FORECLOSURE PREVENTION PLAN.....

NEW -> Contingent Buyer Assistance Program
<p>tiredofbeingwalkedon,</p>

<p>I don't know anything about you or your situtaion. What I do know is that you took me to task for saying that a "foreclosure prevention plan" is crap because your lender sold you on a bad product that has turned your affordable home into an unaffordable home because your interest rate skyrocketed to 17% - WAY, WAY, WAY above prime. You then stated that you hope the "Foreclosure Act of 2008 passes so thousands of people can have that 2nd chance to reclaim their homes." </p>

<p>That is your opinion, and I understand where you are coming from. But take the following into consideration:</p>

<p>Many people who post here are real estate professionals or very savvy investors. Some are in professions that require incredible attention to detail and extensive knowledge of legal and financial instruments. To us, the concept of a home loan doing something we had not anticipated is a near impossibility.</p>

<p>In my industry, YOU DO NOT TRUST ANYONE WITH YOUR AND YOUR FAMILY'S FUTURE, you only trust the printed contract and its clearly stated terms. If the terms are not clearly stated, you DO NOT SIGN.</p>

<p>I am not pointing fingers or judging. I am saying that, unless you are a victim of fraud or altered documents, you entered into a legally binding contract for hundreds of thousands of dollars. If the market had continued to go up, I sincerely doubt that you would be complaining, as you could have refinanced out of that loan when it went south on you.</p>

<p>Therein lies the rub. You want SOMEONE ELSE to bail you out, so you can have a second chance to reclaim your home. That means that SOMEONE ELSE will have to carry your water. SOMEONE ELSE will have to pay the real money that you promised you would pay so that you get to stay in your home. That SOMEONE ELSE is every single person who will take out a mortgage in the forseeable future and the United States taxpayer. The banks won't pay, they'll write it off and raise rates to compensate for their losses.</p>

<p>Now, if the market had continued to appreciate, would you have helped SOMEONE ELSE buy a home? Would you have supported a Renter Elimination Act? Be honest - the answer is no.</p>

<p>Step back even further, and forget the reciprocation aspect - do you support full government absolution of every poor or unlucky financial decision that every American citizen ever makes? How about bad stock picks? Poker losses, Lottery losses, gambling losses?</p>

<p>Investments in family businesses that go wrong? Would you support a You Shouldn't Have Trusted Uncle Billy With The 401(k), But Uncle Sam Will Make You Whole Act? </p>

<p>90% of new restaurants fail, often taking someone's life savings with it - should there be a Restauranteur Failure Prevention Act that gives failed Restauranteurs a second chance to reclaim their life's dream?</p>

<p>I'm not trying to be glib, what you are asking for is NOT private charity, but a government bailout that I will have to pay for. I have been saving and waiting to buy a home for a long time, and any government-mandated plan to keep you in a home you can no longer afford due to choices you made will penalize me. That's not selfish on my end - that's selfish on YOUR end. </p>

<p>So please try to understand where the resistance to ANY bailout is coming from. It is not the government's responsibility to cover the losses of hundreds of thousands of people who bet on the housing market and lost - or those who signed loan documents that they did not understand. </p>

<p>If your loan reset that high, there must have been a mechanism for that reset described in the loan documents. If there wasn't, you may have legal recourse. </p>

<p>However, it sounds like you trusted someone to tell you what the loan terms were instead of determining them for yourself or hiring a third-party to do so. If so, that was a mistake - one that only you should be responsible for making. Sorry, but that is simply reality.</p>
 
<p>sorry tired, I'm not buying it...</p>

<p>The only way you could not have refinanced your house prior to February '07 is if you were already underwater. Since you haven't provided any specifics, I am forced to assume that you either withdrew some equity or were making the minimum payment possible on your ARM or you refused to accept the prepayment penalty, none of which were very "responsible" paths of action. Our household also makes six figures, but when we bought our house we knew full well that we had to make sacrifices to pay off the 20% piggyback loan that allowed us to close the deal. We never used a penny of the HELOC that Wells Fargo graciously kept increasing in value. 3 1/2 years later we are sitting on a 5.25% 30-year fixed and paid cash for a new car.</p>

<p>The bottom line is that you made choices that didn't work out well for you, so you want to hit the "reset" button and start over... and there are hundreds of thousands just like you that are all clamoring for the same thing. You sound like those people who bitch about getting fired for failing a drug test: "I didn't know it was illegal; I didn't know it was drugs/steroids in that needle; it wasn't me it was the 15 people smoking pot at the party in my house, blah blah blah. You agreed to take their money so you could buy a house and to they agreed to lend you that money under certain and specific terms of repayment. Deal with it.</p>
 
tired,



I just re-read your posts and, I have to say - I'm not feeling extremely sorry for you. You ADMIT to gambling on the market. Here are excerpts from your posts:



"Maybe some of the blame should be directed at untrustworthy lenders who put us there."



"We need to be able to trust bankers and lending institutions."



"...you deal with a banker and trust he will do you right. Not all homeowners are unresponsible. Just put in a bad situation by unscrupulous people."



Those were from your first post, which led me to believe that you were possibly a victim of fraud or misrepresentation. But then, in response to others questioning how you could have ended up with such a turd loan, you stated the following:



"As a matter of fact, yes we did read the note and asked questions. ...we were told ARMs were nothing to be afraid of. "Rates will not go up". Yes we did trust them."



On what planet do rates not fluctuate?!?! You accuse the lender of being unscrupuolus and dishonest and untrustworthy and claim that HE put you in the situation you are in because he stated that he did not believe rates would go up?



The lender GAVE YOU HIS OPINION, AS THAT WAS ALL HE HAD TO GIVE. Did he promise that rates wouldn't go up? Was your lender Alan Greenspan? Did he swear on a Bible? Did he sign a contract stating that he would cover any rate fluctuations? If not, he was HONEST and didn't do a damn thing to put you in this position. He told you what you wanted to hear, and you signed the papers.



Newsflash - The only way the rate on your home loan will never go up is if it is a FIXED-RATE loan.



Why would you bet your financial future on the assurance of someone trying to sell you something???



If rates "never go up," why would you need an adjustable rate loan? As xsocal land merchant pointed out, there wasn't much room to go down, but rates have been MUCH higher in recent history.



What part of "adjustable" are you struggling with? Seriously? AND YOU WANT THE GOVERNMENT TO BAIL YOU OUT?!?!?



I do want to thank you, though. You have, better than I ever could, demonstrated exactly why a bailout is a terrible idea. There was no fraud. You put yourself in the position you are in, you didn't do your homework, and you entrusted a salesman with much more authority and knowledge than he could or should possess. Your lender didn't do a damn thing wrong, he simply gave you his biased opinion.
 
I want to thank you all for all your "kind" words. I now believe that your hats are too small for your heads. You don't need to post anymore about me because I also believe that if in fact you are lenders, investors and savvy real estate professionals in 6 figure incomes which I am not, that is why you make 6 figure incomes. You lie to everyone you come into contact with. One day you will be judged and and not by anything on earth - Then it will be too late to help your fellow man.
 
I don't see where tired says he was gambling. CM's cites are that he trusted the professionals he hired but to have a functioning society you *need* to be able to hire professionals you can trust. Also, he's not asking for a bailout, just for his home loan to be subject to the same rules as his auto loan or a business loan.
 
<p>I offered to help. For free. Tired gave me no specifics.</p>

<p>Could it be that he/she STILL doesn't understand how the lender got to 17%?</p>

<p>Tired, you can whisper to me.</p>

<p>And, your posts indicate that somehow WE IBH-ers did something to you. I'm in Florida; what did I do? </p>

<p>All we did is not sympathize, unless you are a victim of fraud, and you have not told us enough to determine that.</p>
 
<p><a href="http://www.nytimes.com/2008/02/27/business/27housing.html?ref=business">http://www.nytimes.com/2008/02/27/business/27housing.html?ref=business</a></p>

<p>"President Bush sided with banks and mortgage lenders on Tuesday, threatening to veto a bill being offered by Senate Democrats that would give more bargaining power to homeowners who face foreclosure."</p>

<p>I did not vote for that man, but I support my President. At least on this issue. </p>
 
tiredofbeingwalkedon,



I am in the legal industry, where I see the hard reality of bad business decisions all the time. Companies fail, and people lose more than their homes because they did not honor contractual terms. This isn't about good or evil or judgment, but economic reality.



You came on here and said that you wanted a second chance at owning a home, because of circumstances that you will not define. I'm beginning to think that you may not be for real, as folks on here could actually HELP you. Instead, you want the rules changed so that you can be saved from a loan that you signed.



Fair - taking out an adjustable rate loan is a gamble. Without details, which tired has not provided, one can only assume that tired chose an ARM because it was initially cheaper than a fixed-rate loan. That or their lender talked them into an ARM. Either way, not doing their diligence on the different loan products and trusting the lender to have their best interests at heart is, at best, naive.



Forgive me for not unsderstanding what you mean by "home loan to be subject to the same rules as his auto loan or a business loan." If you default on a loan, you lose the secured asset, true? Seriously, what am I missing?



Tired, please tell us, in detail, what the loan terms were. People can help if you are for real and have been the victim of fraud. But many people have lost their homes historically due to changing economic conditions. I know FIRST HAND what this means. A family-member lost everything in the decline of the late 1980s and early 1990s. She bought homes to fix-up and flip and got caught holding the bag. She took the hit, sold her Newport home for nothing, rented another one, went back to school and started a new career. No bailout, no finger-pointing.



There should be no new exceptions for the "victims" of the recent housing decline. That's all I am saying.
 
<p><em></em></p>

<p><em>tired</em></p>

<p><em>"You lie to everyone you come into contact with. One day you will be judged and and not by anything on earth - Then it will be too late to help your fellow man.</em> "</p>

<p>This is painting the folks here with a very broad brush since there is a wealth of knowledge, information, and empathy here as well as a wide diversity in opinions. We don't all agree with each other all of the time but it seems that your position is viewed by most here as either greed or just not talking care of your personel business. </p>

<p>Since I am a simple country boy I refer to the saying of the comedian Ron White, "You can't fix stupid."</p>

<p>Regards</p>
 
The change this thread is about is changing the bankruptcy laws to eliminate the special exemption from cramdowns that mortgage loans currently enjoy over other secured loans. In a bankruptcy judges have traditionally been able to reduce any loan. Mortgages were given a special exemption by a court decision in 1993, which would supposedly reduce mortgage rates (it didn't, just like the recent bankruptcy deform didn't reduce credit card rates.)<p>



I don't consider sensible ARMs a "gamble", at least not in the sense that doing *anything* isn't a gamble. Short-term rates will be fair rates unless something goes seriously bonkers in the markets (as in, much worse than now, even). If tired were paying LIBOR+2.75% he'd be paying a perfectly reasonable rate.
 
<p>Fair, Good point about sensible ARMs, I was being overly inclusive. If tired's ARM leapt to 17% as he claims, it is most likely an exotic product and not a sensible ARM. </p>

<p>I would support elimination of the special exemption from cramdowns in formal bankruptcy proceedings. The bankruptcy courts will be busy... </p>

<p>Any other bailout provisions (foreclosure freezes, interest rate freezes, etc.) are non-starters, in my opinion.</p>
 
CM, that's basically my position. I'm OK with Bush's 1 month foreclosure delay for workouts - but no more. Bailouts - heck, even if you think they're a good idea, it's just too big. And about "deserving" vs. "nondeserving" bailees - where are the crosstemporal mindreading machines to determine why people got into particular fixes?
 
After I read the thread a couple of times, it seems people oppose the foreclosure prevention plan because of the following:



1) Some are concerned that the plan might result in a soft landing and they can?t get their dream house at a fair price. In actuality, price will continue to correct based on affordability as well as desirability of the region so people who are patiently waiting will get their home at their named price eventually.

2) Some are upset that borrowers with bad behaviors will get rewarded instead of punished. I hope that people can offer some sympathy and compassion to others that are now losing their homes. I can sense the anguish in Tired?s posts. He or she is suffering and being punished. I just don?t think it is right to pour salt onto the wound even though many believe their assessment is accurate.

3) Some think this is a bailout plan and tax payers will have to pay for it. We have to bail out this mess one way or the other. If thousands of banks fail, Uncle Ben is going to print more paper money to bail them out so we pay either way.

4) Some think it is not fair because these homeowners will keep the home that they can?t afford. From what I read in the posts, the judge will renegotiate the debt based on the market value of the security and what these borrowers can afford to pay. If they can?t afford the fair payment, they are still not eligible. So, in a sense, they are keeping the home that they CAN afford. Even if they get kicked out of their homes now, for those who have good documented income, they could still buy a similar home at the price that they can afford a couple of years later. I don?t really see the purpose of denying them staying in their home except to assert the philosophy of avenging bad behavior.



Not all borrowers who fall victim to the wave of foreclosures are stupid, greedy or lazy. I do expect lawyers, real estate agents and finance advisors to be able to read a loan document but I would give benefit of the doubt to the general public who are not as sophisticated or fortunate in their social standing. For people who take responsibility to empower themselves instead of trusting the professionals they hire, the more power and hurray to them. As for people who don?t, most of them may be simply gullible. These people are not criminals and they haven?t done anything to hurt anyone, so please cut them some slack. The bottom line is what is done cannot be undone. Some form of bail out by the government to either the borrowers or the financial institute at the tax payer?s expense is unavoidable. The important agenda at hand is to minimize the collateral damage. If the economy continues to spiral down out of control, everyone will suffer.
 
<p>The faster the housing correction occurs, the better off we will be when houses start selling again. </p>

<p>1. Unemployed/underemployed people (ex. construction workers, RE agents, mortgage folks, etc.) can get back to work</p>

<p>2. Banks can finally figure out what their paper is really worth (ie. they need to know the bottom before they can mark to market) and trade it and get the credit system back up and running</p>

<p>3. The "Hope Now" type schemes designed to extract as much money from people who can't really afford their places (see economist testimony about Hope Now results at the Senate hearings here - <a href="http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht022608.shtml">http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht022608.shtml</a>) will end, those people can finally get rid of the place they can't afford and get a fresh start.</p>

<p>4. Not changing all the rules of the game (ex. bankrupcy laws and such) is good for the people thinking of lending out money. If we keep on changing (or even discuss changing) the rules, they will be nervous and refuse to lend - which makes the credit crunch worse and increases the damage to the economy).</p>

<p> It is possible to make something worse when you try to fix it - sometimes it is better just to do nothing. As the doctor's oath goes, "Firstly, do no harm..."</p>
 
<p>For F*#&'s sake, you do not "hire" a mortgage broker or lender, you do business with them. If you want someone that is legally responsible for securing a deal that is in *your* best interests you hire a lawyer. Mortgage brokers represent themselves, not you. They sell you a loan financed with someone else's money. Lenders represent their depositors, not you. They give you a loan based on what is good for them, not you. Title companies are effectively neutral, all they do is process paperwork. Listening to their advice is akin to getting retirement advice from your ATM.</p>

<p>Max, I am more than happy to cut someone some slack, provided they accept responsibility for their own actions and have the humility to ask for help, rather than the audacity to demand help while screaming "I got SCREWED!". Your attitude of "there, there, it'll be alright" might make you happy in the pants, but that is exactly the kind of attitude that reinforces this kind of behavior. Comforting people who make their own misery, at the expense of others, does nothing to actually end the misery, much less prevent it from happening again, and again, and again.. Learning from one's mistakes does, but it requires that you admit some responsibility for your own actions. I would also argue that their lack of accountability is going to hurt all of us, and therefor they deserve as much salt in their wounds as it takes to get them to quit crying for a bailout.</p>
 
<p>Max, With the nation in VERY deep economic trouble, the LAST thing we need is feel-good hand-holding that keeps people in homes they could never have afforded without the lax lending standards that prevailed during the boom. If everyone gets a bailout, there is no disincentive for anyone to NOT do this crap again.</p>

<p>We have to get back to real value. that means that trillions in equity that came out of thin air will have to go away.</p>

<p>Your statement: "I would give benefit of the doubt to the general public who are not as sophisticated or fortunate in their social standing" reveals a contempt for accountability and self-reliance which is extremely illustrative and an example of the mindset that partially got us in this mess. Folks who could not afford homes thought they could. All the really hard concentrating and wishing and happy thoughts will not change that fact. A judge should not be able to change that fact. </p>

<p>Motivation is irrelevant. Just because someone believes they deserve a house because the flier they received in the mail or the TV commercial tells them they do deserve a house does not change basic economics.</p>

<p>If we are to unf@ck this mess, everyone involved has to suffer. The banks will lose billions, and the people who bought houses they can no longer afford SHOULD LOSE THEIR HOMES IF THEY CANNOT AFFORD THEM. For you to take the incredibly cavalier position that people should retain their homes while every other entity loses BILLIONS is ludicrous. </p>

<p>Banks have investors, and we all pay with increased costs and stricter standards. Why should they/we lose and the poor, unfortunate, unsophisticated, socially stunted homedebtors get to keep the prize? Come on! </p>

<p>Since when is responsibility irrelevant? We're not talking about the social safety net - welfare, food stamps, etc. We're not talking about people who were placed into a situation against their will or due to hardship or circumstances out of their control. These people bought homes they now cannot afford because they WANTED TO BE HOMEOWNERS. You are talking about rewarding poor/unlucky/uninformed/greedy/innocent/stupid decsionmaking with HOMEOWNERSHIP. </p>

<p>What if the market goes back up? Will the bailed-out homeowners be forced to repay the amount written off? No, their slate is wiped clean while the rest of us clean up their mess.</p>

<p>As for your 4 points: 1) You'd prefer a court essentially GIVE the unqualified their dream home at my expense?</p>

<p>2) Yes, I am VERY upset that people are even thinking about rewarding said bad behavior or poor decision-making. That will perpetuate the myth that choices/actions/decisions have no consequences.</p>

<p>3) We may pay either way, but NO ONE should be rewarded with retaining a home they cannot afford and that other people are paying for. We'll pay less if homes are allowed to find their own value without government interference. </p>

<p>4) Denying them to stay in their home? Are you serious? If they cannot pay for it, it IS NOT THEIR HOME, it belongs to the lender.</p>

<p>Max, I have friends who are losing their home and may possibly get divorced because of it. The anguish, doubt, stress, and heartache is REAL. I am not insensistive to that fact. But the answer is not a giant group hug or an ill-conceived plan that will only postpone the inevitable and may cause irreparable damage to our economy. We have to let this crisis play out and then clean up the mess afterwards. Strong institutions and responsible homeowners will survive, the weak and irresponsible will not.</p>

<p>My friends bought an $800,000 home on a combined salary of $125,000, utilizing an option ARM and betting on the market. They lost. The fact that they had no business buying that much home was irrelevant at the time, and that is why we are here. Perpetuating vodoo real estate economics is NOT the answer.</p>
 
<em>"4) Denying them to stay in their home? Are you serious? If they cannot pay for it, it IS NOT THEIR HOME, it belongs to the lender."</em>





This is the part that is always overlooked. I have written some posts about these people being squatters, and that is what I think they are. They were given the illusion of ownership by renting money from a bank at below-market rates (100% financing and Neg Am loans.) Now that the bank wants to raise their rent to market, and they can't make the payments, they want the rest of us to pay a subsidy so they can continue to live in houses they don't really own and never should have been allowed to believe they owned.





Think about it this way. What if lenders had not gone stupid and written all these bad loans? These people would not have been permitted access to these houses, and they never would have formed this emotional attachment to it. Now that we have so many empty homes sitting vacant around California, perhaps we should just go squat in one. If you can't afford the payments, why pay anything at all? If possession of real estate you don't own and can't afford is criteria for keeping it, we should all go find an empty house, squat in it, and claim it as our own.





What about the people who rent? Should they be subsidized as well? Does anyone remember the episode from Taxi called the <a href="http://www.tv.com/taxi/the-apartment/episode/130/summary.html?tag=ep_list;ep_title;8">Apartment</a>? Latka "buys" a place for $5,000 and invites everyone to come see it. When they get there it is this great luxury apartment. Latka has spent his life savings and thinks he owns the place, but all he really paid was the first month's rent. If they were to remake that episode today, they would have Latka petition for government assistance so he could stay in his "home." He couldn't possibly afford the $5,000 a month rent, so the landlord would have to take a "cram down" on the rent to the $100 a month the character could afford.
 
<p>IR,</p>

<p>Another pointed, perspicacious post...LMAO!</p>

<p><img alt="" src="http://www.grudge-match.com/Images/latka.gif" /></p>
 
<p>I think tiredofbeingwalkedon walked away. </p>

<p>You Can't Handle the Truth!</p>

<p><img class="img" style="WIDTH: 192px; HEIGHT: 90px" height="153" alt="" width="243" src="http://www.jacknicholson.org/afgmmenu.jpg" /></p>

<p>Maybe the above comment is a little rough - but I'm getting TIRED of being financially responsible and then having to bail out irresponsible people.</p>
 
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