Posted by Allison_MI on 7/26/08 11:54am
Msg #257031

housing bill soon to pass

I believe the Senate and House passed the housing bill to help struggling homeowners, so we might see more work soon.

Reply by Linda_H/FL on 7/26/08 12:02pm
Msg #257034

Saw a clip on CNN earlier...woman bought a home for

$560,000 with 100% financing - she made $50K/year!! Amazingly (sarcasm here), she's now in foreclosure...They asked her "Did you know you couldn't afford this home and the payments?" and she said "Yes...but the guy kept telling me not to worry about it". She hasn't made a mortgage payment in a year and she's trying to hold out long enough to get help so she can keep her home as she claims "she has nowhere to go"... I was absolutely dumbfounded listening to this report.

Is THIS what this program is for? I hope not - a program like this has its place and purpose and I'd hate to think our tax dollars are going to go to bail out the foolish and the greedy ... JMHO

Reply by Michelle/AL on 7/26/08 12:18pm
Msg #257042

My Feelings Exactly...well sort of

Linda, I have mixed feelings about this whole "bail out" venture. More than once in my life I have racked up more credit debt than I should have on my credit cards. I always felt that that my only option was to pay off the debt myself. Walking away from it was not an option for me, neither was filing bankruptcy. Instead I either got a part-time job, a roommate, held month-long garage sales, or work out arrangements with the creditors. As a result, lessons were learned and I have become more prudent about my expenditures.

I guess the bail-out efforts are necessary in light of its national scope and international impact. If the goverment stood around and did nothing, our economy could go down (further down) the tubes. I'm no expert. I just barely grasped the supply vs. demand theory in Economics 101. But it seems to me there needs to be a penalty of some sort for those who have made risky decisions knowingly.

Reply by John_NorCal on 7/26/08 3:09pm
Msg #257056

Re: My Feelings Exactly...well sort of

I hear what you're saying Michelle. Like you I have been in the same situation and never once did I ever think of just bailing or asking someone else for help. That being said I think the underlying problem was the free and easy money. It was just plain ridiculous, I saw loans being offered where all they wanted was a desciption of the property, the loan amount and a signature only on the application, no job info, etc. I saw the CNN clip too and was dumbfounded not only by that woman but also the broker. His attitude was "she wanted a house, and that's all there is to my job, just get her a house." He too knew that she couldn't afford the house but stuffed her in there anyway. Back when I was selling homes that was the first thing you did was to make sure a person could afford a home. But then that's when home loans had a semblance of normalacy. So there is blame enough for everyone involved but especially the "regulators" who let this mess happen.

Reply by CaliNotary on 7/26/08 3:54pm
Msg #257064

Re: Saw a clip on CNN earlier...woman bought a home for

"They asked her "Did you know you couldn't afford this home and the payments?" and she said "Yes...but the guy kept telling me not to worry about it" "

This is what drives me crazy about the whole thing. All the blame that's being placed on the brokers. Yeah, there were a lot of people doing a lot of scummy things, but the ultimate responsibility lies on the shoulders of idiots like this woman. She knew she couldn't afford it, but she did it anyway because somebody else told her not to worry about it. Dumbass.

Reply by Linda_H/FL on 7/26/08 3:59pm
Msg #257065

I agree - I wasn't pointing a finger strictly at the broker

although if he DID know she couldn't afford it he shouldn't have pushed through two loans at 100% financing - I think there IS some liability on his part for not looking past the dollar signs floating in his vision..but she was also stupid for believing him and should have dug her heels in and said "no..we need to look at something a bit more modest -half a mil is out of my range"...

Greed on both sides of the coin....MHO My whole point is that's the type of thing I hate to think my tax dollars are bailing out...while a family of 5 working 3-4 jobs to survive gets left out in the cold.

Reply by JanetK_CA on 7/26/08 6:08pm
Msg #257077

Re: I agree - I wasn't pointing a finger strictly at the broker

All good points. Seems there appeared to not be any consequences on either side for poor decisions. The woman chose not to tak responsibility and the lenders were shielded by the securitizing of loans so that if they didn't pay, it was someone else's problem!

The good news, though, is that this "bailout" comes with strings attached. I don't remember the details, but I believe one is that if they sell their home within five years they have to return to the US government a portion of any equity they've acquired since the bailout. The less time that passes, the higher percentage has to be paid back.

Reply by Lee/AR on 7/26/08 10:25pm
Msg #257091

The good news is....

not much, but, if they take the bailout, they'll have to pay back 50% of any gain forever, even after the 5 year 'more than 50%' period. Am willing to bet that they'll be a lot of whining about that, too.

Reply by desktopfull on 7/27/08 9:06am
Msg #257106

Re: The good news is....

Don't forget the 1.5% FHA mortage premium on the principle balance for the life of the loan. They may be getting a 6.1 to 6.9 % loan from FHA for interest on the principle, but with the MIP they will be actually paying 7.6 to 8.4 % while they have the loan. The 1.5% is on the original principle balance for the life of the loan or at least until they refi at the end of 5 years. These are not low-interest loans.

Reply by Linda_H/FL on 7/27/08 9:36am
Msg #257110

Re: The good news is....

Yep ... a lot of whining and the old "I had no idea" or "they never told me" - cuz they're just not paying attention...MHO