Bernanke Urges Banks to Forgive Portion of Mortgages - DFWstangs Forums
 
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post #1 of 10 (permalink) Old 03-05-2008, 05:20 AM Thread Starter
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Bernanke Urges Banks to Forgive Portion of Mortgages

Quote:
March 4 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.
http://www.bloomberg.com/apps/news?p...ASN48&refer=us

How do I get some of this? Do I need to stop paying my mortgage to get some of the loan forgiven?
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post #2 of 10 (permalink) Old 03-05-2008, 06:29 AM
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I guess everyone that flakes on their mortgage, can just live in their "section 8" house? What's the difference? It's basically government subsidized housing, right?
Between that and Hillary's "6 month moratorium" on foreclosures, regular folks should just step on up to a home in the $400k range, and live in style for a while...

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post #3 of 10 (permalink) Old 03-05-2008, 07:01 AM
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...

Quote:
Originally Posted by TexasDevilDog
http://www.bloomberg.com/apps/news?p...ASN48&refer=us

How do I get some of this? Do I need to stop paying my mortgage to get some of the loan forgiven?
Yep, just quit making the payments and they will send you a letter so you can sign up.
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post #4 of 10 (permalink) Old 03-05-2008, 07:08 AM
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Am I mistaken or is Bernake basically asking them to work with their borrowers. Write off part of the principal they would lose anyways (if there was a foreclosure) and thus minimize the overall impact to....

There is a point to that IMO. If something like that was successful in significantly reducing foreclosures it will slow the decline in home values and eventually help them recover.

IMO the thing I don't want to see is a bailout of bond investors. They put their money into these sub prime loans knowing the risks. They also knew of the predatory practices going on to sell these loans. I would be ok with a 6 month halt on foreclosures because what we are seeing in some areas is a real snowball effect where bad loans are getting foreclosed where good loan payers are getting severely hurt as their home values plummet. What I don't support is fixing the mortgage rates, which Hillary really wants to do. That will absolutely KILL the market.

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post #5 of 10 (permalink) Old 03-05-2008, 08:20 AM
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Quote:
Originally Posted by Sgt Beavis
Am I mistaken or is Bernake basically asking them to work with their borrowers. Write off part of the principal they would lose anyways (if there was a foreclosure) and thus minimize the overall impact to....

There is a point to that IMO. If something like that was successful in significantly reducing foreclosures it will slow the decline in home values and eventually help them recover.

IMO the thing I don't want to see is a bailout of bond investors. They put their money into these sub prime loans knowing the risks. They also knew of the predatory practices going on to sell these loans. I would be ok with a 6 month halt on foreclosures because what we are seeing in some areas is a real snowball effect where bad loans are getting foreclosed where good loan payers are getting severely hurt as their home values plummet. What I don't support is fixing the mortgage rates, which Hillary really wants to do. That will absolutely KILL the market.
I'm sure you're right (my post was tongue-in-cheek), but where does it stop? Car repo's are through the roof, too, so will he ask GMAC and Ford Motor Credit to ignore late payments? Anyone driving a Lincoln Blackwood or Denali ,can just ignore the payments for a while? The money in housing and Auto's is in the financing end. It is a direct shot at the profits of those entities to take a huge hit, while the silly-assed consumer gets a free ride.

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post #6 of 10 (permalink) Old 03-05-2008, 09:02 AM
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Quote:
Originally Posted by Vertnut
I'm sure you're right (my post was tongue-in-cheek), but where does it stop? Car repo's are through the roof, too, so will he ask GMAC and Ford Motor Credit to ignore late payments? Anyone driving a Lincoln Blackwood or Denali ,can just ignore the payments for a while? The money in housing and Auto's is in the financing end. It is a direct shot at the profits of those entities to take a huge hit, while the silly-assed consumer gets a free ride.

You're not wrong either. There has to be a limit. However the situation here isn't exactly a normal part of an economic cycle. This is a situation where banks started loaning a shit load of money to people they had no business loaning it to. It is also a situation where predatory lending practices are wide spread. From a "Let the buyer beware" prospective I can see how this falls back on the home owner. However a lot of those folks weren't exactly given all the facts about their mortgages.

In the end I feel that the sub prime market was driven by bond investors that saw a way to be huge profits off those ARM loans. Because so much money was thrown into it you started getting unscrupulous people involved in selling those loans. You can't deny that there are some real mother fuckers out there that were very willing to screw a home buyer over to make a huge profit.

I ran into this myself back in the late '90s and in 2000 when I considered buying a home before I was ready. In the '90s the mortgage guy was up front about the ARM loan. I was a young E4 in the Army and my credit wasn't exactly perfect. In 2000 a real ass hole tried to sucker me into an ARM with a really fucked up rate on a home that I liked in the Colony. Fortunately I took a very serious look at my finances and walked away from the house because I knew I wasn't ready. However you and I know most people just aren't that smart. They let their emotions get to them on buying a home and even when the facts are all laid out in plain site they still fuck it up. Now take those emotions and throw in a broker that is holding back on all the facts and you've got a fucked home buyer....

But back to what you asked, where does it end? Its a damn good question and I wish some of these fuckin' politicians would start asking it. IMO the Government can do a few things to minimize the pain of the subprime crisis but they should only do so to a point and they shouldn't do a fuckin' thing to bail out the investors who knew WTF they were getting into in the first place...

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post #7 of 10 (permalink) Old 03-05-2008, 09:12 AM
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[soapbox/]

It's a crock of shit if you ask me. I make my payments every month, the sorry bastard that couldn't think past the next 5 seconds and got an ARM with a teaser rate of 3%, knowing full well it would adjust to 15% in two years just gets bailed out for being a dumbass.

Reduce the principle amount? I call BS. I could see reducing the interest, but the principle? Is it the banks fault that someone bought more house than they could afford?

This sends the signal that it's perfectly OK to get in over your head, and expect the govt to bail your irresponsible ass out of the problem you got yourself into.

So someone who has been working their asses off for 5-6 years to pay down 15k on their mortgage gets nothing for doing the right thing, yet the Escalade driving non-mortgage paying jackass who has 10 late payments and hasn't paid in 8 months that's facing foreclosure will get 40-50k knocked off their principal so they can get a home equity loan and go buy himself some more shit and not pay his mortgage.....sounds like a great plan. (Damn thats a nice run on sentence )

[/soapbox]

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post #8 of 10 (permalink) Old 03-05-2008, 09:13 AM
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post #9 of 10 (permalink) Old 03-05-2008, 09:21 AM
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Most of the banks and lending institutions (especially credit card companies) were enabling and greedy, if not down-right sloppy. They should share some of the burden, but there is a limit. I liken some of them to the neighborhood pot/coke dealer..."Come on...give it a try. It's no big deal". Before you know it, you're way in over your head.

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post #10 of 10 (permalink) Old 03-05-2008, 09:31 AM
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Just a little insight into what I see come through...


Group A: stated loan, neg am loan with minimum payment, salary grossed up via broker by 50% to float the loan. Minimum neg am payment becomes too much and they cannot afford the loan and call us for help. They've defaulted on consecutive payments so we try and help them out (our workout department does this).

Group B: ARM loan, adjusting within a year to a rate slightly unaffordable to the borrower. They call in to try and plan ahead to work something out because they are upside down on their home (California) and a refinance isn't possible. The answer these people get is, "Sorry we cannot help until you've defaulted on the payments or your loan adjusts."

Then you have people who's loan is adusting within a few months and they are upside down, they usually get some help with it because the of the housing market fiasco.
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