Hooray - Help for Homeowners is on the way!

[SDGuy]

President Obama is unveiling a $75 billion multi-pronged plan Tuesday that seeks to help up to 9 million borrowers suffering from falling home prices and unaffordable monthly payments.

"Helping borrowers who owe more than 80% of their home's value to refinance and reduce their monthly payments."
Looks like I've gotta do a cash-out refinancing STAT. I foolishly put down 25% last September. So - all I've gotta do is cash out around 10% or so, and I should be golden.

"Creating a $75 billion homeowner stability initiative to reduce monthly payments for at-risk borrowers by subsidizing interest rates. The goal would be to bring payments to no more than 31% of a borrower's income."
That should be no problem - once I cash some more money out, my payments should skyrocket. Thankfully, I'll then get another free refinance from the government to lower my payments again. Everyone wins!

"Requiring all financial institutions receiving government funds to participate in a standardized loan modification program, while seeking to have all federal agencies that own or guarantee loans also apply the guidelines."
All right! They won't be able to say no to my FREE refinance.

"Allowing judges to modify mortgages during bankruptcy, a measure the financial industry has strongly opposed."
If all else fails, looks like I'll have a backup plan. I'd better get hopping on treating my house like an ATM if I want to start "suffering from falling home prices and unaffordable monthly payments"...

[Gutenberg]

Your state is second only to Nevada in foreclosures, SDGuy. You think that's good for your state? You think that's good for your neighborhoods? You enjoy seeing people turned out on the street? You think renters who have been keeping up with their payments should be turned out on the street because the landlord hasn't paid the mortgage? You like seeing rotting vacants in otherwise healthy neighborhoods? One out of every 173 homes in your state is in foreclosure. You think that won't affect you?

[beerman]

Unfortunately what SDGuy jokes about is somewhat of a reality. While some people are in dire need, others are simply taking advantage of the situation.

I was in Phoenix recently where the housing market has taken an extremely steep slide and foreclosures are huge. What I learned is that people are buying their dream houses at today's great prices, walking away from their old mortgage, and saying they simply don't need good credit for the next few years. It is really sad that some people take advantage of situations and let other suffer for it.

[Lux Interior]

beerman wrote:
While some people are in dire need, others are simply taking advantage of the situation.

It is really sad that some people take advantage of programs intended to help people in real need.

People will always game the system. And those that don't like it will always blow it out of proportion. That's why some think that all welfare recipients are driving Cadillacs and living in mansions.

So, do we throw the baby out with the bath water and say, "Screw all y'all!" because someone might get a help they don't deserve?

[beerman]

Lux Interior, your post is a perfect example of why this side of the forum has gone downhill over the last year. You quoted me saying that some people are in dire need and then suggest that I'm saying we should just say screw everyone. You are just trying to inflame this conversation without actually adding anything to it.

Too many of us have been calling each other names, putting words in each other mouths and hurling insults rather than discussing the issues. We lambast the politicians for being partisan and then criticize each other because of our differing party views. How does this help?

I don't know how to keep people from taking unfair advantage of the situation. I do think we should help those legitimately in need. To that end I sit on the board for my local Consumer Credit Counseling Services organization. They provide pre-bankruptcy classes as well as budgeting classes to keep people out of bankruptcy.

[Mac1337]

Gutenberg wrote:
Your state is second only to Nevada in foreclosures, SDGuy. You think that's good for your state?

As long as the government tries to price homes we will sink deeper in this hole. Deep down that is what this plan does. Foreclosure is simply selling a house at a price that someone is willing to buy. None of the foreclosed properties will remain vacant so that is a red herring. People who lived there will go on and rent someplace. They won't end up on the street somewhere. Another red herring.

In the meantime, my children can afford a house, the builders will stop building houses no one wants and we will reach an equilibrium.

[deckeda]

so beerman, what do you think was SDGuy's point? Lux's post was as much of a response to SDGuy's, who pretty much didn't express the balanced viewpoint you did.

[beerman]

I took SDGuy's post as sarcasm, that he was criticizing the way people will abuse the system. Lux directly quoted me so I took his post as a response to mine.

[JoeH]

Dakota wrote:
[quote=Gutenberg]
Your state is second only to Nevada in foreclosures, SDGuy. You think that's good for your state?

As long as the government tries to price homes we will sink deeper in this hole. Deep down that is what this plan does. Foreclosure is simply selling a house at a price that someone is willing to buy. None of the foreclosed properties will remain vacant so that is a red herring. People who lived there will go on and rent someplace. They won't end up on the street somewhere. Another red herring.

In the meantime, my children can afford a house, the builders will stop building houses no one wants and we will reach an equilibrium.
Another Dakota post from a narrow set of experience. Obviously you have not been through a foreclosure boom anything like this one. There are entire neighborhoods that in previous periods had a significant fraction of houses foreclosed on. Many did not sell for months or even years and sat vacant. I know of a number near me that during the last heavy round of foreclosures sat vacant long enough that they were vandalized into needing to be torn down instead.

Another thing can happen instead. The house actually does get a buyer. Happened to the house next to mine in the early '90's. Well, he bought it to rent out to the subsidized low income persons sent his way by the friend in social services. Most were okay, but several were not. The owner did next to nothing for repairs and upkeep of the property. By about 6-7 years ago he lost the occupancy permit for the building and he could not even put desperate renters in. It sat for several years, complete with a hole in the roof with a tarp over it, before he either fixed the minimum to get the permit back or something passed under the table. Still sitting there depressing the sell value of my and my neighbors' houses. I am certain similar examples can be found elsewhere

Actually though, your last statement is the most telling. It is the sort that comes from the mind-set of "I've got mine" and assumes everyone else is in the same state. Well they are not, and yes some are ending up on the street.

[freeradical]

The government should just nationalize all homes, apartments, condos, etc, and then dole them out to people based on their needs.

People do have needs, and it's unfair to deny them...