:
All the empty homes (some subdivisions sit nearly empty) around here are large homes (3000sqft+). I would have to say a lot of them never sold at all, though. You need equity to move into a rental? I've never heard of that. kj.

Around here it takes first month's rent, last month's, and a security deposit equal to up to a month's rent before you move in. Now if three months rent isn't "equity"/savings or whatever you want to call it, then I don't know what is. If you had that much, you could still be paying the mortgage, by the time you can't pay the mortgage, you don't have the cash up front to move into a rental. That can be quite a chunk of cash in some areas, there are 2 and 3 bedroom apartments in this area going for over $1000 a month. Nothing fancy either, that kind of place is much more.

Worst case before the housing market bubble burst, if you lost your job and knew you no longer could afford the house you were in, you could borrow against the equity to move into a rental or smaller house and then either turn the house over to the mortgage holder or sell it. Now not even that is available to those "upside down".

As for all those empty homes near you, might want to check on whether they were a development built on spec whose buyers had to back out for one reason or another in the current market. But that is only a portion of the kind of properties going on the block in foreclosure. There are also quite a few less expansive houses going empty now, or about to.

[kj]

>>>Around here it takes first month's rent, last month's, and a security deposit equal to up to a month's rent before you move in. Now if three months rent isn't "equity"/savings or whatever you want to call it, then I don't know what is.

I help people on SSd move into apartments all the time. It doesn't have to cost much.

Looking around, I see a lot of the more liberal thinkers complaining that Obama should have included more like a trillion for this whole deal, so I guess I should feel lucky. kj.

[RgrF]

beerman wrote:
Gutenberg, could you clarify your comments for me? I suspect others understood what you were saying, but I did not. thank you.

As an interesting side note I just got back from a board meeting where a lawyer was very frustrated that a portion of the bailout money will be going to speculators or to people who made incredibly bad financial decisions. He made almost the same comment that kj made, that we are essentially subsidizing someone's lifestyle. I would have to admit I agree but I don't know how any criteria could be setup to exclude those people and still accomplish the goal of keeping people in their houses that otherwise would lose them. Perhaps exclude mortgages that are not on primary residences would be a start?

Not to pick on you beerman but Consumer Credit Counseling is an extension of and supported by the credit industry. Their purpose is to keep people in the credit system even if it means a lifetime payment program.

We're swamped with incoming business. We do consumer bankruptcy. Prior to bankruptcy comes CCC in fact we use to suggest CCC before bankruptcy - we no longer do that. It's become an almost useless option in my experience.

I'd really like to layout the way your people put debtors into lifetime endless payout programs but I have neither the time nor energy. I'd like to relate how consumers come to us and confide that your counselors told them that CCC couldn't help but "don't tell anyone I said that because I'd be in trouble here."
Your program is promoted as a benefit to consumers, it's not. It's a benefit for the financial institutions who foot the bill.

In many ways it's a fraud on the public and probably needs a bit of regulation itself.

PS: If you are on the board of your local CCC and don't already know this then you are not in dereliction of duty as a board member because you are not supposed to go beyond the charter.

Have you ever read that charter?

[Gutenberg]

Thanks, Roger, now I know why beerman's being deliberately dense--he has a profit motive.

kj, if you do not know the difference between dealing with a private, commercial landlord, for whom you need to produce first and last month's rent and a security deposit in advance, and dealing with a Section 8 federal subsidy or public housing--the kinds of apartments you put people on supplemental security income, or Social Security Disability, into--then you are hopeless.

[TLB]

Suze Orman said this morning:
- More than 5% upside down, you don't qualify for aid under the plan
- Poor credit, you don't qualify
- Payment adjustment is only for five years, after that time it will begin ratcheting back to current terms

I haven't explored the plan, but maybe more of a middle ground than some folks believe?

[Gutenberg]

More of a middle ground than some people WANT to believe. We have been saying and saying and saying that the program is for people who have gotten caught in this mess through no (or very little) fault of their own, but the righties insist on shrieking about McMansions and mortgage cheats.

Obviously they haven't been paying attention to the plight of many areas of the Midwest, where housing values have been declining for a decade or so, and people who need to move for a job, or because of family, can't sell the house they currently own. Get ready, California, because this kind of deflation is coming your way. I have talked to quite a few people who are upside-down in their mortgages in Baltimore, and it is not a comfortable position at all. It will take years to work out of it.

It's ridiculous that the righties would rather see many good people on the street than risk rewarding one person who gamed the system. Absolutely dumbfounding.

[Mac1337]

TLB wrote:
Suze Orman said this morning:
- More than 5% upside down, you don't qualify for aid under the plan
- Poor credit, you don't qualify
- Payment adjustment is only for five years, after that time it will begin ratcheting back to current terms

I haven't explored the plan, but maybe more of a middle ground than some folks believe?

In short, those who really need help won't qualify. Let me add couple more. Only conforming loans qualify(for what nobody knows yet). Bye bye California. Investments homes don't qualify. Bye Bye, Phoenix and Vegas. In Phoenix there are subdivisions after subdivisions with nothing more than brand new investment properties that were never sold. How do you dry out that glut?

Then there is this clincher. The lenders are supposed to make the payments 31% of owners income. How do you do that? For some of these mortgages principle payment alone is more than 31%. You expect them to give out interest free loans? Is there money in the bail out for that?