California Brokers Deal with Mortgage Lenders

NEW -> Contingent Buyer Assistance Program
trrenter_IHB

trrenter_IHB

New member
<p>Wow we have a bailout for the greedy. Our California Tax dollars at work!!!! Only in California can you buy a house you can't afford but get to stay in it anyway.</p>

<p><a href="http://www.msnbc.msn.com/id/21914618/">http://www.msnbc.msn.com/id/21914618/</a></p>

<p>Under Tuesday's agreement, announced by Schwarzenegger, borrowers facing an interest rate reset would be eligible to have their rate frozen temporarily if they are current on payments.</p>
 
Bailout for people who never should have been able to get into a house/got more house than they should have. No bailout for those who either kept renting and saving while repairing credit, or real borrowers who got into houses they could afford at higher non-teaser rates.





Nothing wrong with that...
 
<p>I think there is less there than meets the eye. The help is temporary. The owners have to be current. The pleas have to be "evaluated". How long will that take.</p>

<p>I repeat for those who resent people being bailed out, that this problem is too big to be bailed out, except for a few, and except for a short time. Even someone who is currect, may walk if his house is 25% or more underwater. Even if they have the money to pay. Especially if they put down nothing or almost nothing.</p>
 
Um... aside from the PSA being put together by the state, I don't see how any taxpayer funds are involved. TR, do you know more than was put forth in the article?
 
<p><a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/21/BUG5TGAIA.DTL">From the SF Chronicle:</a></p>

<p>"With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists," the governor said in a statement. <em>"This common-sense approach does not involve a government subsidy or bailout."</em></p>

<p>It was unclear for how long the loan servicers would freeze the interest rates. </p>

<p>"The word that was chosen is it's for a 'sustainable' period of time," said Mark Leyes, a spokesman for the California Department of Corporations, which oversees nondepository lending institutions. "What does that mean? The answer is, it depends. It could be two years, five years, even seven years. The idea is until the housing market recovers. At that point, housing values would be restored; equity is restored, refinancing becomes an option. But nobody knows how long that's going to be."</p>

<p>(emphasis added)</p>
 
Although I disagree in principle with bailing out these people, I can see the benefit to everyone overall. Keeping people in those overpriced homes (even if temporary) can keep them paying the overpriced property taxes, which fund schools, fire dept., etc. If we have a massive drop in property tax assessments/revenues, that will hurt all of us in some way.



That said, I don't think it will stop the resetting of house prices to more realistic affordable prices given the tightening of the lending practices. Prices will fall if people must actually qualify to borrow money on a house.
 
<p>Eva,</p>

<p>You are right there is no tax money, I just assumed, you know what happens when you do that.</p>

<p>I am still against the intervention becuase it is suppressing market forces. Sooner or later these houses need to go on the market. The rates essentially need to reset. If a group of people is allowed to pay below market rates then that could have an upward force on rates for new borrowers. </p>

<p>The more houses on the market the lower the prices could go. So keeping these foreclosures from happening could artificially prop up the market for longer and raise the rates for new buyers.</p>

<p> </p>
 
<p>They can bail out all the people they want and turn them all into debt-slaves, I don't care. </p>

<p>The market no longer needs foreclosures to spur rational prices, the damage is already done, appreciation is gone, the easy is gone and that means volume will remain at unsustainably low levels until prices correct. People talk about pent up demand, I believe them. I want to buy, but I'm rational. As are many on this forum. For every one of us, there's at least one pent up demand of a seller that wants out. Every month is one more month of pent up demand for people that would like to sell or need to sell. </p>

<p>The market will be willing participants. The bail-out borrowers will be stuck with albatross of a mortgage payment paying back the principle on an eight hundred thousand loan while the market continues to move along at sell homes at a market rate, much lower. The willing sellers will come from people that bought in the 80s, 90s, or earlier. With the typical Irvine zip code having sales in the teens, I suspect, that many people in a zip code with twenty people in it and 8000+ homes, much be experiencing that many employee relocations, deaths, divorces, retirements, etc.</p>

<p>All foreclosures will do is determine if we put the fork in it in 2008 or 2010.</p>

<p> </p>
 
<p>Re "I am still against the intervention becuase it is suppressing market forces."</p>

<p>I don't think that's true. The lenders wouldn't have agreed it it if it wasn't in their own self-interest. I suspect it's more profitable (ie. they lose less money this way) to keep the houses occupied and some sorts of payments coming in, than to have the houses forclosed and vacant and then having to pay maintenance, taxes, and so on on them while trying to sell and pay RE commisions as as they chase the even faster plunging market down...</p>

<p>Also re "could artificially prop up the market for longer and raise the rates for new buyers"</p>

<p>If the effect of the change is to reduce supply (sellers) and to reduce demand (ex. buyers can't get or afford the financing), then that could push the prices up, down, or have no effect, depending on how much supply and how much demand are affected.</p>
 
As long as the government, in other words the taxpayers, aren't involved I don't care who gets bailed out or what any lender does to renegotiatie their present contract. I don't understand why the government is getting involved. If it truly in the lenders interest to renegotiate, they will. If it isn't, they won't. And if the government gets involved, it will be the taxpayers who end up paying. It is sad to see somone lose the equity in their home, but I fail to see how it is the taxpayers responsibility.
 
How exactly would an interest rate freeze work? This will do nothing for those paying the negative amortization teaser rate on an Option ARM.





And how does this impact people who took out ARMs with an adjustment looming? If you took out a 3 year ARM, and it is the end of your three year term, is the government going to mandate this term be extended?





And how does this impact tighter lending standards. If a borrower no longer qualifies for the loan because the loan-to-value is too high or they lied on their credit application and they have to go full-doc, will the government issue them a loan guarantee?





Quite honestly, I don't see who this really helps.
 
Tanta has written a letter to Hank Paulson regarding the mortgage workout. It is informative, interesting, and entertaining.
 
<p>"<strong>I'm From The Blogs and I'm Here To Help You"</strong> by Tanta <a href="http://calculatedrisk.blogspot.com/2007/11/dear-mr-paulson.html">Calculated Risk: Dear Mr. Paulson</a></p>

<p>This is a must read ! Thx awgee.</p>

<p> </p>
 
<em>"I must say I'm enjoying having you a few inches closer to the reality-based community. I hold hopes that someday you and The Blogs will actually inhabit the same economic planet. That would be like so totally cool."





</em>It might be a while for that to happen. I'm not sure if he is in the same galaxy as us, let alone near our planet.
 
<p>What is he supposed to do? If he tells the truth, he will start a panic.</p>

<p>NPR was trying to get an expert to say things are not quite so bad. They thought that $200 billion losses in the "sub-prime Mkt", whatever they meant by that, were horrible. The expect, a former optomist said he wasn't so optimistic. He made a comment where he said, "Whether the losses are 100, 200 or $300 billion. . . . ." which the commentator naturally didn't follow up on. Was it BS or Lehman that had the losses at $400. And of coure each estimate is higher.</p>

<p>I wonder if people like Tanta are brought to the attention of the gov't guys.</p>

<p>And no presidental candidate is bringing a potential financial meltdown to the debating fore. Of course, then they'd also have to present a rosy scenario solution solution, and there isn't one.</p>

<p>And of course the Tantarant was superb. I'm from the blogs and I'm here to help you. Hehehe.</p>

<p>Has Tanta herself suggested any solutions?</p>
 
<p>Imagine a leader painting the time, pain, and sacrifice solution to the problem of the mortgage excess. Painting crime as crime, financial plundering as the piracy it was. Saying it will hurt, it will be tough, but we can do it, we will be better when we've done it and we will again be the envy of the world when we put our house back in order. Yes, a good old financial small government demagogue. Someone radically proposing to stop the war, raise taxes and cut government programs to fix our debt and evoke financial responsibility from the Government on down.</p>

<p>Instead, they all promise no pain and manna for everyone.</p>

<p>Personally, I'd vote for the demagogue promising pain and suffering. We can do it now, we can do it later, but like a 400lb man, a self-inflicted severe lifestyle change is much better than the cardiac by-pass surgery, diabetes and amputation that awaits if we continue with the excess.</p>

<p> </p>

<p>BTW, Happy Thanksgiving everyone!</p>

<p> </p>
 
nsr - Wouldn't that be Ron Paul?<p>




I tend to think of the bigger problem as debt excess of which the mortgage excess is just the first most visible portion.
 
<p>Ron Paul has not the proverbial snowball's chance in hell.</p>

<p>I suppose somebody is gonna default on something. What's the total amount of the national debt?</p>

<p>I will google it.</p>
 
<script type="text/javascript" src="http://www.zfacts.com/giz/G05/debt.js"></script>





<a href="http://zfacts.com/p/461.html" id="zF05" style="color: black; font-size: 12px;">The Gross National Debt</a>













Eh, it was supposed to be a live counting calculator, but the forums don't seem to like Java.
 
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