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ANOTHER Mortgage Plan…

By JLP | August 26, 2011

All these different bailouts are getting old. Here’s the latest. The details are vague:

One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions who asked not to be identified because they were not allowed to talk about the information.

…Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.

I almost think we would have been better off had we just allowed foreclosures to happen and let the housing market capitulate. I think all this government involvement has only made things worse by stretching out the inevitable.

Topics: Economics, Housing Market | 7 Comments »


7 Responses to “ANOTHER Mortgage Plan…”

  1. Dave Says:
    August 26th, 2011 at 11:31 pm

    I agree. Let the foreclosures that happen happen. But then there will be winners and losers.

  2. BG Says:
    August 27th, 2011 at 9:08 am

    I think it is only fair to allow homeowners to be allowed to refinance at the lower (standard) rates of today.

    If it prevents some foreclosures, then that is a good thing. However, I do not want to see any ‘forgiveness’ of principal — not on the taxpayer dime anyhow.

  3. Steve Braun Says:
    August 27th, 2011 at 1:22 pm

    I agree with letting the foreclosures go through and let the chips fall where they may. I don’t like the fact that the govt has been meddling in housing and mortgages for 40+ years. But since the govt decided to get involved, in the current situation it might have been more efficient and less costly for them to simply make all the mortgage payments on behalf of qualifying individuals — no foreclosures, no short sales, no one on the street, etc. Might have kept home prices stable and helped the economy more.

  4. S Rao Says:
    August 27th, 2011 at 1:56 pm

    I think NO politicians (republican or democrat) will be thrilled with the idea of watching all their constitutents home values drop 10-20% if the market were to truly equilibrate to fair market value. I am on the fence about it- but I could see it decimating some neighborhoods

  5. Jack Says:
    August 29th, 2011 at 1:57 pm

    > I think it is only fair to allow homeowners to
    > be allowed to refinance at the lower (standard)
    > rates of today.

    How is that “fair”? The homeowners entered into a contract with a fixed rate of return. If they want a lower rate, then they can go to another bank — or their current bank — to refinance. What power granted to the federal government in the Constitution allows the federal government to force lenders to refinance unqualified borrowers’ loans?

    If interest rates had gone UP, would it be “fair” to allow the lenders to renegotiate the loans at the higher rates?

  6. BG Says:
    September 2nd, 2011 at 12:25 pm

    “How is that “fair”? The homeowners entered into a contract with a fixed rate of return. If they want a lower rate, then they can go to another bank — or their current bank — to refinance.”

    That is what they are trying to do!!

    The problem is that our government has posed restrictions forbidding mortgage refinances for mortgages that are under-water.

    I think the rules need to be relaxed a bit to allow refinancing of underwater mortgages (with NO cash-backs), but leave in place the equity restrictions for new mortgages (new purchases).

  7. MC Says:
    September 5th, 2011 at 3:50 pm

    Agreed. Can we please let housing come down to prices based on what people actually make as wages/what they can afford?

    Not my fault that these people bought something they can not afford. How are people in their 20s supposed to jump into the housing market if we let these houses carry their over-inflated values?

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