Thoughts on the Latest Mortgage Bailout Plan

This comment left by Alan Chen on the Wall Street Journal article about Obama’s Mortgage Bailout Plan, hits the nail on the head (except for the last sentence):

This is absolutely disgusting. $275 billion to 5 million people who took a risk recklessly and purchased homes they could not afford? They’re simply GIVING away $55,000 tax free per person. As Robert points out, that’s equivalent to what a normal person would get after working to earn almost twice that to net $55K. At least the bail outs to wall street are LOANS.

This is definitely a slippery and dangerous road we are going down. Keep at it and soon the US will look like France, where people are lazy and feel they have a god-given right to everything that everyone else considers an earned privilege.

The housing market needs to readjust, and the government seems to be doing everything it can to prevent that. It is not a right to own a home, it’s an earned privilege. There is nothing wrong with renting while you save up to buy a home. The government really needs to get rid of the interest expense deductions on mortgage payments… it gives too much incentive to buy homes irresponsibly.

Selfishly, I like the mortgage interest deduction. It didn’t inspire my wife and I to buy more house than we could afford. You still have to use your brains…regardless of the tax breaks.

This particular part of the article bugs me:

…the government plans to spend $75 billion to encourage lenders to modify loan terms for people at risk of foreclosure or already in foeclosure proceedings. Lenders and the government would jointly lower monthly payments to 31% of homeowners’ income.

We must live in a fairy land. The very idea of repricing an asset and the underlying liability to within a person’s budget is crazy. It makes me sick to my stomach. Aren’t these repricings going to lower home prices too?

I wish a politician would stand up and say, “I feel sorry for those of you who are about to lose your homes but we have to realize that you made a choice when you purchased your home. One of the blessings of living in America is that we are free to make choices. Unfortunately, we cannot keep you from making bad choices. If you are a homeowner facing foreclosure, move out, rent an apartment, and make better choices to get back on your feet.”

33 thoughts on “Thoughts on the Latest Mortgage Bailout Plan”

  1. In regards to lowering payments for people to 31% of their income: I was under the impression that the primary means the government was using was to stretch out the length of the mortgage (say, from a 30 year to a 40 or 50 year mortgage), allowing the prices to remain higher than their current market prices. I didn’t see anything in the WSJ article to contradict this (or any details about how the modifications would occur), so I’m not sure how exactly the payments would be ‘jointly lowered’.

    Additionally, if you’re concerned about lowering home values, you’re probably better off with bank-backed home repricing than with foreclosure and resale of the property. Let’s say we have a consumer who took out a 200k mortgage on a home that’s now only worth 150k, and who is looking at a foreclosure (maybe his adjustable mortgage rate has gone up, maybe his income has gone down, who knows). If the bank can make arrangements to adjust the mortgage to 160k, they’ll benefit by getting more of their money returned than if they had to foreclose and reissue a mortgage at 150k. (It would also save the bank the expense of foreclosure and the possible added decline in value if multiple properties go into foreclosure in the same area.) There are even suggestions from some, like Jim Cramer, that the banks who agree to this arrangement should be given a type of promissory note, to be paid back with the proceeds of the sale of the house, meaning they wouldn’t even have to eat the value of the mortgage write off.

    The bankers win, by not losing money on bad mortgage loans that they never should have made. The homeowners win, by being able to stay in their homes, even if they couldn’t realistically afford those homes. Their neighbors win, by keeping at least some of the greatly increased value of their own homes, and not having to deal with the fall out of a foreclosed, significantly less expensive house next door.

    Lastly, the government wins, by keeping all the above groups (otherwise known as voters) happy, and not having to worry about being voted out of office next election. And that, unfortunately, is why you can’t expect to see any politician stand up and say, ‘Sorry about the choices you made, but they’re YOUR decisions, and you have to pay for them’; doing so is asking for a one way ticket out of office.

  2. JLP,

    I fully agree with your comment…

    “I feel sorry for those of you who are about to lose your homes but we have to realize that you made a choice when you purchased your home. One of the blessings of living in America is that we are free to make choices. Unfortunately, we cannot keep you from making bad choices. If you are a homeowner facing foreclosure, move out, rent an apartment, and make better choices to get back on your feet.”

    If only the rest of the country thought this way!!!

  3. Obama is colossally overestimating the public’s support for this. I think that just about the only people in favor of spending taxpayer money to bail out those who can’t pay their mortgages are the ones who hope to recieve the money.

  4. Further proof that renting for the past 6 years has made me look like an idiot. Clearly I should’ve gone out in the inflated market and bought a house I couldn’t afford! Then I’d be getting freebies from the government… now I get to continue renting for the foreseeable future because houses are still significantly overvalued.

  5. i was reading the newspaper last night and it finally dawned on me…

    It brought a tear to my eye…As I stared at my 3 year old little boy, it finally dawned on me that I have lost complete faith in my country. I fear for his future. The magnitude of corruption, greed, and incompetance this country has put on display over the past 10-15 years is heartbreaking.

  6. i agree. thus far the new policy seems to be: bankers start lending, it doesn’t matter to who, just lend because that is what we gave you the money for; and, mortgages companies start lending again at rates and prices that people can afford even though they can’t afford the house to begin with.

    sounds like how we got into the mess in the first place. i’ve been saying we are rewarding bad behavior, and punishing success. the cnbc host Rick Santelli is absolutely right.

  7. This country has lost all sight of what made America what it was. Freedom and personal responsibility go hand in hand.

    “Oh, say does that star-spangled banner yet wave
    O’er the land of the free and the home of the brave?”

  8. Did you see on ABC News last night the family in Pheonix who lost their house of 18 years? You can’t tell me they would have lost their house unless they did a cash out refinance (probably more than once) during the peak and blew all that money on useless stuff. Unfortunately we have become a culture where personal accountability has no meaning. When are we going to bail out my 401(k)? I thought stocks always went up just like real estate.

  9. It’s scary how much we’re switching to a “no consequences” mentality. You buy too much house and can’t afford it? Don’t worry, there aren’t any consequences – we’ll just bail you out!

    Whatever happened to personal responsibility?

  10. The Obama administration is just now starting to make the case that the plan benefits ALL homeowners: 90% of mortgage-holders who are current, 10% facing foreclosure, and those who own homes free and clear.

    The thinking is, the responsible ones are protected from the drop in value they would face from having 10% of houses on their street go into foreclosure. These foreclosures only hurt them on paper until/unless they need to sell their house, of course, but many responsible homeowners choose or need to sell their homes, and might not be able to wait for prices to rebound. As a bonus, 10% of people who might have to move get to stay in their homes.

    I do think this message has gotten lost in the general bailout hoopla. Republicans are seeing this as another handout to the irresponsible (subprime mortgages are this decade’s crack babies!), and Democrats seem just to have their hands out because they can, not because it’s (potentially) wise public policy.

  11. I AM an American homeowner who bought a house she could afford. And yes, I am pissed. In 2007 we had to move OUT OF STATE, at a significant *personal* cost (not financial, but family-related) because the prices in Los Angeles got so high that after more than a year and a half of looking, we could not find a house that we could afford to “move up” to after having two more kids. (I had bought a tiny, tiny bungalow on a postage stamp sized lot when I was single — 900 sf was fine when it was just me, but impossible once we were a family of 5–and the lot was so small there was no way to add on.) I guess I should have just gotten a liar’s loan!

  12. “When are we going to bail out my 401(k)? I thought stocks always went up just like real estate.”
    We need TSRP – toxic stock relief program. The government will buy all of our stocks at the price of last year. The stocks will immediately go up and the economy will recover…

    I am on the fence about it. I own my home outright and I don’t really care about its loss in value. But then I live in lower NY state and we aren’t affected as much yet as everyone. I am not sure how I’d have felt if there had been multiple foreclosures in my townhouse condo complex. Not only this would be bad for the neighborhood, but several owners not paying common charges until the property is sold could have easily resulted in a significant increase in common charges for other owners. With all the talk about how foreclosures affect neighborhoods, not much is said about the effect on condos and how owners’ defaulting on common charges increases expenses of their responsible neighbors.

    I don’t really want to pay higher common charges, and I imagine neither do condo owners in places where there are a lot of foreclosures. So if this bill indeed prevents foreclosures, it help responsible people as well.

    I haven’t had time to read the details of the bill, so I don’t know if it really can reduce the number of foreclosures, if it’ll reduce or increase bank losses. I just wonder if the cost of just letting houses foreclose may be higher than this bill.

  13. While politicians like to blame “Wall St.” for this mess or the Republican’s lack of regulation, it’s regulation that got us in this mess in the first place. Take away the interest deduction (yes, it would be painful), and pretend that Greenspan monetary policy didn’t lower interest rates to historic lows, and the housing bubble never would have happened.

  14. FAIR tax! FAIR tax! FAIR tax!

    We need to overhaul our tax system so people that spend the money pay for the benefits they receive. We wouldn’t be having this discussion about deductions since there wouldn’t be any.

  15. I recently purchased a home. I was able to do it the smart way, by putting down 20%. I should of bought a home I couldn’t afford, then lower my payments to 31%….

    Recessions are supposed to be a time where we clean some excess waste. However, were keeping all these people who don’t help our economy in the game. For the long term, I don’t see how this is good.

  16. Jimmy — Balack? Seriously? And the Fair Tax proposal is flawed… read up on it.

    Anyways —
    I am surprised at how many of you out there completely blame the victim. Did some people knowingly go into this situation? Surely.

    But how many people were fooled into this by the lenders?
    Lender: “Yeah, we will just say you make $65,000/year instead of $50,000… its industry standard! You do expect to get a promotion or a raise in the next five years, right?!?”
    First-time Home Buyer: “Yeah, I suppose!”
    Lender: “So that means you can get a $xxx,xxx house. We also have another kind of loan that is pretty popular for its ability to help homebuyers get more bang for their buck…”

    etc etc
    Blame the victim all you want as it is our responsibility to educate ourselves but this problem is very two-sided…

    For those of you who don’t want a mortgage restructuring bill, what is your proposal? It is pretty clear, based on most economists predictions, that doing nothing will exasperate the problem. Genuinely interested in your responses! Thanks

  17. The banks recourse for non payment on a mortgage has always been to take back the security on the note through foreclosure. It seems as if government is making it harder and harder for them to do this. How is this going to help the future availability of mortgages?


    A Modern day “Boston Tea Party”, Americans all over America are pissed and we are not going to take our government’s bad policies and back room decision making anymore. Here is the American publics’ response to government use of taxpayer dollars.

    We, the People ask that you act swiftly and without haste, prosecute, all who aided, abetted and prospered in our current economic collapse; to restore the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity–do ordain and re-establish the rules of our Constitution for the United States of America.

    We, the people are formally requesting legal actions be taken to restore public trust in banking and government.” Otherwise, Democracy is government by the lowest common denominator. OR TELL ME–How do I renounce my citizenship and stay here as an illegal alien? That way I can skip out on paying taxes and still enjoy what’s left of a life I once lead. Bank Behavior + Economic Crisis = TREASON. Your right hand is in one of my pockets taking my tax dollars to bail out this industry’s gambling addiction, while your left hand is in my other pocket aiding bankers to rip me off with ridiculous credit card interest rates.

    The wizards of Government and Wall Street, through their greed and corrupt practices, have given us the people very few options: risk destitution, foreclosure and bankruptcy or save. We’ve chosen to save. To save, save, save ourselves. This is what the internet is all about!

    Put seventy five million and growing, pissed off people with computers at work, and stand back! Our public policies are influenced and our constitution useless, unless, government takes the appropriate legal actions against corporate criminals ordering payment of full monetary restitution from those who willing caused our economic demise–SEIZE THEIR ASSETS… America needs a renaissance. Regular Americans need a psychological boost in aiding in America’s recovery. Urging us to spend our money on junk produced in other countries will not work. Investing in our ability to be productive, and, to introduce new ideas and concepts to the world, would be. Here are our voices…

    1. Once again, this entire argument can be cleared up by asking the question; “which is more important; people or profit?”
    2. The government took away our leverage to negotiate with the banks, and failed to stop them from charging ridiculous interest rates by bailing them out. Some people are paying 30% interest on a credit card balance. On the street that’s called loan sharking and extortion, however, if you get an office, and if you are a banker its business as usual.
    3. The banking industry increases rates every time they receive news of government subsidy which furthers their corrupt practices and greed with no government intervention. Today’s interest rates are not low compared to the high risk new buyers would have to take while home buying in an uncertain market.
    4. The mortgage interest rates are front and back loaded with points, origination fees and high closing costs. Banking should be better regulated or nationalized since they are utilizing taxpayer money.
    5. People should be rioting in the streets over this. What happened to government for the people?
    6. Banks are crooked – they took money and immediately raised interest rates so they could make more profits.
    7. They Government & Wall Street have their right hand in one of our pockets taking our tax dollars to bail out this industry’s gambling addiction, while their left hand is in our other pocket ripping us off with ridiculous credit card interest rates. And their lecturing us about responsibility?
    8. Let Citi-Bank and Bank of America fail – enough government bailout – this is not free or fair market capitalism. Its welfare and it is robbery of public wealth, with nothing being returned to the public except more debt payable to China and the Saudis.
    9. They should have been allowed to fail, and be shown the same mercy that they show homeowners and credit card holders.
    10. We need to all admit that Capitalism FAILED! The credit score system is crooked and is also at the core of the problem.
    11. If everyone stopped paying everything, the system would also fail and the industry would be forced to be revamped. Many people are now considering NOT paying their mortgages, quitting their jobs, to get their “entitlement” of the bailout.
    12. The problem is the people attempting to correct our problems are wealthy men related to the stock market and banking. They know of no other way to deal with a system failure. We need some people off the street, working people, people from factories and construction workers that understand the masses and what they are going through.
    13. Americans Perhaps we are looking at this the wrong way. Instead of treating us like bankers, perhaps we should be treating bankers like the rest of us. Let’s see…no money, no job, no credit, and for some, no home. Not people, just accounting entries and dollars.
    14. With More pacification talk from the Ivy League geniuses who did not see the demise of their own industry coming. Enough of these overpaid, self important, corporate welfare recipients. Harvard and Yale have produced some most ethically bankrupt Americans.
    15. Give the large amounts given to the banks etc., to the American people and they will start spending it and our economy will respond. America needs a renaissance. Regular Americans need a psychological boost in aiding in America’s recovery. Urging us to spend on cheap junk produced in other countries is not it. Investing in our ability to be creative and to introduce new ideas and concepts to the world would.
    16. The lending organizations that made the loans and mortgages to people– that they should have known would not be able to pay it back, make them eat the loans. Bring the credit card interest rates down to 3 or 4 % where they should be.
    17. The movement of funds in America is generated from Wall Street—stocks, banking–insurance interests– to politicians, and then to influence public policy. Chains you can believe in.
    18. Con-artistry and taking full advantage of the ignorance and inabilities of others is an American tradition.
    19. They will say whatever to continue to fraud. None of these people CARE about anything except money. Our government has little or no clue what most heads of financial companies do nor do they have the guts to do anything about it when it is fraud.
    20. From the top of our government down, is out of touch with the lifestyle of the middle class. They allowed lenders to shove these bad loans through as fast as they could get signatures. There need to begin to putting some of them in jail. Appraisers, real estate agents, real estate brokers, lenders of all types, and investment bankers make up the group who stole from people by selling them a dream fronted with lies.
    21. Social change never happens until the “bellybutton touches the backbone” and so it goes and so it will be with this nation. Those who are caught between the con-artists and the laws which are designed to protect them sooner or later rebel through violence and many other kinds of civil unrest which, of course, is resisted by those who can afford to use force to quell the unrest.
    22. Americans in general are far too ignorant and far too cowardly to ever rebel legally or otherwise until, now through financial revolution.
    23. Bank Behavior + Economic Crisis = TREASON (1. the offense of acting to overthrow one’s government or to harm or kill its sovereign. 2. a violation of allegiance to one’s sovereign or to one’s state. 3. the betrayal of a trust or confidence; breach of faith; treachery). And, banks are still engaging in treasonous behavior by raising interest rates on credit cards, mortgages, cars, etc. during the economic crisis they created. Government stop giving them power by giving them our money to use.
    24. The US government and the banks have been in bed together all along. They are interdependent. It’s a symbiotic relationship. When the banks fail, the government fails. If you are a politician, you don’t want the big banks to fail because this debt ridden country will fail. It’s the house of cards we all support through consumerism. Stop buying for you are sealing your own financial coffin and giving them license to abuse us.
    25. Proof $45 million in government money to retrain investment bankers, traders and others who have lost jobs on Wall Street, as well as provide seed capital and office space, for, new businesses those laid-off bankers might create.
    26. Perhaps we are looking at this the wrong way. Instead of treating us like bankers, perhaps we should be treating bankers like the rest of us. Let’s see…no money, no job, no credit, and soon, no home.
    27. Is this a surprise to anyone? Our private banking cartel isn’t finished bankrupting the middle class and system yet. And, the poor–just keep pushing them down until they become homeless and die on our streets. We only need two classes in America anyway as far as the American politicians are concerned…they are a drain on our system unless they are foreign born poor—then, they are entitled to a good life, liberty and the pursuit of happiness, at American taxpayers’ expense.
    28. Notice how there was no problem AND government intervention until the rich started to be threatened. Once that happened we started seeing phrases like “TOO BIG TO FAIL”.
    29. Flawed thinking has been on full display in the way we have approached the foreclosure crisis — particularly the notion that we can postpone dealing with the crisis while we focus our attention (and hundreds of billions of dollars) on saving Citi, JP Morgan Chase, Bank of America and Wells Fargo.
    30. The public interest — people being able to keep their houses — is not aligned with the banks’ interest. Banks don’t want to adjust nonperforming mortgages down to their actual current value because it would lead to marking down the value of the massive asset pools they have rolled the mortgages into.
    31. With banks being essential for the economy to function, the government is allocating a lot of money to protect them from collapse. The recession was caused by – treasonous greedy bankers–let’s call it as it is – pyramid scheme lending sprees, which are affecting everybody.
    32. The biggest losers are the American people, democracy and the American way of life. We were made promises to win elections. All awhile your bills are mounting up, your mortgage is upside down and you have no savings. Living in a shelter, credit in the toilet and flat screen TV in a pawn shop or on the curb. But your President urges you to buy more junk.
    33. To refinance your mortgage you would need a job, closing costs and financial closing fee money unless you are 5% upside down. If you are more than 5% upside down, barely making the mortgage now where do you get the money needed? Stick up the banker who first ripped you off?
    34. We are disgusted, sad, disappointed, and flat out insulted by what we are hearing and reading about all these bailouts except ours. If our president wanted us to be able to refinance our mortgages he should have sent us, out, a bailout check to be able to do so.
    35. It’s about time, our voices are heard because we are sick and tired of all this. Although, I’m happy some of the money will be helping some of us now. There is a saying, too little too late.
    36. Here is another thought about Obama”s mortgage bailout plan. It is so small, and helps so few people; it isn’t really a bail out at all. Those who do qualify will have to run a gauntlet of qualifications and paperwork
    37. Current Available Economic Fixes: No. 1: Increase the capital gains and dividends taxes for higher-income taxpayers, No. 2: Eliminate all oil and gas tax loopholes, No. 3: Eliminate capital gains taxes for small businesses and start-ups, 4: Expand the earned income tax credit, No. 5: Require publicly traded financial partnerships to pay corporate income tax, No. 6: Close loopholes in the corporate tax deductibility of CEO pay, No. 7: Create a retirement savings tax credit for low incomes, No. 8: End income tax for seniors making less than $50,000. No. 9: Repeal the Bush tax cuts for higher incomes. No. 10: Phase out exemptions and deductions for higher earners. No. 11: Make the top players complicit in the economic demise of America, liquidate, their assets as repayment to bring down the deficit. These would have made more sense to be economic stimulus and to help bring down national debt.
    38. We were promised transparency but both houses of congress were asked to vote on the largest economic bill in history, without, us, the people, having a chance to read or respond to what’s in the final version. The reason there was nothing in it for us. We would have been outraged if we had seen it before signed. The bait and switch. Promises of relief, but reality it is about keeping the system that is abusing ordinary Americans alive.
    39. Recent data showing just how sharply growth in the U.S. and elsewhere has declined in the final months of 2008 have cast a deepening shadow over 2009.
    40. Increases in shelters are being reported across the country.
    41. Homelessness: Is now the Family Portrait.
    42. JOBS: White collar jobs have been replaced by blue collar ones for American workers. Stimulus jobs are government, construction and teacher’s union, you are on your own. We were promised 4 million new jobs but now that might be all in “saved” jobs.
    44. Americans check construction job sites and put pressure on any employing illegal aliens or undocumented (NON TAXPAYING) immigrants. YOU PAY NO TAXES YOU GET NO RIGHTS!
    46. Remember to vote all incumbents out EVERY election cycle—to reshuffle the deck, whoever, they are, and, whatever party. Don’t let this go unchecked. Our government (system) is the problem. We must crash the system for our own country’s future survival and for benefit of the taxpaying people.
    47. There is something disturbing about media suggestion of unquestioned allegiance to consumerism and government backed bullsh*t, its cult like.
    48. SO WE THE CITIZENS HAVE STARTED A FINANCIAL REVOLUTION, and decided to stop patronizing corporations and save our money, to collapse the system of the elite! More power to us! Keep on fighting people, for it is working.
    49. We have reduced our spending (to only what we NEED, not what we want) because we NEED our own money more than traitorous US corporations WANT it. We have no loyalty to corporate America because they have no loyalty to us or our fellow citizens. Guess what …
    50. Consumers have cut back sharply on food spending, shunning restaurants, opting for generic products over brand names, trading in lattes for home-brewed coffee and shopping for bargains. “Congress has done a great job of killing the ECONOMY AND PROTECTING CORPORATE businesses”.
    51. Things Are In Our Favor: Retail Sales… Don’t Start a Recovery. The buck stops here and now with us.
    52. U.S. household wealth appeared to have plummeted in 2008 in the face of falling values for stocks and homes.
    53. The government is responsible for the root cause of this mess. It drove up consumerism and promoted the financial industry—and distorted mortgage risk on a national scale. Private corporations simply DO NOT work for public good. They look for maximum profits at any costs. These same government-corporate partnerships subverted our republic and brought us TARP the biggest give-the-rich a party legislation in history. It was Wall Street companies who conceived an economy built on debt, along, with public policy and enlisted an army of felons, tax evaders, liars, cheaters, imposters, extortionist, and smooth talkers. With the economy slaughtered they lobbied government into cooperation, to act as mortgage brokers making them complicit in using our money and passing the bad debt onto taxpayers.
    54. What doesn’t work capitalism? It promotes radical inequality, worship of greed and money, preying on the ignorant masses that just buy into the agenda of the wealthy elite, and encourages monopolies that pose as competitive enterprises.
    55. The average guy has woken to the fact that the last round of raises, the ruling elite gave itself – it did so, on the average guy’s back. Outsourcing jobs to foreign workers—encouraging the jobs being offered to foreign workers as being low paying jobs. Sure tech support and customer service jobs are low paying to the elite. Have you called your bank for customer service or for tech support for a consumer product lately to reach India whose middle class has grown as a result of these low paying jobs? Your president is a liar.
    56. Reducing our medical benefits, freezing and curtailing pension plans. Obstructing unemployment benefits. Massive layoffs and stealth wage reductions through the increased use of part-timing. And, lending for everything: payday, credit cards, medical & dental care, cars, houses – and college education – at usurious rates.
    57. The average guy is not outraged because Tom Daschle made five million dollars. He’s outraged because the money came by the increasing of his co-payments, reducing his flexibility in selecting doctors, raising his credit card interest rates, denying his legitimate medical claims, fazing out his job or outsourcing to cheaper labor, and of inflating his home value and charging him three times what it worth as a loan with interest; over taxing, then giving tax credits, cuts and rebates as false pacification.
    58. Changing presidents or congressional members doesn’t change the lives of average Americans. True change can only come from the American people through what we choose to support or not support. Three quarters of the American GDP is based on consumerism. American people buying things. Stop buying and you will see the change we are seeking. The banks got billions and the American people got $13 a week. Throw up your middle finger at government by stopping consumerism. Purchase only the things you need.
    59. Americans, we are nowhere near angry enough, time to up the ante. We have to continue organizing protests. Get together our masses–of the newly unemployed, students, and those concerned who may have never been given a chance as productive citizens; get together to protest on Wall Street, in front of the White House, and on the National Mall. On Capital Hill, at our Congress member’s district offices, and in front of all the corporations that received taxpayer money.
    60. Only, when we take our emotion, energy, and organization to the streets, in a non-violent manner will our politicians get the message. They won’t be able to get to work because they will have to get through us first, therefore, we cannot be ignored. They will see the same people on the way in, as they will see on the way out. Every election give them their pink slips by voting them out.
    61. Remember during the protest period, to continue to save your money. Do not spend it! If you must spend it; spend it very wisely.
    62. Many Americans are angry about how cavalier those in Washington appear to be about their own sense of entitlement and their total obliviousness to the plight of many of us who used to feel secure about calling ourselves middle class and American citizens.
    63. Americans, we cannot simply under react. Keep speaking out in OUTRAGE.
    64. The Great American Con-Job is government and corporate businesses. Citizens we are being rolled by our own government.
    65. Whoever is in office be it Democrat or Republican makes no different. American government is about keeping the system going. The system is for the elite; corporate America, our elected officials and keeping capitalism alive. The masses of people are inconsequential and expendable at every level, until now.
    66. DIG IN DEEPER PEOPLE its working…ignore media and government’s cries—of, we will create jobs and put you all back to work to spend.
    67. Make them feel your pain each time they have to struggle to make the national budget work they will KNOW how you feel EACH MONTH trying to make your money work in tough economic times. And, the money is there, with all the tax breaks the wealthy and corporations get, they could close those LOOPHOLES and bring down the national debt. Translation: They want to continue riding our backs, to feed the system. You know how it goes…they need THE MASSES, us, to help, the rich get richer.
    68. AGAIN, Americans, we are nowhere near angry enough, time to up the ante. TAKE THE (NON VIOLENT) FIGHT DIRECTLY TO THEM.

    American people while the old way of “storming the fort” was applicable in that day and age to signal revolt, this is modern America’s way, by us staging a “financial revolution”. Not buying into the consumerism that keeps THEM from rolling us.

    We have seen our annuities shrink by tens of thousands of dollars, and likewise, the value of our homes. Of course we are not spending. We may never spend. One reason is that we are so ANGRY at the corporations. We are tired of being subjected to social engineering every time we enter a store, tired of cheap junk merchandise from China, tired of our government being bought instead of representing us, tired of the government being taken over by armband religion, tired of our healthcare, tired of lousy schools that are unaffordable, tired of bailouts which is really nothing but more robbery of the people, specifically, the middle class.

    We have no representation, no free press, and no recourse of any kind, except, not spending. So, by golly, we are not spending. It’s practice for when we won’t be able to spend anyway, because the government will end up with every last cent that we ever earn anyway and they just give it away freely to Wall Street as bailouts while they make us beg for help like the lady in Florida.

    Note: All citizen bailout is back ended…we will do something for you, after, you do something for the system (FILE YOUR INCOME TAXES & pay taxes). Whereas bank bailouts are cash infusions and front end (no documents needed).

    Congress, American government, consider yourself notified. Americans are no longer “buying” the swampland, of buy, buy, buy, or, consume, consume, consume. It is now save, save, save ourselves. Unless you start infusing capital directly to the American people to help bail us out, to get us through this depression, expect it to go on for as long as it takes, to bring down the system of the elite. You left us no other recourse. We are no longer going along with the program (stimulus, relief, bailout, TARP or whatever you decide to call the next “chump change” pacification); you heard it, first, from us…

  19. I agree that the mortgage interest deduction should be abolished since it distorts incentives and is unfairly distributive – transferring money from renters (who are typically less wealthy as a group) to home owners (who are typically more wealthy as a group).

    Having said that, the question of mortgage bail-out is a more complex one. I have previously written that homeowners should not be bailed out. However, if you believe that by failing to bail-out homeowners you are in fact making the economic crisis worse and threatening the stability of the financial sector, it may be a reasonable position that vile as it is home owners need to be rescued. Not for their own good, but for the health of the economy as a whole.

    I haven’t made up my mind on this issue, but I can tell you that even if this is necessary and does make me personally sick that reckless financial behavior is being rewarded.

  20. I must have done it all wrong!

    I bought a house I could afford
    with a fixed interest rate


    for the last couple of years I have been paying more than all the idiots around me, and, those same people are now getting their loan balances as well as interest rates modified.

    It is like getting screwed twice.

    Or maybe three times,

    since my house is worth jack-shit.

  21. I hear that one of the requirements to take part in this readjustment plan is for the homeowner to take a credit counseling class. This is insane. It seems some will get paid $100K (or more) in exchange for taking a class.

    The fact is that there are people that took the risk of buying a home, signed multiple papers that reinforced the risk, and now will get bailed out when times get tough.

  22. “While politicians like to blame “Wall St.” for this mess or the Republican’s lack of regulation, it’s regulation that got us in this mess in the first place. Take away the interest deduction (yes, it would be painful), and pretend that Greenspan monetary policy didn’t lower interest rates to historic lows, and the housing bubble never would have happened.”
    Hello? It’s the removal of regulations like a) allowing large banks to go into investment business b) allowing large investment companies to overleverage as well some others I don’t recall that got us into this mess.

    As to mortgage interest deduction – it is good for the economy when people buy homes, hence the interest deduction – to promote home ownership. Banks get profits, can give more business loans so businesses can expand. The owners invest in their properties – unlike tenants or rental owners – which means they can remodel a kitchen or a bathroom which gives job to contractors and sells appliances. Home owners create more jobs than renters, people who get jobs pay taxes. Banks who gets income from interest pay taxes too.

    As to Greenspan, yes he made a number of mistakes – specifically related to deregulation and support of “new” mortgages – but lowering the interest rates after the internet bubble burst and after 9-11 was hardly one of them. There was a recession than, then there was fear, and the economy needed help. Maybe he kept the rates low too long, but reducing rates during a recession is pretty normal. Right now the rates are even lower.

    As to the housing rescue – I may see some problems like I think that when the judge lowers down the balance, the bank should still be able to get the full cost if the price goes up later on and the owner sells with a gain. Why should the owner get this money? There may be other things that I don’t like.

    But as to everyone’s rightful indignation, the way I think is – what is best for us, who are responsible: having home in our neighborhood foreclose or not? Will it cost us more to help these owners many of whom don’t deserve help or letting more houses foreclose and the economy continue to go down the drain with many of us losing our jobs eventually? So the main issue for me is will this bill help the economy or not. I don’t have an answer – yet. But I do suggest people look at it from this standpoint.

  23. I could care less if my neighbor goes into foreclosure. Sure, it sucks for them, but that is life. Obviously something is wrong – bought too much, have a job that is not sustainable, no emergency fund, etc. My home value has dropped regardless. It is only a matter of time for it to come back – just like my 401k.

    Hell, I could finally build that new fence I want if my neighbor dips out.

  24. Thomas – this is short-sighted of you. You should care if your neighbors go into foreclosure not because you care about your neighbors but because the foreclosures in your neighborhood will ultimately affect you:

    a) if there are too many foreclosures in your neighborhood, the value of your home will go down
    b) if a lot of houses stay vacant with nobody cutting the grass, the value of your home is affected
    c) the crime in your neighborhood may go up
    d) if a lot of your neighbors stop paying property taxes as well, your town will get less in revenue and will raise your taxes
    e) if you live in a condo and not in a house and many of your neighbors don’t pay common charges, then your common charges may go up and/or there may be a special assessment. Banks don’t care about your complex, and they are likely not to bother to show up for board meetings or vote or even sign proxies. If not enough people vote, no decision about vital repairs or anything can be made. Or banks can vote against every expense even necessary ones.

  25. A few things to think about ….

    If the average cost to those helped is $55,000, that is about 30% of the average cost of each home helped. Medium existing home sale price for 2008 is $198,000 which is down from $221,000 in 2006. Thus, the fix is 3x the fall of the average sale price. Why not give people the drop in their house price and get them to sell it?

    If you fix the supply side by bringing down some of the # of foreclosures, how does this fix the demand side (ohhh yeah, they get 10%, $8,000 tax break for new buyers yet 65% of population owns homes already). Right now, no one is buying, except the lucky few with cash holdings. No one wants to buy because they don’t know if they can sell (whether it is 100 homes on the market in their area or 90 due to holding of foreclosures).

    The long-term price of a home is tied to 31% (or some %) of our medium income, as house needs to be affordable. Yes, people did bid up prices to where they had to fall – thinking it was a safe investment, so government helping now only softens the fall, it does not prevent a future fall. Price is the price people will pay for it long-term. Thus, the only people this bill helps are (1) those who get the help and (2) those who need to sell a home without buying another one (note, if you take a discount on selling, you get a discount buying). Does it matter if your house lost $50,000 from $250,000 to $200,000 if you aren’t selling? If long-term price is $225,000, that is what you sell it for in 5+ years.

    In actuality, the fix may lower future home values because
    1) If people are paying 2%-3% more in taxes to pay for all the bailout, that drops the magical % from house (31%) down.

    2) If there are more Treasuries out there with higher yields (due to increasing supply of debt), the % rate for mortgages goes up bring down the amount people can borrow.

    So, the fix is just trying to soften the fall that will lower future home prices – long-after this Congress and administration is gone.

  26. Let the housing market flush-out and find a bottom. It will anyway.
    There is no way to avoid this painful process.
    Feel the pain now or feel it later.

    Get your head out of the sand, we WILL feel the pain and there is plenty more to come.

  27. I get tired of people throwing all the homeowners that face foreclosure in the “you bought more than you could afford” or the good old “you should have made better decisions”.

    I am not for a bailout of this mess. I am for the banks should have to make some amends on things they did. Many in the foreclosure mess are not at fault and the banks in many opinions engaged in flat out fraud. The homeowner was trying to do the responsible thing. They were seeking help with modification.

    I am an older veteran on 100% total and perm disability for injuries and get Social Security. My wife now works for the VA. Payment is not an issue. Chase doing the right thing and letting me is another issue.

    I purchased my home on VA. I had to make the stringent underwriting criteria. My income was and had to be at I think the 31% thing. Although not required, I was able to put 15 to 20% down.

    My wife lost her job in 08. I called Chase who many think here is the victim, to let them know I would be a few weeks late on my payment. I was current and had not missed a payment in 3 years (with original mortgage company) of the note. As I talked the Chase Rep who took about 20 minutes talking me into modification. I declined and told them I would just pay the late fee and move on.

    I get a call a few days later and the Chase Rep again very strongly advised my best option, with the way the economy was at the time to do a modification. Again after about 20 minutes of conversation I agreed to apply. This was the worst mistake and decision I have ever made.

    The initial process took over 5 months. I was told and INSTRUCTED specifically not to make the mortgage payments during this time. I was told they didn’t or couldn’t except payments during the modification process because they needed the numbers consistent from time of application. I was specifically told if I did make payments the modification process would be immediately be terminated.

    I did as I was INSTRUCTED to by Chase. I trusted they were making the rules of the modification process. Guess what. After 3 months, while instructing me not to make payments or face consequence, they foreclosed on me.

    What is Chase answer. First time I didn’t qualify (after taking 5 months and put me in foreclosure)for not submitting paper work I was never told to submit. They however, then said I should reapply since I was now in foreclosure, as this would stop that process. I did and was after another 4 months put on a “trial plan” I was making the required payments. On the last one they suspended it, and again claimed paperwork. This time I had sent everything in and had certified copies of the mailing. So they put me through the process again. I have now been put through the process at least 8 times. Each time taking 2-5 months. They continued to instruct me not to make payments. I began to question that, so documented the calls, including recording them. I tried at least 3 trial periods, Each time Chase terminated the plan. Twice for not making the payments. I have the paper work however that shows the plan was terminated approx. 4 weeks before I recieved the plan or plan was made. That happened twice or the good old didn’t turn in paper work thing, which came just as the plan was to be made permanate because I had made each payment in the trial.

    I am again in the process. During the last 8 months I was told they couldn’t do a modification because I had not met the “Investor Criteria” of at least 12 payments (Chase was the bank who bought my original note) I tried to explain the problem of their instructing me not to make payments. I asked who the investor was, so I might talk to them. They could or would only tell me the Government owned the note as the investor, but couldn’t tell me which agency.

    I finally called VA to assist me. My income to debt ratio is 80% of my monthly payment. I didn’t qualify for a VA “refund” The VA could not help,except to call Chase. They said Chase according to rules had make a modification if I could prove I could make the payments, which I can. Chase then threw in yes that is right, but the investor won’t let us and VA said they could not regulate what the investor criteria was. They could only work that if Chase owned the note.

    Well after another 7 months now, I have been calling every Government agency to find the Government investor. I was not on any of those list. The only agency in Government who has anything to do with my mortgage are the VA and agencies who guarantee the loan. Now in the last month, I have found Chase is and always has been the holder of the mortgage and there never was an investor. In the last year they have added over 25K in fees and interest.

    I have contacted my Senators, and Congressman, VA, Office of the currency, the Attorney General of my state and the 50 state Attorney Generals Investigation. I have testified in depositions for Fed. Court suits about this for others, as this appears to have been a normal practice for at least Chase.

    By the way. During this time, and before I was even delinquent, they made it so I could not get a new refinance as they reported the delinquency to credit agencies.

    So in essence the deal with Chase to a lot of us is: They talk one into modification. They string the process out several months and instruct people not to make payments. They then report these past due payments they instruct as part of the process or be denied a mod to credit agencies. At that point one cannot get a new loan or refi based on the credit report. While doing the mod, they do foreclosure for past due amounts and increase original loan thousands of dollars. Then they claim they can’t do a mod because of investor criteria. Then it is they can’t tell in their records who the investor is (which is when I became suspicious as how could they tell me I didn’t meet criteria, but not know who was making that criteria)

    Then it turns out there is no investor. So the bank (investor) tells people not to make payments, then deny modifications for not meeting their own criteria. They however continue to process modifications many times and doin so collect and add cost onto the original note.

    So don’t run that crap that everyone in foreclosure either bought home they couldn’t afford. Or the crap of making bad decisions. Or just take your lumps and move on.

    I again am not for the Government financing a bailout. But I am sure as hell for the banks who did this to people and we can prove it, be made accountable for their decisions to do this to people. I don’t care if in fines, settlement or whatever. But in these cases which there are and any responsible person can find them, the banks should be made responsible for what they did.

    All I ever asked was to go back to my original payment. Show once I start payments I am current, and make amends to my credit rating with agencies for them causing me to be delinquent.

    I am at a loss of what to do next, if they deny my latest application. I am tired of messing with Chase so why not just live here until I have to leave. Or should I sue as several attorneys say I have a great and documented case. That cost about $200 per hour and about 6K at a minimum.

    I am under water now, I bought my home at 161K and financed about $148K. The home just appraised at $118K. But with added interest and fee’s Chase says I now owe $176K.

    So spare me the pity on the bank and all homeowners in foreclosure are at fault crap.

  28. By the way. If there is a bailout, which again I am not in favor of, at the 31% rate thing, my mortgage would go up over 1K a month. That would go from $1118 PITI to over $2200.

    I like I said only want to go back to my original debt. I only wanted some forbearance on past due so I would not show delinquent. That is what I want now. Take off all the charges and fee’s for instructing me not to make payments. Once I start payments at old rate, show me as current. Make adjustments and report to the credit agencies on the delinquents Chase instructed me to do. And last of all stop the foreclosure process completely and take off in foreclosure in the credit agency reports.

    Not asking for a bailout or huge modification.

    I just want to have Chase fix what they broke. They are the ones who set the rules for their modification process. If the mortgage contract was broken, it was on their instruction and rules.

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