FORECLOSURE PREVENTION PLAN.....

NEW -> Contingent Buyer Assistance Program
I thought a home is not "owned" by the homeowner unless and until the mortgage is paid off. If bankruptcy allows judges to write down the mortgage to the fair market value of the house, then the lender who is the real owner will lose to the borrower who isn't.
 
Fair Economist, the bill you linked to is a very good reason that you shouldn't want Obambi in any position of power. Mortgage fraud is already illegal. Introducing new laws on the books that already duplicate existing laws that are widely ignored won't solve any problem. On the contrary, it tends to degrade respect for the law.





We don't need new laws, we need to enforce existing laws.
 
At present there is no law against mortgage fraud. Many, perhaps most, mortgage frauds could be prosecuted under other statutes like wire fraud or bank fraud but not always and in any case it makes a difference both practically and in focus to have specific laws against mortgage fraud. The penalties are whoppers, too.<p>



In terms of enforcement it's certainly true that we could use more. Enforcement is always limited by the availability of funding and information. Obama's law also provides tracking information for disbarred/censured mortgage professionals, reporting requirements for suspicious activity, federal/state coordination and communication, and most importantly, funding to get it all done. <p>



And finally, it's to our benefit to have a President who is trying to stop mortgage fraud as opposed to one that invokes an ignored 1863 clause affecting the Office of the Comptroller of the Currency to <b>block</b> <a href="http://query.nytimes.com/gst/fullpage.html?res=9404EFDD173CF932A25751C1A9659C8B63">state investigations</a> of mortgage fraud. We don't know if McCain or Hillary would do the same as Bush, but I'd still prefer a President who has already pushed for the right action over an unknown.
 
Isn't this all closing the barn door after the horse has escaped and the barn has fallen down and the only thing left standing is the door.
 
IR,

The politicians have no realization about how much burden this proposal would put on the legal system or the investment required to install the required machinery. There is no efficient solution to this mess other than the garbage loans being cleaned from the system and the lenders taking a hit for these. The bush administration and the democrats are both scary based on their ignorance on economic issues and the absence of a sane voice amongst them about the implications of such 'irrational exuberance' (aka rescue package) :-)
 
<p>Lenders Fighting Mortgage Rewrite</p>

Measure Targets Bankrupt Homeowners

<p><a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/02/21/AR2008022102687.html">http://www.washingtonpost.com/wp-dyn/content/article/2008/02/21/AR2008022102687.html</a></p>

<p>The proposal, which could come to a vote in the Senate as early as next week, is being pushed by Democratic congressional leaders </p>

<p>...</p>

<p>The Bush administration has said that it opposes both provisions as overly coercive and potentially detrimental to the already strained mortgage market. </p>

<p>...</p>

<p>Bank lobbyists have also gone online to make their case. The mortgage bankers have set up a Web site, <a target="" href="http://www.mortgagebankers.org/StopTheCramDown">http:/<wbr></wbr>/<wbr></wbr>www.mortgagebankers.org/<wbr></wbr>StopTheCramDown</a>, that can calculate how much mortgage costs might increase by state and by county if the Durbin measure were to become law. "Cram down" is the industry term for a forced easing of mortgage terms. </p>
 
Man, 1.5% increase in mortgage rates? The mortgage bankers got that from the same place the NAR gets its sales and price forecasts. Lenders will lose *less* on a cramdown than on a foreclosure. And given that borrowers have to go through bankruptcy to get the cramdown, it will hardly be a casual action for somebody underwater by 3%.
 
LL, I hear you and I realize that the economy is in a tailspin, but there has to be some accountability built into the system. Whoever takes the hit - banks or borrowers - WE WILL PAY IN THE END.



The fundamental issue is a revaluation of the nation's economy. Keeping people who never had any business buying a home in homes at taxpayer expense can't be a realistic solution. I'm open for suggestions.
 
<p>I wish I had a solution. I don't.</p>

<p>Cram downs and public works projects are all I can think of.</p>

<p>Ok, what if we go Ayn Randian and just do nothing and let the chips fall where they may? We use cigarettes for currency? I'm serious. If virtually all the banks fail, will they be replaced? And by what? How do you buy your next quart of milk or gallon of gas. How many banks would fail?</p>

<p>Starving people can equal civil unrest.</p>

<p>I hope I'm just a worrywort.</p>
 
CM_DUDE - Don't you get it. People think that if the government pays for it that it will not cost them. They think somone else will pay. Or they will only have to pay a little bit. They don't want to face reality.
 
<p>LL, I don't think we need to go full Ayn Rand, but I do think that bailing people out is the wrong way to go. Let them walk away from their homes, have ruined credit and then slowly build themselves back up. That's simply the way life works. It happened to me, it happened to my Mom after her divorce, and it happened to many of my friends after they went nuts with credit cards issued to them when they enrolled in college. They didn't have them money to repay the money they borrowed and they paid the price. If you borrow money and don't pay it back, you should suffer the consequences. It took me 10 long years paying way too much interest to rebuild my credit after I screwed up in my early 20's. I sure learned my lesson. Millions of Americans have a tough lesson to learn.</p>

<p>Banks gambled on rising home values as well, and they lost. You don't see Uncle Sam standing at the doors of casinos making gamblers whole for putting their money on black, do you? Like the S&L scandal, Enron, etc. new accountability should be built into the system.</p>

<p>People living in homes they cannot afford need to move somewhere they can afford to rent or buy. There have been terribly hard times in the modern history of the US, and we are on the verge of another terribly hard time. Pretending that poor economic choices have no consequences, or creating government policies/programs that relieve people of those consequences at the expense of others is simply not practicable.</p>

<p>Our economy is already a virtual house of cards because of deficit borrowing, and if we allow pandering politicians to continue buying votes with our kids future, the house of cards WILL collapse. We have to take this hit and let the chips fall where they may. Some banks will fail. Others won't. The institutions that remain will be stronger and will institute tighter controls. Housing costs will fall dramatically, AS THEY SHOULD, and people will be able to find places to live. They may not have Pergo floors, granite counters, or flat screens, but SO WHAT? Money costs money, and it is high time that people re-learn that lesson. </p>

<p>I don't make enough money to buy a home in Costa Mesa, so I rent. I could buy a home in another community, but that would increase my commute and take me out of the community I love, so I rent. Just because I WANT to own a home in Costa Mesa does not mean that the government or Dick Durbin should make it happen. </p>

<p>Why should ANYONE get to live in a home they cannot afford? SOMEONE has to pay for it - that reality is inescapable.</p>

<p>I know a lot of this has been said before, but we really are in serious trouble. Politicians lying about economic reality and buying votes with borrowed money will NOT solve anything.</p>
 
Awgee> CM_DUDE - Don't you get it. People think that if the government pays for it that it will not cost them. They think somone else will pay. Or they will only have to pay a little bit. They don't want to face reality.





Awgee, the 50% of the population that earns the least money pays a total of 3% of taxes paid into the system. For the vast majority of the population, thinking that someone else will pay is perfectly rational. Given their life experience, why would they think differently?
 
Winex,



And HRC and Obama are TRIPPING OVER THEMSELVES trying to make that 50% pay even less and people making as little as $75k pay MORE.



It truly is disgusting the way the Dems pit the poor against the middle class and wealthy. In Des Moines, $75k may be a lot, but it ain't crap in So Cal.
 
WINEX - IMO, the 50% that only pays 3% of the taxes end up paying through inflation, restriction of freedom, subsidizing of moral hazard, and in so many hidden ways that it is not beneficial for them either.
 
>And HRC and Obama are TRIPPING OVER THEMSELVES trying to make that 50% pay even less and people making as little as $75k pay MORE.





CM_DUDE, if you will recall, when Bill Clinton was running for President in 1992, he promised middle class tax cuts that would be subsidized by taxing the rich. When he was able to get the Democrat controlled Congress to pass the largest tax increase in history, everyone making $35k a year was defined as rich and had to pay for his socialist ideals.





The moral of the story is that while politicians don't always live up to their campaign promises, when a candidate is promising that they will raise your taxes, you can count on them doing everything they said and then some.
 
>WINEX - IMO, the 50% that only pays 3% of the taxes end up paying through inflation, restriction of freedom, subsidizing of moral hazard, and in so many hidden ways that it is not beneficial for them either.





Awgee, freedom and responsibility are inexorably linked. The creation and expansion of the "nanny state" by the Federal government isn't about helping people. It's all about a few gaining power at the expense of the masses (of idiots).





The most widely ignored part of the Constitution is the 10th amendment. If the Federal government acted as if any powers not expressly granted to the Federal government were left to states and individuals, our government would be a fraction of it's current size. And if you removed the weight of government from the backs of the people, you would have an economic expansion unlike anything ever seen before. While I agree that everyone would be better off with a less intrusive government, the concept of "one man, one vote" means that the less educated members of society can push through short sighted goals that ultimately hurt everyone.
 
Winex,



I'm a big fan of the 10th Amedment myself and I couldn't agree more, it is widely, if not completely ignored. I like the idea of a country with a smaller federal government and more control given to the states, local governments. Over the 20 years I've been consulting one thing I've noticed is that the larger the organization the greater the waste and less efficiency there seems to be--this has been particularly true in the work I've done at the federal level of government. Good god, do I have the stories. So, it would strike me that if we were to send less money to Washington and more money to Sacramento, we'd likely have lower overall taxes due to a net reduction in waste, transaction costs and organizational friction.



I like the idea of keep more tax revenues in the state for another reason: California sends far more money to DC than we recieve back. Unless I am mistaken California is actually the greatest net contributor state in the Union. Keeping more money in the CA would also lower or overall tax rates because we'd be revenue neutral rather than the sugar momma to the blue states. And if Alaskans wanted to built a bridge to nowhere they could do it on their dime, rather than ours.
 
So let's say legislation gets passed for the FHA or some branch of the government to buy mortgages. Forget about all the moral hazard and long and short term effects for a minute. Let's talk reality. Just where is the federal government going to get this money to buy mortgages? If anyone thinks the government will just get it out of the budget, I got some news for you. There is no place in the budget to find half a trillion or maybe a trillion dollars. The government does not have the money. The American people do not have the money. Maybe they will borrow it? More news, the Chinese stopped buying US treasuries a few months ago, and if you think that this will influence them to change their mind, I got a house to sell ya.<p>


There is only one way to fund this type of bail out and every other bail out that will be proposed. The US treasury has to sell their valuable bonds to the Federal Reserve who will electronically print money to buy the bonds.<p>


A few of you have been saying they think gold has topped out. I doubt it.
 
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